##### Table of Contents






SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




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FORM 10-K



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|[X] | Annual report pursuant to Section 13 or 15(d) of the
	Securities Exchange Act of 1934 for the fiscal year ended
	October 31, 1999

or



|      |                                                                                                                                       
|----- | --------------------------------------------------------------------------------------------------------------------------------------
|[   ] | Transition report pursuant to Section 13 or 15(d) of the
	Securities Exchange Act of 1934 for the transition period from
	          to

Commission file number 1-15101



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TD Waterhouse Group, Inc.

(Exact Name of Registrant as Specified in Its
Charter)


|                                         |  |                    
|---------------------------------------- |  | -------------------
|                                        
|                                        
|                                        
|                                        
|Delaware                                 |  | 13-4056516         
|(State or Other Jurisdiction of          |  | (IRS Employer      
|Incorporation or Organization)           |  | Identification No.)
|                                        
|                                        
|                                        
|                                        
|                                        
|100 Wall Street, New York, NY            |  | 10005              
|(Address of Principal Executive Offices) |  | (Zip Code)         

212-806-3500

(Registrants Telephone Number, Including
Area Code)


Securities Registered pursuant to Section 12(b) of the
Act:

|                    |  |                                     
|------------------- |  | ------------------------------------
|Title of each class |  | Name of exchange on which registered
|                    |  |                                     
|None                |  | None                                

Securities Registered pursuant to Section 12(g) of the
Act:

Common Stock, $.01 par value per share


(Title of Class)




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Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.  Yes (X) No (  )

Indicate by check mark if disclosure of delinquent
 filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment of this
Form 10-K.  [   ]

As of January 20, 2000, the aggregate market
value of voting stock held by non-affiliates of the registrant
was approximately $642,000,000 (based upon the closing price for
shares of the Registrants Common Stock as reported by the
New York Stock Exchange on that date). Shares of Common Stock of
the Registrant held by each officer, director and holder of 5% or
 more of the outstanding Common Stock of the Registrant have been
 excluded in that such persons may be deemed to be affiliates of
the Registrant. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

The number of shares of Common Stock outstanding
as of January 20, 2000 was 376,419,200 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Definitive Proxy Statement relating to the
Registrants 2000 Annual Meeting of Stockholders to be filed
 hereafter (incorporated into Part III hereof).









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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Part I                                                                                       
|Item 1. Business                                                                             
|Item 2. Properties                                                                           
|Item 3. Legal Proceedings                                                                    
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Part II                                                                                      
|Item 5. Market for the Companys Common Equity and Related Stockholder Matters               
|Item 6. Selected Financial Data                                                              
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk                          
|Item 8. Financial Statements and Supplementary Data                                          
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Part III                                                                                     
|Item 10. Directors and Executive Officers of the Company                                     
|Item 11. Executive Compensation                                                              
|Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|Item 13. Certain Relationships and Related Transactions                                      
|Part IV                                                                                      
|Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|Signatures                                                                                   



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TD WATERHOUSE GROUP, INC.

Annual Report on Form 10-K for the Fiscal Year ended
October 31, 1999


Table of Contents


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|              |  |                                                                                        |    | Page
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|PART I        |  |                                                                                        |    |     
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|Item 1.       |  | Business                                                                               |    |      | 3  | 
|             
|             
|             
|             
|Item 2.       |  | Properties                                                                             |    |      | 31 | 
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|             
|             
|             
|Item 3.       |  | Legal Proceedings                                                                      |    |      | 31 | 
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|             
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|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                    |    |      | 31 | 
|             
|             
|             
|             
|PART II       |  |                                                                                        |    |     
|              |  |                                                                                        |    |     
|Item 5.       |  | Market for Registrants Common Equity and Related
	Shareowner Matters                  |    |      | 32 | 
|             
|             
|             
|             
|Item 6.       |  | Selected Financial Data                                                                |    |      | 33 | 
|             
|             
|             
|             
|Item 7.       |  | Managements Discussion and Analysis of Financial
	Condition and Results of Operations |    |      | 34 | 
|             
|             
|             
|             
|Item  7A.     |  | Quantitative and Qualitative Disclosures about Market Risk                             |    |      | 45 | 
|             
|             
|             
|             
|Item 8.       |  | Financial Statements and Supplementary Data                                            |    |      | 46 | 
|             
|             
|             
|             
|Item 9.       |  | Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure  |    |      | 69 | 
|             
|             
|             
|             
|PART III      |  |                                                                                        |    |     
|              |  |                                                                                        |    |     
|Item  10.     |  | Directors and Executive Officers of the Company                                        |    |      | 69 | 
|             
|             
|             
|             
|Item  11.     |  | Executive Compensation                                                                 |    |      | 69 | 
|             
|             
|             
|             
|Item  12.     |  | Security Ownership of Certain Beneficial Owners and Management                         |    |      | 69 | 
|             
|             
|             
|             
|Item  13.     |  | Certain Relationships and Related Transactions                                         |    |      | 69 | 
|             
|             
|             
|             
|PART IV       |  |                                                                                        |    |     
|              |  |                                                                                        |    |     
|Item  14.     |  | Exhibits, Financial Statement Schedules and Reports on
	Form 8-K                       |    |      | 69 | 
|             
|             
|             
|             
|Exhibit Index |  |                                                                                        | 69 |     
|             
|             
|             
|             
|Signatures    |  |                                                                                        | 71 |     




The page numbers in this Table of Contents reflects actual page
numbers, not EDGAR page tag numbers.

UNLESS OTHERWISE INDICATED, REFERENCES TO COMPANY
MEAN TD WATERHOUSE GROUP, INC. AND ITS SUBSIDIARIES,
AND REFERENCES TO TD BANK MEAN THE TORONTO-DOMINION BANK. AS
 OF SEPTEMBER 1999, THE ENTITY FORMERLY KNOWN AS WATERHOUSE
INVESTOR SERVICES, INC. IS NOW NAMED TD WATERHOUSE
HOLDINGS, INC. AND THE ENTITY FORMERLY KNOWN AS WATERHOUSE
SECURITIES, INC. IS NOW NAMED TD WATERHOUSE INVESTOR
SERVICES, INC. REFERENCES TO FISCAL MEAN THE
COMPANYS YEAR ENDED OCTOBER 31 (E.G. FISCAL
1999 REPRESENTS THE PERIOD NOVEMBER 1, 1998 TO
OCTOBER 31, 1999).



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##### Table of Contents






Part I




Item 1.  Business

TD Waterhouse is one of the largest discount brokers in the
world. Leveraging our investment in technology, we have become
one of the premier global online brokers and a leading provider
of online investing services and related financial products.

We have the second largest discount brokerage operations globally
 with over 2.9 million customer accounts. At
October 31, 1999, we had approximately 2.2 million
active accounts and over $121 billion in customer assets.

We have a significant international presence with operations in
the United States, Canada, Australia, the United Kingdom and Hong
 Kong. We have the second largest global branch network of any
discount broker with over 200 branches worldwide.

Our primary markets are the U.S. and Canada, which accounted
 for 74% and 24%, respectively, of our fiscal 1999 consolidated
revenues. Approximately 2.0 million of our total customer
accounts at October 31, 1999 were held by customers in the
U.S. and approximately 700,000 were held by customers in
Canada.

In addition to securities trading services, we also provide our
customers with a broad range of banking, mutual fund and other
consumer financial products and services on an integrated basis,
including:



| |   |                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a broad range of investment news, third party research reports
	and personal investment management tools such as portfolio
	tracking and stock and mutual fund screening programs;                                                                  
|
| |  | over 10,000 mutual funds from over 550 fund families (including
	the TD Waterhouse Dow 30 Fund and a series of money market funds
	that we advise), with over $26 billion in assets held in
	these funds through us at October 31, 1999;            
|
| |  | insured transaction accounts, checking, ATM access, electronic
	funds transfer, insured certificates of deposit, mortgage
	services and other banking products, which are provided through
	our affiliates TD Waterhouse Bank, N.A. and TD Bank; and
|
| |  | clearing and execution services to correspondents and other
	broker-dealers.                                                                                                                                                                        

We use a multi-channel distribution system to provide our
customers with access to our products and services. Customers may
 utilize any of the following delivery channels to access our
services:



| |   |                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | online channels via the Internet, using our webBroker;                                                                                                                                                                                                                                      
|
| |  | a network of branch offices, supported by service centers
	accessible by toll-free telephone numbers that are available in
	each of our major markets 24 hours a day, seven days a week;                                                                                                    
|
| |  | touch-tone telephone to access our automated trading
	systems; and                                                                                                                                                                                                                          
|
| |  | TalkBroker, a real time voice recognition market information
	system, which provides customers of our Canadian operations with
	real time stock and option quotes and mutual fund pricing, as
	well as trading of equities, options and mutual funds, through
	the use of voice recognition.

Business Strategy

Our ongoing business strategy focuses on positioning us to take
advantage of the current industry dynamics by leveraging our
position as the worlds second largest broker to the
self-directed investor. Key elements of our strategy include:



| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Launching Products and Services  We plan to
	develop products and services to optimize every customer
	relationship and deliver more choices to customers in order to
	broaden and increase the value of our customer relationships.

3



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##### Table of Contents





| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Leveraging Technology  We plan to continue to
	utilize and leverage technology to reach more customers with more
	 products and services in more useful, convenient and low-cost
	ways.
|
| |  | Reaching the World  We plan on expanding in
	both our core North American markets and around the world.                                                                                

Fundamental to our strategy is our attention to:



| |   |                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Building global brand awareness to support development of new and
	 existing markets.                                                                                                                                                                                                                                                                                       
|
| |  | Developing strategic relationships with online providers,
	equipment and software publishers, joint venture partners,
	affiliates in TD Bank Financial Group (consisting of TD Bank and
	its affiliates, including TD Waterhouse Bank, N.A. and TD
	Securities Inc.), and marketing and cross promotion alliances, to
	 reach more customers and add value to every account.
|
| |  | Enhancing financial performance in all our operations by building
	 key businesses, focusing on low-cost distribution and extracting
	 economies of scale from acquisitions.                                                                                                                                                                                                

Our History

Our U.S. operations commenced in 1979 as Waterhouse
Securities, Inc. located in New York City. After a successful
initial public offering in 1987 by its parent, Waterhouse
Investor Services, Inc. (WISI), Waterhouse
Securities, Inc., a member of the New York Stock Exchange, was
able to develop its own self-clearing capability in 1988 and
subsequently launched Waterhouse National Bank in 1994,
Waterhouse Asset Management in 1995 and National Investor
Services Corp. in 1997. In 1998, Waterhouse Securities, Inc.
became the third largest discount brokerage firm in the
U.S. measured by number of customer accounts.

WISI was acquired in 1996 by TD Bank, which had begun building
its own discount brokerage operations as early as 1984 following
the deregulation of brokerage commissions in Canada. In 1987, TD
Banks discount brokerage operations became a fully
registered broker and the first bank-owned firm in Canada to
purchase a seat on the Toronto Stock Exchange. By 1989, through a
 series of acquisitions and internal growth, TD Bank operated the
 largest discount broker in Canada. In connection with the
initial public offerings of our Common Stock on June 23,
1999, TD Bank reorganized its worldwide discount brokerage
operations so that they would be consolidated into our company
and our subsidiaries.

We have expanded our discount brokerage businesses through
internal growth, the opening of offices in new domestic and
overseas markets, and the acquisition of other discount brokerage
 companies. These acquisitions complemented our internal growth
strategy by providing us with a cost-effective means of acquiring
 new accounts, adding scale and providing us with entry platforms
 in new markets. The table below sets forth certain information
concerning these acquisitions:

|                        |                  |             |                |          |  |               |             |  |         |  |        |  | 
|----------------------- | ---------------- | ----------- | -------------- | -------- |  | ------------- | ----------- |  | ------- |  | ------ |  | 
|                        |                  | Acquisition |                | Purchase |  | Total        
|                        |                  | Date        |                | Price    |  | Accounts     
|                        |                  |             |                |          |  |              
|Gall & Eke              |                  |             | September 1998 |          |  |               | $13 million |  |         |  | 50,000 | 
|                        | (United Kingdom) |             |                |          |  |               |             |  |         |  |        |  | 
|                       
|                       
|                       
|                       
|Jack White & Company    |                  |             | May 1998       |          |  | $103  million |             |  | 130,000 | 
|                        | (U.S.)           |             |                |          |  |               |             |  |         |  |        |  | 
|                       
|                       
|                       
|                       
|Kennedy Cabot & Co.     |                  |             | November 1997  |          |  | $154  million |             |  | 202,000 | 
|                        | (U.S.)           |             |                |          |  |               |             |  |         |  |        |  | 
|                       
|                       
|                       
|                       
|Rivkin Croll Smith      |                  |             | November 1997  |          |  |               | $19 million |  |         |  | 44,000 | 
|                        | (Australia)      |             |                |          |  |               |             |  |         |  |        |  | 
|                       
|                       
|                       
|                       
|Pont Securities Limited |                  |             | May 1997       |          |  |               | $23 million |  |         |  | 53,000 | 
|                        | (Australia)      |             |                |          |  |               |             |  |         |  |        |  | 
|                       
|                       
|                       
|                       
|Marathon Brokerage      |                  |             | October 1993   |          |  |               | $46 million |  |         |  | 92,000 | 
|                        | (Canada)         |             |                |          |  |               |             |  |         |  |        |  | 

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Our global expansion continued in November 1999, with the
acquisition of YorkSHARE Limited, a significant discount broker
in the United Kingdom with 120,000 customer accounts. We are also
 expanding into new markets through joint ventures with strategic
 partners. In December 1999, we signed an agreement to form
a joint venture company in Japan with The Bank of
Tokyo-Mitsubishi, Ltd., Japans largest bank. Pending
regulatory approvals, the new joint venture company will be
launched in Spring 2000 and will offer a range of online discount
 brokerage services. We have also agreed to form a joint venture
in India with Tata Finance Limited, one of Indias leading
industrial and financial conglomerates, to pursue online
brokerage opportunities.

Multi-Channel Delivery Systems

Our strategy focuses on providing a wide array of high-quality,
low-cost products and services to our customers through a variety
 of distribution channels. We differentiate ourselves from most
of our competitors in the brokerage industry by providing
full-service multi-channel delivery systems which allow customers
 to choose how they prefer to do business with us. We provide a
variety of electronic channels through which our customers can
access our products and services. Customers are able to obtain
account information, access a broad array of research information
 and enter trade orders on an automated basis through these
electronic channels at any time, thereby providing added
convenience for customers and minimizing our costs of responding
to and processing routine customer transactions. In addition to
our electronic distribution channels, we maintain an extensive
and growing branch office network, supported by 13 regional
U.S. and Canadian telephone service centers that support the
 branch offices during normal business hours, three of which
provide after-hours service, thereby providing personal service
to the customers of our U.S. and Canadian operations
24 hours a day, seven days a week.

Over the past three years, our Internet trading services have
become an increasingly important part of our business. Trades
through our online services represented approximately 62% of our
total trading volume for fiscal 1999 and reached 68% in the
fourth quarter of fiscal 1999.

Internet Access

Customers can access their brokerage accounts online through the
Internet, including by utilizing online service providers such as
 America Online and the Microsoft Network. Our Internet web site,
 marketed under the name TD Waterhouse webBroker, allows
customers to engage in a full range of trading activities while
online. In addition, webBroker provides customers with access to
a broad range of free investing information, including:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | real-time stock quotes;                                                                                            
|
| |  | news and charts;                                                                                                   
|
| |  | research reports;                                                                                                  
|
| |  | investment management tools, such as portfolio tracking;                                                           
|
| |  | stock and mutual fund screening tools;                                                                             
|
| |  | market commentary;                                                                                                 
|
| |  | technical analysis and alerts; and                                                                                 
|
| |  | account management tools which allow customers to review account
	balances, transaction histories and order status.

In addition, to assist customers in using online channels, we
maintain Electronic Brokerage Support Centers which operate
24 hours a day, seven days a week in the U.S. and
extended hours in Canada. These services are available through
toll-free numbers to all our online customers.

We are in the process of developing and implementing a number of
enhancements to our online delivery channels. These enhancements
are designed to expand the range of products and services
available to our

5



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##### Table of Contents







| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | webBroker for our investment advisor customers in the
	U.S. and Canada, which provides secure access to multiple
	accounts, block trading and trade allocation and consolidated
	portfolio reports;
|
| |  | webBroker in French for our Canadian customers;                                                                                                                                                    
|
| |  | webBanking, which permits our customers to access the full range
	of banking products and services offered by our affiliated banks
	through links to webBroker; and                                
|
| |  | access to our products and services through hand-held wireless
	devices, such as pagers, electronic organizers and cellular
	phones.                                                               

Other Electronic Channels

In addition to Internet access, we offer our customers access to
our products and services through the following other electronic
channels:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Touch-tone Telephone.Our interactive investing systems,
	TradeDirect® in the U.S. and TeleMax in Canada, provide
	customers with a convenient way to obtain quotes, place orders
	and review certain account information using a touch-tone
	telephone.                                                                                                                                                                                                                                                                                   
|
| |  | Voice Recognition.TalkBroker, currently available to the
	customers of our Canadian operations, is our real time voice
	recognition market information system which provides customers
	with real-time Canadian and U.S. equity and stock option
	quotes and Canadian mutual fund pricing, as well as trading of
	equities, options and mutual funds, through the use of voice
	recognition over the telephone. We are currently developing a
	similar system for our U.S. business. We expect this system
	to be available in early 2000.
|
| |  | Direct Dial-up Access. Customers of our Canadian
	operations can use their personal computers to access their
	brokerage accounts online by using free proprietary software
	provided by us to dial directly into our private computer
	networks for real-time online brokerage services and market
	information.                                                                                                                                                                                                                         

Our direct dial-up access and touch-tone telephone services are
available in both French and English to our Canadian customers.

Electronic distribution channels have become an increasingly
important part of our business in the past several years. We
provide significant discounts from our standard commission rates
for trades executed through electronic brokerage channels,
reflecting the lower cost of providing services through these
channels.

Branch Office Network and Service Centers

We believe that having a significant branch network is an
important marketing tool in opening new customer accounts and in
maintaining a high level of customer satisfaction and retention.
Customers can use branch offices to open accounts, deliver and
receive checks and securities, obtain market information, place
orders, and obtain related customer services in person. Our
branches also offer seminars to existing and prospective
customers on a range of topics relating to personal investment
strategies. At October 31, 1999, we operated 164 branch
offices in 44 states in the U.S. and 38 branch offices in
nine provinces in Canada, as well as seven branch offices in
Australia, one branch office in Hong Kong and two branch offices
in the United Kingdom.

Our branch office network is supported by 13 regional
U.S. and Canadian telephone service centers during normal
business hours, three of which provide after-hour service in the
U.S. and Canada, including two that are open 24 hours a
 day, seven days a week.

United States.During normal business hours, our customers
 can visit or call a toll-free number to reach an account officer
 at a local branch to place an order, obtain account information
or transact other business. During business hours the account
officers in our branches are supported by customer service
representatives

6



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##### Table of Contents





To allow personnel at branch offices to focus on customer
service, we recently opened six account processing centers in the
 U.S. which provide administrative support to the branch
offices. These services include processing customer securities
and checks, processing account applications and processing
customer correspondence.

The capacity of the service centers and processing centers allows
 the branch office network to be maintained at lower staffing
levels and to focus on customer service and business development.
 Every one of our registered representatives at our service
centers has immediate access to the customer account and
market-related information necessary to respond to an individual
customers inquiries.

At October 31, 1999, our branch offices and service centers
were staffed by more than 3,200 account officers and customer
service representatives. We anticipate further increases in
staffing levels will be necessary as trading volume increases.

We recently completed a significant project to expand and upgrade
 our call processing system in order to support expected growth
while maintaining high levels of customer satisfaction. This
project replaced all of our current telephone systems and links
with a centralized call processing system developed and installed
 by Lucent Technologies which automatically routes calls to an
available broker at one of three networked service centers or in
the branches. The system is designed to use advanced technologies
 to route calls based on load and broker availability, prioritize
 queuing of calls based on customer profiles, and direct calls
requiring specialized services to the appropriate location.

Once the call processing system and service center expansion
programs have been fully implemented, we estimate that a majority
 of customer calls will be handled through service centers,
thereby allowing branch staff to focus a majority of their
efforts on business development and customer assistance and
education. In addition, the new system will provide staffing
efficiencies, by limiting the number of managers needed to
oversee operations, and natural redundancy in the event of
disaster or service downtime at one location.

Canada.Our customers in Canada can reach an investment
representative 24 hours a day, seven days a week by using
toll-free numbers to contact their local branch office or calling
 a service center directly. In addition, the local branches are
supported by six regional customer service centers located in
four provinces. After market hours, customer calls are routed to
our after-hours service center in Canada. Customer orders placed
after market hours are routed to the appropriate markets the
following business day. In addition, further customer assistance
is available through our customer support group, which is
separate from our call centers. These customer service
representatives respond to all customer correspondence and
investigate all statement inquiries and discrepancies. Our
service centers are staffed with trained specialists providing
advice on mutual funds, options and fixed income investments.

Outside the U.S. and Canada.In Australia, a significant
amount of our business is conducted over the telephone at our
service center in Sydney. Our customers may place orders, obtain
account information and transact other business through this
service center five days a week until 8:00 p.m. In order to
maintain personal contact with our customers and to develop new
business, we operate seven full-service local branch offices.

In the United Kingdom, we operate a business development office
in London and customer service centers in Bradford and
Manchester. In Hong Kong, our call center operates five days a
week and is open until 12:00 midnight.

7



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##### Table of Contents



Products and Services

We offer a broad range of products and services to meet
customers varying investment and financial needs, as well
as access to extensive investment news and information. Our
products and services are tailored to meet the needs of
self-directed individual investors and independent fee-based
investment advisors. For fiscal 1999, approximately 85%, 6% and
9% of our customers transactions were in equity securities,
 options and mutual funds, respectively. We do not trade equity
securities as principal for our own account, maintain inventories
 of securities for sale, engage in commodities transactions or
otherwise deal in or underwrite securities.

Brokerage Services For Individual Investors

United States.We offer our customers the ability to buy
and sell all U.S. and major foreign exchange-listed,
Nasdaq-listed and other equity securities, options, mutual funds,
 unit investment trusts, variable annuities and fixed income
investments, including U.S. Treasuries, zero-coupon bonds,
listed and over-the-counter (OTC) corporate bonds,
municipal bonds, GNMAs and CDs. We offer both margin accounts and
 cash accounts to our customers. We make commodities transactions
 available to our customers by acting as an introducing broker
for commodities trading. In November 1999, we began to offer our
webBroker customers the opportunity to participate in an extended
 hours trading session for Nasdaq-listed securities through the
REDIBook Electronic Communications Network. The extended hours
trading session is available Monday through Friday from 4:30 p.m.
 to 7:00 p.m. Eastern Standard Time.

Customers must have specific approval to trade options. At
October 31, 1999, approximately 167,000 accounts were so
approved. To write uncovered options, customers must go through
an additional approval process and must maintain a significantly
higher level of equity in their brokerage accounts.

Canada.We offer our customers in Canada the ability to
buy and sell all equity securities which are listed on
U.S. and Canadian exchanges, Nasdaq and all major foreign
exchanges, as well as Canadian and U.S. options, mutual
funds, Canadian government and corporate bonds, zero-coupon
bonds, strip bonds, Eurobonds, Yankee bonds, U.S. Treasuries
 and mortgage-backed securities. In addition, customers may buy
and sell money market investments, including guaranteed
investment certificates, short-term government bonds, term
deposits, bankers acceptances, bearer deposit notes, commercial
paper, finance company paper and money market strips.
Transactions in Canada Savings Bonds and provincial savings bonds
 are available. We also offer our customers the ability to buy
and sell gold and silver certificates.

Customers must have specific approval to trade options. At
October 31, 1999, approximately 68,000 accounts were so
approved. Our options specialists offer information to our
customers to assist them in their investments in Canadian or
U.S. exchange-traded options.

Over the past several years, an increasing percentage of the
trading activity of our Canadian customers has involved
U.S. equity securities. For fiscal years 1997, 1998 and
1999, approximately 12%, 16%, and 25%, respectively, of all
trading volume in our Canadian operations involved
U.S. equity securities.

We offer our customers the ability to choose from a variety of
different types of brokerage accounts and investment plans.
Brokerage accounts include margin accounts and cash accounts. The
 only equity securities which may be traded on margin are stocks
which are listed on major Canadian and U.S. exchanges and
certain stocks listed on Nasdaq.

Outside the U.S. and Canada.In Australia, our
customers can buy and sell all Australian exchange-listed
equities, options, derivatives and managed funds. We do not
currently provide margin trading services directly to our
Australian customers. We settle such transactions on behalf of
our customers with a margin lender. We currently offer our
customers the ability to trade U.S. securities listed on Nasdaq,
the New York Stock Exchange and the American Stock Exchange.

In the United Kingdom, our customers can buy and sell all London
Stock Exchange and U.S. and Canadian exchange-listed equity
securities. We do not currently offer margin trading to our U.K.
customers.

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Our Hong Kong operations act as an introducing broker and
marketing affiliate to our Canadian operations. This business
serves as a liaison between our customers in Hong Kong and our
Canadian operations, providing Hong Kong residents with access to
 all U.S. and Canadian exchange-listed securities. In
addition, our Hong Kong customers can also buy and sell local
unit trusts (or mutual funds) and fixed income products. Since
November 1999, customers of our Hong Kong operations may trade
Hong Kong exchange-listed securities.

Mutual Funds

United States.Through the TD Waterhouse Mutual Fund
Network, we currently offer our U.S. customers access to
over 9,000 mutual funds from over 495 fund families,
including over 1,400 no-fee, no-load mutual funds in over
225 fund families which customers can trade with no
transaction fees (NTF), which are part of our NTF
program. Under our NTF program, we receive fees from the funds
and fund sponsors for providing services for the TD Waterhouse
Mutual Fund Network program, including record keeping and
shareholder services. These fees are based upon balances of
customer assets invested in the participating funds through us.
For no-load funds which are not part of the NTF program, we
currently charge our customers a flat fee per trade, regardless
of the size of the transaction. Our broad mutual fund offerings
provide our customers with simplified record keeping and
investment monitoring through the use of one consolidated
statement. Customer assets held by us that have been purchased
through the TD Waterhouse Mutual Fund Network, excluding our
proprietary funds, totaled $12 billion at October 31,
1999. Assets held in mutual funds in our NTF program were
approximately $4.4 billion at October 31, 1999.

Our proprietary funds include four taxable and two tax exempt
money market funds and the TD Waterhouse Dow 30 Fund, all of
which are advised by one of our subsidiaries. Customer assets
invested in the TD Waterhouse proprietary funds totaled
approximately $8 billion at October 31, 1999. Fees
received by us from these proprietary funds for providing
transfer agent services, shareholder services, administration and
 investment management are based upon daily balances of customer
assets invested in these funds.

Canada.We offer investors 1,200 different mutual funds
from over 70 fund families including over 80 funds in
the Green Line Family of Funds which are managed by our
affiliate, TD Asset Management Inc. We receive customary trailer
fees from the funds, including the funds managed by our
affiliate, based upon balances of customer assets invested in the
 participating funds through us. We do not charge a commission on
 no-load funds and most load funds. We do charge a commission for
 certain load funds. There is a regular redemption fee for all
load and no-load funds with the exception of the Green Line
Family of Funds. Customer assets held by us in mutual funds
totaled $5.5 billion at October 31, 1999, including
$3.4 billion of assets invested in the Green Line Family of
Funds.

In addition, our team of mutual fund specialists provide our
customers with important comparative information about the 1,200
mutual funds we make available to our Canadian customers. Our TD
Waterhouse FundSelect Internet tool allows our online customers
to compare all the Canadian mutual funds available through us by
key criteria.

Under the Green Line Managed Assets Program, our mutual fund
specialists assess the investment needs of customers and assist
them in designing a portfolio made up of a selection of the
mutual funds offered by us tailored to their investment
objectives. Funds in the Managed Assets Program include both load
 funds and no-load funds, but are sold on a commission-free
basis. The cost to our customers participating in this program is
 much lower than a traditional full-commission brokerage program
for the benefits of having a portfolio manager determine the
appropriate asset mix, select the funds in which to invest,
monitor and rebalance the fund mix on a regular basis and provide
 a detailed performance report of the customers portfolio.

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Special Services

In addition to the primary services offered to our customers, we
seek to differentiate ourselves from other discount brokers and
build long-term client relationships by providing additional
services to meet specific needs and requirements of our customer
base, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Customer Relationship Officers.Our staff of specially
	trained customer relationship officers assists our customers in
	developing asset allocation strategies and evaluating investment
	choices with the goal of enhancing customer awareness of their
	investment options and encouraging customers to consolidate their
	 various investment assets at TD Waterhouse.                                                                                                                                                                                                                                                                    
|
| |  | Services for Active Customers.In the U.S., our Investors
	Advantage program provides special benefits and privileges to our
	 more active customers, including reduced margin rates and
	priority service. In Canada, a select group of our most active
	investors may participate in our Presidents Account
	program. Members of this program receive substantial savings on
	commissions, reduced margin loan rates, premium rates on
	investment balances, free online connect time, free real-time
	quotes, free investment reports, priority telephone services, and
	 an annual trading summary.                                      
|
| |  | Multi-Lingual Services.Through selected branch offices
	and service centers in our major markets, we provide brokerage
	services and access to all our products and services to customers
	 whose primary language is French, Spanish, Mandarin, Cantonese
	and certain other Asian languages.                                                                                                                                                                                                                                                                                                                                               
|
| |  | Investment Guidance.Through selected branch offices, we
	provide our customers with guidance regarding fixed income
	investing and assistance selecting among a full-range of mutual
	funds and money market investments.                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | IPOs and New Issues. In Canada and the U.S., we provide
	access to registered offerings of new issues to our qualified
	customers through an arrangement with our affiliate, TD
	Securities Inc., when it participates as underwriter or a selling
	 group member in these offerings. In December 1999, we
	entered into a joint venture with The Charles Schwab Corporation,
	 Ameritrade Holding Corporation and several other parties to form
	 an investment bank which will provide our qualified
	U.S. customers with online access through webBroker to
	initial public offerings that this newly formed investment bank
	underwrites.

Retirement Services and Registered Plans

United States. We offer a variety of no-fee, no-minimum
balance retirement plan products for both individuals and
businesses. We offer various IRAs for individuals as well as SEP
plans, profit sharing plans, 401(k) plans and other retirement
plans for businesses and self-employed individuals. Customers are
 provided with investment and savings assistance through our
Retirement Planning Guide to assist in determining retirement
needs, our Retirement Plans Customer Service Desk or by using our
 online Retirement Planning Center.

Canada. In addition to brokerage accounts, our Canadian
customers may open registered accounts, which shelter eligible
investments from income taxes while saving for retirement or
education. The registered accounts we offer include self-directed
 RSPs, self-directed RIFs, registered education savings plans and
 Quebec stock savings plans.

Brokerage Services For Investment Advisors

United States. Through our TD Waterhouse Institutional
Services Division, which operates out of two regional offices, we
 offer a full range of brokerage execution and operational
support services to independent fee-based registered investment
advisors and to financial institutions, such as banks and trust
companies, which provide trust and other investment services for
their clients. The clients of such advisors benefit from our
discounted commissions. Clients of advisors generally pay a fee
to their advisor for his or her advice and pay a commission to us
 for execution and custodial services.

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This division of our business has its own sales force and
marketing strategy. Specialized technology, including proprietary
 software and data translation interfaces, is provided to all
advisors. An experienced relationship manager is assigned to each
 advisory firm. A range of products and services which have been
individualized to meet the needs of financial advisors are
available, including block trading and trade allocation,
processing management fees payable to advisors, free investment
research, online trading, downloads of client account information
 and consolidated monthly statements of client accounts. In
addition, Internet trading services are available to our
investment advisor clients through webBroker. This division now
serves over 2,500 investment advisors who manage total customer
assets through accounts with us of over $9.5 billion.

Through the TD Waterhouse referral program, AdvisorDirect, we
provide qualified customers with referrals to registered
investment advisors meeting certain minimum requirements,
including registration with the SEC, and who agree to maintain
custody of their clients assets at TD Waterhouse. In order
to qualify for this referral service, our customers must have a
portfolio with a balance of at least $100,000. While benefiting
our retail customers, this program also benefits our investment
advisor clients by providing participating registered investment
advisors access to our U.S. customer base of over
1.6 million active customer accounts. We do not pay to or
receive from the registered investment advisors any fees or
compensation for participation in the TD Waterhouse referral
 program.

Our managed assets network is a service we make available to the
financial advisors who conduct business through us and to their
clients. This customized portfolio management program offers
advisors and their clients access to more than 50 equity and
fixed income portfolios managed by a select group of
institutional asset managers. Among the benefits of the managed
assets network are low asset management fees and substantially
lower minimum investment requirements than would be available to
these financial advisors on their own. In addition, it enables
registered investment advisors to delegate sophisticated analysis
 to institutional managers.

Canada. Since 1987, our Canadian operations have provided
securities trading, clearing, settlement and account
administration services to independent investment counselors
across Canada. Capitalizing on a growing acceptance of
outsourcing in the Canadian investment community, we generate
revenue by providing an administration model for those counselor
firms seeking an alternative to running their own traditional
proprietary back office.

By leveraging our investment in technology, economies of scale
and management expertise, we can offer investment counselors
quality administration services at a competitive price.
Investment counselors manage private client accounts under our
product label. Trade commissions on the accounts are paid to us,
and we assume responsibility for account opening, trading, credit
 and regulatory compliance. As of October 31, 1999, we
serviced 93 investment counselor firms and had approximately
12,600 accounts and $1.3 billion under administration.

Outside the U.S. and Canada. Through our Australian
operations, we offer a broad range of brokerage execution and
operation support services to independent fee-based investment
advisors. The clients of the investment advisors pay the advisor
a fee and pay us a commission for trades executed. Our webBroker
permits the independent advisor to link up multiple client
accounts for ease of reference. Our recently launched Premium
webBroker facility provides the investment advisors with a full
range of market and client data on an integrated basis. In Hong
Kong, apart from our call center operations, we have commissioned
 investment executives to serve the customers of our Hong Kong
operations during market hours. The services of such investment
executives are at higher commission rates.

Cash Management Services

United States. Our customers in the U.S. can choose
to have cash balances in their accounts automatically swept, on a
 daily basis, into any of a selection of money market funds or an
 FDIC-insured money market deposit account offered through TD
Waterhouse Bank, N.A., our affiliate. On certain existing
brokerage accounts, we pay interest on cash balances. Our
customers with online accounts are required to establish an
Investors Money Management (IMM) account. Customers
with IMM accounts may access

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Canada. We pay interest at competitive rates on all cash
balances in the brokerage accounts of our Canadian customers,
including all cash dividends and interest earned on investments.
We offer an automatic deposit service to a TD Bank account.
Customers may elect to have interest and dividend income in both
U.S. and Canadian funds automatically deposited to a Green
Line Income Generation Account. Our customers may also access
funds in their brokerage account through checking, ATM account
access and electronic funds transfer, which are provided through
TD Bank. Other services available to our customers include
monthly investments in mutual funds with automatic withdrawals
from the customers brokerage account or bank account.

Investor Information Services

We provide a broad spectrum of free investment information and
research tools to our active customer base in order to help the
self-directed investor with his or her investment decisions.
These include printed research materials, such as Standard
& Poorssresearch reports, as well as quote
information, charts of stock prices, portfolio tracking, stock
and mutual fund performance and screening tools and links to
significant Internet financial services web sites. We also
provide our customers with information and research online. Our
partnership with leading content providers gives our online
customers access to a broad range of financial information and
facilitates their ability to make informed investment decisions.
Both in the United States and Canada, in addition to the delayed
quotes, charts, and personal portfolio tracker which are freely
available to anyone who visits our web site, we provide our
webBroker customers with access to research, financial data and
news to assist them in making investment decisions.

Retail Banking Products and Services

United States.We offer our customers related financial
products and services provided by our affiliate, TD Waterhouse
Bank, N.A. In addition to the FDIC-insured money market sweep
account offered through our retail brokerage business, the
products and services of TD Waterhouse Bank, N.A. include
interest-bearing checking accounts, fixed term certificates of
deposits, Visa and MasterCard credit cards, electronic bill
payment via touch-tone telephone, unsecured lines of credit, and
mortgage services through an arrangement with an unaffiliated
financial institution. In addition, customers can utilize TD
Waterhouse Bank, N.A.s webBanking service to perform
certain banking transactions online. Customers can access their
brokerage account through a TD Waterhouse Investors Money
Management Account. In addition, customers with a
TD Waterhouse brokerage account and a TD Waterhouse Bank,
N.A. checking account may transfer funds online or by telephone
between such accounts through our Funds Transfer Link program.
Customers enrolled in our Funds Transfer Link program also have
access to a consolidated financial summary, which lets them view
their TD Waterhouse bank and brokerage balances on one screen.
The products of TD Waterhouse Bank, N.A. have been designed to
assist our customers in managing their investments and personal
finance. In connection with the reorganization, we have entered
into agreements with TD Waterhouse Bank, N.A. with respect to
marketing, distribution and management support.

Canada. Our MoneyLink service provides our customers with
access to their brokerage account by offering a variety of
banking services including Canadian and U.S. dollar
checking, TD Bank in-branch banking, automated banking machine
access, telephone banking and web banking. These services provide
 our customers with access to the funds in their brokerage
accounts 24 hours a day, seven days a week. TD Access
telephone and web banking services allows customers to transfer
funds from any personal TD Bank account to their brokerage
account using the bill payment function. Customers
may also use electronic funds transfer to transfer funds from
their brokerage account to any bank account in Canada.

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Insurance Products

We provide our Canadian customers with access to insurance
professionals who can offer travel, home, auto and life
insurance. Life insurance is offered by agents of Toronto
Dominion Life Insurance Company. Travel insurance is provided
under a group insurance contract we hold for our customers. Home
and auto insurance products are offered to our clients through
Vector Intermediaries Inc., an unaffiliated insurance broker.

Customer Financing

We conduct securities transactions for our customers on either a
cash or margin basis. In an account authorized for margin
trading, we may lend our customers a portion of the market value
of certain securities up to the limit imposed by applicable
authorities, which for most equity securities is initially 50%.
As a matter of policy, we generally require our customers to
maintain higher percentages of collateral values than the minimum
 percentages required under these regulations. In specific
situations involving stocks that are exhibiting a high degree of
volatility, we may elect to increase the required collateral
value percentage even higher or prohibit customers from buying
shares of those stocks on margin at all. Margin loans are
collateralized by the securities in the customers account.

Interest on margin loans to customers provides an important
source of our revenue. During fiscal 1999, outstanding margin
loans to customers averaged $3.7 billion to the customers of
 our U.S. operations and $748 million to the customers
of our Canadian operations and grew to $4.9 billion and $941
million, respectively, by October 31, 1999. In permitting a
customer to engage in margin or short sale transactions, we face
credit risk if the customer fails to meet his or her obligations
in the event of adverse changes in the market value of the
securities positions in his or her account. In the event of such
an adverse change, we require our customers to deposit additional
 securities or cash, so that the amount of the customers
obligation is not greater than specified percentages of the cash
and market values of the securities in the account.

We may use cash balances in our customers brokerage
accounts (other than registered client accounts) to finance
margin loans to other clients. With respect to our Canadian
operations, the portion of such cash balances not used to finance
 margin loans to our customers may be utilized by us to finance
our day to day operations in Canada, which reduces our cost of
funds.

Marketing and Advertising

Our marketing strategy is focused on three goals: building brand
awareness, attracting new customers and retaining and
cross-selling to our existing customers value-added products and
services. We pursue these goals through a combination of
marketing through our branch office network, media, advertising,
including outdoor billboard and banner advertising, marketing on
our own web sites and other online opportunities, direct mail
marketing, public relations, and co-marketing programs. In
general, our marketing approach is tailored to fit the investing
needs and practices of the local market, the available
technological infrastructure, and other relevant factors.

Our advertising focuses on building awareness of the brand,
products and services and positioning us as the discount broker
with the most value for the self-directed investor offering the
best combination of product offerings, price and customer
service. We regularly place print advertisements in a broad range
 of business, technology and financial publications, including
Barrons, Investors Business Daily, Money,
SmartMoney, the Wall Street Journal andKiplingers in the United States andThe Globe and Mail, National
Post, Macleans, La Presse andLes Affaires, in
Canada. We also advertise regularly on cable television including
 CNBC, MSNBC and CNN and broadcast television in select local
markets. In Canada, we advertise via sponsorship of a daily
business report segment on a national television news broadcast
and business reports on news broadcasts on regional radio
networks.

Through our web sites, prospective customers can get detailed
information on our products and services, access account
applications, view an online demonstration and request additional
 information. We have alliances linking webBroker with America
Online, Yahoo! and @ Home Canada. We believe these links are a

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We also believe that providing an effective customer service team
 to handle customer needs is critical to our success. Our
customer service organization helps customers get online, handles
 product and service inquiries and responds to all brokerage and
technical questions. Our U.S. and Canadian customers have
customer service access through a toll-free number 24 hours
a day, seven days a week.

In Canada, our marketing strategy also focuses on leveraging the
900 TD Bank retail outlets. Over 6,500 personal bankers at these
branches are trained to assist in account acquisition and to
cross-sell our products and services. In Canada, we are also
active in providing investment seminars across the country to
assist customers in learning about our products and services as
well as assisting in their investment decisions. We do community
oriented advertising for our Asian language and French
communities. We also participate in financial trade shows, which
we believe are important in creating branch awareness.

To establish and build brand awareness of TD Waterhouse in North
America and around the world, we launched a $100-million
multi-faceted marketing and advertising campaign in the fourth
quarter of 1999. Our advertising and marketing costs per new
account were approximately $85 in fiscal 1999 and $161 in the
fourth quarter of fiscal 1999, which we believe are significantly
 lower than a number of our primary competitors.

Alliances with Online Providers

We have developed alliances with selected proprietary online
service providers to increase account development and expand
distribution. These providers attract significant numbers of
users, and our relationships with them give us access to expanded
 market opportunities. Set forth below are descriptions of our
key alliances:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | America Online. In July 1998, we entered into a
	two-year agreement with America Online (AOL), a
	private network and Internet service provider. Under the
	agreement, we are one of four exclusive brokerage partners in the
	 AOL Personal Finance Channel. The agreement provides for
	extensive marketing and promotional opportunities across AOL
	properties and for a mini-TD Waterhouse site that is
	resident on AOLs private network and available to AOL
	members. We have buttons and banners located primarily in the AOL
	 Personal Finance Channel but also throughout the AOL network,
	including the AOL home page, that link directly to our mini site
	on AOL or the TD Waterhouse web site on the Internet. In
	April 1999, we entered into a one-year agreement with AOL
	with respect to our Canadian business. Under the agreement, we
	are one of four exclusive brokerage partners in the AOL Personal
	Finance Channel that is accessible by Canadian subscribers to
	AOL, with buttons and banners located in the channel.
|
| |  | Yahoo!. We have renewed our advertising agreement with
	Yahoo!, a web portal/search engine, to promote our
	U.S. online investing services. Pursuant to the agreement,
	Yahoo! provides advertising in the form of buttons on the Yahoo!
	quotes return page and banners in the Yahoo! Finance area and
	throughout the Yahoo! site.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | @Home Canada. Effective October 1999, our Canadian
	subsidiary, TD  Waterhouse Investor Services (Canada), Inc.,
	 and TD Bank entered into a one-year agreement with @Home
	Canada Inc., a provider of internet services to Canadian cable
	companies. The agreement provides for a marketing alliance in
	which @Home Canada subscribers can access investing information
	and electronic banking and brokerage services sponsored by
	TD Waterhouse Canada and TD  Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | IPO and New Issue Access. We are currently implementing an
	 arrangement with a newly formed investment bank of which we are
	a co-founder, to provide online access to IPOs to our customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Clearing Operations

We perform clearing services for all securities transactions in
our customer accounts. These services involve issuing trade
confirmations, settling and transferring payment for securities
on the settlement date, providing custodial services for
securities and cash held in the customers accounts and
similar functions involved in all securities trading
transactions.

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We also provide clearing services for approximately 19 other
unaffiliated broker-dealers (referred to as introducing
brokers) in the U.S. and Canada representing
approximately $1.6 billion in assets at October 31,
1999. As part of our clearing services for third parties, we
maintain certain books and records for the introducing brokers,
hold securities and free cash balances of the introducing
brokers customers, execute and settle trades for those
customers and, when appropriate, extend margin loans to those
customers. These clearing operations have generated additional
revenues as well as contributed to increased operating margins.

The vast majority of our customer transactions are cleared
through the facilities of the National Securities Clearing
Corporation or the Options Clearing Corporation for our
U.S. clearing operations, and through the facilities of the
Canadian Depository for Securities, the Canadian Derivative
Clearing Corp. and the Mutual Fund Clearing & Settlement
 Service for our Canadian clearing transactions. Certain other
transactions, such as mutual fund transactions and transactions
in securities not eligible for settlement through a clearing
corporation, are settled directly with the mutual funds or other
financial institutions or through agents in those markets.

Our U.K. and Australia operations also perform similar services
for all securities in their customer accounts. Our Hong Kong
subsidiary clears its customers trades in U.S. and Canadian
 exchange-listed securities through our Canadian clearing
operations. In November 1999, our Hong Kong subsidiary began
clearing its customers trades in Hong Kong exchange-listed
securities through the Hong Kong Securities Clearing Company
Limited.

In connection with our customers activities, we borrow
securities both to cover short sales and to complete customer
transactions in the event a customer fails to deliver securities
by the required settlement date. We collateralize these
borrowings by depositing cash or securities with the lender and
receive a rebate calculated to yield a negotiated rate of return.
 When lending securities, we receive cash or securities and
generally pay a rebate to the other party in the transaction at a
 rate calculated to yield a negotiated return. Securities lending
 and borrowing transactions are executed pursuant to written
agreements with counterparties that require that the securities
borrowed be marked-to-market on a daily basis and
that excess collateral be refunded or that additional collateral
be furnished in the event of changes in the market value of the
securities. The securities usually are
marked-to-market on a daily basis through the
facilities of the various national clearing organizations.

Competition

United States. All aspects of our business are highly
competitive. We compete directly with a broad range of companies
seeking to attract consumer financial assets, including
full-service discount brokerage firms, mutual fund companies,
investment banking firms, commercial and savings banks, insurance
 companies and others. The financial services industry has become
 considerably more concentrated as numerous securities firms have
 been acquired by or merged into other firms. Some of these
competitors have greater financial resources than we do and offer
 certain additional financial products and services. In addition,
 we expect competition from domestic and international commercial
 banks to increase as a result of recent legislative and
regulatory initiatives in the U.S. (including the passage of the
Gramm-Leach-Bliley Act in November 1999) to remove or relieve
certain restrictions on mergers between commercial banks and
other types of financial services providers. We primarily compete
 with these firms on the basis of quality of customer service,
breadth of products and services offered, prices, accessibility
through delivery channels, and technological innovation and
expertise.

Discount brokerage firms and online-only financial services
providers compete vigorously with us with respect to commission
charges. Full-commission brokerage firms also offer discounted
commissions to selected retail brokerage customers. In addition,
some of our competitors in both the full-commission and discount
brokerage industries have substantially increased their spending
on advertising and direct solicitation of customers.

Competition in the online-trading business has become similarly
intense as recent expansion and customer acceptance of conducting
 financial transactions online has attracted new brokerage firms
to the market. Price competition continues to intensify in online
 investing as traditional brokerage firms have entered the market
 and existing competitors have aggressively sought to gain market
 share. We have experienced declines in our average commission
per trade as the proportion of our customers using electronic
brokerage

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Canada. In contrast to the U.S. market, market share
in Canada is concentrated amongst a limited number of
institutions. We believe our client base as measured by the total
 number of accounts represents approximately 45% of the total
discount brokerage market.

Given the perceived attractiveness of the wealth management
market segment and the enhanced profile of discount brokerage
over the past several years, competition continues to be intense.
 In addition to the various bank or trust owned discount brokers,
 several dedicated operators have recently entered the Canadian
market. These include E*Trade Canada and Charles Schwab Canada,
which in 1999 purchased the businesses of two small brokerage
firms. We also expect that a number of mutual fund and insurance
companies will enter the discount brokerage market in the near
future. Many of these competitors have adopted aggressive pricing
 as their primary strategy to obtain market share.

Outside the U.S. and Canada. The discount brokerage
market in Australia is just developing. Our competitors in
Australia include Commonwealth Securities Ltd., which is a
bank-owned discount broker, and E*Trade. Currently we are the
second largest discount broker in Australia, based on trading
volume, behind Commonwealth Securities. The discount brokerage
market in the United Kingdom is relatively underdeveloped and
very fragmented. We are continuing to expand our operations in
the United Kingdom. In Hong Kong, local securities brokerage
firms are venturing into the internet-based trading market, which
 is currently relatively fragmented and underdeveloped. We are
the first major discount brokerage to have a presence in Hong
Kong.

Technology and Information Systems

We maintain sophisticated and proprietary technology that
automates traditionally labor-intensive securities transactions
and provides us with a platform to support our operations. We
believe that our ability to effectively leverage technology to
improve our products and services has been a key component in the
 development of our franchise. Our systems provide customers with
 efficient service and have the fundamental advantage of being
scalable and adaptable as usage increases and service and product
 offerings are expanded.

Our technology platform is supported by an internal staff of
programmers, developers and operators. In addition, we have
dedicated quality control analysts, web site developers,
technical writers and design specialists who are responsible for
ensuring that our electronic access channels are easy to use,
dependable and reflect the most current enhancements and
features.

Our standard development model is to build our electronic
commerce systems using a three-tier approach. The first tier is
the client presentation layer, which consists of our
various delivery channels: Internet, PC dialup, touch-tone, and
voice recognition. We typically code these applications
ourselves, or in conjunction with an outside vendor, to ensure
that we retain the associated competitive advantage.

The second layer is our middleware, which validates
and logs transactions, formats them for the appropriate back
office systems, and returns the completed transaction to the
user. By separating the third layer from the client presentation
layer, we allow ourselves the ability to change presentation
easily or to change back office systems without affecting the
client directly.

Finally, the third layer consists of back office systems,
quotation services, and other databases. Specific formats are
required to communicate with each of these systems, but the
presentation and middleware layers are unaffected by these
complexities.

In the U.S., the primary component of our system with respect to
online trading is our middleware component. Our middleware
unifies front-end applications and multiple interfaces, supports
different languages, hardware platforms and protocols, and
establishes the interface between ADP, our back-office service

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ADP, in the U.S., and ISM, in Canada, are our providers of back
office services including broker terminal services, order entry
systems and other information necessary to run our business,
including transaction summaries, data feeds for compliance and
risk management, execution reports, and trade confirmations. Our
systems, which are maintained independently of their systems,
accept trading orders and forward them to the back-office service
 provider for processing. Our data systems also contain our
customer profile data base functions, perform functions to enable
 our customers on webBroker and provide other support to our
clearing divisions.

We continue to make significant investments in systems
technology. To enhance the capacity and reliability of our
systems, we have established two separate data centers in each of
 Jersey City, New Jersey for our U.S. business and in
Toronto for our Canadian business. These facilities support
network services, trading and investor services. These are fully
redundant data centers which allow the business to be run from a
single site should the other fail. To provide for system
continuity during potential outages, we also have equipped our
computer facilities in both countries with uninterruptible power
supply units, as well as back-up generators.

The secure transmission of confidential information over public
networks is a critical element of our operations. We use a
combination of proprietary and industry standard security
measures to protect customers accounts. Customers are
assigned unique account numbers, user identifications and trading
 passwords that must be used each time they log on to the system.
 We rely on industry-standard encryption and authentication
technology, including public key cryptography technology licensed
 from RSA Data Security, Inc., to provide the security and
authentication necessary to effect the secure exchange of
information. Touch-Tone telephone transactions are secured
through a personal identification number, the same technology
used in the ATMs. We have an agreement to provide digital
certification and authentication services for electronic commerce
 for our web servers through VeriSign, Inc.

Government Regulation; Net Capital Requirements

The businesses in which we operate are subject to extensive
regulation and supervision under federal, state and provincial
law in the U.S. and Canada and under the applicable laws of
each other country in which we conduct business. The various
governmental authorities and industry self-regulatory
organizations which have supervisory and regulatory jurisdiction
over us generally have broad enforcement powers to censure, fine,
 issue cease-and-desist orders or suspend or expel a
broker-dealer or any of its officers or employees who violate
applicable laws or regulations.

Securities Regulation

United States. The securities industry in the U.S. is
 subject to extensive regulation under both federal and state
laws. The Securities and Exchange Commission is the federal
agency responsible for the administration of the federal
securities laws. Our U.S. brokerage and clearing
subsidiaries are registered as broker-dealers, and our subsidiary
 which acts as advisor to our proprietary U.S. mutual funds
is registered as an investment advisor, with the SEC. Much of the
 regulation of broker-dealers has been delegated by the SEC to
self-regulatory organizations, principally the Municipal
Securities Rulemaking Board, the National Association of
Securities Dealers and the New York Stock Exchange, which has
been designated by the SEC as our primary regulator. These
self-regulatory organizations adopt rules (subject to approval by
 the SEC) that govern the industry and conduct periodic
examinations of the operations of our U.S. brokerage and
clearing subsidiaries. Securities firms are also subject to
regulation by state securities administrators in those states in
which they conduct business. Our U.S. brokerage and clearing
 subsidiaries are registered as broker-dealers in all 50 states,
the District of Columbia and Puerto Rico.

Broker-dealers in the U.S. are subject to regulations
covering all aspects of the securities business, including sales
methods, trade practices among broker-dealers, use and
safekeeping of customers funds and securities, capital
structure, record keeping, the conduct of directors, officers and
 employees, possession and control of customer funds and
securities, margin lending and execution and settlement of
transactions.

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Our U.S. brokerage and clearing subsidiaries are members of
the Securities Investor Protection Corporation
(SIPC), which provides, in the event of the
liquidation of a broker-dealer, protection for customers
accounts of up to $500,000 for each customer, subject to a
limitation of $100,000 for claims for cash balances. The SIPC is
funded through assessments on registered broker-dealers. In
addition, we have arranged for full supplemental insurance
coverage of customer securities through Asset Guaranty Insurance
Company. Neither SIPC nor this supplemental coverage provides
coverage for losses due to market fluctuations.

Canada. The securities industry in Canada is under the
jurisdiction of the provincial and territorial governments and is
 subject to extensive regulation. Each province or territory has
a securities commission (or equivalent) that is responsible for
the administration of the securities legislation of that
jurisdiction. Our Canadian brokerage subsidiary is registered as
an investment dealer or its equivalent in all provinces and
territories in Canada and is a member of The Investment Dealers
Association of Canada (IDA). Much of the regulation
of investment dealers has been delegated to the IDA, a
self-regulatory organization, which is the primary regulator of
our Canadian brokerage subsidiary. The IDA adopts rules in
conjunction with the various securities commissions that govern
the industry and conducts yearly examinations of our Canadian
brokerage subsidiary. Our Canadian brokerage subsidiary may
acquire a seat on one or more of the stock exchanges in Canada.

Broker-dealers in Canada are subject to regulations covering all
aspects of the securities business including sales practices,
possession and control of customer funds and securities, capital
structure, record keeping, the registration and conduct of
directors, officers and employees, margin lending, execution and
settlement of transactions and trade practices among
broker-dealers.

Our Canadian brokerage subsidiary is a member of the Canadian
Investor Protection Fund (CIPF) which provides, in
the event of the bankruptcy or insolvency of a broker-dealer,
protection for customers accounts of up to Cdn.$1,000,000
for each customer. The CIPF is funded through assessments on
registered broker-dealers.

Outside the U.S. and Canada. Our Australian
operations are regulated by the Australian Securities and
Investment Commission which is the regulator of all federal legal
 requirements for Australian broker-dealers. The Australian
corporations law delegates the power of specific regulation of
stockbrokers to the Australian Stock Exchange (ASX).
The ASX Business Rules set out all mandatory requirements of
brokers including those relating to minimum liquid capital,
client relations, record keeping, dealing practice, trust
accounts and the conduct of directors and officers. ASX Business
Rules require membership in the National Guarantee Fund which
acts to protect investors in the event of a broker liquidating.
There are minimum liquid capital requirements for a broker-dealer
 set out in ASX Business Rules.

Our United Kingdom operations are primarily regulated by the
Securities and Futures Authority, which imposes minimum capital
requirements. These requirements are based on ongoing
expenditures levels as well as market related risk exposures.

The Securities and Futures Authority also issues and enforces
numerous rules and regulations covering such areas as handling of
 client assets, record keeping and other activities. Compliance
with these rules is subject to ongoing verification.
Noncompliance can result in reprimands, fines, suspensions and
authorization reductions or withdrawals. Our United Kingdom
brokerage subsidiary is also obliged to comply with the rules and
 regulations of the London Stock Exchange.

Our Hong Kong brokerage subsidiary operates in Hong Kong as an
introducing broker and marketing affiliate of our Canadian
brokerage operations. This subsidiary is regulated by the
Securities and Futures Commission of Hong Kong. Our other Hong
Kong brokerage subsidiaries are registered as securities dealers
with the Securities and Futures Commission of Hong Kong and one
of these subsidiaries is a member of the Stock Exchange of Hong
Kong Ltd.

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Capital Requirements

United States. As registered broker-dealers and members of
 the NASD, our U.S. brokerage and clearing subsidiaries are
subject to the SECs net capital rule, Rule 15c3-1,
promulgated under the Securities Exchange Act of 1934. Net
capital is essentially defined as net worth (assets minus
liabilities), plus qualifying subordinated borrowings and certain
 discretionary liabilities, less certain mandatory deductions
that result from excluding assets that are not readily
convertible into cash and from valuing conservatively certain
other assets. Among these deductions are adjustments (called
haircuts) which reflect the possibility of a decline
in the market value of an asset prior to its disposition.

The NYSE monitors the application of the net capital rule to our
U.S. brokerage and clearing subsidiaries. The net capital
rule, which specifies a minimum net capital requirement for
registered broker-dealers, is designed to measure the general
financial integrity and liquidity of a broker-dealer and requires
 that at least a minimum part of its assets be kept in relatively
 liquid form. TD Waterhouse Investor Services, Inc., our
U.S. brokerage subsidiary, computes net capital under the
basic method, which requires minimum net capital equal to the
greater of $250,000 or 6 2/3% of aggregate indebtedness. In
addition, it may not permit its aggregate indebtedness to all
other persons to exceed 1,500 percent of its net capital.
National Investor Services Corp., our U.S. clearing
subsidiary, computes net capital under the alternative method,
which requires minimum net capital equal to the greater of
$250,000 or 2% of aggregate debit items arising from customer
transactions. A broker-dealer may be required to reduce its
business if its net capital is less than 4% of aggregate debit
balances and may also be prohibited from expanding its business
or paying cash dividends if resulting net capital would be less
than 5% of aggregate debit balances (accounts due from
customers). In addition, the net capital rule does not allow
withdrawal of subordinated capital if net capital would be less
than 5% of such debit balances. At October 31, 1999, our
U.S. brokerage and clearing subsidiaries had net capital of
approximately $21.4 million and $381 million,
respectively, which exceeded their minimum net capital
requirements by $18.9 million and $277.3 million,
respectively.

The net capital rule also limits the ability of broker-dealers to
 transfer capital to parent companies and other affiliates. Under
 the net capital rule, equity capital cannot be withdrawn from a
broker-dealer without the prior approval of the SEC when net
capital after the withdrawal would be less than 25% of its
securities position. In addition, the net capital rule requires a
 broker-dealer to notify the SEC and the appropriate
self-regulatory organization two business days before a
withdrawal of excess net capital if the withdrawal would exceed
30% of the broker-dealers excess net capital, and two
business days after a withdrawal that exceeds 20% of excess net
capital, provided that no such notice need be given if the
withdrawal is less than $500,000. Finally, the net capital rule
authorizes the SEC to order a freeze on the transfer of capital
if a broker-dealer plans a withdrawal of more than 30% of its
excess net capital and the SEC believes that such a withdrawal
would be detrimental to the financial integrity of such
broker-dealer or would jeopardize the broker-dealers
ability to pay its customers.

Compliance with the net capital rule could limit those operations
 of our registered broker-dealer subsidiaries in the
U.S. that require the intensive use of capital, such as our
clearing operations and the financing of customer account
balances, and also could restrict their ability to pay dividends,
 repay debt and redeem or purchase shares of their outstanding
stock. Failure to maintain the minimum net capital required by
the net capital rule could subject a firm to suspension or
expulsion by the NYSE and the NASD, certain sanctions by the SEC
and other regulatory bodies, and ultimately could lead to a
firms liquidation. A change in such rules, or the
imposition of new rules, affecting the scope, coverage,
calculation or amount of such net capital requirements, or a
significant operating loss or any unusually large charge against
net capital, could adversely affect the ability of our brokerage
and clearing subsidiaries in the U.S. to expand or maintain
present levels of business or pay dividends or interest.

Canada. As a member of the IDA, our Canadian brokerage
subsidiary must meet rules regarding minimum levels of risk
adjusted capital, which is calculated in accordance with a
prescribed financial questionnaire and report and can generally
be described as qualifying capital (equity, retained earnings and
 qualifying subordinated debt) less non-allowable assets, i.e.,
items not readily convertible to cash, margin charges which
reflect an assessment of the risk of a decline in market value of
 assets and the risk associated

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Employees

At October 31, 1999, on a full-time equivalent basis, we
employed 6,129 persons. A total of 4,214 of these employees are
based in the U.S. and 1,569 are based in Canada. Our
Australia operations employed approximately 145 persons, our U.K.
 operations employed approximately 161 persons and our Hong Kong
operations employed 40 persons. None of our employees is subject
to a collective bargaining agreement. We believe that our
relations with our employees are good.

Executive Officers of the Registrant

We have set forth below certain information for each person who
serves as an Executive Officer of TD Waterhouse.

|                    |  |     |    |          |  |                                                        
|------------------- |  | --- | -- | -------- |  | -------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Stephen D. McDonald |  |     | 43 |          |  | Chief Executive Officer and Deputy Chairman            
|                   
|                   
|                   
|                   
|Frank J. Petrilli   |  |     | 49 |          |  | President and Chief Operating Officer                  
|                   
|                   
|                   
|                   
|John G. See         |  |     | 42 |          |  | Vice Chairman                                          
|                   
|                   
|                   
|                   
|Joseph N. Barra     |  |     | 40 |          |  | Executive Vice President                               
|                   
|                   
|                   
|                   
|John H. Chapel      |  |     | 47 |          |  | Executive Vice President                               
|                   
|                   
|                   
|                   
|A. Wayne Kyle       |  |     | 51 |          |  | Executive Vice President, Human Resources              
|                   
|                   
|                   
|                   
|Bharat B. Masrani   |  |     | 43 |          |  | Executive Vice President                               
|                   
|                   
|                   
|                   
|Randall M. Miller   |  |     | 40 |          |  | Executive Vice President, Marketing                    
|                   
|                   
|                   
|                   
|Richard H. Neiman   |  |     | 49 |          |  | Executive Vice President, General Counsel and Secretary
|                   
|                   
|                   
|                   
|Gerard J. OMahoney |  |     | 45 |          |  | Executive Vice President                               
|                   
|                   
|                   
|                   
|Richard J. Rzasa    |  |     | 40 |          |  | Executive Vice President and Chief Information Officer 
|                   
|                   
|                   
|                   
|B. Kevin Sterns     |  |     | 53 |          |  | Executive Vice President and Chief Financial Officer   

Stephen D. McDonald serves as the Deputy
Chairman of the Board of Directors and Chief Executive Officer of
 TD Waterhouse and is Vice Chair of TD Bank Financial Group.
Mr. McDonald joined TD Bank in 1983 and since then has
occupied various positions, including Vice Chair, Group
Administration; Executive Vice President, Corporate Banking; and
Senior Vice President, USA Division, Corporate and Investment
Banking Group.

Frank J. Petrilli serves as the President and
Chief Operating Officer and a director of TD Waterhouse.
Mr. Petrilli is also currently an Executive Vice President
of TD Bank Financial Group. Since 1997, Mr. Petrilli has
served as President and Chief Executive Officer, TD Waterhouse
Holdings, Inc. and from 1998 to 1999 as a Senior Vice President,
TD Bank Financial Group. Mr. Petrilli joined TD Waterhouse
Holdings, Inc. in 1995 as President and Chief Operating Officer.
Prior to joining TD Waterhouse Holdings, Inc., Mr. Petrilli
served in senior management positions at American Express,
including President and Chief Operating Officer of American
Express Centurion Bank (a wholly owned subsidiary of American
Express), from 1988 to 1995.

John G. See serves as the Vice Chairman of the
 Board of Directors of TD Waterhouse. Mr. See is also the
President and Chief Executive Officer of TD Waterhouse Investor
Services (Canada), Inc. From 1995 to 1999, Mr. See served as
 President and Chief Operating Officer of TD Waterhouse Investor
Services (Canada), Inc., formerly, Green Line Investor Services,
Inc. and since 1995 as Senior Vice President, TD Bank Financial
Group. Mr. See joined TD Bank in 1981 and since then has
held various positions of increasing responsibility the Corporate
 and Investment Banking Group in Houston, New York and London.

Joseph N. Barra serves as Executive Vice
President, TD Waterhouse, with responsibility for clearing
operations in the U.S. Since January 1997,
Mr. Barra has served as President of our subsidiary,
National Investor Services Corp. and Chief Executive Officer
since March 1998. Mr. Barra joined TD Waterhouse

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John H. Chapel serves as Executive Vice
President, TD Waterhouse, with responsibilities for all areas of
brokerage operations in the U.S. Since 1995, Mr. Chapel
 has served as President of our subsidiary, TD Waterhouse
Investor Services, Inc. with responsibility for all areas of
brokerage operations. Mr. Chapel joined Waterhouse
Securities, Inc. in 1981 and has held various positions including
 Executive Vice President, Branch Administration.

A. Wayne Kyle serves as Executive Vice President,
Human Resources, TD Waterhouse. Since 1996, Mr. Kyle has
served as Executive Vice President, Human Resources, TD
Waterhouse Holdings, Inc. Mr. Kyle joined TD Bank in 1971
and since then has held various positions including Vice
President, Human Resources, Investor Services Division, TD Bank
Financial Group.

Bharat B. Masrani serves as Executive Vice
President, TD Waterhouse, with responsibility for all areas of
brokerage operations in the UK and Europe. Since 1997 until the
date of the reorganization, Mr. Masrani served as Senior
Vice President, Corporate Banking (London, England).
Mr. Masrani joined TD Bank Financial Group in 1987 and since
 then has held various positions including Vice President,
Corporate Banking (London, England) and Vice President, Corporate
 Banking (Bombay, India).

Randall M. Miller serves as Executive Vice
President, Marketing, TD Waterhouse. Since February 1994
until the date of the reorganization, Mr. Miller has served
as a Senior Vice President and Executive Vice President of TD
Waterhouse Investor Services, Inc.

Richard H. Neiman serves as Executive Vice
President, General Counsel and Secretary, TD Waterhouse. Since
July 1994, Mr. Neiman has served as Executive Vice
President and General Counsel, TD Waterhouse Holdings, Inc. Prior
 to joining TD Waterhouse Holdings, Inc., Mr. Neiman was a
Director of Regulatory Advisory Services at Price Waterhouse LLP
in Washington, D.C. from 1990 to 1994 and served in various legal
 positions at Citicorp in New York, including General Counsel of
its Global Equities Group, from 1979 to 1989.

Gerard J. OMahoney serves as Executive
Vice President, TD Waterhouse, with responsibility for Canadian
and overseas clearing and securities services operations. Since
1996, until the date of the reorganization,
Mr. OMahoney served as Senior Vice President, TD
Securities Services, Wealth Management Services.
Mr. OMahoney joined TD Bank Financial Group in 1982
and has since held various positions including Assistant General
Manager, Operations, Corporate Banking (London, England) and
Director, Administration TD Australia Ltd. (Melbourne,
Australia), Investor Services Division and Vice President, Mutual
 Funds Operations, Investor and Trust Services Division.

B. Kevin Sterns serves as Executive Vice President
and Chief Financial Officer, TD Waterhouse. Since 1996,
Mr. Sterns has served as Executive Vice President and Chief
Financial Officer, TD Waterhouse Holdings, Inc. Mr. Sterns
joined TD Bank Financial Group in 1970 and since then has held
various positions including Vice President Finance and
Operations, U.S.A. Division, Corporate and Investment Banking
Group (New York).

Richard J. Rzasa serves as Executive Vice
President and Chief Information Officer, TD Waterhouse. From 1985
 until September 1999, Mr. Rzasa held various positions
 at Lehman Brothers and most recently served as a Senior Vice
President of Technology.

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THE REORGANIZATION

In connection with the initial public offerings (the
Offerings) of our common stock on June 23, 1999,
 TD Bank reorganized its worldwide discount brokerage operations
so that they would be consolidated into our company and our
subsidiaries. This reorganization included the following steps:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TD Waterhouse Holdings, Inc., formerly Waterhouse Investor
	Services, Inc., which prior to the reorganization served as the
	U.S. holding company for TD Banks U.S. discount
	brokerage operations, converted the shares of common stock it
	held in one of its wholly-owned registered broker-dealer
	subsidiaries into shares of new common stock and preferred stock.
	 The preferred stock is redeemable at any time, in whole or in
	part, at the issuers option for an aggregate redemption
	price of $237 million, pays dividends semi-annually at a
	variable rate based on six month London interbank offered rates,
	and has no fixed maturity. TD Waterhouse Holdings, Inc.
	contributed all of the common stock of its registered
	broker-dealer subsidiaries as well as all of the common stock of
	certain of its other U.S. subsidiaries to us. A portion of
	the proceeds from the Offerings was used to fund the redemption
	of $236.9 million of the preferred stock in July 1999.
	TD Waterhouse Holdings retained the outstanding shares of
	preferred stock of the broker-dealer subsidiary.
|
| |  | TD Bank transferred its Canadian discount brokerage business and
	brokerage clearing business to 
	 our newly-formed Canadian subsidiary, TD Waterhouse Investor
	Services (Canada) Inc. (TDW Canada). In exchange, the
	 following were issued to TD Bank:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | a series of 36 million exchangeable preference shares of our
	 subsidiary, TDW Canada; and
|
| |  | promissory notes of TDW Canada totaling approximately
	$45 million.                       

A portion of the proceeds of the Offerings was used to repay
these promissory notes. The exchangeable preference shares are
exchangeable at any time at TD Banks option for an
equivalent number of shares of our common stock, and have
dividend rights equal to the equivalent number of shares of our
common stock. As part of the transfer, TDW Canada assumed all
past liabilities of these businesses and each of TD Bank and TDW
Canada indemnified the other and its relevant subsidiaries, and
its respective directors, officers, agents and employees, against
 all past, present and future liabilities related to the
transferred and retained businesses.



| |   |                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TD Waterhouse Holdings, Inc. was issued one special voting
	preferred share of the Company. The special voting preferred
	share has voting rights equal to the number of shares of our
	common stock into which the exchangeable preference shares may be
	 exchanged, and will be cancelled when the exchangeable
	preference shares are no longer outstanding.
|
| |  | TD Bank transferred ownership of its United Kingdom, Australia
	and Hong Kong discount broker subsidiaries to us in exchange for
	shares of our common stock and promissory notes totaling
	$27 million. A portion of the proceeds of the Offerings will
	 be used to repay these promissory notes.                                                             
|
| |  | We entered into a master services agreement with TD Bank pursuant
	 to which certain services are made available to us and we make
	certain services available to TD Bank.                                                                                                                                                                                      

In order to transfer its Canadian discount brokerage business and
 brokerage clearing business to us, TD Bank entered into transfer
 and assumption agreements with TDW Canada, which in general
provided for the transfer of assets used exclusively in the
transferred businesses. The assets were transferred to TDW Canada
 immediately prior to the completion of the Offerings.

The assets transferred consisted of all tangible assets, such as
computers, equipment and furniture, which exclusively related to
the transferred businesses. Accounts receivable as well as cash
and cash equivalents of the transferred businesses were also
transferred. All intellectual property owned by TD Bank or its
non-transferred subsidiaries and used exclusively by the
transferred businesses was transferred to TDW Canada. The
transferred businesses currently operate in premises leased from
third parties or in space owned or leased by TD Bank. Pursuant to
 the master services agreement, TD Bank continues to make
available to TDW Canada shared space used by the transferred
businesses.

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All employees involved in the transferred businesses were
employees of TD Bank prior to the reorganization. In most cases,
those employees who were exclusively engaged in performing the
activities of the transferred businesses in Canada were
transferred to TDW Canada. In addition, employees who performed
services for both TD Bank and us were retained by, or transferred
 to, the entity for which they predominantly provide services,
with appropriate exceptions where business needs required.
Pursuant to the master services agreement, TD Bank and TDW Canada
 made available to the other employees who immediately prior to
the Offerings provided services to both TD Bank and the
transferred businesses.

As a result of these reorganizations, approximately 1,450
associates were transferred to us. TDW Canadas associates
comprise all employees working in its local branches, customer
service centers and back office activities. With the exception of
 certain support services provided by TD Bank associates, TDW
Canadas associates perform all day-to-day compliance,
technology and information systems management and human resources
 functions for TDW Canada.

The transfer and assumption agreements provided for TD Bank to
transfer to us all of its title to and rights and interests in
the transferred assets. The transfer and assumption agreements
provided for assumptions and indemnities designed to place sole
legal and financial responsibility on TDW Canada for all
liabilities known or contingent relating to the transferred
businesses, the past and present operations and the assets
transferred or licensed to TDW Canada. As a result, the
liabilities assumed by TDW Canada included all liabilities and
obligations, actual or contingent, relating to the transferred
businesses, such as accounts payable, contractual obligations and
 ongoing or presently unknown claims and suits. The transfer and
assumption agreements contained indemnification provisions in
connection with the conduct of TDW Canadas business after
the transfer of the transferred businesses, misstatements or
omissions in the offering prospectus with respect to the
transferred businesses and the use of trademarks, trade names,
logos and other indemnities. TD Bank similarly indemnified TDW
Canada in respect of its past, present and future businesses,
other than the transferred businesses.

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Risk Factors

An investment in our company involves certain risks, including
those described below. There may be additional risks that we do
not currently know of or that we currently deem immaterial based
on the information available to us. Our business, financial
condition or results of operations could be materially adversely
affected by any of these risks, resulting in a decline in the
trading price of our common stock, and you could lose all or part
 of your investment.

From time to time, we may make forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Those forward-looking statements reflect our current
beliefs and are based on information currently available to us.
However, forward-looking statements are by their nature subject
to risks and uncertainties. Our actual results may differ
materially from those contemplated by such forward-looking
statements. Factors and risks that could cause our future results
 to differ from those contemplated in such forward-looking
statements include, but are not limited to, those described below
 and in other documents we may file with the SEC.

Any forward-looking statements we may make speak only as of the
date they are made and we do not undertake any obligation to
update them.

Our Business Could Be Harmed by Market Volatility and Other
Securities Industry Risks

Our revenues are derived primarily from securities brokerage and
related services, and we expect this business to continue to
account for almost all of our revenues. We, like other securities
 firms, are directly affected by economic and political
conditions, broad trends in business and finance and changes in
the conditions of the securities markets in which our customers
trade. Over the past several years the securities markets in the
U.S. and Canada (which are the principal trading markets for
 most of our customers) have fluctuated considerably. A downturn
in either of these markets would adversely affect our operating
results. Recently, the markets for technology and
Internet-related stocks have been especially volatile, and a
significant downturn would have an even greater effect on us
because a substantial portion of our customers invest in these
types of stocks. In previous major stock market declines, many
firms in the securities industry suffered financial losses, and
the level of individual investor trading activity decreased after
 these events. When trading volume is low, our profitability
would likely be adversely affected because a significant portion
of our costs do not vary with revenue. For these reasons, severe
market fluctuations could have a material adverse effect on our
business, financial condition and operating results. Some of our
competitors with more diversified business lines might withstand
such a downturn in the securities industry better than we would.
See  We Face Substantial Competition Which Could
Reduce Our Market Share and Harm Our Financial Performance.

During the past several years, the stock market has experienced a
 significant increase in market pricing and trading volume, which
 has contributed to an increase in investor interest in buying
and trading securities. A sustained downturn in the stock market
could adversely affect investor interest in buying and trading
securities and accordingly, adversely affect our business.

Our Business Relies Heavily On Computers and Other Electronic
Systems and Capacity Constraints and Failures of These Systems
Could Harm Our Business

We receive and process a majority of our trade orders through
electronic means such as the Internet, dial-up links to our
private computer networks and touch-tone telephones. In addition,
 we execute all of our trades through a series of computerized
processing systems and links to third parties. Thus, we depend
heavily on the capacity and reliability of the electronic systems
 supporting this type of trading. Heavy use of our systems during
 peak trading times or at times of unusual market volatility
could cause our systems to operate slowly or even to fail for
periods of time. Over the last two years, we have experienced
periods of extremely high trading volume and substantial
volatility in the securities markets. On several occasions during
 these periods, the volume and volatility of trading activity
caused individual system components or processes to fail,
resulting in the temporary unavailability of our web site for
electronic trading. On some other occasions, high trading volume
has caused significant delays in executing trading orders,
resulting in some customers orders being

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As our business expands, we also face risks relating to the need
to expand and upgrade our transaction processing systems, network
 infrastructure and other aspects of our technology. While many
of our systems are designed to accommodate additional growth
without redesign or replacement, we may nevertheless need to make
 significant investments in additional hardware and software to
accommodate growth. In addition, we cannot assure you that we
will be able to predict accurately the timing or rate of such
growth, or expand and upgrade our systems and infrastructure on a
 timely basis.

We Operate in a Highly Regulated Industry and Compliance
Failures Could Adversely Affect Our Business

The securities industry in the U.S., Canada and the other
jurisdictions in which we operate is subject to extensive
regulation covering all aspects of the securities business. As a
clearing broker, we have to comply with additional laws and
rules. These include rules relating to possession and control of
customer funds and securities margin lending and execution and
settlement of transactions.

The various governmental authorities and industry self-regulatory
 organizations that supervise and regulate us generally have
broad enforcement powers to censure, fine, issue cease-and-desist
 orders or suspend or expel us or any of our officers or
employees who violate applicable laws or regulations. Our ability
 to comply with all applicable laws and rules is largely
dependent on our establishment and maintenance of compliance and
reporting systems, as well as our ability to attract and retain
qualified compliance and other personnel. We could be subject to
disciplinary or other regulatory or legal actions in the future
due to noncompliance. In addition, it is possible that any past
noncompliance could subject us to future civil lawsuits, the
outcome of which could have a material adverse effect on our
financial condition and operating results.

In addition, we use the Internet as a major distribution channel
to provide products and services to our customers. Due to the
increasing popularity of the Internet, it is possible that new
laws and regulations may be adopted dealing with such issues as
user privacy, content and pricing. Such laws and regulations
might increase our cost of using, or limit our ability to use,
the Internet as a distribution channel. In addition, the growth
of the Internet as a means of conducting international business
has raised many legal issues regarding, among other things, the
circumstances in which countries or other jurisdictions have the
right to regulate Internet services that may be available to
their citizens from service providers located elsewhere. In many
cases, there are no laws, regulations, judicial decisions or
governmental interpretations that clearly resolve these issues.
This uncertainty may adversely affect our ability to use the
Internet to expand our international operations, and creates the
risk that we could be subject to disciplinary sanctions or other
penalties for failure to comply with applicable laws or
regulations.

We Face Substantial Competition Which Could Reduce Our Market
Share and Harm Our Financial Performance

The market for brokerage services is rapidly evolving and
intensely competitive. We expect competition to continue and
intensify in the future. We face direct competition from other
discount brokerage firms, many of which provide touch-tone
telephone and online brokerage services but do not maintain
significant branch networks. This may result in those other firms
 having a lower cost structure and an ability to charge lower
commissions.

We also encounter competition from established full commission
brokerage firms whose pricing and Internet strategies are
continuing to evolve and who could elect to market the same types
 of services that we offer. During the past year, Merrill Lynch,
the largest U.S. brokerage firm, introduced discounted
online brokerage services to its customers and others have, or
have announced plans to, introduce similar services. In

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Increased financial profit levels within the securities industry
over the past several years have strengthened existing
competitors. We believe that such success will continue to
attract new competitors to the industry, such as banks, software
development companies, insurance companies, providers of online
financial and information services and others. Commercial banks
and other financial institutions have become more competitive
with us by offering their customers certain corporate and
individual financial services traditionally provided by
securities firms. The current trends toward consolidation and
product line expansion in the commercial banking industry could
further increase competition in all aspects of our business. To
the extent our competitors are able to attract and retain
customers based on the convenience of one-stop shopping, our
business or ability to grow could be adversely affected.

There can be no assurance that we will be able to compete
effectively with current or future competitors. See
 Competition.

Failure to Introduce New Services and Products in a Timely
Manner May Affect Our Ability to Compete Effectively

Our future success will depend in large part on our ability to
develop and enhance our services and products. We operate in a
very competitive industry in which the ability to develop and
deliver advanced services through the Internet and other channels
 is a key competitive factor. There are significant technical
risks in the development of new or enhanced services and
products, including the risk that we will be unable to:



| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | effectively use new technologies;                                    
|
| |  | adapt our services and products to emerging industry
	standards; or  
|
| |  | develop, introduce and market enhanced or new services and
	products.

Historically, we have been able to develop and introduce enhanced
 or new products and services in response to market and customer
requirements and emerging industry standards. However, if in the
future we are unable to develop and introduce enhanced or new
services and products quickly enough to respond to market or
customer requirements or to comply with emerging industry
standards, or if these services and products do not achieve
market acceptance, our business, financial condition and
operating results could be materially adversely affected.

Expansion of Our Operations Outside North America Involves
Special Challenges That We May Not Be Able to Meet, Which Could
Negatively Impact Our Financial Results

To date, we have established or acquired operations in Australia,
 the United Kingdom and Hong Kong and we plan to expand our
operations into other European and Asian countries in the near
future. There are certain risks inherent in doing business in
international markets, particularly in the regulated brokerage
industry, which could include for any particular market:



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | less developed technological infrastructures, resulting in lower
	customer acceptance of, or access to, electronic channels;
|
| |  | less developed automation in exchanges, depositories and national
	 clearing systems;                                       
|
| |  | unexpected changes in regulatory requirements, tariffs and other
	trade barriers;                                           
|
| |  | difficulties in staffing and managing foreign operations;                                                                   
|
| |  | fluctuations in currency exchange rates;                                                                                    
|
| |  | reduced protection for intellectual property rights;                                                                        

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| |   |                                                                        
| | - | -----------------------------------------------------------------------
| |  | seasonal reductions in business activity during the summer
	months; and
|
| |  | potentially adverse tax consequences.                                  

Any of the factors described above could have a material adverse
effect on our future international operations and consequently on
 our business, financial condition and operating results.

We Intend to Continue Growing Through Acquisitions of Other
Companies and Joint Ventures with Strategic Partners, and Our
Business and Financial Results Could Be Adversely Affected If We
Do Not Successfully Implement These Acquisitions and Joint
Ventures

A significant portion of our growth to date has been based on
acquisitions, and we may acquire other companies or businesses in
 the future. Acquisitions entail numerous risks, including:



| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | difficulties in the assimilation of acquired operations and
	products;                       
|
| |  | diversion of managements attention from other business
	concerns;                           
|
| |  | assumption of unknown material liabilities of acquired companies;                            
|
| |  | amortization of acquired intangible assets, which would reduce
	future reported earnings; and
|
| |  | potential loss of customers or key employees of acquired
	companies.                         

We cannot assure you that we will be able to integrate
successfully any operations, personnel, services or products that
 might be acquired in the future.

We also intend to grow by forming joint ventures with various
strategic partners throughout the world. Such joint ventures
entail numerous risks, including, but not limited to,
difficulties in growing the business of the newly formed joint
ventures and having a minority interest in certain joint venture
entities controlled by others. There can be no assurance that any
 of the joint ventures we enter into will be successful.

Our Clearing Operations Expose Us to Potential Liability for
Clearing Errors and Other Risks That Could Adversely Affect Us

We are a self-clearing broker in the U.S., Canada,
Australia, the United Kingdom and Hong Kong. We also provide
clearing services for unaffiliated broker-dealers (referred to as
 introducing brokers) in the U.S. and Canada.
Self-clearing securities firms are subject to substantially more
regulatory control and examination than brokers that rely on
others to perform those functions, such as many of our
competitors. Errors in performing clearing functions, including
clerical and other errors related to the handling of funds and
securities held by us on behalf of customers and introducing
brokers, could lead to civil penalties imposed by applicable
authorities as well as losses and liability in related lawsuits
brought by customers and others. Any liability that arises as a
result of our clearing operations could have a material adverse
effect on our business, financial condition and operating
results.

Securities industry regulators in the U.S. and Canada are
currently reviewing the extent to which clearing firms will be
held accountable for the improper activities of introducing
brokers for which they provide clearing services. We cannot
assure you that our procedures will be sufficient to protect us
from liability for the acts of introducing brokers under current
laws and regulations or that securities industry regulators will
not enact more restrictive laws or regulations or change their
interpretations of current laws and regulations.

Our Clearing Operations Require Us to Have Access to
Significant Sources of Liquidity Which May Not Be Available

As a clearing firm, we extend credit to customers who purchase
securities through their margin accounts. A significant portion
of our revenues is derived from these margin loans. To the extent
 that these margin loans exceed customer free credit balances
(that is, customer cash balances maintained with us), we
generally must obtain financing from third parties. Currently, we
 obtain a significant portion of our funds for customer margin
loans and our operating expenses from such excess customer free
credit balances. To the extent customer cash

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We Need to Comply with Stringent Capital Requirements

Many of the regulatory agencies, securities exchanges and other
industry self-regulatory organizations that regulate us have
stringent rules with respect to the maintenance of specific
levels of net capital by securities broker-dealers. Net capital
is the net worth (assets minus liabilities) of a broker or
dealer, less deductions for certain types of assets. If our
brokerage subsidiaries fail to maintain the required net capital,
 they may be subject to suspension or revocation of their
licenses, which could ultimately lead to their being liquidated.
If such net capital rules are changed or expanded, or if there is
 an unusually large charge against net capital, we might be
required to limit or discontinue those portions of our business
that require the intensive use of capital. Such operations
include our clearing operations and the financing of customer
account balances. Also, our ability to withdraw capital from our
brokerage subsidiaries could be restricted, which in turn could
limit our ability to pay dividends, repay debt and redeem or
purchase shares of our outstanding stock, if necessary. A large
operating loss or charge against net capital could adversely
affect our ability to expand or even maintain our present levels
of business.

The Loss of Our Third Party Suppliers of Key Services Would
Adversely Affect Our Business

We rely on a number of third parties to process transactions.
These include service bureaus for our customer account record
keeping and data processing services and market makers and stock
exchanges to execute customer orders. In the U.S., we depend on
Automatic Data Processing and in Canada on Information Systems
Management Corporation (a wholly-owned subsidiary of IBM Canada)
for back-office services, including broker terminal services and
order entry systems, and other information necessary to run our
business, including transaction summaries, data feeds for
compliance and risk management, execution reports, and trade
confirmations. In addition, the key component of our Internet
trading technology is the webBroker front-end program and the
middleware. The inability of Marketware to support our business
would put the ongoing viability and improvement of our system at
risk. We cannot assure you that any of these providers will be
able to continue to provide these services in an efficient,
cost-effective manner or that they will be able to adequately
expand their services to meet our needs. An interruption in or
the cessation of service by any third-party service provider as a
 result of systems failures or capacity constraints or for any
other reason, and our inability to make alternative arrangements
in a timely manner, if at all, would have a material adverse
effect on our business, financial condition and operating
results. See Business  Products and
Services.

Because We Rely On Encryption Technology Our Business is
Vulnerable to Security Risks Which May Compromise Our Customer
Transaction Data

A significant barrier to Internet commerce is the secure
transmission of confidential information over public networks. We
 rely on third-party encryption and authentication technology to
facilitate secure transmission of confidential information. We
cannot assure you that advances in computer and cryptography
capabilities or other developments will not result in a
compromise of the algorithms we use to protect customer
transaction data. See  Technology and
Information Systems.

We May be Unable to Manage Effectively Our Rapid Growth

Our rapid growth has placed significant demands on our management
 and other resources and is likely to continue. To manage the
currently anticipated growth of our business, we will need to
attract, hire and retain highly skilled and motivated officers
and employees. In particular, we currently need to hire a
significant number of account representatives and other customer
service personnel to support the expansion of our service centers
 and expect that a need for increased staffing will continue. In
addition, most of our competitors are facing similar staffing
shortages, making the competition for qualified employees
particularly strong. We

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Our Exposure to Possible Securities Litigation Could Adversely
 Affect Our Business

Many aspects of the securities brokerage business, including
online trading services, involve substantial risks of liability.
In recent years, there has been an increasing incidence of
litigation involving the securities brokerage industry, including
 class action and other suits that generally seek substantial
damages, including in some cases punitive damages. Like other
securities brokerage firms, we have been named as a defendant in
class actions and other suits. Any such litigation brought in the
 future could have a material adverse effect on our business,
financial condition and operating results. See
 Legal Proceedings.

Losses Due to Customer Defaults and Fraud Could Have an
Adverse Effect on Our Business

Extending credit to our customers involves certain risks. We
allow most of our customers to purchase securities on margin. We
also allow customers, subject to certain internal approval
requirements, to place trades up to specified limits without
first depositing any money into their accounts. We generally are
obligated to settle trades with the other party even if our
customer fails to meet his or her obligations to us. This risk is
 especially great when the market is declining rapidly and the
value of the collateral we hold, if any, could fall below the
amount of our customers obligations to us for that trade.
Under applicable regulations and our internal policies, any time
we extend credit to a customer to purchase securities, we must
require the customer to maintain a minimum cash or securities
deposit level in his or her account. We run the risk of loss if
there are sharp changes in the market values of securities
pledged to us and our customers fail to honor their commitments
to supply additional cash collateral.

In addition to the risks of extending credit to customers, we are
 exposed to potential losses resulting from fraud and other
misconduct by customers, including fraudulent Internet trading
(including fraudulent access to legitimate customer accounts, or
the use of a false identity to open an account) or the use of
forged or counterfeit checks for payment. Such types of fraud may
 be difficult to prevent or detect, and we may not be able to
recover the losses caused by such activities. It is possible that
 as a higher proportion of our trading volume is comprised of
online transactions, it may be more difficult to detect fraud or
misconduct at an early stage. Any such losses could have a
material adverse effect on our business, financial condition and
operating results.

Control By TD Bank Could Prevent a Change of Control of Our
Company and May Affect the Market Price of Our Common Stock

Currently, TD Bank beneficially owns approximately 88.5% of our
common stock, including shares issuable upon exchange of the
exchangeable preference shares issued to TD Bank in the
reorganization. Accordingly, for as long as TD Bank continues to
beneficially own more than 50% of our common stock, TD Bank will
be able to elect our entire board of directors, control all
matters that require a stockholder vote (such as mergers,
acquisitions and other business combinations) and exercise a
significant amount of influence over our management and
operations. This concentration of ownership could have the effect
 of preventing us from undergoing a change of control in the
future and might affect the market price of our common stock.

Conflicts of Interest with TD Bank May Arise

Various conflicts of interest between us and TD Bank may arise in
 the future in a number of areas relating to our past and ongoing
 relationships, including potential acquisitions of businesses or
 properties, potential competitive business activities, the
election of new or additional directors, payment of dividends,
incurrence of indebtedness, tax matters, financial commitments,
marketing functions, indemnity arrangements, service
arrangements, issuances of our capital stock, sales or
distributions by TD Bank of its remaining shares of our

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As part of the reorganization, TD Bank contributed all of its
worldwide discount brokerage operations to us. TD Bank does not
currently have any plans to form or acquire any other discount
brokerage operations, other than through us. However, TD Bank,
through its TD Evergreen Investment Services division, is
currently engaged in the full-service brokerage and related
investment service business, and TD Bank, directly and through
its subsidiaries, is engaged in the investment banking business.
TD Bank is not restricted from competing with us and we cannot
assure you that TD Bank will not expand its Evergreen or TD
Securities Inc. operations in ways that would result in direct or
 indirect competition with us. It is also possible that changes
in the markets in which we operate may in the future result in us
 competing directly or indirectly with TD Bank and its other
subsidiaries.

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Item 2.  Properties

Our corporate headquarters are located at 100 Wall Street, New
York, New York. This office consists of approximately 117,000
square feet under a lease which expires as to approximately
51,000 square feet in 2002 and the remaining square feet in 2006.
 We also lease approximately 65,000 square feet of space at
55 Water Street, New York, New York for our
clearing operations under a lease that expires in 2006. In
addition, we lease approximately 1,025,000 square feet worldwide
for our other branches and offices under various leases, the
majority of which expire on dates through 2006.




Item 3.  Legal Proceedings

Many aspects of our business involve substantial risks of
liability. In recent years, there has been an increasing
incidence of litigation involving the securities brokerage
industry, including class action suits that generally seek
substantial damages, including in some cases punitive damages.
Like other securities brokerage firms, we have been named as a
defendant in law suits and from time to time we have been
threatened with, or named as a defendant in, arbitrations and
administrative proceedings. Compliance and trading problems that
are reported to federal, state and provincial securities
regulators, securities exchanges or other self-regulatory
organizations by dissatisfied customers are investigated by such
regulatory bodies, and, if pursued by such regulatory body or
such customers, may rise to the level of arbitration or
disciplinary action. We are also subject to periodic regulatory
audits and inspections.

We are not, nor are our subsidiaries, currently a party to any
litigation that we believe could have a material adverse effect
on our business, financial condition or operating results.

Together with several other online brokers, we received a letter
from the New York State Office of the Attorney General dated
 February 2, 1999 requesting that our U.S. brokerage
subsidiary provide certain documents and make certain employees
available to discuss complaints that the Attorney Generals
office has received regarding system outages or failures of
online brokerage services. We have met with representatives of
the Attorney Generals office, have provided certain
information to them and have resolved all matters concerning the
inquiries of the Attorney Generals office. The Attorney
Generals office concluded its inquiry with a report issued
on November 22, 1999. Pursuant to the report, the Attorney
General will be working with the Securities Industry Association
to pursue certain important industry and educational initiatives.
 We will be participating in such efforts.

In April 1999, we received correspondence from the
SECs Office of Compliance, Inspections and Examinations,
which conducts examinations of registered broker-dealers,
requesting information with respect to our execution policies and
 practices regarding the handling of customer orders. We
understand that other discount brokerage firms have received
similar correspondence from the SEC. We have provided and will
continue to provide information and documentation to the SEC
regarding our policies and practices in this area. In response to
 concerns raised by the SEC staff regarding the practices
followed by a number of brokerage firms, including TD Waterhouse,
 to obtain best execution of trades for customers, we have
engaged in an ongoing review of our practices and policies in the
 area in order to assure that they are in compliance with
applicable rules. We believe that obtaining the best execution of
 trades for our customers is key to maintaining customer
satisfaction and loyalty and therefore is a fundamental
requirement for our long term growth and profitability.




Item 4.  Submission of Matters to a Vote of
Security Holders

No matters were submitted to a vote of the Companys
security holders during the fourth quarter of fiscal 1999.

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Part II




Item 5.  Market for the Companys Common
Equity and Related Stockholder Matters

The Companys Common Stock has been trading on The New York
Stock Exchange and The Toronto Stock Exchange under the symbol
TWE since June 23, 1999. The following table
shows the high and low closing sales prices for our Common Stock
for the period indicated, as reported on The New York Stock
Exchange Composite Tape.

|                              |  |                           |        |     |  |   |         | 
|----------------------------- |  | ------------------------- | ------ | --- |  | - | ------- | 
|                              |  |                          
|                              |  | Price of Common Stock    
|                              |  |                          
|                              |  |                          
|                              |  | For the fiscal year ended
|                              |  | October 31, 1999         
|                              |  |                          
|                              |  | High                      |        | Low
|                              |  |                           |        |    
|Fourth Quarter                |  | $                         | 17.50  |     |  | $ | 11.4375 | 
|                             
|                             
|                             
|                             
|June 23, 1999  July 31, 1999 |  | $                         | 26.125 |     |  | $ | 17.375  | 

The closing sale price of the Companys Common Stock as
reported on the New York Stock Exchange on January 20, 2000
was $14.875 per share. As of January 20, 2000, there
were 223 holders of record of the Companys Common Stock
based on information provided by our transfer agent. The number
of stockholders does not reflect the actual number of individual
or institutional stockholders of the Company because certain
shares are held in the name of nominees.

Dividends

We have never declared or paid cash dividends on our capital
stock. We intend to retain all of our earnings for use in our
business and do not anticipate paying any cash dividends in the
foreseeable future. Any decision to declare and pay dividends in
the future will be made at the discretion of our board of
directors, after taking into account such matters as general
business conditions, financial results, capital requirements,
contractual, legal and regulatory restrictions on the payment of
dividends by us to our stockholders or by our subsidiaries to us
and such other factors as the board of directors may deem
relevant.

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Item 6.  Selected Financial Data


TD WATERHOUSE GROUP, INC.

SUMMARY FINANCIAL RESULTS

YEAR ENDED OCTOBER 31


|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |        | 
|---------------------------------------- | ---------------------------------- | ------------------------------------------------------------- | ----------- | ---------- |  | ---------- | ----------- | ----------- |  | ------ | ------- | ------- |  | ------ | ------- | ------- |  | - | ------- | ------ |  | - | ------- | ------- |  | - | ------- | ------ |  | - | ------- | ------ | 
|                                         |                                    | 1999                                                          |             |            |  |            |             |             |  |        |         |        
|                                         |                                    |                                                               |             | 1998       |  | 1997       |             | 1996        |  | 1995   |         | 1994   
|                                         |                                    |                                                               |             | Historical |  | Historical |             | Pro Forma   |  |        |         |        
|                                         |                                    | Consolidated                                                  |             | Combined   |  | Combined   |             | Combined(1) |  | Canada |         | U.S.    |  | Canada |         | U.S.   
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |        
|                                         |                                    |                                                              
|                                         |                                    | (in thousands of dollars, except share and per share amounts)
|                                        
|                                        
|                                        
|                                        
|Statement of income data                 |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Revenues:                                |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Commissions and fees               |                                                               | $           | 633,530    |  |            | $           | 409,432     |  |        | $       | 313,572 |  |        | $       | 270,505 |  |   | $       | 64,833 |  |   | $       | 113,881 |  |   | $       | 77,398 |  |   | $       | 83,917 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Mutual fund and related revenue    |                                                               |             | 98,414     |  |            |             | 59,022      |  |        |         | 35,762  |  |        |         | 23,515  |  |   |         | 5,831  |  |   |         | 9,286   |  |   |         |       |  |   |         | 6,018  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Net interest revenue               |                                                               |             | 186,834    |  |            |             | 117,733     |  |        |         | 68,874  |  |        |         | 53,085  |  |   |         | 28,660 |  |   |         | 18,888  |  |   |         | 26,604 |  |   |         | 13,056 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Other                              |                                                               |             | 41,339     |  |            |             | 28,274      |  |        |         | 28,424  |  |        |         | 23,681  |  |   |         | 14,493 |  |   |         | 1,375   |  |   |         | 9,863  |  |   |         | 1,603  | 
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Total revenues                           |                                    |                                                               | 960,117     |            |  |            | 614,461     |             |  |        | 446,632 |         |  |        | 370,786 |         |  |   | 113,817 |        |  |   | 143,430 |         |  |   | 113,865 |        |  |   | 104,594 |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Expenses:                                |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Employee compensation and benefits |                                                               |             | 277,602    |  |            |             | 183,377     |  |        |         | 138,261 |  |        |         | 107,137 |  |   |         | 31,414 |  |   |         | 43,259  |  |   |         | 35,136 |  |   |         | 32,272 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Execution and clearing costs       |                                                               |             | 133,443    |  |            |             | 95,523      |  |        |         | 63,316  |  |        |         | 47,510  |  |   |         | 17,219 |  |   |         | 14,989  |  |   |         | 18,312 |  |   |         | 11,983 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Occupancy and equipment            |                                                               |             | 80,010     |  |            |             | 56,596      |  |        |         | 43,485  |  |        |         | 44,413  |  |   |         | 10,221 |  |   |         | 12,992  |  |   |         | 8,555  |  |   |         | 10,223 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Advertising and marketing          |                                                               |             | 62,761     |  |            |             | 33,184      |  |        |         | 18,511  |  |        |         | 14,439  |  |   |         | 3,572  |  |   |         | 9,441   |  |   |         | 3,120  |  |   |         | 4,677  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Communications                     |                                                               |             | 41,100     |  |            |             | 30,809      |  |        |         | 22,981  |  |        |         | 19,154  |  |   |         | 6,718  |  |   |         | 6,032   |  |   |         | 7,330  |  |   |         | 4,189  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Amortization of goodwill           |                                                               |             | 37,390     |  |            |             | 33,000      |  |        |         | 21,630  |  |        |         | 21,121  |  |   |         | 1,623  |  |   |         |        |  |   |         | 1,638  |  |   |         |       | 
|                                        
|                                        
|                                        
|                                        
|                                         | Professional fees                  |                                                               |             | 24,519     |  |            |             | 15,350      |  |        |         | 14,871  |  |        |         | 15,034  |  |   |         | 5,799  |  |   |         | 4,095   |  |   |         | 4,172  |  |   |         | 2,480  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Other                              |                                                               |             | 120,754    |  |            |             | 63,144      |  |        |         | 44,956  |  |        |         | 34,311  |  |   |         | 11,313 |  |   |         | 13,969  |  |   |         | 15,219 |  |   |         | 9,477  | 
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Total expenses                           |                                    |                                                               | 777,579     |            |  |            | 510,983     |             |  |        | 368,011 |         |  |        | 303,119 |         |  |   | 87,879  |        |  |   | 104,777 |         |  |   | 93,482  |        |  |   | 75,301  |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Income before income taxes               |                                    |                                                               | 182,538     |            |  |            | 103,478     |             |  |        | 78,621  |         |  |        | 67,667  |         |  |   | 25,938  |        |  |   | 38,653  |         |  |   | 20,383  |        |  |   | 29,293  |       
|                                        
|                                        
|                                        
|                                        
|Income tax provision                     |                                    |                                                               | 85,192      |            |  |            | 54,765      |             |  |        | 42,416  |         |  |        | 41,363  |         |  |   | 12,127  |        |  |   | 15,228  |         |  |   | 9,689   |        |  |   | 11,731  |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Net income                               |                                    | $                                                             | 97,346      |            |  | $          | 48,713      |             |  | $      | 36,205  |         |  | $      | 26,304  |         |  | $ | 13,811  |        |  | $ | 23,425  |         |  | $ | 10,694  |        |  | $ | 17,562  |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                        
|                                        
|                                        
|                                        
|Basic and diluted earnings per share     |                                    | $                                                             | 0.28        |            |  | $          | 0.15        |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|Shares used to compute per share data(2) |                                    |                                                               | 348,509,453 |            |  |            | 333,000,000 |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       
|                                         |                                    |                                                               |             |            |  |            |             |             |  |        |         |         |  |        |         |         |  |   |         |        |  |   |         |         |  |   |         |        |  |   |         |       

|                                  |  |                |           |            |  |            |           |            |  |        |           |      |  |        |           |      |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|--------------------------------- |  | -------------- | --------- | ---------- |  | ---------- | --------- | ---------- |  | ------ | --------- | ---- |  | ------ | --------- | ---- |  | - | ------- |  |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                  |  | 1999           |           |            |  |            |           |            |  |        |           |     
|                                  |  |                |           | 1998       |  | 1997       |           | 1996       |  | 1995   |           | 1994
|                                  |  |                |           | Historical |  | Historical |           | Historical |  |        |           |     
|                                  |  | Consolidated   |           | Combined   |  | Combined   |           | Combined   |  | Canada |           | U.S. |  | Canada |           | U.S.
|                                  |  |                |           |            |  |            |           |            |  |        |           |      |  |        |           |     
|                                  |  |               
|                                  |  | (in thousands)
|                                 
|                                 
|                                 
|                                 
|Statement of financial condition  |  |                |           |            |  |            |           |            |  |        |           |      |  |        |           |      |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|                                 
|                                 
|                                 
|                                 
|Cash and cash equivalents         |  | $              | 569,181   |            |  | $          | 522,029   |            |  | $      | 291,511   |      |  | $      | 246,097   |      |  | $ | 42,441  |  |  | $ | 14,553  |  |  | $ | 43,484  |  |  | $ | 9,806   | 
|                                 
|                                 
|                                 
|                                 
|Securities owned, at market value |  |                | 342,042   |            |  |            | 76,279    |            |  |        | 66,549    |      |  |        | 67,857    |      |  |   | 26,912  |  |  |   | 1,450   |  |  |   | 28,965  |  |  |   |        | 
|                                 
|                                 
|                                 
|                                 
|Receivables from customers        |  |                | 5,868,804 |            |  |            | 2,556,182 |            |  |        | 1,757,019 |      |  |        | 962,551   |      |  |   | 339,239 |  |  |   | 415,885 |  |  |   | 326,984 |  |  |   | 285,165 | 
|                                 
|                                 
|                                 
|                                 
|Total assets                      |  |                | 8,591,816 |            |  |            | 4,298,736 |            |  |        | 2,946,594 |      |  |        | 1,969,007 |      |  |   | 696,025 |  |  |   | 457,107 |  |  |   | 674,431 |  |  |   | 322,932 | 
|                                 
|                                 
|                                 
|                                 
|Securities loaned                 |  |                | 3,962,958 |            |  |            | 1,033,964 |            |  |        | 916,700   |      |  |        | 403,765   |      |  |   | 72,639  |  |  |   |        |  |  |   | 74,689  |  |  |   |        | 
|                                 
|                                 
|                                 
|                                 
|Payable to customers              |  |                | 2,016,535 |            |  |            | 1,947,430 |            |  |        | 1,190,480 |      |  |        | 764,457   |      |  |   | 496,387 |  |  |   | 121,632 |  |  |   | 436,537 |  |  |   | 96,992  | 
|                                 
|                                 
|                                 
|                                 
|Equity                            |  |                | 1,952,120 |            |  |            | 995,135   |            |  |        | 619,519   |      |  |        | 535,795   |      |  |   | 51,836  |  |  |   | 55,054  |  |  |   | 36,827  |  |  |   | 42,556  | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The pro forma combined statement of income data for the year
	ended October 31, 1996 has been prepared to give effect to
	the acquisition of the Waterhouse Securities Group on
	October 31, 1996, as if the acquisition had occurred on
	November 1, 1995. The pro forma adjustment represents the
	amortization of goodwill for the year ended October 31, 1996
	 in the amount of $19,488 related to the acquisition of the
	Waterhouse Securities Group. There were no other pro forma
	adjustments.
|   
|(2) | Shares used to compute pro forma per share data for the year
	ended October 31, 1998 represent common stock outstanding
	immediately after the reorganization described elsewhere in this
	report but before the offerings. The shares include 36,000,000
	shares of common stock issuable on the exchange of the
	exchangeable preference shares of our Canadian subsidiary issued
	to TD Bank in the reorganization.                                                                                  

33



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##### Table of Contents



TD WATERHOUSE GROUP, INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of Operations

Overview

The following discussion and analysis of the financial condition
and results of operations of the Company are based on the
consolidated results of our U.S. and international businesses. A
more detailed discussion of the accounting principles used to
consolidate the assets, liabilities and results of operations of
the businesses and the specific entities included in the
consolidation is set forth in Notes 1, 2 and 3 to our
consolidated financial statements, on pages 53-57 of this
report.

Revenues

Commissions and fees, which account for the majority of total
revenues, include commissions earned for executing customer
trades; payments received by us from market-makers, exchanges and
 other execution agents for order flow; and fees for providing
trade execution and clearance services to financial institutions
in the United States and Canada. Commissions and fees are
primarily affected by changes in transaction volumes and changes
in the commission or fee rates charged per transaction.
Commissions, which account for more than 91% of commissions and
transaction fees, fluctuate based on the number of active
customer accounts, the average number of trades per account, and
the average commission per revenue trade. Active customer
accounts have grown 35%, to 2.17 million as at
October 31, 1999 from 1.61 million as at
October 31, 1998, which was 68% over the 960,000 active
accounts as at October 31, 1997. We define active accounts
as accounts that had purchase, sale, other activity or an equity
balance during the previous calendar quarter. The growth in
trading volumes in the United States and major global equities
markets, along with the migration of customers to the online
channel, has resulted in a 31% increase in the average number of
trades per account for fiscal 1999 over fiscal 1998, which had
grown by 9% over fiscal 1997. The effect of such increases has
been partially offset by a decrease in the average commission per
 revenue trade, to approximately $23 per trade in fiscal 1999,
down 20% from approximately $29 per trade in fiscal 1998, which
was down 27% from approximately $40 per trade in fiscal 1997.
This was primarily due to the introduction of our online trading
products in the United States in early 1997, which provided
customers using our online services with significant discounts
from our standard commission schedule. We use other
broker-dealers to execute our customers orders, and receive
 revenue from these broker-dealers for such order flow. Payments
for order flow have not increased commensurate with increases in
trading volumes, as a result of changes in regulations and market
 conventions that caused market-makers and execution agents to
change their payment policies for order flow by reducing the
payment per trade and by limiting the types of trades on which
payments are made. Order flow revenue has been consistently less
than 4% of total revenue for the periods discussed herein.
Transaction fees for execution and clearing services have grown
since 1996 due to the addition of new clients in the United
States and Canada, and general increases in market volumes.

Mutual fund and related revenue represents customary trailer fees
 from third-party and affiliated mutual funds in the United
States and Canada and, in the United States only, fees for
shareholder services, administration and investment management
services provided to our proprietary money market and mutual
funds. Such fees are primarily based upon the daily amount of
customer assets invested in third-party mutual funds and upon the
 average daily net asset value of our proprietary money market
and mutual funds. As of October 31, 1999, we held in excess
of $4.4 billion of customer assets in no-load, no-fee mutual
 funds sponsored by third parties, up approximately 47% from the
fiscal 1998 year-end balance of approximately
$3.0 billion. Our proprietary money market accounts and
mutual funds had net assets valued at $12.2 billion at
October 31, 1999, up 91% from the fiscal 1998 year-end
balance of $6.4 billion. This growth includes
$2.1 billion of funds related to the Jack White &
Company acquisition. Commissions relating to the purchase and
sale of mutual funds are included in commissions and fees.

34



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##### Table of Contents



We also receive fees for providing referral and administrative
services to our affiliate, TD Waterhouse Bank, N.A.
(TDWB), which are based on the daily cash balances
our customers choose to sweep into a Federal Deposit Insurance
Corporation (FDIC) insured money market account with
TDWB. In addition, we provide investment advisory services to
TDWB with respect to TDWBs fixed income portfolio, and
receive a fee based on the market value of the assets under
management. Fees related to services provided to TDWB are
classified as mutual fund and related revenue.

Net interest revenue is the difference between interest earned on
 our interest-earning assets (which primarily consist of margin
loans to customers) and the interest expense associated with our
interest-bearing liabilities (which include free credit balances
in customers accounts, deposits received for stock loaned
and other borrowings). Net interest revenue is principally
affected by changes in customer margin balances as well as the
prevailing net interest spread. Net interest spread represents
the difference between the rate we charge customers on margin
loans (based on the broker call rate) and the rate we pay our
customers (which is our lowest-cost source of funds) or the rate
we pay our other creditors. In the United States, securities
regulations place limits on the amount of customer funds we can
use to finance our business, while no such limitations exist in
Canada. Accordingly, the net interest spread from our Canadian
brokerage operations has exceeded that of our U.S. operations.

Other revenue consists primarily of revenues derived from
ancillary services such as floor brokerage and retirement account
 administration.

Our primary markets are the United States and Canada, which
accounted for 74% and 24%, respectively, of our fiscal 1999
consolidated revenues and 69% and 29%, respectively, of our
consolidated revenues for fiscal 1998. Approximately
2.0 million of our total customer accounts at
October 31, 1999 were held by customers in the United States
 and approximately 700,000 were held by customers in Canada. The
table below shows the growth in our business over the past three
years in each of our operating regions:

|                                    |  |      |           |      |  |      |           |  |  |   |         | 
|----------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | ------- | 
|Fiscal year ended October 31        |  | 1999 |           | 1998 |  | 1997
|                                    |  |      |           |      |  |     
|United States                       |  |      |           |      |  |      |           |  |  |   |         | 
|                                   
|                                   
|                                   
|                                   
|Revenues (in thousands)             |  | $    | 709,214   |      |  | $    | 423,789   |  |  | $ | 250,095 | 
|                                   
|                                   
|                                   
|                                   
|Total accounts                      |  |      | 1,989,000 |      |  |      | 1,509,635 |  |  |   | 774,924 | 
|                                   
|                                   
|                                   
|                                   
|Average daily trades                |  |      | 88,022    |      |  |      | 42,165    |  |  |   | 19,260  | 
|                                   
|                                   
|                                   
|                                   
|Total customer assets (in billions) |  | $    | 96.6      |      |  | $    | 58.6      |  |  | $ | 26.1    | 
|                                   
|                                   
|                                   
|                                   
|Canada                              |  |      |           |      |  |      |           |  |  |   |         | 
|                                   
|                                   
|                                   
|                                   
|Revenues (in thousands)             |  | $    | 228,967   |      |  | $    | 180,051   |  |  | $ | 194,028 | 
|                                   
|                                   
|                                   
|                                   
|Total accounts                      |  |      | 700,000   |      |  |      | 593,296   |  |  |   | 520,735 | 
|                                   
|                                   
|                                   
|                                   
|Average daily trades                |  |      | 16,970    |      |  |      | 12,886    |  |  |   | 12,744  | 
|                                   
|                                   
|                                   
|                                   
|Total customer assets (in billions) |  | $    | 23.2      |      |  | $    | 16.1      |  |  | $ | 15.9    | 
|                                   
|                                   
|                                   
|                                   
|Outside North America               |  |      |           |      |  |      |           |  |  |   |         | 
|                                   
|                                   
|                                   
|                                   
|Revenues (in thousands)             |  | $    | 21,936    |      |  | $    | 10,621    |  |  | $ | 2,509   | 
|                                   
|                                   
|                                   
|                                   
|Total accounts                      |  |      | 272,000   |      |  |      | 198,695   |  |  |   | 77,513  | 
|                                   
|                                   
|                                   
|                                   
|Average daily trades                |  |      | 2,070     |      |  |      | 1,122     |  |  |   | 467     | 
|                                   
|                                   
|                                   
|                                   
|Total customer assets (in billions) |  | $    | 1.9       |      |  | $    | 1.2       |  |  | $ |        | 

Operating expenses

Our largest operating expense is employee compensation and
benefits, which includes salaries and wages, incentive
compensation and related employee benefits and taxes. We employ a
 small number of commissioned sales representatives; therefore,
compensation and benefits do not vary directly with changes in
commission revenue. Most associates do, however, receive annual
incentive compensation based on the overall operating results of
our operations in each geographical region as well as
employees individual performance. Therefore, a significant
portion of compensation and benefits expense will fluctuate based
 on our operating results. Compensation expense also reflects the
 change in intrinsic value of TD Bank stock options granted to
our employees under TD Banks stock option plan.

35



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##### Table of Contents



Execution and clearing costs include fees paid to floor brokers
and exchanges for trade execution costs, fees paid to third-party
 vendors for data processing services, and fees paid to clearing
entities for certain clearance and settlement services. Execution
 and clearing costs, with the exception of data processing
expenses, generally fluctuate based on transaction volume. Data
processing services are generally provided under longer-term
fixed fee arrangements with providers.

Occupancy and equipment expense includes the costs of leasing and
 maintaining our office space and branch network, the lease and
rental costs related to computers and other equipment, and
depreciation and amortization expense associated with our fixed
assets and leasehold improvements. Occupancy and equipment
expense is primarily affected by increases in the number of
branches and employees.

Advertising and marketing includes media, print and direct mail
advertising expenses and other costs incurred to create brand
awareness, promote our product and service offerings, and
introduce new products and services. Due to the rapid development
 of new products and services and increased competition,
advertising and marketing expense has increased significantly
from period to period. Management expects this trend to continue,
 as evidenced by our announcement of an expected
$100 million branding and advertising campaign.

Communications expense includes telecommunications expenses,
which are generally affected by changes in customer transaction
volumes and the increased use of electronic communication
channels and online service offerings.

We have been active in acquiring new businesses to rapidly expand
 our operations, including Marathon Brokerage in 1993, Waterhouse
 Securities in 1996, Pont Securities Limited in 1997 and Rivkin
Croll Smith, Kennedy Cabot & Co., Jack White &
Company and Gall & Eke in fiscal 1998. Goodwill relating
 to our major acquisitions is generally being amortized over a
period of 20 years from the date of acquisition.

Professional fees include fees paid to consultants engaged to
support our product, service and systems development efforts, as
well as legal and accounting fees. These expenses generally
fluctuate with overall changes in the level of business activity.

Other expenses primarily consist of administrative expenses and
other costs including postage, printing and supplies.

We are subject to income taxes in each country in which we
operate. The difference between our effective tax rate and the
U.S. statutory rate of 35% differs from period to period, but
primarily results from state and local taxes in the United
States, provincial taxes in Canada and the effect of certain
non-deductible expenses, most notably the amortization of
goodwill.

We adjust our expenses in anticipation of and in response to
changes in financial market conditions and customer trading
patterns. Certain of our expenses (including incentive
compensation, portions of communications, and execution and
clearing costs) vary directly with changes in financial
performance or customer trading activity. Expenses relating to
the level of temporary employees, contractors, overtime hours,
professional services, and advertising and marketing are
adjustable over the short term to help us achieve our financial
objectives. Additionally, developmental spending (including
branch openings, product and service rollouts, and certain
information technology systems improvements) is generally
discretionary and can be altered in response to market
conditions. However, a significant portion of our expenses such
as salaries and wages, occupancy and equipment, depreciation and
amortization of goodwill do not vary directly, at least in the
short term, with fluctuations in revenues or securities trading
volumes. Also, we view our developmental spending as essential to
 our future growth, and therefore attempt to avoid major
adjustments in such spending unless faced with a sustained
slowdown in customer trading activity. Given the nature of our
revenues and expenses, and the economic and competitive factors
discussed above, our earnings may be subject to significant
volatility from period to period. Our results for any interim
period are not necessarily indicative of results for a full year.

We have experienced substantial changes in and expansion of our
business and operations since we began offering our online
Internet investing services in the United States in 1997. We
expect to continue to

36



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##### Table of Contents





Results of Operations

The following table sets forth the statements of income data for
the periods indicated as a percentage of total revenues:

|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|---------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|Year ended October 31              |  | 1999 |       | 1998 |  | 1997
|                                   |  |      |       |      |  |     
|Revenues                           |  |      |       |      |  |      |       |   |  |  |       |  
|                                  
|                                  
|                                  
|                                  
|Commissions and fees               |  |      | 66.0  | %    |  |      | 66.6  | % |  |  | 70.2  | %
|                                  
|                                  
|                                  
|                                  
|Mutual fund and related revenue    |  |      | 10.2  |      |  |      | 9.6   |   |  |  | 8.0   |  
|                                  
|                                  
|                                  
|                                  
|Net interest revenue               |  |      | 19.5  |      |  |      | 19.2  |   |  |  | 15.4  |  
|                                  
|                                  
|                                  
|                                  
|Other                              |  |      | 4.3   |      |  |      | 4.6   |   |  |  | 6.4   |  
|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|Total revenues                     |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|Expenses                           |  |      |       |      |  |      |       |   |  |  |       |  
|                                  
|                                  
|                                  
|                                  
|Employee compensation and benefits |  |      | 28.9  | %    |  |      | 29.8  | % |  |  | 31.0  | %
|                                  
|                                  
|                                  
|                                  
|Execution and clearing costs       |  |      | 13.9  |      |  |      | 15.5  |   |  |  | 14.2  |  
|                                  
|                                  
|                                  
|                                  
|Occupancy and equipment            |  |      | 8.3   |      |  |      | 9.2   |   |  |  | 9.7   |  
|                                  
|                                  
|                                  
|                                  
|Advertising and marketing          |  |      | 6.5   |      |  |      | 5.4   |   |  |  | 4.1   |  
|                                  
|                                  
|                                  
|                                  
|Communications                     |  |      | 4.3   |      |  |      | 5.0   |   |  |  | 5.1   |  
|                                  
|                                  
|                                  
|                                  
|Amortization of goodwill           |  |      | 3.9   |      |  |      | 5.4   |   |  |  | 4.8   |  
|                                  
|                                  
|                                  
|                                  
|Professional fees                  |  |      | 2.6   |      |  |      | 2.5   |   |  |  | 3.3   |  
|                                  
|                                  
|                                  
|                                  
|Other                              |  |      | 12.6  |      |  |      | 10.3  |   |  |  | 10.1  |  
|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|Total expenses                     |  |      | 81.0  | %    |  |      | 83.1  | % |  |  | 82.3  | %
|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|Income before income taxes         |  |      | 19.0  | %    |  |      | 16.9  | % |  |  | 17.7  | %
|                                  
|                                  
|                                  
|                                  
|Income tax provision               |  |      | 8.9   |      |  |      | 8.9   |   |  |  | 9.5   |  
|                                   |  |      |       |      |  |      |       |   |  |  |       |  
|Net income                         |  |      | 10.1  | %    |  |      | 8.0   | % |  |  | 8.2   | %
|                                   |  |      |       |      |  |      |       |   |  |  |       |  

Financial Overview

Years ended October 31, 1999, 1998 and 1997


1999 versus 1998

Net income for the fiscal year ended October 31, 1999 was a
record $97.3 million, up 99.8% from fiscal year 1998 net
income of $48.7 million. Fiscal year 1999 revenues were also
 a record $960.1 million, up 56.2% from $614.5 million
in fiscal year 1998, primarily due to a 54.7% increase in
commissions and transaction fees, a 66.8% increase in mutual fund
 and related revenue, and a 58.7% increase in net interest
revenue.

Total operating expenses during fiscal year 1999 were
$777.6 million, up 52.1% from $511.0 million for fiscal
 year 1998, primarily resulting from the significant growth in
our business and the full-year impact of our 1998 acquisition of
Jack White & Company.

1998 versus 1997

Net income for the fiscal year ended October 31, 1998 was a
record $48.7 million, up 34.5% from fiscal year 1997 net
income of $36.2 million. Fiscal year 1998 revenues were a
record $614.5 million, up 37.6% from $446.6 million in
fiscal year 1997, primarily due to a 30.6% increase in
commissions and transaction fees, a 65.0% increase in mutual fund
 and related revenue, and a 70.9% increase in net interest
revenue. These increases reflect approximately $87 million
of incremental revenue related to the Kennedy Cabot &
Co. and Jack White & Company acquisitions.

37



---



##### Table of Contents



Total operating expenses during fiscal year 1998 were
$511.0 million, up 38.8% from $368.0 million for fiscal
 year 1997, primarily resulting from the significant growth in
our business as well as approximately $75 million of
incremental expenses related to the acquisition of Kennedy
Cabot & Co. and Jack White & Company.

Commissions and fees

1999 versus 1998

Commissions and fees were $633.5 million for the fiscal year
 ended October 31, 1999, up $224.1 million, or 54.7%,
from fiscal year 1998. The total number of trades executed
increased 90.6% as our customer base grew due to the rapid growth
 of our core franchise. The average commission per revenue trade
decreased 20.1% to approximately $23. This decrease was mainly
due to an increase in the proportion of trades placed through our
 online brokerage channels.

We added approximately 739,000 new customer accounts during
fiscal year 1999, an increase of 44.6% from the approximately
511,000 new accounts added during fiscal year 1998. Our
advertising and marketing expense per new account was
approximately $85 for fiscal year 1999 versus $65 for fiscal year
 1998.

|                                     |  |      |         |      |  |          |        |  |  |  |     |   
|------------------------------------ |  | ---- | ------- | ---- |  | -------- | ------ |  |  |  | --- | --
|Fiscal year ended October 31         |  | 1999 |         | 1998 |  | % Change
|                                     |  |      |         |      |  |         
|Average trades per day               |  |      |         |      |  |          |        |  |  |  |     |   
|                                    
|                                    
|                                    
|                                    
|WebBroker                            |  |      | 61,751  |      |  |          | 20,586 |  |  |  | 200 | % 
|                                    
|                                    
|                                    
|                                    
|PC dial-up                           |  |      | 4,883   |      |  |          | 4,625  |  |  |  | 6   |   
|                                     |  |      |         |      |  |          |        |  |  |  |     |   
|Total online trades                  |  |      | 66,634  |      |  |          | 25,211 |  |  |  | 164 |   
|                                    
|                                    
|                                    
|                                    
|Touch-tone                           |  |      | 4,368   |      |  |          | 3,410  |  |  |  | 28  |   
|                                     |  |      |         |      |  |          |        |  |  |  |     |   
|Total electronic trades              |  |      | 71,002  |      |  |          | 28,621 |  |  |  | 148 |   
|                                    
|                                    
|                                    
|                                    
|Agent trades                         |  |      | 36,060  |      |  |          | 27,552 |  |  |  | 31  |   
|                                     |  |      |         |      |  |          |        |  |  |  |     |   
|Total daily average trades           |  |      | 107,062 |      |  |          | 56,173 |  |  |  | 91  | % 
|                                     |  |      |         |      |  |          |        |  |  |  |     |   
|Average commission per revenue trade |  | $    | 23.02   |      |  | $        | 28.82  |  |  |  | (20 | )%

1998 versus 1997

Commissions and fees were $409.4 million for the fiscal year
 ended October 31, 1998, up $95.9 million, or 30.6%,
from fiscal year 1997. The total number of trades executed
increased 71.9% as our customer base grew due to recent
acquisitions and the rapid growth of our core franchise. The
average commission per revenue trade decreased 27.5% to
approximately $29. This decrease was mainly due to an increase in
 the proportion of trades placed through our online brokerage
channels, which have significantly lower commission rates.

We added approximately 511,000 new customer accounts during
fiscal year 1998, an increase of 57.7% from the approximately
324,000 new accounts added during fiscal year 1997. Our
advertising and marketing expense per new account was
approximately $65 for fiscal year 1998 versus $57 for fiscal year
 1997.

|                                     |  |      |         |      |  |          |         |  |  |  |     |   
|------------------------------------ |  | ---- | ------- | ---- |  | -------- | ------- |  |  |  | --- | --
|Fiscal year ended October 31         |  | 1998 |         | 1997 |  | % Change
|                                     |  |      |         |      |  |         
|Average trades per day               |  |      |         |      |  |          |         |  |  |  |     |   
|                                    
|                                    
|                                    
|                                    
|Total electronic trades              |  |      | 28,621  |      |  |          | 11,200  |  |  |  | 156 | % 
|                                    
|                                    
|                                    
|                                    
|Agent trades                         |  |      | 27,552  |      |  |          | 21,271  |  |  |  | 30  |   
|                                     |  |      |         |      |  |          |         |  |  |  |     |   
|Total daily average trades           |  |      | 56,173  |      |  |          | 32,471  |  |  |  | 73  | % 
|                                     |  |      |         |      |  |          |         |  |  |  |     |   
|Average commission per revenue trade |  |      | $ 28.82 |      |  |          | $ 39.73 |  |  |  | (27 | )%

38



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##### Table of Contents



Mutual fund and related revenue

1999 versus 1998

Mutual fund and related revenue was $98.4 million for the fiscal
year ended October 31, 1999, up $39.4 million, or 66.8%,
from the prior fiscal year. This increase was primarily due to a
significant increase in customer assets in third-party mutual
funds and proprietary money market and mutual funds, including
the full year impact of the acquisition of Jack White &
Company.

1998 versus 1997

Mutual fund and related revenue was $59.0 million for the fiscal
year ended October 31, 1998, up $23.3 million, or 65.0%,
from the prior fiscal year. This increase was primarily due to a
significant increase in customer assets held in third-party
mutual funds and proprietary money market and mutual funds, which
 was driven in part by the acquisition of Jack White &
Company, whose customers held a large proportion of their assets
in mutual funds.

Net interest revenue

1999 versus 1998

Net interest revenue was $186.8 million for the fiscal year ended
 October 31, 1999, up $69.1 million, or 58.7%, from fiscal
year 1998. This increase was principally due to an 83.5% increase
 in average customer margin loans to $4.48 billion during fiscal
year 1999 from $2.44 billion during fiscal year 1998. Our net
interest spread decreased to 2.59% in fiscal year 1999 from 3.02%
 in fiscal year 1998 due primarily to the continued rapid growth
of our U.S. operations, which have a lower net interest spread
than our Canadian operations.

1998 versus 1997

Net interest revenue was $117.7 million for the fiscal year ended
 October 31, 1998, up $48.9 million, or 70.9%, from fiscal
year 1997. This increase was principally due to a 104.6% increase
 in average customer margin loans to $2.4 billion during fiscal
year 1998 from $1.2 billion during fiscal year 1997. Our net
interest spread decreased to 3.02% in fiscal year 1998 from 3.28%
 in fiscal year 1997 due primarily to the rapid growth of our
U.S. operations, which have a lower net interest spread than our
Canadian operations.

Operating Expenses

Years ended October 31, 1999, 1998 and 1997


1999 versus 1998

Compensation and benefits expense was $277.6 million for the
fiscal year ended October 31, 1999, up $94.2 million, or
51.4%, from the prior fiscal year. This increase was primarily
due to a greater number of associates and to increases in
incentive compensation consistent with our increased profits.

Execution and clearing costs were $133.4 million for fiscal year
1999, up $37.9 million, or 39.7%, from fiscal year 1998. The
increase was primarily due to the corresponding increase in trade
 volume during the year, partially offset by the savings derived
from the operational leverage of our clearing business.

Occupancy and equipment expense was $80.0 million for the fiscal
year ended October 31, 1999, up $23.4 million, or 41.3%,
from fiscal year 1998. This increase was primarily due to
additional lease expenses on our expanded office space, as well
as increased lease and depreciation expenses on data processing
equipment. During fiscal year 1999, we opened 20 new
branches.

Advertising and marketing expense was $62.8 million in fiscal
year 1999, up $29.6 million, or 89.0%, from fiscal year 1998.
This increase primarily relates to increased national advertising
 campaigns.

Communications expense was $41.1 million during fiscal year 1999,
 up $10.3 million, or 33.4%, from fiscal year 1998. This increase
 was primarily due to increased trading volumes and the opening
of new branches.

39



---



##### Table of Contents



Amortization of goodwill was $37.4 million for fiscal year 1999,
up $4.4 million, or 13.3%, from fiscal year 1998. This increase
was primarily due to the full-year effect of the acquisition of
Jack White & Company, which occurred in late May 1998.

Professional fees were $24.5 million in fiscal year 1999, up $9.1
 million, or 59.7%, from the prior fiscal year. This increase was
 primarily due to additional fees incurred for computer
programming and systems consultants.

Other expenses were $120.8 million for fiscal year 1999, up $57.7
 million, or 91.4%, from the prior fiscal year, consistent with
the overall increase in business activity.

Our effective income tax rates for the fiscal years 1999 and 1998
 were 46.7% and 52.9%, respectively. Our effective tax rates,
excluding the effects of non-deductible goodwill, were 41.6% and
44.3%, respectively, for the fiscal years ended October 31,
1999 and 1998.

1998 versus 1997

Compensation and benefits expense was $183.4 million for the
fiscal year ended October 31, 1998, up $45.1 million, or
32.6%, from the prior fiscal year. This increase was primarily
due to a greater number of employees and to increases in
incentive compensation consistent with our increased profits.

Execution and clearing costs were $95.5 million for fiscal year
1998, up $32.2 million, or 50.9%, from fiscal year 1997. The
increase was primarily due to the corresponding increase in trade
 volume during the year, partially offset by the savings derived
from the operational leverage of our clearing business.

Occupancy and equipment expense was $56.6 million for the fiscal
year ended October 31, 1998, up $13.1 million, or 30.2%,
from fiscal year 1997. This increase was primarily due to
additional lease expenses on our expanded office space, as well
as increased lease and maintenance expenses on data processing
equipment. During fiscal year 1998, we opened 31 new branches and
 acquired 17 branches and offices in connection with the
acquisitions of Kennedy Cabot & Co., Jack White & Company
 and Gall & Eke.

Advertising and marketing expense was $33.2 million in fiscal
year 1998, up $14.7 million, or 79.3%, from fiscal year 1997.
This increase primarily relates to increased national advertising
 campaigns.

Communications expense was $30.8 million during fiscal year 1998,
 up $7.8 million, or 34.1%, from fiscal year 1997. This increase
was primarily due to increased trading volumes and the opening of
 new branches.

Amortization of goodwill was $33.0 million for fiscal year 1998,
up $11.4 million, or 52.6%, from fiscal year 1997. This increase
was primarily due to the full-year effect of the acquisition of
Kennedy Cabot & Co. and the acquisition of Jack White &
Company in late May 1998.

Professional fees were $15.4 million in fiscal year 1998, up $0.5
 million, or 3.2%, from the prior fiscal year. This was primarily
 due to increased fees for computer programming and systems
consultants.

Other expenses were $63.1 million for fiscal year 1998, up $18.2
million, or 40.5%, from the prior fiscal year, consistent with
the overall increase in business activity.

Our effective income tax rates for the fiscal years 1998 and 1997
 were 52.9% and 53.9%, respectively. Our effective tax rates,
excluding the effects of non-deductible goodwill, were 44.3% and
43.0%, respectively, for the fiscal years ended October 31,
1998 and 1997.

Quarterly Results

The following tables set forth certain unaudited quarterly
statements of income data and certain unaudited quarterly
operating data for the eight quarters ended October 31,
1999. In our opinion, this unaudited information has been
prepared on substantially the same basis as the financial
statements appearing on pages 49 to 52, and includes
all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the unaudited quarterly data. The
unaudited quarterly data should be read in conjunction with

40



---



##### Table of Contents





|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | ------------------------- | ------- | -------- |  | --------- | ------- | ----------- |  | ----------- | ------- | -------- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                   |  |                          
|                                   |  | Quarter ended            
|                                   |  |                          
|                                   |  | October 31,               |         | July 31, |  | April 30, |         | January 31, |  | October 31, |         | July 31,
|                                   |  | 1999                      |         | 1999     |  | 1999      |         | 1999        |  | 1998        |         | 1998    
|                                   |  |                           |         |          |  |           |         |             |  |             |         |         
|                                   |  |                          
|                                   |  | (in thousands of dollars)
|                                  
|                                  
|                                  
|                                  
|Revenues                           |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|                                  
|                                  
|                                  
|                                  
|Commissions and fees               |  | $                         | 149,397 |          |  | $         | 155,455 |             |  | $           | 176,634 |          |  | $ | 152,044 |  |  | $ | 111,686 |  |  | $ | 105,634 | 
|                                  
|                                  
|                                  
|                                  
|Mutual fund and related revenue    |  |                           | 29,097  |          |  |           | 25,722  |             |  |             | 22,812  |          |  |   | 20,783  |  |  |   | 18,846  |  |  |   | 16,790  | 
|                                  
|                                  
|                                  
|                                  
|Net interest revenue               |  |                           | 61,851  |          |  |           | 51,668  |             |  |             | 39,311  |          |  |   | 34,004  |  |  |   | 32,061  |  |  |   | 33,004  | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                           | 12,785  |          |  |           | 10,109  |             |  |             | 10,241  |          |  |   | 8,204   |  |  |   | 7,028   |  |  |   | 7,501   | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|Total revenues                     |  |                           | 253,130 |          |  |           | 242,954 |             |  |             | 248,998 |          |  |   | 215,035 |  |  |   | 169,621 |  |  |   | 162,929 | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|Expenses                           |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|                                  
|                                  
|                                  
|                                  
|Employee compensation and benefits |  |                           | 75,946  |          |  |           | 71,335  |             |  |             | 70,462  |          |  |   | 59,859  |  |  |   | 46,733  |  |  |   | 48,084  | 
|                                  
|                                  
|                                  
|                                  
|Execution and clearing costs       |  |                           | 32,851  |          |  |           | 32,489  |             |  |             | 33,424  |          |  |   | 34,679  |  |  |   | 28,591  |  |  |   | 25,482  | 
|                                  
|                                  
|                                  
|                                  
|Occupancy and equipment            |  |                           | 21,800  |          |  |           | 21,409  |             |  |             | 19,047  |          |  |   | 17,754  |  |  |   | 15,300  |  |  |   | 14,900  | 
|                                  
|                                  
|                                  
|                                  
|Advertising and marketing          |  |                           | 24,063  |          |  |           | 14,642  |             |  |             | 12,487  |          |  |   | 11,569  |  |  |   | 9,014   |  |  |   | 8,351   | 
|                                  
|                                  
|                                  
|                                  
|Communications                     |  |                           | 8,413   |          |  |           | 9,971   |             |  |             | 11,999  |          |  |   | 10,717  |  |  |   | 7,922   |  |  |   | 8,971   | 
|                                  
|                                  
|                                  
|                                  
|Amortization of
	goodwill          |  |                           | 9,537   |          |  |           | 9,290   |             |  |             | 9,284   |          |  |   | 9,279   |  |  |   | 9,103   |  |  |   | 8,534   | 
|                                  
|                                  
|                                  
|                                  
|Professional fees                  |  |                           | 7,849   |          |  |           | 6,422   |             |  |             | 6,166   |          |  |   | 4,082   |  |  |   | 3,851   |  |  |   | 4,305   | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                           | 32,159  |          |  |           | 28,383  |             |  |             | 31,212  |          |  |   | 29,000  |  |  |   | 19,026  |  |  |   | 17,193  | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|Total expenses                     |  |                           | 212,618 |          |  |           | 193,941 |             |  |             | 194,081 |          |  |   | 176,939 |  |  |   | 139,540 |  |  |   | 135,820 | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|Income before income taxes         |  |                           | 40,512  |          |  |           | 49,013  |             |  |             | 54,917  |          |  |   | 38,096  |  |  |   | 30,081  |  |  |   | 27,109  | 
|                                  
|                                  
|                                  
|                                  
|Income tax provision               |  |                           | 19,588  |          |  |           | 22,621  |             |  |             | 24,954  |          |  |   | 18,029  |  |  |   | 15,617  |  |  |   | 14,194  | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 
|Net income                         |  | $                         | 20,924  |          |  | $         | 26,392  |             |  | $           | 29,963  |          |  | $ | 20,067  |  |  | $ | 14,464  |  |  | $ | 12,915  | 
|                                   |  |                           |         |          |  |           |         |             |  |             |         |          |  |   |         |  |  |   |         |  |  |   |         | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                   |  |                           |         |             |  |   |         | 
|---------------------------------- |  | ------------------------- | ------- | ----------- |  | - | ------- | 
|                                   |  |                          
|                                   |  | Quarter ended            
|                                   |  |                          
|                                   |  | April 30,                 |         | January 31,
|                                   |  | 1998                      |         | 1998       
|                                   |  |                           |         |            
|                                   |  |                          
|                                   |  | (in thousands of dollars)
|                                  
|                                  
|                                  
|                                  
|Revenues                           |  |                           |         |             |  |   |         | 
|                                  
|                                  
|                                  
|                                  
|Commissions and fees               |  | $                         | 108,241 |             |  | $ | 83,871  | 
|                                  
|                                  
|                                  
|                                  
|Mutual fund and related revenue    |  |                           | 12,803  |             |  |   | 10,583  | 
|                                  
|                                  
|                                  
|                                  
|Net interest revenue               |  |                           | 28,900  |             |  |   | 23,768  | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                           | 7,468   |             |  |   | 6,277   | 
|                                   |  |                           |         |             |  |   |         | 
|Total revenues                     |  |                           | 157,412 |             |  |   | 124,499 | 
|                                   |  |                           |         |             |  |   |         | 
|Expenses                           |  |                           |         |             |  |   |         | 
|                                  
|                                  
|                                  
|                                  
|Employee compensation and benefits |  |                           | 48,393  |             |  |   | 40,167  | 
|                                  
|                                  
|                                  
|                                  
|Execution and clearing costs       |  |                           | 22,191  |             |  |   | 19,259  | 
|                                  
|                                  
|                                  
|                                  
|Occupancy and equipment            |  |                           | 13,993  |             |  |   | 12,403  | 
|                                  
|                                  
|                                  
|                                  
|Advertising and marketing          |  |                           | 8,124   |             |  |   | 7,695   | 
|                                  
|                                  
|                                  
|                                  
|Communications                     |  |                           | 7,277   |             |  |   | 6,639   | 
|                                  
|                                  
|                                  
|                                  
|Amortization of
	goodwill          |  |                           | 7,685   |             |  |   | 7,678   | 
|                                  
|                                  
|                                  
|                                  
|Professional fees                  |  |                           | 4,076   |             |  |   | 3,118   | 
|                                  
|                                  
|                                  
|                                  
|Other                              |  |                           | 15,121  |             |  |   | 11,804  | 
|                                   |  |                           |         |             |  |   |         | 
|Total expenses                     |  |                           | 126,860 |             |  |   | 108,763 | 
|                                   |  |                           |         |             |  |   |         | 
|Income before income taxes         |  |                           | 30,552  |             |  |   | 15,736  | 
|                                  
|                                  
|                                  
|                                  
|Income tax provision               |  |                           | 15,732  |             |  |   | 9,222   | 
|                                   |  |                           |         |             |  |   |         | 
|Net income                         |  | $                         | 14,820  |             |  | $ | 6,514   | 
|                                   |  |                           |         |             |  |   |         | 

41



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##### Table of Contents



|                                             |               |               |           |          |  |           |           |             |  |             |           |          |  |   |           |        |  |   |           |        |  |   |           |        | 
|-------------------------------------------- | ------------- | ------------- | --------- | -------- |  | --------- | --------- | ----------- |  | ----------- | --------- | -------- |  | - | --------- | ------ |  | - | --------- | ------ |  | - | --------- | ------ | 
|                                             |               |              
|                                             |               | Quarter ended
|                                             |               |              
|                                             |               | October 31,   |           | July 31, |  | April 30, |           | January 31, |  | October 31, |           | July 31,
|                                             |               | 1999          |           | 1999     |  | 1999      |           | 1999        |  | 1998        |           | 1998    
|                                             |               |               |           |          |  |           |           |             |  |             |           |         
|Other operating data                         |               |               |           |          |  |           |           |             |  |             |           |          |  |   |           |        |  |   |           |        |  |   |           |       
|                                            
|                                            
|                                            
|                                            
|Pre-tax operating margin, excluding goodwill |               |               | 19.8      | %        |  |           | 24.0      | %           |  |             | 25.8      | %        |  |   | 22.0      | %      |  |   | 23.1      | %      |  |   | 21.9      | %     
|                                            
|                                            
|                                            
|                                            
|Average commissions per revenue trade        |               | $             | 22.38     |          |  | $         | 22.07     |             |  | $           | 23.11     |          |  | $ | 24.14     |        |  | $ | 25.72     |        |  | $ | 28.09     |       
|                                            
|                                            
|                                            
|                                            
|Average trades per day:                      |               |               |           |          |  |           |           |             |  |             |           |          |  |   |           |        |  |   |           |        |  |   |           |       
|                                            
|                                            
|                                            
|                                            
|                                             | Online        |               |           | 69,958   |  |           |           | 69,915      |  |             |           | 69,452   |  |   |           | 56,875 |  |   |           | 33,493 |  |   |           | 26,178 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Electronic(1) |               |           | 73,637   |  |           |           | 74,221      |  |             |           | 74,265   |  |   |           | 61,562 |  |   |           | 36,876 |  |   |           | 29,293 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Total         |               |           | 103,478  |  |           |           | 108,593     |  |             |           | 117,978  |  |   |           | 97,981 |  |   |           | 66,118 |  |   |           | 58,240 | 
|                                            
|                                            
|                                            
|                                            
|Total accounts                               |               |               | 2,961,000 |          |  |           | 2,833,000 |             |  |             | 2,640,000 |          |  |   | 2,467,000 |        |  |   | 2,302,000 |        |  |   | 2,124,000 |       
|                                            
|                                            
|                                            
|                                            
|Total active accounts(2)                     |               |               | 2,168,000 |          |  |           | 2,066,000 |             |  |             | 1,884,000 |          |  |   | 1,736,000 |        |  |   | 1,609,000 |        |  |   | 1,485,000 |       
|                                            
|                                            
|                                            
|                                            
|Number of new accounts                       |               |               | 150,000   |          |  |           | 169,000   |             |  |             | 253,000   |          |  |   | 167,000   |        |  |   | 134,000   |        |  |   | 125,000   |       
|                                            
|                                            
|                                            
|                                            
|Total customer assets (in billions)          |               | $             | 121.7     |          |  | $         | 112.7     |             |  | $           | 106.1     |          |  | $ | 95.7      |        |  | $ | 75.9      |        |  | $ | 74.4      |       
|                                            
|                                            
|                                            
|                                            
|Total associates                             |               |               | 6,110     |          |  |           | 5,981     |             |  |             | 5,310     |          |  |   | 4,534     |        |  |   | 4,217     |        |  |   | 4,242     |       
|                                            
|                                            
|                                            
|                                            
|Total branches                               |               |               | 212       |          |  |           | 210       |             |  |             | 210       |          |  |   | 200       |        |  |   | 192       |        |  |   | 183       |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                             |               |               |           |             |  |   |           |        | 
|-------------------------------------------- | ------------- | ------------- | --------- | ----------- |  | - | --------- | ------ | 
|                                             |               |              
|                                             |               | Quarter ended
|                                             |               |              
|                                             |               | April 30,     |           | January 31,
|                                             |               | 1998          |           | 1998       
|                                             |               |               |           |            
|Other operating data                         |               |               |           |             |  |   |           |       
|                                            
|                                            
|                                            
|                                            
|Pre-tax operating margin, excluding goodwill |               |               | 24.3      | %           |  |   | 18.8      | %     
|                                            
|                                            
|                                            
|                                            
|Average commissions per revenue trade        |               | $             | 30.74     |             |  | $ | 32.79     |       
|                                            
|                                            
|                                            
|                                            
|Average trades per day:                      |               |               |           |             |  |   |           |       
|                                            
|                                            
|                                            
|                                            
|                                             | Online        |               |           | 24,966      |  |   |           | 15,752 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Electronic(1) |               |           | 28,825      |  |   |           | 19,038 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Total         |               |           | 57,446      |  |   |           | 42,237 | 
|                                            
|                                            
|                                            
|                                            
|Total accounts                               |               |               | 1,856,000 |             |  |   | 1,695,000 |       
|                                            
|                                            
|                                            
|                                            
|Total active accounts(2)                     |               |               | 1,258,000 |             |  |   | 1,172,000 |       
|                                            
|                                            
|                                            
|                                            
|Number of new accounts                       |               |               | 154,000   |             |  |   | 98,000    |       
|                                            
|                                            
|                                            
|                                            
|Total customer assets (in billions)          |               | $             | 61.2      |             |  | $ | 52.0      |       
|                                            
|                                            
|                                            
|                                            
|Total associates                             |               |               | 3,786     |             |  |   | 3,470     |       
|                                            
|                                            
|                                            
|                                            
|Total branches                               |               |               | 177       |             |  |   | 167       |       




|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Electronic trades include transactions completed both on line and
	 by touch-tone phone.                                         
|   
|(2) | Active accounts are accounts that had purchase, sale, other
	activity or an equity balance during the previous calendar
	quarter.

During fiscal year 1999 we opened 20 new branches, compared to
the increase of 48 branches in fiscal 1998, which included 16
branches and the approximately 332,000 associated total accounts
added in connection with our acquisitions of Kennedy Cabot &
Co. and Jack White & Company.

We have experienced, and expect to continue to experience,
significant fluctuations in quarterly operating results due to a
variety of factors, including general volume and volatility in
the securities markets, the impact of competition, levels of
online trading, changes in interest rates, changes in foreign
currency exchange rates, changes in regulations, our ability to
manage personnel and process online trading activity, the amount
and timing of capital expenditures, the incurrence of costs
associated with acquisitions, and general economic conditions.
Our expense structure is based on historical expense levels and
the levels of demand for our brokerage services. If demand for
our brokerage services declines and we are unable to adjust our
cost structure on a timely basis, it could have a material
adverse effect on our business, financial condition and operating
 results.

Due to all of the foregoing factors, period-to-period comparisons
 of our revenues and operating results are not necessarily
meaningful, and such comparisons cannot be relied upon as
indicators of future performance. In addition, we cannot assure
you that we will be able to sustain the rates of revenue growth
that we have experienced in the past, improve our operating
results or sustain our profitability on a quarterly basis.

Liquidity and Capital Resources

Historically, we have financed our customer securities operations
 primarily through customer credit balances, deposits received
for securities loaned and other short-term borrowings. As of
October 31, 1999, 88.9% of our assets consisted of cash and
cash equivalents or assets readily convertible into cash
(principally receivables from customers, receivables from brokers
 and dealers, deposits paid for stock borrowed and securities
owned). Receivables from customers primarily consist of margin
loans to customers, which are secured by customers readily
marketable securities. Receivables from brokers and dealers
consist of amounts receivable for pending securities
transactions, which can generally be settled within three
business days. Deposits paid for securities borrowed represent
cash deposits placed with brokers securing marketable

42



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##### Table of Contents





Capital expenditures and investments in new technology, services
and advertising have been primarily financed to date through
earnings from operations. Acquisitions of new businesses have
been funded through capital contributions from TD Bank.

Net income plus depreciation and amortization was $148.6 million,
 $91.6 million and $64.9 million for the fiscal years ended
October 31, 1999, 1998 and 1997, respectively. Depreciation
and amortization expense, which relates to fixed assets,
leasehold improvements and goodwill, was $51.3 million, $42.9
million and $28.6 million for the fiscal years ended
October 31, 1999, 1998 and 1997, respectively. Capital
expenditures were $59.8 million, $17.7 million and $26.8 million
for the fiscal years ended October 31, 1999, 1998 and 1997,
respectively, which represented 6.2%, 2.9% and 6.0%,
respectively, of total revenues in each period. Capital
expenditures, excluding acquisitions of new businesses, during
the fiscal years ended October 31, 1999, 1998 and 1997
primarily related to the purchase of communications and data
processing equipment, and leasehold improvements related to new
branches and office facilities. The cost of acquiring new
businesses, net of assets acquired and liabilities assumed, was
approximately $289.0 million and $21.0 million during the years
ended October 31, 1998 and 1997, respectively.

Our broker-dealer subsidiaries are subject to regulatory
requirements intended to ensure their general soundness and
liquidity, which require that the broker-dealers comply with
certain minimum capital requirements. These regulations, which
differ in each country, generally prohibit our broker-dealer
subsidiaries from repaying borrowings from TD Bank, paying cash
dividends, making loans to us or affiliates, or otherwise
entering into transactions which would result in a significant
reduction in their regulatory capital positions without prior
notification and/or the approval of the broker-dealers
principal regulator. Our capital structure is designed to provide
 each entity and business with capital and liquidity consistent
with its business and regulatory requirements.

Year 2000 Compliance

The Year 2000 issue refers to concerns that computer and other
electronic systems may not correctly interpret dates in the
21st century, possibly resulting in errors. If these
concerns are not properly addressed, our ability to conduct
normal business activities could be affected.

All of our internal systems were updated as required and tested
for Year 2000 readiness, with special emphasis being given
to our trading-related, communications and data processing
systems, which we consider critical to our ability to conduct our
 customers business. To ensure that our business would not
be affected, the following actions were undertaken:



| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | quality assurance testing of our main trading-related systems,
	including all customer interfaces and links to exchanges and
	utilities in all markets in which we operate;             
|
| |  | participating with third-party vendors and licensors in testing
	of material hardware, software and services that are both
	directly and indirectly related to the main trading systems;
|
| |  | contacting vendors of critical non-trading-related communications
	 and data processing systems;                                                                                        
|
| |  | assessing repair or replacement requirements, with appropriate
	remedial actions;                                                                                                       
|
| |  | implementing updated applications and procedures; and                                                                                                                                   
|
| |  | creating contingency plans in the event of Year 2000 failures.                                                                                                                          

As a result of these actions, our ability to conduct normal
business activity was not affected and we are confident that
operations will continue without any significant disruption. Our
confidence is based on the results of the extensive testing
carried out on all of our systems. The testing was conducted
first on individual systems, then in an enterprise-wide test with
 customer-critical systems running together in an integrated
manner. We expanded the scope of testing by participating in
industry tests with the clearing associations and exchanges in
each market, and successfully completed end-to-end tests of the
operating systems.

43



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##### Table of Contents



We had a program in place to ensure that the systems which had
been updated for Year 2000 continued to be Year 2000 ready if
subsequently changed. In addition, as of August 4, 1999, we
did not permit any changes to our systems except those absolutely
 necessary, a policy which remained in place until after
January 15, 2000 to ensure that the Year 2000 status of our
systems was not altered. A similar policy was in place with our
external service providers to ensure their systems remained fully
 compatible with our systems.

Notwithstanding our confidence in our systems readiness, as a
prudent measure the various business and support units reviewed
their business recovery procedures and, where required, modified
and tested them to meet the Year 2000 challenge. All areas tested
 their procedures for adequacy.

We prepared a plan to monitor, test and report on systems as the
systems commenced processing Year 2000 dates. It should be noted
that many systems were dealing with Year 2000 dates before the
end of 1999, and no problems were experienced with them. We
considered the period from December 31, 1999 to
January 5, 2000 to be critical and created control teams to
deal with the full range of contingent exposure within each
business unit, and an overall command center to monitor
operations closely during this period. We conducted simulation
tests of the contingency plans for these operations. As systems
began to process data after December 31, 1999, we had people
 on-site monitoring them to ensure that they continued to
operate, and address any problems that might arise. This is our
normal process for major systems events such as implementation of
 new versions of systems. We are committed to ensuring the
optimal achievable operation of systems, and to this end will
continue our ongoing program of monitoring critical systems
during the coming period.

We anticipated higher-than-usual activity toward the end of the
year and into early 2000, and increased the capacity of all
delivery channels to accommodate the potential increased demand.
We monitored activity very closely and had extra staff ready to
meet additional demand.

The total cost associated with Year 2000 conversion is
approximately $11.25 million including contingencies, of which
$9.7 million had been incurred prior to October 31, 1999.
All material costs are expensed as incurred. Our Year 2000
compliance costs are substantially less than many of our
competitors and other securities firms, due primarily to the fact
 that we utilize third-party vendors for our back office systems.

Recently Issued Accounting Standards

Statement of Financial Accounting Standards (SFAS)
No. 133, Accounting for Derivative Instruments and
Hedging Activities, was issued in 1998. This standard
requires us to recognize all derivatives as either assets or
liabilities in our financial statements and to measure such
instruments at their fair values. Hedging activities must be
redesignated and documented pursuant to the provisions of the
standard. This standard becomes effective for all fiscal quarters
 of fiscal years which begin after June 15, 2000. At this
time, we do not believe that adoption of this standard will have
a material impact on our financial condition and results of
operations.

In March 1998, the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use, effective for fiscal years
beginning after December 15, 1998. SOP 98-1 requires that
certain costs of computer software developed or obtained for
internal use be capitalized and amortized over the useful life of
 the related software. We currently expense the costs of all
software development in the period in which a cost is incurred.
We have adopted this statement for the fiscal year
November 1, 1999 to October 31, 2000, and are currently
 assessing its impact.

44



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##### Table of Contents






Item 7A.  Quantitative and Qualitative
Disclosures about Market Risk

On January 28, 1997, the Securities and Exchange Commission
adopted new rules (Securities Act Release No. 7386)
that require disclosure about the policies used to account for
derivatives and certain quantitative and qualitative information
about market risk exposures. Market risk generally represents the
 risk of loss that may result from the potential change in the
value of a financial instrument as a result of fluctuations in
interest rates and market prices. We have not traded or otherwise
 engaged in transactions involving derivatives nor do we expect
to in the future. We have established policies, procedures and
internal processes governing our management of market risks in
the normal course of our business operations.

As part of our brokerage business, we hold short-term
interest-earning assets (mainly margin loans to customers)
totaling $6.8 billion and $3.6 billion as at October 31,
1999 and 1998, respectively, of which $1.9 billion and $1.3
billion, respectively, were denominated in foreign currencies,
primarily the Canadian dollar. Our interest-earning assets are
financed by short-term interest-bearing liabilities in the form
of customer balances and deposits received for stock loaned. We
earn a net interest spread on the difference between amounts
earned on customer margin loans and amounts paid on stock loan
and customer credit balances. Since we establish the rate paid on
 customer cash balances, a substantial portion of our interest
rate risk is under our direct management. We generally move rates
 earned on loans in lockstep with rates paid on credit balances
in order to maintain a consistent net interest spread, and
therefore do not anticipate that changes in interest rates will
have a material adverse effect on our earnings and cash flows.
Similarly, since we manage the assets and liabilities related to
our brokerage business on a geographic basis and fund assets with
 liabilities denominated in the same currency as the assets, we
do not anticipate that changes in foreign exchange rates will
have a material adverse effect on our earnings or cash flows.

We held marketable securities (securities owned) at
October 31, 1999 and 1998 that were recorded at fair values
of $342.0 million and $76.3 million, respectively, and had sold
securities short (securities sold, not yet purchased) as at
October 31, 1999 and 1998 with fair values of $3.6 million
and $5.0 million, respectively, which exposes us to market price
risk. This risk is estimated as the potential loss in fair value
resulting from a hypothetical 10% adverse change in quoted market
 prices, and amounted to approximately $34.6 million and $8.1
million as at October 31, 1999 and 1998, respectively. Of
these positions, approximately $10.2 million and $41.2 million of
 securities owned at October 31, 1999 and 1998, respectively, and
 $3.4 million and $5.0 million of securities sold short at
October 31, 1999 and 1998, respectively, were denominated in
 foreign currencies, primarily the Canadian dollar. Therefore, we
 are also exposed to foreign currency risk. This risk is
estimated as the potential loss in fair value resulting from a
hypothetical 10% adverse change in foreign exchange rates, and
amounted to approximately $1.4 million and $4.6 million as at
October 31, 1999 and 1998, respectively. Actual results may
differ.

45



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##### Table of Contents






Item 8.  Financial Statements and Supplementary
 Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

|                                                           |  |   
|---------------------------------------------------------- |  | --
|                                                          
|                                                          
|                                                          
|                                                          
|Report of Management                                       |  | 47
|                                                          
|                                                          
|                                                          
|                                                          
|Report of Independent Accountants                          |  | 48
|                                                          
|                                                          
|                                                          
|                                                          
|Consolidated Statements of Financial Condition             |  | 49
|                                                          
|                                                          
|                                                          
|                                                          
|Consolidated Statements of Income                          |  | 50
|                                                          
|                                                          
|                                                          
|                                                          
|Consolidated Statements of Changes in Stockholders Equity |  | 51
|                                                          
|                                                          
|                                                          
|                                                          
|Consolidated Statements of Cash Flows                      |  | 52
|                                                          
|                                                          
|                                                          
|                                                          
|Notes to the Consolidated Financial Statements             |  | 53

46



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##### Table of Contents



TD WATERHOUSE GROUP, INC.

REPORT OF MANAGEMENT

The consolidated financial statements of TD Waterhouse Group,
Inc. and related financial information presented elsewhere in
this Annual Report have been prepared by management, which is
responsible for the integrity, consistency, objectivity and
reliability of the information. Accounting principles generally
accepted in the United States have been applied and management
has exercised its judgement and made best estimates where deemed
appropriate.

The Companys accounting systems and related internal
controls are designed, and their supporting procedures
maintained, to provide reasonable assurance that financial
records are complete and accurate and that Company and customer
assets are safeguarded against loss and unauthorized use or
disposition. These supporting procedures include careful
selection and training of qualified staff, the establishment of
organizational structures providing a well-defined division of
responsibilities and accountability for performance, and the
communication of policies and guidelines of business conduct
throughout the Company.

The Audit Committee of the Board of Directors, which is comprised
 of directors who are not officers or employees of the Company,
oversees managements responsibilities for the financial
reporting and internal control systems. The Audit Committee meets
 periodically with our internal auditors, with Company management
 and with PricewaterhouseCoopers LLP to discuss accounting,
auditing, internal controls over financial reporting and other
matters.

PricewaterhouseCoopers LLP, an independent accounting firm, has
audited our consolidated financial statements. They were given
unrestricted access to all the Companys financial records
and related data. We believe that all representations made to
PricewaterhouseCoopers during their audit were valid and
appropriate.

/s/  STEPHEN D. MCDONALD

Stephen D. McDonald





/s/  FRANK J. PETRILLI

Frank J. Petrilli





/s/  B. KEVIN STERNS

B. Kevin Sterns





47



---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors and The Stockholders of TD
Waterhouse Group, Inc.

In our opinion, the accompanying consolidated statements of
financial condition and the related consolidated statements of
income, of changes in stockholders equity and of cash flows
 present fairly, in all material respects, the financial position
 of TD Waterhouse Group, Inc. and its subsidiaries at
October 31, 1999 and 1998, and the results of their
operations and cash flows for each of the three years in the
period ended October 31, 1999, in conformity with accounting
 principles generally accepted in the United States. These
financial statements are the responsibility of the Companys
 management; our responsibility is to express an opinion on these
 financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we
plan and perform the audits to obtain reasonable assurance about
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, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.



| |                                
| | -------------------------------
| | /s/  PRICEWATERHOUSECOOPERS LLP
|
| | PricewaterhouseCoopers LLP     





48



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##### Table of Contents



TD WATERHOUSE GROUP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

AT OCTOBER 31


|                                                           |                                                                           |                                            |           |       |           |   |           |   |           | 
|---------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------ | --------- | ----- | --------- | - | --------- | - | --------- | 
|                                                           |                                                                           | 1999                                       |           | 1998 
|                                                           |                                                                           |                                            |           |      
|                                                           |                                                                           |                                           
|                                                           |                                                                           | (in thousands of dollars, except          
|                                                           |                                                                           | share and per share data)                 
|                                                          
|                                                          
|                                                          
|                                                          
|ASSETS                                                     |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cash and cash equivalents                                  |                                                                           | $                                          | 569,181   |       |           | $ | 522,029   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Securities owned, at market value                          |                                                                           |                                            | 342,042   |       |           |   | 76,279    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Receivable from brokers and dealers                        |                                                                           |                                            | 194,370   |       |           |   | 71,717    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Receivable from customers                                  |                                                                           |                                            | 5,868,804 |       |           |   | 2,556,182 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Deposits paid for securities borrowed                      |                                                                           |                                            | 664,299   |       |           |   | 232,685   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Receivable from affiliates                                 |                                                                           |                                            | 7,010     |       |           |   | 82,038    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Deposits with clearing organizations                       |                                                                           |                                            | 35,495    |       |           |   | 15,914    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Fixed assets, net of accumulated depreciation              |                                                                           |                                            | 73,543    |       |           |   | 27,604    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Goodwill, net of accumulated amortization                  |                                                                           |                                            | 654,081   |       |           |   | 672,516   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Other assets                                               |                                                                           |                                            | 182,991   |       |           |   | 41,772    |  
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|                                                           |                                                                           | Total assets                               |           | $     | 8,591,816 |   |           | $ | 4,298,736 | 
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                       |                                                                           |                                            |           |       |           |   |           |  
|Liabilities                                                |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|Bank loans and overdrafts                                  |                                                                           | $                                          | 249,010   |       |           | $ | 31,183    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Deposits received for securities loaned                    |                                                                           |                                            | 3,962,958 |       |           |   | 1,033,964 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Securities sold, not yet purchased                         |                                                                           |                                            | 3,554     |       |           |   | 4,987     |  
|                                                          
|                                                          
|                                                          
|                                                          
|Payable to brokers and dealers                             |                                                                           |                                            | 160,254   |       |           |   | 152,865   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Payable to customers                                       |                                                                           |                                            | 2,016,535 |       |           |   | 1,947,430 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Payable to affiliates                                      |                                                                           |                                            | 32,323    |       |           |   | 36,181    |  
|                                                          
|                                                          
|                                                          
|                                                          
|Accrued compensation, taxes payable and other liabilities  |                                                                           |                                            | 215,062   |       |           |   | 96,991    |  
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|                                                           |                                                                           | Total liabilities                          |           |       | 6,639,696 |   |           |   | 3,303,601 | 
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|Commitments and contingent liabilities (Notes 7, 9 and 13) |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|Stockholders Equity                                       |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|Historical combined equity                                 |                                                                           |                                            |          |       |           |   | 994,452   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Preferred stock, $0.01 par value:                          |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | 100 million shares authorized, one share issued and outstanding           |                                            |           |      |           |   |           |  |          
|                                                          
|                                                          
|                                                          
|                                                          
|Preferred stock of subsidiaries, $23,700 par value:        |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | 100,000 shares authorized, five shares issued and outstanding             |                                            |           | 119   |           |   |           |  |          
|                                                          
|                                                          
|                                                          
|                                                          
|Common stock, $0.01 par value:                             |                                                                           |                                            |           |       |           |   |           |  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | 700 million shares authorized, 376,419,200 shares issued and
	outstanding |                                            |           | 3,764 |           |   |           |  |          
|                                                          
|                                                          
|                                                          
|                                                          
|Additional paid-in capital                                 |                                                                           |                                            | 1,916,622 |       |           |   |          |  
|                                                          
|                                                          
|                                                          
|                                                          
|Retained earnings                                          |                                                                           |                                            | 31,441    |       |           |   |          |  
|                                                          
|                                                          
|                                                          
|                                                          
|Accumulated other comprehensive income                     |                                                                           |                                            | 174       |       |           |   | 683       |  
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|                                                           |                                                                           | Total stockholders equity                 |           |       | 1,952,120 |   |           |   | 995,135   | 
|                                                           |                                                                           |                                            |           |       |           |   |           |  
|                                                           |                                                                           | Total liabilities and stockholders equity |           | $     | 8,591,816 |   |           | $ | 4,298,736 | 
|                                                           |                                                                           |                                            |           |       |           |   |           |  

The accompanying notes are an integral part of these consolidated
 financial statements.

49



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TD WATERHOUSE GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEAR ENDED OCTOBER 31


|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |         | 
|--------------------------------------------- | -------------- | ---------------------------------------------------------- | ----------- | ------- |  | ---- | ----------- | ------- |  | - | ------- | ------- | 
|                                              |                | 1999                                                       |             | 1998    |  | 1997
|                                              |                |                                                            |             |         |  |     
|                                              |                |                                                           
|                                              |                | (in thousands of dollars, except share and per share data)
|                                             
|                                             
|                                             
|                                             
|REVENUES                                      |                |                                                            |             |         |  |      |             |         |  |   |         |        
|                                             
|                                             
|                                             
|                                             
|Commissions and fees                          |                | $                                                          | 633,530     |         |  | $    | 409,432     |         |  | $ | 313,572 |        
|                                             
|                                             
|                                             
|                                             
|Mutual fund and related revenue               |                |                                                            | 98,414      |         |  |      | 59,022      |         |  |   | 35,762  |        
|                                             
|                                             
|                                             
|                                             
|Net interest revenue                          |                |                                                            | 186,834     |         |  |      | 117,733     |         |  |   | 68,874  |        
|                                             
|                                             
|                                             
|                                             
|Other                                         |                |                                                            | 41,339      |         |  |      | 28,274      |         |  |   | 28,424  |        
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|                                              | Total revenues |                                                            |             | 960,117 |  |      |             | 614,461 |  |   |         | 446,632 | 
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|EXPENSES                                      |                |                                                            |             |         |  |      |             |         |  |   |         |        
|                                             
|                                             
|                                             
|                                             
|Employee compensation and benefits            |                |                                                            | 277,602     |         |  |      | 183,377     |         |  |   | 138,261 |        
|                                             
|                                             
|                                             
|                                             
|Execution and clearing costs                  |                |                                                            | 133,443     |         |  |      | 95,523      |         |  |   | 63,316  |        
|                                             
|                                             
|                                             
|                                             
|Occupancy and equipment                       |                |                                                            | 80,010      |         |  |      | 56,596      |         |  |   | 43,485  |        
|                                             
|                                             
|                                             
|                                             
|Advertising and marketing                     |                |                                                            | 62,761      |         |  |      | 33,184      |         |  |   | 18,511  |        
|                                             
|                                             
|                                             
|                                             
|Communications                                |                |                                                            | 41,100      |         |  |      | 30,809      |         |  |   | 22,981  |        
|                                             
|                                             
|                                             
|                                             
|Amortization of goodwill                      |                |                                                            | 37,390      |         |  |      | 33,000      |         |  |   | 21,630  |        
|                                             
|                                             
|                                             
|                                             
|Professional fees                             |                |                                                            | 24,519      |         |  |      | 15,350      |         |  |   | 14,871  |        
|                                             
|                                             
|                                             
|                                             
|Other                                         |                |                                                            | 120,754     |         |  |      | 63,144      |         |  |   | 44,956  |        
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|                                              | Total expenses |                                                            |             | 777,579 |  |      |             | 510,983 |  |   |         | 368,011 | 
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|Income before income taxes                    |                |                                                            | 182,538     |         |  |      | 103,478     |         |  |   | 78,621  |        
|                                             
|                                             
|                                             
|                                             
|Income tax provision                          |                |                                                            | 85,192      |         |  |      | 54,765      |         |  |   | 42,416  |        
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|Net income                                    |                | $                                                          | 97,346      |         |  | $    | 48,713      |         |  | $ | 36,205  |        
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|Basic and diluted earnings per share          |                | $                                                          | 0.28        |         |  | $    | 0.15        |         |  |   |         |        
|                                              |                |                                                            |             |         |  |      |             |         |  |   |         |        
|Weighted average number of shares outstanding |                |                                                            | 348,509,453 |         |  |      | 333,000,000 |         |  |   |         |        

The accompanying notes are an integral part of these consolidated
 financial statements.

50



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##### Table of Contents



TD WATERHOUSE GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
EQUITY

|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|------------------------------------------------------------------------ |  | ------------------------- | ---------- | ------ |  | --------- | ----- | ---------- |  | -------- | -------- | ------------- |  | - | --------- |  |  | - | ------ |  |  | - | --- | 
|                                                                         |  | Historical                |            |        |  |           |       | Additional |  |          |          | Other        
|                                                                         |  | combined                  |            | Common |  | Preferred |       | paid-in    |  | Retained |          | comprehensive
|                                                                         |  | equity                    |            | stock  |  | stock     |       | capital    |  | earnings |          | income       
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |              
|                                                                         |  |                          
|                                                                         |  | (in thousands of dollars)
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Balance at October 31, 1996                                              |  | $                         | 467,411    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income                                                               |  |                           | 36,205     |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 115,322    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           | 581        |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Balance at October  31, 1997                                             |  |                           | 619,519    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Comprehensive income
	for the year ended
	October 31, 1997               |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income                                                               |  |                           | 48,713     |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 325,976    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           | 927        |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Balance at October  31, 1998                                             |  |                           | 995,135    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Comprehensive income
	for the year ended
	October 31, 1998               |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income for the period from November  1, 1998 through
	June  23, 1999 |  |                           | 65,905     |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 171,012    |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Historical combined equity at June 22, 1999                              |  |                           | 1,232,052  |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Reorganization as of June 23, 1999 (Note  2)                             |  |                           | (1,232,052 | )      |  |           |       |            |  | $        | 237,000  |               |  | $ | 934,801   |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net proceeds of the initial public offerings (Note 2)                    |  |                           |            |        |  | $         | 3,764 |            |  |          |          |               |  |   | 981,821   |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Repayment of preferred shares                                            |  |                           |            |        |  |           |       |            |  |          | (236,881 | )             |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income for the period from June 24, 1999 through
	October  31, 1999  |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  | $ | 31,441 |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  | $ | 174 | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|Comprehensive income
	for the year ended
	October 31, 1999               |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Total stockholders equity at October 31, 1999                           |  | $                         |           |        |  | $         | 3,764 |            |  | $        | 119      |               |  | $ | 1,916,622 |  |  | $ | 31,441 |  |  | $ | 174 | 
|                                                                         |  |                           |            |        |  |           |       |            |  |          |          |               |  |   |           |  |  |   |        |  |  |   |     | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                         |  |                           |           |               |  |   |        | 
|------------------------------------------------------------------------ |  | ------------------------- | --------- | ------------- |  | - | ------ | 
|                                                                         |  | Total                     |           | Total        
|                                                                         |  | stockholders             |           | comprehensive
|                                                                         |  | equity                    |           | income       
|                                                                         |  |                           |           |              
|                                                                         |  |                          
|                                                                         |  | (in thousands of dollars)
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Balance at October 31, 1996                                              |  | $                         | 467,411   |               |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income                                                               |  |                           | 36,205    |               |  | $ | 36,205 | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 115,322   |               |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           | 581       |               |  |   | 581    | 
|                                                                         |  |                           |           |               |  |   |        | 
|Balance at October  31, 1997                                             |  |                           | 619,519   |               |  |   |        | 
|                                                                         |  |                           |           |               |  |   |        | 
|Comprehensive income
	for the year ended
	October 31, 1997               |  |                           |           |               |  | $ | 36,786 | 
|                                                                         |  |                           |           |               |  |   |        | 
|Net income                                                               |  |                           | 48,713    |               |  | $ | 48,713 | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 325,976   |               |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           | 927       |               |  |   | 927    | 
|                                                                         |  |                           |           |               |  |   |        | 
|Balance at October  31, 1998                                             |  |                           | 995,135   |               |  |   |        | 
|                                                                         |  |                           |           |               |  |   |        | 
|Comprehensive income
	for the year ended
	October 31, 1998               |  |                           |           |               |  | $ | 49,640 | 
|                                                                         |  |                           |           |               |  |   |        | 
|Net income for the period from November  1, 1998 through
	June  23, 1999 |  |                           | 65,905    |               |  | $ | 65,905 | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Capital contributions                                                    |  |                           | 171,012   |               |  |   |        | 
|                                                                         |  |                           |           |               |  |   |        | 
|Historical combined equity at June 22, 1999                              |  |                           | 1,232,052 |               |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Reorganization as of June 23, 1999 (Note  2)                             |  |                           | (60,251   | )             |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net proceeds of the initial public offerings (Note 2)                    |  |                           | 985,585   |               |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Repayment of preferred shares                                            |  |                           | (236,881  | )             |  |   |        | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Net income for the period from June 24, 1999 through
	October  31, 1999  |  |                           | 31,441    |               |  |   | 31,441 | 
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Translation adjustment arising during the period, net of taxes           |  |                           | 174       |               |  |   | 174    | 
|                                                                         |  |                           |           |               |  |   |        | 
|Comprehensive income
	for the year ended
	October 31, 1999               |  |                           |           |               |  | $ | 97,520 | 
|                                                                         |  |                           |           |               |  |   |        | 
|Total stockholders equity at October 31, 1999                           |  | $                         | 1,952,120 |               |  |   |        | 
|                                                                         |  |                           |           |               |  |   |        | 

The accompanying notes are an integral part of these consolidated
 financial statements.

51



---



##### Table of Contents



TD WATERHOUSE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED OCTOBER 31


|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |            |  
|----------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------- | -------- | ---------- | - | ---- | -------- | -------- | - | - | ------- | ---------- | -
|                                                                                          |                                                           | 1999                      |          | 1998       |   | 1997
|                                                                                          |                                                           |                           |          |            |   |     
|                                                                                          |                                                           |                          
|                                                                                          |                                                           | (in thousands of dollars)
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|CASH FLOWS FROM OPERATING ACTIVITIES                                                      |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Net income                                                                                |                                                           | $                         | 97,346   |            |   | $    | 48,713   |          |   | $ | 36,205  |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Adjustments to reconcile net income to cash (used in)/provided by
	 operating activities: |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Depreciation and amortization                                                             |                                                           |                           | 53,617   |            |   |      | 42,855   |          |   |   | 28,649  |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|(Increases)/decreases in operating assets:                                                |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Securities owned                                          |                           |          | (265,763   | ) |      |          | (9,730   | ) |   |         | (4,327     | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Receivable from brokers and dealers                       |                           |          | (122,653   | ) |      |          | 42,078   |   |   |         | (52,625    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Receivable from customers                                 |                           |          | (3,312,622 | ) |      |          | (799,163 | ) |   |         | (1,329,202 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Deposits paid for securities borrowed                     |                           |          | (431,614   | ) |      |          | (61,848  | ) |   |         | (48,937    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Receivable from affiliates                                |                           |          | 75,028     |   |      |          | (10,278  | ) |   |         | (71,760    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Deposits with clearing organizations                      |                           |          | (19,581    | ) |      |          | (10,939  | ) |   |         | (4,975     | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Other assets                                              |                           |          | (141,219   | ) |      |          | (4,736   | ) |   |         | (27,799    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Increases/(decreases) in operating liabilities:                                           |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Bank loans and overdrafts                                 |                           |          | 217,827    |   |      |          | 12,608   |   |   |         | 18,575     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Deposits received for securities loaned                   |                           |          | 2,928,994  |   |      |          | 117,264  |   |   |         | 776,249    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Securities sold, not yet purchased                        |                           |          | (1,433     | ) |      |          | (2,108   | ) |   |         | 7,095      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Payable to brokers and dealers                            |                           |          | 7,389      |   |      |          | 58,494   |   |   |         | 1,220      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Payable to customers                                      |                           |          | 69,105     |   |      |          | 756,950  |   |   |         | 570,824    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Payable to affiliates                                     |                           |          | (8,464     | ) |      |          | 8,371    |   |   |         | 5,672      |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Accrued compensation, taxes payable and other liabilities |                           |          | 118,071    |   |      |          | 2,809    |   |   |         | 36,171     |  
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Cash (used in)/provided by operating activities                                           |                                                           |                           | (735,972 | )          |   |      | 191,340  |          |   |   | (58,965 | )         
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|CASH FLOWS FROM INVESTING ACTIVITIES                                                      |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Purchase of furniture, equipment and leasehold improvements                               |                                                           |                           | (62,166  | )          |   |      | (17,661  | )        |   |   | (26,817 | )         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Acquisitions of businesses, net of assets acquired and
	liabilities assumed               |                                                           |                           | (12,034  | )          |   |      | (292,202 | )        |   |   | (16,726 | )         
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Cash used in investing activities                                                         |                                                           |                           | (74,200  | )          |   |      | (309,863 | )        |   |   | (43,543 | )         
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                                      |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Net proceeds from initial public offerings                                                |                                                           |                           | 985,585  |            |   |      |         |          |   |   |        |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Subordinated debt with affiliate                                                          |                                                           |                           | (17,532  | )          |   |      | 22,138   |          |   |   |        |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Capital contributions from parent                                                         |                                                           |                           | 171,012  |            |   |      | 325,976  |          |   |   | 115,322 |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Preferred share redemption                                                                |                                                           |                           | (236,881 | )          |   |      |         |          |   |   |        |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Repayment of debt                                                                         |                                                           |                           | (45,034  | )          |   |      |         |          |   |   |        |           
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Cash provided by financing activities                                                     |                                                           |                           | 857,150  |            |   |      | 348,114  |          |   |   | 115,322 |           
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Effect of exchange rate differences on cash and cash equivalents                          |                                                           |                           | 174      |            |   |      | 927      |          |   |   | 581     |           
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Increase in cash and cash equivalents                                                     |                                                           |                           | 47,152   |            |   |      | 230,518  |          |   |   | 13,395  |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash and cash equivalents, beginning of period                                            |                                                           |                           | 522,029  |            |   |      | 291,511  |          |   |   | 278,116 |           
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Cash and cash equivalents, end of period                                                  |                                                           | $                         | 569,181  |            |   | $    | 522,029  |          |   | $ | 291,511 |           
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|Supplemental disclosures of cash flow information:                                        |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Cash paid for interest                                    |                           | $        | 187,245    |   |      | $        | 107,197  |   |   | $       | 36,854     |  
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           
|                                                                                          | Cash paid for income taxes                                |                           | $        | 81,198     |   |      | $        | 55,677   |   |   | $       | 38,615     |  
|                                                                                          |                                                           |                           |          |            |   |      |          |          |   |   |         |           

The accompanying notes are an integral part of these consolidated
 financial statements.

52



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##### Table of Contents



TD WATERHOUSE GROUP, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization and Description of The Business

TD Waterhouse Group, Inc. (the Company) is a Delaware
 holding company which through its operating subsidiaries is a
leading provider of online financial services to investors in the
 United States, Canada, the United Kingdom, Australia and Hong
Kong. The Company is 88.5% owned by The Toronto-Dominion Bank
(TD Bank) through its wholly-owned subsidiary, TD
Waterhouse Holdings, Inc. (TDW Holdings). The
Companys primary operating subsidiaries are:



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TD Waterhouse Investor Services, Inc. (TDW US), a
	U.S.-registered broker-dealer which provides discount brokerage
	services to retail customers in the United States                       
|
| |  | National Investor Services Corp. (NISC), a
	U.S.-registered broker-dealer which provides execution and
	clearance services for affiliates, including TDW US, and
	third-party broker-dealers
|
| |  | TD Waterhouse Asset Management, Inc. (TDWAM), a
	U.S.-registered investment advisor which provides investment
	advice to a series of affiliated mutual funds                                
|
| |  | TD Waterhouse Advertising, Inc. (TDWA), a U.S.-based
	advertising firm which places advertising for affiliates                                                                              
|
| |  | Marketware International, Inc. (MWI), a software
	development firm which provides software solutions to affiliates
	and to third parties                                                    
|
| |  | TD Waterhouse Investor Services (Canada), Inc. (TDW
	Canada), a registered broker-dealer which provides discount
	 brokerage services to retail clients in Canada                           
|
| |  | TD Waterhouse Investor Services (UK) Limited (TDW
	UK), a registered broker-dealer which provides discount
	brokerage services to customers in the United Kingdom                           
|
| |  | TD Waterhouse Investor Services (Hong Kong) Limited (TDW
	HK), a registered broker-dealer which provides discount
	brokerage services to customers located in Asia                          
|
| |  | TD Waterhouse Holdings (Australia) Pty. Limited (TDW
	Australia), a registered broker-dealer which provides
	discount brokerage services to customers located in Australia.                 

2.  Reorganization and Initial Public Offerings

In connection with the initial public offerings (the
Offerings) of the Companys common stock on
June 23, 1999, TD Bank reorganized its worldwide discount
brokerage operations so that they would be consolidated into the
Company and its subsidiaries. This reorganization included the
following steps:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | TDW Holdings, formerly Waterhouse Investor Services, Inc.
	(WISI), which prior to the reorganization served as
	the U.S. holding company for TD Banks U.S. discount
	brokerage operations, converted the shares of common stock it
	held in one of its wholly-owned registered broker-dealer
	subsidiaries into shares of new common stock and preferred stock.
	 The preferred stock is redeemable at any time, in whole or in
	part, at the issuers option for an aggregate redemption
	price of $237 million, pays dividends semi-annually at a variable
	 rate based on London interbank offered rates, and has no fixed
	maturity. TDW Holdings contributed all of the common stock of its
	 registered broker-dealer subsidiaries as well as all of the
	common stock of its other U.S. subsidiaries as well as all of the
	 common stock of its other U.S. subsidiaries to the Company. A
	portion of the proceeds from the Offerings was used to fund the
	redemption of $236.9 million of the preferred stock. TDW Holdings
	 retained the remaining outstanding shares of preferred stock of
	the broker-dealer subsidiary.
|
| |  | TD Bank transferred its Canadian discount brokerage business and
	brokerage clearing business to the newly formed Canadian
	subsidiary, TDW Canada. In exchange, a series of 36 million
	exchangeable preference shares of the subsidiary TDW Canada and
	promissory notes of TDW Canada totaling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

53



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | approximately $45 million were issued to TD Bank. A portion of
	the proceeds of the Offerings was used to repay these promissory
	notes. The exchangeable preference shares are exchangeable at any
	 time at TD Banks option for an equivalent number of shares
	 of the Companys common stock, and have dividend rights
	equal to the equivalent number of shares of the Companys
	common stock. As part of the transfer, TDW Canada assumed all
	past liabilities of these businesses and each of TD Bank and TDW
	Canada indemnified the other and its relevant subsidiaries, and
	its respective directors, officers, agents and employees, against
	 all past, present and future liabilities related to the
	transferred and retained businesses.
|
| |  | TDW Holdings received one special voting preferred share of the
	Company. The special voting preferred share has voting rights
	equal to the number of shares of the Companys common stock
	into which the exchangeable preference shares may be exchanged,
	and will be canceled when the exchangeable preference shares are
	no longer outstanding.                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | TD Bank transferred ownership of its United Kingdom, Australia
	and Hong Kong discount broker subsidiaries to the Company in
	exchange for shares of the Companys common stock and
	promissory notes totaling $27 million. A portion of the proceeds
	of the Offerings will be used to repay these promissory notes.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The Company entered into a master services agreement with TD Bank
	 pursuant to which certain services are made available to the
	Company and certain services are made available by the Company to
	 TD Bank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

In order to effect the item last described, TD Bank entered into
transfer and assumption agreements with TDW Canada, which in
general provided for the transfer of assets used exclusively in
the transferred businesses. The assets were transferred to TDW
Canada immediately prior to the completion of the Offerings.

The assets transferred consisted of all tangible assets, such as
computers, equipment and furniture, which exclusively related to
the transferred businesses. Accounts receivable as well as cash
and cash equivalents of the transferred businesses were also
transferred. All intellectual property owned by TD Bank or its
non-transferred subsidiaries and used exclusively by the
transferred businesses was transferred to TDW Canada. The
transferred businesses currently operate in premises leased from
third parties or in space owned or leased by TD Bank. Pursuant to
 the master services agreement, TD Bank continues to make
available to TDW Canada shared space used by the transferred
businesses.

As a result of the reorganization, approximately 1,450 associates
 were transferred to the Company. TDW Canadas associates
comprise all employees working in its local branches, customer
service centers and back office activities. With the exception of
 certain support services provided by TD Bank associates, TDW
Canadas associates perform all day-to-day compliance,
technology and information systems management and human resource
functions for TDW Canada.

The transfer and assumption agreements provided for TD Bank to
transfer all of its title to, and rights and interests in, the
assets. The transfer and assumption agreements provided for
assumptions and indemnities designed to place sole legal and
financial responsibility on TDW Canada for all liabilities known
or contingent relating to the transferred businesses, the past
and present operations and the assets transferred or licensed to
TDW Canada. As a result, the liabilities assumed by TDW Canada
included all liabilities and obligations, actual or contingent,
relating to the transferred businesses, such as accounts payable,
 contractual obligations, and ongoing or presently unknown claims
 and suits. The transfer and assumption agreements contained
indemnification provisions in connection with the conduct of TDW
Canadas business after the transfer of the transferred
businesses, misstatements or omissions in the offering prospectus
 with respect to the transferred businesses, and the use of
trademarks, trade names, logos and other indemnities.

54



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

TD Bank similarly indemnified TDW Canada in respect of its past,
present and future businesses, other than the transferred
businesses.

3.  Summary of Significant Accounting Policies

Basis of presentation

The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant transactions and balances between and among the
Company and its subsidiaries have been eliminated in the
consolidation.

Use of estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets
 and liabilities at the date of the financial statements, and the
 reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Commissions and fees

Customers securities transactions are recorded on a
settlement date basis, with commission revenue and related
expenses recorded on a trade date basis. Fees consist primarily
of payments from market-makers and exchanges for directing order
executions, as well as clearing fees.

Mutual fund and related revenue

Mutual fund and related revenue consists of fees earned for
providing investment advisory services to a series of related
mutual funds, and trailer fees for services provided to
third-party mutual funds, affiliated mutual funds and an
affiliated bank. Such revenue is recorded when earned.

Net interest revenue

The Company reports interest revenue, which primarily arises from
 margin loans to customers, net of the related financing cost
(interest expense). For the years ended October 31, 1999,
1998 and 1997, interest expense was $193,026, $110,175 and
$39,422, respectively.

Advertising and marketing

Advertising production costs are expensed when the advertising
campaign commences. Costs of communicating advertising are
expensed as the services are received. Other marketing costs are
expensed as incurred.

Depreciation and amortization of fixed assets

Depreciation of capitalized furniture and equipment is provided
on a straight-line basis using estimated useful lives of three to
 five years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the lease term or the
estimated useful life. Fixed assets are stated at cost net of
accumulated depreciation and amortization of $24,479 at
October 31, 1999 and $14,156 at October 31, 1998.
Depreciation and amortization expense is included in occupancy
and equipment expense in the consolidated statements of income.
The Company recorded depreciation and amortization of $16,227,
$9,855 and $7,019 for the years ended October 31, 1999, 1998
 and 1997, respectively.

55



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Prior to the reorganization, TDW Canada was charged rental
expense for its use of equipment and other fixed assets, which
were owned by TD Bank (see also Note 15). The rental expense
approximates the depreciation on such equipment. The Company was
charged $3,019, $7,584 and $7,942 for the years ended
October 31, 1999, 1998 and 1997, respectively. These costs
have been included in occupancy and equipment expense in the
consolidated statements of income.

Acquisitions and goodwill

All business combinations have been accounted for under the
purchase method and accordingly, the excess of the purchase price
 over the fair value of the net assets acquired has been recorded
 as goodwill in the consolidated statements of financial
condition. Pursuant to the purchase method, the results of
operations, changes in equity and cash flows of acquired
companies and businesses are included in operations only for
those periods following the date of their acquisition (Note 4).

Goodwill arising from acquisitions of businesses is amortized on
a straight-line basis over a period of no more than
20 years. Goodwill is stated at cost, net of accumulated
amortization of $94,731, $57,341 and $24,341 for the years ended
October 31, 1999, 1998 and 1997, respectively.

Income taxes

The Companys U.S. operations are included in the
consolidated federal income tax returns filed by an affiliate in
the United States. The Company files separate income tax returns
in other countries. The Company determines its provision for
federal income taxes as if it were to file separate income tax
returns. In the United States, the Company also files combined
state and local income tax returns with an affiliate. The
allocation of income tax expense is in accordance with a tax
sharing agreement.

The Company records deferred tax assets and liabilities for the
difference between the tax basis of assets and liabilities and
the amounts recorded for financial reporting purposes, using
current tax rates. Deferred tax expenses and benefits are
recognized in the consolidated statements of income for changes
in deferred tax assets and liabilities.

Cash and cash equivalents

For purposes of reporting cash flows, the Company considers all
highly liquid investments with original maturities of three
months or less (except for amounts designated as securities
owned) to be cash equivalents.

Securities owned

Securities owned and securities sold, not yet purchased are
recorded on a trade date basis and primarily represent U.S. and
Canadian government securities, other debt instruments, equity
securities and mutual fund positions, and are carried at fair
value with unrealized gains and losses reported in income.

Financing transactions

Deposits paid for securities borrowed and deposits received for
securities loaned are recorded at the amount of cash collateral
advanced or received. Deposits paid for securities borrowed
transactions require the Company to deposit cash with the lender.
 With respect to deposits received for securities loaned, the
Company receives collateral in the form of cash in an amount
generally in excess of the market value of the securities loaned.
 The Company monitors the market value of the securities borrowed
 and loaned on a daily basis, with additional collateral obtained
 or refunded, as necessary.

56



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Foreign currency translation

Assets and liabilities of international subsidiaries are
translated based on the end-of-period exchange rates from local
currency to U.S. dollars. Results of operations are translated at
 the average exchange rates in effect during the period. The
resulting gains or losses are reported as a component of equity
in the consolidated statements of financial condition.

Segment information

Statement of Financial Accounting Standards (SFAS)
No. 131, Disclosures about Segments of an Enterprise and
Related Information, establishes standards for reporting
information about the operating and geographic segments of the
Companys business. Currently, the nature and extent of the
Companys operations are such that it operates in only one
reportable segment as a provider of discount brokerage services.
Information regarding the Companys geographic segments is
set forth in Note 18.

4.  Acquisitions

The Company has been active in acquiring discount brokerage
businesses. A description of the Companys more significant
acquisitions, including the date acquired, purchase price
(including acquisition costs) and goodwill recognized, is as
follows:

Marathon Brokerage, a division of First Marathon Securities
Limited, a Canadian discount brokerage firm, was acquired in
October 1993 for $46 million and its operations were merged
into TDW Canada. The $42 million excess of the purchase price
over the fair value of the net assets acquired was recorded as
goodwill.

WISI, a U.S. bank holding company and nationwide discount
brokerage firm, was acquired by TD Bank in October 1996 for
cash and TD Bank common stock. For purposes of preparing the
consolidated financial statements of the Company, the discount
brokerage business of WISI was recorded by the Company as a
contribution of capital by TD Bank as of the close of business on
 October 31, 1996. The purchase price assigned to the
discount brokerage business was $525 million. The $390 million
excess over the fair value of the net assets acquired from WISI
and contributed to the Company was recorded by the Company as
goodwill.

Kennedy Cabot & Co. (KCC), a discount brokerage
firm located in Beverly Hills, California, was acquired in
November 1997 for approximately $163 million, and its
operations were merged into TDW US. The acquisition was funded by
 capital contributions from TD Bank, and goodwill of $159 million
 was recorded.

Pont Securities Limited (Pont) and Rivkin Croll Smith
 (Rivkin), Australia-based discount brokerage firms,
were acquired during fiscal years 1997 and 1998, respectively,
for an aggregate price of $42 million, and their operations were
reorganized to create TDW Australia. The $38 million excess of
the purchase price over the fair value of the net assets acquired
 was recorded as goodwill.

Jack White & Company (Jack White), a discount
brokerage firm based in San Diego, California, was acquired in
May 1998 for $106 million, and its operations were merged into
TDW US. The acquisition was funded by capital contributions from
TD Bank, and the $102 million excess of the purchase price over
the fair value of the net assets acquired was recorded as
goodwill.

Gall & Eke (G&E), a U.K.-based discount
brokerage firm, was acquired in September 1998 for $13
million and merged with TDW UK. The $11 million excess of the
purchase price over the fair value of the net assets acquired was
 recorded as goodwill.

Pursuant to the purchase method of accounting, the accompanying
consolidated statements of income reflect the results of
operations of the aforementioned entities and businesses only
subsequent to the date of

57



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

acquisition. The following unaudited supplemental pro forma
information has been prepared to give effect to the acquisitions
as of the beginning of the fiscal year preceding the fiscal year
in which the acquisitions occurred.

|                     |  |                |         |                |  |   |         | 
|-------------------- |  | -------------- | ------- | -------------- |  | - | ------- | 
|                     |  | Fiscal 1998(a) |         | Fiscal 1997(b)
|                     |  |                |         |               
|Pro forma revenues   |  | $              | 650,908 |                |  | $ | 581,991 | 
|                    
|                    
|                    
|                    
|Pro forma net income |  | $              | 47,749  |                |  | $ | 51,050  | 




|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(a) | Adjusted to reflect the acquisitions of Rivkin, KCC, Jack White
	and G&E as of November 1, 1997.      
|   
|(b) | Adjusted to reflect the acquisitions of Pont, Rivkin, KCC, Jack
	White and G&E as of November 1, 1996.

5.  Receivables From and Payables To Brokers and
Dealers

Receivables from and payables to brokers and dealers comprise the
 following:

|                 |                              |      |         |         |  |   |         |         | 
|---------------- | ---------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|As at October 31 |                              | 1999 |         | 1998   
|                 |                              |      |         |        
|Receivable:      |                              |      |         |         |  |   |         |        
|                
|                
|                
|                
|                 | Securities failed to deliver |      | $       | 126,495 |  |   | $       | 40,743  | 
|                
|                
|                
|                
|                 | Clearing and other fees      |      |         | 56,453  |  |   |         | 14,463  | 
|                
|                
|                
|                
|                 | Other                        |      |         | 11,422  |  |   |         | 16,511  | 
|                 |                              |      |         |         |  |   |         |        
|                 |                              | $    | 194,370 |         |  | $ | 71,717  |        
|                 |                              |      |         |         |  |   |         |        
|Payable:         |                              |      |         |         |  |   |         |        
|                
|                
|                
|                
|                 | Securities failed to receive |      | $       | 85,816  |  |   | $       | 126,060 | 
|                
|                
|                
|                
|                 | Other                        |      |         | 74,438  |  |   |         | 26,805  | 
|                 |                              |      |         |         |  |   |         |        
|                 |                              | $    | 160,254 |         |  | $ | 152,865 |        
|                 |                              |      |         |         |  |   |         |        

6.  Receivables From and Payables To Customers

Receivables from customers are generally collateralized by
marketable securities. Receivables from customers are reported
net of unsecured or partially secured amounts over 30 days
recorded as an allowance for doubtful accounts. The allowances
were $10,781 and $4,731 as of October 31, 1999 and 1998,
respectively.

Payables to customers primarily represent free credit balances in
 customers accounts. The Company pays customers interest on
 certain free credit balances at a rate based on prevailing
short-term money market rates. Interest expense for the years
ended October 31, 1999, 1998 and 1997 were $66,943, $58,226
and $17,898, respectively.

7.  Financing Activities

Bank loans and overdrafts primarily represent short-term
borrowings in the United States which bear interest at rates
based primarily on the U.S. Federal funds rate. The loans are
generally collateralized by customers margin securities
valued at approximately $419,955 and $115,448 as of
October 31, 1999 and 1998, respectively. The following is a
summary of comparative bank loan data:

|                                                |  |      |         |      |  |   |         |  
|----------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|As at October 31                                |  | 1999 |         | 1998
|                                                |  |      |         |     
|Average amount outstanding during period        |  | $    | 222,222 |      |  | $ | 24,068  |  
|                                               
|                                               
|                                               
|                                               
|Maximum amount outstanding during period        |  |      | 502,031 |      |  |   | 230,900 |  
|                                               
|                                               
|                                               
|                                               
|Weighted average interest rate at end of period |  |      | 5.68    | %    |  |   | 5.85    | %
|                                               
|                                               
|                                               
|                                               
|Weighted average interest rate during period    |  |      | 5.33    | %    |  |   | 5.88    | %

58



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

TDW US maintains available bank credit lines totaling $1,555,000
and $255,000 as at October 31, 1999 and 1998, respectively.
Included within the October 31, 1999 balance is a bank
credit line of $400,000 with TD Bank. All the lines require
collateralization and bear interest at a rate based on the U.S.
Federal funds rate. At October 31, 1999 and 1998, TDW US had
 drawn down $196 and $400 on these credit lines, respectively.
TDW Canada has received unsecured letters of credit agreements
with TD Bank on behalf of two clearing organizations totaling
$64,600 and $47,369 at October 31, 1999 and 1998,
respectively. TDW Canada pays an annual fee of 25 basis points on
 the notional value of the letters of credit, which amounted to
$369, $244 and $191 for the years ended October 31, 1999,
1998 and 1997, respectively. There were no borrowings outstanding
 under these lines at October 31, 1999 and 1998.

Deposits received for securities loaned primarily represent
short-term collateralized financing transactions, which bear
interest based on prevailing market rates (average rates of 4.69%
 and 5.27% for the years ended October 31, 1999 and 1998,
respectively). In addition, TDW Canada acts as an intermediary
between lenders and borrowers of securities and earns a net
interest spread on stock loan and stock borrow transactions.

8.  Stock Options

Certain employees of the Company participate in the
Companys stock option plan which was adopted in connection
with the offerings. Under the plan, options on the Companys
 common shares are issued to employees for terms of
10 years, vesting over a four-year period and are
exercisable at the market price of the shares on the date the
options were issued. Outstanding options have an exercise price
of $24.00, have a weighted average remaining life of nine years,
and expire on June 28, 2009.

A summary of the Companys stock option activity is as
follows:

|                                      |  |        |           |                  |  |   |       | 
|------------------------------------- |  | ------ | --------- | ---------------- |  | - | ----- | 
|                                      |  |        |           | Weighted average
|                                      |  | Shares |           | exercise price  
|                                      |  |        |           |                 
|Outstanding at date of reorganization |  |        |          |                  |  |   |      | 
|                                     
|                                     
|                                     
|                                     
|Granted                               |  |        | 3,310,754 |                  |  | $ | 24.00 | 
|                                     
|                                     
|                                     
|                                     
|Canceled                              |  |        | 60,304    |                  |  |   | 24.00 | 
|                                      |  |        |           |                  |  |   |       | 
|Outstanding at October 31, 1999       |  |        | 3,250,450 |                  |  | $ | 24.00 | 
|                                      |  |        |           |                  |  |   |       | 

The weighted average fair value of options granted during the
year ended October 31, 1999 was $14.00 per option. The
weighted average remaining contractual life of options
outstanding at October 31, 1999 was nine years.

The Company applies APB Opinion No. 25, Accounting for
Stock Issued to Employees, in accounting for its stock option
 plan and, accordingly, does not recognize any compensation cost
associated with this plan in the consolidated financial
statements. Had the Company determined compensation cost based on
 the fair value at the grant date for its options under SFAS
No. 123, Accounting for Stock-Based Compensation, the
 Companys net income for the year ended October 31,
1999 would have been as follows:

|                                                  |  |      |        | 
|------------------------------------------------- |  | ---- | ------ | 
|For the year ended October 31                     |  | 1999
|                                                  |  |     
|Net income as reported                            |  | $    | 97,346 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Pro forma net income                              |  |      | 73,077 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Basic and diluted earnings per share, as reported |  |      | 0.28   | 
|                                                 
|                                                 
|                                                 
|                                                 
|Pro forma basic and diluted earnings per share    |  |      | 0.21   | 

The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted average assumptions used for options granted
during the period: dividend yield of 0%; expected volatility of
60%; risk-free interest rate of 6.00%; and an expected life of
four years for all grants.

59



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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

In addition, certain employees of the Company participate in TD
Banks stock option plan. Under TD Banks stock option
plan, options on TD Bank common shares are issued to certain
employees of the Company for terms of 10 years, vesting over
 a four-year period and exercisable at the market price of the
shares on the date the options were issued. During 1997, the plan
 was modified to allow employees to elect to receive cash for the
 options equal to their intrinsic value, being the difference
between the option exercise price and the current market value of
 the shares. Pursuant to SFAS No. 123, the Company records
compensation expense based on the annual change in the intrinsic
value of the stock options. The Company recorded compensation
expense/ (income) in the amounts of $5,332, $(117) and $5,478 for
 the years ended October 31, 1999, 1998 and 1997,
respectively, for employee stock options. No compensation expense
 was recognized for fiscal years prior to 1997. Outstanding
options have exercise prices ranging from $5.57 to $20.80, have a
 weighted average remaining contractual life of 7.9 years,
and expire on dates ranging from April 2003 to
December 2008.

A summary of the Companys portion of stock option activity
and related information of TD Bank is as follows:

|                                        |  |             |           |                  |  |             |       |                  |  |  |           |   |  |   |       | 
|--------------------------------------- |  | ----------- | --------- | ---------------- |  | ----------- | ----- | ---------------- |  |  | --------- | - |  | - | ----- | 
|                                        |  | October 31, |           | Weighted average |  | October 31, |       | Weighted average
|                                        |  | 1999        |           | exercise price   |  | 1998        |       | exercise price  
|                                        |  |             |           |                  |  |             |       |                 
|Number outstanding, beginning of period |  |             | 1,224,194 |                  |  | $           | 10.74 |                  |  |  | 821,792   |   |  | $ | 8.80  | 
|                                       
|                                       
|                                       
|                                       
|Granted                                 |  |             | 673,400   |                  |  |             | 16.86 |                  |  |  | 501,800   |   |  |   | 20.79 | 
|                                       
|                                       
|                                       
|                                       
|Exercised                               |  |             | (77,498   | )                |  |             | 7.41  |                  |  |  | (97,300   | ) |  |   | 7.24  | 
|                                       
|                                       
|                                       
|                                       
|Forfeited                               |  |             | (8,146    | )                |  |             | 16.00 |                  |  |  | (2,098    | ) |  |   | 10.02 | 
|                                        |  |             |           |                  |  |             |       |                  |  |  |           |   |  |   |       | 
|Number outstanding, end of period       |  |             | 1,811,950 |                  |  | $           | 15.42 |                  |  |  | 1,224,194 |   |  | $ | 10.74 | 
|                                        |  |             |           |                  |  |             |       |                  |  |  |           |   |  |   |       | 
|Exercisable, end of period              |  |             | 581,275   |                  |  | $           | 11.37 |                  |  |  | 455,234   |   |  | $ | 7.55  | 
|                                        |  |             |           |                  |  |             |       |                  |  |  |           |   |  |   |       | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                        |  |             |          |                  |  |   |       | 
|--------------------------------------- |  | ----------- | -------- | ---------------- |  | - | ----- | 
|                                        |  | October 31, |          | Weighted average
|                                        |  | 1997        |          | exercise price  
|                                        |  |             |          |                 
|Number outstanding, beginning of period |  |             | 582,112  |                  |  | $ | 7.57  | 
|                                       
|                                       
|                                       
|                                       
|Granted                                 |  |             | 388,600  |                  |  |   | 12.67 | 
|                                       
|                                       
|                                       
|                                       
|Exercised                               |  |             | (138,950 | )                |  |   | 6.82  | 
|                                       
|                                       
|                                       
|                                       
|Forfeited                               |  |             | (9,970   | )                |  |   | 9.04  | 
|                                        |  |             |          |                  |  |   |       | 
|Number outstanding, end of period       |  |             | 821,792  |                  |  | $ | 8.80  | 
|                                        |  |             |          |                  |  |   |       | 
|Exercisable, end of period              |  |             | 356,804  |                  |  | $ | 7.20  | 
|                                        |  |             |          |                  |  |   |       | 

9.  Commitments and Contingent Liabilities

The Company leases office space and equipment under noncancelable
 operating leases with third parties and affiliates
(Note 15) extending for periods in excess of one year.
Future minimum rental commitments under such leases as of
October 31, 1999 are as follows:

|                               |  |   |         | 
|------------------------------ |  | - | ------- | 
|For the year ending October 31 |  |  
|                               |  |  
|2000                           |  | $ | 28,609  | 
|                              
|                              
|                              
|                              
|2001                           |  |   | 24,303  | 
|                              
|                              
|                              
|                              
|2002                           |  |   | 21,105  | 
|                              
|                              
|                              
|                              
|2003                           |  |   | 16,359  | 
|                              
|                              
|                              
|                              
|2004                           |  |   | 13,102  | 
|                              
|                              
|                              
|                              
|Thereafter                     |  |   | 29,805  | 
|                               |  |   |         | 
|                               |  | $ | 133,283 | 
|                               |  |   |         | 

60



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Rental expense amounted to approximately $33,059, $22,300 and
$15,081 for the years ended October 31, 1999, 1998 and 1997,
 respectively.

Securities sold, not yet purchased represents obligations of the
Company to purchase securities at a future date. The Company may
incur a loss if the market value of the securities subsequently
increases.

In the normal course of conducting its securities business, the
Company has been named as a defendant in certain lawsuits, claims
 and legal actions. In the opinion of management, after
consultation with outside legal counsel, the ultimate outcome of
pending litigation and inquiries will not have a material adverse
 effect on the financial condition or results of operations of
the Company.

10.  Net Capital Requirements

As registered broker-dealers and members of the New York Stock
Exchange, TDW US and NISC are subject to the Securities and
Exchange Commissions Uniform Net Capital Rule (the
Rule), which requires the maintenance of minimum net
capital. At October 31, 1999 and 1998, TDW US and NISC were
both in compliance with their respective capital requirements and
 had net capital of $21,439 and $15,339, and of $380,967 and
$160,314, respectively, which was $18,918 and $13,299, and
$277,276 and $118,269, respectively, in excess of their required
net capital.

Subsequent to the reorganization described in Note 2, TDW
Canada became a member of the Investment Dealers Association of
Canada (IDA) and is required to meet the
risk-adjusted capital rules, which require the maintenance of
minimum risk-adjusted capital of Cdn$250 (U.S.$170 at
October 31, 1999). Prior to the reorganization, TDW Canada
was not subject to the IDA risk-adjusted capital rules and
therefore did not maintain stand-alone minimum risk-adjusted
capital. As of October 31, 1999, TDW Canada was in
compliance with such requirements.

TDW UK, TDW Australia and TDW HK are all subject to broker-dealer
 capital requirements in their respective countries and, as of
October 31, 1999 and 1998, were in compliance with such
requirements, as and when applicable.

11.  Employee Benefit Plans

Substantially all of the Companys full-time U.S. employees
are eligible to participate in the defined contribution profit
sharing and 401(k) plans sponsored by an affiliate. The Company
makes discretionary contributions to the profit sharing plan and
makes mandatory matching contributions to the 401(k) plan based
on a percentage of each employees contribution, up to 6%
per pay period of the employees compensation. The total
expenses recognized by the Company for contributions to the U.S.
profit sharing and 401(k) plans for the years ended
October 31, 1999, 1998 and 1997 were $10,960, $6,400 and
$5,035, respectively.

Substantially all of the Companys Canadian employees are
eligible to participate in TD Banks pension plan, in which
membership is voluntary and funding is provided by contributions
from TD Bank and members of the plan. Each year, actuarial
valuations are made of the pension plans maintained by TD Bank to
 determine the present value of the accrued pension benefits.
Pension plan assets are valued at market values. Pension costs
are determined based upon separate accrued valuations using the
projected benefit method pro-rated on service and TD Bank
managements estimates rather than on valuations for funding
 purposes. There is no separate actuarial valuation for the
Company, but the Company is charged its portion of pension
expense by TD Bank. Pension expense/ (income) includes the cost
of pension benefits for the current years service, interest
 expense on pension liabilities, income on plan assets, and the
amortization of pension adjustments on a straight-line basis over
 the expected average remaining service life of TD Banks
employee group. The Companys pro-rata share of TD
Banks pension expense/ (income) was $1,433, ($182) and
($341) for the years ended October 31, 1999, 1998 and 1997,
respectively.

61



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

TD Bank also provides the Companys Canadian employees with
certain health care and life insurance benefits upon retirement.
Eligible employees are those who retire from TD Bank and the
Company at normal retirement age.

12.  Income Taxes

Income tax expense consists of the following:

|                              |              |      |        |        |   |      |        |        |  |   |        |        | 
|----------------------------- | ------------ | ---- | ------ | ------ | - | ---- | ------ | ------ |  | - | ------ | ------ | 
|For the year ended October 31 |              | 1999 |        | 1998   |   | 1997
|                              |              |      |        |        |   |     
|Current:                      |              |      |        |        |   |      |        |        |  |   |        |       
|                             
|                             
|                             
|                             
|                              | U.S. Federal |      | $      | 54,071 |   |      | $      | 27,392 |  |   | $      | 12,099 | 
|                             
|                             
|                             
|                             
|                              | State        |      |        | 8,121  |   |      |        | 4,696  |  |   |        | 2,074  | 
|                             
|                             
|                             
|                             
|                              | Foreign      |      |        | 29,512 |   |      |        | 21,180 |  |   |        | 20,544 | 
|                              |              |      |        |        |   |      |        |        |  |   |        |       
|Total current                 |              |      | 91,704 |        |   |      | 53,268 |        |  |   | 34,717 |       
|                              |              |      |        |        |   |      |        |        |  |   |        |       
|Deferred:                     |              |      |        |        |   |      |        |        |  |   |        |       
|                             
|                             
|                             
|                             
|                              | U.S. Federal |      |        | (2,097 | ) |      |        | 1,149  |  |   |        | 6,363  | 
|                             
|                             
|                             
|                             
|                              | State        |      |        | (931   | ) |      |        | 197    |  |   |        | 1,091  | 
|                             
|                             
|                             
|                             
|                              | Foreign      |      |        | (3,484 | ) |      |        | 151    |  |   |        | 245    | 
|                              |              |      |        |        |   |      |        |        |  |   |        |       
|Total deferred                |              |      | (6,512 | )      |   |      | 1,497  |        |  |   | 7,699  |       
|                              |              |      |        |        |   |      |        |        |  |   |        |       
|Total income tax expense      |              | $    | 85,192 |        |   | $    | 54,765 |        |  | $ | 42,416 |       
|                              |              |      |        |        |   |      |        |        |  |   |        |       

The temporary differences which have created deferred tax assets
and liabilities, included in other assets in the consolidated
statements of financial condition, are detailed below:

|                               |                               |      |        |        |   |   |        |        |  
|------------------------------ | ----------------------------- | ---- | ------ | ------ | - | - | ------ | ------ | -
|As at October 31               |                               | 1999 |        | 1998  
|                               |                               |      |        |       
|Deferred tax assets:           |                               |      |        |        |   |   |        |       
|                              
|                              
|                              
|                              
|                               | Depreciation and amortization |      | $      | 1,326  |   |   | $      | 645    |  
|                              
|                              
|                              
|                              
|                               | Accruals and allowances       |      |        | 3,611  |   |   |        | 2,269  |  
|                              
|                              
|                              
|                              
|                               | Foreign operations            |      |        | 3,484  |   |   |        |       |  
|                               |                               |      |        |        |   |   |        |       
|Total deferred tax assets      |                               |      | 8,421  |        |   |   | 2,914  |       
|                               |                               |      |        |        |   |   |        |       
|Deferred tax liabilities:      |                               |      |        |        |   |   |        |       
|                              
|                              
|                              
|                              
|                               | Goodwill and other            |      |        | (3,592 | ) |   |        | (1,312 | )
|                               |                               |      |        |        |   |   |        |       
|Total deferred tax liabilities |                               |      | (3,592 | )      |   |   | (1,312 | )     
|                               |                               |      |        |        |   |   |        |       
|Net deferred tax asset         |                               | $    | 4,829  |        |   | $ | 1,602  |       
|                               |                               |      |        |        |   |   |        |       

The Company determined that no valuation allowance against
deferred tax assets as at October 31, 1999 and 1998 was
necessary.

62



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The following is a reconciliation of the provision for income
taxes and the amount computed by applying the U.S. Federal
statutory rate to income before income taxes:

|                                                                |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|For the year ended October 31                                   |  | 1999 |      | 1998 |  | 1997
|                                                                |  |      |      |      |  |     
|U.S. Federal statutory income tax rate                          |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|                                                               
|                                                               
|                                                               
|                                                               
|State and local income taxes, net of Federal income tax benefit |  |      | 3.9  |      |  |      | 4.8  |   |  |  | 3.5  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign provincial income taxes                                 |  |      | 3.4  |      |  |      | 6.7  |   |  |  | 6.7  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Amortization of goodwill and other                              |  |      | 4.4  |      |  |      | 6.4  |   |  |  | 8.7  |  
|                                                                |  |      |      |      |  |      |      |   |  |  |      |  
|                                                                |  |      | 46.7 | %    |  |      | 52.9 | % |  |  | 53.9 | %
|                                                                |  |      |      |      |  |      |      |   |  |  |      |  

13.  Financial Instruments With Off Balance Sheet
Risk and Concentration of Credit Risk

In the normal course of business, the Company is exposed to off
balance sheet risk. The Company executes, as agent, securities
transactions on behalf of its customers. If either the customer
or a counterparty fails to perform, the Company may be required
to discharge the obligations of the nonperforming party. In such
circumstances, the Company may sustain a loss if the market value
 of the security is different from the contract value of the
transaction.

In the normal course of business, the Company may deliver
securities as collateral in support of various secured financing
sources such as bank loans and deposits received for securities
loaned. Additionally, the Company delivers customer securities as
 collateral to satisfy margin deposits of various clearing
organizations. In the event the counterparty is unable to meet
its contracted obligation to return customer securities delivered
 as collateral, the Company may be obligated to purchase the
securities in order to return them to the owner. In such
circumstances, the Company may incur a loss up to the amount by
which the market value of the securities exceeds the value of the
 loan or other collateral received by, or in the possession or
control of, the Company.

For transactions in which the Company extends credit to customers
 and counterparties, the Company seeks to control the risks
associated with these activities by requiring customers to
maintain margin collateral in compliance with various regulatory
and internal guidelines. The Company monitors required margin
levels daily and, pursuant to such guidelines, requests customers
 to deposit additional collateral or reduce securities positions,
 when necessary.

The Company has a global retail customer base. The Company
conducts business with brokers and dealers, clearing
organizations and depositories that are primarily located in the
United States, Canada, Australia, United Kingdom and Hong Kong.
The majority of the Companys transactions and,
consequently, the concentration of its credit exposures are with
customers, broker-dealers and other financial institutions in the
 United States and Canada. These result in credit exposure in the
 event that the counterparty fails to fulfill its contractual
obligations. The Companys exposure to credit risk can be
directly impacted by volatile securities markets which may impair
 the ability of counterparties to satisfy their contractual
obligations. The Company seeks to control its credit risk through
 a variety of reporting and control procedures, including
establishing credit limits based upon a review of the
counterpartys financial condition and credit rating. The
Company monitors collateral levels on a daily basis for
compliance with regulatory and internal guidelines and requests
changes in collateral levels, as appropriate.

14.  Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments,
requires the disclosure of the fair value of financial
instruments, including assets and liabilities recognized in the
consolidated statements of financial condition. Management
estimates that the aggregate net fair value of all other
financial instruments recognized in the consolidated statements
of financial condition

63



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

(including deposits received for securities loaned, receivables,
payables and accruals, and bank loans and overdrafts)
approximates their carrying value, as such financial instruments
are short-term in nature, bear interest at current market rates
or are subject to restrictions or other specific provisions which
 offset any fair value adjustments.

15.  Related Party Transactions

The Company transacts business and has extensive relationships
with TD Bank, TDW Holdings and other affiliates. Due to these
relationships, it is possible that the terms of these
transactions are not the same as those which would result from
transactions among unrelated parties. A description of these
transactions and relationships is set forth below.

General

Directors, officers and employees of the Company maintain cash
and margin accounts with the Companys broker-dealer
subsidiaries and execute securities transactions through these
firms in the ordinary course of business. As of October 31,
1999 and 1998, receivables from customers included $32,397 and
$15,264, respectively, representing accounts of executive
officers and directors. As of October 31, 1999 and 1998, payables
 to customers included $1,764 and $1,621, respectively,
representing accounts of executive officers and directors.

The Company, where possible, utilizes the commercial banking and
related services of TD Bank and its affiliates, which are
provided to the Company at standard commercial rates.

As more fully discussed in Note 12, the Companys U.S.
operations are included in the consolidated federal income tax
returns and combined state and local income tax returns of an
affiliate filed in the United States and its Canadian operations
are included in income tax returns filed by TD Bank or TD
Securities Inc. in Canada. The provisions recorded by the Company
 for income taxes in the United States and Canada do not differ
materially from the provisions that would have resulted had the
Company filed separate income tax returns.

U.S. operations

TDWAM acts as investment advisor and provides various
administrative and shareholder services to a series of
proprietary mutual funds. TDWAM receives fees from the funds
based primarily on the average daily net asset value of the
funds, but may, at its discretion, choose to waive all or a
portion of the fees at any time.

TDWAM also provides investment advisory services to TD Waterhouse
 Bank, N.A. (TDWB), an affiliated commercial bank,
with respect to TDWBs investments in fixed income
securities and receives fees based on the market value of the
assets under management.

Customers of TDW US and NISC may elect to sweep their excess cash
 balances held in their brokerage accounts into a Federal Deposit
 Insurance Corporation (FDIC) insured money market
account offered by TDWB. In connection with this arrangement, TDW
 US and NISC provide TDWB with record-keeping and shareholder
services and as compensation receive a fee based on the average
daily cash balance that their customers maintain at TDWB.

64



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Fee income related to the aforementioned transactions and
relationships of the Company has been included in mutual fund and
 related revenue in the accompanying consolidated statements of
income; the corresponding amounts are as follows:

|                              |  |      |         |      |  |      |        |   |  |   |        |  
|----------------------------- |  | ---- | ------- | ---- |  | ---- | ------ | - |  | - | ------ | -
|For the year ended October 31 |  | 1999 |         | 1998 |  | 1997
|                              |  |      |         |      |  |     
|Fees                          |  | $    | 53,265  |      |  | $    | 23,719 |   |  | $ | 17,253 |  
|                             
|                             
|                             
|                             
|Fees waived                   |  |      | (13,854 | )    |  |      | (3,894 | ) |  |   | (1,331 | )
|                              |  |      |         |      |  |      |        |   |  |   |        |  
|Fee income                    |  | $    | 39,411  |      |  | $    | 19,825 |   |  | $ | 15,922 |  
|                              |  |      |         |      |  |      |        |   |  |   |        |  

Commencing in fiscal 1998, NISC provided clearing services to a
U.S. affiliate of TD Bank and received clearing fees at rates
approximating those charged to third-party introducing brokers.
The income from this relationship was $867 and $959 for the years
 ended October 31, 1999 and 1998, respectively. These fees
have been included in commissions and fees.

In addition, the Company, primarily through TDW US, provides TDWB
 with various marketing and administrative support services.
These services include the marketing of TDWBs FDIC insured
deposit accounts and various credit products. In addition to
these marketing services, TDW US provides TDWB with various
executive and administrative support services. These services
include audit, tax, human resources, employee benefits and legal,
 as well as providing office space. The Company also provides
certain administrative and regulatory reporting functions for
TDWB. The Company is reimbursed for such services on a cost
recovery basis, which approximated $67 per month or $800 per
annum in 1999, and is included in other revenue in the
consolidated statements of income.

International operations

TDW Canada sells mutual funds, some of which are managed by TD
Asset Management. TD Asset Management pays trailer fees to the
Company based on the net asset value of the mutual funds held by
TDW Canadas customers.

TDW Canada also pays TD Bank a referral fee for customers
introduced by TD Banks retail bank branches.

TDW Canada provides clearing services to TD Bank. Prior to the
reorganization and the Offerings, this part of TDW Canada was a
division of TD Bank and, therefore, fees received by TDW Canada
from TD Bank were determined on a cost recovery basis. Subsequent
 to the reorganization and initial public offerings, fees for
such services were renegotiated at commercial rates.

Prior to the reorganization and the Offerings, all employees
involved in the TDW Canada businesses were employees of TD Bank.
TD Bank allocated compensation expense to the Company for those
periods based on an estimate of the actual compensation earned by
 each TD Bank employee that performed services for TDW Canada,
plus an estimate of the related employment benefits applicable to
 these employees, which was based on a percentage of total
compensation.

TD Bank provides significant administrative and other services to
 TDW Canada. Charges for these services are calculated on a cost
recovery basis. A detailed description of the services is as
follows:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Leases for TDW Canadas head office and branch locations are
	 negotiated by TD Bank and rental expense is allocated to the
	Company by TD Bank. The rental charge includes the lease costs,
	insurance and management, and maintenance expenses. Rental
	amounts are also paid by the Company on TD Bank-owned property
	which TDW Canada occupies. TD Bank also charges TDW Canada for
	use of its equipment and provides hardware, software and
	telephone infrastructure services, which are charged to TDW
	Canada based on services used.

65



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Professional services such as internal audit and legal are
	provided by TD Bank and charged to the Company at an hourly rate
	for specific work performed on TDW Canadas business. TD
	Banks systems research and development group works with TDW
	 Canadas in-house systems group to provide software
	solutions and is also charged at an hourly rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Overhead costs associated with the following general services
	have been allocated to the Company based on the proportion of TDW
	 Canadas revenues to the total consolidated TD Bank
	revenues: payroll services and corporate human resource policy
	and procedures, financial statement consolidation, business
	planning, forecasting and tax planning, official external
	communications (which include press releases, annual and
	quarterly reporting, and investor, government and community
	relations), charitable donations and costs related to employee
	communications, and overall TD Bank marketing expenses (which
	include advertising and market research). In addition, economic
	research is provided for TDW Canada and used for marketing and
	client education purposes, and the costs of preparing the
	research are charged based on usage. Policies and procedures for
	credit and market risk management are formulated centrally by TD
	Bank. Expense allocations are determined based on the time spent
	on each business.

TD Bank advances funding in the form of subordinated loans to TDW
 Australia and TDW UK. TDW Australia maintained available
subordinated debt lines with an affiliate totaling $25,507 and
$24,944 for the years ended October 31, 1999 and 1998,
respectively. TDW UK established a subordinated debt line with
TDBank, which for the year ended October 31, 1999 was
$8,373. As at October 31, 1998, TDW Australia had drawn down
 $22,138 on its lines (no drawdown at October 31, 1999). TDW
 UK had drawn down $4,606 on its line at October 31, 1999
(no drawdown at October 31, 1998).

Revenues and expenses resulting from the aforementioned
transactions and relationships of the Company, which are included
 in the accompanying consolidated statements of income, are as
follows:

|                                |  |      |        |      |  |      |        |   |  |   |        | 
|------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | 
|For the year ended October 31   |  | 1999 |        | 1998 |  | 1997
|                                |  |      |        |      |  |     
|Revenues                        |  |      |        |      |  |      |        |   |  |   |        | 
|                               
|                               
|                               
|                               
|Commissions and fees            |  | $    | 21,166 |      |  | $    | 16,524 |   |  | $ | 14,706 | 
|                               
|                               
|                               
|                               
|Mutual fund and related revenue |  |      | 7,366  |      |  |      | 5,959  |   |  |   | 4,710  | 
|                               
|                               
|                               
|                               
|Net interest revenue            |  |      | (1,215 | )    |  |      | (1,038 | ) |  |   |       | 
|                                |  |      |        |      |  |      |        |   |  |   |        | 
|Total revenues                  |  | $    | 27,317 |      |  | $    | 21,445 |   |  | $ | 19,416 | 
|                                |  |      |        |      |  |      |        |   |  |   |        | 
|Expenses                        |  |      |        |      |  |      |        |   |  |   |        | 
|                               
|                               
|                               
|                               
|Compensation and benefits       |  | $    | 32,475 |      |  | $    | 52,717 |   |  | $ | 51,647 | 
|                               
|                               
|                               
|                               
|Occupancy and equipment         |  |      | 11,017 |      |  |      | 17,065 |   |  |   | 16,783 | 
|                               
|                               
|                               
|                               
|Professional fees               |  |      | 3,431  |      |  |      | 3,600  |   |  |   | 4,141  | 
|                               
|                               
|                               
|                               
|Other expenses                  |  |      | 18,138 |      |  |      | 7,190  |   |  |   | 7,054  | 
|                                |  |      |        |      |  |      |        |   |  |   |        | 
|Total expenses                  |  | $    | 65,061 |      |  | $    | 80,572 |   |  | $ | 79,625 | 
|                                |  |      |        |      |  |      |        |   |  |   |        | 

16.  Stockholders Equity

Historical combined equity at October 31, 1998 represents
the net equity of the subsidiaries and divisions of subsidiaries
of TD Bank, which were contributed to the Company in connection
with the reorganization and Offerings.

Common stock in the consolidated statements of financial
condition includes 36 million shares of common stock, which are
issuable upon exchange of the exchangeable preference shares of
TDW Canada held by TD Bank (Note 2).

66



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##### Table of Contents



TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

17.  Earnings Per Share

SFAS No. 128, Earnings Per Share, requires a dual
presentation of basic and diluted earnings per share. Both basic
and diluted earnings per share are computed by dividing net
income by the weighted average number of common shares
outstanding, including the exchangeable preference shares of TDW
Canada (Note 2). The Companys outstanding stock
options did not have a dilutive effect on earnings during the
periods presented.

18.  International Operations

The total revenues, income before income taxes and identifiable
assets of the Companys businesses by geographic region are
summarized below:

|                              |               |      |         |         |   |      |         |         |   |   |         |         |  
|----------------------------- | ------------- | ---- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|For the year ended October 31 |               | 1999 |         | 1998    |   | 1997
|                              |               |      |         |         |   |     
|Total revenues:               |               |      |         |         |   |      |         |         |   |   |         |        
|                             
|                             
|                             
|                             
|                              | United States |      | $       | 709,214 |   |      | $       | 423,789 |   |   | $       | 250,095 |  
|                             
|                             
|                             
|                             
|                              | Canada        |      |         | 228,967 |   |      |         | 180,051 |   |   |         | 194,028 |  
|                             
|                             
|                             
|                             
|                              | Other         |      |         | 21,936  |   |      |         | 10,621  |   |   |         | 2,509   |  
|                              |               |      |         |         |   |      |         |         |   |   |         |        
|Total                         |               | $    | 960,117 |         |   | $    | 614,461 |         |   | $ | 446,632 |        
|                              |               |      |         |         |   |      |         |         |   |   |         |        
|Income before income taxes:   |               |      |         |         |   |      |         |         |   |   |         |        
|                             
|                             
|                             
|                             
|                              | United States |      | $       | 134,331 |   |      | $       | 64,243  |   |   | $       | 35,775  |  
|                             
|                             
|                             
|                             
|                              | Canada        |      |         | 61,367  |   |      |         | 45,739  |   |   |         | 44,290  |  
|                             
|                             
|                             
|                             
|                              | Other         |      |         | (13,160 | ) |      |         | (6,504  | ) |   |         | (1,444  | )
|                              |               |      |         |         |   |      |         |         |   |   |         |        
|Total                         |               | $    | 182,538 |         |   | $    | 103,478 |         |   | $ | 78,621  |        
|                              |               |      |         |         |   |      |         |         |   |   |         |        

|                     |               |      |           |           |  |   |           |           |  |  |  |  | 
|-------------------- | ------------- | ---- | --------- | --------- |  | - | --------- | --------- |  |  |  |  | 
|October 31           |               | 1999 |           | 1998      |  |  
|                     |               |      |           |           |  |  
|Identifiable assets: |               |      |           |           |  |   |           |           |  |  |  | 
|                    
|                    
|                    
|                    
|                     | United States |      | $         | 6,327,880 |  |   | $         | 2,800,713 |  |  |  |  | 
|                    
|                    
|                    
|                    
|                     | Canada        |      |           | 2,048,049 |  |   |           | 1,383,020 |  |  |  |  | 
|                    
|                    
|                    
|                    
|                     | Other         |      |           | 215,887   |  |   |           | 115,003   |  |  |  |  | 
|                     |               |      |           |           |  |   |           |           |  |  |  | 
|Total                |               | $    | 8,591,816 |           |  | $ | 4,298,736 |           |  |  |  | 
|                     |               |      |           |           |  |   |           |           |  |  |  | 



|    |                                                                              
|--- | -----------------------------------------------------------------------------
|19. | Reconciliation of U.S. and Canadian Generally Accepted
	Accounting Principles

The consolidated financial statements of the Company are prepared
 in accordance with accounting principles generally accepted in
the United States (U.S. GAAP). Material differences
at October 31, 1999 and 1998 and for the fiscal years ended
October 31, 1999, 1998 and 1997 between U.S. GAAP and
accounting principles generally accepted in Canada
(Canadian GAAP) are described below:

|                                     |  |      |        |      |  |      |        |   |  |   |        | 
|------------------------------------ |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | 
|For the year ended October 31        |  | 1999 |        | 1998 |  | 1997
|                                     |  |      |        |      |  |     
|Net income                           |  |      |        |      |  |      |        |   |  |   |        | 
|                                    
|                                    
|                                    
|                                    
|Net income based on U.S. GAAP        |  | $    | 97,346 |      |  | $    | 48,713 |   |  | $ | 36,205 | 
|                                    
|                                    
|                                    
|                                    
|Stock-based compensation, net of tax |  |      | 2,562  |      |  |      | (68    | ) |  |   | 3,177  | 
|                                     |  |      |        |      |  |      |        |   |  |   |        | 
|Net income based on Canadian GAAP    |  | $    | 99,908 |      |  | $    | 48,645 |   |  | $ | 39,382 | 
|                                     |  |      |        |      |  |      |        |   |  |   |        | 

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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                                         |  |      |           |      |  |   |           |  |  |  |  | 
|---------------------------------------- |  | ---- | --------- | ---- |  | - | --------- |  |  |  |  | 
|As at October 31                         |  | 1999 |           | 1998 |  |  
|                                         |  |      |           |      |  |  
|Statement of financial condition         |  |      |           |      |  |   |           |  |  |  |  | 
|                                        
|                                        
|                                        
|                                        
|Total assets based on U.S. GAAP          |  | $    | 8,591,816 |      |  | $ | 4,298,736 |  |  |  |  | 
|                                        
|                                        
|                                        
|                                        
|Customer transactions as of trade date   |  |      | 1,218,236 |      |  |   | 795,429   |  |  |  |  | 
|                                         |  |      |           |      |  |   |           |  |  |  |  | 
|Total assets based on Canadian GAAP      |  | $    | 9,810,052 |      |  | $ | 5,094,165 |  |  |  |  | 
|                                         |  |      |           |      |  |   |           |  |  |  |  | 
|Total liabilities based on U.S. GAAP     |  | $    | 6,639,696 |      |  | $ | 3,303,601 |  |  |  |  | 
|                                        
|                                        
|                                        
|                                        
|Customer transactions as of trade date   |  |      | 839,411   |      |  |   | 795,429   |  |  |  |  | 
|                                         |  |      |           |      |  |   |           |  |  |  |  | 
|Total liabilities based on Canadian GAAP |  | $    | 7,479,107 |      |  | $ | 4,099,030 |  |  |  |  | 
|                                         |  |      |           |      |  |   |           |  |  |  |  | 

Stock-based compensation

During 1997, the TD Bank employee stock option plan was modified
to allow option holders to elect to receive cash for the
options intrinsic value, which is the difference between
the options exercise price and the current market value of
the shares. In accounting for stock options with this feature,
SFAS No. 123 requires expensing the annual change in the
intrinsic value of the stock options. For options that have not
fully vested, the change in intrinsic value is amortized over the
 remaining vesting period. For purposes of preparing its Canadian
 GAAP financial statements, TD Bank does not record compensation
expense for stock-based compensation, but rather cash payments to
 option holders are charged to retained earnings.

Customers securities transactions

Under U.S. GAAP, customers securities transactions are
recorded on a settlement date basis. Under Canadian GAAP,
customers securities transactions are recorded on a trade
date basis.

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TD WATERHOUSE GROUP, INC.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)






Item 9.  Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

None




Part III






Item 10.  Directors and Executive Officers of
the Company


The information about Directors required to be furnished pursuant
 to this item is incorporated by reference from portions of our
definitive proxy statement for our 2000 Annual Meeting of
Stockholders to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days
after October 31, 1999 (the Proxy Statement).
Information with respect to our Executive Officers is included on
 pages 20-21 of this filing in Item 1.
Business-Executive Officers of the Registrant.




Item 11.  Executive Compensation

The information required to be furnished pursuant to this item is
 incorporated by reference from portions of the Proxy Statement.




Item 12.  Security Ownership of Certain
Beneficial Owners and Management

The information required to be furnished pursuant to this item is
 incorporated by reference from portions of the Proxy Statement.




Item 13.  Certain Relationships and Related
Transactions

The information required to be furnished pursuant to this item is
 incorporated by reference from portions of the Proxy Statement.






Part IV







Item 14.  Exhibits, Financial Statement
Schedules and Reports on Form 8-K


(a)  The following documents are filed as part of this
Report:

1.  Financial Statements and Financial Statement Schedules



| |                                                           
| | ----------------------------------------------------------
| | See Item 8. Financial Statements and Supplementary
	Data

2.  Exhibits

|        |     |             |  |                                                                                                                                                                                                                                                         
|------- | --- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 2.1 |             |  | Form of Transfer and Assumption Agreement between TD Bank
	and TD Waterhouse Investor Services (Canada) Inc.
	(Incorporated by reference to Exhibit 2.1 of the
	Companys Registration Statement on Form S-1,
	Registration No.  333-77521).            
|        | 2.2 |             |  | Form of Transfer and Assumption Agreement between TD 
	Securities Inc. and TD Waterhouse Investor Services (Canada)
	 Inc. (Incorporated by reference to Exhibit 2.2 of the
	Companys Registration Statement on Form S-1,
	Registration No. 333-77521).
|        | 2.3 |             |  | Form of Share Transfer Agreement between TD Bank and
	TD  Waterhouse (Incorporated by reference to
	Exhibit 2.3 of the Companys Registration Statement on
	Form S-1, Registration No. 333-77521).                                                      
|        | 3.1 |             |  | Form of Amended and Restated Certificate of Incorporation of
	TD Waterhouse (Incorporated by reference to Exhibit 3.1
	 of the Companys Registration Statement on Form S-1,
	Registration No. 333-77521).                                              
|        | 3.2 |             |  | Form of By-laws of TD Waterhouse (Incorporated by reference
	to Exhibit 3.2 of the Companys Registration Statement
	on Form S-1, Registration No. 333-77521).                                                                                          

69



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|        |      |             |  |                                                                                                                                                                                                                                                                                                            
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 4.1  |             |  | Specimen common stock certificate (Incorporated by reference to
	Exhibit 4.1 of the Companys Registration Statement on
	Form S-1, Registration No. 333-77521).                                                                                                                                            
|        | 4.2  |             |  | Form of Support and Exchange Agreement between TD 
	Waterhouse, TD Waterhouse Investor Services (Canada) Inc.,
	TD Bank, TD Waterhouse Holdings, Inc. and
	TD Securities Inc. (Incorporated by reference to
	Exhibit 4.2 of the Companys Registration Statement on
	Form S-1, Registration No. 333-77521).
|        | 4.3  |             |  | Form of Exchangeable Preference Share Terms of TD 
	Waterhouse Investor Services (Canada), Inc. (Incorporated by
	reference to Exhibit 4.3 of the Companys Registration
	Statement on Form S-1, Registration No. 333-77521).                                                                              
|        | 4.4  |             |  | Form of Certificate of Designation creating Special Voting
	Preferred Stock of TD Waterhouse (Incorporated by reference
	to Exhibit 4.4 of the Companys Registration Statement
	on Form S-1, Registration No. 333-77521).                                                                                 
|        | 4.5  |             |  | Specimen Special Voting Preferred stock certificate (Incorporated
	 by reference to Exhibit 4.5 of the Companys
	Registration Statement on Form S-1, Registration No. 
	333-77521).                                                                                                                       
|        | 10.1 |             |  | Form of 1999 TD Waterhouse Stock Incentive Plan
	(Incorporated by reference to Exhibit 10.1 of the
	Companys Registration Statement on Form S-1,
	Registration No.  333-77521).                                                                                                                           
|        | 10.2 |             |  | The Toronto-Dominion Bank 1993 Stock Option Plan (Incorporated by
	 reference to Exhibit 10.2 of the Companys
	Registration Statement on Form S-1, Registration No. 
	333-77521).                                                                                                                         
|        | 10.3 |             |  | Form of Master Services Agreement between TD Waterhouse and
	TD Bank (Incorporated by reference to Exhibit 10.3 of
	the Companys Registration Statement on Form S-1,
	Registration No. 333-77521).                                                                                                        
|        | 10.4 |             |  | Form of Tax Sharing Agreement between TD Waterhouse and
	TD  Waterhouse Holdings, Inc. (Incorporated by reference to
	Exhibit 10.4 of the Companys Registration Statement on
	 Form S-1, Registration No. 333-77521).                                                                                     
|        | 10.5 |             |  | TD Bank Long Term Capital Plan.                                                                                                                                                                                                                                                                            
|        | 10.6 |             |  | Employment Agreement, dated as of October 1, 1999 between
	Stephen D. McDonald and the Company.                                                                                                                                                                                                            
|        | 10.7 |             |  | Employment Agreement, dated as of October 1, 1999 between
	Frank J. Petrilli and the Company.                                                                                                                                                                                                              
|        | 10.8 |             |  | Employment Agreement, dated as of October 1, 1999 between
	John G. See and the Company.                                                                                                                                                                                                                    
|        | 21.1 |             |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                      
|        | 27.1 |             |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                   

(b)  Reports on Form 8-K



| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | No reports on Form 8-K were filed during the fourth quarter
	of the fiscal year ended October 31, 1999.

(c)  Exhibits



| |                                    
| | -----------------------------------
| | See Section (a)(2) of this Item 14.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| |                          
| | -------------------------
| | TD WATERHOUSE GROUP, INC.

Dated: January 28, 2000

| |     |                       
| | --- | ----------------------
| | By: | /s/STEPHEN D. MCDONALD

| |                            
| | ---------------------------
| |                            
| | Stephen  D. McDonald       
| | Chief Executive Officer and
| | Deputy Chairman            

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.

|                                                           |  |                                                                                                      |  |                 
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----------------
|Signature                                                  |  | Title                                                                                                |  | Date            
|                                                           |  |                                                                                                      |  |                 
|/s/ A. CHARLES BAILLIEA. Charles Baillie                   |  | Chairman of the Board                                                                                |  | January 28, 2000
|/s/ STEPHEN D. MCDONALDStephen D. McDonald                 |  | Chief Executive Officer,
	Deputy Chairman and Director
	(Principal Executive Officer)                |  | January 28, 2000
|/s/ FRANK J. PETRILLIFrank J. Petrilli                     |  | President, Chief Operating
	Officer and Director                                                     |  | January 28, 2000
|/s/ JOHN G. SEEJohn G. See                                 |  | Vice Chairman of the Board
	and Director                                                             |  | January 28, 2000
|/s/ LAWRENCE M. WATERHOUSE, JR.Lawrence M. Waterhouse, Jr. |  | Director                                                                                             |  | January 28, 2000
|/s/ DR. WENDY K. DOBSONDr. Wendy K. Dobson                 |  | Director                                                                                             |  | January 28, 2000
|/s/ STEVEN B. DODGESteven B. Dodge                         |  | Director                                                                                             |  | January 28, 2000
|/s/ LEO J. HINDERY, JR.Leo J. Hindery, Jr.                 |  | Director                                                                                             |  | January 28, 2000
|/s/ JOHN M. THOMPSONJohn M. Thompson                       |  | Director                                                                                             |  | January 28, 2000
|/s/ B. KEVIN STERNSB. Kevin Sterns                         |  | Executive Vice President
	and Chief Financial Officer
	(Principal Financial and
	Accounting Officer) |  | January 28, 2000

71