Exhibit # 99.2

DUNDEE BANCORP INC.

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTSThe accompanying consolidated financial statements, the notes thereto and other financial information contained in this annual report have been prepared by, and are the responsibility of, the management of Dundee Bancorp Inc. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles, using management's best estimates and judgments when appropriate.
The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Audit Committee, which is comprised of three independent Directors, meets with management as well as the external auditors to satisfy itself that management is properly discharging its financial reporting responsibilities and to review the Companys consolidated financial statements and the report of the auditors. It reports its findings to the Board of Directors who approve the consolidated financial statements.
The consolidated financial statements as at and for the year ended December 31, 2002 have been audited by Ernst & Young LLP, the independent auditors, in accordance with generally accepted auditing standards. The auditors have full and unrestricted access to the Audit Committee. Comparative financial statements as at and for the year ended December 31, 2001 were audited by other auditors who expressed an opinion without reservation on those statements in their report dated March 15, 2002.                                 
Ned Goodman                                                                  Joanne FerstmanPresident and                                                                   Vice President and  
Chief Executive Officer                                                   Chief Financial Officer

Toronto, Ontario

March 31, 2003



DUNDEE BANCORP INC.

AUDITORS' REPORT

To the Shareholders of

DUNDEE BANCORP INC.,

We have audited the consolidated balance sheet of Dundee
Bancorp Inc.as at December 31, 2002 and the consolidated statement of
operations, changes in shareholders' equity and cash flows for the year then
ended. 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 audit.

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

In our opinion, these consolidated financial statements
present fairly, in all material respects, the financial position of the Company
as at December 31, 2002 and the results of its operations and its cash flows for
the year then ended in accordance with Canadian generally accepted accounting
principles.

The consolidated financial statements as at December 31, 2001 and for the
year then ended were audited by other auditors who expressed an opinion without
reservation on those statements in their report dated March 15, 2002.



Chartered Accountants

Toronto, Canada
March 31, 2003



DUNDEE BANCORP INC.

CONSOLIDATED BALANCE SHEETS

|As at December 31, 2002 and
    2001             |                   |                  |   |          
|------------------------------------------------ | ----------------- | ---------------- | - | ---------
|(expressed in thousands of
    Canadian dollars) |                   |                  |   |          
|                                                 |                   |                  |  
|                                                 | December 31, 2002 | December 31,2001
|ASSETS                                           |                   |                  |   |          
|Cash and short term investments                  | $                 | 119,467          | $ | 117,995  
|Brokerage securities owned (note
    3)          |                   | 12,201           |   | 10,613   
|Accounts receivable                              |                   | 48,830           |   | 39,281   
|Client accounts receivable                       |                   | 230,730          |   | 229,172  
|Investment portfolio (note 4)                    |                   | 428,925          |   | 441,324  
|Deferred sales commissions (note
    5)          |                   | 81,089           |   | 56,910   
|Capital and other assets (note 6)                |                   | 278,750          |   | 154,837  
|TOTAL ASSETS                                     | $                 | 1,199,992        | $ | 1,050,132
|                                                 |                   |                  |   |          
|                                                 |                   |                  |   |          
|LIABILITIES                                      |                   |                  |   |          
|Bank indebtedness (note 7)                       | $                 | 7,374            | $ | -        
|Accounts payable and accrued
    liabilities     |                   | 61,977           |   | 46,289   
|Brokerage securities sold short
    (note 3)     |                   | 4,845            |   | 2,094    
|Client deposits and related
    liabilities      |                   | 260,711          |   | 269,615  
|Income taxes payable                             |                   | 613              |   | 2,344    
|Corporate debt (note 8)                          |                   | 238,628          |   | 203,799  
|Future income tax liabilities
    (note 12)      |                   | 38,434           |   | 42,415   
|                                                 |                   | 612,582          |   | 566,556  
|                                                 |                   |                  |   |          
|                                                 |                   |                  |   |          
|NON CONTROLLING
    INTEREST (note 16)           |                   | 108,444          |   | 37,721   
|                                                 |                   |                  |   |          
|                                                 |                   |                  |   |          
|SHAREHOLDERS'
    EQUITY                         |                   |                  |   |          
|Share capital (note 9)                           |                   |                  |   |          
|Common shares                                    |                   | 331,514          |   | 340,109  
|Retained earnings                                |                   | 147,452          |   | 105,746  
|                                                 |                   | 478,966          |   | 445,855  
|TOTAL
    LIABILITIES AND SHAREHOLDERS' EQUITY   | $                 | 1,199,992        | $ | 1,050,132

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

Approved by the Board:



|Director | Director
|-------- | --------



DUNDEE BANCORP INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

|For the years ended December
    31, 2002 and 2001                                              |                  |                  |   |         
|----------------------------------------------------------------------------------------------- | ---------------- | ---------------- | - | --------
|(expressed in thousands of
    Canadian dollars, except per share amounts)                      |                  |                  |   |         
|                                                                                                |                  |                  |   |         
|                                                                                                | December 31,2002 | December 31,2001
|REVENUE                                                                                         |                  |                  |   |         
|Management and administration fees                                                              | $                | 130,460          | $ | 113,168 
|Redemption fees                                                                                 |                  | 10,410           |   | 10,463  
|Financial services                                                                              |                  | 124,987          |   | 115,647 
|Oil and gas sales, net of
    royalties                                                         |                  | 6,896            |   | 981     
|                                                                                                |                  | 272,753          |   | 240,259 
|Investment income                                                                               |                  | 10,942           |   | 8,421   
|                                                                                                |                  | 283,695          |   | 248,680 
|EXPENSES                                                                                        |                  |                  |   |         
|Selling, general and
    administrative                                                         |                  | 125,558          |   | 119,348 
|Variable compensation                                                                           |                  | 71,307           |   | 60,299  
|Trailer fees                                                                                    |                  | 22,973           |   | 19,566  
|Operating costs, oil and gas
    properties                                                     |                  | 2,037            |   | 434     
|                                                                                                |                  | 221,875          |   | 199,647 
|OPERATING
    EARNINGS BEFORE INTEREST,                                                         |                  |                  |   |         
|TAXES AND OTHER
    NON CASH ITEMS                                                              |                  | 61,820           |   | 49,033  
|Amortization of deferred sales
    commissions                                                  |                  | 34,571           |   | 37,262  
|Amortization of goodwill (note 15)                                                              |                  | -                |   | 5,719   
|Depreciation, depletion and
    amortization                                                    |                  | 8,909            |   | 6,356   
|Interest expense                                                                                |                  | 14,051           |   | 14,593  
|OPERATING
    EARNINGS (LOSS)                                                                   |                  | 4,289            |   | (14,897)
|Share of earnings (losses) of
    equity accounted investees                                    |                  | 2,252            |   | (20,124)
|Dilution gain (note 2)                                                                          |                  | 75,680           |   | -       
|Increase in investment provision
    to reflect decreases in value of investments               |                  | (9,265)          |   | (31,379)
|Income taxes (note 12)                                                                          |                  |                  |   |         
|Current                                                                                         |                  | (10,861)         |   | (2,451) 
|Future                                                                                          |                  | 3,413            |   | 10,353  
|Non controlling interest                                                                        |                  | (15,252)         |   | 1,533   
|NET EARNINGS
    (LOSS)                                                                         | $                | 50,256           | $ | (56,965)
|                                                                                                |                  |                  |   |         
|                                                                                                |                  |                  |   |         
|                                                                                                |                  |                  |   |         
|NET EARNINGS
    (LOSS) PER SHARE                                                               |                  |                  |   |         
|Basic earnings
    (loss) per share                                                             | $                | 1.98             | $ | (2.17)  
|Diluted earnings (loss) per share                                                               | $                | 1.96             | $ | (2.17)  
|                                                                                                |                  |                  |   |         
|The
    accompanying notes are an integral part of these consolidated financial
    statements.



DUNDEE BANCORP INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

|For the years ended December
    31, 2002 and 2001                                          |   |          |             |          |          |          |       |         
|------------------------------------------------------------------------------------------- | - | -------- | ----------- | -------- | -------- | -------- | ----- | --------
|(expressed in thousands of
    dollars)                                                     |   |          |             |          |          |          |       |         
|                                                                                            |   |          |             |          |          |          |       |         
|                                                                                            |   |          |             | Deferred |          |          |       |         
|                                                                                            |   | Common   | Acquisition |          | Retained |          |      
|                                                                                            |   | Shares   | Obligations |          | Earnings |          | Total
|Balance, December 31,2000                                                                   | $ | 346,475  | $           | -        | $        | 163,462  | $     | 509,937 
|Net loss for the year                                                                       |   | -        |             | -        |          | (56,965) |       | (56,965)
|Change in opening retained
    earnings to account for change                               |   |          |             |          |          |          |       |         
|in accounting policy of equity
    accounted investees                                      |   | -        |             | -        |          | 701      |       | 701     
|Issuance of Class A subordinate
    shares for cash, net of costs                           |   | 714      |             | -        |          | -        |       | 714     
|Issuance of Class A subordinate
    shares for non-monetary consideration                   |   | 625      |             | -        |          | -        |       | 625     
|Deferred business acquisition
    obligations (note 9)                                      |   | -        |             | (1,083)  |          | -        |       | (1,083) 
|Acquisition of Class A subordinate
    shares for cancellation                              |   | (6,669)  |             | -        |          | (1,295)  |       | (7,964) 
|Cancellation of options granted,
    net of tax                                             |   | -        |             | -        |          | (157)    |       | (157)   
|Unrealized dilution gains, net of
    tax                                                   |   | 47       |             | -        |          | -        |       | 47      
|Balance, December 31,2001                                                                   |   | 341,192  |             | (1,083)  |          | 105,746  |       | 445,855 
|Net earnings for the year                                                                   |   | -        |             | -        |          | 50,256   |       | 50,256  
|Goodwill impairment loss (note 15)                                                          |   | -        |             | -        |          | (3,948)  |       | (3,948) 
|Change in opening retained
    earnings to account for changes in                           |   |          |             |          |          |          |       |         
|accounting policies of equity
    accounted investees, net of tax (note 15)                 |   | -        |             | -        |          | (2,124)  |       | (2,124) 
|Issuance of Class A subordinate
    shares for cash, net of costs                           |   | 1,651    |             | -        |          | -        |       | 1,651   
|Cancellation of Class A
    subordinate shares in respect of                                |   |          |             |          |          |          |       |         
|deferred business acquisition
    obligations (note 9)                                      |   | (1,083)  |             | 1,083    |          | -        |       | -       
|Acquisition of Class A subordinate
    shares for cancellation                              |   | (10,246) |             | -        |          | (2,478)  |       | (12,724)
|Balance,
    December 31,2002                                                               | $ | 331,514  | $           | -        | $        | 147,452  | $     | 478,966 
|                                                                                            |   |          |             |          |          |          |       |         
|The accompanying notes are an
    integral part of these consolidated financial statements.



DUNDEE BANCORP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|For the years ended December
    31, 2002 and 2001                                              |                  |                  |   |         
|----------------------------------------------------------------------------------------------- | ---------------- | ---------------- | - | --------
|(expressed in thousands of
    Canadian dollars)                                                |                  |                  |   |         
|                                                                                                |                  |                  |   |         
|                                                                                                | December 31,2002 | December 31,2001
|CASH FLOWS FROM
    OPERATING ACTIVITIES:                                                       |                  |                  |   |         
|Net earnings (loss)                                                                             | $                | 50,256           | $ | (56,965)
|Non cash items in earnings (loss):                                                              |                  |                  |   |         
|Depreciation,depletion and
    amortization                                                     |                  | 43,480           |   | 49,337  
|Net investment losses (gains)                                                                   |                  | 2,653            |   | (1,715) 
|Share of unremitted equity
    (earnings) losses                                                |                  | (2,252)          |   | 20,124  
|Dilution gain realized on
    reorganization (note 2)                                           |                  | (75,680)         |   | -       
|Increase in investment provision
    to reflect decreases in value of investments               |                  | 9,265            |   | 31,379  
|Future income taxes                                                                             |                  | (3,413)          |   | (10,353)
|Non controlling interest                                                                        |                  | 15,252           |   | (1,533) 
|Other                                                                                           |                  | 1,889            |   | 3,479   
|                                                                                                |                  | 41,450           |   | 33,753  
|Changes in:                                                                                     |                  |                  |   |         
|Accounts receivable                                                                             |                  | 1,846            |   | 5,421   
|Accounts payable and accrued
    liabilities                                                    |                  | (3,190)          |   | (10,577)
|Bank indebtedness                                                                               |                  | 7,374            |   | (23,284)
|Income taxes payable                                                                            |                  | (662)            |   | (8,805) 
|Brokerage securities owned and
    sold short,net                                               |                  | 1,163            |   | (5,575) 
|Client accounts receivable,net of
    client deposits and related liabilities                   |                  | (10,462)         |   | 48,341  
|CASH PROVIDED FROM OPERATING
    ACTIVITIES                                                     |                  | 37,519           |   | 39,274  
|                                                                                                |                  |                  |   |         
|CASH FLOWS FROM
    INVESTING ACTIVITIES:                                                       |                  |                  |   |         
|Proceeds on dispositions of
    portfolio investments                                           |                  | 12,510           |   | 16,758  
|Acquisitions of portfolio
    investments                                                       |                  | (12,779)         |   | (34,607)
|Cash acquired in business
    acquisitions (note 2)                                             |                  | 915              |   | 11,390  
|Sales commissions paid on
    distribution of mutual funds                                      |                  | (26,047)         |   | (18,238)
|Other                                                                                           |                  | (15,209)         |   | (13,391)
|CASH USED IN INVESTING ACTIVITIES                                                               |                  | (40,610)         |   | (38,088)
|                                                                                                |                  |                  |   |         
|CASH FLOWS FROM
    FINANCING ACTIVITIES:                                                       |                  |                  |   |         
|Increase in corporate debt                                                                      |                  | 1,058            |   | 16,301  
|Issuance of Class A subordinate
    shares,net of costs                                         |                  | 1,651            |   | 714     
|Issuance of shares in subsidiaries
    to non controlling interest                              |                  | 27,181           |   | 1,403   
|Redemption of subsidiary shares
    from non controlling interest                               |                  | (12,556)         |   | -       
|Dividends paid to non controlling
    shareholders                                              |                  | (264)            |   | -       
|Issuance of shares in Eurogas to
    non controlling interest                                   |                  | 217              |   | -       
|Acquisition of Class A subordinate
    shares                                                   |                  | (12,724)         |   | (7,964) 
|Cancellation of options granted                                                                 |                  | -                |   | (101)   
|CASH PROVIDED FROM FINANCING
    ACTIVITIES                                                     |                  | 4,563            |   | 10,353  
|                                                                                                |                  |                  |   |         
|NET INCREASE IN
    CASH DURING THE YEAR                                                        |                  | 1,472            |   | 11,539  
|Cash and short term investments,
    beginning of year                                          |                  | 117,995          |   | 106,456 
|CASH AND SHORT
    TERM INVESTMENTS, END OF YEAR                                                | $                | 119,467          | $ | 117,995 
|                                                                                                |                  |                  |   |         
|Cash flows from operating
    activities include the following:                                 |                  |                  |   |         
|Interest paid                                                                                   | $                | 13,637           | $ | 13,506  
|Taxes paid                                                                                      | $                | 13,504           | $ | 13,419  
|                                                                                                |                  |                  |   |         
|The
    accompanying notes are an integral part of these consolidated financial
    statements.



DUNDEE BANCORP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

(tabular dollar amounts in thousands of Canadian dollars)

Dundee Bancorp Inc. ("Dundee Bancorp" or the "Company") is
primarily a holding company dedicated to wealth management and financial
services. Its domestic financial service activities are carried out through its
84% owned subsidiary, Dundee Wealth Management Inc. ("Dundee Wealth"). Dundee
Bancorp also provides financial services internationally through offices in
Bermuda and the Cayman Islands. Together, these domestic and international
financial services operations provide a broad range of financial products and
services to individuals, institutions and corporations. Dundee Bancorp also
holds and manages its own portfolio of investments, both directly and indirectly
through wholly owned subsidiaries. The portfolio includes both publicly listed
and private companies in a variety of sectors, including real estate, resources
and financial services.

1.

BASIS OF PRESENTATION

The consolidated financial statements of the Company are
prepared in accordance with Canadian generally accepted accounting principles.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of
the Company and its subsidiaries. The Company's interest in each of its major
subsidiaries is 100% except for:

- its direct interest in Dundee Wealth which, at December 31,
2002 was 84% (2001 - 85%);

- its indirect interest in DWM Inc. ("DWM") which, at December
31, 2002 was 81.7% owned by Dundee Wealth (note 2); and

- Eurogas Corporation ("Eurogas") which, at December 31, 2002
and 2001 was 51%. The Company's exploration, development and production
activities in Eurogas are conducted jointly with other entities and accordingly,
the accounts reflect only the Company's proportionate interest in such
activities.

All intercompany transactions have been eliminated in these consolidated
financial statements.

USE OF ESTIMATES

The preparation of financial statements in accordance with
Canadian generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingencies at the date of the consolidated
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from these estimates.

CASH AND SHORT TERM INVESTMENTS

Cash and short term investments are carried at cost, which approximates fair
value.

BROKERAGE SECURITIES OWNED AND SECURITIES SOLD SHORT

Brokerage securities owned and securities sold short are
recorded at fair value, which is based on quoted market prices or management's
estimates of amounts to be realized on settlement, assuming current market
conditions and an orderly disposition over a reasonable period of time. For
non-listed securities, fair value is based on management's estimates.

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are carried at fair value
with resulting gains and losses reported in current operations. The fair value
of a derivative contract represents the amount the Company would have to pay a
third-party to assume its obligations under the contract, or the amount a
third-party would pay to receive the Company's benefits under the contract. Fair
value for exchange traded options is based on quoted market prices. The
Company's brokerage subsidiary primarily trades options on an agency basis.

CLIENT ACCOUNTS

In accordance with brokerage industry practice, client
transactions are entered into on either a cash or margin basis. These
transactions are recorded on a trade date basis. If transactions are conducted
on a margin basis, whereby the Company's brokerage subsidiary extends credit to
a client for the purchase of securities, the securities purchased and/or other
securities in the client's account are held as collateral for the amounts
loaned. Amounts due from clients are carried at the contractual amount
receivable, net of any allowance for credit losses.

INVESTMENT PORTFOLIO

Investments in companies subject to significant influence are
accounted for using the equity method whereby the Company recognizes in earnings
its proportionate share of earnings or losses of the investee. Application of
the equity method will result in the recognition of a dilution gain or loss if
the Company's interest in the investment is diluted as a result, for example, of
the issuance of additional shares by the investee.

Other investments are accounted for using the cost method
unless it is determined by management that an impairment in value that is other
than temporary has occurred, at which point a provision is recorded.

FINANCIAL INSTRUMENTS

The Company's investment portfolio includes publicly listed
and privately issued securities. Changes in interest rates may indirectly affect
the value of these securities. An investment, including an equity accounted
investment, may be written down to reflect a decrease in the underlying net
realizable value of the investment if, in the opinion of management, such
decrease is other than temporary.

DEFERRED SALES COMMISSIONS

Deferred sales commissions consist of sales commissions paid
to brokers and dealers on the sale of mutual fund units sold on a deferred sales
charge basis. Commencing in the month they are paid, these costs are amortized
on a straight-line basis over a five year period.

CAPITAL AND OTHER ASSETS

Exploration and Development Expenditures

Included in capital and other assets are deferred exploration
and development expenditures incurred by the Company's 51% owned subsidiary,
Eurogas. These expenditures are recorded by Eurogas pursuant to the full cost
method of accounting. Under the full cost method, all costs related to the
exploration for and development of oil and gas reserves are accumulated in
separate country-by-country cost centres. Proceeds received from the disposal of
properties are normally deducted from the full cost centres without recognition
of a gain or loss. When a significant portion of properties is sold, a gain or
loss is recorded and reflected in the consolidated statement of operations.
Exploration and development expenditures are reported net of a provision for
site restoration and abandonment costs.

Eurogas calculates a "cost ceiling" which limits the net book
value of exploration and development expenditures to the undiscounted and
unescalated estimated future net revenues from production of proven reserves
based upon year end prices, plus the cost of unproven properties after deduction
of expected associated future costs. Additional depletion is provided if the net
book value of exploration and development expenditures exceed such future
revenues.

Depreciation and depletion of oil and gas properties and
equipment is computed using the unit-of-production method whereby the ratio of
production to proven reserves, before royalties, determines the proportion of
depletable costs to be expensed. Undeveloped properties are excluded from the
depletion calculation until quantities of proven reserves are found, or
impairment occurs.

Eurogas annually evaluates costs of future well abandonment and site
restoration for its properties.

The estimated costs are provided for by the
unit-of-production method and are included in depreciation, depletion and
amortization expense. Actual costs of well abandonment and site restoration are
charged to the accumulated provision when incurred.

Pre-production Exploration Costs

Eurogas is currently engaged in a pre-production stage
exploratory program in Tunisia and has capitalized all associated costs. The
recovery of the capitalized costs is dependent on the economic viability of the
project.

Goodwill and Other Intangible Assets

On January 1, 2002, the Company adopted the CICA Handbook
Section 3062, "Goodwill and Other Intangible Assets". Under this section,
goodwill and certain other intangible assets, including investment management
contracts, which have been determined to have an indefinite life are no longer
amortized. Previously, these assets were amortized on a straight-line basis over
20 years (note 15).

Corporate debt issue costs are amortized over the term of the debt.

Other Assets

Capital assets are recorded at cost, net of accumulated
amortization, and are amortized on a straight-line or declining balance basis.
Annual amortization rates adopted by the Company range from 10% to 35%.

Leasehold improvements are amortized on a straight-line basis over the lease
terms.

Other assets include deposits made to regulatory authorities,
including contingency trust funds and the Canadian Investor Protection Fund.

REVENUE RECOGNITION

Management and administration fees are generally calculated
as a percentage of the net asset value of the respective mutual fund or other
discretionary portfolio being managed and are recognized on an accrual basis.
The Company may also earn performance fees from these managed assets when their
market appreciation exceeds established benchmarks. Performance fees are also
recognized on an accrual basis.

Redemption fees paid by unitholders of mutual funds purchased
on a deferred sales charge basis, the sales commission of which was financed by
the Company, are recognized as revenue on the settlement date of the redemption
of the applicable mutual fund units.

Financial services revenue, including securities transactions
and related commission revenue and expenses, are recorded in the accounts on a
trade date basis. Interest earned from client accounts and from securities owned
or sold short is recognized as earned and has been included in financial
services revenue.

Brokerage securities owned and securities sold short are
recorded at fair value. Both realized and unrealized gains and losses from
securities owned and securities sold short are included in the determination of
net earnings.

Investment income includes interest and dividend income from
investments carried at cost which are recognized as earned, and realized
investment gains or losses in respect of the Company's investment portfolio.

INCOME TAXES

The Company uses the asset and liability method to provide
for income taxes on all transactions recorded in the consolidated financial
statements. The asset and liability method requires that income taxes reflect
the expected future tax consequences of temporary differences between the
carrying amounts of assets and liabilities and their tax bases. Future income
tax assets and liabilities are determined for each temporary difference based on
the tax rates which are expected to be in effect when the underlying assets and
liabilities are expected to be realized.

FOREIGN CURRENCY TRANSLATION

All foreign currency denominated amounts, including those of
integrated foreign operations, are translated into Canadian dollars using
average rates for the year for items included in the consolidated statements of
operations, the rate in effect at the consolidated balance sheet dates for
monetary assets and liabilities included in the consolidated balance sheets and
historical rates for other items. Translation gains or losses are included in
the determination of net earnings.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing the net
earnings for the year by the weighted average number of Class A subordinate
voting shares ("Subordinate Shares") and Class B common shares ("Class B
Shares") outstanding during 2002 of 25,436,218 (2001 - 26,211,526).

Diluted earnings per share is calculated to reflect the
dilutive effect of exercising outstanding stock options by application of the
treasury stock method. The weighted average number of shares outstanding during
2002, calculated on a diluted basis, would increase by 204,206. Because the
Company incurred losses during 2001, options outstanding would be anti-dilutive.

RECLASSIFICATION OF 2001 AMOUNTS

Certain of the prior year amounts have been reclassified to conform with the
basis of presentation adopted for 2002.

2.

ACQUISITIONS COMPLETED IN THE YEAR ENDED DECEMBER 31, 2002

Acquisition of
Canadian First Financial Group Inc. ("CFFG")

On August 2, 2002, Dundee Wealth completed a share purchase
agreement whereby Dundee Wealth acquired all of the issued and outstanding
shares of CFFG, a public financial services management company. The shares of
CFFG were subsequently transferred to DWM as part of the reorganization
described below. The acquisition has been accounted for as a purchase
transaction and accordingly, the purchase price was allocated to the assets and
liabilities acquired based on their estimated fair value on August 2, 2002. The
total purchase price was $13,404,000 and was comprised of cash of $10,744,000
and additional obligations in the amount of $2,660,000. The amount by which the
total purchase price exceeds the estimated fair value of the net assets acquired
was $12,926,000 and has been included in "Capital and other assets" on the
consolidated balance sheets (note 6). In accordance with the new provisions of
CICA Handbook Section 3062, "Goodwill and Other Intangible Assets", this
goodwill will not be amortized (note 15).

|Estimated fair
    value of assets acquired, |   |       
|-------------------------------------------- | - | ------
|net of liabilities
    assumed               | $ | 478   
|Aggregate purchase
    price                 |   | 13,404
|                                             |   |       
|                                             |   |       
|Goodwill                                     | $ | 12,926

Consolidated operating results for the year ended December
31, 2002 include the operating results of CFFG from the effective date of the
acquisition, August 2, 2002.

Reorganization of Dundee Wealth and DWM and Subsequent
Acquisition of DynamicNova Inc. ("DynamicNova")

On October 2, 2002, Dundee Wealth entered into various
transactions with DWM pursuant to which substantially all of Dundee Wealth's
assets and liabilities, including its 100% interest in its financial services
and investment management subsidiaries were transferred to DWM. Concurrent with
the transaction, DWM completed a share purchase agreement whereby it acquired
all of the issued and outstanding shares of DynamicNova (formerly StrategicNova
Inc.), an investment management company and manager of the DynamicNova Group of
Mutual Funds. The acquisition has been accounted for in the books of the Company
as a purchase transaction and accordingly, the purchase price was allocated to
the assets and liabilities acquired based on their estimated fair value on
October 2, 2002. The total purchase price was $88,069,000 and was satisfied by
the issuance of shares of DWM with a value of $84,194,000 and additional
obligations in the amount of $3,875,000. The Company has recorded transaction
costs of $2,600,000 in respect of the acquisition, which amount, net of taxes,
has been aggregated to the estimated fair value of the investment management
contracts. Investment management contracts acquired have been determined to have
an indefinite life and therefore, the related intangible asset is not subject to
amortization (note 15).

|Investment
    management contracts                  | $ | 108,682 
|---------------------------------------------------- | - | --------
|Estimated fair
    value of other assets acquired,   |   |         
|net of liabilities
    assumed                       |   | (18,389)
|                                                     | $ | 90,293  
|Represented by:                                      |   |         
|Aggregate purchase
    price                         | $ | 88,069  
|Transaction costs
    of $2,600,net of taxes of $376 |   | 2,224   
|                                                     | $ | 90,293  

Consolidated operating results for the year ended December
31, 2002 include operating results of DynamicNova from the effective date of the
acquisition, October 2, 2002.

Dilution Gain

As part of the DynamicNova transaction, DWM issued shares for
cash and for the transfer, to DWM, of certain obligations previously owed by
DynamicNova to its former majority shareholder. As a result, CDP Financial
Services Inc. ("CDP") became an 18.3% shareholder of DWM, diluting Dundee
Wealth's interest to 81.7%. In accordance with Canadian generally accepted
accounting principles, Dundee Wealth is considered to have disposed of
approximately 18.3% of its interest in DWM resulting in a dilution gain to
Dundee Wealth of $74,403,000. The dilution gain has been included in current
year's operating results.

Obligations and Other Liabilities in Respect of
Business Acquisitions

The $3,875,000 and $2,600,000 additional obligations incurred
as part of the acquisition of DynamicNova and the $2,660,000 additional
obligations incurred as part of the acquisition of CFFG, are included in
accounts payable and accrued liabilities. During 2002, the Company paid cash of
$5,348,000 in partial settlement of these obligations.

ACQUISITIONS COMPLETED IN THE YEAR ENDED DECEMBER 31, 2001

Acquisition of Eurogas

In November 2001, the Company acquired in the open market and
by way of a private transaction, an additional 3,754,200 common shares of
Eurogas for cash consideration of $794,000 and settlement of amounts otherwise
receivable by the Company totalling $969,000, bringing its total investment to
38,502,193 common shares or 51% of total common shares of Eurogas issued and
outstanding. The total carrying value of Eurogas after the acquisition,
including the Company's share of earnings and losses under the equity method of
accounting, adjusted for tax, was $22,685,000. Subsequent to the transaction,
the Company has accounted for its investment in Eurogas on a consolidated basis.

The consolidation of Eurogas has been accounted for as a
purchase transaction and accordingly, the purchase price was allocated to the
assets and liabilities acquired based on their estimated fair values as of
November 22, 2001, the effective date of acquisition of control. A summary of
the fair value of assets acquired is as follows:

|Oil and gas
    properties                                  | $ | 29,763  
|----------------------------------------------------------- | - | --------
|Estimated fair
    value of other assets acquired,          |   |         
|net of liabilities
    assumed                              |   | 12,454  
|Non controlling
    interest in subsidiaries of Eurogas     |   | (1,418) 
|                                                            |   | 40,799  
|Attributable to
    non controlling shareholders of Eurogas |   | (18,114)
|                                                            | $ | 22,685  
|Represented by:                                             |   |         
|Cash                                                        | $ | 794     
|Settlement of
    amounts otherwise receivable              |   |         
|by the Company                                              |   | 969     
|Carrying value of
    Eurogas investment at                 |   |         
|date of
    acquisition                                     |   | 20,922  
|                                                            | $ | 22,685  

3.

|                                     |   |            |   | 2002           |   |            |   | 2001          
|------------------------------------ | - | ---------- | - | -------------- | - | ---------- | - | --------------
|                                     |   | Securities |   | Securities     |   | Securities |   | Securities    
|                                     |   | Owned      |   | Sold
    Short |   | Owned      |   | Sold
    Short
|Bonds and other
    debt instruments | $ | 6,831      | $ | 1,554          | $ | 4,788      | $ | 892           
|Equities                             |   | 5,370      |   | 3,291          |   | 5,825      |   | 1,202         
|                                     | $ | 12,201     | $ | 4,845          | $ | 10,613     | $ | 2,094         

From time to time, the Company's brokerage subsidiary may
sell securities that it does not currently own and will therefore be obligated
to purchase such securities at a future date. The subsidiary may incur a loss if
the market value of these securities subsequently increases.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company's brokerage subsidiary trades in certain derivative instruments
for the purpose of managing proprietary trading strategies or for the purpose of
risk management.

The Company's brokerage subsidiary uses forward contracts to
cover outstanding obligations in either Canadian or U.S. currency. Forward
contract transactions involve the future delivery of an amount of a currency at
a specified price at a specified time.

The following table discloses the outstanding contracts as at December 31,
2002 and 2001:

|                      |   |       |   | 2002   |   |       |   | 2001 
|--------------------- | - | ----- | - | ------ | - | ----- | - | -----
|                      |   | Buy   |   | Sell   |   | Buy   |   | Sell 
|USD Forward Contracts | $ | 2,677 | $ | 13,750 | $ | 1,802 | $ | 3,820

All forward contracts are generally short term in nature and mature within 30
to 120 days.

4.

|                                |              |        |         |        |        |        |        |         | 2002    |              |        |         |        |        |        |         | 2001         
|------------------------------- | ------------ | ------ | ------- | ------ | ------ | ------ | ------ | ------- | ------- | ------------ | ------ | ------- | ------ | ------ | ------ | ------- | -------------
|                                | Year
    End |        |         |        | Non-   |        |        |         |         | Year
    End |        |         | Non-   |        |        |        
|                                | Ownership    |        | Listed  |        | Quoted |        | Loans  |         | Total   | Ownership    | Listed |         | Quoted |        | Loans  | Total  
|Equity Accounted                |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Investments                     |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Black Hawk                      |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Mining Inc.                     | 18%          | $      | 3,024   | $      | -      | $      | -      | $       | 3,024   | 19%          | $      | 4,079   | $      | -      | $      | - $     | 4,079        
|Breakwater                      |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Resources Ltd.                  | 27%          |        | 25,465  |        | -      |        | -      |         | 25,465  | 29%          |        | 27,518  |        | -      |        | -       | 27,518       
|Dundee Realty                   |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Corporation                     | 45%          |        | 140,601 |        | -      |        | -      |         | 140,601 | 40%          |        | 137,949 |        | -      |        | -       | 137,949      
|Repadre Capital                 |              |        |         |        |        |        |        |         |         |              |        |         |        |        |        |         |              
|Corporation                     | 17%          |        | 20,866  |        | -      |        | -      |         | 20,866  | 22%          |        | 14,470  |        | -      |        | -       | 14,470       
|Zemex Corporation               | 39%          |        | 35,585  |        | -      |        | -      |         | 35,585  | 36%          |        | 36,481  |        | -      |        | -       | 36,481       
|Other                           |              |        | 1,994   |        | 2,748  |        | 1,991  |         | 6,733   |              |        | 3,478   |        | 2,568  |        | 1,991   | 8,037        
|Marketable
    Securities       |              | 65,043 |         | -      |        | -      |        | 65,043  |         |              | 79,185 |         | -      |        | -      | 79,185 
|Other Portfolio
    Investments |              | 95,298 |         | 12,189 |        | 24,121 |        | 131,608 |         |              | 94,702 |         | 14,270 |        | 24,633 | 133,605
|                                |              | $      | 387,876 | $      | 14,937 | $      | 26,112 | $       | 428,925 |              | $      | 397,862 | $      | 16,838 | $      | 26,624  | $
    441,324

The fair market value of the investment portfolio as at December 31, 2002
approximates $440,000,000 (2001 - $423,000,000), determined using quoted market
values for listed securities and carrying values for non-quoted securities and
loans.

As at December 31, 2002, the Company has investments of
$76,985,000 (2001 - $87,825,000) in investment products which are managed by a
wholly owned subsidiary of Dundee Wealth. Transactions on these assets are
conducted on the same basis as third-party investors.

INCOME FROM INVESTMENT PORTFOLIO

Income generated by the Company's merchant banking and investment portfolio
includes:

|                                                                                  |   | 2002    |   | 2001    
|--------------------------------------------------------------------------------- | - | ------- | - | --------
|Interest,dividends
    and foreign exchange                                       | $ | 4,678   | $ | 6,706   
|Realized
    investment gains,net                                                 |   | 6,264   |   | 1,715   
|                                                                                  |   | 10,942  |   | 8,421   
|                                                                                  |   |         |   |         
|                                                                                  |   |         |   |         
|Share of losses of
    equity accounted investments                               |   | (847)   |   | (19,400)
|Gains (losses)
    from dilutions of interest in equity accounted investments     |   | 3,099   |   | (724)   
|                                                                                  |   | 2,252   |   | (20,124)
|                                                                                  |   |         |   |         
|                                                                                  |   |         |   |         
|Increase in
    investment provision to reflect decreases in value of investments |   | (9,265) |   | (31,379)
|                                                                                  | $ | 3,929   | $ | (43,082)

5.

|                                                           |   | 2002     |   | 2001    
|---------------------------------------------------------- | - | -------- | - | --------
|Deferred sales
    commissions,beginning of year           | $ | 56,910   | $ | 75,934  
|Commissions
    acquired in business acquisitions (note 2) |   | 32,703   |   | -       
|Commissions funded
    during the year                     |   | 26,047   |   | 18,238  
|Amortization
    during the year                           |   | (34,571) |   | (37,262)
|Deferred sales commissions,end of year                     | $ | 81,089   | $ | 56,910  

6.

|                                                                                                                              |   |         |              |        |              | 2002    |              | 2001   
|----------------------------------------------------------------------------------------------------------------------------- | - | ------- | ------------ | ------ | ------------ | ------- | ------------ | -------
|                                                                                                                              |   |         | Accumulated  |        | Net
    Book |         | Net
    Book
|                                                                                                                              |   | Cost    | Amortization |        | Value        |         | Value       
|Capital assets                                                                                                                | $ | 60,042  | $            | 38,908 | $            | 21,134  | $            | 20,693 
|Goodwill                                                                                                                      |   | 73,858  |              | 14,551 |              | 59,307  |              | 50,854 
|Investment
    management contracts                                                                                           |   | 156,040 |              | 7,446  |              | 148,594 |              | 39,912 
|Oil and gas
    properties                                                                                                    |   | 39,418  |              | 2,195  |              | 37,223  |              | 30,369 
|Corporate debt
    issue costs                                                                                                |   | 1,565   |              | 823    |              | 742     |              | 899    
|Other                                                                                                                         |   | 11,783  |              | 33     |              | 11,750  |              | 12,110 
|                                                                                                                              | $ | 342,706 | $            | 63,956 | $            | 278,750 | $            | 154,837
|                                                                                                                              |   |         |              |        |              |         |              |        
|                                                                                                                              |   |         |              |        |              |         |              |        
|The
    following table summarizes oil and gas properties and capital expenditures
    thereon on a country-by-country basis:
|                                                                                                                              |   |         |              |        |              |         |              |        
|                                                                                                                              |   |         |              |        |              |         |              |        
|                                                                                                                              |   | Canada  |              | Spain  |              | Tunisia |              | Total  
|Net book value at
    date of acquisition                                                                                     | $ | 14,096  | $            | 4,702  | $            | 10,965  | $            | 29,763 
|Capital
    expenditures in 2001                                                                                              |   | 435     |              | 37     |              | 436     |              | 908    
|Depletion                                                                                                                     |   | (302)   |              | -      |              | -       |              | (302)  
|Net book
    value,December 31,2001                                                                                           |   | 14,229  |              | 4,739  |              | 11,401  |              | 30,369 
|Capital
    expenditures during 2002                                                                                          |   | 3,666   |              | 2,115  |              | 2,966   |              | 8,747  
|Depletion                                                                                                                     |   | (1,893) |              | -      |              | -       |              | (1,893)
|Net book value,December 31,2002                                                                                               | $ | 16,002  | $            | 6,854  | $            | 14,367  | $            | 37,223 

7.

The Company's brokerage subsidiary may borrow up to a maximum
of $100,000,000 pursuant to a call loan facility established with a Canadian
chartered bank, primarily to facilitate the securities settlement process for
both client and firm inventory transactions. Amounts borrowed pursuant to this
facility are collateralized by either unpaid client securities or securities
owned by the Company. At December 31, 2002, the Company had $7,374,000 (2001 -
nil) outstanding pursuant to this facility. During 2002, the Company paid
interest on the outstanding call loan balance at interest rates between 2.75%
and 3.50% on Canadian funds (2001 - 3.00% and 6.25%) and 1.88% on U.S. funds
(2001 - between 2.38% and 6.63%).

8.

|                                                                 |   | 2002    |   | 2001   
|---------------------------------------------------------------- | - | ------- | - | -------
|Corporate                                                        |   |         |   |        
|$150,000,000 -
    6.70% senior debentures due September 24,2007 | $ | 149,781 | $ | 149,734
|Revolving term
    credit facility,corporate                     |   | 27,893  |   | 26,383 
|Subsidiary companies                                             |   |         |   |        
|Revolving term
    credit facility,Dundee Wealth                 |   | 19,460  |   | 16,986 
|Revolving term
    credit facility,DMFL Holding Corp.            |   | 22,290  |   | -      
|Income Trusts                                                    |   | 12,680  |   | 7,641  
|Prime Trust                                                      |   | 2,534   |   | -      
|Notes payable                                                    |   | 2,281   |   | 2,281  
|Other                                                            |   | 1,709   |   | 774    
|                                                                 | $ | 238,628 | $ | 203,799

SENIOR DEBENTURES

On September 24, 1997, the Company issued $150,000,000
ten-year senior unsecured debentures (the "Debentures") at a discount of $3.09
per $1,000 principal amount. Net proceeds of the issue, after commissions and
related expenses, were $147,977,000. The Debentures pay interest at 6.70% per
annum, payable semi-annually in arrears on March 24 and September 24 of each
year. The Debentures are redeemable in whole or in part at any time prior to
maturity, at the option of the Company, at the higher of the par value of the
Debentures or at a price calculated to provide a yield to maturity equal to the
Government of Canada Yield at the time of the redemption plus 0.20%. At December
31, 2002, the fair value of the Debentures, based on quoted market values was
$135,957,000 (2001 - $129,378,000).

REVOLVING TERM CREDIT FACILITIES, CORPORATE

On September 30, 2002, as amended, the Company renewed its
revolving term, unsecured credit facility with a Canadian chartered bank,
extending the expiry date to April 30, 2003. The credit facility provides for a
tiered interest rate structure based on the Company's public debt rating on its
Debentures. Based on the Company's current debt rating, Canadian dollar draws on
the credit facility bear interest, at the Company's option, at either a Canadian
chartered bank's prime lending rate, or Corporate Bankers' Acceptance rate plus
1% (previously 5/8 of 1%). United States dollar borrowings under the credit
facility bear interest, based on the current debt rating on the Company's
Debentures, at US Base Rate or, at the Company's option, at the London
Inter-Bank Offer Rate plus 1%. The Company is subject to a standby fee of 1/4 of
1% on unused amounts under the facility. At December 31, 2002, $27,893,000 (2001
- $26,383,000) had been borrowed under the Company's credit facility. Interest
rates paid by the Company on Canadian dollar draws during 2002 ranged between
3.75% and 4.50% (2001 - between 4.0% and 7.5%). The Company also borrowed
through Corporate Bankers' Acceptances at rates during the year of between 2.12%
and 3.03% (2001 - between 3.20% and 5.85%).

On November 15, 2001, the Company obtained a facility of
US$6,500,000 to permit the Company to provide a letter of credit in respect of
Breakwater Resources Ltd. Subsequent to December 31, 2002, the facility was
further extended to January 31, 2004.

REVOLVING TERM CREDIT FACILITY, DUNDEE WEALTH

On September 30, 2002, as amended, Dundee Wealth temporarily
renewed its $20,000,000 unsecured revolving term credit facility with a Canadian
chartered bank, extending the expiry date to April 30, 2003. At maturity, the
revolving term credit facility will not be renewed, but will be replaced with a
draw against the credit facility provided by Dundee Bancorp in an amount
sufficient to repay all amounts outstanding under the current unsecured credit
facility.

Canadian dollar draws on the current credit facility bear
interest, at Dundee Wealth's option, at either a Canadian chartered bank's prime
lending rate, or Corporate Bankers' Acceptance rate plus 1%. The credit facility
also provides for United States dollar borrowings at US Base Rate or, at Dundee
Wealth's option, at the London Inter-Bank Offer Rate plus 1%. Dundee Wealth is
subject to a standby fee of 1/4 of 1% on unused amounts under the credit
facility. At December 31, 2002, $19,460,000 (2001 - $16,986,000) had been
borrowed pursuant to Dundee Wealth's credit facility. Interest rates paid by
Dundee Wealth on Canadian dollar draws during 2002 ranged between 3.75% and
4.50% (2001 - between 4.0% and 7.5%). Dundee Wealth also borrowed through
Corporate Bankers' Acceptances at rates during the year of between 2.15% and
2.95% (2001 - between 2.24% and 5.85%).

REVOLVING TERM CREDIT FACILITY, DMFL HOLDING CORP.

As a result of the acquisition of DynamicNova (note 2), a
$22,300,000 credit facility with a Canadian chartered bank was renegotiated on
December 31, 2002 and transferred to a subsidiary of Dundee Wealth, DMFL Holding
Corp. The amended credit facility is a 364-day revolving term facility maturing
on January 1, 2004. The facility is subject to interest at prime plus 0.25% per
annum and a standby fee of 0.1875% per annum. As at December 31, 2002, the
subsidiary had borrowed $22,290,000 pursuant to the credit facility.

The facility is secured by way of a General Security
Agreement on all of the assets of certain subsidiaries of the Company including
the assets of Dynamic Mutual Funds Ltd. and DynamicNova. The facility is also
secured by unsecured guarantees from Dundee Wealth and DWM.

INCOME TRUSTS

Infinity Income Trust and Multi-Fund Income Trust (the
"Trusts") were formed for the purpose of financing the deferred sales
commissions of Dynamic Focus+ Mutual Funds for the period from August 1, 1997 up
to and including February 26, 1998 and the deferred sales commissions of certain
DynamicNova Mutual Funds for the period from August 1, 1997 up to and including
July 17, 1998. Amounts owed to the Trusts as at December 31 are detailed below:



|                               |   | 2002   |   | 2001 
|------------------------------ | - | ------ | - | -----
|Secured notes                  | $ | 9,146  | $ | 5,914
|Participation
    certificates |   | 3,534  |   | 1,727
|                               | $ | 12,680 | $ | 7,641

Interest on the secured notes is charged at 5.00% per annum.
No interest is charged on the participation certificates. Certain subsidiaries
of the Company have ceded part of their monthly management fee from the Dynamic
Focus+ Mutual Funds or DynamicNova Mutual Funds, as applicable, calculated as
0.15% to 0.55% per annum of the net asset value of the units where the sales
commissions were financed by the Trusts, to be applied against amounts
outstanding. Repayments will be applied first to the interest, then to the
secured notes, and finally to the participation certificates.

The repayment of the secured notes and participation
certificates will continue to the earlier of April 30, 2013 or until there are
no remaining mutual fund units financed by the Trusts. In the event that the
monthly management fee ceded is insufficient to repay the secured notes and the
participation certificates by April 30, 2013, any amounts outstanding will not
be required to be repaid by the subsidiaries. Any redemption charges paid by the
unitholders on redemption of mutual fund units will be applied to the repayment
of the secured notes and the participation certificates. The secured notes are
secured by a general security interest registered under the Personal Property
Security Act in the accounts of certain mutual funds managed by the Company.

PRIME TRUST

From July 18, 1998 to July 26, 1999, deferred sales
commissions of certain DynamicNova Mutual Funds were financed through Prime
Trust, which is a securitization vehicle administered by a Canadian chartered
bank. A subsidiary of the Company has ceded a portion of its monthly management
fee from certain DynamicNova Mutual Funds, calculated as 1.40% per annum or, in
the case of certain money market funds, 0.25% per annum, of the net asset value
of the units where the sales commissions were financed by the Prime Trust, to be
applied against amounts outstanding. The Prime Trust bears interest at 6.34% per
annum plus the spread between the 30-day bankers' acceptance rate and the 30-day
commercial paper rate.

9.

AUTHORIZED

The Company is authorized to issue an unlimited number of
Subordinate Shares, an unlimited number of Class B Shares, an unlimited number
of first preference shares, issuable in series, an unlimited number of second
preference shares, issuable in series, and an unlimited number of third
preference shares, issuable in series.

COMMON SHARES

Holders of Subordinate Shares and Class B Shares are entitled
to one vote and 100 votes respectively, for each such share held. The
Subordinate Shares and Class B Shares will participate equally, share for share,
as to dividends. The Class B Shares are convertible into Subordinate Shares on a
one-for-one basis at any time. In the event of an offer to purchase the Class B
Shares by a third-party, and in certain circumstances, each Subordinate Share
will be convertible, at the option of the holder, into one Class B Share for
purposes of accepting such an offer.

PREFERENCE SHARES

First Preference
Shares

Each series of first preference shares will rank on a parity
with the first preference shares of every other series and will be entitled to
preference on the payment of dividends and the distribution of assets in the
event of the liquidation, dissolution or winding-up of the Company over the
Subordinate Shares, Class B Shares, second preference shares and third
preference shares.

Second Preference Shares

Each series of second preference shares will rank junior and
subordinate to the first preference shares, on a parity with second preference
shares of every other series and will be entitled to preference over the
Subordinate Shares, Class B Shares and third preference shares.

Third Preference Shares

Each series of third preference shares will rank junior and
subordinate to the first preference shares and the second preference shares, on
a parity with the third preference shares of every other series and will be
entitled to preference over the Subordinate Shares and Class B Shares.

ISSUED AND OUTSTANDING

|                                             | Subordinate Shares | Class B Shares | Total    
|-------------------------------------------- | ------------------ | -------------- | ---------
|                                             | Number             | Amount         | Number   
|Outstanding
    December 31,2000             | 25,213,562         | $
    297,418  | 1,059,121
|Issued (redeemed) during the year            |                    |                |          
|ended December 31,2001                       |                    |                |          
|Redeemed pursuant
    to issuer bid          | (557,766)          | (6,669)        | -        
|Issuance of shares
    under the             |                    |                |          
|employee Share
    Incentive Plan            | 43,802             | 746            | -        
|Options exercised                            | 55,000             | 593            | -        
|Conversion from
    Class B shares           |                    |                |          
|to Subordinate
    Shares                    | 8,217              | 65             | (8,217)  
|Total Share Capital                          |                    |                |          
|Outstanding December 31 ,2001                | 24,762,815         | 292,153        | 1,050,904
|Issued (redeemed) during the year            |                    |                |          
|ended December 31,2002                       |                    |                |          
|Redeemed pursuant
    to issuer bid          | (866,667)          | (10,246)       | -        
|Issuance of shares
    under the             |                    |                |          
|employee Share
    Incentive Plan            | 9,004              | 129            | -        
|Cancellation of
    shares previously issued |                    |                |          
|in business
    acquisitions                 | (40,097)           | (1,083)        | -        
|Options exercised                            | 412,895            | 1,522          | -        
|Conversion from
    Class B shares           |                    |                |          
|to Subordinate
    Shares                    | 1,607              | 13             | (1,607)  
|Outstanding
    December 31,2002             | 24,279,557         | $
    282,488  | 1,049,297
|Dilution gain,net
    of tax                 |                    |                |          
|Total Share Capital                          |                    |                |          
|Outstanding December 31,2002                 |                    |                |          

OBLIGATIONS AND OTHER LIABILITIES IN RESPECT OF BUSINESS ACQUISITIONS

The Company issued a total of 83,015 Subordinate Shares as
partial consideration pursuant to the terms of a business acquisition completed
in May 1998. These shares were subject to an escrow agreement and were to be
released in each of the four years following the date of acquisition, subject to
achieving predefined income levels in the organization acquired. During 2001,
the Company determined that it expects to cancel a total of 40,097 Subordinate
Shares due to these income levels not being achieved. Accordingly, the Company
has reduced the carrying value of its goodwill associated with this investment
by $1,083,000, being the value of the 40,097 Subordinate Shares originally
issued. This amount has been included as a reduction in shareholders' equity.

DILUTION GAIN

As a result of a reorganization and subsequent business
acquisitions completed in 1999 and 2000, the Company's investment in Dundee
Wealth was diluted from 100% to approximately 85%. For financial reporting
purposes, the Company is considered to have disposed of approximately 15% of its
interest in Dundee Wealth resulting in a dilution gain of approximately
$40,787,000, net of taxes of $20,429,000. This dilution gain was recorded
directly to shareholders' equity.

RETAINED EARNINGS

During 2002, the Company purchased for cancellation 866,667
Subordinate Shares (2001 - 557,766) having an aggregate stated capital of
$10,246,000 (2001 - $6,669,000). The difference between the purchase price of
$12,724,000 (2001 - $7,964,000) and the stated capital has been charged to
retained earnings.

10. SHARE BASED COMPENSATION

Certain employees of the Company and its subsidiaries may be
entitled to participate in the Company's Share Incentive Plan. The Share
Incentive Plan consists of a share purchase plan, a share bonus plan and a share
option plan.

SHARE PURCHASE PLAN

Under the share purchase plan, eligible participants may
contribute up to a specified maximum amount of their basic annual salary towards
the purchase of Subordinate Shares of the Company from treasury. The Company may
match up to the full amount of each participant's contribution to the share
purchase plan such contribution being used either to purchase common shares in
the open market or to issue additional shares from treasury.

During 2002, participants contributed $129,000 (2001
-$121,000) to the share purchase plan and received 9,004 (2001 - 7,715)
Subordinate Shares issued from treasury. The Company recognized compensation
expense of $129,000 (2001 - $121,000) in respect of the share purchase plan, the
entire amount of which was used to purchase Subordinate Shares in the open
market.

As at December 31, 2002, a maximum of 660,000 Subordinate
Shares were approved for issuance pursuant to the share purchase plan, an
aggregate of 319,590 have been issued and an aggregate of 340,410 Subordinate
Shares remain available for issue from treasury.

SHARE BONUS PLAN

The share bonus plan permits Subordinate Shares of the
Company to be issued from treasury as a discretionary bonus to eligible
participants from time to time on terms established in accordance with the Share
Incentive Plan. During 2001, with the approval of the compensation committee of
the Company, a total of 27,000 Subordinate Shares were issued to eligible
participants and the Company recognized bonus compensation expense of $456,000.
There were no awards made pursuant to the share bonus plan during the year ended
December 31, 2002.

As of December 31, 2002, a maximum of 500,000 Subordinate
Shares were approved for issuance pursuant to the share bonus plan, an aggregate
of 67,000 have been issued and an aggregate of 433,000 Subordinate Shares remain
available for issue from treasury of which 5,000 have been conditionally
awarded.

SHARE OPTION PLAN

Under the share option plan, Dundee Bancorp may issue options
to purchase Subordinate Shares to eligible participants. The exercise price per
common shares may not be less than the closing price of the common shares on the
TSX or such other stock exchange, as applicable, on the last trading day
immediately preceding the day the options are granted. Each option currently
outstanding becomes exercisable as to 33 1/3% of the Subordinate Shares, on a
cumulative basis, on the first three anniversary dates following the date of
grant. Current options outstanding expire 10 years from the date of grant.

The total number of share options cannot exceed 4,000,000.
Options to purchase an aggregate of 2,484,169 Subordinate Shares of Dundee
Bancorp were outstanding as at December 31, 2002, an aggregate of 798,996 have
been exercised and an aggregate of 716,835 Subordinate Shares remain available
for grant of options under the share option plan.

A summary of the status of the Company's share option plan as at December 31,
2002 and 2001, and the changes during the years then ended is presented below:

|                               |           |                | 2002     |                |   | 2001    
|------------------------------ | --------- | -------------- | -------- | -------------- | - | --------
|                               |           |                | Weighted |                |   | Weighted
|                               | Number of |                | Average  | Number of      |   | Average 
|                               | Options   | Exercise Price | Options  | Exercise Price
|Outstanding,beginning of year  | 2,948,732 | $              | 14.50    | 3,007,605      | $ | 14.45   
|Granted                        | 35,000    | $              | 15.40    | 125,000        | $ | 14.05   
|Exercised                      | (412,895) | $              | 3.69     | (83,052)       | $ | 10.80   
|Cancelled                      | (86,668)  | $              | 21.32    | (100,821)      | $ | 15.49   
|Outstanding,end of year        | 2,484,169 | $              | 16.07    | 2,948,732      | $ | 14.50   
|Exercisable at
    December 31 | 2,250,834 | $              | 16.20    | 2,384,619      | $ | 14.46   

Options outstanding as at December 31, 2002 are as follows:

|                     |             |                | Weighted         | Remaining   |          
|-------------------- | ----------- | -------------- | ---------------- | ----------- | ---------
|                     | Options     |                | Average          | Contractual | Options  
|Exercise Price Range | Outstanding | Exercise Price | Life
    (Years) | Exercisable
|$4.50 to $7.13       | 50,000      | $              | 5.55             | 0.39        | 50,000   
|$8.63 to $13.15      | 401,501     | $              | 9.95             | 2.78        | 358,167  
|$14.00 to $17.75     | 1,799,168   | $              | 15.53            | 5.54        | 1,609,167
|$27.25 to $40.75     | 233,500     | $              | 33.06            | 4.87        | 233,500  

SHARE INCENTIVE PLANS OF DUNDEE WEALTH

Dundee Wealth has established a share incentive plan for
employees, officers and directors of Dundee Wealth and its subsidiaries and a
share incentive plan for independent financial advisors and service providers
of, and consultants to Dundee Wealth. Each of the share incentive plans consists
of a share purchase plan, a share bonus plan, a share option plan and a deferred
share bonus plan. During 2002, Dundee Wealth recognized compensation expense of
$2,484,000 (2001 - $2,131,000) in respect of these plans (note 15).

11. CONTINGENCIES AND COMMITMENTS

LEASE COMMITMENTS

The Company and its subsidiaries have lease agreements for
premises pursuant to which future minimum lease payments, exclusive of operating
costs and realty taxes, are as follows:



|2003       | $ | 6,394 
|---------- | - | ------
|2004       |   | 4,464 
|2005       |   | 4,234 
|2006       |   | 3,818 
|2007       |   | 3,202 
|Thereafter |   | 7,551 
|           | $ | 29,663

GUARANTEES AND LETTERS OF CREDIT

The Company has issued guarantees and letters of credit
totalling approximately $11,268,000 at December 31, 2002 (2001 - $11,350,000) to
cover potential indebtedness of certain companies. Included in the amount is a
letter of credit for US$6,500,000 issued to the banking syndicate of Breakwater
Resources Ltd. to increase its loan facility. The letter of credit amount, if
drawn, will rank pari passu with the bank's fixed asset security for its loan to
Breakwater Resources Ltd.

SHAREHOLDERS' AGREEMENT

Pursuant to a shareholders' agreement between the Company,
CDP, Dundee Wealth and DWM, CDP has the right, in certain circumstances, to
require DWM, Dundee Wealth or Dundee Bancorp to purchase for cash all or part of
its shares in DWM at fair market value.

SUPPORT AGREEMENTS

The Company and certain of its subsidiaries have entered into
support agreements, pursuant to which the companies agree to comply with the
covenants and provisions of the Company's $150,000,000 trust indentures, and to
indemnify Dundee Bancorp with respect to all losses, costs and expenses arising
from a breach of such agreements. The obligations to Dundee Bancorp are secured
by substantially all of the assets of Dundee Wealth and certain of its
subsidiaries, which in certain cases, are subordinate to the security interest
in favour of a Canadian chartered bank.

MERGER AGREEMENT WITH IPC FINANCIAL NETWORK INC. ("IPCFN")

On December 26, 2002, Dundee Wealth entered into a merger
agreement with IPCFN with the intention that IPCFN amalgamate with a wholly
owned subsidiary of Dundee Wealth. The transaction is subject to a number of
conditions and is scheduled to close in April 2003. Shareholders of IPCFN will
receive a combination of cash, Dundee Wealth common shares and Dundee Wealth
preference shares as consideration, with the result that IPCFN will initially
become a wholly owned subsidiary of Dundee Wealth. The aggregate purchase price
payable to IPCFN shareholders will approximate $118,700,000 and will include
cash and other obligations to be settled in cash immediately following closing
approximating $33,300,000.

CONTINGENT LIABILITIES

The Company is a defendant in various legal actions. Although
the ultimate outcome of these actions cannot be ascertained at this time and the
results of legal proceedings cannot be predicted with certainty, it is the
opinion of management that adequate provisions have been made for any
liabilities, and the resolution of these matters will not have a material
adverse effect on the financial position of the Company.

12. INCOME TAXES

The Company's income tax provision (recovery) differs from the amount that
would be computed by applying the combined Canadian federal and provincial
statutory income tax rate as a result of the following:

|                                                                                              |   | 2002    |   | 2001    
|--------------------------------------------------------------------------------------------- | - | ------- | - | --------
|Combined Canadian
    federal and provincial statutory income tax rate of 39% (2001 - 42%)    | $ | (790)   | $ | (27,715)
|Non deductible
    expenses                                                                   |   | 6,638   |   | 3,885   
|Non taxable
    revenues                                                                      |   | (3,664) |   | -       
|Adjustment to
    carrying value of future tax assets relating to loss carry forwards         |   | 581     |   | 1,824   
|Benefit of foreign
    losses not recognized                                                  |   | 2,261   |   | 22,258  
|Effect of expected
    income tax rate reductions on future income tax assets and liabilities |   | -       |   | (6,426) 
|Remeasurement of
    rates applied to future tax assets and liabilities                       |   | 697     |   | -       
|Other                                                                                         |   | 1,725   |   | (1,728) 
|Income tax provision (recovery)                                                               | $ | 7,448   | $ | (7,902) 

Significant components of the Company's future income tax assets and
liabilities as at December 31, 2002 and 2001 are as follows:

|                                                                |   | 2002   |   | 2001  
|--------------------------------------------------------------- | - | ------ | - | ------
|Future income tax
    assets                                    |   |        |   |       
|Tax loss carry
    forwards                                     | $ | 13,360 | $ | 14,641
|Capital assets                                                  |   | 4,478  |   | 2,913 
|Other                                                           |   | 10,146 |   | 6,504 
|                                                                |   | 27,984 |   | 24,058
|Future income tax
    liabilities                               |   |        |   |       
|Investment
    portfolio,including equity accounted investments |   | 21,623 |   | 31,244
|Unrealized
    dilution gain on reorganization                  |   | 9,220  |   | 9,219 
|Deferred sales
    commissions                                  |   | 25,829 |   | 20,244
|Oil and gas
    properties                                      |   | 2,675  |   | 2,675 
|Management
    contracts                                        |   | 395    |   | 417   
|Other                                                           |   | 6,676  |   | 2,674 
|                                                                |   | 66,418 |   | 66,473
|Net future income tax liability                                 | $ | 38,434 | $ | 42,415

Future income tax assets are recognized only to the extent that, in the
opinion of management, it is more likely than not that these future income tax
assets will be realized.

13. SEGMENTED INFORMATION

Financial information is presented according to the following operating
segments:

THE WEALTH MANAGEMENT DIVISION

The wealth management segment includes the operating results
and net assets of the Company's financial service subsidiary, Dundee Wealth.
This segment provides investment management and administrative services to
Dynamic, DynamicNova, Dynamic Power and Dynamic Focus+ Mutual Fund families, the
Viscount Wealth Management Program, Dundee Precious Metals Inc., Dynamic Venture
Opportunities Fund Ltd., CMP Resource Limited Partnerships, Canada Dominion
Resources Limited Partnerships, high net worth private individuals, institutions
and corporations. This operating segment also includes the retail distribution
and brokerage subsidiaries of Dundee Wealth which are engaged in retail
distribution of financial products and are also engaged in institutional sales,
trading, research and investment banking.

CORPORATE AND INVESTMENT PORTFOLIO ACTIVITIES

Corporate and investment portfolio activities include various
revenues and expenses incurred at the corporate level, including revenues
generated and expenses incurred in the management of the Company's investment
portfolio. Investment activities carried on by certain foreign subsidiaries are
included in this segment.

INTERNATIONAL OPERATIONS

The Company's international activities are carried out
through several wholly owned subsidiaries located in Bermuda and the Cayman
Islands. Through these entities, the Company provides investment management and
administrative services to mutual funds, hedge funds and other investment
clients.

|                                    |   |         |            | Wealth  |                      | Corporate and |   |               |   |       |   |       
|----------------------------------- | - | ------- | ---------- | ------- | -------------------- | ------------- | - | ------------- | - | ----- | - | ------
|SEGMENTED ASSETS                    |   |         | Management |         | Investment Portfolio |               |   | International |   | TOTAL
|As at December
    31,              |   | 2002    |            | 2001    |                      | 2002          |   | 2001          |   | 2002  |   | 2001  
|Cash and short
    term investments | $ | 103,071 | $          | 95,194  | $                    | 5,657         | $ | 2,721         | $ | 2,206 | $ | 8,735 
|Brokerage
    securities owned      |   | 12,201  |            | 10,613  |                      | -             |   | -             |   | -     |   | -     
|Accounts
    receivable             |   | 37,874  |            | 33,433  |                      | 2,663         |   | 3,026         |   | 4,376 |   | 1,570 
|Amounts due from
    subsidiaries   |   | -       |            | -       |                      | 46,127        |   | 43,196        |   | -     |   | -     
|Client accounts
    receivable      |   | 230,730 |            | 229,172 |                      | -             |   | -             |   | -     |   | -     
|Investment
    portfolio            |   | 12,412  |            | 13,097  |                      | 416,313       |   | 428,027       |   | -     |   | -     
|Deferred sales
    commissions      |   | 81,089  |            | 56,910  |                      | -             |   | -             |   | -     |   | -     
|Capital and other
    assets        |   | 218,505 |            | 92,427  |                      | 20,210        |   | 25,295        |   | 2,812 |   | 6,746 
|Total Assets                        | $ | 695,882 | $          | 530,846 | $                    | 490,970       | $ | 502,265       | $ | 9,394 | $ | 17,051
|Intersegment
    assets             |   |         |            |         |                      |               |   |               |   |       |   |       
|Oil and gas
    properties          |   |         |            |         |                      |               |   |               |   |       |   |       
|and associated
    assets           |   |         |            |         |                      |               |   |               |   |       |   |       
|Residual carrying
    value         |   |         |            |         |                      |               |   |               |   |       |   |       
|of investment in
    India          |   |         |            |         |                      |               |   |               |   |       |   |       
|                                    |   |         |            |         |                      |               |   |               |   |       |   |       



|                                         |   |         |            | Wealth  |                      | Corporate and |   |               |   |        |   |        |   |         
|---------------------------------------- | - | ------- | ---------- | ------- | -------------------- | ------------- | - | ------------- | - | ------ | - | ------ | - | --------
|SEGMENTED LIABILITIES                    |   |         | Management |         | Investment Portfolio |               |   | International |   |        |   | TOTAL 
|As at December
    31,                   |   | 2002    |            | 2001    |                      | 2002          |   | 2001          |   | 2002   |   | 2001   |   | 2002    
|Bank indebtedness                        | $ | 7,374   | $          | -       | $                    | -             | $ | -             | $ | -      | $ | -      | $ | 7,374   
|Accounts payable
    and                 |   |         |            |         |                      |               |   |               |   |        |   |        |   |         
|accrued
    liabilities                  |   | 46,784  |            | 34,725  |                      | 11,936        |   | 7,483         |   | 460    |   | 364    |   | 59,180  
|Brokerage
    securities sold short      |   | 4,845   |            | 2,094   |                      | -             |   | -             |   | -      |   | -      |   | 4,845   
|Client deposits
    and                  |   |         |            |         |                      |               |   |               |   |        |   |        |   |         
|related
    liabilities                  |   | 260,711 |            | 269,615 |                      | -             |   | -             |   | -      |   | -      |   | 260,711 
|Income taxes
    payable                 |   | (82)    |            | 5,536   |                      | 695           |   | (3,192)       |   | -      |   | -      |   | 613     
|Amounts due to
    parent                |   | 9,216   |            | 12,587  |                      | -             |   | -             |   | 36,911 |   | 30,603 |   | 46,127  
|Corporate debt                           |   | 57,360  |            | 24,627  |                      | 180,729       |   | 179,172       |   | -      |   | -      |   | 238,089 
|Future income tax
    liability          |   | 4,282   |            | 7,798   |                      | 33,600        |   | 35,603        |   | -      |   | -      |   | 37,882  
|Total Liabilities                        | $ | 390,490 | $          | 356,982 | $                    | 226,960       | $ | 219,066       | $ | 37,371 | $ | 30,967 |   | 654,821 
|Intersegment
    liabilities             |   |         |            |         |                      |               |   |               |   |        |   |        |   | (46,127)
|Oil and gas
    properties               |   |         |            |         |                      |               |   |               |   |        |   |        |   |         
|and associated
    liabilities           |   |         |            |         |                      |               |   |               |   |        |   |        |   | 2,505   
|Expected
    liabilities associated with |   |         |            |         |                      |               |   |               |   |        |   |        |   |         
|discontinued
    operations in India     |   |         |            |         |                      |               |   |               |   |        |   |        |   | 1,383   
|                                         |   |         |            |         |                      |               |   |               |   |        |   |        | $ | 612,582 



|                                     |            |         |                      | Wealth  |      | Corporate and |      |          |      |         |      |         |      |        
|------------------------------------ | ---------- | ------- | -------------------- | ------- | ---- | ------------- | ---- | -------- | ---- | ------- | ---- | ------- | ---- | -------
|SEGMENTED
    EARNINGS (LOSS)        | Management |         | Investment Portfolio |         |      | International |      |          |      | TOTAL  
|For the years
    ended December 31, | 2002       |         | 2001                 |         | 2002 |               | 2001 |          | 2002 |         | 2001 |         | 2002 |        
|Revenue                              | $          | 266,848 | $                    | 235,256 | $    | 7,099         | $    | 16,388   | $    | 3,150   | $    | 3,719   | $    | 277,097
|Expenses                             |            | 256,430 |                      | 234,867 |      | 17,998        |      | 22,883   |      | 4,638   |      | 4,886   |      | 279,066
|Amortization of
    goodwill         |            | -       |                      | 4,463   |      | -             |      | 777      |      | -       |      | 479     |      | -      
|OPERATING
    (LOSS) EARNINGS        |            | 10,418  |                      | (4,074) |      | (10,899)      |      | (7,272)  |      | (1,488) |      | (1,646) |      | (1,969)
|Other items:                         |            |         |                      |         |      |               |      |          |      |         |      |         |      |        
|Equity earnings
    (loss)           |            | -       |                      | -       |      | 2,252         |      | (20,124) |      | -       |      | -       |      | 2,252  
|Investment
    provision             |            | (793)   |                      | (939)   |      | (8,472)       |      | (22,487) |      | -       |      | -       |      | (9,265)
|(LOSS) EARNINGS
    BEFORE TAXES     | $          | 9,625   | $                    | (5,013) | $    | (17,119)      | $    | (49,883) | $    | (1,488) | $    | (1,646) |      | (8,982)
|Dilution gain                        |            |         |                      |         |      |               |      |          |      |         |      |         |      | 75,680 
|Oil and gas
    properties           |            |         |                      |         |      |               |      |          |      |         |      |         |      | 6,258  
|Discontinuance of
    operations     |            |         |                      |         |      |               |      |          |      |         |      |         |      |        
|in India                             |            |         |                      |         |      |               |      |          |      |         |      |         |      | -      
|Income taxes                         |            |         |                      |         |      |               |      |          |      |         |      |         |      |        
|Current                              |            |         |                      |         |      |               |      |          |      |         |      |         |      | 10,861 
|Future                               |            |         |                      |         |      |               |      |          |      |         |      |         |      | (3,413)
|Non controlling
    interest         |            |         |                      |         |      |               |      |          |      |         |      |         |      | 15,252 
|                                     |            |         |                      |         |      |               |      |          |      |         |      |         | $    | 50,256 

14. FINANCIAL INSTRUMENTS

In the normal course of business, subsidiaries of Dundee
Wealth may enter into various derivative instrument contracts to meet the needs
of customers, earn trading income, and manage the subsidiaries' exposure to
market risk. Each type of contract will limit, or give rise to varying degrees
and types of risk including credit risk, market risk and interest rate risk.

CREDIT RISK

Credit risk arises from the potential for a counterparty to default on a
contractual obligation. Certain of Dundee

Wealth's subsidiaries are exposed to the risk that in the
event of counterparty default, prevailing market conditions are such that the
Company would incur a loss in replacing the defaulted transaction. Dundee
Wealth's subsidiaries limit the credit risk of derivatives traded
over-the-counter by dealing with counterparties that are creditworthy. For
exchange traded products, exposure to credit risk is limited, as these
transactions are standardized contracts executed on established exchanges and
subject to daily settlement of variation margins. Written options also have no
credit risk as the counterparty has already performed in accordance with the
terms of the contract through an up front payment of the premium.

Certain of the Company's other activities are subject to the
risk of counterparty non-performance. In connection with these activities, the
Company enters into securities borrowing and lending arrangements and certain
other collateralized transactions which may result in credit exposure in the
event the counterparty to the transaction is unable to fulfill its contractual
obligations.

The Company seeks to control the risks associated with client
activities by monitoring credit exposures, limiting transactions with specific
clients, and by primarily requiring settlement of securities transactions on a
cash basis or delivery against payment. Clients purchasing securities on margin
must maintain collateral in their client accounts in accordance with regulatory
guidelines.

The Company's exposure to credit risk associated with its trading activities
is measured on an individual counterparty basis.

MARKET RISK

The Company is exposed to the risk of loss resulting from
changes in prices of financial instruments in markets in which the Company
participates such as the interest rate, equity, and to a lesser extent, foreign
exchange markets. As financial instruments held for trading are recognized at
market values, these changes affect reported earnings (loss) as they occur.

INTEREST RATE RISK

Interest rate risk arises from the possibility that changes in interest rates
will affect the value of financial instruments. The Company does not hedge its
exposure to interest rate risk as it is minimal.

15. CHANGES IN ACCOUNTING POLICIES

GOODWILL AND OTHER INTANGIBLE ASSETS

On January 1, 2002, the Company adopted CICA Handbook Section
3062, "Goodwill and Other Intangible Assets". Under this section, goodwill and
certain other intangible assets with an indefinite life are no longer amortized.
Previously, these assets were amortized on a straight-line basis over 20 years.

The effects of the above change in accounting policy to the consolidated
financial statements had the requirements of Section 3062 been applied
retroactively to 2001 would be as follows:

|                                                                                          |   | 2002   |   | 2001    
|----------------------------------------------------------------------------------------- | - | ------ | - | --------
|Reported earnings
    (loss)                                                              | $ | 50,256 | $ | (56,965)
|Add back
    amortization of goodwill and other intangible assets,net of tax              |   | -      |   | 5,419   
|Net earnings
    (loss) adjusted for amortization of goodwill and other intangible assets | $ | 50,256 | $ | (51,546)
|                                                                                          |   |        |   |         
|                                                                                          |   |        |   |         
|As previously
    reported                                                                |   |        |   |         
|Basic earnings
    (loss) per share                                                       | $ | 1.98   | $ | (2.17)  
|Diluted earnings
    (loss) per share                                                     | $ | 1.96   | $ | (2.17)  
|                                                                                          |   |        |   |         
|                                                                                          |   |        |   |         
|Adjusted for
    amortization of goodwill and other intangible assets                     |   |        |   |         
|Basic earnings
    (loss) per share                                                       | $ | 1.98   | $ | (1.97)  
|Diluted earnings
    (loss) per share                                                     | $ | 1.96   | $ | (1.97)  

The new guideline requires impairment testing on the carrying
value of goodwill and other intangible assets. During the first six months of
2002, the Company assessed the carrying value of goodwill and other intangible
assets as at December 31, 2001 by applying fair-value-based tests and determined
that it was appropriate to reduce the carrying value of goodwill related to
certain of its international activities by $3,948,000. In accordance with
provisions of the new section, the Company reduced its opening retained earnings
as at January 1, 2002 by this amount. The Company applied these same
fair-value-based tests to its carrying value in goodwill and other intangible
assets as at December 31, 2002 and determined that there has not been any
further impairment.

Certain equity accounted investees applied the new
requirements of this section to the carrying value of their goodwill as at
December 31, 2001 and determined that it would be appropriate to recognize an
impairment. The impairment was recorded as an adjustment to opening retained
earnings of the equity accounted investee on January 1, 2002. Dundee Bancorp
recorded its proportionate interest in this impairment, net of tax, against
Dundee Bancorp's opening retained earnings as at January 1, 2002.

CHANGES IN ACCOUNTING POLICIES ADOPTED BY EQUITY ACCOUNTED INVESTEES

An equity accounted investee of the Company has adopted the
new CICA recommendation for the elimination of the deferral and amortization of
unrealized gains and losses on foreign currency denominated monetary items that
have a fixed or ascertainable life extending beyond the current reporting
period. This same investee has amended its policy for revenue recognition on
sales of inventory. Under the new method, revenue is recognized upon delivery of
inventory to third party customers. Previously, revenue was recognized at the
time of production. The effect of these changes in accounting policies is to
reduce January 1, 2002 opening retained earnings in the equity accounted
investee. Dundee Bancorp has recorded its proportionate interest in this
reduction, net of tax, against Dundee Bancorp's retained earnings as at January
1, 2002.

Cumulative Effects of Accounting Changes to Opening
Retained Earnings

|Change in
    accounting policies,equity accounted investees | $ | (2,124)
|------------------------------------------------------------ | - | -------
|Goodwill
    impairment adjustment                           | $ | (3,948)

ACCOUNTING FOR STOCK BASED COMPENSATION

Effective January 1, 2002, the Company prospectively adopted
the requirements of CICA Handbook Section 3870, "Stock Based Compensation". This
section requires the use of fair-value-based methods to account for certain
types of share-based compensation arrangements. The impact to reported earnings
of adopting the new standard is as follows:

Share Option Plans

Awarding of share options under current terms and conditions
will not result in compensation expense when granted, but will be credited to
shareholders' equity when the share option is ultimately exercised. Under
Section 3870, the Company is allowed to continue its existing policy of not
recording compensation cost on the grant of share options to employees, with the
addition of pro forma information.

The Company is obliged by the CICA to provide pro forma
earnings and other related information for employee share options by using an
option-pricing model that includes volatility. Fair value of options for pro
forma purposes has been determined using the Black-Scholes option-pricing model
using management's best estimates as further detailed in the table below:

|                                                  | Equity    |       |        |        |         |        |         |        |      
|------------------------------------------------- | --------- | ----- | ------ | ------ | ------- | ------ | ------- | ------ | -----
|                                                  | Accounted |       | Dundee |        |         |        | Dundee  |        |      
|For the year
    ended December 31, 2002          | Investees |       | Wealth |        | Eurogas |        | Bancorp |        | Total
|Risk Free Rate of
    Return                      |           |       |        | 5.11%  |         | 5.00%  |         | 5.46%  |      
|Dividend Yield                                    |           |       |        | 0.00%  |         | 0.00%  |         | 0.00%  |      
|Volatility Factor                                 |           |       |        | 45.26% |         | 74.20% |         | 41.93% |      
|Weighted Average
    Expected Option Life (years) |           |       |        | 6      |         | 5      |         | 6      |      
|                                                  |           |       |        |        |         |        |         |        |      
|                                                  |           |       |        |        |         |        |         |        |      
|Earnings,as
    reported                          |           |       |        |        |         |        |         |        | $    
|Calculated
    Valuation of Options               | $         | (276) | $      | (265)  | $       | (52)   | $       | (92)   |      
|Non Controlling
    Interest                      |           |       |        |        |         |        |         |        |      
|Pro Forma Earnings                                |           |       |        |        |         |        |         |        | $    
|                                                  |           |       |        |        |         |        |         |        |      
|                                                  |           |       |        |        |         |        |         |        |      
|Pro Forma Basic
    Earnings per Share            |           |       |        |        |         |        |         |        | $    
|Pro Forma Diluted
    Earnings per Share          |           |       |        |        |         |        |         |        | $    

Share Bonus Plans and Reserved Share Arrangements

From time to time, employees of Dundee Wealth's operating
subsidiaries may be granted awards by the compensation committee of Dundee
Wealth that would entitle the employee to receive common shares of Dundee Wealth
if certain conditions are met. Previously, Dundee Wealth recognized the
associated expense of these awards when the conditions of issue were met. The
new requirements result in recognition of compensation expense as follows:

- in the case of shares awarded conditional on the employees'
continuing employment until specified dates, compensation expense will be
recognized evenly over the period between the date of grant of the award and the
specified date; and

- in the case of shares awarded conditional on employees
achieving certain production levels, then pro-rated based on production levels
reached during the reporting period relative to the target production level.

During 2002, Dundee Wealth recognized $400,000 of compensation expense in
respect of these awards.

16. SUBSEQUENT EVENTS

On January 1, 2003, Dynamic amalgamated with DynamicNova and
several subsidiaries of DynamicNova. Dynamic is the manager of each of the
Dynamic and DynamicNova Mutual Funds.

In February 2003, a subsidiary of the Company entered into an
agreement pursuant to which it will acquire the remaining 49% interest in the
Canada Dominion Group of Companies which it did not already own. The transaction
was completed effective March 28, 2003.

QUARTERLY FINANCIAL INFORMATION (unaudited)

|                             |   | 1st
    Quarter | 2nd
    Quarter | 3rd
    Quarter | 4th
    Quarter |               | YTD           
|---------------------------- | - | --------------- | --------------- | --------------- | --------------- | ------------- | --------------
|                             |   | 2002            | 2001            | 2002            | 2001            | 2002          | 2001          
|                             |   |                 |                 |                 |                 |               |               
|REVENUE                      |   |                 |                 |                 |                 |               |               
|Management and               |   |                 |                 |                 |                 |               |               
|administration
    fees      | $ | 28,888          | $
    28,619    | $
    30,839    | $
    28,168    | $
    27,086  | $
    26,926  
|Redemption fees              |   | 2,319           | 2,936           | 2,394           | 2,832           | 2,041         | 2,401         
|Financial services           |   | 30,213          | 32,834          | 36,200          | 28,627          | 26,372        | 22,658        
|                             |   | 61,420          | 64,389          | 69,433          | 59,627          | 55,499        | 51,985        
|Investment income
    (loss) |   | 1,218           | 4,557           | 2,563           | 713             | 770           | 4,184         
|Oil and gas
    sales,net    |   |                 |                 |                 |                 |               |               
|of royalties                 |   | 1,383           | -               | 1,966           | -               | 1,327         | -             
|                             |   | 64,021          | 68,946          | 73,962          | 60,340          | 57,596        | 56,169        
|EXPENSES                     |   |                 |                 |                 |                 |               |               
|Selling,general              |   |                 |                 |                 |                 |               |               
|and administrative           |   | 28,523          | 27,437          | 32,388          | 30,279          | 27,851        | 31,353        
|Variable
    compensation    |   | 17,275          | 18,880          | 20,367          | 13,469          | 16,090        | 11,503        
|Trailer fees                 |   | 5,047           | 5,202           | 5,040           | 4,835           | 5,130         | 4,807         
|Operating
    costs,oil and  |   |                 |                 |                 |                 |               |               
|gas properties               |   | 430             | -               | 453             | -               | 581           | -             
|                             |   | 51,275          | 51,519          | 58,248          | 48,583          | 49,652        | 47,663        
|OPERATING EARNINGS           |   |                 |                 |                 |                 |               |               
|BEFORE INTEREST,             |   |                 |                 |                 |                 |               |               
|TAXES AND OTHER              |   |                 |                 |                 |                 |               |               
|NON CASH ITEMS               |   | 12,746          | 17,427          | 15,714          | 11,757          | 7,944         | 8,506         
|Amortization of
    deferred |   |                 |                 |                 |                 |               |               
|sales commissions            |   | 8,163           | 10,169          | 7,718           | 9,419           | 7,260         | 9,029         
|Amortization of
    goodwill |   | -               | 1,448           | -               | 1,419           | -             | 1,436         
|Depreciation,depletion       |   |                 |                 |                 |                 |               |               
|and amortization             |   | 1,876           | 1,337           | 2,429           | 1,472           | 2,108         | 1,610         
|Interest expense             |   | 3,167           | 3,418           | 3,266           | 3,931           | 3,352         | 3,634         
|OPERATING                    |   |                 |                 |                 |                 |               |               
|EARNINGS (LOSS)              |   | (460)           | 1,055           | 2,301           | (4,484)         | (4,776)       | (7,203)       
|Share of earnings            |   |                 |                 |                 |                 |               |               
|(losses) of equity           |   |                 |                 |                 |                 |               |               
|accounted
    investments    |   | 2,871           | 594             | 6,034           | 967             | (2,007)       | (34,379)      
|Dilution gain                |   | -               | -               | -               | -               | -             | -             
|Increase in
    investment   |   |                 |                 |                 |                 |               |               
|provision to
    reflect     |   |                 |                 |                 |                 |               |               
|decreases in value           |   |                 |                 |                 |                 |               |               
|of investments               |   | -               | -               | -               | -               | (3,973)       | (18,622)      
|Income taxes                 |   |                 |                 |                 |                 |               |               
|Current                      |   | 4,311           | 3,574           | 2,329           | 4,265           | 2,232         | (148)         
|Future                       |   | (3,303)         | (908)           | 1,614           | (4,354)         | (5,205)       | (677)         
|Non controlling
    interest |   | 84              | 85              | 238             | (282)           | (477)         | (647)         
|NET EARNINGS (LOSS)          | $ | 1,319           | $
    (1,102)   | $
    4,154     | $
    (3,146)   | $
    (7,306) | $
    (58,732)