TD WATERHOUSE GROUP INC, S-1/A, 1999-06-22

TD WATERHOUSE GROUP INC
S-1/A, 1999-06-22
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 1999

REGISTRATION NO. 333-77521
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------

PRE-EFFECTIVE AMENDMENT NO. 3

Form S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------------
TD WATERHOUSE GROUP, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6791 13-4056516
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

100 WALL STREET
NEW YORK, NEW YORK 10005
(212) 806-3500
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------
STEPHEN D. MCDONALD
CHIEF EXECUTIVE OFFICER
TD WATERHOUSE GROUP, INC.
100 WALL STREET
NEW YORK, NEW YORK 10005
(212) 806-3500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------------

COPIES TO:

<TABLE>
<S> <C> <C>
LEE MEYERSON, ESQ. R. GLENN BUMSTEAD, ESQ. STEPHEN L. BURNS, ESQ.
SIMPSON THACHER & BARTLETT SENIOR VICE PRESIDENT, CRAVATH, SWAINE & MOORE
425 LEXINGTON AVENUE GENERAL COUNSEL AND SECRETARY WORLDWIDE PLAZA
NEW YORK, NEW YORK 10017 THE TORONTO-DOMINION BANK 825 EIGHTH AVENUE
(212) 455-2000 TORONTO DOMINION CENTRE NEW YORK, NEW YORK 10019
TORONTO, ONTARIO M5K 1A2 (212) 474-1000
(416) 982-8345
</TABLE>

------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, check the following box. [ ]
------------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JUNE 22, 1999

32,000,000 Shares
[TD WATERHOUSE LOGO]

TD WATERHOUSE GROUP, INC.

Common Stock
------------------------

We are offering 20,800,000 shares of our common stock in the United States
through a syndicate of U.S. underwriters, 8,000,000 shares in Canada through a
syndicate of Canadian underwriters, and 3,200,000 shares outside of the United
States and Canada through a syndicate of international managers. The
underwriters and managers have an option to purchase on a pro rata basis up to
4,800,000 additional shares to cover over-allotments.

Prior to these offerings, there has not been a public market for our common
stock. The initial public offering price is expected to be between $20.00 and
$24.00 per share. Our common stock has been approved for listing on The New York
Stock Exchange, and has been conditionally approved for listing on The Toronto
Stock Exchange, under the symbol "TWE."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" STARTING ON
PAGE 8.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS TD WATERHOUSE
------------- ------------- -------------
<S> <C> <C> <C>
Per Share............................................ $ $ $
Total................................................ $ $ $
</TABLE>

We expect to deliver the shares of common stock on or about ,
1999.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

------------------------

Joint Global Coordinators

CREDIT SUISSE FIRST BOSTON TD SECURITIES
-------------------------------

CREDIT SUISSE FIRST BOSTON TD SECURITIES

GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
MORGAN STANLEY DEAN WITTER

The date of this prospectus is , 1999.
<PAGE> 3

TD WATERHOUSE,
A GLOBAL ONLINE BROKER

[Graphic Picture: Computer Screen Showing TD Waterhouse Logo and Globe.]
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 2
Risk Factors........................... 8
Special Note Regarding Forward-Looking
Statements........................... 18
Use of Proceeds........................ 19
Dividend Policy........................ 20
Dilution............................... 20
Capitalization......................... 21
Selected Financial and Other Data...... 22
Management's Discussion and Analysis of
Results of Operations and Financial
Condition............................ 24
The Reorganization..................... 40
Business............................... 43
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Management............................. 65
Principal Stockholder.................. 75
Description of Capital Stock........... 79
Certain Anti-Takeover and
Other Provisions..................... 83
Shares Eligible for Future Sale........ 88
Material U.S. Federal Income Tax
Consequences To Non-U.S. Holders..... 89
Underwriting........................... 91
Legal Matters.......................... 95
Experts................................ 95
Additional Information................. 95
Index to Financial Statements.......... F-1
</TABLE>

------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE
INFORMATION CONTAINED IN THIS DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS
DOCUMENT, REGARDLESS OF THE TIME OF DELIVERY OF THIS DOCUMENT OR ANY SALE OF
COMMON STOCK.

------------------------------------
DEALER PROSPECTUS DELIVERY OBLIGATION

UNTIL , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERINGS), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THE OFFERINGS, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATIONS TO DELIVER A PROSPECTUS WHEN ACTING AS
AN UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1
<PAGE> 5

PROSPECTUS SUMMARY

The following section summarizes information presented later in this
prospectus. You should carefully read the entire prospectus, and particularly
the "Risk Factors" section, before investing in our common stock.

Unless otherwise indicated, this prospectus refers to TD Waterhouse Group,
Inc. and its subsidiaries after giving effect to the reorganization that will
take place in connection with these offerings. In the reorganization, The
Toronto-Dominion Bank, which currently owns all of our common stock, will
transfer to TD Waterhouse all of TD Bank's discount brokerage businesses outside
the U.S. All of the financial and other information in this prospectus has been
restated to reflect this reorganization (which is described in detail later in
this prospectus under the caption "The Reorganization") as if it had occurred at
the beginning of the periods shown or discussed. Unless otherwise indicated, all
references in this prospectus to "dollars" or "$" are to U.S. dollars.

THE COMPANY

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

- the second largest discount brokerage operations globally with over 2.6
million customer accounts, including approximately 1.9 million active
accounts, and more than $105 billion in customer assets under
administration as of April 30, 1999;

- the third largest online discount brokerage operations globally by
trading volume and customer assets;

- a significant international presence with operations in the U.S.,
Canada, Australia, the United Kingdom and Hong Kong;

- the second largest global branch network of any discount broker with
over 200 branches worldwide and an additional 40 branches planned by the
end of 2000; and

- complemented our internal growth with a targeted acquisition program
that has included the acquisition and integration of six companies since
1993, with over 570,000 customer accounts.

We specialize in providing financial services to individual retail
investors who manage their own investments and personal finances and to
fee-based independent investment advisors. Customers in our major markets are
able to utilize our services 24 hours a day, seven days a week through a variety
of delivery channels, including the Internet and other electronic channels as
well as our extensive network of branches and service centers. At April 30,
1999, approximately 855,000 of our customer accounts were enabled for online
trading, and for the most recent fiscal quarter ended April 30, 1999,
approximately 59% of our average daily trading volume of 118,000 trades were
conducted online.

We provide our customers with a broad range of brokerage, mutual fund,
banking and other consumer financial products and services on an integrated
basis. Our mutual fund offerings include over 9,600 mutual funds from over 525
fund families. At April 30, 1999, our customers had invested approximately $23
billion in these mutual funds through us, including over $6.7 billion in
proprietary funds that we advise. In addition to clearing for our own customer
accounts, we also provide correspondent clearing services for a number of other
broker-dealers.

Through our affiliates, Waterhouse National Bank and TD Bank, we provide
our customers with fully integrated banking services, including insured money
market accounts (which had over $3.6 billion in deposits at April 30, 1999),
credit cards, checking, ATM access, insured certificates of deposit and other
banking products. To date, our revenues and net income from banking products and
services provided through our affiliates have not been material, but we believe
that our ability to offer our customers a full line of financial products and
services which includes these consumer banking products and services is a
significant competitive factor in attracting and retaining our customers. We
also provide our customers with a broad array

2
<PAGE> 6

of investment news, research reports and personal investment management tools
(such as portfolio tracking and mutual fund and stock screening programs).

RECENT OPERATING PERFORMANCE

We have achieved substantial growth in recent years in a number of key
operating statistics, with customer accounts, average trades per day and
customer assets for the six months ended April 30, 1999 increasing 42%, 117% and
73%, respectively, from the comparable period in 1998. Our financial performance
over this period also strengthened, with significant growth in revenues and net
income.

- Total revenues for the six months ended April 30, 1999 were a record
$464 million, up 65% from $282 million for the comparable period in
1998; and

- Net income for the six months ended April 30, 1999 was a record $50.0
million, up 135% from $21.3 million for the comparable period in 1998.

We have generated this growth while maintaining or improving operating
margins. For the six months ended April 30, 1999, our pre-tax operating margin
excluding goodwill was 24%, compared to 22% for the comparable period in 1998.

According to estimates compiled by industry analysts, our market share of
online trading activity in the U.S. was approximately 12% in the first calendar
quarter of 1999. This ranks us third in the U.S. and globally based on online
trading volume. In Canada, we were the first in the industry to offer online
trading in 1992 and the first to offer Internet-based trading in 1996. We
continue to be the market leader in Canadian discount brokerage, with a market
share based on client assets of approximately 50% of the total market as of
December 31, 1998, which we believe is more than double that of our nearest
discount brokerage competitor. In addition, we had a market share for the
calendar year 1998 of approximately 18% of total retail listed market orders,
ranking us number one in the Canadian retail brokerage industry.

In the U.S., we have been recognized as a leading provider of low-cost,
high quality financial services. In both 1997 and 1998, SmartMoney magazine
named us "America's #1 Discount Broker," and ranked our online trading service
#1 in 1998. In 1999, SmartMoney ranked us as the #2 overall discount broker and
#1 in both the Breadth of Products and the Extra Services categories. In October
1998, Kiplinger's magazine ranked us as the best discount broker for mutual
funds.

OUR STRATEGY

The discount brokerage industry has grown rapidly over the past decade,
with the largest portion of this growth coming from the significant increase in
online brokerage activity. According to data compiled by International Data
Corporation, since the introduction of Internet access for online brokerage
services in 1996, the number of online brokerage accounts has increased to an
estimated 1.5 million at the end of 1996, 3.5 million at the end of 1997 and 6.4
million at the end of 1998, representing approximately $324 billion in assets.
Online trading is estimated to have reached an average of over 499,000 trades
per day during the first quarter of 1999 and now accounts for an estimated 25%
of all retail stock trades in the U.S.

Our strategy to date has focused on increasing our share of this growing
market, and particularly the important online trading segment, through a
combination of the following elements:

- offering our customers a broad range of financial products and services;

- providing a choice of diverse and integrated delivery channels to our
customers, including Internet, direct dial-up and touch-tone telephone
access, as well as our extensive network of branch offices;

- investing in advanced technology solutions and leveraging selected
strategic partnerships;

- maintaining a commitment to high-quality customer service; and

- offering highly competitive pricing.

3
<PAGE> 7

Our ongoing business strategy focuses on positioning us to take advantage
of the current industry dynamics by leveraging our position as the world's
second largest discount brokerage firm. Key elements of our strategy include:

- building brand awareness on a global basis;

- expanding our products and services;

- building customer assets by focusing on high growth, profitable market
segments;

- leveraging our technological expertise to enhance our customers'
experience and empower them to better manage their investments;

- continuing our international expansion both in existing markets and into
attractive new markets; and

- enhancing our financial performance by building key businesses, focusing
on low cost distribution and continuing to integrate and extract
economies of scale from acquisitions.

------------------------------------

Our principal executive offices are located at 100 Wall Street, New York,
NY 10005, and our telephone number is (212) 806-3500.

4
<PAGE> 8

THE OFFERING

<TABLE>
<S> <C>
Common stock offered:
U.S. offering............................. 20,800,000 shares
Canadian offering......................... 8,000,000 shares
International offering.................... 3,200,000 shares
Total.................................. 32,000,000 shares
Common stock to be outstanding following the
offerings................................. 365,000,000 shares
Use of proceeds............................. We intend to use approximately $443 million
of the estimated net proceeds of the
offerings for investments in technology and
systems upgrades, increases in our
advertising and marketing budget and other
working capital and general corporate
purposes. The exact amount and timing of
such expenditures, however, will depend upon
a number of factors, including growth in
customers and trading activity, market
conditions and technological developments,
and accordingly, management will have broad
discretion in allocating the proceeds from
the offerings for specific purposes. We may
also use a portion of the net proceeds to
finance acquisitions of other companies,
although we do not currently have any
pending or proposed significant
acquisitions.
In addition, we intend to use approximately
$221 million of the remaining net proceeds
to repay certain intercompany debt to TD
Bank and to redeem shares of the preferred
stock of several of our subsidiaries held by
TD Bank.
NYSE and TSE listing symbol................. TWE
</TABLE>

The share totals listed above do not include 4,800,000 additional shares
that will be offered by us if the underwriters and managers exercise their
over-allotment option in full. Some of the disclosure in this prospectus will be
different if the underwriters and managers exercise this option. Unless we state
otherwise, the information in this prospectus assumes that the underwriters and
managers will not exercise this option.

In addition, the number of shares of common stock shown in this prospectus
as outstanding following the offerings includes shares which are
issuable upon exchange of the exchangeable preference shares held by TD Bank
(see "The Reorganization"), and excludes 32,850,000 shares to be reserved for
issuance pursuant to employee incentive and stock option plans.

5
<PAGE> 9

SUMMARY FINANCIAL AND OPERATING DATA

The following table presents the results of the Waterhouse Securities
Group, our U.S.-based operations that were acquired at the end of fiscal year
1996, and the Green Line Group, our Canada-based operations, as stand-alone
operations in fiscal years 1994 and 1995 and as combined operations thereafter.
Pro forma 1996 accounts have been prepared to present the combined results of
operations as if the acquisition of the Waterhouse Securities Group occurred as
of the beginning of fiscal year 1996. The data presented for the six months
ended April 30, 1998 and April 30, 1999 are unaudited. See "Selected Financial
and Other Data," "The Reorganization" and our combined financial statements and
the notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>

YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
----------------------- ------------------------ PRO FORMA HISTORICAL HISTORICAL
CANADA U.S. CANADA U.S. COMBINED COMBINED COMBINED
---------- ---------- ---------- ----------- --------- ---------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues
Commissions and fees.............. $77,398 $83,917 $64,833 $113,881 $ 270,505 $ 313,572 $ 409,432
Mutual fund and related revenue... -- 6,018 5,831 9,286 23,515 35,762 59,022
Net interest revenue.............. 26,604 13,056 28,660 18,888 53,085 68,874 117,733
Other............................. 9,863 1,603 14,493 1,375 23,681 28,424 28,274
------- ------- ------- -------- --------- --------- -----------
TOTAL REVENUES.................. 113,865 104,594 113,817 143,430 370,786 446,632 614,461
------- ------- ------- -------- --------- --------- -----------
Expenses
Employee compensation and
benefits........................ 35,136 32,272 31,414 43,259 107,137 138,261 183,377
Execution and clearing costs...... 18,312 11,983 17,219 14,989 47,510 63,316 95,523
Occupancy and equipment........... 8,555 10,223 10,221 12,992 44,413 43,485 56,596
Advertising and marketing......... 3,120 4,677 3,572 9,441 14,439 18,511 33,184
Communications.................... 7,330 4,189 6,718 6,032 19,154 22,981 30,809
Amortization of goodwill.......... 1,638 -- 1,623 -- 21,121 21,630 33,000
Professional fees................. 4,172 2,480 5,799 4,095 15,034 14,871 15,350
Other............................. 15,219 9,477 11,313 13,969 34,311 44,956 63,144
------- ------- ------- -------- --------- --------- -----------
TOTAL EXPENSES.................. 93,482 75,301 87,879 104,777 303,119 368,011 510,983
------- ------- ------- -------- --------- --------- -----------
Income before income taxes......... 20,383 29,293 25,938 38,653 67,667 78,621 103,478
Income tax provision............... 9,689 11,731 12,127 15,228 41,363 42,416 54,765
------- ------- ------- -------- --------- --------- -----------
NET INCOME...................... $10,694 $17,562 $13,811 $ 23,425 $ 26,304 $ 36,205 $ 48,713
======= ======= ======= ======== ========= ========= ===========
Pro forma basic and diluted
earnings per share................ $ 0.15
===========
Shares used to compute pro forma
per share data (1)................ 333,000,000
===========

<CAPTION>
SIX MONTHS ENDED
APRIL 30,
------------------------
1998 1999
HISTORICAL HISTORICAL
COMBINED COMBINED
---------- -----------
<S> <C> <C>
STATEMENT OF INCOME DATA:
Revenues
Commissions and fees.............. $ 192,112 $ 328,678
Mutual fund and related revenue... 23,386 43,595
Net interest revenue.............. 52,668 73,315
Other............................. 13,745 18,445
--------- -----------
TOTAL REVENUES.................. 281,911 464,033
--------- -----------
Expenses
Employee compensation and
benefits........................ 88,560 130,321
Execution and clearing costs...... 41,450 68,103
Occupancy and equipment........... 26,396 36,801
Advertising and marketing......... 15,819 24,056
Communications.................... 13,916 22,716
Amortization of goodwill.......... 15,363 18,563
Professional fees................. 7,194 10,248
Other............................. 26,925 60,211
--------- -----------
TOTAL EXPENSES.................. 235,623 371,019
--------- -----------
Income before income taxes......... 46,288 93,014
Income tax provision............... 24,954 42,985
--------- -----------
NET INCOME...................... $ 21,334 $ 50,029
========= ===========
Pro forma basic and diluted
earnings per share................ $ 0.15
===========
Shares used to compute pro forma
per share data (1)................ 333,000,000
===========
</TABLE>

<CAPTION>
SIX MONTHS ENDED
APRIL 30,
-----------------------
1998 1999
HISTORICAL HISTORICAL
COMBINED COMBINED
---------- ----------
<S> <C> <C>
OTHER OPERATING DATA:
Pre-tax operating margin,
excluding goodwill............ 21.9% 24.0%
Average commissions per revenue
trade......................... $ 31.60 $ 23.56
Advertising and marketing
expense per new account....... $ 62.84 $ 57.25
Average trades per day
Electronic.................... 23,971 68,016
Total......................... 49,903 108,140
Total accounts................. 1,856,000 2,640,000
Total active accounts(2)....... 1,258,000 1,884,000
Number of new accounts......... 252,000 420,000
Total customer assets (in
billions)..................... $ 61.2 $ 106.1
Total employees................ 3,786 5,310
Total branches................. 177 210
</TABLE>

- ---------------

(1) Shares used to compute pro forma per share data for the year ended October
31, 1998 and the six months ended April 30, 1999 represent common stock
outstanding immediately after the reorganization described elsewhere in this
prospectus but before the offerings. The shares include shares of
common stock issuable on the exchange of the exchangeable preference shares
of our Canadian subsidiary to be issued to TD Bank in the reorganization.

(2) Active accounts are accounts that had purchase, sale or other activity
during the previous calendar quarter.

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<PAGE> 10

The following table sets forth selected data from our combined statement of
financial condition as of April 30, 1999 and as adjusted to give effect to (1)
the reorganization, (2) the sale of 32 million shares of common stock by us in
the offering at an average initial public offering price of $22.00 per share
(the mid-point of the range of estimated initial public offering prices set
forth on the cover page of this prospectus) and after the deduction of the
underwriting discounts and estimated expenses payable by us in the offering and
(3) the application of the net proceeds therefrom. See "Use of Proceeds."

This table should be read in conjunction with our historical combined
financial statements and the notes thereto included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
APRIL 30, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
COMBINED STATEMENT OF FINANCIAL CONDITION DATA:
Cash and cash equivalents................................... $ 671,286 $1,114,286
Securities owned, at market value........................... 63,407 63,407
Receivable from customers................................... 5,096,753 5,096,753
Total assets................................................ 7,628,382 8,071,382
Deposits received for securities loaned..................... 3,780,347 3,780,347
Payable to customers........................................ 2,010,910 2,010,910
Equity...................................................... 1,190,407 1,649,407
</TABLE>

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RISK FACTORS

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

OUR BUSINESS COULD BE HARMED BY MARKET VOLATILITY AND OTHER SECURITIES INDUSTRY
RISKS

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

OUR BUSINESS RELIES HEAVILY ON COMPUTERS AND OTHER ELECTRONIC SYSTEMS AND
CAPACITY CONSTRAINTS AND FAILURES OF THESE SYSTEMS COULD HARM OUR BUSINESS

We receive and process a majority of our trade orders through electronic
means such as the Internet, dial-up links to our private computer networks and
touch-tone telephones. In addition, we execute all of our trades through a
series of computerized processing systems and links to third parties. Thus, we
depend heavily on the capacity and reliability of the electronic systems
supporting this type of trading. Heavy use of our systems during peak trading
times or at times of unusual market volatility could cause our systems to
operate slowly or even to fail for periods of time. Recently, we have
experienced periods of extremely high trading volume and substantial volatility
in the securities markets. On several occasions during these periods, the volume
and volatility of trading activity caused individual system components or
processes to fail, resulting in the temporary unavailability of our web site for
electronic trading. On some other occasions, high trading volume has caused
significant delays in executing trading orders, resulting in some customers'
orders being executed at prices they did not anticipate. We cannot assure you
that these events will not occur again in the future. These occurrences are
dissatisfying to our customers, who may file formal complaints with us or
industry regulatory organizations, initiate regulatory inquiries or proceedings,
file lawsuits against us, switch brokerage firms or cease online trading
altogether. See "Business -- Legal and Administrative Proceedings." While we
constantly monitor system loads and performance and regularly implement system
upgrades to handle predicted increases in trading volume and volatility, we
cannot assure you that we will be able to accurately predict such future volume
increases or volatility or that our systems will be able to accommodate such
volume increases or volatility without failure or degradation.

Our electronic systems are also vulnerable to damage or interruption from
human error, natural disasters, power loss, sabotage, computer viruses and
similar events or the loss of support services from third parties.

As our business expands, we also face risks relating to the need to expand
and upgrade our transaction processing systems, network infrastructure and other
aspects of our technology. While many of our systems are designed to be scalable
(that is, to accommodate additional growth without redesign or replacement), we
may

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nevertheless need to make significant investments in additional hardware and
software to accommodate growth. In addition, we cannot assure you that we will
be able to predict accurately the timing or rate of such growth, or expand and
upgrade our systems and infrastructure on a timely basis.

WE OPERATE IN A HIGHLY REGULATED INDUSTRY AND COMPLIANCE FAILURES COULD
ADVERSELY AFFECT OUR BUSINESS

The securities industry in the U.S., Canada and the other jurisdictions in
which we operate is subject to extensive regulation covering all aspects of the
securities business, including:

- registration of offices and personnel;

- sales methods;

- acceptance and execution of customer orders;

- handling of customer funds and securities;

- trading practices;

- capital structure;

- record keeping;

- conduct of directors, officers and employees; and

- supervision.

As a clearing broker, we have to comply with additional laws and rules.
These include rules relating to possession and control of customer funds and
securities, margin lending and execution and settlement of transactions. See "--
Our Clearing Operations Expose Us to Potential Liability for Clearing Errors and
Other Risks That Could Adversely Affect Us."

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

Recently, various regulatory and enforcement agencies have been reviewing
systems capacity, customer access, best execution practices, and other service
issues as they relate to the discount and online brokerage industry, including
TD Waterhouse. These could result in enforcement actions, new regulations, or
the retroactive application of existing regulations, any of which could have a
material adverse effect on our business, financial condition and operating
results. See "Business -- Legal and Administrative Proceedings."

In addition, we use the Internet as a major distribution channel to provide
products and services to our customers. Due to the increasing popularity of the
Internet, it is possible that new laws and regulations may be adopted dealing
with such issues as user privacy, content and pricing. Such laws and regulations
might increase our cost of using, or limit our ability to use, the Internet as a
distribution channel, which in turn could have a material adverse effect on our
business, financial condition and operating results.

THE FUTURE SUCCESS OF OUR ONLINE BROKERAGE BUSINESS WILL DEPEND ON THE CONTINUED
DEVELOPMENT AND MAINTENANCE OF THE INTERNET INFRASTRUCTURE

The Internet has experienced, and is expected to continue to experience,
significant growth in the number of users and amount of traffic. Our future
success will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. This will require a reliable
network backbone with

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the necessary speed, data capacity and security, and the timely development of
complementary products, such as high speed modems, for providing reliable
Internet access and services.

Many Internet service providers, which provide our customers with access to
the Internet, and other suppliers of Internet systems and components have
experienced a variety of outages and other delays as a result of damage to
portions of their infrastructure and other technical problems and could face
similar outages and delays in the future. Such outages and delays are likely to
affect the level of Internet usage and the processing of transactions on our web
site and are not within our control. In addition, the Internet could lose its
viability due to delays in the development or adoption of new standards to
handle increased levels of activity or due to increased government regulation.
The adoption of new standards or government regulation may require us to incur
substantial data processing development and compliance costs.

WE FACE SUBSTANTIAL COMPETITION WHICH COULD REDUCE OUR MARKET SHARE AND HARM OUR
FINANCIAL PERFORMANCE

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

We also encounter competition from established full commission brokerage
firms whose pricing and Internet strategies are continuing to evolve and who
could elect to market the same types of services that we offer. Recently,
Merrill Lynch, the largest U.S. brokerage firm, announced plans to provide
discounted online brokerage services to its customers by December 1999. In
addition, we compete with financial institutions, mutual fund sponsors and other
organizations, some of which provide (or may in the future provide) electronic
and other discount brokerage services.

Some of our competitors have certain advantages over us, including:
- longer operating histories and greater financial, technical, marketing
and other resources;
- a wider range of services and financial products;
- greater name recognition and larger customer bases;
- more extensive promotional activities, better terms and lower prices
available to customers; and
- cooperative relationships among themselves or with third parties to
enhance services and products.

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

We cannot assure you that we will be able to compete effectively with
current or future competitors. See "Business -- Competition."

FAILURE TO INTRODUCE NEW SERVICES AND PRODUCTS IN A TIMELY MANNER MAY AFFECT OUR
ABILITY TO COMPETE EFFECTIVELY

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

- adapt our services and products to emerging industry standards; or
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<PAGE> 14

- develop, introduce and market enhanced or new services and products.

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

EXPANSION OF OUR OPERATIONS OUTSIDE NORTH AMERICA INVOLVES SPECIAL CHALLENGES
THAT WE MAY NOT BE
ABLE TO MEET, WHICH COULD NEGATIVELY IMPACT OUR FINANCIAL RESULTS

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

- less developed technological infrastructures, resulting in lower
customer acceptance of, or access to, electronic channels;

- less developed automation in exchanges, depositories and national
clearing systems;

- unexpected changes in regulatory requirements, tariffs and other trade
barriers;

- difficulties in staffing and managing foreign operations;

- fluctuations in currency exchange rates;

- reduced protection for intellectual property rights;

- seasonal reductions in business activity during the summer months; and

- potentially adverse tax consequences.

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

We are required to comply with the laws and regulations of each country in
which we conduct business. Any failure to develop effective compliance and
reporting systems could result in regulatory penalties in the applicable
jurisdiction, which could have a material adverse effect on our business,
financial condition and operating results. The growth of the Internet as a means
of conducting international business has raised many legal issues regarding,
among other things, the circumstances in which countries or other jurisdictions
have the right to regulate Internet services that may be available to their
citizens from service providers located elsewhere. In many cases, there are no
laws, regulations, judicial decisions or governmental interpretations that
clearly resolve these issues. This uncertainty may adversely affect our ability
to use the Internet to expand our international operations, and creates the risk
that we could be subject to disciplinary sanctions or other penalties for
failure to comply with applicable laws or regulations.

WE INTEND TO CONTINUE GROWING THROUGH ACQUISITIONS OF OTHER COMPANIES, AND OUR
BUSINESS AND FINANCIAL RESULTS COULD BE ADVERSELY AFFECTED IF WE DO NOT
SUCCESSFULLY IMPLEMENT THESE ACQUISITIONS

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

- difficulties in the assimilation of acquired operations and products;

- diversion of management's attention from other business concerns;

- assumption of unknown material liabilities of acquired companies;

- amortization of acquired intangible assets, which would reduce future
reported earnings; and

- potential loss of customers or key employees of acquired companies.

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<PAGE> 15

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

OUR CLEARING OPERATIONS EXPOSE US TO POTENTIAL LIABILITY FOR CLEARING ERRORS AND
OTHER RISKS THAT COULD ADVERSELY AFFECT US

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

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

OUR CLEARING OPERATIONS REQUIRE US TO HAVE ACCESS TO SIGNIFICANT SOURCES OF
LIQUIDITY WHICH MAY NOT BE AVAILABLE

As a clearing firm, we extend credit to customers who purchase securities
through their margin accounts. A significant portion of our revenues is derived
from these margin loans. To the extent that these margin loans exceed customer
free credit balances (that is, customer cash balances maintained with us), we
generally must obtain financing from third parties. Currently, we obtain a
significant portion of our funds for customer margin loans and our operating
expenses from such excess customer free credit balances. To the extent customer
cash balances are available for use by us at interest costs lower than third
party financing, our cost of funds is reduced and our net income is enhanced.
Such interest savings contribute substantially to the profitability of our
operations. We cannot assure you that we will continue to be able to obtain such
financing on favorable terms or in sufficient amounts.

WE NEED TO COMPLY WITH STRINGENT CAPITAL REQUIREMENTS

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

THE LOSS OF OUR THIRD PARTY SUPPLIERS OF KEY SERVICES WOULD ADVERSELY AFFECT OUR
BUSINESS

We rely on a number of third parties to process transactions. These include
service bureaus for our customer account record keeping and data processing
services and market makers and stock exchanges to execute customer orders. In
the U.S., we depend on Automatic Data Processing and in Canada on

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Information Systems Management Corporation (a wholly-owned subsidiary of IBM
Canada) for back-office services, including broker terminal services and order
entry systems, and other information necessary to run our business, including
transaction summaries, data feeds for compliance and risk management, execution
reports, and trade confirmations. In addition, the key component of our Internet
trading technology is the webBroker front-end program and the middleware (which
links customer interface programs to our back office systems) provided to us by
our affiliate, Marketware International Inc. The inability of Marketware to
support our business would put the ongoing viability and improvement of our
system at risk. We cannot assure you that any of these providers will be able to
continue to provide these services in an efficient, cost-effective manner or
that they will be able to adequately expand their services to meet our needs. An
interruption in or the cessation of service by any third-party service provider
as a result of systems failures or capacity constraints or for any other reason,
and our inability to make alternative arrangements in a timely manner, if at
all, would have a material adverse effect on our business, financial condition
and operating results. See "Business -- Products and Services."

BECAUSE WE RELY ON ENCRYPTION TECHNOLOGY OUR BUSINESS IS VULNERABLE TO SECURITY
RISKS WHICH MAY COMPROMISE OUR CUSTOMER TRANSACTION DATA

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

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS AND KEY PERSONNEL COULD ADVERSELY
AFFECT OUR BUSINESS

Our continued success will depend to a significant extent on the efforts
and abilities of certain of our senior executive officers. The loss of a senior
executive officer could have a material adverse effect on our business,
financial condition and results of operations. While we intend to enter into
employment agreements with certain of our key senior executives in connection
with the offerings and while all members of senior management hold stock options
(and are expected to receive additional options in connection with the
offerings), we cannot assure you that any of such persons will not voluntarily
terminate his or her employment with us. See "Management -- Employment
Agreements" and "-- Anticipated Stock Option Grants."

WE MAY BE UNABLE TO MANAGE EFFECTIVELY OUR RAPID GROWTH

Our rapid growth has placed significant demands on our management and other
resources and is likely to continue. To manage the currently anticipated growth
of our business, we will need to attract, hire and retain highly skilled and
motivated officers and employees. In particular, we currently need to hire a
significant number of account representatives and other customer service
personnel to support the expansion of our service centers and expect that a need
for increased staffing will continue. In addition, most of our competitors are
facing similar staffing shortages, making the competition for qualified
employees particularly strong. We will also need to improve existing systems
and/or implement new systems for transaction processing, operational and
financial management and training, integrating and managing our growing employee
base. We cannot assure you that we will be able to attract the employees or
conduct the system improvements necessary to manage this growth effectively or
that we will be able to achieve the rate of growth we have experienced in the
past.

OUR EXPOSURE TO POSSIBLE SECURITIES LITIGATION COULD ADVERSELY AFFECT OUR
BUSINESS

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

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<PAGE> 17

our business, financial condition and operating results. See "Business -- Legal
and Administrative Proceedings."

LOSSES DUE TO CUSTOMER DEFAULTS AND FRAUD COULD HAVE AN ADVERSE EFFECT ON OUR
BUSINESS

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

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

INEFFECTIVE RISK MANAGEMENT METHODS COULD HARM OUR BUSINESS

Our policies and procedures to identify, monitor and manage our risks may
not be fully effective. Certain of our methods to manage risk are based on
historical measures of market behavior and are not necessarily predictive of
future risk exposures, which could be greater than the historical measures and
correlations indicate. Other risk management methods depend upon evaluation of
information regarding markets, clients or other matters that is publicly
available or otherwise accessible by us. Such information may not in all cases
be accurate, complete, up-to-date or properly evaluated. Management of
operational, legal and regulatory risk requires, among other things, policies
and procedures to record properly and verify a large number of transactions and
events, and we cannot assure you that those policies and procedures will be
effective.

FAILURE TO ACHIEVE YEAR 2000 COMPLIANCE COULD CAUSE SIGNIFICANT LOSSES

Because many computer systems were not designed to handle dates beyond the
year 1999, computer hardware and software may need to be modified prior to the
year 2000 in order to remain functional.

We have assessed the potential impacts of the year 2000 issue on our
products, services and internal information systems and have successfully
completed industry-wide testing of all our systems. We believe that we have
budgeted sufficiently for the costs of all additional required testing and
remediation for year 2000 issues. Nevertheless, we cannot assure you that the
actual costs incurred by us for this testing and remediation will not be
significantly greater than planned. We also cannot assure you that our systems
will perform successfully after December 31, 1999.

We must rely on outside vendors to address year 2000 issues for their
hardware and software. We have assessed and evaluated potential year 2000 issues
with respect to our outside vendors and have performed tests to ensure that
their critical systems are year 2000 compliant. Based on these procedures, we
believe that all our back-office service providers worldwide are currently
running on systems that are year 2000 compliant. In addition, we are developing
contingency plans with respect to potential year 2000 issues in our
mission-critical systems and to address the risk of business disruption due to
vendor year 2000 issues. Nevertheless, we cannot assure you that our vendors'
systems will work properly after December 31, 1999 or that our contingency plans

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<PAGE> 18

will respond adequately to any such failures. Either occurrence would have an
adverse effect on our business, financial condition and operating results.

Certain of the methods of trading we employ depend heavily on the integrity
of electronic systems outside of our control, such as online and Internet
service providers, and third-party software, such as Internet browsers. A
failure of any of these systems due to year 2000 issues would interfere with the
trading process and, in turn, may have a material adverse effect on our
business, financial condition and operating results.

Due to our dependence on computer technology to conduct our business, we
are particularly vulnerable to possible year 2000 processing failures, and their
effect on our business, financial condition and operating results could be
material. See "Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Year 2000 Compliance."

WE HAVE BROAD DISCRETION IN ALLOCATING THE USE OF PROCEEDS OF THE OFFERINGS AND
OUR FAILURE TO EFFECTIVELY APPLY SUCH PROCEEDS COULD ADVERSELY AFFECT OUR
BUSINESS

We intend to use approximately $443 million out of the estimated total net
proceeds of the offerings of $664 million, or approximately $543 million out of
an estimated total of $764 million if the underwriters exercise their
over-allotment option in full, to purchase additional shares of our common stock
for (1) investments in technology and systems upgrades, (2) increases in our
advertising and marketing budget and (3) other working capital and general
corporate purposes. A portion of the net proceeds may also be used to help
finance acquisitions of other companies. We have not, however, allocated
specific amounts of proceeds for these or other specific purposes and we will
have significant flexibility in determining the amounts of net proceeds we apply
to different uses and the timing of such applications. Our failure to apply
these funds effectively could have a material adverse effect on our business,
results of operations and financial condition. See "Use of Proceeds."

CONTROL BY TD BANK COULD PREVENT A CHANGE OF CONTROL OF OUR COMPANY AND MAY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK

We are currently a wholly-owned subsidiary of TD Bank. Upon completion of
the offerings of our common stock, TD Bank will beneficially own approximately
91.2% of our common stock, including shares issuable upon exchange of the
exchangeable preference shares issued to TD Bank in the reorganization (90.0% if
the underwriters' over-allotment option is exercised in full). Accordingly, for
as long as TD Bank continues to beneficially own more than 50% of our common
stock, TD Bank will be able to elect our entire board of directors, control all
matters that require a stockholder vote (such as mergers, acquisitions and other
business combinations) and exercise a significant amount of influence over our
management and operations. This concentration of ownership could have the effect
of preventing us from undergoing a change of control in the future and might
affect the market price of our common stock.

CONFLICTS OF INTEREST AND COMPETITION WITH TD BANK MAY ARISE

Various conflicts of interest between us and TD Bank may arise in the
future in a number of areas relating to our past and ongoing relationships,
including potential acquisitions of businesses or properties, potential
competitive business activities, the election of new or additional directors,
payment of dividends, incurrence of indebtedness, tax matters, financial
commitments, marketing functions, indemnity arrangements, service arrangements,
issuances of our capital stock, sales or distributions by TD Bank of its
remaining shares of our common stock and the exercise by TD Bank of control over
our management and affairs. A majority of our anticipated directors after the
offerings also serve as officers or directors of TD Bank or its other
subsidiaries. Service as a director or officer of both us and TD Bank or its
other subsidiaries would create conflicts of interest if such directors and
officers are faced with decisions that could have materially different
implications for us and for TD Bank. Our charter will include certain provisions
relating to the allocation of business opportunities that may be suitable for
both us and TD Bank. These provisions will expire only after TD Bank no longer
beneficially owns at least ten percent of our common stock and no person who
serves on our board of directors also serves on the board of directors of TD
Bank or any of its other subsidiaries. See "Certain Anti-

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<PAGE> 19

Takeover and Other Provisions -- Corporate Opportunities." We have not
established any other formal procedures relating to conflicts of interests
involving our directors. If and when such a conflict of interest arises, our
directors intend to take all actions necessary to comply with their fiduciary
duties to our stockholders under Delaware law, including, where appropriate,
abstaining from voting on matters which present a conflict of interest for such
director.

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

AGREEMENTS BETWEEN US AND TD BANK ARE NOT THE RESULT OF ARMS'-LENGTH
NEGOTIATIONS

In connection with the reorganization of TD Bank's worldwide discount
brokerage operations into our company, we will enter into an intercompany master
services agreement with TD Bank. This agreement provides that, among other
things, TD Bank may provide a broad range of administrative and support services
to our Canadian subsidiaries, lease space to us for our Canadian operations, and
purchase and maintain data processing and other equipment on our behalf. The
agreement also provides that we will furnish securities clearing and other
services to TD Bank and that Waterhouse National Bank and TD Bank will provide
us with a range of banking products and services. We will also enter into
transfer and assumption agreements pursuant to which TD Bank will transfer its
Canadian and other non-U.S. discount brokerage and clearing businesses to us as
part of the reorganization. We believe that the master services agreement and
the other agreements we are entering into with TD Bank in connection with the
reorganization contain terms, including pricing terms, which are fair to us and
are similar to terms we could have negotiated with unaffiliated third parties.
However, these agreements are not the result of arms'-length negotiations
because of TD Bank's ownership and control of us. Accordingly, there can be no
assurance that we could not have obtained more favorable terms from an
unaffiliated third party. See "The Reorganization" and "Principal Stockholder."

Also in connection with the reorganization, we will enter into a
tax-sharing agreement with Waterhouse Investor Services, Inc., a wholly-owned
subsidiary of TD Bank which acts as the U.S. holding company for certain of TD
Bank's U.S. subsidiaries (including both us and Waterhouse National Bank). Under
the tax-sharing agreement, Waterhouse Investor Services, Inc. has sole authority
to respond to and conduct all tax proceedings (including tax audits) relating to
our federal and combined state returns, to file all such returns on our behalf
and to determine the amount of our liability to (or entitlement to payment from)
Waterhouse Investor Services, Inc. under the tax-sharing agreement. See
"Principal Stockholder -- Tax-Sharing Agreement." This arrangement may result in
conflicts of interests between us and Waterhouse Investor Services, Inc. and its
other subsidiaries.

CERTAIN PROVISIONS OF OUR CHARTER AND DELAWARE LAW WHICH COULD MAKE A TAKEOVER
MORE DIFFICULT
COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK OR DEPRIVE YOU OF A
PREMIUM OVER THE MARKET PRICE

Our charter and bylaws and the laws of Delaware (the state in which we are
incorporated) contain provisions that might make it more difficult for someone
to acquire control of us in a transaction not approved by our board of
directors. These provisions could also discourage proxy contests and make it
more difficult for you and other stockholders to elect directors other than the
candidates nominated by our board of directors. The existence of these
provisions could adversely affect the market price of our common stock. Although
such provisions do not have a substantial practical significance to investors
while TD Bank controls us, such provisions could have the effect of depriving
stockholders of an opportunity to sell their shares at a premium

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<PAGE> 20

over prevailing market prices should TD Bank's combined voting power decrease to
less than 50%. See "Description of Capital Stock" and "Certain Anti-Takeover and
Other Provisions."

FUTURE SALES OF SHARES BY TD BANK COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR
COMMON STOCK

After completion of the offerings, there will be approximately 365.0
million shares of our common stock outstanding, of which approximately 333.0
million shares (including shares issuable upon exchange of exchangeable
preference shares issued to TD Bank in the reorganization) will be held
beneficially by our parent, TD Bank (or 369.8 million shares and 333.0 million
shares, respectively, if the underwriters and managers exercise their
over-allotment option in full). TD Bank will be able to sell these shares in the
public markets from time to time, subject to certain limitations on the timing,
amount and method of such sales imposed by SEC regulations. TD Bank has agreed
with the underwriters for the offerings that it will not sell any of its shares
without their prior consent until 180 days after the date of this prospectus. If
TD Bank were to sell a large number of shares following these offerings, the
market price of our common stock could decline significantly. Moreover, the
perception in the public markets that such sales by TD Bank might occur could
also adversely affect the market price of our common stock. See "Shares Eligible
for Future Sale."

THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK AND THE MARKET PRICE OF THE
SHARES MAY FLUCTUATE

Prior to these offerings, there has been no market for our common stock.
The price of our common stock after the offerings may fluctuate widely,
depending upon many factors, including the perceived prospects of our business
and the securities or financial services industries in general, differences
between our actual financial and operating results and those expected by
investors and analysts, changes in analysts' recommendations or projections,
changes in general economic or market conditions and broad market fluctuations.
In recent years, the securities markets have experienced substantial volatility
in prevailing price levels that is unrelated or disproportionate to the
operating performance of individual companies. Over this period the trading
prices of discount brokerage company stocks have been particularly volatile.
Accordingly, our common stock may trade at prices significantly below the
initial public offering price.

Our common stock has been approved for listing on The New York Stock
Exchange and conditionally approved for listing on The Toronto Stock Exchange.
These stock exchange listings do not, however, guarantee that a trading market
for the common stock will develop or, if a market does develop, the depth of the
trading market for the common stock or the prices at which the common stock will
trade in such market.

INVESTORS WHO PURCHASE COMMON STOCK IN THE OFFERINGS WILL EXPERIENCE IMMEDIATE
AND SUBSTANTIAL DILUTION

If you purchase shares of our common stock in the offerings, you will
experience immediate and significant dilution in the tangible book value of the
shares you purchase. This means that the price you pay will be significantly
greater than the net tangible book value of the shares you acquire. This
dilution is due to the fact that the effective cash cost to TD Bank of the
shares of our common stock it has purchased in the past is significantly less
than the price at which our shares of common stock are being offered to the
public in these offerings. See "Dilution."

17
<PAGE> 21

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains "forward-looking" statements which reflect our
expectations regarding our future growth, results of operations, performance and
business prospects and opportunities. Wherever possible, words such as
"anticipate," "believe," "plan," "expect" and similar expressions have been used
to identify these forward-looking statements. These statements reflect our
current beliefs and are based on information currently available to us.
Forward-looking statements involve significant risks and uncertainties. A number
of factors could cause actual results to differ materially from the results
discussed in the forward-looking statements, including those listed in the
preceding "Risk Factors" section of this prospectus. Although the
forward-looking statements contained in this prospectus are based upon what we
believe to be reasonable assumptions, we cannot assure you that actual results
will be consistent with these forward-looking statements. These forward-looking
statements are made as of the date of this prospectus and we assume no
obligation to update or revise them to reflect new events or circumstances.

18
<PAGE> 22

USE OF PROCEEDS

Based upon an assumed initial public offering price of $22.00 per share
(the midpoint of the range of estimated initial public offering prices set forth
on the cover page of this prospectus), we estimate that we will receive net
proceeds of the offerings of approximately $664 million (or $764 million if the
underwriters and managers exercise their over-allotment option in full), after
deducting the underwriting discounts and commissions and estimated expenses that
are payable by us in the offerings.

We intend to use approximately $221 million of the estimated net proceeds
of the offerings to repay certain intercompany debt we owe to TD Bank, which was
generally incurred in connection with the reorganization, and to redeem shares
of preferred stock of several of our subsidiaries issued to TD Bank in
connection with the reorganization. See "The Reorganization." The following
table provides a detailed breakdown of these payments to be made to TD Bank:

Debt repayment:

<TABLE>
<S> <C>
- Promissory notes issued by TD Waterhouse Canada in
partial payment for its acquisition of the Canadian
discount brokerage and brokerage clearance businesses
of TD Bank as part of the reorganization (interest rate
of Canadian banker's acceptance rate plus .50% per
annum, payable on demand).............................. $ 40 million

- Promissory notes issued by TD Waterhouse in partial
payment for the acquisition of the U.K., Australian and
Hong Kong discount brokerage businesses of TD Bank as
part of the reorganization (interest rate of Canadian
banker's acceptance rate plus .50% per annum, payable
on demand)............................................. $ 25 million

- Existing debt owing by Green Line Australia to a
subsidiary of TD Bank (interest rate of Australian bank
bill rate plus 0.22% per annum)........................ $ 16 million
------------
Total debt repayment................................... $ 81 million
Preferred share redemption.................................. $140 million
------------
Total............................................. $221 million
============
</TABLE>

We have not allocated for specific purposes a substantial portion of the
estimated proceeds from the offerings. After repayment of the intercompany debt
and redemption of the preferred stock as described above, approximately $443
million of net proceeds will be available to us. While we have not yet allocated
this portion of the net proceeds for specific purposes, we anticipate that we
will use these proceeds for investments in technology and systems upgrades,
increases in our advertising and marketing budget and other working capital and
general corporate purposes. The exact amount and timing of such expenditures,
however, will depend upon a number of factors, including growth in customers and
trading activity, market conditions and technological developments, and
accordingly, management will have broad discretion in allocating the proceeds
from the offerings for specific purposes. We may also use a portion of the net
proceeds to help finance acquisitions of other companies, although we do not
currently have any pending or proposed significant acquisitions.

Pending such uses, we may invest the net proceeds in short-term liquid
instruments, including deposit obligations, commercial paper and other debt
securities of TD Bank.

We have decided to become a public company at this time in order to raise
capital for our ongoing growth, realize some of the current value of our
businesses and enable us to use publicly traded securities reflecting our
businesses and prospects to finance strategic acquisitions that we may decide to
pursue in the future. The size of the offerings was determined by management
based upon their judgment as to the appropriate balance of a number of factors,
including our current and projected capital needs and those of TD

19
<PAGE> 23

Bank, current and anticipated market conditions, the minimum amount of
publicly-held shares necessary to facilitate an active trading market for the
shares on both the NYSE and the TSE, and other relevant considerations.

DIVIDEND POLICY

We intend to retain all of our earnings for use in our business and do not
anticipate paying any cash dividends in the foreseeable future. Any decision to
declare and pay dividends in the future will be made at the discretion of our
board of directors, after taking into account such matters as general business
conditions, financial results, capital requirements, contractual, legal and
regulatory restrictions on the payment of dividends by us to our stockholders or
by our subsidiaries to us and such other factors as the board of directors may
deem relevant. See "Business -- Government Regulation; Net Capital Requirements"
and "Description of Capital Stock."

DILUTION

As of April 30, 1999, the net tangible book value of our common stock
(after giving effect to the reorganization) was approximately $533 million, or
approximately $1.60 per share. Net tangible book value per share of common stock
represents the amount of our total consolidated tangible assets minus total
consolidated liabilities, divided by the 333 million shares of common stock
outstanding (after giving effect to the reorganization). After giving effect to
the sale by us of 32 million shares of common stock in the offerings at an
assumed initial public offering price of $22.00 per share (the midpoint of the
range of estimated initial public offering prices set forth on the cover page of
this prospectus), and after deducting the underwriting discounts and commissions
and estimated expenses payable by us in the offerings, our net tangible book
value as of April 30, 1999 would have been approximately $1,197,033, or
approximately $3.28 per share. This represents an immediate increase in net
tangible book value of $1.68 per share of common stock to our existing
stockholder and an immediate dilution in net tangible book value of $18.72 per
share to new investors purchasing shares of our common stock at the assumed
initial public offering price.

The following table illustrates this dilution on a per share basis(1):

<TABLE>
<S> <C>
Assumed initial public offering price per share of common
stock..................................................... $22.00
Net tangible book value per share of common stock before the
offerings................................................. 1.60
Increase in net tangible book value per share of common
stock attributable to the offerings(2).................... 1.68
------
Pro forma net tangible book value per share of common stock
after giving effect to the offerings...................... 3.28
------
Dilution in net tangible book value per share of common
stock to new investors.................................... $18.72
======
</TABLE>

- ---------------

(1) Assumes that the underwriters and managers do not exercise their
over-allotment option which is described under "Underwriting."

(2) After deducting the underwriting discounts and commissions and estimated
expenses payable by us in the offerings.

The following table summarizes the differences, as of April 30, 1999 (after
giving effect to the reorganization), between our existing stockholder, TD Bank,
and the new investors with respect to the number of shares purchased, the total
consideration paid (in thousands) and the average price paid per share:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------------ ----------------------- PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholder................ 333,000,000 91.2% $1,190,407 62.8% $ 3.57
New investors....................... 32,000,000 8.8 704,000 37.2 $22.00
----------- ---- ---------- ----
Total............................. 365,000,000 100% $1,894,407 100%
=========== ==== ========== ====
</TABLE>

The computations in this section include as outstanding the
shares of common stock issuable upon exchange of the exchangeable preference
shares acquired by TD Bank in the reorganization. See "The Reorganization."
20
<PAGE> 24

CAPITALIZATION

The following table sets forth the consolidated capitalization of TD
Waterhouse as of April 30, 1999 and as adjusted to give effect to (1) the
reorganization, (2) the sale of 32 million shares of common stock by us in the
offerings at an assumed initial public offering price of $22.00 per share (the
midpoint of the range of estimated initial public offering prices set forth on
the cover page of this prospectus) and after deduction of the underwriting
discounts and estimated expenses payable by us in the offerings, and (3) the
application of the net proceeds therefrom. See "Use of Proceeds."

This table should be read in conjunction with our historical combined
financial statements and the notes thereto included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
AS OF APRIL 30, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Cash and cash equivalents................................... $ 671,286 $1,114,286
========== ==========
Total liabilities........................................... $6,437,975 $6,421,975
========== ==========
CAPITALIZATION:
Historical combined equity.................................. $1,190,407 $ --
---------- ----------
Stockholders' equity:
Common stock, $.01 par value: 700 million shares
authorized, 100 shares issued and outstanding, actual;
365 million shares issued and outstanding, as
adjusted(1)............................................ -- 3,650
Series common stock, $.01 par value: 100 million shares
authorized, no shares issued and outstanding, actual
and as adjusted........................................ -- --
Preferred stock, $.01 par value: 100 million shares
authorized, no shares issued and outstanding, actual;
one share issued and outstanding as adjusted(2)........ -- --
Preferred stock of subsidiaries, $10,000 par value: 14,000
shares authorized, no shares issued and outstanding,
actual; 14,000 shares redeemed and retired, as
adjusted............................................... -- --
Additional paid-in capital................................ -- 1,645,757
Retained earnings......................................... -- --
---------- ----------
Total stockholders' equity............................. $ -- $1,649,407
---------- ----------
Total capitalization................................. $1,190,407 $1,649,407
========== ==========
</TABLE>

- ---------------

(1) The common stock at April 30, 1999, as adjusted, includes shares
which are issuable upon exchange of the exchangeable preference shares held
by TD Bank (See "The Reorganization"), and excludes 32,850,000 shares to be
reserved for issuance pursuant to employee incentive and stock option plans.

(2) See "Description of Capital Stock -- Special Voting Preferred Share."

21
<PAGE> 25

SELECTED FINANCIAL AND OTHER DATA

The following selected financial data should be read together with the
combined financial statements of TD Waterhouse and the notes thereto included
elsewhere in this prospectus and the discussion under "Management's Discussion
and Analysis of Results of Operations and Financial Condition." The combined
statement of income data for the years ended October 31, 1997 and 1998, and the
combined statement of financial condition data at October 31, 1997 and 1998,
have been derived from our audited historical combined financial statements
included elsewhere in this prospectus. The combined statement of income data for
the six months ended April 30, 1998 and April 30, 1999 and the combined
statement of financial condition data at April 30, 1999 have been derived from
our unaudited historical combined financial statements included elsewhere in
this prospectus. The pro forma combined statement of income data for the year
ended October 31, 1996 has been derived from our audited combined financial
statements and the audited combined financial statements of the Waterhouse
Securities Group, also included in this prospectus, as if the Waterhouse
Securities Group had been under the control of TD Bank as of the beginning of
1996. The Green Line Group's financial data and the Waterhouse Securities
Group's financial data as of and for the years ended October 31, 1994 and 1995
have been derived from their respective unaudited financial statements not
included in this prospectus. In our opinion, the unaudited statement of income
data has been prepared on substantially the same basis as the audited combined
financial statements included in this prospectus.
<TABLE>
<CAPTION>

YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1994 1995 1996 1997 1998
----------------- ------------------ PRO FORMA HISTORICAL HISTORICAL
CANADA U.S. CANADA U.S. COMBINED(1) COMBINED COMBINED
------- ------- ------- -------- ----------- ---------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues
Commissions and fees................ $77,398 $83,917 $64,833 $113,881 $270,505 $313,572 $ 409,432
Mutual fund and related revenue..... -- 6,018 5,831 9,286 23,515 35,762 59,022
Net interest revenue................ 26,604 13,056 28,660 18,888 53,085 68,874 117,733
Other............................... 9,863 1,603 14,493 1,375 23,681 28,424 28,274
------- ------- ------- -------- -------- -------- -----------
TOTAL REVENUES.................... 113,865 104,594 113,817 143,430 370,786 446,632 614,461
------- ------- ------- -------- -------- -------- -----------
Expenses
Employee compensation and
benefits.......................... 35,136 32,272 31,414 43,259 107,137 138,261 183,377
Execution and clearing costs........ 18,312 11,983 17,219 14,989 47,510 63,316 95,523
Occupancy and equipment............. 8,555 10,223 10,221 12,992 44,413 43,485 56,596
Advertising and marketing........... 3,120 4,677 3,572 9,441 14,439 18,511 33,184
Communications...................... 7,330 4,189 6,718 6,032 19,154 22,981 30,809
Amortization of goodwill............ 1,638 -- 1,623 -- 21,121 21,630 33,000
Professional fees................... 4,172 2,480 5,799 4,095 15,034 14,871 15,350
Other............................... 15,219 9,477 11,313 13,969 34,311 44,956 63,144
------- ------- ------- -------- -------- -------- -----------
TOTAL EXPENSES.................... 93,482 75,301 87,879 104,777 303,119 368,011 510,983
------- ------- ------- -------- -------- -------- -----------
Income before income taxes........... 20,383 29,293 25,938 38,653 67,667 78,621 103,478
Income tax provision................. 9,689 11,731 12,127 15,228 41,363 42,416 54,765
------- ------- ------- -------- -------- -------- -----------
NET INCOME........................ $10,694 $17,562 $13,811 $ 23,425 $ 26,304 $ 36,205 $ 48,713
======= ======= ======= ======== ======== ======== ===========
Pro forma basic and diluted earnings
per share........................... $ 0.15
===========
Shares used to compute pro forma per
share data(2)....................... 333,000,000
===========

<CAPTION>
SIX MONTHS ENDED
APRIL 30,
------------------------
1998 1999
HISTORICAL HISTORICAL
COMBINED COMBINED
---------- -----------
<S> <C> <C>
STATEMENT OF INCOME DATA:
Revenues
Commissions and fees................ $192,112 $ 328,678
Mutual fund and related revenue..... 23,386 43,595
Net interest revenue................ 52,668 73,315
Other............................... 13,745 18,445
-------- -----------
TOTAL REVENUES.................... 281,911 464,033
-------- -----------
Expenses
Employee compensation and
benefits.......................... 88,560 130,321
Execution and clearing costs........ 41,450 68,103
Occupancy and equipment............. 26,396 36,801
Advertising and marketing........... 15,819 24,056
Communications...................... 13,916 22,716
Amortization of goodwill............ 15,363 18,563
Professional fees................... 7,194 10,248
Other............................... 26,925 60,211
-------- -----------
TOTAL EXPENSES.................... 235,623 371,019
-------- -----------
Income before income taxes........... 46,288 93,014
Income tax provision................. 24,954 42,985
-------- -----------
NET INCOME........................ $ 21,334 $ 50,029
======== ===========
Pro forma basic and diluted earnings
per share........................... $ 0.15
===========
Shares used to compute pro forma per
share data(2)....................... 333,000,000
===========
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
--------------------------------------------------------------------------------- ----------
1994 1995 1996 1997 1998 1999
------------------- ------------------- HISTORICAL HISTORICAL HISTORICAL HISTORICAL
CANADA U.S. CANADA U.S. COMBINED COMBINED COMBINED COMBINED
-------- -------- -------- -------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF FINANCIAL CONDITION
DATA:
Cash and cash equivalents........ $ 43,484 $ 9,806 $ 42,441 $ 14,553 $ 246,097 $ 291,511 $ 522,029 $ 671,286
Securities owned, at market
value........................... 28,965 -- 26,912 1,450 67,857 66,549 76,279 63,407
Receivable from customers........ 326,984 285,165 339,239 415,885 962,551 1,757,019 2,556,182 5,096,753
Total assets..................... 674,431 322,932 696,025 457,107 1,969,007 2,946,594 4,298,736 7,628,382
Securities loaned................ 74,689 -- 72,639 -- 403,765 916,700 1,033,964 3,780,347
Payable to customers............. 436,537 96,992 496,387 121,632 764,457 1,190,480 1,947,430 2,010,910
Equity........................... 36,827 42,556 51,836 55,054 535,795 619,519 995,135 1,190,407
</TABLE>

22
<PAGE> 26

- ---------------

(1) The pro forma combined statement of income data for the year ended October
31, 1996 has been prepared to give effect to the acquisition of the
Waterhouse Securities Group on October 31, 1996, as if the acquisition had
occurred on November 1, 1995. The pro forma adjustment represents the
amortization of goodwill for the year ended October 31, 1996 in the amount
of $19,488 related to the acquisition of the Waterhouse Securities Group.
There were no other pro forma adjustments.

(2) Shares used to compute pro forma per share data for the year ended October
31, 1998 and the six months ended April 30, 1999 represent common stock
outstanding immediately after the reorganization described elsewhere in this
prospectus but before the offerings. The shares include shares of common
stock issuable on the exchange of the exchangeable preference shares of our
Canadian subsidiary to be issued to TD Bank in the reorganization.

23
<PAGE> 27

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

OVERVIEW

After completion of the offerings, our operations will be comprised of the
following businesses:

- TD Bank's U.S.-based Waterhouse Securities Group, which includes
Waterhouse Securities, Inc. and certain of its affiliates.

- TD Bank's Canada-based Green Line Group, which operates as discount
brokers in Canada, as well as Australia, the United Kingdom and Hong
Kong.

The Waterhouse Securities Group consists of certain subsidiaries of TD
Bank, acquired effective October 31, 1996. The Green Line Group consists of
certain divisions and subsidiaries of TD Bank. These assets will be combined to
form our business in a reorganization that is described under "The
Reorganization" below.

Accordingly, the following discussion and analysis of our financial
condition and results of operations are based on the combined results of these
businesses. A more detailed discussion of the accounting principles used to
combine the assets, liabilities and results of operations of the businesses and
the specific entities and divisions included in the combination is set forth in
Notes 1 and 2 to our combined financial statements included elsewhere in this
prospectus.

REVENUES

Commissions and fees, which account for the majority of total revenues,
include commissions earned for executing customer trades, payments received by
us from market-makers, exchanges and other execution agents for order flow and
fees for providing trade execution and clearance services to financial
institutions in the U.S. and Canada. Commissions and fees are primarily affected
by changes in transaction volumes and changes in the commission or fee rates
charged per transaction. Commissions, which account for over 90% of commissions
and transaction fees, fluctuate based on the number of active customer accounts,
the average number of trades per account, and the average commission per revenue
trade. Active customer accounts have grown from approximately 0.7 million at
October 31, 1996 to approximately 1.9 million as of April 30, 1999. We define
active accounts as accounts that had purchase, sale or other activity during the
previous calendar quarter. Combined with the significant growth in daily average
trading volumes in the U.S. and major global equities markets, this account
growth has resulted in a 61% increase in the average number of trades per
account during this same period. The effect of such increases has been partially
offset by a decrease in the average commission per revenue trade from
approximately $47 per trade in the first fiscal quarter of 1997 to approximately
$23 per trade in the second fiscal quarter of 1999. This was primarily due to
the introduction of our online trading products in early 1997, which provided
online customers with significant discounts from our standard commission
schedule. We use other broker-dealers to execute our customers' orders and
receive revenue from these broker-dealers for such order flow. Payments for
order flow have not increased commensurate with increases in trading volumes as
a result of changes in regulations and market conventions that caused
market-makers and execution agents to change their payment policies for order
flow by reducing the payment per trade and by limiting the types of trades on
which payments are made. Order flow revenue has been consistently less than 5%
of total revenue for the periods reviewed herein. Transaction fees for execution
and clearing services have grown since 1996 due to the creation of a separate
clearing entity in the U.S., the addition of new clients in the U.S. and Canada
and general increases in market volumes.

Mutual fund and related revenue represents customary trailer fees from
third party and affiliated mutual funds in the U.S. and Canada and, in the U.S.
only, fees for shareholder services, administration and investment management
services provided to our proprietary money market and mutual funds. Such fees
are primarily based upon the daily amount of customer assets invested in third
party mutual funds and upon the average daily net asset value of our proprietary
money market and mutual funds. As of April 30, 1999, we held in excess of $4
billion of customer assets in no-load, no-fee mutual funds sponsored by third
parties. Our

24
<PAGE> 28

proprietary money market accounts and mutual funds had net assets valued at
$10.4 billion at April 30, 1999. Commissions relating to the purchase and sale
of mutual funds are included in commissions and fees.

We also receive fees for providing referral and administrative services to
our affiliate, Waterhouse National Bank ("WNB"), which is based on the daily
cash balances our customers choose to sweep into an FDIC insured money market
account. In addition, we provide investment advisory services to WNB with
respect to WNB's fixed income portfolio and receive a fee based on the market
value of the assets under management. Fees related to services provided to WNB
are classified as mutual fund and related revenues.

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

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

OPERATING EXPENSES

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

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

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

Advertising and marketing includes media, print and direct mail advertising
expenses and other costs incurred to create brand awareness, promote our product
and service offerings and introduce new products and services. Due to the rapid
development of new products and services and increased competition, advertising
and promotion has increased significantly from period to period and management
expects this trend to continue in the future.

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

We have been active in acquiring new businesses to rapidly expand our
operations including: Marathon Brokerage in 1993, Waterhouse Securities Group in
1996, Pont Securities Limited in 1997 and Rivkin Croll

25
<PAGE> 29

Smith, Kennedy Cabot & Co., Jack White & Co. and Gall & Eke in 1998. Goodwill
relating to our major acquisitions is generally being amortized over a period of
20 years from the date of acquisition.

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

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

We are subject to income taxes in each country in which we operate. The
difference between our effective tax rate and the U.S. statutory rate of 35%
differs from period to period, but primarily results from state and local taxes
in the U.S., provincial taxes in Canada, and the effect of certain
non-deductible expenses, most notably the amortization of goodwill related to
our acquisition of Waterhouse Securities Group, which is approximately $19.5
million per year.

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

We have experienced substantial changes in and expansion of our business
and operations since we began offering our online Internet investing services in
the U.S. in 1997. We expect to continue to experience periods of rapid change in
the future. Our past expansion has placed, and any future expansion would place,
significant demands on our administrative, operational, financial and other
resources.

26
<PAGE> 30

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, SIX MONTHS ENDED APRIL 30,
--------------------------------------- --------------------------
1996 1997 1998 1998 1999
PRO FORMA HISTORICAL HISTORICAL HISTORICAL HISTORICAL
COMBINED COMBINED COMBINED COMBINED COMBINED
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Commissions and fees................ 73.0% 70.2% 66.6% 68.1% 70.8%
Mutual fund and related revenue..... 6.3 8.0 9.6 8.3 9.4
Net interest revenue................ 14.3 15.4 19.2 18.7 15.8
Other............................... 6.4 6.4 4.6 4.9 4.0
----- ----- ----- ----- -----
Total revenues................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
EXPENSES
Employee compensation and
benefits......................... 28.9% 31.0% 29.8% 31.4% 28.1%
Execution and clearing costs........ 12.8 14.2 15.5 14.7 14.7
Occupancy and equipment............. 12.0 9.7 9.2 9.4 7.9
Advertising and marketing........... 3.9 4.1 5.4 5.6 5.2
Communications...................... 5.2 5.1 5.0 4.9 4.9
Amortization of goodwill............ 5.7 4.8 5.4 5.4 4.0
Professional fees................... 4.1 3.3 2.5 2.6 2.2
Other............................... 9.3 10.1 10.3 9.6 13.0
----- ----- ----- ----- -----
Total expenses................... 81.9% 82.3% 83.1% 83.6% 80.0%
===== ===== ===== ===== =====
Income before income taxes............ 18.1% 17.7% 16.9% 16.4% 20.0%
Income tax provision.................. 11.2 9.5 8.9 8.9 9.3
----- ----- ----- ----- -----
NET INCOME............................ 6.9% 8.2% 8.0% 7.5% 10.7%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED APRIL 30, 1999 VERSUS SIX MONTHS ENDED APRIL 30, 1998

FINANCIAL OVERVIEW

Net income for the six months ended April 30, 1999 was a record $50.0
million, up 134.5% from $21.3 million for the comparable period in 1998.
Revenues for the six months ended April 30, 1999 were a record $464.0 million,
up 64.6% from $281.9 million for the comparable period in 1998, primarily due to
a 71.1% increase in commissions and transaction fees, an 86.4% increase in
mutual fund and related revenue and a 39.2% increase in net interest revenue.
1999 revenues reflect approximately $33 million of incremental revenue related
to Jack White & Co., which we acquired in May 1998.

Total operating expenses of $371.0 million for the six months ended April
30, 1999 were up 57.5% from $235.6 million for the comparable period in 1998,
primarily resulting from additional business volume as well as approximately $30
million of incremental expenses related to Jack White & Co.

REVENUES

COMMISSIONS AND FEES

Commissions and fees were $328.7 million for the six months ended April 30,
1999, up $136.6 million, or 71.1%, from the comparable period in 1998. The total
number of trades executed by us has increased 118.0% from the comparable period
in 1998 as our customer base has grown. Average commissions per revenue trade
decreased 25.4% due to the expanded popularity of our online brokerage services,
which are offered at a significantly lower price than traditional agent based
trading. For the six months ended April 30, 1999, total

27
<PAGE> 31

online and total electronic trades represented 58.5% and 62.9% of total trades,
respectively, as compared to 40.9% and 48.0%, respectively, in the comparable
1998 period.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
------------------- PERCENT
1998 1999 CHANGE
------- -------- -------
<S> <C> <C> <C>
webBroker................................................... 15,830 57,471 263%
PC dial-up.................................................. 4,566 5,793 27%
------- --------
Total online trades....................................... 20,396 63,264 210%
Touch-tone.................................................. 3,575 4,752 33%
------- --------
Total electronic trades................................... 23,971 68,016 184%
Agent trades................................................ 25,932 40,124 55%
------- --------
Total daily average trades................................ 49,903 108,140 117%
======= ========
Average commissions, per revenue trade...................... $ 31.60 $ 23.56 (25)%
</TABLE>

We added approximately 420,000 new customer accounts during the six months
ended April 30, 1999, an increase of 66.7% from the approximately 252,000 new
accounts added during the comparable period in 1998. Our advertising and
marketing expense per new account was approximately $57 for the six months ended
April 30, 1999 versus $63 for the comparable 1998 period.

MUTUAL FUND AND RELATED REVENUE

Mutual fund and related revenue was $43.6 million for the six months ended
April 30, 1999, up $20.2 million, or 86.4%, from the comparable period in 1998.
This increase was primarily due to a significant increase in customer assets
held in third party mutual funds and proprietary money market and mutual funds,
which was driven in part by the acquisition of Jack White & Co. in May 1998,
whose customers held a large proportion of their assets in mutual funds.

NET INTEREST REVENUE

Net interest revenue was $73.3 million for the six months ended April 30,
1999, up $20.6 million, or 39.2%, from the comparable period in 1998. This
increase was primarily due to a 73.5% increase in average customer margin loans
from $2 billion during the six months ended April 30, 1998 to $3.5 billion
during the comparable period in 1999. Our average net interest spread of 2.65%
for the six months ended April 30, 1999 was lower than the spread of 2.95% for
the comparable period in 1998 due to the continued growth of our U.S.
operations, which have a lower net interest spread than our Canadian and foreign
operations.

OPERATING EXPENSES

Compensation and benefits expense was $130.3 million for the six months
ended April 30, 1999, up $41.8 million, or 47.2%, from the comparable period in
1998. This increase was primarily due to the addition of new employees to
support our rapid growth and an increase in incentive compensation to reflect
the improvement in our operating results. Compensation as a percentage of
revenues has decreased which reflects the fact that revenue growth has outpaced
our employee growth in the short term.

Execution and clearing costs were $68.1 million for the six months ended
April 30, 1999, up $26.7 million, or 64.3%, from the comparable period in 1998.
This increase was primarily due to increased transaction volume offset by
productivity gains from our ability to leverage our large clearing operations.

Occupancy and equipment expense was $36.8 million for the six months ended
April 30, 1999, up $10.4 million, or 39.4%, from the comparable period in 1998.
This increase was primarily due to additional lease expenses on our expanded
office space, as well as increased lease and maintenance expenses on data
processing equipment. During the first and second quarter of fiscal 1999, we
opened 18 new branches.

28
<PAGE> 32

Advertising and marketing expense was $24.1 million for the six months
ended April 30, 1999, up $8.2 million, or 52.1%, from the comparable period in
1998. This increase primarily relates to increased national advertising in the
United States.

Communications expense was $22.7 million for the six months ended April 30,
1999, up $8.8 million, or 63.2%, from the comparable period in 1998. This
increase was primarily due to increased trading volumes and the opening of new
branches.

Amortization of goodwill was $18.6 million for the six months ended April
30, 1999, up $3.2 million, or 20.8%, from the comparable period in 1998. This
increase was primarily due to the acquisition of Jack White & Co.

Professional fees were $10.2 million for the six months ended April 30,
1999, up $3.1 million, or 42.5%, from the comparable period in 1998. This
increase was primarily due to fees for computer programming and systems
consultants.

Other expenses were $60.2 million for the six months ended April 30, 1999,
up $33.3 million, or 123.6%, from the comparable period in 1998. This increase
was consistent with the overall growth in the business. Additionally, other
expenses for the six months ended April 30, 1999 includes the settlement of a
claim approximating $5 million related to non-brokerage matters.

Our effective income tax rate for the six months ended April 30, 1999 and
1998 was 46.2% and 53.9%, respectively. The decrease in the effective tax rate
was primarily due to the significant increase in pre-tax income from our U.S.
operations, which has the effect of reducing the impact of permanent differences
such as the amortization of goodwill, as well as foreign provincial taxes. Our
effective tax rate, excluding the tax effects of non-deductible goodwill, was
41.5% and 44.3%, respectively, for the six months ended April 30, 1999 and 1998.

YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

FINANCIAL OVERVIEW

1998 VERSUS 1997

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

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

1997 VERSUS HISTORICAL 1996

Waterhouse Securities Group was purchased at the end of fiscal year 1996
and we accounted for the acquisition using the purchase method of accounting.
Pursuant to the purchase method, our 1996 financial statements and the financial
statements for all periods prior to the acquisition have not been restated to
include Waterhouse's results of operations. Accordingly, the fluctuations
between our total revenues, operating expenses and net income for 1997 of $446.6
million, $368.0 million and $36.2 million, respectively, versus our comparable
amounts in 1996 of $167.4 million, $113.2 million and $29.6 million,
respectively, are due primarily to the acquisition of Waterhouse. For the twelve
months ended October 31, 1996 Waterhouse's total revenues, operating expenses
and net income were $203.4 million, $170.4 million and $16.2 million,
respectively. Given the significant effect the Waterhouse acquisition had on our
1997 results of operations, we believe that a detailed discussion and analysis
of our 1997 versus 1996 historical financial statements would not be meaningful.
Accordingly, for purposes of comparing our results of operations for fiscal year
1997 versus
29
<PAGE> 33

1996, we have made certain pro forma adjustments to our historical combined
financial statements to give effect to the acquisition of Waterhouse as if it
had occurred as of the beginning of fiscal year 1996. See "Selected Financial
and Other Data." The following discussion and analyses compares our 1997
historical results to the pro forma 1996 amounts.

1997 VERSUS PRO FORMA 1996

Net income for the fiscal year ended October 31, 1997 was a record $36.2
million, up 37.6% from fiscal year 1996 net income of $26.3 million. Fiscal year
1997 revenues were a record $446.6 million, up 20.5% from $370.8 million for
fiscal year 1996, primarily due to a 15.9% increase in commissions and
transaction fees, a 52.1% increase in mutual fund and related revenue and a
29.7% increase in net interest revenue. These increases mainly resulted from
increases in overall trading volume, customer assets and increased margin loans
to customers.

Total operating expenses during fiscal year 1997 were $368.0 million, up
21.4% from $303.1 million for the fiscal year 1996 keeping pace with the
significant growth in our business.

REVENUES

COMMISSIONS AND TRANSACTION FEES

1998 VERSUS 1997

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

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

1997 VERSUS PRO FORMA 1996

Commissions and transaction fees were $313.6 million for the fiscal year
ended October 31, 1997, up $43.1 million, or 15.9%, from fiscal year 1996. The
total number of trades executed by us increased 39.4% as our customer base has
grown. Average commissions per revenue trade decreased 16.7% to $40. This
decrease was mainly due to the introduction of online trading in 1997, which has
substantially lower commission rates than traditional channels.

We added approximately 324,000 new customer accounts during fiscal year
1997, an increase of 31.8% from the approximately 246,000 new accounts added
during fiscal year 1996. Our advertising and marketing expense per new account
was approximately $57 for fiscal year 1997 versus $59 for fiscal year 1996.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Electronic trades........................................... 5,415 11,200 28,621
Agent trades................................................ 17,782 21,271 27,552
------- ------- -------
Total daily average trades.................................. 23,197 32,471 56,173
======= ======= =======
Average commissions per revenue trade....................... $ 47.72 $ 39.73 $ 28.82
</TABLE>

30
<PAGE> 34

MUTUAL FUND AND RELATED REVENUES

1998 VERSUS 1997

Mutual fund and related revenue was $59.0 million for the fiscal year ended
October 31, 1998, up $23.3 million, or 65.0%, from the prior fiscal year 1997.
This increase was primarily due to a significant increase in customer assets
held in third party mutual funds and proprietary money market and mutual funds,
which was driven in part by the acquisition of Jack White & Co., whose customers
held a large proportion of their assets in mutual funds.

1997 VERSUS PRO FORMA 1996

Mutual fund and related revenue was $35.8 million for the fiscal year ended
October 31, 1997, up $12.2 million, or 52.1%, from the prior fiscal year. This
increase was primarily due to a significant increase in customer assets in third
party mutual funds and proprietary money market and mutual funds.

NET INTEREST REVENUE

1998 VERSUS 1997

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

1997 VERSUS PRO FORMA 1996

Net interest revenue was $68.9 million for the fiscal year ended October
31, 1997, up $15.8 million, or 29.7%, from fiscal year 1996. This increase was
principally due to a 35.5% increase in average customer margin loans from $881.0
million during 1996 to $1.2 billion during 1997. Our net interest spread
decreased from 3.57% in fiscal year 1996 to 3.28% in fiscal year 1997 due to the
rapid growth of our U.S. operations, which have a lower net interest spread than
our Canadian and foreign operations.

OPERATING EXPENSES

1998 VERSUS 1997

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

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

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

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

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

31
<PAGE> 35

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

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

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

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

1997 VERSUS PRO FORMA 1996

Compensation and benefits expense was $138.3 million for the fiscal year
ended October 31, 1997, up $31.1 million, or 29.1%, from the prior fiscal year.
This increase was primarily due to a greater number of employees principally due
to increased trading volumes and branch openings, partially offset by
approximately $4.1 million of non-recurring costs at Waterhouse resulting from
the cash out of certain employee stock options prior to Waterhouse's acquisition
by TD Bank.

Execution and clearing costs were $63.3 million for the fiscal year 1997,
up $15.8 million, or 33.3%, from fiscal year 1996. This increase was primarily
due to a corresponding increase in customer trades.

Occupancy and equipment expense was $43.5 million for the fiscal year ended
October 31, 1997, slightly down from the prior fiscal year. This decrease was
primarily due to increased expenses due to additional employees and new branch
offices, mostly offset by the effect of certain write-downs of computer
equipment and other fixed assets in fiscal year 1996, which did not recur in
fiscal year 1997.

Advertising and marketing expense was $18.5 million in fiscal year 1997, up
$4.1 million, or 28.2%, from 1996. This increase primarily relates to the
increased national advertising campaigns in the U.S.

Communications expense was $23.0 million during the fiscal year 1997, up
$3.8 million, or 20.0%, from the prior fiscal year. This increase was primarily
due to increased trading volumes and branch openings.

Amortization of goodwill was $21.6 million for the fiscal year 1997, was
slightly higher than the fiscal year 1996 pro forma amount.

Professional fees were $14.9 million in fiscal year 1997, a slight decrease
from the prior fiscal year pro forma amount. This decrease was primarily due to
certain one-time costs consisting of investment banking, legal and accounting
fees Waterhouse incurred in fiscal year 1996 in connection with its acquisition
by TD Bank.

Other expenses were $45.0 million for fiscal year 1997, up $10.6 million,
or 31.0%, from the prior fiscal year. This increase was consistent with the
overall increase in business activity during the year.

Our effective income tax rate for the fiscal year 1997 and pro forma fiscal
year 1996 was 53.9% and 61.1%, respectively, which reflects the effect of
certain non-deductible expenses incurred in fiscal year 1996 and the favorable
effect in fiscal year 1997 of increased income before income taxes, which
reduces the impact of permanent differences, most notably the amortization of
goodwill. Our effective tax rate, excluding the effects of non-deductible
goodwill, was 43.0% and 47.2%, respectively, for fiscal years 1997 and 1996.

32
<PAGE> 36

COMBINED QUARTERLY RESULTS

The following table sets forth certain unaudited combined quarterly
statement of income data, such data as a percentage of total revenues and
certain unaudited combined quarterly operating data for the ten quarters ended
April 30, 1999. In our opinion, this unaudited information has been prepared on
substantially the same basis as the combined financial statements appearing
elsewhere in this prospectus and includes all adjustments (consisting of normal
recurring adjustments) necessary to present fairly the unaudited combined
quarterly data. The unaudited combined quarterly data should be read in
conjunction with the combined financial statements and notes thereto appearing
elsewhere in this prospectus. The results for any quarter are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31,
1997 1997 1997 1997 1998 1998 1998
----------- --------- -------- ----------- ----------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Commissions and fees........... $ 78,227 $ 71,936 $ 74,246 $ 89,163 $ 83,871 $108,241 $105,634
Mutual fund and related
revenue....................... 7,337 8,579 9,727 10,119 10,583 12,803 16,790
Net interest revenue........... 15,143 15,481 17,261 20,989 23,768 28,900 33,004
Other.......................... 4,869 7,480 11,233 4,842 6,277 7,468 7,501
-------- -------- -------- -------- -------- -------- --------
TOTAL REVENUES................ 105,576 103,476 112,467 125,113 124,499 157,412 162,929
-------- -------- -------- -------- -------- -------- --------
EXPENSES
Employee compensation and
benefits...................... 33,291 33,697 34,440 36,833 40,167 48,393 48,084
Execution and clearing costs... 14,238 13,829 16,116 19,133 19,259 22,191 25,482
Occupancy and equipment........ 10,122 10,358 10,960 12,045 12,403 13,993 14,900
Advertising and marketing...... 4,330 4,684 4,342 5,155 7,695 8,124 8,351
Communications................. 5,945 5,579 5,081 6,376 6,639 7,277 8,971
Amortization of goodwill....... 5,283 5,275 5,539 5,533 7,678 7,685 8,534
Professional fees.............. 3,193 3,457 3,479 4,742 3,118 4,076 4,305
Other.......................... 9,897 13,175 8,427 13,457 11,804 15,121 17,193
-------- -------- -------- -------- -------- -------- --------
TOTAL EXPENSES................ 86,299 90,054 88,384 103,274 108,763 126,860 135,820
-------- -------- -------- -------- -------- -------- --------
Income before income taxes..... 19,277 13,422 24,083 21,839 15,736 30,552 27,109
Income tax provision........... 10,437 7,937 12,496 11,546 9,222 15,732 14,194
-------- -------- -------- -------- -------- -------- --------
NET INCOME.................... $ 8,840 $ 5,485 $ 11,587 $ 10,293 $ 6,514 $ 14,820 $ 12,915
======== ======== ======== ======== ======== ======== ========

<CAPTION>
QUARTER ENDED
-------------------------------------
OCTOBER 31, JANUARY 31, APRIL 30,
1998 1999 1999
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUES
Commissions and fees........... $111,686 $152,044 $176,634
Mutual fund and related
revenue....................... 18,846 20,783 22,812
Net interest revenue........... 32,061 34,004 39,311
Other.......................... 7,028 8,204 10,241
-------- -------- --------
TOTAL REVENUES................ 169,621 215,035 248,998
-------- -------- --------
EXPENSES
Employee compensation and
benefits...................... 46,733 59,859 70,462
Execution and clearing costs... 28,591 34,679 33,424
Occupancy and equipment........ 15,300 17,754 19,047
Advertising and marketing...... 9,014 11,569 12,487
Communications................. 7,922 10,717 11,999
Amortization of goodwill....... 9,103 9,279 9,284
Professional fees.............. 3,851 4,082 6,166
Other.......................... 19,026 28,999 31,212
-------- -------- --------
TOTAL EXPENSES................ 139,540 176,938 194,081
-------- -------- --------
Income before income taxes..... 30,081 38,097 54,917
Income tax provision........... 15,617 18,031 24,954
-------- -------- --------
NET INCOME.................... $ 14,464 $ 20,066 $ 29,963
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31,
1997 1997 1997 1997 1998 1998 1998
----------- --------- -------- ----------- ----------- --------- --------
(AS PERCENTAGE OF TOTAL REVENUES)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Commissions and fees........... 74.1% 69.5% 66.0% 71.3% 67.4% 68.8% 64.8%
Mutual fund and related
revenue....................... 7.0 8.3 8.7 8.1 8.5 8.1 10.3
Net interest revenue........... 14.3 15.0 15.3 16.7 19.1 18.4 20.3
Other.......................... 4.6 7.2 10.0 3.9 5.0 4.7 4.6
----- ----- ---- ----- ----- ----- -----
TOTAL REVENUES................ 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ---- ----- ----- ----- -----
EXPENSES
Employee compensation and
benefits...................... 31.5 32.6 30.6 29.4 32.3 30.7 29.5
Execution and clearing costs... 13.5 13.4 14.3 15.3 15.5 14.1 15.7
Occupancy and equipment........ 9.6 10.0 9.7 9.6 10.0 8.9 9.1
Advertising and marketing...... 4.1 4.5 3.9 4.1 6.2 5.2 5.1
Communications................. 5.6 5.4 4.5 5.1 5.3 4.6 5.5
Amortization of goodwill....... 5.0 5.1 4.9 4.4 6.2 4.9 5.2
Professional fees.............. 3.0 3.3 3.1 3.8 2.5 2.6 2.7
Other.......................... 9.4 12.7 7.5 10.8 9.4 9.6 10.6
----- ----- ---- ----- ----- ----- -----
TOTAL EXPENSES................ 81.7 87.0 78.5 82.5 87.4 80.6 83.4
----- ----- ---- ----- ----- ----- -----
Income before income taxes..... 18.3 13.0 21.5 17.5 12.6 19.4 16.6
Income tax provision........... 9.9 7.7 11.1 9.2 7.4 10.0 8.7
----- ----- ---- ----- ----- ----- -----
NET INCOME.................... 8.4% 5.3% 10.4% 8.3% 5.2% 9.4% 7.9%
===== ===== ==== ===== ===== ===== =====

<CAPTION>
QUARTER ENDED
-------------------------------------
OCTOBER 31, JANUARY 31, APRIL 30,
1998 1999 1999
----------- ----------- ---------
<S> <C> <C> <C>
REVENUES
Commissions and fees........... 65.8% 70.7% 70.9%
Mutual fund and related
revenue....................... 11.1 9.7 9.2
Net interest revenue........... 18.9 15.8 15.8
Other.......................... 4.2 3.8 4.1
----- ----- --------
TOTAL REVENUES................ 100.0 100.0 100.0
----- ----- --------
EXPENSES
Employee compensation and
benefits...................... 27.6 27.8 28.3
Execution and clearing costs... 16.9 16.1 13.4
Occupancy and equipment........ 9.0 8.3 7.7
Advertising and marketing...... 5.3 5.4 5.0
Communications................. 4.7 5.0 4.8
Amortization of goodwill....... 5.4 4.3 3.7
Professional fees.............. 2.3 1.9 2.5
Other.......................... 11.1 13.5 12.5
----- ----- --------
TOTAL EXPENSES................ 82.3 82.3 77.9
----- ----- --------
Income before income taxes..... 17.7 17.7 22.1
Income tax provision........... 9.2 8.4 10.0
----- ----- --------
NET INCOME.................... 8.5% 9.3% 12.1%
===== ===== ========
</TABLE>

33
<PAGE> 37

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------------------
JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31, OCTOBER 31,
1997 1997 1997 1997 1998 1998 1998 1998
----------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
Pre-tax operating
margin, excluding
goodwill............ 23.3% 18.1% 26.3% 21.9% 18.8% 24.3% 21.9% 23.1%
Average commissions
per revenue trade... $ 47.44 $ 45.43 $ 38.15 $ 32.89 $ 32.79 $ 30.74 $ 28.09 $ 25.72
Average trades per
day
Electronic.......... 4,943 8,122 12,004 19,407 19,038 28,825 29,293 36,876
Total............... 27,815 28,016 31,649 42,033 42,237 57,446 58,240 66,118
Total accounts....... 1,093,000 1,178,000 1,239,000 1,373,000 1,695,000 1,856,000 2,124,000 2,302,000
Total active
accounts(1)......... 756,000 812,000 864,000 960,000 1,172,000 1,258,000 1,485,000 1,609,000
Number of new
accounts............ 69,000 93,000 72,000 90,000 98,000 154,000 125,000 134,000
Total customer assets
(in billions)....... $ 32.3 $ 32.9 $ 39.8 $ 42.0 $ 52.0 $ 61.2 $ 74.4 $ 75.9
Total employees...... 2,953 3,088 2,911 3,006 3,470 3,786 4,242 4,217
Total branches....... 126 130 142 144 167 177 183 192

<CAPTION>
QUARTER ENDED
------------------------
JANUARY 31, APRIL 30,
1999 1999
----------- ----------
<S> <C> <C>
OTHER OPERATING DATA:
Pre-tax operating
margin, excluding
goodwill............ 22.0% 25.8%
Average commissions
per revenue trade... $ 24.14 $ 23.11
Average trades per
day
Electronic.......... 61,562 74,265
Total............... 97,981 117,978
Total accounts....... 2,467,000 2,640,000
Total active
accounts(1)......... 1,736,000 1,884,000
Number of new
accounts............ 167,000 253,000
Total customer assets
(in billions)....... $ 95.7 $ 106.1
Total employees...... 4,534 5,310
Total branches....... 200 210
</TABLE>

(1) Active accounts are accounts which had purchase, sale or other activity
during the previous calendar quarter.

During fiscal year 1998, we added 16 new branches and approximately 332,000
total accounts in connection with our acquisition of Kennedy Cabot & Co. and
Jack White & Co.

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

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

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have financed our customer securities operations primarily
through customer credit balances, deposits received for securities loaned and
other short-term borrowings. As of April 30, 1999, 88% of our assets consisted
of cash and cash equivalents or assets readily convertible into cash
(principally receivables from customers, receivables from brokers and dealers,
deposits paid for stock borrowed, and securities owned). Receivables from
customers primarily consist of margin loans to customers, which are secured by
customers' readily marketable securities. Receivables from brokers and dealers
consists of amounts receivable for pending securities transactions, which can
generally be settled within three business days. Deposits paid for securities
borrowed represent cash deposits placed with brokers securing marketable
securities borrowed by us. Securities owned consist primarily of U.S. and
Canadian government securities and other securities, which trade in highly
liquid markets.

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

34
<PAGE> 38

Net income plus depreciation and amortization was $31.2 million, $64.9
million, $91.6 million, $41.3 million and $74.7 million, for the fiscal years
ended October 31, 1996, 1997 and 1998, and the six months ended April 30, 1998
and 1999, respectively. Depreciation and amortization expense which relates to
fixed assets, leasehold improvements and goodwill, was $1.6 million, $28.6
million, $42.9 million, $20.0 million and $24.6 million, for the fiscal years
ended October 31, 1996, 1997 and 1998, and the six months ended April 30, 1998
and 1999, respectively. Capital expenditures were $26.8 million, $17.7 million,
$10.4 million and $12.2 million in the fiscal years ended October 31, 1997 and
1998 and the six months ended April 30, 1998 and 1999, respectively, which
represented 6.0%, 2.9%, 3.7% and 2.6% of total revenues in each period. Capital
expenditures, excluding acquisitions of new businesses, during the fiscal years
ended October 31, 1996, 1997 and 1998 and the first and second quarters of 1999,
primarily related to the purchase of communications and data processing
equipment and leasehold improvements related to new branches and office
facilities. The cost of acquiring new businesses, net of assets acquired and
liabilities assumed, was approximately $390.0 million during fiscal year 1996
related to the acquisition of Waterhouse Securities Group, $21.0 million during
the year ended October 31, 1997 and $289.0 million during the year ended October
31, 1998.

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

We currently anticipate that the net proceeds from these offerings together
with our available cash resources and credit facilities will be sufficient to
meet anticipated working capital, capital expenditures and regulatory capital
requirements for at least the next twelve months.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As a part of our brokerage business, we hold short-term interest-earning
assets (mainly margin loans to customers) totaling $3.6 billion and $6.1 billion
at October 31, 1998 and April 30, 1999, respectively, of which $1.3 billion and
$1.8 billion, respectively, were denominated in foreign currencies, primarily
the Canadian dollar. Our interest earning assets are financed by short-term
interest-bearing liabilities in the form of customer balances and deposits
received for stock loaned. We earn a net interest spread on the difference
between amounts earned on customer margin loans and amounts paid on stock loan
and customer credit balances. Since we establish the rate paid on customer cash
balances, a substantial portion of our interest rate risk is under our direct
management. We generally move rates earned on loans in lockstep with rates paid
on credit balances to maintain a consistent net interest spread, and, therefore,
do not anticipate that changes in interest rates will have a material adverse
effect on our earnings and cash flows. Similarly, since we manage the assets and
liabilities related to our brokerage business on a geographic basis and fund
assets with liabilities denominated in the same currency as the assets, we do
not anticipate that changes in foreign exchange rates will have a material
adverse effect on our net interest revenues or cash flows.

We held marketable securities (securities owned) at October 31, 1998 and
April 30, 1999, which were recorded at fair value of $76.3 million and $63.4
million, respectively, and sold securities short (securities sold, not yet
purchased) at October 31, 1998 and April 30, 1999 with a fair value of $5.0
million and $7.8 million,

35
<PAGE> 39

respectively, which exposes us to market price risk. This risk is estimated as
the potential loss in fair value resulting from a hypothetical 10 percent
adverse change in quoted market prices and amounts to approximately $8.1 million
and $7.1 million at October 31, 1998 and April 30, 1999, respectively. Of these
positions, approximately $41.2 million and $9.7 million of securities owned at
October 31, 1998 and April 30, 1999, respectively, and $5.0 million and $7.8
million of securities sold short at October 31, 1998 and April 30, 1999,
respectively, were denominated in foreign currencies, primarily the Canadian
dollar. Therefore, we are also exposed to foreign currency risk. This risk is
estimated as the potential loss in fair value resulting from a hypothetical 10%
adverse change in foreign exchange rates and amounts to approximately $4.6
million and $1.8 million at October 31, 1998 and April 30, 1999, respectively.
Actual results may differ.

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by many companies and governmental agencies may
need to be upgraded to comply with such Year 2000 requirements or risk system
failure or miscalculations causing disruptions of normal business activities.

State of Readiness. We have made an assessment of the Year 2000 readiness
of our trading-related, communications and data processing systems. Our
readiness plan consists of:

- quality assurance testing of our main trading-related systems including
all customer interfaces and links to exchanges and utilities;

- contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to
the main trading systems;

- contacting vendors of critical non-trading related communications and
data processing systems;

- assessment of repair or replacement requirements;

- repair or replacement;

- implementation; and

- creation of contingency plans in the event of Year 2000 failures.

We received detailed plans and ongoing status reports on Year 2000
compliance from all of our significant third party vendors. In response to our
inquiry in early 1997, approximately 98% of these vendors claimed to be Year
2000 compliant. We required proof that all interfacing systems were able to
receive and interpret the vendor's dates correctly. In all cases, we assigned
the responsibility for validating compliance to the system and development
experts who support the systems today. We then worked with the vendor to prepare
test strategies and plans, which identified and documented all data exchanges
and which contained detailed information on date solutions and project
timelines. If a vendor declined or failed to give suitable assurances, we
replaced the system involved with a system that meets our standards.

In the U.S., we have successfully participated in the July Year 2000 Beta
test of the Securities Industry Association (SIA) and the March/April SIA Year
2000 Industry "streetwide" test. We have conducted extensive testing with ADP,
our primary vendor, and the various systems we use in conjunction with ADP
including electronic trading products. As a result we presently believe that our
main trading-related systems are currently Year 2000 compliant. We have required
vendors of material hardware and software components of our IT systems to assure
Year 2000 compliance. We plan to complete this process during the first half of
1999. We are currently assessing the materiality of our non-IT systems and will
seek assurances of Year 2000 compliance from providers of material non-IT
systems. Until such testing is complete and such vendors and providers are
contacted, we will not be able to completely evaluate whether our IT systems or
non-IT systems will need to be revised or replaced. We plan to conclude this
process by June 30, 1999.

36
<PAGE> 40

In Canada, we have successfully completed extensive Year 2000 end-to-end
testing of the securities systems provided by our most critical third party
vendor, Information Systems Management Corporation (ISM). These tests were
conducted using forward dated transactions in a future dated environment. They
established our readiness to access customer account data, place orders, handle
back office accounting processes and link electronically to Clearing
Corporations and the exchanges. In addition, we are actively participating with
the Canadian Securities Association, other brokers and representatives of the
industry infrastructure in "Industry Street Tests." We have successfully
completed Beta tests with the securities and mutual fund industry, and full
industry tests for debt and money market instruments. As a result of this, we
believe that all of its systems that are necessary for inter-industry trading of
securities, mutual funds and debt instruments are Year 2000 compliant. Our final
demonstration of readiness will be established with the conclusion of the
Securities and Mutual Fund Street tests in June 1999. We have required suppliers
of all hardware and software components of its IT and non-IT systems to provide
assurances of their Year 2000 readiness. In every instance where there is a data
interface involving the system of a third party software supplier, we have a
program to conduct future date testing to confirm the readiness of the software.
We plan to conclude this process by June 30, 1999.

In Australia, we believe that our key brokerage systems are Year 2000
compliant. The Australian Stock Exchange completed renovations and testing of
SEATS (the equity trading system) and provided a statement of compliance to our
customers in November 1998. By July 1998, a number of major Australian brokers
had successfully tested CHESS, the electronic clearing and settlement system
provided by the Australia Stock Exchange, and SHARES, the back office accounting
system provided by Star systems. We hired a consultant from a major broker that
participated in the July test and we completed an in-depth examination of those
test results, between October and December 1998. We are currently involved with
four other Australian brokers and the Australian Stock Exchange in performing
end-to-end testing of SHARES, CHESS, SEATS and the banking interface with a
major Australian bank, using forward dated transactions in a future dated
environment. This final test, which we plan to conclude by June 30, 1999, will
establish our readiness to access customer transactions in a future dated
environment and establish our readiness to access customer account data, place
orders, handle back office accounting processes and settle trades with the
Australian Stock Exchange. The Australian securities industry made its final
demonstration of readiness with the equities "street" tests in May 1999 and is
expected to conclude options "street" tests in September 1999. All of our key
systems and service providers are active participants in these tests. We have
required suppliers of all hardware and software components of our IT and non-IT
systems to provide assurances of our Year 2000 readiness. In every instance
where there is a data interface involving the system of a third party software
supplier, we have a program to conduct future date testing to confirm the
readiness of the software. We plan to conclude this process by June 30, 1999.

In the United Kingdom, we are currently testing our key brokerage systems
for Year 2000 compliance. We recently replaced our key back office system, and
we have required suppliers of all hardware and software components of our IT and
non-IT systems to provide assurances of our Year 2000 readiness. In every
instance where there is a data interface involving the system of a third party
software supplier, we have a program to conduct future date testing to confirm
the readiness of the software. We plan to conclude this process by August 30,
1999.

Costs. To date, we have incurred approximately $4.8 million in costs in
connection with identifying and evaluating Year 2000 compliance issues. Most of
our expenses have related to, and are expected to continue to relate to,
upgrading our communications systems in the U.S., as well as operating costs
associated with time spent by employees in the evaluation process and Year 2000
compliance matters in general. At this time, we estimate that the total cost of
the Year 2000 project to be approximately $10 million. Although we do not
anticipate that any additional amounts above this estimate will be material,
such expenses, if higher than anticipated, could have a material adverse effect
on our business, financial condition and operating results. Our Year 2000
compliance costs are substantially less than many of our competitors and other
securities firms due primarily to the fact that we utilize third party vendors
for our back-office systems.

Risks. We are not currently aware of any Year 2000 compliance problems
relating to our main trading-related, communications or data processing systems
that would have a material adverse effect on our business,
37
<PAGE> 41

financial condition and operating results, without taking into account our
efforts to avoid or fix such problems. We cannot assure you that we will not
discover Year 2000 compliance problems that will require substantial revisions.
In addition, we cannot assure you that third-party software, hardware or
services incorporated into our systems will not need to be revised or replaced,
all of which could be time consuming and expensive. Our failure to fix our main
trading-related, communications or data processing systems or to fix or replace
third-party software, hardware or services on a timely basis could result in
lost revenues, increased operating costs, the loss of customers and other
business interruptions, any of which could have a material adverse effect on our
business, financial condition and operating results. Moreover, the failure to
adequately address Year 2000 compliance issues in our main trading-related,
communications or data processing systems could result in litigation, which
could be costly and time-consuming to defend.

In addition, there can be no assurance that governmental agencies, utility
companies, securities exchanges, Internet access companies, third-party service
providers and others outside our control will be Year 2000 compliant. The
failure by such entities to be Year 2000 compliant could result in a systemic
failure beyond our control, such as a prolonged Internet, telecommunications or
electrical failure, which could also prevent us from delivering our services to
our customers and could have a material adverse effect on our business, results
of operations and financial condition.

Contingency Plan. As discussed above, we are engaged in an ongoing Year
2000 assessment and are actively developing contingency plans. The result of our
industry testing and the responses received from third-party vendors, service
providers and customers will be taken into account in determining the nature and
extent of any contingency plans.

We recognize the challenge involved in attempting to enforce vendor
assurances, many of which come with protective disclaimers. As a result, we have
implemented a detailed testing regime to validate each significant vendor's
claim of compliance, and we have undertaken detailed contingency planning.
Because of the disclaimers involved, we believe it is unlikely in most cases
that we would have enforceable claims against vendors whose assurances regarding
Year 2000 compliance are found to be incorrect, except in cases of fraud or
clear negligence.

RECENTLY ISSUED ACCOUNTING STANDARDS

SFAS No. 123, Accounting for Stock-Based Compensation, was issued in
October 1995. This statement established financial accounting and reporting
standards for stock-based compensation plans. The accounting requirements of
this statement were effective for transactions entered into in fiscal years that
begin after December 15, 1995. The disclosure requirements of this statement
were effective for financial statements for fiscal years beginning after
December 15, 1995, or for the fiscal year for which this Statement is initially
adopted for recognizing compensation cost, whichever comes first. We adopted the
provisions of this statement in fiscal 1997. The adoption of these provisions
did not have a material impact on our combined financial statements.

In conjunction with the reorganization, we intend to establish an employee
stock-based compensation plan (see "Management -- TD Waterhouse Stock Incentive
Plan"). We intend to use the intrinsic value method for this stock incentive
plan and will provide the pro forma disclosures in our financial statements
prepared after the offerings, as required by SFAS No. 123.

SFAS No. 128, Earnings Per Share, was issued in February 1997 and was
effective for periods ending after December 15, 1997, with restatement required
for all prior periods. SFAS No. 128 establishes new standards for computing and
presenting earnings per share. This statement replaces primary and fully diluted
earnings per share with "basic earnings per share", which excludes dilution, and
"diluted earnings per share", which includes the effect of all potentially
dilutive common shares and other dilutive securities. Because we have not
historically reported earnings per share, this statement had no impact on the
historical combined financial statements. This statement will, however, apply to
our financial statements that are prepared after the offering. Also, we have
applied the provision of SFAS No. 128 in determining pro forma basic and diluted
earnings per share for the six months ended April 30, 1999 and for the year
ended October 31, 1998. See "Selected Financial and Other Data."
38
<PAGE> 42

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

SFAS No. 134, Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise,
was issued in October 1998. SFAS No. 134 provides guidance for mortgage banking
entities on how to account for interests retained after securitizing mortgage
loans previously held for sale. SFAS No. 134 is effective for fiscal quarters
beginning after December 15, 1998. At this time, we do not believe that adoption
of this standard will have a material impact on our financial condition and
results of operations.

SFAS No. 135, Rescission of FASB Statement No. 75 and Technical
Corrections, was issued in February 1999. SFAS No. 135 is effective for fiscal
years ending after February 15, 1999. This statement is not applicable to us and
will have no impact on our financial position, results of operations, earnings
per share or cash flows.

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

39
<PAGE> 43

THE REORGANIZATION

In connection with these offerings, TD Bank will reorganize its worldwide
discount brokerage operations so that they will be consolidated into our company
and our subsidiaries. This reorganization will include the following steps:

- Waterhouse Investor Services, Inc., which prior to the reorganization
served as the U.S. holding company for TD Bank's U.S. discount brokerage
operations, will convert the shares of common stock it holds of its two
wholly-owned registered broker-dealer subsidiaries into shares of new
common stock and preferred stock. The preferred stock will be redeemable
at any time, in whole or in part, at the issuer's option for an
aggregate redemption price of $140 million, will pay dividends
semi-annually at a variable rate based on six month London interbank
offered rates, and will have no fixed maturity.

- Waterhouse Investor Services, Inc. will then contribute to us all of the
common stock of its registered broker-dealer subsidiaries as well as all
of the common stock of certain of its other U.S. subsidiaries.
Waterhouse Investor Services, Inc. will retain the shares of preferred
stock of the broker-dealer subsidiaries. We intend to use a portion of
the proceeds from the offerings to fund the redemption of these shares
of preferred stock. See "Use of Proceeds."

- TD Bank will transfer its Canadian discount brokerage business and
brokerage clearing business to our newly-formed Canadian subsidiary, TD
Waterhouse Canada. In exchange, we will issue to TD Bank:

- a series of million exchangeable preference shares of our
subsidiary, TD Waterhouse Canada; and

- promissory notes of TD Waterhouse Canada totaling approximately $40
million.

We will use a portion of the proceeds of the offerings to repay these
promissory notes. See "Use of Proceeds." The exchangeable preference
shares will be exchangeable at any time at TD Bank's option for an
equivalent number of shares of our common stock, and will have dividend
rights equal to the equivalent number of shares of our common stock. See
"Description of Capital Stock -- Exchangeable Preference Shares of TD
Waterhouse Canada." As part of the transfer, TD Waterhouse Canada will
assume all past liabilities of these businesses and each of TD Bank and
TD Waterhouse Canada will indemnify the other and its relevant
subsidiaries, and its respective directors, officers, agents and
employees, against all past, present and future liabilities related to
the transferred and retained businesses.

- TD Bank will be issued one special voting preferred share of TD
Waterhouse. The special voting preferred share will have voting rights
equal to the number of shares of our common stock into which the
exchangeable preference shares may be exchanged, and will be cancelled
when the exchangeable preference shares are no longer outstanding. See
"Description of Capital Stock -- Special Voting Preferred Share."

- TD Bank will transfer ownership of its United Kingdom, Australia and
Hong Kong discount broker subsidiaries to us in exchange for shares of
our common stock and promissory notes totaling approximately $25
million. We intend to use a portion of the proceeds of the offerings to
repay these promissory notes. See "Use of Proceeds."

- We will enter into a master services agreement with TD Bank pursuant to
which certain services will be made available to us and we will make
certain services available to TD Bank. See "Principal Stockholder --
Master Services Agreement."

In order to effect the third step described above, TD Bank will enter into
transfer and assumption agreements with TD Waterhouse Canada, which generally
provide for the transfer of assets used exclusively in the transferred
businesses. Subject to obtaining all material regulatory consents and approvals,
the assets will be transferred to TD Waterhouse Canada immediately prior to the
completion of these offerings. However, if any required regulatory consent or
approval is not obtained prior to the completion of these offerings, the

40
<PAGE> 44

transfer will occur as soon as practicable following the receipt of the required
consent or approval. For accounting and administrative reasons, the transfer and
assumption agreements provide that TD Waterhouse Canada will be entitled to
receive, as part of the transfer, the net economic benefits derived from the
operation of the transferred businesses from and after the first day of the
month in which these offerings are completed until the transfer occurs.
Accordingly, it is possible that for a period of time after the offerings, our
Canadian businesses will be owned and operated by TD Bank for our economic
benefit.

The assets to be transferred will consist of all tangible assets, such as
computers, equipment and furniture, which exclusively relate to the transferred
businesses. Accounts receivable, cash and cash equivalents of the transferred
businesses will also be transferred. All intellectual property owned by TD Bank
or its non-transferred subsidiaries and used exclusively by the transferred
businesses will be transferred to TD Waterhouse Canada. The transferred
businesses currently operate in premises leased from third parties or in space
owned or leased by TD Bank. Pursuant to the master services agreement described
under "Principal Stockholder," TD Bank will continue to make available to TD
Waterhouse Canada shared space used by the transferred businesses.

All employees involved in the transferred businesses will have been
employees of TD Bank prior to the reorganization. In most cases, those employees
who are exclusively engaged in performing the activities of the transferred
businesses in Canada will be transferred to TD Waterhouse Canada. In addition,
employees who perform services for both TD Bank and us will be retained by, or
transferred to, the entity for which they predominantly provide services, with
appropriate exceptions where business needs require. The employees to be
transferred may remain with TD Bank for a transitionary period after the
completion of the offerings. Pursuant to the master services agreement, TD Bank
and TD Waterhouse Canada will make available to the other employees who
immediately prior to these offerings provided services to both TD Bank and the
transferred businesses.

As a result of these arrangements approximately 1,350 employees will be
transferred to us. TD Waterhouse Canada's employees will comprise all employees
working in its local branches, customer service centers and back office
activities. With the exception of certain support services to be provided by TD
Bank employees, TD Waterhouse Canada's employees will perform all day-to-day
compliance, technology and information systems management and human resources
functions for TD Waterhouse Canada.

The transfer and assumption agreements provide for TD Bank to transfer all
of its right, title and interest in the assets. The transfer and assumption
agreements provide for assumptions and indemnities designed to place sole legal
and financial responsibility on TD Waterhouse Canada for all liabilities known
or contingent relating to the transferred businesses, its past and present
operations and the assets transferred or licensed to TD Waterhouse Canada. As a
result, the liabilities to be assumed by TD Waterhouse Canada include all
liabilities and obligations, actual or contingent, relating to the transferred
businesses, such as accounts payable, contractual obligations and ongoing or
presently unknown claims and suits. The transfer and assumption agreements
contain indemnification provisions in connection with the conduct of TD
Waterhouse Canada's business after the transfer of the transferred businesses,
misstatements or omissions in this prospectus with respect to the transferred
businesses and the use of trademarks, trade names, logos and other indemnities.
TD Bank similarly is obligated to indemnify TD Waterhouse Canada in respect of
its past, present and future businesses, other than the transferred businesses.

41
<PAGE> 45

Upon completion of the reorganization, the corporate structure of our
company reflecting our principal operations will be as follows:
TD BANK CHART

The exchangeable preference shares to be held by TD Bank will be
exchangeable at any time for an equivalent number of shares of our common stock.
TD Bank will also hold a special preferred voting share of TD Waterhouse which
will entitle TD Bank to an aggregate number of votes equal to the number of
exchangeable preference shares outstanding from time to time.

42
<PAGE> 46

BUSINESS

OVERVIEW

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

We have the second largest discount brokerage operations globally with over
2.6 million customer accounts. As of April 30, 1999, we had approximately 1.9
million active accounts and over $105 billion in customer assets under
administration. When measured by trading volume and customer assets, we have the
third largest online discount brokerage operations globally.

We have a significant international presence with operations in the United
States, Canada, Australia, the United Kingdom and Hong Kong. We have the second
largest global branch network of any discount broker with over 200 branches
worldwide and an additional 40 branches planned by the end of 2000.

Our primary markets are the U.S. and Canada, which accounted for 69% and
29%, respectively, of our fiscal 1998 consolidated revenues and 74% and 24%,
respectively, of our consolidated revenues for the first six months of fiscal
1999. Approximately 1.8 million of our total customer accounts at April 30, 1999
were held by customers in the U.S. and 642,000 were held by customers in Canada.
The table below shows the growth in our business over the past five years in
each of our operating regions:

<TABLE>
<CAPTION>
SIX
MONTHS
FISCAL YEAR ENDED OCTOBER 31, ENDED
------------------------------------------------------ APRIL 30,
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S.
Revenues (in thousands)....................... $104,594 $143,430 $203,377 $250,095 $ 423,789 $ 343,191
Number of accounts............................ 363,338 454,554 591,334 774,924 1,509,635 1,775,087
Average daily trades.......................... 6,431 8,774 13,114 19,260 42,165 89,266
Assets under administration (in billions)..... $ 7.3 $ 11.6 $ 16.2 $ 26.1 $ 58.6 $ 84.0
CANADA
Revenues (in thousands)....................... $113,865 $113,817 $167,409 $194,028 $ 180,051 $ 110,938
Number of accounts............................ 335,082 357,891 437,027 520,735 593,296 642,752
Average daily trades.......................... 6,488 6,532 10,083 12,744 12,886 16,906
Assets under administration (in billions)..... $ 9.2 $ 11.0 $ 12.5 $ 15.9 $ 16.1 $ 20.5
OUTSIDE NORTH AMERICA
Revenues (in thousands)....................... -- -- -- $ 2,509 $ 10,621 $ 9,904
Number of accounts............................ -- -- -- 77,513 198,695 221,628
Average daily trades.......................... -- -- -- 467 1,122 1,968
Assets under administration (in billions)..... -- -- -- -- $ 1.2 $ 1.6
</TABLE>

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

- a broad range of investment news, third party research reports and
personal investment management tools such as portfolio tracking and
stock and mutual fund screening programs;

- over 9,600 mutual funds from over 525 fund families (including the
Waterhouse Dow 30 Fund and a series of money market funds that we
advise), with over $23 billion in assets held in these funds through us
as of April 30, 1999;

- insured transaction accounts, checking, ATM access, electronic funds
transfer, insured certificates of deposit and other banking products,
which are provided through our affiliates Waterhouse National Bank and
TD Bank; and

- clearing and execution services to correspondents and other
broker-dealers.

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<PAGE> 47

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

- online channels via either the Internet, using our webBroker for our
customers in the U.S., Canada and Australia, or by using a direct
personal computer dial-up link using free proprietary software;

- a network of branch offices, supported by service centers accessible by
toll-free telephone numbers that are available in each of our major
markets 24 hours a day, seven days a week;

- touch-tone telephone to access our automated trading systems; and

- TalkBroker, a real time voice recognition market information system,
which provides customers of our Canadian operations with real time stock
and option quotes and mutual fund pricing through the use of voice
recognition.

INDUSTRY OVERVIEW

The discount brokerage industry has grown rapidly over the past decade,
with the largest portion of this growth coming from the significant increase in
online brokerage activity. According to data compiled by International Data
Corporation, since the introduction of Internet access for online brokerage
services in 1996, the number of online brokerage accounts has increased to an
estimated 1.5 million at the end of 1996, 3.5 million at the end of 1997 and 6.4
million at the end of 1998, representing approximately $324 billion in assets.
Online trading activity is estimated to have reached an average of over 499,000
trades per day during the first quarter of 1999 and now accounts for an
estimated 25% of all retail stock trades in the U.S.

We believe that this growth has resulted from a number of key developments
and trends, including the following:

- - The unbundling of financial services -- Investors are able to select
specific products and services as they need them and can choose from a
variety of financial service providers for different products and services.
Many brokerage firms have begun to specialize and customize products, with
some providing investment advice and planning and others providing discount
and electronic brokerage services.

- - Increasing self-reliance and value consciousness of investors -- Investors
have become more knowledgeable about investment strategies and investment
alternatives and are becoming more willing to make their own financial and
investment decisions. These investors tend to seek greater value, often in
the form of lower transaction costs, and represent a key market for discount
brokerage services.

- - Growth in financial assets held by individuals -- As the population ages,
generational wealth transference is placing capital into the hands of new
investors who are actively seeking investment opportunities. This inflow of
investment dollars is not only contributing to the increase in valuation
levels of the overall market but is also increasing the number and size of
investment accounts.

- - The democratization of market information -- The Internet and other
convenient and inexpensive channels have provided consumers with greater
access to real time market information and research. Individuals now have
the same information that many brokers do, and as a result, "self-directed"
investors have begun to manage their own portfolios, with decreasing
reliance on full-commission brokers.

- - Development of the Internet as a new investing channel -- The use of the
Internet and new technology to process and deliver large amounts of
information and to facilitate inexpensive communication of data has been
growing at an accelerating rate. The Internet has provided an alternate
delivery channel and provided an interface with the customer to facilitate
order placement and trade execution. We anticipate that this trend and the
others noted above will continue to benefit the discount brokerage industry,
particularly for brokerage firms with well-developed Internet delivery
channels.

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<PAGE> 48

BUSINESS STRATEGY

- - Building brand awareness on a global basis -- Through advertising, branch
expansion, increased use of dedicated business development officers, and
development of strategic alliances and partnerships, we will continue to
build our global brand. Following completion of the offerings, we plan to
unify our operations, marketing and advertising under a single trade name
worldwide.

- - Expanding our products and services -- We plan to expand our current
products and services to include a full array of banking products, webBroker
in all our markets, expanded initial public offering and new issue access
and additional proprietary mutual funds.

- - Building customer assets by focusing on high growth, profitable market
segments -- We intend to continue to build customer assets through targeting
attractive market segments with specialized services and our business
development marketing approach.

- - Leveraging our technological expertise to enhance our customers' experience
and empower them to better manage their investments -- We plan to continue
to utilize and leverage technology to provide our customers the highest
level of service available in the industry.

- - Continuing our international expansion both in existing markets and into
attractive new markets -- We plan to continue our strategic international
growth strategy by expanding our current international presence and
evaluating opportunities in attractive new markets, including other European
and Asian markets.

- - Enhancing our financial performance -- By building key businesses, focusing
on low cost distribution, and continuing to integrate and extract economies
of scale from acquisitions, we plan to enhance current profitability.

OUR HISTORY

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

Waterhouse Securities, Inc. was acquired in 1996 by TD Bank, which had
begun building its own discount brokerage operations under the name Green Line
Investor Services as early as 1984 following the deregulation of brokerage
commissions in Canada. In 1987 Green Line became a fully registered broker and
was the first bank-owned firm in Canada to purchase a seat on the TSE. By 1989,
through a series of acquisitions and internal growth, Green Line had become the
largest discount broker in Canada.

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<PAGE> 49

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

<TABLE>
<CAPTION>
ACQUISITION PURCHASE TOTAL
DATE PRICE ACCOUNTS
-------------- ------------ --------
<S> <C> <C> <C>
Gall & Eke....................................... September 1998 $ 13 million 50,000
(United Kingdom)
Jack White & Co.................................. May 1998 $103 million 130,000
(U.S.)
Kennedy Cabot & Co............................... November 1997 $154 million 202,000
(U.S.)
Rivkin Croll Smith............................... November 1997 $ 19 million 44,000
(Australia)
Pont Securities Limited.......................... May 1997 $ 23 million 53,000
(Australia)
Marathon Brokerage............................... October 1993 $ 46 million 92,000
(Canada)
</TABLE>

MULTI-CHANNEL DELIVERY SYSTEMS

Our strategy focuses on providing a wide array of high-quality, low-cost
products and services to our customers through a variety of distribution
channels. We differentiate ourselves from most of our competitors in the
brokerage industry by providing full-service multi-channel delivery systems
which allow customers to choose how they prefer to do business with us. We
provide a variety of electronic channels through which our customers can access
our products and services. Customers are able to obtain account information,
access a broad array of research information and enter trade orders on an
automated basis through these electronic channels at any time, thereby providing
added convenience for customers and minimizing our costs of responding to and
processing routine customer transactions. In addition to our electronic
distribution channels, we maintain an extensive and growing branch office
network, supported by 11 regional U.S. and Canadian telephone service centers
that support the branch offices during normal business hours, three of which
provide after-hours service, thereby providing personal service to the customers
of our U.S. and Canadian operations 24 hours a day, seven days a week.

Over the past two years, our Internet trading services have become an
increasingly important part of our business. Trades through our webBroker
services represented approximately 37% and 53% of our total trading volume for
fiscal 1998 and the six months ended April 30, 1999, respectively.

Internet Access

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

- real-time stock quotes;

- news and charts;

- research reports;

- investment management tools, such as portfolio tracking;

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<PAGE> 50

- stock and mutual fund screening tools;

- market commentary;

- technical analysis and alerts; and

- account management tools which allow customers to review account
balances, transaction histories and order status.

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

We are in the process of developing and implementing a number of
enhancements to our online delivery channels which we expect to be available
later this year. These enhancements are designed to expand the range of products
and services available to our customers at any time and to enhance our
customers' access to our online delivery channels. These enhancements include
the following:

- webBroker for our investment advisor customers in the U.S. and Canada,
which provides secure access to multiple accounts, block trading and
trade allocation and consolidated portfolio reports;

- webBroker in French for our Canadian customers;

- webBanking, which will permit our customers to access the full range of
banking products and services offered by our affiliated banks through
links to webBroker; and

- access to our products and services through hand-held wireless devices,
such as pagers, electronic organizers and cellular phones.

Other Electronic Channels

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

- - Direct Dial-up Access. Our customers can use their personal computers to
access their brokerage accounts online by using free proprietary software
provided by us to dial directly into our private computer networks for
real-time online brokerage services and market information.

- - Touch-tone Telephone. Our interactive investing systems, TradeDirect(R) and
TeleMax, provide customers with a convenient way to obtain quotes, place
orders and review certain account information using a touch-tone telephone.

- - Voice Recognition. TalkBroker, currently available to the customers of our
Canadian operations, is our real time voice recognition market information
system which provides customers with real-time Canadian and U.S. equity and
stock option quotes and Canadian mutual fund pricing through the use of
voice recognition over the telephone. We are currently developing a similar
system for our U.S. business and are in the process of developing a voice
recognition system for placing trade orders in both Canada and the U.S. We
expect these systems to be available later this year.

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

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<PAGE> 51

Electronic distribution channels have become an increasingly important part
of our business in the past several years. We provide significant discounts from
our standard commission rates for trades executed through electronic brokerage
channels, reflecting the lower cost of providing these services through online
channels. The following table shows customer trading through electronic channels
by our customers as a percentage of total trades:

<TABLE>
<CAPTION>
FISCAL 1998 FISCAL 1999
----------------------------------------------------- -------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER 1ST QUARTER 2ND QUARTER
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
webBroker................ 28.2% 34.3% 37.5% 43.1% 51.8% 54.2%
PC dial-up............... 9.1 9.2 7.5 7.6 6.2 4.7
----- ----- ----- ----- ----- -----
Total online........... 37.3 43.5 45.0 50.7 58.0 58.9
Touch-tone............... 7.8 6.7 5.3 5.1 4.8 4.1
----- ----- ----- ----- ----- -----
Total electronic....... 45.1% 50.2% 50.3% 55.8% 62.8% 63.0%
===== ===== ===== ===== ===== =====
</TABLE>

Branch Office Network and Service Centers

We believe that having a significant branch network is an important
marketing tool in opening new customer accounts and in maintaining a high level
of customer satisfaction and retention. Customers can use branch offices to open
accounts, deliver and receive checks and securities, obtain market information,
place orders, and obtain related customer services in person. Many of our
branches also offer seminars to existing and prospective customers on a range of
topics relating to personal investment strategies. At April 30, 1999, we
operated 162 branch offices in 44 states in the U.S. and 38 branch offices in
nine provinces in Canada, as well as seven branch offices in Australia, one
branch office in Hong Kong and two branch offices in the United Kingdom. We
anticipate that we will have branches in all 50 states and Puerto Rico by the
end of 1999, and 200 branch offices in the U.S. by the end of 2000.

Our branch office network is supported by 11 regional U.S. and Canadian
telephone service centers during normal business hours, three of which provide
after-hour service in the U.S. and Canada, 24 hours a day, seven days a week.

United States. During normal business hours, our customers can visit or
call a toll-free number to reach an account officer at a local branch to place a
trade order, obtain account information or transact other business. During
business hours the account officers in our branches are supported by customer
service representatives at our regional customer service centers in New York
City, Jersey City, Phoenix, Chicago and Atlanta. Customer calls are routed to
service centers based on call volume at the branches in order to maximize
efficiency and customer service. In addition, after normal business hours and on
weekends and legal holidays, customers of our U.S. operations are provided with
a toll-free number to reach our after-hours service center. These service
centers enable us to make customer service representatives available 24 hours a
day, seven days a week to all of our U.S. customers. Customer orders placed
during nonmarket hours are routed to appropriate markets the following business
day.

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

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

At April 30, 1999, our branch offices and service centers were staffed by
more than 2,500 account officers and customer service representatives. Recent
growth in our average daily trading volume has resulted in a need for
significantly higher staffing at our branches and service centers. As a result,
we are currently implementing

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<PAGE> 52

a plan to increase our staffing levels to an estimated level of 3,000. We
anticipate further increases in staffing levels will be necessary if these
increases in trading volume continue.

We are currently in the process of implementing a significant new
initiative focused on expanding and upgrading our call processing system in
order to support expected growth while maintaining high levels of customer
satisfaction. This project, which is scheduled to be completed in October 1999,
will replace all of our current telephone systems and links with a centralized
call processing system developed and installed by Lucent Technologies that will
automatically route calls to an available broker at one of three networked
service centers or in the branches. The system is designed to use advanced
technologies to route calls based on load and broker availability, prioritize
queuing of calls based on customer profiles, and direct calls requiring
specialized services to the appropriate location.

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

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

Outside the U.S. and Canada. In Australia, approximately 75% of our
business is conducted over the telephone at our service center in Sydney. Our
customers may place orders, obtain account information and transact other
business through this service center five days a week until 8:00 p.m. In order
to maintain personal contact with our customers and to develop new business, we
operate seven full-service local branch offices.

In the United Kingdom, we operate a business development office in London
and a customer service center in Manchester. We currently operate out of one
branch office in Hong Kong, and are developing plans to expand our presence in
the region to include the offering of local securities trading and execution
services.

PRODUCTS AND SERVICES

We offer a broad range of products and services to meet customers' varying
investment and financial needs, as well as access to extensive investment news
and information. Our products and services are tailored to meet the needs of
self-directed individual investors and independent fee-based investment
advisors. For the first six months of fiscal 1999, approximately 84%, 7% and 9%
of our customers' transactions were in equity securities, options and mutual
funds, respectively. We do not trade equity securities as principal for our own
account, maintain inventories of securities for sale, engage in commodities
transactions or otherwise deal in or underwrite securities.

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<PAGE> 53

The following table outlines the products and services we offer to our
customers in the U.S., Canada and internationally.

<TABLE>
<CAPTION>
INTERNET ACCESS ALL OTHER CHANNELS
----------------------------------- -------------------------------
U.S. CANADA INTERNATIONAL* U.S. CANADA INTERNATIONAL
--------- ------ -------------- ----- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
PRODUCTS
Equities...................... X X X X X X
IPOs.......................... X X X X X X
Mutual Funds.................. X X X X X
Options....................... X X X X X
Bonds......................... X X X X
Foreign Securities............ X X X X
Retirement Plans.............. X X X X
Money Market Investments...... X X X X
Variable Annuities............ X
Other Insurance............... X X X X
Commodities................... X
Credit Cards.................. X X
Banking Products.............. X X
SERVICES
Quotes........................ X X X X X X
Research...................... X X X X X X
News and Alerts............... X X X X X X
Charts and Tracking........... X X X X X
Margin Services............... X X X X
Cash Management Services...... X X X
Bill Payment.................. X X
Electronic Brokerage
Support.................... X X X X X
Web Banking................... ** X
</TABLE>

- ---------------

* Australia only.

** Pending.

BROKERAGE SERVICES FOR INDIVIDUAL INVESTORS

United States. We offer our customers the ability to buy and sell all U.S.
and major foreign exchange-listed, Nasdaq-listed and other equity securities,
options, mutual funds, unit investment trusts, variable annuities and fixed
income investments, including U.S. Treasuries, zero-coupon bonds, listed and
over-the-counter ("OTC") corporate bonds, municipal bonds, GNMAs and CDs. We
offer both margin accounts and cash accounts to our customers. Customers
approved for margin transactions may borrow a portion of the value of certain
securities purchased through us, or may sell securities short. We make
commodities transactions available to our customers by acting as an introducing
broker for commodities trading.

Customers must have specific approval to trade options. As of April 30,
1999, approximately 154,000 accounts were so approved. To write uncovered
options, customers must go through an additional approval process and must
maintain a significantly higher level of equity in their brokerage accounts.

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

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<PAGE> 54

and money market strips. Transactions in Canada Savings Bonds and provincial
savings bonds are available. We also offer our customers the ability to buy and
sell gold and silver certificates.

Customers must have specific approval to trade options. As of April 30,
1999, approximately 50,000 accounts were so approved. Our options specialists
offer information to our customers to assist them in their investments in
Canadian or U.S. exchange-traded options.

Over the past several years, an increasing percentage of the trading
activity of our Canadian customers has involved U.S. equity securities. For
fiscal years 1996, 1997 and 1998 and the second quarter of fiscal 1999,
approximately 10%, 12%, 16% and 24%, respectively, of all trading volume in our
Canadian operations involved U.S. equity securities.

We offer our customers the ability to choose from a variety of different
types of brokerage accounts and investment plans. Brokerage accounts include
margin accounts and cash accounts. Customers approved for margin transactions
may borrow a portion of the price of certain securities purchased through us or
may sell securities short. The only equity securities which may be traded on
margin are stocks which are listed on major Canadian and U.S. exchanges and
certain stocks listed on Nasdaq.

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

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

Our Hong Kong operations act primarily as an introducing broker and
marketing affiliate to our Canadian operations. This business serves as a
liaison between our customers in Hong Kong and our Canadian operations,
providing Hong Kong residents with access to all U.S. and Canadian
exchange-listed securities. In addition, our Hong Kong customers can also buy
and sell local unit trusts (or mutual funds) and fixed income products. We
currently are developing systems that will allow us to offer our customers
access to local Hong Kong exchange-listed securities later this year.

MUTUAL FUNDS

United States. Through the Waterhouse Mutual Fund Network, we currently
offer our U.S. customers access to over 8,500 mutual funds from over 450 fund
families, including over 1,400 no-load mutual funds in 219 fund families which
customers can trade with no transaction fees ("NTF"), which are part of our NTF
program. Under our NTF program, we receive fees from the funds and fund sponsors
for providing services for the Waterhouse Mutual Fund Network program, including
record keeping and shareholder services. These fees are based upon balances of
customer assets invested in the participating funds through us. For no-load
funds which are not part of the NTF program, we currently charge our customers a
flat fee per trade, regardless of the size of the transaction. Our broad mutual
fund offerings provide our customers with simplified record keeping and
investment monitoring through the use of one consolidated statement. Customer
assets held by us that have been purchased through the Waterhouse Mutual Fund
Network, excluding our proprietary funds, totalled $10.9 billion as of April 30,
1999. Assets held in mutual funds in our NTF program were in excess of $4.0
billion as of April 30, 1999.

Our proprietary funds include four taxable and two tax exempt money market
funds and the Waterhouse Dow 30 Fund, all of which are advised by one of our
subsidiaries. Customer assets invested in the Waterhouse proprietary funds
totaled approximately $6.7 billion at April 30, 1999. Fees received by us from
these proprietary funds for providing transfer agent services, shareholder
services, administration and investment management are based upon daily balances
of customer assets invested in these funds.

Canada. We offer investors over 1,100 different mutual funds from 75 fund
families including over 40 funds in the Green Line Family of Funds which are
managed by our affiliate, TD Asset Management Inc. We

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receive customary trailer fees from the funds, including the funds managed by
our affiliate, based upon balances of customer assets invested in the
participating funds through us. We do not charge a commission on no-load funds
but we may charge a commission for load funds. There is a regular redemption fee
for all no-load funds with the exception of the Green Line Family of Funds.
Customer assets held by us in mutual funds totaled $5.4 billion as of April 30,
1999, including $3.4 billion of assets invested in the Green Line Family of
Funds.

In addition, our team of mutual fund specialists provide our customers with
important comparative information about the over 1,100 mutual funds we make
available to our Canadian customers. Our Green Line FundSelect Internet tool
allows our online customers to compare all the Canadian mutual funds available
through us by key criteria.

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

SPECIAL SERVICES

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

- - Business Development Officers. Our staff of specially trained business
development officers assists our customers in developing asset allocation
strategies and evaluating investment choices with the goal of enhancing
customer awareness of their investment options and encouraging customers to
consolidate their various investment assets at TD Waterhouse.

- - Services for Active Customers. In the U.S., our Investors Advantage program
provides special benefits and privileges to our more active customers,
including reduced margin rates and priority service. In Canada, a select
group of our most active investors may participate in our President's
Account program. Members of this program receive substantial savings on
commissions, reduced margin loan rates, premium rates on investment
balances, free online connect time, free real-time quotes, free investment
reports, priority telephone services, and an annual trading summary.

- - Multi-Lingual Services. Through selected branch offices and service centers
in our major markets, we provide brokerage services and access to all our
products and services to customers whose primary language is French,
Spanish, Mandarin, Cantonese and certain other Asian languages.

- - Investment Guidance. Through selected branch offices, we provide our
customers with guidance regarding fixed income investing and assistance
selecting among a full-range of mutual funds and money market investments.

- - IPOs and New Issues. In Canada and the U.S., we provide access to
registered offerings of new issues to our qualified customers through an
arrangement with our affiliate, TD Securities Inc., when it participates as
underwriter or a selling group member in these offerings. In March 1999 we
entered into an agreement with Wit Capital to provide our qualified U.S.
customers with online access through webBroker to initial public offerings
that Wit Capital underwrites.

RETIREMENT SERVICES AND REGISTERED PLANS

United States. We offer a variety of no-fee, no-minimum balance retirement
plan products for both individuals and businesses. We offer various IRAs for
individuals as well as SEP plans, profit sharing plans, 401(k) plans and other
retirement plans for businesses and self-employed individuals. Customers are
provided

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<PAGE> 56

with investment and savings assistance through our Retirement Planning Guide to
assist in determining retirement needs, our Retirement Plans Customer Service
Desk or by using our online Retirement Planning Center.

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

BROKERAGE SERVICES FOR INVESTMENT ADVISORS

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

This division of our business has its own sales force and marketing
strategy. Specialized technology, including proprietary software and data
translation interfaces, is provided to all advisors. An experienced relationship
manager is assigned to each advisory firm. A range of products and services
which have been individualized to meet the needs of financial advisors are
available, including: block trading and trade allocation, processing management
fees payable to advisors, free investment research, trading online, downloads of
client account information and consolidated monthly statements of client
accounts. We anticipate that Internet trading services will be available to our
investment advisor clients through webBroker in July 1999. This division now
serves over 2,600 investment advisors who manage total customer assets through
accounts with us of over $7 billion.

Through the Waterhouse referral program, we provide qualified customers
with referrals to registered investment advisors meeting certain minimum
requirements, including registration with the SEC, and who agree to maintain
custody of their clients' assets at TD Waterhouse. In order to qualify for this
referral service, our customers must have a portfolio with a balance of at least
$100,000. While benefitting our retail customers, this program also benefits our
investment advisor clients by providing participating registered investment
advisors access to our U.S. customer base of over 1.3 million active individual
investors. We do not pay to or receive from the registered investment advisors
any fees or compensation for participation in the Waterhouse referral program.

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

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

By leveraging our investment in technology, economies of scale and
management expertise, we can offer investment counselors quality administration
services at a competitive price. Investment counselors manage private client
accounts under our product label. Trade commissions on the accounts are paid to
us, and we assume responsibility for account opening, trading, credit and
regulatory compliance. We currently service

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over 80 investment counselor firms and have approximately 10,700 accounts and
$1.2 billion under administration.

Outside the U.S. and Canada. Through our Australian operations, we offer a
broad range of brokerage execution and operation support services to independent
fee-based investment advisors. The clients of the investment advisors pay the
advisor a fee and pay us a commission for trades executed. Our webBroker permits
the independent advisor to link up multiple client accounts for ease of
reference. Our recently launched Premium webBroker facility, provides the
investment advisors with a full range of market and client data on an integrated
basis.

CASH MANAGEMENT SERVICES

United States. Our customers in the U.S. can choose to have cash balances
in their accounts automatically swept, on a daily basis, into any of a selection
of money market funds or an FDIC-insured money market deposit account offered
through Waterhouse National Bank, our affiliate. On certain existing brokerage
accounts, we pay interest on cash balances. Our customers with online accounts
are required to establish an Investor Money Management ("IMM") account which is
also available to all our other customers with a minimum balance of $1,000.
Customers with IMM accounts may access available funds in their accounts either
with a personal check or a VISA(R) CheckCard. When a customer with an IMM
account is approved for margin trading, the checks and CheckCard also provide
access to margin cash available. Other services available to our customers to
help them manage their finances and investments include direct deposits into
their brokerage account, automated transfers from their bank to brokerage
account, periodic investing whereby customers can add to a mutual fund position
each month or quarter, dividend reinvestment and electronic bill payment which
permits customers to pay bills by touch-tone telephone.

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

INVESTOR INFORMATION SERVICES

We provide a broad spectrum of free investment information and research
tools to our active customer base in order to help the self-directed investor
with his or her investment decisions. These include printed research materials,
quote information, charts of stock prices, portfolio tracking, stock and mutual
fund performance and screening tools and links to significant Internet financial
services web sites.

Printed Research Materials

United States. We make the following printed research publications
available to all customers of our U.S. operations:

- - Standard & Poor's Stock Reports, Stock Guides, and S&P's The Outlook -- The
Mid-Year and Annual Forecast Issues. Together, these reports are published
on over 3,800 stocks, including all NYSE and American Stock Exchange
securities and over 1,000 Nasdaq securities, and include investment data on
over 7,000 securities, summaries and interpretations of stock market trends
and investment strategy recommendations.

- - Our Monthly Newsletter. Our monthly newsletter features research from
Standard & Poor's and covers investing subjects of topical interest and
information about our products and services.

- - Standard & Poor's Stock Market Leaders Guide and Credit Analysis
Reports. These publications rank stocks according to a variety of
investment criteria and profile corporate bond issuers.
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- - Mutual Fund Information & Comparison Guide and Mutual Fund Top Performers
Report. These reports contain rankings, commentary and data compiled by
Morningstar, Inc. regarding all 8,500 mutual funds we offer.

- - Annual Retirement Planning Guide and Annual Tax Planning Guide. These
guides help our customers plan for retirement with financial strategies and
worksheets and outline tax planning strategies and tax-saving ideas.

Canada. We make the following printed research publications available to
our customers in Canada:

- - Standard & Poor's research reports, First Call reports and Financial Post
reports are available on more than 7,500 listed companies in the U.S. and
Canada.

- - Green Line News. This monthly newsletter produced by us contains tips on
investment strategies and advice from experts and forecasts by TD Bank's
Economics Department.

- - Mutual Fund Review. These quarterly reports, which provide comprehensive
statistical information on the over 1,100 funds offered to our Canadian
customers, are automatically provided for free to our customers with a
mutual fund account value of Cdn. $1,000 or more.

- - Other Research Products. We also offer our customers access to financial
computer software, investment books and other third party reference guides
at special discounts.

Online Market Data

We also provide our customers with information and research online. Our
partnership with leading content providers gives our online customers access to
a broad range of financial information and facilitates their ability to make
informed investment decisions.

United States. In addition to the delayed quotes, charts, and personal
portfolio tracker which are freely available to anyone who visits our web site,
we provide our webBroker customers with access to the most up-to-the-minute
financial data and news to assist them in making investment decisions.

- - Quotes, Charts, and Portfolio Tracking. Online customers can obtain free
real-time quotes for stocks, mutual funds and options at any time. Free
access to historical charts that track intra-day, daily, weekly and monthly
stock and option prices are available for over 25,000 publicly traded
Canadian and U.S. companies stocks, over 7,500 mutual funds, and over
100,000 options as well as advanced charting from Big Charts, which features
comparison charting for comparing stocks and mutual funds to various
indices. Our customers can create their own personal portfolio tracker with
up to 25 stocks and mutual funds. S&P Comstock provides real-time quotes.
Quote.com provides our delayed quotes, charts and portfolio tracking.
Current news and charts are directly linked to the portfolio tracking and
quote lookup features.

- - Quote and News Alerts. Customers are alerted by pagers and e-mail when
there is current news on an identified stock or when a stock has reached a
pre-selected price threshold.

- - News. Customers can obtain headline and full-text news on over 6,000
companies. News sources include Reuters, AP, Businesswire, PR Newswire, and
other sources. News service is supplied by Quote.com.

- - S&P Stock Reports Online. Online customers have unlimited access to
Standard & Poor's reports containing information such as quantitative and
technical evaluations, overviews, valuations, key stock statistics,
quarterly and fiscal year statistics, business summaries and charts.

- - Zacks Investment Research. Zacks Investment Research Incorporated provides
our online customers with research recommendations from over 3,000 analysts
at 240 firms.

- - Stock Screening by Market Guide. Our webBroker's Stock Screening tool
enables our online customers to quickly identify stocks that fit their
specific parameters by selecting from any combination of search options to
search Market Guide's database of over 10,500 public companies.
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- - Morningstar, Inc. Morningstar, Inc. provides performance information and
proprietary "star" ratings on mutual funds within the Waterhouse Family of
Funds.

- - Briefing.com. Briefing.com, a service of Charter Media, Inc., provides
market commentary and analysis to our online customers. Updates are posted
throughout the day to keep investors informed of important developments
affecting the markets.

- - MarketEdge. MarketEdge supplies computer-generated opinions designed to
identify conditions that historically have demonstrated a high degree of
accuracy in forecasting an individual stock's price movement. These opinions
are based on a variety of quantitative and technical factors.

Canada. In addition to the delayed quotes, charts, and portfolio tracker
that are freely available to anyone who visits the Green Line web site, we
provide our Green Line webBroker customers with access to the following research
and financial data and news to assist them in making investment decisions:

- - Quotes, Charts, and Portfolio Tracking. Online customers can obtain free
real-time quotes for U.S. and Canadian stocks, mutual funds, and options any
time. Free access to historical charts that track intra-day, daily, weekly
and monthly stock prices are available for all publicly traded Canadian and
U.S. companies. Our customers can create their own personal portfolio
tracker for up to five model portfolios with up to ten stocks, options,
mutual funds and indicies. Bridge Information provides real-time quotes.
Quote.com provides our delayed quotes and charts and portfolio tracking.

- - News. Customers can obtain up to the minute news and in depth analysis from
Reuters, as well as the latest Canadian news from Canadian Corporation News
and Canadian Market News.

RETAIL BANKING PRODUCTS AND SERVICES

United States. We offer our customers related financial products and
services provided by our affiliate, Waterhouse National Bank. In addition to the
FDIC-insured money market sweep account offered through our retail brokerage
business, the products and services of Waterhouse National Bank include
interest-bearing checking accounts, fixed term certificates of deposits, Visa
and MasterCard credit cards, electronic bill paying via touch-tone telephone,
unsecured personal lines of credit and, through an arrangement with an
unaffiliated financial institution, home equity lines of credit and
single-family residential mortgages. In addition, Waterhouse National Bank is in
the process of developing Internet banking services. Customers can access their
brokerage account through a Waterhouse Investors Money Management Account,
which, in addition to providing for free credit balances in a customer's
brokerage account to be swept automatically each business day into such
customer's designated sweep portfolio, also provides access to a customer's
investment in such sweep portfolio by unlimited writing of checks or using an
ATM/VISA CheckCard. The products of Waterhouse National Bank have been designed
to assist our customers in managing their investments and personal finance. In
connection with the reorganization, we have entered into agreements with
Waterhouse National Bank with respect to marketing, distribution and management
support. See "Principal Stockholder -- Certain Transactions Between Us and TD
Bank."

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

INSURANCE PRODUCTS

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

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

Interest on margin loans to customers provides an important source of our
revenue. During fiscal 1998, outstanding margin loans to customers averaged $1.8
billion to the customers of our U.S. operations and $659 million to the
customers of our Canadian operations. During the first six months of fiscal
1999, outstanding margin loans averaged $2.9 billion and $664 million in the
U.S. and Canada, respectively. In permitting a customer to engage in margin or
short sale transactions, we face credit risk if the customer fails to meet his
or her obligations in the event of adverse changes in the market value of the
securities positions in his or her account. In the event of such an adverse
change, we require our customers to deposit additional securities or cash, so
that the amount of the customer's obligation is not greater than specified
percentages of the cash and market values of the securities in the account.

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

MARKETING AND ADVERTISING

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

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

Through our web sites, prospective customers can get detailed information
on our products and services, access account applications, view an online
demonstration and request additional information. We have alliances linking
webBroker with America Online, Microsoft Network and Yahoo!. We believe these
links are a significant factor in increasing brand awareness and generating
leads, as consumers increasingly look to the Internet as a key source of
information and commercial activity.

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

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

We intend to use a portion of the proceeds from these offerings to
substantially increase our annual marketing and advertising budget. The
combination of this increased marketing funding in conjunction with our low
account acquisition costs will enable us to focus our efforts on building our
unified global brand. Following the completion of the offerings, we will begin
marketing under a uniform trade name worldwide. Our advertising and marketing
costs per new account were approximately $65 in fiscal 1998 and $57 for the six
months ended April 30, 1999, which we believe is significantly lower than a
number of our primary competitors.

ALLIANCES WITH ONLINE PROVIDERS

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

- - America Online. In July 1998, we renewed our relationship with America
Online ("AOL"), a private network and Internet service provider, by entering
into a two-year agreement. Under the agreement, we are one of four exclusive
brokerage partners in the AOL Personal Finance Channel. The agreement
provides for extensive marketing and promotional opportunities across AOL
properties and for a "mini-Waterhouse" site that is resident on AOL's
private network and available to AOL members. We have buttons and banners
located primarily in the AOL Personal Finance Channel but also throughout
the AOL network, including the AOL home page, that link directly to our mini
site on AOL or the Waterhouse web site on the Internet. In April 1999, we
entered into a one-year agreement with AOL with respect to our Canadian
business. Under the agreement, we are one of four exclusive brokerage
partners in the AOL Personal Finance Channel that is accessible by Canadian
subscribers to AOL, with buttons and banners located in the channel.

- - MSN.com. In the U.S., we have developed a number of key relationships with
Microsoft Corporation that are designed to promote our online investing
services on the MSN web site. In January 1999, we entered into a one-year
advertising agreement pursuant to which Microsoft provides advertising of
our brokerage services in the form of buttons, banners, and text links, all
of which link directly to our web site on the Internet. We are one of three
exclusive broker participants in this "MSN Broker Package," which includes
advertising on the MSN.com home page, the MSN quotes return page, MSN's
MoneyCentral quotes return page and portfolio page.

- - Yahoo!. In March 1999, we entered into a three month advertising agreement
with Yahoo!, a web portal/search engine, to promote our U.S. online
investing services. Pursuant to the agreement, Yahoo! provides advertising
in the form of buttons on the Yahoo! quotes return page and banners in the
Yahoo! Finance area and throughout the Yahoo! site.

- - IPO and New Issue Access. We are currently implementing an arrangement with
Wit Capital to provide online access to IPOs to our customers. See "--
Products and Services -- Special Services."

CLEARING OPERATIONS

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

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We also provide clearing services for approximately 18 other unaffiliated
broker-dealers (referred to as "introducing brokers") in the U.S. and Canada
representing approximately $2.0 billion in assets at April 30, 1999. As part of
our clearing services for third parties, we maintain certain books and records
for the introducing brokers, hold securities and free cash balances of the
introducing brokers' customers, execute and settle trades for those customers
and, when appropriate, extend margin loans to those customers. These clearing
operations have generated additional revenues as well as contributed to
increased operating margins.

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

Our U.K. and Australia operations also perform similar services for all
securities in their customer accounts. Our Hong Kong subsidiary clears its
customers' trades through our Canadian clearing operations.

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

COMPETITION

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

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

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

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customers who utilize electronic distribution channels continues to grow, we
expect that the average commission per trade will continue to decline.

Canada. In contrast to the U.S. market, market share in Canada is
concentrated amongst a limited number of institutions. We believe our client
base as measured by the total number of accounts represents in excess of 50% of
the total discount brokerage market.

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

Outside the U.S. and Canada. The discount brokerage market in Australia is
just developing. Our competitors in Australia include Commonwealth Securities
Ltd., which is a bank-owned discount broker, E*Trade and Australia Discount
Securities. Currently we are the second largest discount broker in Australia,
based on trading volume, behind Commonwealth Securities. The discount brokerage
market in the United Kingdom is also relatively underdeveloped and very
fragmented.

TECHNOLOGY AND INFORMATION SYSTEMS

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

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

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

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

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

In the U.S., the primary component of our system with respect to online
trading is our middleware component, which we license from Marketware
International. Our middleware unifies front-end applications and multiple
interfaces, supports different languages, hardware platforms and protocols, and
establishes the interface between ADP, our back-office service provider, and our
customers who execute transactions via webBroker or TradeDirect. In Canada, our
middleware is currently used only on our web product.

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

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

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

EMPLOYEES

At April 30, 1999, on a full-time equivalent basis, we employed
approximately 5,310 persons. A total of 3,565 of these employees are based in
the U.S. and approximately 1,494 are based in Canada. Our Australia operations
employed approximately 144 persons, our U.K. operations employed approximately
99 persons and our Hong Kong operations employed 8 persons. None of our
employees is subject to a collective bargaining agreement. We believe that our
relations with our employees are good.

PROPERTIES

Our corporate headquarters are located at 100 Wall Street, New York, New
York. This office consists of approximately 110,000 square feet under a lease
which expires in 2002. We also lease approximately 65,000 square feet of space
at 55 Water Street, New York, New York for our clearing operations under a lease
that expires in 2006. We lease approximately 700,000 square feet worldwide for
our other branches and offices under various leases, the majority of which
expire on dates through 2006.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

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

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

Together with several other online brokers, we have received a letter from
the New York State Office of the Attorney General dated February 2, 1999
requesting that our U.S. brokerage subsidiary provide certain documents and make
certain employees available to discuss complaints that the Attorney General's
office has received regarding system outages or failures of online brokerage
services. We have met with representatives

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<PAGE> 65

of the Attorney General's office, have provided certain information to them and
are continuing to produce information as requested. In addition, we also
understand that the Securities and Exchange Commission and other federal and
state regulatory authorities are conducting inquiries into or reviewing similar
matters.

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

GOVERNMENT REGULATION; NET CAPITAL REQUIREMENTS

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

Securities Regulation

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

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

Our U.S. brokerage and clearing subsidiaries are members of the Securities
Investor Protection Corporation ("SIPC"), which provides, in the event of the
liquidation of a broker-dealer, protection for customers' accounts of up to
$500,000 for each customer, subject to a limitation of $100,000 for claims for
cash balances. The SIPC is funded through assessments on registered
broker-dealers. In addition, we have arranged for supplemental insurance
coverage of customer securities in the amount of $149.5 million for each account
provided by National Union Fire Insurance Company, a subsidiary of American
International Group, one of the world's largest insurance companies. Neither
SIPC nor this supplemental coverage provides coverage for losses due to market
fluctuations.

Canada. The securities industry in Canada is under the jurisdiction of the
provincial and territorial governments and is subject to extensive regulation.
Each province or territory has a securities commission (or
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<PAGE> 66

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

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

Upon consummation of the reorganization, our Canadian brokerage subsidiary
will be a member of the Canadian Investor Protection Fund ("CIPF") which
provides, in the event of the bankruptcy or insolvency of a broker-dealer,
protection for customers' accounts of up to Cdn.$500,000 for each customer,
subject to a limitation of Cdn.$60,000 for claims for cash balances. The CIPF is
funded through assessments on registered broker-dealers.

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

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

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

Our Hong Kong brokerage subsidiary operates in Hong Kong as an introducing
broker and marketing affiliate of our Canadian brokerage operations. This
subsidiary is regulated by the Securities and Futures Commission of Hong Kong.

Capital Requirements

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

The NYSE monitors the application of the net capital rule to our U.S.
brokerage and clearing subsidiaries. The net capital rule, which specifies a
minimum net capital requirement for registered broker-dealers, is designed to
measure the general financial integrity and liquidity of a broker-dealer and
requires that at least a minimum part of its assets be kept in relatively liquid
form. Waterhouse Securities, Inc., our U.S.
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<PAGE> 67

brokerage subsidiary, computes net capital under the basic method, which
requires minimum net capital equal to the greater of $250,000 or 6 2/3% of
aggregate indebtedness. In addition, it may not permit its aggregate
indebtedness to all other persons to exceed 1,500 percent of its net capital.
National Investor Services, Inc., our U.S. clearing subsidiary, computes net
capital under the alternative method, which requires minimum net capital equal
to the greater of $250,000 or 2% of aggregate debit items arising from customer
transactions. A broker-dealer may be required to reduce its business if its net
capital is less than 4% of aggregate debit balances and may also be prohibited
from expanding its business or paying cash dividends if resulting net capital
would be less than 5% of aggregate debit balances (accounts due from customers).
In addition, the net capital rule does not allow withdrawal of subordinated
capital if net capital would be less than 5% of such debit balances. At April
30, 1999, our U.S. brokerage and clearing subsidiaries had net capital of $15.7
million and $346.7 million, respectively, which exceeded their minimum net
capital requirements by $12.6 million and $257.1 million.

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

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

Canada. As a member of the IDA, our Canadian brokerage subsidiary must
meet rules regarding minimum levels of risk adjusted capital, which is
calculated in accordance with a prescribed financial questionnaire and report
and can generally be described as qualifying capital (equity, retained earnings
and qualifying subordinated debt) less non-allowable assets, i.e., items not
readily convertible to cash, margin charges which reflect an assessment of the
risk of a decline in market value of assets and the risk associated with the
ultimate collection of client receivables, and a securities concentration
charge. The IDA monitors the risk adjusted capital by means of a monthly and
annual financial reporting audit and early warning reporting requirements.

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MANAGEMENT

THE BOARD OF DIRECTORS

Our charter and by-laws provide that the number of directors on our board
of directors shall be not less than five nor more than twenty (as fixed from
time to time by resolution of a majority of the board of directors) and require
the division of the board of directors into three separate classes with
staggered terms of three years each. The board has initially fixed the number of
directors at five.

As of the date of this prospectus, the following individuals are our
directors:

<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE AGE
- -------------------------------------------------- ---
<S> <C>
CLASS I DIRECTORS WITH TERMS EXPIRING IN 2002:
A. Charles Baillie.......................................... 59
Mr. Baillie is the Chairman of the Board of Directors
of TD Waterhouse. Since 1998 Mr. Baillie has served as
Chairman and Chief Executive Officer of TD Bank. Mr.
Baillie joined TD Bank in 1972 and since then has
occupied various positions including President & Chief
Executive Officer. Mr. Baillie is also a director of
Cadillac Fairview Corporation, Dana Corporation and
Texaco Inc.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2001:
Stephen D. McDonald......................................... 42
Mr. McDonald is the Deputy Chairman of the Board of
Directors and Chief Executive Officer of TD Waterhouse
and is Vice Chair of TD Bank. Mr. McDonald joined TD
Bank in 1983 and since then has occupied various
positions, including Vice Chair, Group Administration;
Executive Vice President, Corporate Banking; and Senior
Vice President, USA Division, Corporate and Investment
Banking Group.
Lawrence M. Waterhouse, Jr.................................. 62
Mr. Waterhouse serves as a director of TD Waterhouse.
Mr. Waterhouse founded Waterhouse Securities, Inc. and
has served as its Chairman since its inception in 1978.
In addition, Mr. Waterhouse has served as Chairman of
Waterhouse Investor Services, Inc. since its inception
in 1987 and served as its Chief Executive Officer from
1987 to 1998. Also, Mr. Waterhouse has served as
Chairman of Waterhouse National Bank since its
inception in 1994.
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2000:
Frank J. Petrilli........................................... 48
Mr. Petrilli is the President and Chief Operating
Officer and a director of TD Waterhouse. Since 1997,
Mr. Petrilli has served as President and Chief
Executive Officer, Waterhouse Investor Services, Inc.
and since 1998 as a Senior Vice President, TD Bank
Financial Group. Mr. Petrilli joined Waterhouse
Investor Services, Inc. in 1995 as President and Chief
Operating Officer. Prior to joining Waterhouse, Mr.
Petrilli served in senior management positions at
American Express, including President and Chief
Operating Officer of Centurion Bank (a wholly owned
subsidiary of American Express), from 1988 to 1995.
John G. See................................................. 42
Mr. See is the Vice Chairman of the Board of Directors
of TD Waterhouse, whose responsibilities include
managing our Canadian operations. Since 1995, Mr. See
has served as Senior Vice President, Green Line
Investor Services and Senior Vice President, TD Bank
Financial Group. Mr. See joined TD Bank in 1981 and
since then has held various positions of increasing
responsibility the Corporate and Investment Banking
Group in Houston, New York and London.
</TABLE>

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<PAGE> 69

Prior to completion of the offerings, we expect to elect the following four
additional directors to our board:

<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE AGE
- -------------------------------------------------- ---
<S> <C>
John M. Thompson............................................ 56
Mr. Thompson is Senior Vice President and Group
Executive for IBM's Software Group, where he manages
the company's worldwide software business. Mr. Thompson
has development and marketing responsibility for IBM's
Internet, Software Solutions and Network Computing
Software divisions, as well as Lotus Development Corp.
and Tivoli Systems. Mr. Thompson is also a director of
TD Bank and Hertz Corporation. Mr. Thompson has held
numerous management positions during his 32-year IBM
tenure including President and Chief Executive Officer
of IBM Canada Ltd. and Corporate Vice President,
Marketing and Services and Senior Vice President of
IBM's Server Group.
Dr. Wendy Dobson............................................ 57
Dr. Dobson is Professor and Director, Institute for
International Business at the University of Toronto.
Dr. Dobson served as Associate Deputy Minister of
Finance in the Canadian government and as Canada's "G-7
Deputy" between 1987 and 1989. Between 1981 and 1987,
she was President of the C.D. Howe Institute, Canada's
leading independent economic policy research
institution. Dr. Dobson is also a director of
TransCanada Pipelines Ltd. and TD Bank, and is a member
of several international networks including the
Trilateral Commission and the Pacific Trade and
Development network (PAFTAD).
Leo J. Hindery, Jr.......................................... 51
Mr. Hindery is President and Chief Executive Officer of
AT&T Broadband & Internet Services, which was formed
out of the March 1999 merger of Tele-Communications,
Inc. (TCI) into AT&T and which encompasses all of
AT&T's domestic local telephone, video and data
services operations. Previously, Mr. Hindery was
President of TCI, to which position he was elected on
March 1, 1999. Prior to joining TCI, Mr. Hindery was
Managing General Partner of InterMedia Partners, the
nation's ninth largest multiple cable system operator,
which he founded in 1988. Mr. Hindery is also a
director of Liberty Media Corporation.
Steven B. Dodge............................................. 53
Mr. Dodge is Chairman and Chief Executive of American
Tower Corporation, a leading independent owner and
operator of communication towers in the U.S. American
Tower was formed in 1995 as a subsidiary of American
Radio Systems Corporation, a publicly traded radio
company, of which Mr. Dodge was a founder and Chief
Executive Officer. Prior to his involvement with
American Radio, Mr. Dodge was the founder and Chief
Executive Officer of American Cable Systems, a publicly
traded television company, which was merged into
Continental Cable (now Media One) in 1998. Mr. Dodge is
also a director of PageMart Wireless Inc., Sensitech,
Inc. and Jobson Publishing and serves as a Trustee of
the Dana Farber Cancer Institute.
</TABLE>

Of these four additional directors, Messrs. Hindery and Dodge are not
affiliated with us or TD Bank and will qualify as independent directors.

BOARD COMMITTEES

Our board of directors will initially have two committees: an audit
committee and a management resources and compensation advisory committee.

The audit committee will initially consist of Messrs. Hindery and Dodge.
The audit committee will be responsible for making recommendations concerning
the engagement of independent auditors, reviewing with the independent auditors
the plans and results of the audit engagement, approving professional services
provided by the independent auditors, reviewing the independence of the
independent auditors, considering the range of audit and non-audit fees and
reviewing the adequacy of our internal accounting controls.

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<PAGE> 70

The management resources and compensation advisory committee will also
initially include Messrs. Hindery and Dodge. The compensation committee will be
responsible for the determination of compensation of our executive officers and
the administration of our employee incentive plans. Prior to the offerings, the
executive officers named in the Summary Compensation Table below were
participants in the executive compensation programs of TD Bank. The management
resources and compensation advisory committee of TD Bank was responsible for the
review of those programs, and for grants awarded under those programs.

The board of directors may, from time to time, establish certain other
committees to facilitate the management of our business.

COMPENSATION OF DIRECTORS

Our independent directors will be paid an annual fee of $25,000. In
addition, each independent director will be paid a fee of $1,000 for attendance
at each meeting of the board or committee of the board. Directors who are
employees of TD Waterhouse or TD Bank will not receive any fees for their
service on the board or a committee thereof. We will reimburse directors for
their out-of-pocket expenses in connection with their service on the board.

EXECUTIVE OFFICERS

We have set forth below certain information for each person who is expected
to serve as an executive officer of TD Waterhouse upon consummation of the
reorganization. For information concerning the business experience of Stephen D.
McDonald, Frank J. Petrilli and John G. See, see "-- The Board of Directors."

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Stephen D. McDonald.................. 42 Chief Executive Officer and Deputy Chairman
Frank J. Petrilli.................... 48 President and Chief Operating Officer
John G. See.......................... 42 Vice Chairman
Joseph N. Barra...................... 39 Executive Vice President
John H. Chapel....................... 46 Executive Vice President
A. Wayne Kyle........................ 50 Executive Vice President, Human Resources
Bharat B. Masrani.................... 42 Executive Vice President
Richard H. Neiman.................... 48 Executive Vice President and General Counsel
Gerrard J. O'Mahoney................. 44 Executive Vice President
B. Kevin Sterns...................... 52 Executive Vice President and Chief Financial Officer
Richard W. Arnold.................... 51 Senior Vice President
Andrew S. Nevin...................... 36 Senior Vice President
</TABLE>

JOSEPH N. BARRA will serve as Executive Vice President, TD Waterhouse, with
responsibility for clearing operations in the U.S. Since January 1997, Mr. Barra
has served as President of our subsidiary, National Investor Services Corp. and
Chief Executive Officer since March 1998. Mr. Barra joined Waterhouse Investor
Services, Inc. in 1996 as President of the clearing division of Waterhouse
Securities. Prior to joining Waterhouse Investor Services, Inc., Mr. Barra was
Executive Cashier and Vice President of National Financial Services Corporation,
a wholly owned subsidiary of Fidelity Investments.

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

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

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<PAGE> 71

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

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

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

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

RICHARD W. ARNOLD will serve as Senior Vice President, TD Waterhouse with
responsibility for all areas of brokerage in Australia. Since April 1999 until
the date of the reorganization, Mr. Arnold served as Managing Director, Green
Line Australia. Prior to joining TD Bank, Mr. Arnold served in senior positions
with various companies including, Executive Vice President, Strategic Planning
and Corporate Development, Charles Schwab Company, Inc.

ANDREW S. NEVIN will serve as Senior Vice President, TD Waterhouse, with
responsibility for all areas of brokerage in the Asia Pacific Region. Since
February 1999 until the date of the reorganization, Mr. Nevin served as
Executive Vice President and Managing Director of Asia Pacific Region, Green
Line Investor Services, Wealth Management Services. Mr. Nevin joined TD Bank in
1995 as Manager of Corporate Finance, Investment Banking. Since then, Mr. Nevin
has served in various positions including Vice President and Managing Director
of Asia Pacific Region, Green Line Investor Services, Wealth Management
Services. Prior to joining TD Bank, Mr. Nevin served as a Senior Engagement
Manager for McKinsey & Company.

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<PAGE> 72

EXECUTIVE COMPENSATION

The following table sets forth the compensation that was paid by TD Bank or
its subsidiaries during the fiscal year ending on October 31, 1998 with respect
to the chief executive officer of TD Waterhouse and the four individuals who
will become executive officers of TD Waterhouse upon consummation of the
reorganization and who would have been, based on such compensation, the most
highly compensated executive officers during fiscal year 1998 (the "Named
Executive Officers"). The principal positions listed in the table are those that
will be held by such persons upon consummation of the reorganization.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

ANNUAL COMPENSATION
----------------------------------------
OTHER ANNUAL
SALARY BONUS COMPENSATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
--------------------------- ---- -------- ---------- ---------------
<S> <C> <C> <C> <C>
Stephen D. McDonald............................. 1998 $257,583 $ 296,196*(4) $ 88
Chief Executive Officer and Deputy Chairman
Frank J. Petrilli............................... 1998 $300,000 $1,000,000* n/a
President and Chief Operating Officer
John G. See..................................... 1998 $135,814 $ 186,821* $569
Vice Chairman
Richard H. Neiman............................... 1998 $230,000 $ 115,000* n/a
Executive Vice President and General Counsel
B. Kevin Sterns................................. 1998 $174,918 $ 135,000* n/a
Executive Vice President and Chief Financial
Officer

<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
SECURITIES
RESTRICTED UNDERLYING
STOCK OPTIONS LTIP
AWARDS(2) GRANTED PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION ($) (#) ($) COMPENSATION(3)
--------------------------- ------------- ---------- -------- ---------------
<S> <C> <C> <C> <C>
Stephen D. McDonald............................. n/a 54,000 n/a $ 1,578
Chief Executive Officer and Deputy Chairman
Frank J. Petrilli............................... 4,000 13,400 n/a $20,342
President and Chief Operating Officer
John G. See..................................... n/a 13,400 n/a $ 1,188
Vice Chairman
Richard H. Neiman............................... n/a 5,100 n/a $20,342
Executive Vice President and General Counsel
B. Kevin Sterns................................. n/a 5,100 n/a $20,342
Executive Vice President and Chief Financial
Officer
</TABLE>

- ---------------

(1) The value of perquisites and benefits for each Named Executive Officer is
less than the lesser of $50,000 and 10% of total annual salary and bonus.
The amounts quoted in this column represent the taxable benefits on reduced
rate loans for Mr. McDonald and Mr. See.

(2) The aggregate holdings and value of restricted share units on October 31,
1998, are as follows:

<TABLE>
<CAPTION>
# UNITS VALUE ON OCTOBER 31, 1998
------- -------------------------
<S> <C> <C>
F. Petrilli.......................... 4,000 $205,220
</TABLE>

Dividend equivalents are not paid on these units. Units are redeemed on the
3rd anniversary. This represents an award granted in 1998.

(3) All figures in this column reflect 401(k) and profit sharing plan
contributions, and life insurance premiums for U.S. residents and Employee
Savings Plan contributions and life insurance premiums for Canadian
residents.

(4) Mr. McDonald elected to defer a portion of his bonus equal to $31,590 into
phantom share units of TD Bank as part of its Senior Executive Deferred
Share Unit Plan.

* Awarded on December 10, 1998.

TD BANK STOCK OPTION PLAN

TD Bank adopted the Toronto-Dominion 1993 Stock Option Plan in 1993.

The stock option plan permits the grant of stock options to management
employees of TD Bank and its subsidiaries. A maximum of 21 million common shares
of TD Bank may be subject to the stock option plan. The aggregate number of
common shares for which options may be granted to any single participant shall
not exceed 5% of the total number of issued and outstanding shares. The number
of common shares issued or reserved pursuant to the stock option plan (or
outstanding options) is subject to adjustment on account of stock splits, stock
dividends and other dilutive changes in the common shares. Common shares that
are subject to options that expire, terminate or lapse will again be available
for option or grant under the stock option plan.

Administration. The stock option plan is administered by the TD Bank
Management Resources and Compensation Advisory Committee of the board of
directors of TD Bank. The committee may appoint the

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<PAGE> 73

Chairman, President or the senior officer of the TD Bank responsible for human
resources to act on its behalf and in accordance with its determinations to
administer the stock option plan. The committee has the sole discretion to
determine the employees to whom options may be granted under the stock option
plan and the terms, conditions and limitations of each grant.

Exercise. The exercise price for each option shall be the closing price of
the common shares on the TSE on the last date on which common shares were traded
before the date the option was granted. An option holder may exercise an option
by written notice and payment of the exercise price; provided, that no option
may be exercised later than 10 years after the date upon which it was granted.

Transferability. Options granted under the stock option plan are not
transferable other than by will or by the laws of descent and distribution.

Change in Control. In the event of a change in control (as defined in the
stock option plan), all options not exercisable shall immediately become
exercisable in full.

Amendment and Termination. The board of directors of TD Bank may amend or
terminate the stock option plan in any respect at any time, but no amendment (1)
shall be implemented without the approval of the shareholders of TD Bank, if
such approval is required by any regulatory authorities or stock exchanges or
(2) can impair any previously granted without his or her consent.

The following table sets forth certain information concerning options with
respect to TD Bank common shares granted to the Named Executive Officers during
the fiscal year ended October 31, 1998:

OPTION/SAR GRANTS FROM TD BANK IN LAST FISCAL YEAR(1)

<TABLE>
<CAPTION>
PERCENT OF
TOTAL
NUMBER OF OPTIONS/SAR'S
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN
OPTIONS/SAR'S FISCAL YEAR EXERCISE OR GRANT DATE
GRANTED 1998 BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) (%) ($/SHARE) DATE ($)
- ---- ------------- ------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen D. McDonald.................. 54,000 2.6% $43.086 April 2, 2008 $502,211
Frank J. Petrilli.................... 13,400 0.6% $43.086 April 2, 2008 $124,623
John G. See.......................... 13,400 0.6% $43.086 April 2, 2008 $124,623
Richard H. Neiman.................... 5,100 0.2% $43.086 April 2, 2008 $ 47,431
B. Kevin Sterns...................... 5,100 0.2% $43.086 April 2, 2008 $ 47,431
</TABLE>

- ---------------

(1) Option awards for fiscal 1998 were granted for TD Bank common shares. The
first 25% of the award becomes exercisable after one year, the second 25%
after two years, the third 25% after three years, and the final 25% after
four years.

(2) Grant date value is based on the number of options granted multiplied by the
Black-Scholes value at time of issue, which was $9.3002.

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<PAGE> 74

AGGREGATED TD BANK OPTION/SAR EXERCISES IN FISCAL YEAR ENDED OCTOBER 31, 1998

OPTION VALUES AS OF OCTOBER 31, 1998

The following table sets forth certain information concerning TD Bank stock
option exercises during the last fiscal year by the Named Executive Officers and
unexercised options held by such officers at the end of the last fiscal year.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR END(1) AT FISCAL YEAR END(2)
SECURITIES ACQUIRED # $
ON EXERCISE VALUE REALIZED --------------------------- ---------------------------
NAME # $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen D. McDonald.......... 61,000 $1,781,045 54,500 61,500 $1,054,762 $ 124,684
Frank J. Petrilli............ 0 $ 0 3,875 25,025 $ 27,627 $ 82,880
John G. See.................. 33,000 $ 931,946 30,500 34,900 $ 469,999 $ 232,014
Richard H. Neiman............ 0 $ 0 1,500 9,600 $ 10,694 $ 32,082
B. Kevin Sterns.............. 0 $ 0 16,775 13,175 $ 410,221 $ 126,722
</TABLE>

- ---------------

(1) Options issued in 1993 through 1998 and Phantom Stock Options issued in 1990
through 1992.

(2) The closing price of TD Bank common shares on the TSE on October 30, 1998
was $29.75.

TD WATERHOUSE STOCK INCENTIVE PLAN

In connection with the reorganization, we intend to adopt the 1999 TD
Waterhouse stock incentive plan to be effective immediately prior to the
reorganization.

The stock incentive plan permits the grant of non-qualified stock options,
incentive stock options, stock appreciation rights, restricted stock and other
stock-based awards to employees, directors or consultants of ours or of our
affiliates. A maximum of 9% of the outstanding shares of common stock may be
subject to awards under the stock incentive plan. The maximum number of shares
of common stock for which options and stock appreciation rights may be granted
during a calendar year to any participant will be one million. The number of
shares issued or reserved pursuant to the stock incentive plan (or pursuant to
outstanding awards) is subject to adjustment on account of stock splits, stock
dividends and other dilutive changes in the common stock.

Administration. The stock incentive plan is administered by the management
resources and compensation committee of our board of directors, which may
delegate its duties and powers to any subcommittee thereof consisting solely of
two or more individuals who are intended to qualify as "non-employee directors"
within the meaning of Rule 16b-3 under the Securities Act (or any successor rule
thereto) and "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (or any successor section thereto).
The committee has the sole discretion to determine the employees, directors and
consultants to whom awards may be granted under the stock incentive plan and the
manner in which such awards will vest. In addition, we may also grant
performance-based awards, deductible by us under Section 162(m), based on the
attainment of written, objective performance goals approved by the committee for
a performance period, established by the committee while the outcome for such
period is substantially uncertain and no more than 90 days after the
commencement of the period to which the performance goal relates (or, if less,
the number of days which is equal to 25% of the relevant performance period).
The committee shall determine whether performance goals are met, the amount of
the performance-based award and the time of payment.

Options. The committee determines the exercise price for each option;
provided, however, that options must have an exercise price that is at least
equal to the fair market value of the common stock on the date the option is
granted (at least equal to 110% of fair market value in the case of an incentive
stock option granted to an employee who owns common stock having more than 10%
of the voting power). An option holder may exercise an option by written notice
and payment of the exercise price in (1) cash, (2) by the surrender of a number
of shares of common stock already owned by the option holder for at least six
months with a fair

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<PAGE> 75

market value equal to the exercise price, (3) a combination of cash and common
stock (as qualified by clause (2)); or (4) through the delivery of irrevocable
instruments to a broker to deliver promptly to us an amount equal to the
exercise price for the shares being purchased.

Stock Appreciation Rights. The committee may grant stock appreciation
rights independent of or in connection with an option. The exercise price per
share of a stock appreciation right shall be an amount determined by the
committee but in no event shall such amount be less than the greater of (1) the
fair market value of the common stock on the date the stock appreciation right
is granted or, in the case of a stock appreciation right granted in conjunction
with an option, the exercise price of the related option and (2) an amount
permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges. Generally, each stock appreciation right shall
entitle a participant upon exercise to an amount equal to (1) the excess of (A)
the fair market value on the exercise date of one share of common stock over (B)
the exercise price, times (2) the number of shares of common stock covered by
the stock appreciation right. Payment shall be made in common stock or in cash,
or partly in common stock and partly in cash (any common stock valued at fair
market value), all as shall be determined by the committee.

Transferability. Unless otherwise determined by the committee, awards
granted under the stock incentive plan are not transferable other than by will
or by the laws of descent and distribution.

Change in Control. In the event of a change of control (as defined in the
stock incentive plan), (1) any outstanding awards then held by participants
which are unexercisable or otherwise unvested shall automatically be deemed
exercisable or otherwise vested, as the case may be, as of immediately prior to
the change of control and (2) the committee may make provision for a cash
payment to the holder of an award in consideration for the cancellation of the
award.

Amendment and Termination. Our board of directors may amend, alter or
discontinue the stock incentive plan in any respect at any time, but no
amendment (1) without the approval of our shareholders, can increase the total
number of shares of common stock reserved for the purposes of the stock
incentive plan or change the maximum number of shares of common stock for which
awards may be granted to any participant or (2) can impair any awards previously
granted or deprive an option holder, without his or her consent, of any common
stock previously acquired.

Tax Consequences. Generally, we are entitled to a deduction equal to the
compensation recognized by the holder for our taxable year that ends with or
within the taxable year in which the holder recognized the compensation,
assuming the compensation amounts satisfy the ordinary and necessary and
reasonable compensation requirements for deductibility.

PENSION PLANS

TD Bank has entered into retirement income arrangements with Messrs.
McDonald, See and Sterns, which supplement the defined benefit pension payable
from the Pension Fund Society and the pension attributable to the profit sharing
plan for U.S. employees, maintained by TD Bank. Similar arrangements have not
been entered into with Messrs. Neiman and Petrilli. Under these arrangements,
each participating officer is entitled, upon retirement, to receive a benefit
based on 2% per year of service (to a maximum of 35 years) of the average of the
final three year's salary minus an adjustment for Canadian or, where applicable,
U.S. social security benefits. These amounts payable include the annual lifetime
benefits under the Pension Fund Society or, where applicable, the profit sharing
plan. The maximum annual benefit payable to participating officers will be the
greater of (A) 50% (60% in the case of Mr. McDonald) of the average of the
highest five consecutive years of salary and incentive compensation payments in
the last ten years of service, or (B) 70% of the average of the final three
years of salary.

Messrs. McDonald, See and Sterns are expected to have attained the maximum
years of service credit at age 63.

Benefits earned in respect of service in Canada are determined and paid in
Canadian dollars. Similarly, benefits earned in respect of service in the U.S.
are determined and paid in U.S. dollars. These retirement benefits are payable
for life. Upon death, reduced payments continue to the surviving spouse.
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<PAGE> 76

Tables I and II show the standard annual pension benefits payable to the
Named Executive Officers who participate in the supplementary retirement income
arrangements described above at age 63 for the various salary/service
combinations shown in the table. The amounts in Table I reflect the exclusion of
payments of U.S. Social Security benefits. The amounts in Table II pension plans
reflect the exclusion of payments from Canada or Quebec Pension Plans. These
benefits are reduced for those who retire earlier than age 62.

TABLE I

OFFSET FOR U.S. SOCIAL SECURITY BENEFITS

<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------
BASE SALARY 15 20 25 30 35
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............................... $ 22,939 $ 30,585 $ 38,231 $ 45,878 $ 53,524
$200,000............................... $ 52,939 $ 70,585 $ 88,231 $105,878 $123,524
$300,000............................... $ 82,939 $110,585 $138,231 $165,878 $193,524
$400,000............................... $112,939 $150,585 $188,231 $225,878 $263,524
$500,000............................... $142,939 $190,585 $238,231 $285,878 $333,524
$600,000............................... $172,939 $230,585 $288,231 $345,878 $403,524
$700,000............................... $202,939 $270,585 $338,231 $405,878 $473,524
$800,000............................... $232,939 $310,585 $388,231 $465,878 $543,524
$900,000............................... $262,939 $350,585 $438,231 $525,878 $613,524
$1,000,000............................. $292,939 $390,585 $488,231 $585,878 $683,524
</TABLE>

TABLE II

OFFSET FOR CANADA PENSION PLAN/QUEBEC PENSION PLAN BENEFITS

<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------
BASE SALARY 15 20 25 30 35
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............................... $ 27,442 $ 36,589 $ 45,736 $ 54,883 $ 64,030
$200,000............................... $ 57,442 $ 76,589 $ 95,736 $114,883 $134,030
$300,000............................... $ 87,442 $116,589 $145,736 $174,883 $204,030
$400,000............................... $117,442 $156,589 $195,736 $234,883 $274,030
$500,000............................... $147,442 $196,589 $245,736 $294,883 $344,030
$600,000............................... $177,442 $236,589 $295,736 $354,883 $414,030
$700,000............................... $207,442 $276,589 $345,736 $414,883 $484,030
$800,000............................... $237,442 $316,589 $395,736 $474,883 $554,030
$900,000............................... $267,442 $356,589 $445,736 $534,883 $624,030
$1,000,000............................. $297,442 $396,589 $495,736 $594,883 $694,030
</TABLE>

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<PAGE> 77

ANTICIPATED STOCK OPTION GRANTS

In connection with the offerings, we expect to make grants of stock options
to executive officers, non-employee directors and certain other employees. The
exercise price of such options is expected to be the public offering price of
our common stock set forth on the cover page of this prospectus. The following
table sets forth the number of shares of our common stock underlying options
that are expected to be granted to the cach of our executive officers, our
executive officers as a group, our non-employee directors as a group, and all
other employees as a group.

<TABLE>
<CAPTION>
ANTICIPATED
NUMBER OF SHARES
NAME UNDERLYING OPTIONS
- ---- ------------------
<S> <C>
Stephen D. McDonald......................................... 25,000
Frank J. Petrilli........................................... 37,500
John G. See................................................. 25,000
Richard H. Neiman........................................... 6,000
B. Kevin Sterns............................................. 6,000
Other Executive Officers.................................... 99,500
---------
Total Executive Officer Group............................. 199,000
Non-employee Director Group................................. 20,000
All Other Employees......................................... 1,559,460
---------
Total.................................................. 1,778,460
=========
</TABLE>

EMPLOYMENT AGREEMENTS

We are currently negotiating and expect to enter into employment agreements
with certain of our key executive officers immediately following the
reorganization.

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<PAGE> 78

PRINCIPAL STOCKHOLDER

All of the outstanding shares of our common stock are currently owned by TD
Bank. Upon completion of the offerings, TD Bank will beneficially own
approximately 91.2% of our outstanding common stock, including shares issuable
upon exchange of the exchangeable preference shares issued to TD Bank in the
reorganization (90.0% if the underwriters and managers exercise their
over-allotment option in full).

Other than as set forth above, we are not aware of any person or group that
will beneficially own more than 5% of our outstanding common stock after the
offerings.

TD Bank is a chartered bank which was formed on February 1, 1955. At April
30, 1999, TD Bank ranked as the largest Canadian bank in terms of market
capitalization and the fifth largest based on total assets. TD Bank serves its
customers through its network of more than 900 retail banking and investment
outlets, as well as through its electronic banking services.

TD Bank has advised us that it is its present intention to maintain
majority ownership of TD Waterhouse for the foreseeable future.

CERTAIN TRANSACTIONS BETWEEN US AND TD BANK

After the reorganization, TD Bank will continue to provide services to our
Canadian operations, such as office space, equipment purchase and maintenance,
human resources and employee pension and benefits, audit, tax planning and
reporting, legal, compliance, banking, risk management, telecommunications,
technology research and development. TD Bank, as our affiliate, will continue to
provide banking products and services to our Canadian customers. In addition,
the services of any employees who are to be transferred to us, but remain with
TD Bank on a transitional basis, will also be made available to us. Both we and
TD Bank will continue to make available to each other those personnel who
provided executive and support services to each other prior to the
reorganization.

We believe the fees and other amounts to be paid by and to us under the
above arrangements approximate the amounts that would be paid if such
arrangements were provided by unaffiliated third parties.

MASTER SERVICES AGREEMENT

In connection with the reorganization, we and TD Bank will enter into an
intercompany master services agreement with respect to services to be provided
by TD Bank to us (primarily to TD Waterhouse Canada) and vice-versa. The master
services agreement provides that such services will be provided in exchange for
fees which, generally, (1) in the case of services purchased by TD Bank from
third parties for us will be based upon the incremental cost charged by such
third parties to TD Bank and (2) in the case of services directly provided by TD
Bank to us, will be based on estimated or actual cost, including a reasonable
allocation of direct and indirect overhead cost incurred by TD Bank, plus,
unless otherwise agreed, a reasonable profit margin. The master services
agreement may be terminated by either party on one year's notice. The services
will be made available on an "as needed" basis. This arrangement provides us
with the flexibility to bring "in-house" services we currently receive from TD
Bank if it is suitable to do so. In the performance of these services, TD Bank
may enter into contracts with third parties as our agent.

The purpose of the master services agreement is to ensure that TD Bank and
we provide services to each other in the scope and manner which are generally
consistent with current practices, having regard to the various assets and
employees to be transferred to us pursuant to the reorganization. The primary
services initially to be provided by TD Bank to us are described below in more
detail.

OFFICE SPACE

TD Bank will make available to our Canadian operations space within certain
buildings leased or owned by TD Bank. We are required to indemnify TD Bank
against certain liabilities in respect of the use of this space. In addition, if
we request, TD Bank will enter into leases with third parties as agent for us
and on our

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<PAGE> 79

behalf for premises which are solely used for our Canadian operations. We will
indemnify TD Bank in connection with all obligations under these leases.

EQUIPMENT PURCHASE AND MAINTENANCE

TD Bank may purchase on behalf of TD Waterhouse such equipment, furniture
and office supplies as requested by our Canadian operations and, in addition,
will provide equipment and furniture maintenance services.

HUMAN RESOURCES AND EMPLOYEE PENSION AND BENEFITS

As presently contemplated, human resources and employee pension and benefit
services will be limited to policy, executive compensation and corporate
development.

AUDIT, TAX PLANNING AND REPORTING, LEGAL AND COMPLIANCE

TD Bank will provide high level tax and internal audit services for TD
Waterhouse Canada, and will assist in the development of corporate budgets. TD
Bank will provide legal services to our non-U.S. operations and, with the office
of the General Counsel of TD Waterhouse, will direct legal matters and
proceedings of TD Waterhouse. The employees primarily responsible for TD
Waterhouse Canada's compliance functions will be transferred to and become
employees of TD Waterhouse Canada. TD Bank will provide management oversight and
executive support of compliance functions.

BANKING

TD Bank will provide customary banking services to TD Waterhouse Canada.

RISK MANAGEMENT

TD Bank will provide high level risk management oversight of our credit,
concentration and risk management policies.

TELECOMMUNICATIONS, TECHNOLOGY RESEARCH AND DEVELOPMENT

TD Bank will continue to make available to us its in-house technology
infrastructure, facilities and expertise, including its applications research
and development capabilities.

TERMINATION

Either party may terminate the master services agreement by providing a
minimum of one years notice to the other party. The agreement may also be
terminated by either party immediately and without notice in the event that the
other party enters into proceedings in bankruptcy, insolvency, reorganization,
liquidation, dissolution or any other similar proceeding.

CREDIT ARRANGEMENTS

Under a separate agreement, TD Bank will make available to TD Waterhouse
Canada credit at market rates in the form of a standby subordinated loan
facility required for regulatory compliance.

SECURITIES TRADING AND RELATED ISSUES

TD Bank will continue to provide to TD Waterhouse Canada trade execution
for equities and fixed income securities, as well as sales channel access
through its retail branch network for new accounts. TD Waterhouse Canada will
provide clearing and custodial services to TD Bank's non-discount broker
subsidiaries. We will continue to provide to TD Bank various management and
technology-related support for its securities-related non-discount broker
businesses.

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<PAGE> 80

CERTAIN TRANSACTIONS BETWEEN US AND WATERHOUSE NATIONAL BANK

Waterhouse National Bank was established in 1994 primarily to offer deposit
and loan products and other banking services to the customer base of Waterhouse
Securities, Inc. Though Waterhouse National Bank will not be owned directly by
us after the reorganization, Waterhouse National Bank will, as an affiliated
company, continue to provide such banking products and services to our customer
base. In addition to providing deposit and loan related products, Waterhouse
National Bank will also provide us with certain support services such as check
and debit card processing. We in turn will continue to provide Waterhouse
National Bank with various marketing and administrative support services. These
services include the marketing of Waterhouse National Bank's FDIC insured
deposit accounts and various credit products. We will also provide Waterhouse
National Bank with various executive and administrative support services,
including providing office space, and audit, tax, human resource, employee
benefits and legal services. The master services agreement includes the
provision of these intercompany services.

TAX-SHARING AGREEMENT

After the offerings, we will be included in the Waterhouse Investor
Services, Inc. ("WISI") federal consolidated income tax group, and our federal
income tax liability will be included in the consolidated federal income tax
liability of WISI and its subsidiaries. In addition, in some cases our
subsidiaries will also be included with certain WISI subsidiaries in combined,
consolidated or unitary income tax groups for state and local tax purposes. In
connection with the reorganization, we and WISI will enter into a tax-sharing
agreement. Pursuant to this tax-sharing agreement, we and WISI will make
payments between each other such that, with respect to any period, the amount of
taxes to be paid by us, subject to certain adjustments, will be determined as
though we were the common parent of an affiliated group of corporations filing
combined, consolidated or unitary (as applicable) federal, state and local
returns rather than a consolidated subsidiary of WISI with respect to federal,
state and local income taxes (including, except as provided below, any amounts
determined to be due as a result of a redetermination of the tax liability of
WISI arising from an audit or otherwise). With respect to foreign tax credits
and other tax attributes, our right to reimbursement will be determined based on
the usage of such tax attributes by the consolidated group.

In determining the amount of tax-sharing payments under the tax-sharing
agreement, WISI will prepare or cause to be prepared pro forma returns with
respect to federal and applicable state and local income taxes that reflect the
same positions and elections used by WISI in preparing the tax returns for
WISI's consolidated group and other applicable groups. Under the tax-sharing
agreement, WISI will continue to have all the rights of a parent of a
consolidated group (and similar rights provided for by applicable state and
local law with respect to a parent of a combined, consolidated or unitary
group), will be the sole and exclusive agent for us in any and all matters
relating to our income tax, franchise tax and similar liabilities, will have
sole and exclusive responsibility for the preparation and filing of consolidated
federal and consolidated or combined state and local income tax returns (or
amended returns), and will have the power, in its sole discretion, to contest or
comprise any asserted tax adjustment or deficiency and to file, litigate or
compromise any claim for refund on our behalf related to such return.

In general, we will be included in WISI's consolidated group for federal
income tax purposes for so long as WISI beneficially owns at least 80% of the
total voting power and value of our outstanding common stock. Each member of a
consolidated group is jointly and severally liable for the federal income tax
liability of each other member of the consolidated group. Accordingly, although
the tax-sharing agreement allocates tax liabilities between us and WISI as
though we were the common parent of a separate affiliated group of companies,
during the period in which we are included in WISI's consolidated group, we
could be liable in the event that any federal tax liability is incurred, but not
discharged, by any other member of WISI's consolidated group.

TRANSFER AND ASSUMPTION AGREEMENTS

As part of the reorganization of its brokerage business, TD Bank will be
transferring its Canadian discount brokerage business and brokerage clearing
business to our newly formed Canadian subsidiary,

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<PAGE> 81

TD Waterhouse Canada. The transfer will take place on the later of the date of
completion of these offerings and the date all regulatory consents and approvals
are obtained. Pending consummation of the transfer, TD Bank will own and operate
these businesses, and will provide to our subsidiary, TD Waterhouse Canada, on
the transfer date the economic benefit of these businesses beginning on the
first day of the month in which these offerings are completed until the transfer
occurs. See "The Reorganization."

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<PAGE> 82

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

The total number of shares of all classes of stock that we have authority
to issue under our charter is 900,000,000 shares, of which 700,000,000 shares
represent shares of our common stock, 100,000,000 shares represent shares of our
preferred stock and 100,000,000 shares represent shares of our series common
stock . As of the date of this prospectus, 100 shares of our common stock and no
shares of either the preferred stock or the series common stock were issued and
outstanding.

COMMON STOCK

Subject to any preferential rights of any preferred stock or series common
stock created by our board of directors, each outstanding share of common stock
will be entitled to such dividends, if any, as may be declared from time to time
by our board of directors. See "Dividend Policy." Each outstanding share is
entitled to one vote on all matters submitted to a vote of stockholders. In the
event of our liquidation, dissolution or winding up, holders of our common stock
are entitled to receive on a pro rata basis any assets remaining after provision
for payment of creditors and after payment of any liquidation preferences to
holders of preferred stock and series common stock.

The transfer agent and registrar for our common stock in the United States
is ChaseMellon Shareholder Services, L.L.C. and the co-transfer agent and
registrar in Canada is CIBC Mellon Trust Company.

PREFERRED STOCK AND SERIES COMMON STOCK

Each of the authorized preferred stock and the authorized series common
stock is available for issuance from time to time in one or more series at the
discretion of our board of directors without stockholder approval except as
noted below. Our board of directors has the authority to prescribe for each
series of preferred stock or series common stock it establishes the number of
shares in that series, the voting rights (if any) to which shares in that series
are entitled, the consideration for shares in that series and the designation,
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions of the shares in that
series. Depending upon the rights of such preferred stock or series common
stock, as applicable, the issuance of preferred stock or series common stock, as
applicable, could have an adverse effect on holders of common stock by delaying
or preventing a change in control of our company, making removal of our present
management more difficult or resulting in restrictions upon the payment of
dividends and other distributions to the holders of common stock.

For a description of the terms of the special voting preferred share that
we will issue in the reorganization, see "-- Special Voting Preferred Share,"
below.

AUTHORIZED BUT UNISSUED CAPITAL STOCK

Delaware law generally does not require stockholder approval for any
issuance of authorized shares. However, the listing requirements of the NYSE
require stockholder approval of certain issuances of stock equal to or exceeding
20% of the then outstanding voting power or then outstanding number of shares of
our common stock. In addition, the rules of the TSE may also require shareholder
approval in certain circumstances. These additional shares may be used for a
variety of corporate purposes, including future public offerings to raise
additional capital or to facilitate corporate acquisitions. We currently do not
have any plans to issue additional shares of common stock, preferred stock or
series common stock other than in connection with employee compensation plans.

EXCHANGEABLE PREFERENCE SHARES OF TD WATERHOUSE CANADA

As part of the reorganization, TD Bank will contribute all of the assets
and liabilities of its Canadian discount brokerage business and certain related
businesses to TD Waterhouse Canada, in return for million exchangeable
preference shares of our subsidiary, TD Waterhouse Canada. TD Bank will also
acquire one special voting preferred share of TD Waterhouse.

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<PAGE> 83

The exchangeable preference shares, by their terms and together with the
special voting preferred share and a support and exchange agreement we will
enter into with TD Bank and TD Waterhouse Canada, are designed to have
characteristics equivalent to shares of our common stock. The material
attributes of the exchangeable preference shares and the support and exchange
agreement in that regard include the following:

Ranking. The exchangeable preference shares will rank senior to the TD
Waterhouse Canada common shares and any other shares ranking junior to the
exchangeable preference shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or winding
up of TD Waterhouse Canada.

Dividends. TD Bank will be entitled to receive dividends in respect of the
exchangeable preference shares equivalent to dividends, if any, paid from time
to time by us on shares of our common stock. The declaration date, record date
and payment date for dividends on the exchangeable preference shares will be the
same as that for the corresponding dividends on the shares of our common stock.

Voting Rights. Except as required by applicable law, the exchangeable
preference shares will not entitle TD Bank to receive notice of or attend any
meeting of the shareholders of TD Waterhouse Canada or to vote at any such
meeting.

Exchange Rights. TD Bank will be entitled at any time to exchange an
exchangeable preference share for one of our common shares plus an additional
cash amount equivalent to the full amount of all declared and unpaid dividends,
if any, on the exchangeable preference share and all dividends and distributions
declared on a share of our common stock not declared on the exchangeable
preference shares with a record date prior to the exchange of such exchangeable
preference shares.

Certain Restrictions. In the event that dividends on the outstanding
exchangeable preference shares corresponding to any dividends declared on our
common stock have not been declared and paid in full, subject to certain
exceptions, TD Waterhouse Canada may not, without the approval of TD Bank, pay
dividends on, or redeem, purchase or make capital distributions in respect of,
certain of its securities. In addition, TD Waterhouse Canada will not, without
the prior approval of TD Bank, issue any shares other than exchangeable
preference shares, TD Waterhouse Canada common shares and other shares not
ranking superior to the exchangeable preference shares.

Transfer Restrictions. No exchangeable preference share may be transferred
without the approval of the board of directors of TD Waterhouse Canada.

Amendment and Approval. The rights, privileges, restrictions and
conditions attaching to the exchangeable preference shares may be changed only
with the approval of TD Bank.

Support and Exchange Agreement. The following is a summary description of
other material provisions of the support and exchange agreement.

Under the support and exchange agreement, we will agree that:

- we will not declare or pay dividends on our common stock unless TD
Waterhouse Canada has sufficient money or assets or authorized but
unissued securities available to enable the due declaration and punctual
payment in accordance with applicable law of an equivalent dividend on
the exchangeable preference shares and TD Waterhouse Canada
simultaneously declares or pays, as the case may be, an equivalent
dividend on the exchangeable preference shares;

- we will advise TD Waterhouse Canada in advance of the declaration of any
dividend on our common stock;

- we will ensure that the record date for any dividend declared on our
common stock is not less than ten business days after the declaration
date for such dividend or such shorter period within which applicable
law may be complied with;

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- we will take all actions and do all things necessary to ensure that TD
Waterhouse Canada is able to perform its obligations in respect of the
exchange rights of the exchangeable preference shares; and

- we will not vote or otherwise take any action or omit to take any action
causing the liquidation, dissolution or winding up of TD Waterhouse
Canada.

The support and exchange agreement also provides that without the prior
approval of TD Waterhouse Canada and TD Bank (as set forth under "-- Amendment
and Approval" above), we will not (1) distribute additional shares of our common
stock or rights, options or warrants to subscribe therefor (except for an issue
of shares of our common stock to shareholders who exercise an option to receive
dividends in the form of shares of our common stock) or other securities,
property or assets to all or substantially all holders of shares of our common
stock, (2) change any of the rights, privileges or other terms of our common
stock or (3) effect a merger, consolidation, reorganization or other transaction
affecting the common stock, unless the same or an equivalent distribution on or
change to the exchangeable preference shares (or in the rights of the holders
thereof) is made simultaneously. In the event of any proposed tender offer,
exchange offer or similar transaction affecting our common stock, we will use
reasonable efforts to take all actions necessary or desirable to enable TD Bank
in respect of the exchangeable preference shares to participate in such
transaction to the same extent and on an economically equivalent basis as the
holders of our common stock.

We will make such filings and seek such regulatory consents and approvals
as are necessary so that the shares of our common stock issuable upon the
exchange of exchangeable preference shares will be issued in compliance with
applicable securities laws.

SPECIAL VOTING PREFERRED SHARE

As part of the reorganization, we will issue to TD Bank one special voting
preferred share of TD Waterhouse. The special voting preferred share will have
the following terms:

Dividends and Distributions. The holder of the special voting preferred
share shall not be entitled to receive any portion of any dividend or
distribution at any time.

Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
or winding up of TD Waterhouse, the holder of the special voting preferred share
shall not be entitled to any portion of any distribution.

Voting Rights. The special voting preferred share shall entitle the holder
to an aggregate number of votes equal to the number of exchangeable preference
shares of TD Waterhouse Canada then outstanding. Except as otherwise provided
herein or by law, the holder of the special voting preferred share and the
holders of shares of our common stock shall vote together as one class on all
matters submitted to a vote of our shareholders. The consent of the holder of
the special voting preferred share will be required to effect any amendment or
change to the terms of the special voting preferred share which adversely
affects any of the rights, powers or preferences of the special voting preferred
share.

Additional Provisions. At such time as (1) the special voting preferred
share entitles the holder to a number of votes equal to zero because there are
no exchangeable preference shares of TD Waterhouse Canada then outstanding, and
(2) there is no share of stock, debt, option or other agreement, obligation of
or commitment of TD Waterhouse Canada that could by its terms require TD
Waterhouse Canada to issue any exchangeable preference shares to any person,
then the special voting preferred share will be retired and cancelled promptly
thereafter.

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Purchase for Cancellation. If the special voting preferred share should be
purchased or otherwise acquired by us in any manner whatsoever, then the special
voting preferred share shall be retired and canceled promptly after it is
acquired.

No Redemption or Conversion. The special voting preferred share will not
be redeemable or convertible.

Transfer Restrictions. The special voting preferred share may not be
transferred without the approval of our board of directors.

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CERTAIN ANTI-TAKEOVER AND OTHER PROVISIONS

Our charter and by-laws and applicable sections of the General Corporation
Law of the State of Delaware (the "DGCL") contain several provisions that may
make the acquisition of control of our company more difficult without the prior
approval of our board of directors.

DELAWARE GENERAL CORPORATION LAW

The terms of Section 203 of the DGCL apply to us since we are a Delaware
corporation. Pursuant to Section 203, with certain exceptions, a Delaware
corporation may not engage in any of a broad range of business combinations,
such as mergers, consolidations and sales of assets, with an "interested
stockholder" for a period of three years from the time that such person became
an interested stockholder unless (1) the transaction that results in the
person's becoming an interested stockholder or the business combination is
approved by the board of directors of the corporation before the person becomes
an interested stockholder, (2) upon consummation of the transaction which
results in the stockholder becoming an interested stockholder, the interested
stockholder owns 85% or more of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding shares owned by persons who are
directors and also officers, and shares owned by certain employee stock plans or
(3) on or after the time the person becomes an interested stockholder, the
business combination is approved by the corporation's board of directors and by
holders of at least two-thirds of the corporation's outstanding voting stock,
excluding shares owned by the interested stockholder, at a meeting of
stockholders. Under Section 203, an "interested stockholder" is defined as any
person, other than the corporation and any direct or indirect majority-owned
subsidiary, that is (1) the owner of 15% or more of the outstanding voting stock
of the corporation or (2) an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which it
is sought to be determined whether such person is an interested stockholder.
Section 203 does not apply to a corporation that so provides in an amendment to
its charter or by-laws passed by holders of a majority of its outstanding
shares, but such stockholder action does not become effective for 12 months
following its adoption and would not apply to persons who were already
interested stockholders at the time of the amendment. Our charter does not
exclude us from the restrictions imposed under Section 203.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period. The provisions of
Section 203 may encourage companies interested in acquiring our company to
negotiate in advance with our board of directors, because the stockholder
approval requirement is avoided if our board of directors approves either the
business combination or the transaction that results in the stockholder becoming
an interested stockholder. Such provisions also may have the effect of
preventing changes in the board of directors. It is further possible that such
provisions could make it more difficult to accomplish transactions that
stockholders may otherwise deem to be in their best interests.

PREFERRED STOCK AND SERIES COMMON STOCK

Our charter authorizes our board to issue additional shares of common stock
without the need for further stockholder approval. Our charter also authorizes
our board of directors to issue up to 100,000,000 shares of preferred stock and
100,000,000 shares of series common stock, in one or more series, and to
establish the rights and preferences (including the convertibility of such
shares into shares of common stock) of any series of preferred stock or series
common stock so issued. One of the effects of the existence of unissued and
unreserved common stock, preferred stock and series common stock may be to
enable our board of directors to issue shares to persons friendly to current
management, which issuance could render more difficult or discourage an attempt
to obtain control of our company by means of a merger, tender offer, proxy
contest or otherwise, and thereby delay or prevent a change in control of our
company even if some of our stockholders believed that such change of control
was in their best interests.

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PROVISIONS OF OUR CHARTER AND BY-LAWS AFFECTING A CHANGE IN CONTROL

Certain provisions of our charter and by-laws may delay or make more
difficult unsolicited acquisitions or changes of control of our company. We
believe that such provisions will enable us to develop our business in a manner
that will foster our long-term growth without disruption caused by the threat of
a takeover not deemed by our board of directors to be in the best interests of
our company and our stockholders. Such provisions could have the effect of
discouraging third parties from making proposals involving an unsolicited
acquisition or change of control of our company, although such proposals, if
made, might be considered desirable by a majority of our stockholders. Such
provisions may also have the effect of making it more difficult for third
parties to cause the replacement of the current board of directors. These
provisions include, in addition to those noted above:

- prohibitions against stockholders' calling a special meeting of
stockholders or, in certain circumstances, acting by written consent in
lieu of a meeting;

- requirements for advance notice for raising business or making
nominations at stockholders' meetings;

- the ability of the board of directors to increase the size of the board
of directors and to appoint directors to newly created directorships;

- a classified board of directors; and

- higher than majority requirements to make certain amendments to the
by-laws and charter.

Stockholder Action by Written Consent; Special Meetings

Our charter and by-laws provide that prior to the date on which TD Bank
beneficially owns less than 50% of the voting power of our outstanding capital
stock, any action required or permitted to be taken by stockholders may be
effected by written consent in lieu of a meeting, but that after such date
stockholder action can be taken only at an annual or special meeting and cannot
be taken by written consent in lieu of a meeting. Our charter and by-laws also
provide that special meetings of our stockholders can be called only by our
Chief Executive Officer or by a vote of the majority of our board of directors.
Furthermore, our by-laws provide that only such business as is specified in the
notice of any such special meeting of stockholders may come before such meeting.

Advance Notice for Raising Business or Making Nominations at Meetings

Our by-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders and for nominations by
stockholders of candidates for election as directors at an annual or special
meeting at which directors are to be elected. Only such business may be
conducted at an annual meeting of stockholders as has been brought before the
meeting by, or at the direction of, the chairman of the board of directors, or
by a stockholder of ours who is entitled to vote at the meeting who has given to
the Secretary of TD Waterhouse timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. The chairman
of such meeting has the authority to make determinations as to the business to
be conducted. Only persons who are nominated by, or at the direction of, the
chairman of the board of directors, or who are nominated by a stockholder who
has given timely written notice, in proper form, to the Secretary prior to a
meeting at which directors are to be elected will be eligible for election as
our directors.

To be timely, a stockholder's notice of business to be brought before an
annual meeting and nominations of candidates for election as directors at any
annual meeting shall be delivered to the Secretary of TD Waterhouse at our
principal executive offices not less than 90 days nor more than 120 days prior
to the first anniversary of the preceding year's annual meeting. However, in the
event that the date of the annual meeting is advanced by more than 20 days, or
delayed by more than 70 days, from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the tenth day following
the day on which public announcement of the date of such meeting is first made.

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To be timely, a stockholder's notice of nominations of persons for election
to the board of directors may be made at a special meeting of stockholders if
the stockholder's notice is delivered to the Secretary of TD Waterhouse at our
principal executive offices not earlier than the 120th day prior to such special
meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at such meeting.

The notice of any nomination for election as a director must set forth the
name and address of, and the class and number of shares of our capital stock
held by, the stockholder who intends to make the nomination and the beneficial
owner, if any, on whose behalf the nomination is being made; the name and
address of the person or persons to be nominated; a representation that the
stockholder is a holder of record of our capital stock entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, such other information regarding
each nominee proposed by such stockholder as would have been required to be
included in a proxy statement tiled pursuant to the proxy rules of the SEC had
each nominee been nominated, or intended to be nominated by the board of
directors; and the consent of each nominee to serve as a director if so elected.

Our by-laws and charter provide that as long as TD Bank beneficially owns
ten percent or more of the voting power of our outstanding capital stock, the
foregoing advance notice procedure for director nominations and stockholder
proposals will not apply to it.

Number of Directors; Filling of Vacancies; Removal

Our charter and by-laws provide that newly created directorships resulting
from an increase in the authorized number of directors (or any vacancy) may only
be filled by a vote of a majority of directors then in office. Accordingly, the
board of directors may be able to prevent any stockholder from obtaining
majority representation on the board of directors by increasing the size of the
board and filling the newly created directorships with its own nominees. If any
applicable provision of the DGCL expressly confers power on stockholders to fill
such a directorship at a special meeting of stockholders, such a directorship
may be filled at such meeting only by the affirmative vote of at least 80% in
voting power of all shares of our capital stock entitled to vote generally in
the election of directors, voting as a single class. Until such time as TD Bank
beneficially owns less than 50% of the voting power of our outstanding capital
stock, directors may be removed at any time, with or without cause, by the
affirmative vote of a majority in voting power of all shares of our capital
stock entitled to vote generally in the election of directors, voting as a
single class. Thereafter, directors may be removed only for cause, and only by
the affirmative vote of at least 80% in voting power of all shares of our
capital stock entitled to vote generally in the election of directors, voting as
a single class.

Classified Board of Directors

Our charter provides for the board of directors to be divided into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the board of directors will be elected each year.

We believe that a classified board will help to assure the continuity and
stability of our board of directors and our business strategies and policies as
determined by our board of directors, because a majority of the directors at any
given time will have prior experience as our directors. This provision should
also help to ensure that the board of directors, if confronted with an
unsolicited proposal from a third party that has acquired a block of our voting
stock, will have sufficient time to review the proposal and appropriate
alternatives and to seek the best available result for all stockholders.

This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of the board of directors
until the second annual stockholders meeting following the date the acquirer
obtains the controlling stock interest, could have the effect of discouraging a
potential

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acquirer from making a tender offer or otherwise attempting to obtain control of
our company and could thus increase the likelihood that incumbent directors will
retain their positions.

Amendments to Our By-laws

Our charter provides that the affirmative vote of the holders of at least
80% in voting power of all the shares of our capital stock entitled to vote
generally in the election of directors, voting together as a single class, shall
be required in order for the stockholders to alter, amend or repeal any
provision of the by-laws which is to the same effect as provisions contained in
our charter relating to (1) the amendment of our by-laws, (2) the classified
board of directors and the filling of director vacancies and (3) calling and
taking actions at meetings of stockholders and prohibiting stockholders from
taking action by written consent.

Amendments to Our Charter

Our charter requires the affirmative vote of the holders of at least 80% in
voting power of all the shares of our capital stock entitled to vote generally
in the election of directors, voting together as a single class, to alter, amend
or repeal provisions of our charter relating to (1) the amendment of our charter
and/or by-laws, (2) the classified board of directors and the filling of
director vacancies and (3) calling and taking actions at meetings of
stockholders and prohibiting stockholders from taking action by written consent.

CORPORATE OPPORTUNITIES

Our charter will provide that TD Bank shall have no duty to refrain from
engaging in the same or similar activities or lines of business as us and
neither TD Bank nor any officer or director thereof (except as provided below)
shall be liable to us or our stockholders for breach of any fiduciary duty by
reason of any such activities of TD Bank. In the event that TD Bank acquires
knowledge of a potential transaction or matter which may be a corporate
opportunity for both TD Bank and us, TD Bank shall have no duty to communicate
or offer such corporate opportunity to us and shall not be liable to us or our
stockholders for breach of any fiduciary duty as a stockholder of ours by reason
of the fact that TD Bank pursues or acquires such corporate opportunity for
itself, directs such corporate opportunity to another person, or does not
communicate information regarding such corporate opportunity to us.

In the event that one of the directors or officers of our company who is
also a director or officer of TD Bank acquires knowledge of a potential
transaction or matter which may be a corporate opportunity for both us and TD
Bank, such director or officer of ours shall have fully satisfied and fulfilled
the fiduciary duty of such director or officer and our stockholders with respect
to such corporate opportunity if such director or officer acts in a manner
consistent with the following policy:

- a corporate opportunity offered to any person who is an officer of
ours, and who is also a director but not an officer of TD Bank, shall
belong to us;

- a corporate opportunity offered to any person who is a director but
not an officer of ours, and who is also a director or officer of TD
Bank, shall belong to us if such opportunity is expressly offered to
such person in writing solely in his or her capacity as a director of
ours, and otherwise shall belong to TD Bank; and

- a corporate opportunity offered to any person who is an officer of
both ours and TD Bank shall belong to us if such opportunity is
expressly offered to such person in writing solely in his or her
capacity as an officer of ours, and otherwise shall belong to TD Bank.

For purposes of the foregoing:

- a director of ours who is chairman of our board of directors or of a
committee of our board of directors shall not be deemed to be an officer
of ours by reason of holding such position (without regard to whether
such position is deemed an officer of ours under our by-laws), unless
such person is a full-time employee of ours;

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- "us" or "ours" means TD Waterhouse and all corporations,
partnerships, joint ventures, associations and other entities in which
we beneficially own (directly or indirectly) 50% or more of the
outstanding voting stock, voting power, partnership interests or similar
voting interests; and

- the term "TD Bank" shall mean TD Bank and all corporations,
partnerships, joint ventures, associations and other entities (other
than TD Waterhouse, as defined in accordance with the preceding clause
(A) in which TD Bank beneficially owns (directly or indirectly) 50% or
more of the outstanding voting stock, voting power, partnership
interests or similar voting interests.

The foregoing provisions of our charter shall expire on the date that TD
Bank ceases to beneficially own common stock representing at least ten percent
of the total voting power of all classes of outstanding voting stock and no
person who is a director or officer of ours is also a director or officer of TD
Bank or any of its subsidiaries (other than us).

In addition to any vote of the stockholders required by our charter, until
the time that TD Bank ceases to beneficially own common stock representing at
least ten percent of the total voting power of all classes of our outstanding
common stock, the affirmative vote of the holders of more than 80% of the total
voting power of all classes of our outstanding voting stock shall be required to
alter, amend or repeal in a manner adverse to the interests of TD Bank and its
subsidiaries (other than us), or adopt any provision adverse to the interests of
TD Bank and its subsidiaries (other than us), and inconsistent with, the
corporate opportunity provisions described above. Accordingly, so long as TD
Bank beneficially owns common stock representing at least ten percent of the
total voting power of all classes of our outstanding common stock, it can
prevent any such alteration, amendment, repeal or adoption.

Any person purchasing or otherwise acquiring our common stock will be
deemed to have notice of, and to have consented to, the foregoing provisions of
our charter.

The Delaware courts have not directly ruled on the validity of provisions
similar to the foregoing corporate opportunity provisions which are included in
our charter and could rule that they are not valid or enforceable.

INDEMNIFICATION AND LIMITATION OF LIABILITY FOR DIRECTORS AND OFFICERS

Our charter provides that we will indemnify our directors and officers to
the fullest extent permitted by the laws of the State of Delaware. Our charter
also provides that a director of our company shall not be liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the DGCL as the same exists or may hereafter be amended.

The indemnification rights conferred by our charter are not exclusive of
any other right to which a person seeking indemnification may otherwise be
entitled. We will also provide liability insurance for our directors and
officers for certain losses arising from claims or charges made against them,
while acting in their capacities as directors or officers.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the offerings, we will have 365.0 million shares of
common stock issued and outstanding. Of these shares, the shares of common stock
sold in the offerings will be freely tradeable without restrictions or further
registration under the Securities Act, except for any shares purchased by an
"affiliate" of ours as defined in Rule 144 under the Securities Act ("Rule
144"), which will be subject to the resale limitations under Rule 144. We have
agreed with the underwriters not to effect transactions in or relating to our
common stock for a period of time following this offering. See "Underwriting."

Immediately after the offerings, TD Bank will beneficially own 333.0
million shares of common stock (including shares issuable upon exchange of the
exchangeable preference shares acquired by TD Bank in the reorganization), which
will represent approximately 91.2% of our outstanding common stock in the
aggregate (90.0% if the underwriters and managers exercise their over-allotment
option in full). None of the shares of common stock beneficially owned by TD
Bank will be registered under the Securities Act upon consummation of the
offerings and may not be sold by TD Bank in the absence of an effective
registration statement under the Securities Act, except in accordance with an
exemption from registration thereunder, including under Rule 144. As an
"affiliate" of ours, TD Bank will be able to freely sell shares of our common
stock currently owned by it after the offerings, subject only to the volume and
manner of sale restrictions under Rule 144 described below. TD Bank has agreed
with the underwriters not to effect any transactions in or relating to our
common stock for a period of time following the offerings. See "Underwriting."

In general, under Rule 144, a person or persons whose shares are required
to be aggregated who has beneficially owned shares of common stock for a period
of one year, including a person who may be deemed an "affiliate," is entitled to
sell, within any three-month period, a number of shares not exceeding the
greater of (1) 1% of the total number of outstanding shares of such class and
(2) the average weekly reported trading volume of such class during the four
calendar weeks immediately preceding such sale. A person who is not an
"affiliate" of ours and who has beneficially owned shares for at least two years
is entitled to sell such shares under Rule 144 without regard to the volume
limitations described above. Under Rule 144, an "affiliate" of an issuer is a
person that directly or indirectly through the use of one or more intermediaries
controls, is controlled by, or is under common control with, such issuer.

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MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS

In the opinion of Simpson Thacher & Bartlett, our counsel, the following
describes the material U.S. federal income and estate tax consequences of the
ownership and disposition of our common stock to a Non-U.S. Holder (as described
below) as of the date hereof. This discussion does not address all aspects of
U.S. federal income and estate taxes that may be relevant to such Non-U.S.
Holders in light of their personal circumstances and does not discuss any
potential foreign, state and local tax consequences of owning or disposing of
our common stock. Furthermore, the discussion below is based upon the provisions
of the Code, and regulations, rulings and judicial decisions thereunder as of
the date hereof, and such authorities may be repealed, revoked or modified so as
to result in U.S. federal income tax consequences different from those discussed
below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR COMMON
STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME
TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

As used herein, a "U.S. Holder" of our common stock means a holder that is
(1) a citizen or resident of the U.S., (2) a corporation, or other entity that
is taxable as a corporation, created or organized in or under the laws of the
U.S. or any political subdivision thereof, (3) an estate the income of which is
subject to U.S. federal income taxation regardless of its source and (4) a trust
(X) that is subject to the supervision of a court within the U.S. and the
control of one or more U.S. persons as described in section 7701(a)(30) of the
Code or (Y) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person. In the case of a partnership that
holds our common stock, any partner described in any of (1) through (4), above,
is also a U.S. Holder. A "Non-U.S. Holder" is a holder, including any partner in
a partnership that holds our common stock, that is not a U.S. Holder.

DIVIDENDS

Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. However, dividends
that are effectively connected with the conduct of a trade or business by the
Non-U.S. Holder within the U.S. and, where a tax treaty applies, are
attributable to a U.S. permanent establishment of the Non-U.S. Holder, are not
subject to the withholding tax, but instead are subject to U.S. federal income
tax on a net income basis at applicable graduated individual or corporate rates.
Certain certification and disclosure requirements must be complied with in order
to be exempt from withholding under such effectively connected income exemption.
Any such effectively connected dividends received by a foreign corporation may,
under certain circumstances, be subject to an additional "branch profits tax" at
a 30% rate or such lower rate as may be specified by an applicable income tax
treaty.

Until January 1, 2001, dividends paid to an address outside the U.S. are
presumed to be paid to a resident of such country (unless the payer has
knowledge to the contrary) for purposes of the withholding tax discussed above
and, under the current interpretation of U.S. Treasury regulations, for purposes
of determining the applicability of a tax treaty rate. However, under U.S.
Treasury regulations (the "Final Regulations"), a Non-U.S. Holder of common
stock who wishes to claim the benefit of an applicable treaty rate (and avoid
back-up withholding as discussed below) for dividends paid after December 31,
2000, will be required to satisfy applicable certification and other
requirements.

A Non-U.S. Holder of common stock eligible for a reduced rate of U.S.
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service (the "IRS").

GAIN ON DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of common stock
unless (1) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the U.S., and, where a tax treaty applies, is attributable to
a U.S. permanent establishment of the Non-U.S. Holder, (2) in the case of a
Non-U.S. Holder who is an

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individual and holds our common stock as a capital asset, such holder is present
in the U.S. for 183 or more days in the taxable year of the sale or other
disposition and certain other conditions are met or (3) we are or have been a
"U.S. real property holding corporation" (a "USRPHC") at any time during the
shorter of the five-year period ending on the date of the disposition by the
Non-U.S. Holder or the period during which the Non-U.S. Holder held our common
stock, and certain other conditions are met.

An individual Non-U.S. Holder described in clause (1) above will be subject
to tax on the net gain derived from the sale under regular graduated U.S.
federal income tax rates. An individual Non-U.S. Holder described in clause (2)
above will be subject to a flat 30% tax on the gain derived from the sale, which
may be offset by U.S. source capital losses (even though the individual is not
considered a resident of the U.S.). If a Non-U.S. Holder that is a foreign
corporation falls under clause (1) above, it will be subject to tax on its gain
under regular graduated U.S. federal income tax rates and, in addition, may be
subject to the branch profits tax equal to 30% of its effectively connected
earnings and profits within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable income tax treaty.

If we are or have been a USRPHC during the shorter of the periods described
in clause (3), above, then, any gain or loss on the disposition of our common
stock by a Non-U.S. Holder would be treated as effectively connected with a
trade or business of the Non-U.S. Holder in the U.S., and the Non-U.S. Holder
would be taxed as described with respect to clause (1), above. However, even if
we were a USRPHC, any gain recognized by a Non-U.S. Holder still would not be
subject to U.S. tax if our shares were considered to be "regularly traded on an
established securities market" and the Non-U.S. Holder disposing of such shares
did not own, actually or constructively, at any time during the shorter of the
periods described in clause (3), above, more than five percent of a class of our
common stock. We believe that we never have been and are not currently a USRPHC,
and we consider it unlikely, based on our current business plans and operations,
that we will become a USRPHC in the foreseeable future.

Special rules may apply to certain Non-U.S. Holders, such as "controlled
foreign corporations," "passive foreign investment companies" and "foreign
personal holding companies," that are subject to special treatment under the
Code. Such entities should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them.

FEDERAL ESTATE TAX

Common stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

We must report annually to the IRS and to each Non-U.S. Holder the amount
of dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.

Under current law, backup withholding at the rate of 31% generally will not
apply to dividends paid to a Non-U.S. Holder at an address outside the U.S.
(unless the payer has knowledge that the payee is a U.S. person). Under the
Final Regulations, however, a Non-US Holder will be subject to back-up
withholding with respect to dividends paid after December 31, 2000 unless
applicable certification requirements are met.

Payment of the proceeds of a sale of our common stock within the U.S. or
conducted through certain U.S. related financial intermediaries is subject to
information reporting and, in the case of a payment made within the U.S. or made
through a U.S. office of a broker, backup withholding unless the applicable
documentary or certification requirements are met or the holder otherwise
establishes an exemption.

Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.

90
<PAGE> 94

UNDERWRITING

Credit Suisse First Boston Corporation ("CSFBC") and TD Securities (USA)
Inc. are acting as the U.S. representatives for the U.S. underwriters named
below. Credit Suisse First Boston (Europe) Limited, and The Toronto-Dominion
Bank are acting as the international representatives for the international
managers named below. Each of the U.S. and Canadian underwriters and
international managers has agreed to purchase the number of shares set forth
below opposite its name. Their obligations are subject to certain conditions to
be contained in a U.S. and international underwriting agreement dated
, 1999, and a Canadian underwriting agreement dated , 1999.
We have filed the form of the U.S. and international underwriting agreement as
an exhibit to the registration statement.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Credit Suisse First Boston Corporation......................
TD Securities (USA) Inc.....................................
Goldman, Sachs & Co.........................................
Salomon Smith Barney Inc....................................
Morgan Stanley & Co. Incorporated...........................
--------
Subtotal...............................................
--------
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
CANADIAN UNDERWRITERS SHARES
--------------------- ---------
<S> <C>
TD Securities Inc...........................................
Credit Suisse First Boston Securities Canada, Inc...........
Nesbitt Burns Inc...........................................
ScotiaMcLeod Inc............................................
CIBC World Markets Inc......................................
RBC Dominion Securities Inc.................................
Merrill Lynch Canada Inc....................................
Levesque Beaubien Geoffrion Inc.............................
Griffiths McBurney & Partners...............................
First Marathon Securities Limited...........................
HSBC Securities (Canada), Inc...............................
Newcrest Capital Inc........................................
Trilon Securities Corporation...............................
--------
Subtotal...............................................
--------
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Credit Suisse First Boston (Europe) Limited.................
The Toronto-Dominion Bank...................................
Goldman Sachs International.................................
Salomon Brothers International Limited......................
Morgan Stanley & Co. International Limited..................
--------
Subtotal...............................................
--------
Total................................................
========
</TABLE>

The U.S. offering, the Canadian offering and the international offering are
each conditioned upon the closing of the others.

The underwriting agreements provide that the U.S. underwriters, the
Canadian underwriters and the international managers will be obligated to
purchase all the shares of common stock in the offerings if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting
91
<PAGE> 95

agreements also provide that, in the event of a default, purchase commitments
may be increased or the underwriting agreements may be terminated.

We have granted to the underwriters and managers a 30-day option
exercisable by CSFBC and TD Securities (USA) Inc., the joint global
coordinators. The underwriters and managers may purchase on a pro rata basis up
to 4.8 million additional shares of common stock at the public offering price,
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments.

The underwriters and managers are entering into an inter-syndicate
agreement providing for, among other things, the coordination of certain of
their activities by the joint global coordinators. Pursuant to the inter-
syndicate agreement, sales may be made between the U.S. underwriters, the
Canadian underwriters and the international managers of such number of shares as
may be agreed upon by the joint global coordinators. The per share price of any
shares so sold will be the public offering price of such shares less an amount
not greater than the per share amount of the selling concession or commissions
to dealers applicable to such shares. Pursuant to the inter-syndicate agreement,
each U.S. underwriter agrees that it has not and will not offer or sell,
directly or indirectly, any shares or distribute any prospectus relating to the
offering other than within the United States or to a United States Person; each
Canadian underwriter agrees that it has not and will not offer or sell, directly
or indirectly, any shares or distribute any prospectus relating to the offering
to any person outside of Canada or to any United States Person; and each
international manager agrees that it has not and will not offer or sell,
directly or indirectly, any shares or distribute any prospectus relating to the
offering within the United States and Canada or to any United States Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions specified in the inter-syndicate agreement. In this context,
"United States Person" means any individual who is resident in the United
States, or any corporation, pension, profit sharing or other trust entity or
other entity organized or incorporated under or governed by the laws of the
United States or any political subdivision thereof (other than a foreign branch
or agency of any United States person), and includes any United States branch or
agency of a non-United States Person. "United States" means the United States of
America, its territories and possessions and all areas subject to its
jurisdiction. "Canada" means Canada, its provinces and territories and
possessions and all areas subject to its jurisdiction.

The underwriters and managers will offer the common stock initially at the
public offering price set forth on the cover page of this prospectus and to the
selling group members at such price less a concession of $ per share.
The underwriters and the managers and the selling group members may also reallow
a discount of $ per share on sales to certain other broker/dealers.
After the initial offering, the offering price, concession and discount may be
changed only by mutual agreement of the joint global coordinators.

The following table summarizes the compensation and the estimated expenses
payable by us.

<TABLE>
<CAPTION>
TOTAL
--------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions.............. $ $ $
Expenses payable by us.............................. $ $ $
</TABLE>

The underwriters and managers have informed us that they will not make
discretionary sales of the common stock being offered.

Each of the underwriters and managers represents and agrees that:

(1) it has not offered or sold and prior to the date six months after the
date of issue will not offer or sell any of our common stock to persons
in the United Kingdom except to persons whose ordinary activities
involved them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses
or otherwise in circumstances which have not resulted or do not result
in an offer to the public in the United Kingdom within the meaning of
the Public Offers of the Securities Regulations 1995;

92
<PAGE> 96

(2) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to our common stock in, from or otherwise involving the United
Kingdom; and

(3) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of our common stock to a person who is of a kind described in Article
II(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.

We and TD Bank have each agreed that we will not sell or otherwise dispose
of any additional shares of common stock or securities convertible into or
exchangeable or exercisable for any shares of common stock, or disclose the
intention to make any sale or disposition. These restrictions are effective for
a period of 180 days after the date of this prospectus. These restrictions are
subject to the following exceptions:

(1) in the case of TD Waterhouse, grants of stock options with respect to
our common stock to our officers, directors and employees and issuances
of common stock in connection with the exercise of such stock options,
and in connection with the exchange of exchangeable preference shares of
TD Waterhouse Canada; and

(2) the prior written consent of the joint global coordinators.

We have agreed to indemnify the underwriters and managers against certain
liabilities described in the underwriting agreements. In addition, we have
agreed to contribute to payments which the underwriters and managers may be
required to make relating to such liabilities.

Our common stock has been approved for listing on the NYSE and has been
conditionally approved for listing on the TSE under the symbol "TWE." In order
to meet one of the requirements for listing our common stock on the NYSE, the
underwriters and managers have agreed to sell round lots of 100 shares or more
to a minimum of 2,000 beneficial owners. The listing on the TSE is conditioned
upon our fulfillment of all of the requirements of the TSE on or before
September 7, 1999, including the distribution of our shares of common stock to a
minimum number of public shareholders.

Prior to the offerings, there has been no public market for our common
stock. The initial public offering price for the common stock will be determined
by negotiation between us and the underwriters and managers, and may not reflect
the market price for the common stock following the offerings. Among the
principal factors considered in determining the initial public offering price
will be:

- the information set forth in this prospectus and otherwise available to
the underwriters and managers;

- market conditions for initial public offerings;

- the history of and prospects for the industry in which we are competing;

- our past and present operations;

- our past and present earnings and current financial position;

- the ability of our management;

- our prospects for future earnings;

- the present state of our development and our current financial
condition;

- the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies;

- the general condition of the securities markets at the time of these
offerings; and

- other relevant factors.

93
<PAGE> 97

We cannot assure you that the initial public offering price will correspond
to the price at which the common stock will trade in the public market
subsequent to the offerings or that an active trading market for the common
stock will develop and continue after the offerings.

The joint global co-ordinators may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended.
Over-allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of common
stock in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the U.S. representatives to
reclaim a selling concession from a syndicate member when common stock
originally sold by such syndicate member is purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of our
common stock to be higher than it would otherwise be in the absence of such
transactions. These transactions may be effected on the NYSE and the TSE or
otherwise and, if commenced, may be discontinued at any time.

After the offerings, because TD Securities (USA) Inc. is a member of the
NYSE and because of its relationship with us and TD Bank, it will not be
permitted under the rules of the NYSE to make markets in or recommendations
regarding the sale of our common stock.

TD Bank, which currently owns 100% of our common stock, is also the parent
of and thereby an affiliate of TD Securities (USA) Inc., a member of the
National Association of Securities Dealers, Inc. (the "NASD") and an underwriter
in this offering. As a result of the foregoing, this offering is subject to the
provision of Rule 2720 of the Conduct Rules of the NASD (formerly Schedule E to
the Bylaws of the NASD). Accordingly, the underwriting terms for offering
conform with the requirements set forth in Rule 2720. In particular, the price
at which our common stock is to be distributed to the public must be at a price
no higher than that recommended by a "qualified independent underwriter" who has
also participated in the preparation of this prospectus and the registration
statement of which this prospectus is a part and who meets certain standards. In
accordance with this requirement, CSFBC will serve in such role and will
recommend the public offering price in compliance with the requirements of Rule
2720. CSFBC in its role as qualified independent underwriter, has performed the
due diligence investigations and reviewed and participated in the preparation of
this prospectus and the registration statement of which this prospectus is a
part.

The underwriters and the managers and their affiliates have provided and
will in the future continue to provide investment banking and other financial
services, including the provision of credit facilities, for us and TD Bank and
certain of our respective affiliates in the ordinary course of business for
which they have received and will receive customary compensation. TD Securities
Inc. will receive a portion of the proceeds of these offerings when we repay
certain indebtedness owed by us to TD Securities Inc. See "The Reorganization."

A portion of the common stock being underwritten by TD Securities (USA)
Inc. will be offered for sale to our U.S. customers. A portion of the common
stock being underwritten by TD Securities Inc. will be offered for sale to our
Canadian customers.

This prospectus may be used by the underwriters and managers and other
dealers in connection with offers and sales of the shares, including sales of
shares initially sold by the underwriters in the offerings being made outside of
the U.S., to persons located in the U.S.

94
<PAGE> 98

LEGAL MATTERS

The validity of the shares of our common stock being offered by us will be
passed upon for us by Simpson Thacher & Bartlett, New York, New York. Cravath,
Swaine & Moore, New York, New York represents the underwriters.

EXPERTS

The combined financial statements of TD Waterhouse Group, Inc. (a
combination of certain businesses of The Toronto-Dominion Bank) as of October
31, 1998 and 1997 and for each of the three years in the period ended October
31, 1998 included in this prospectus, and the combined financial statements of
Waterhouse Securities Group (a combination of certain businesses of Waterhouse
Investor Services, Inc.) for the twelve months ended October 31, 1996 also
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

Upon completion of the offerings, we will be required to file annual,
quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any documents filed by us at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
Our filings with the SEC are also available to the public through the SEC's
Internet site at http://www.sec.gov and through the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005. After the offerings, we expect
to provide annual reports to our shareholders that include financial information
reported on by our independent public accountants.

We have filed a Registration Statement on Form S-1 with the SEC. This
prospectus is a part of the Registration Statement and does not contain all of
the information in the Registration Statement. Whenever a reference is made in
this prospectus to a contract or other document of ours, please be aware that
such reference is not necessarily complete and that you should refer to the
exhibits that are a part of the Registration Statement for a copy of the
contract or other document. You may review a copy of the Registration Statement
at the SEC's public reference room in Washington, D.C. as well as through the
SEC's Internet site.

95
<PAGE> 99

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)
INDEX TO COMBINED FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION

<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
COMBINED FINANCIAL STATEMENTS:
Report of Independent Accountants........................... F-2
Combined Statements of Financial Condition as of October 31,
1997 and 1998, and April 30, 1999 (unaudited)............. F-3
Combined Statements of Income for the years ended October
31, 1996, 1997 and 1998, and for the six months ended
April 30, 1998 (unaudited) and 1999 (unaudited)........... F-4
Combined Statements of Changes in Equity for the years ended
October 31, 1996, 1997 and 1998, and for the six months
ended April 30, 1999 (unaudited).......................... F-5
Combined Statements of Cash Flows for the years ended
October 31, 1996, 1997 and 1998, and for the six months
ended April 30, 1998 (unaudited) and 1999 (unaudited)..... F-6
Notes to the Combined Financial Statements.................. F-7
SUPPLEMENTAL INFORMATION:
Combined Statements of Income, of Changes in Equity and of
Cash Flows of Waterhouse Securities Group (a combination
of certain businesses of Waterhouse Investor Services,
Inc.) for the twelve month period ended October 31,
1996...................................................... F-26
Notes to the Combined Financial Statements.................. F-29
Report of Independent Accountants........................... F-35
</TABLE>

F-1
<PAGE> 100

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholder of
TD Waterhouse Group, Inc.

In our opinion, the accompanying combined statements of financial condition
and the related combined statements of income, of changes in equity and of cash
flows present fairly, in all material respects, the financial position of TD
Waterhouse Group, Inc. (a combination of certain businesses of The Toronto-
Dominion Bank) at October 31, 1997 and 1998, and the results of its operations
and cash flows for each of the three years in the period ended October 31, 1998,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP
New York, New York
April 29, 1999

F-2
<PAGE> 101

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

COMBINED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31, APRIL 30,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 291,511 $ 522,029 $ 671,286
Securities owned, at market value.................... 66,549 76,279 63,407
Receivable from brokers and dealers.................. 113,795 71,717 199,251
Receivable from customers............................ 1,757,019 2,556,182 5,096,753
Deposits paid for securities borrowed................ 170,837 232,685 696,708
Receivable from affiliates........................... 71,760 82,038 106,672
Deposits with clearing organizations................. 4,975 15,914 26,192
Fixed assets, net of accumulated depreciation........ 19,798 27,604 33,714
Goodwill, net of accumulated amortization............ 413,314 672,516 657,374
Other assets......................................... 37,036 41,772 77,025
---------- ---------- ----------
Total assets....................................... $2,946,594 $4,298,736 $7,628,382
========== ========== ==========
LIABILITIES AND EQUITY
LIABILITIES
Bank loans and overdrafts............................ $ 18,575 $ 31,183 $ 232,728
Deposits received for securities loaned.............. 916,700 1,033,964 3,780,347
Securities sold, not yet purchased................... 7,095 4,987 7,848
Payable to brokers and dealers....................... 94,371 152,865 140,553
Payable to customers................................. 1,190,480 1,947,430 2,010,910
Payable to affiliates................................ 5,672 36,181 27,053
Accrued compensation, taxes payable and other
liabilities........................................ 94,182 96,991 238,536
---------- ---------- ----------
Total liabilities.................................. 2,327,075 3,303,601 6,437,975
---------- ---------- ----------
Commitments and contingent liabilities (Notes 6, 8
and 12)
EQUITY
Equity............................................... 619,763 994,452 1,190,234
Accumulated other comprehensive income............... (244) 683 173
---------- ---------- ----------
Total equity....................................... 619,519 995,135 1,190,407
---------- ---------- ----------
Total liabilities and equity....................... $2,946,594 $4,298,736 $7,628,382
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-3
<PAGE> 102

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
FOR THE YEAR ENDED OCTOBER 31, APRIL 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(NOTE 1) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Commissions and fees................... $104,688 $313,572 $409,432 $192,112 $328,678
Mutual fund and related revenue........ 8,288 35,762 59,022 23,386 43,595
Net interest revenue................... 31,826 68,874 117,733 52,668 73,315
Other.................................. 22,607 28,424 28,274 13,745 18,445
-------- -------- -------- -------- --------
Total revenues....................... 167,409 446,632 614,461 281,911 464,033
-------- -------- -------- -------- --------
EXPENSES
Employee compensation and benefits..... 40,432 138,261 183,377 88,560 130,321
Execution and clearing costs........... 21,954 63,316 95,523 41,450 68,103
Occupancy and equipment................ 14,306 43,485 56,596 26,396 36,801
Advertising and marketing.............. 5,118 18,511 33,184 15,819 24,056
Communications......................... 9,983 22,981 30,809 13,916 22,716
Amortization of goodwill............... 1,633 21,630 33,000 15,363 18,563
Professional fees...................... 5,388 14,871 15,350 7,194 10,248
Other.................................. 14,420 44,956 63,144 26,925 60,211
-------- -------- -------- -------- --------
Total expenses....................... 113,234 368,011 510,983 235,623 371,019
-------- -------- -------- -------- --------
Income before income taxes............. 54,175 78,621 103,478 46,288 93,014
Income tax provision................... 24,556 42,416 54,765 24,954 42,985
-------- -------- -------- -------- --------
NET INCOME........................... $ 29,619 $ 36,205 $ 48,713 $ 21,334 $ 50,029
======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-4
<PAGE> 103

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)
COMBINED STATEMENTS OF CHANGES IN EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMPREHENSIVE
EQUITY INCOME
---------- -------------
<S> <C> <C> <C>
Balance at October 31, 1995............................ $ 51,836
Net income........................................... 29,619 $29,619
Dividend to Parent................................... (3,259)
Capital contributions................................ 389,760
Translation adjustment arising during the period, net
of taxes.......................................... (545) (545)
----------
Total Equity at October 31, 1996....................... 467,411
-------
Total comprehensive income as of October 31, 1996...... $29,074
=======
Net income........................................... 36,205 $36,205
Capital Contributions................................ 115,322
Translation adjustment arising during the period, net
of taxes.......................................... 581 581
----------
Total Equity at October 31, 1997....................... 619,519
-------
Total comprehensive income as of October 31, 1997...... $36,786
=======
Net income........................................... 48,713 $48,713
Capital Contributions................................ 325,976
Translation adjustment arising during the period, net
of taxes.......................................... 927 927
----------
Total Equity at October 31, 1998....................... 995,135
-------
Total comprehensive income as of October 31, 1998...... $49,640
=======
Net income (Unaudited)............................... 50,029 $50,029
Capital Contributions (Unaudited).................... 145,753
Translation adjustment arising during the period, net
of taxes (Unaudited).............................. (510) (510)
----------
Total Equity at April 30, 1999 (Unaudited)............. $1,190,407
----------
-------
Total comprehensive income as of April 30, 1999
(Unaudited).......................................... $49,519
=======
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-5
<PAGE> 104

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
FOR THE YEAR ENDED OCTOBER 31, APRIL 30,
---------------------------------- ----------------------
1996 1997 1998 1998 1999
-------- ----------- --------- --------- ----------
(NOTE 1) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................. $ 29,619 $ 36,205 $ 48,713 $ 21,334 $ 50,029
Adjustments to reconcile net income to
cash (used in)/provided by operating
activities:
Depreciation and amortization.......... 1,633 28,649 42,855 19,993 24,636
(Increases) decreases in operating
assets:
Securities owned..................... (35,310) (4,327) (9,730) (11,027) 12,872
Receivable from brokers and
dealers........................... (32,157) (52,625) 42,078 (19,422) (127,534)
Receivable from customers............ (88,578) (1,329,202) (799,163) (963,384) (2,540,571)
Deposits paid for securities
borrowed.......................... 56,798 (48,937) (61,848) (892,537) (464,023)
Receivable from affiliates........... 7,557 (71,760) (10,278) 71,760 (24,634)
Deposits with clearing
organizations..................... -- (4,975) (10,939) (8,401) (10,278)
Other assets......................... (728) (27,799) (4,736) (13,590) (35,254)
Increases (decreases) in operating
liabilities:
Bank loans and overdrafts............ -- 18,575 12,608 6,425 201,545
Deposits received for securities
loaned............................ 67,812 776,249 117,264 614,650 2,746,383
Securities sold, not yet purchased... (15,958) 7,095 (2,108) 2,006 2,861
Payable to brokers and dealers....... 75,750 1,220 58,494 91,734 (12,312)
Payable to customers................. 123,269 570,824 756,950 1,116,570 63,480
Payable to affiliates................ -- 5,672 8,371 8,090 (9,128)
Accrued compensation, taxes payable
and other liabilities............. 16,206 36,171 2,809 (9,954) 141,628
-------- ----------- --------- --------- ----------
Cash provided by/(used in)
operating activities............ 205,913 (58,965) 191,340 34,247 19,700
-------- ----------- --------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, equipment and
leasehold improvements............... -- (26,817) (17,661) (10,459) (12,183)
Acquisitions of businesses, net of
assets acquired and liabilities
assumed.............................. (393,085) (16,726) (292,202) (203,085) (3,421)
-------- ----------- --------- --------- ----------
Cash used in investing
activities...................... (393,085) (43,543) (309,863) (213,544) (15,604)
-------- ----------- --------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Subordinated debt with affiliate....... -- -- 22,138 20,133 (82)
Dividend to Parent..................... (3,259) -- -- -- --
Capital contribution from Parent....... 389,760 115,322 325,976 159,004 145,753
-------- ----------- --------- --------- ----------
Cash provided by financing
activities...................... 386,501 115,322 348,114 179,137 145,671
-------- ----------- --------- --------- ----------
Effect of exchange rate differences in
cash and cash equivalents............ (545) 581 927 1,348 (510)
-------- ----------- --------- --------- ----------
Increase in cash and cash
equivalents.......................... 198,784 13,395 230,518 1,188 149,257
Cash and cash equivalents, beginning of
period............................... 79,332 278,116 291,511 291,511 522,029
-------- ----------- --------- --------- ----------
Cash and cash equivalents, end of
period............................... $278,116 $ 291,511 $ 522,029 $ 292,699 $ 671,286
======== =========== ========= ========= ==========
Supplemental disclosures of cash flow
information
Cash paid for interest............... $ 24,492 $ 36,854 $ 107,197 $ 29,458 $ 48,971
======== =========== ========= ========= ==========
Cash paid for income taxes........... $ 28,613 $ 38,615 $ 55,677 $ 22,059 $ 32,373
======== =========== ========= ========= ==========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-6
<PAGE> 105

TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS

On March 31, 1999, the Board of Directors of The Toronto-Dominion Bank ("TD
Bank") approved the initial public offering of TD Bank's global discount
brokerage business. The accompanying financial statements include the entities
and divisions described below which comprise TD Bank's global discount brokerage
business for all periods during which they were under TD Bank's control (Note
3). The financial statements for the year ended October 31, 1996 include only
the results of operations and cash flows of Green Line, as defined below. The
separate financial statements of Waterhouse, as defined below, which was
acquired effective October 31, 1996, have been included as supplemental
information.

The TD Bank's global discount brokerage business consists of the following
entities and divisions:

Waterhouse Securities Group ("Waterhouse")

- Waterhouse Securities, Inc. ("WSI"), a U.S. registered broker-dealer
which provides discount brokerage services to retail customers in the
U.S.

- National Investor Services, Corp. ("NISC"), a U.S. registered
broker-dealer which provides execution and clearance services for
affiliates, including WSI, and third-party broker-dealers.

- Waterhouse Asset Management, Inc. ("WAM"), a U.S. registered investment
advisor which provides investment advice to a series of affiliated
mutual funds.

- Waterhouse, Nicoll & Associates, Inc. ("WNA"), a U.S. based advertising
firm which places advertising for affiliates.

Green Line Group ("Green Line")

- Green Line Investor Services (Canada) ("GLIS-Canada"), a division of TD
Securities Inc. which provides discount brokerage services to retail
clients in Canada and the U.S.

- TD Securities Services ("TDSS"), a division of TD Bank which provides
execution and clearance services to GLIS-Canada, TD Securities Inc., TD
Bank and third-party broker-dealers.

- Green Line Investor Services (Europe) Limited ("GLIS-UK"), a registered
broker-dealer which provides discount brokerage services to customers in
the United Kingdom.

- Green Line Investor Services (Hong Kong) Inc. ("GLIS-HK"), a registered
broker-dealer which provides discount brokerage services to customers
located in Asia.

- Green Line Investor Services Limited ("GLIS-Australia"), a registered
broker-dealer which provides discount brokerage services to customers
located in Australia.

As more fully discussed in Note 17, through a series of transactions, TD
Bank will reorganize the aforementioned entities and divisions under the
ownership of its indirect wholly owned subsidiary TD Waterhouse Group, Inc. (the
"Company") a Delaware corporation, which, immediately after such reorganization,
will commence with an initial public offering of its common stock. Hereafter,
references to the "Company" will refer to TD Waterhouse Group, Inc. and the
entities and divisions comprising TD Bank's global discount brokerage business
on a combined basis.

F-7
<PAGE> 106
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

As more fully discussed in Note 14, certain expenses related to corporate
overhead costs have been allocated to the Company by TD Bank. In the opinion of
management, the methods used to allocate such expenses are reasonable for
purposes of preparing the accompanying combined financial statements.

The Company is one of the largest discount brokers in the world and
provides securities and mutual fund investment services to retail customers
located in the United States, Canada, Australia, the United Kingdom and Hong
Kong. The Company also provides clearing and execution services for other
broker-dealers in the United States and Canada and through WAM, acts as
investment advisor to a series of proprietary mutual funds.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the Company
and the entities and divisions comprising TD Bank's global discount brokerage
business, described in Note 1, on a combined basis for all periods during which
they were under TD Bank's control (Note 3). All significant transactions and
balances between and among the combined entities and divisions have been
eliminated in the combination. The accompanying financial statements of the
Company for the year ended October 31, 1996 include only the results of
operations and cash flows of Green Line. The separate financial statements of
Waterhouse, which was acquired effective October 31, 1996, have been included as
supplemental information.

USE OF ESTIMATES

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

COMMISSIONS AND FEES

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

MUTUAL FUND AND RELATED REVENUE

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

NET INTEREST REVENUE

The Company reports interest revenue, which primarily arises from margin
loans to customers, net of the related financing cost (interest expense). For
the years ended October 31, 1996, 1997 and 1998 and for the six months ended
April 30, 1998 (unaudited) and 1999 (unaudited), interest expense was $40,921,
$39,422, $110,175, $47,698 (unaudited) and $75,594 (unaudited), respectively.

F-8
<PAGE> 107
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

ADVERTISING AND MARKETING

Advertising and marketing costs are expensed as incurred.

DEPRECIATION AND AMORTIZATION OF FIXED ASSETS

Depreciation of capitalized furniture and equipment is provided on a
straight-line basis using estimated useful lives of three to five years.
Leasehold improvements are amortized on a straight-line basis over the lesser of
the lease term or the estimated useful life. Fixed assets are stated at cost net
of accumulated depreciation and amortization of $10,332, $14,156 and $18,733
(unaudited) at October 31, 1997 and 1998 and April 30, 1999 (unaudited),
respectively. Depreciation and amortization expense is included in occupancy and
equipment expense in the combined statements of income. The Company recorded
depreciation and amortization of $7,019, $9,855, $4,630 (unaudited), and $6,073
(unaudited) for the years ended October 31, 1997 and 1998 and for the six months
ended April 30, 1998 (unaudited) and 1999 (unaudited), respectively.

GLIS-Canada has been charged rental expense for its use of equipment and
other fixed assets, which are owned by TD Bank. (See also Note 14.) The rental
expense approximates the depreciation on such equipment. The Company was charged
$5,857, $7,942, $7,584, $4,072 (unaudited), and $3,399 (unaudited) for the years
ended October 31, 1996, 1997 and 1998 and for the six months ended April 30,
1998 (unaudited) and 1999 (unaudited) respectively, which has been included in
occupancy and equipment expense in the combined statements of income.

ACQUISITIONS AND GOODWILL

All business combinations have been accounted for under the purchase method
and accordingly, the excess of the purchase price over the fair value of the net
assets acquired has been recorded as goodwill on the combined statements of
financial condition. Pursuant to the purchase method, the results of operations,
changes in equity and cash flows of acquired companies and businesses are
included in combined operations only for those periods following the date of
their acquisition. (Note 3)

Goodwill arising from acquisitions of businesses is amortized on a
straight-line basis over a period of no more than twenty years. Goodwill is
stated at cost, net of accumulated amortization of $24,341, $57,341 and $75,904
(unaudited) at October 31, 1997 and 1998 and April 30, 1999 (unaudited),
respectively.

INCOME TAXES

The Company's U.S. operations are included in the consolidated federal
income tax returns filed by an affiliate in the U.S. and the Company's Canadian
operations are included in the federal income tax returns filed by TD Bank or TD
Securities Inc. in Canada. The Company files separate income tax returns in
other countries. The Company determines its provision for federal income taxes
as if it were to file separate income tax returns. In the U.S., the Company also
files combined state and local income tax returns with an affiliate. In Canada,
the Canadian operations are also included in the provincial tax returns filed by
TD Bank or TD Securities Inc.

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

F-9
<PAGE> 108
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

CASH AND CASH EQUIVALENTS

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

SECURITIES OWNED

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

FINANCING TRANSACTIONS

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

FOREIGN CURRENCY TRANSLATION

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

SEGMENT INFORMATION

Statement of Financial Accounting Standards ("SFAS") No. 131 Disclosures
about Segments of an Enterprise and Related Information, establishes standards
for reporting information about operating and geographic segments of the
Company's business. Currently, the nature and extent of the Company's operations
are such that it operates in only one reportable segment as a provider of
discount brokerage services. Information regarding the Company's geographic
segments is set forth in Note 15.

UNAUDITED INTERIM FINANCIAL INFORMATION

The combined financial information at April 30, 1999 and for the six months
ended April 30, 1998 and 1999 is unaudited. In the opinion of management, such
information contains all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation of the results of such periods.

3. ACQUISITIONS

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

F-10
<PAGE> 109
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

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

Waterhouse Investor Services, Inc. ("WISI"), a U.S. bank holding company
and nationwide discount brokerage firm, was acquired by TD Bank in October 1996
for cash and TD Bank common stock. For purposes of preparing the combined
financial statements of the Company, the discount brokerage business of WISI,
which included WSI, NISC, WAM and WNA, was assumed to be contributed by TD Bank
to the Company as of the close of business on October 31, 1996. The $390 million
excess of the purchase price assigned to the discount brokerage business of $525
million, over the fair value of the net assets acquired from WISI and
contributed to the Company was recorded by the Company as goodwill. The combined
financial statements of WISI's discount brokerage business for the twelve-months
ended October 31, 1996 have been included as supplemental information.

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

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

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

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

Pursuant to the purchase method of accounting, the accompanying combined
statements of income only reflect the results of operations of the
aforementioned entities and businesses subsequent to the date of acquisition.
The following supplemental pro forma information has been prepared to give
effect to the acquisition as of the beginning of the fiscal year preceding the
fiscal year in which the acquisition occurred.

<TABLE>
<CAPTION>
FISCAL 1996(1) FISCAL 1997(2) FISCAL 1998(3)
-------------- -------------- --------------
<S> <C> <C> <C>
Pro forma revenues.................................. $376,601 $581,991 $650,908
======== ======== ========
Pro forma net income................................ $ 26,542 $ 51,050 $ 47,749
======== ======== ========
</TABLE>

- ---------------

(1) Adjusted to reflect the acquisitions of Waterhouse and Pont as of November
1, 1995.

(2) Adjusted to reflect the acquisition of Pont, Rivkin, KCC, Jack White and G&E
as of November 1, 1996.

(3) Adjusted to reflect the acquisitions of Rivkin, KCC, Jack White and G&E as
of November 1, 1997.

F-11
<PAGE> 110
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

4. RECEIVABLE FROM AND PAYABLE TO BROKERS AND DEALERS

Receivables from and payables to brokers and dealers are comprised of the
following:

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31, APRIL 30,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Receivable
Securities failed to deliver......................... $ 93,004 $ 40,743 $188,701
Clearing and other fees.............................. 11,815 14,463 7,048
Other................................................ 8,976 16,511 3,502
-------- -------- --------
$113,795 $ 71,717 $199,251
======== ======== ========
Payable
Securities failed to receive $ 93,119 $126,060 $113,873
Other 1,252 26,805 26,680
-------- -------- --------
$ 94,371 $152,865 $140,553
======== ======== ========
</TABLE>

5. RECEIVABLE FROM AND PAYABLE TO CUSTOMERS

Receivables from customers are generally collateralized by marketable
securities. Receivables from customers are reported net of unsecured or
partially secured amounts over 30 days recorded as an allowance for doubtful
accounts of $2,619, $4,731, and $9,931 (unaudited) as of October 31, 1997 and
1998, and April 30, 1999 (unaudited), respectively.

Payables to customers primarily represent free credit balances in
customers' accounts. The Company pays customers interest on certain free credit
balances at a rate based on prevailing short-term money market rates. Interest
expense for the years ended October 31, 1996, 1997 and 1998 and for the six
months ended April 30, 1998 (unaudited) and 1999 (unaudited) was $25,196,
$17,898, $58,226, $26,205 (unaudited) and $34,146 (unaudited), respectively.

6. FINANCING ACTIVITIES

Bank loans and overdrafts primarily represent short-term borrowings in the
U.S. which bear interest at rates based primarily on the Federal funds rate. The
loans are generally collateralized by customers' margin securities valued at
approximately $99,258, $115,448, and $786,084 (unaudited) as of October 31, 1997
and 1998, and April 30, 1999 (unaudited), respectively. The following is a
summary of comparative bank loan data:

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31, APRIL 30,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Average amount outstanding during the period........... $ 17,843 $ 24,068 $135,239
Maximum amount outstanding during the period........... 79,400 230,900 344,400
Weighted average interest rate at period-end........... 6.02% 5.85% 5.30%
Weighted average interest rate during the period....... 5.83% 5.88% 5.22%
</TABLE>

F-12
<PAGE> 111
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

Waterhouse maintains available bank credit lines totaling $255,000,
$255,000, and $405,000 (unaudited) at October 31, 1997 and 1998 and April 30,
1999 (unaudited), respectively. Included within the April 30, 1999 (unaudited)
balance is a bank credit line of $150,000 with TD Bank. All the lines require
collateralization and bear interest at a rate based on the Federal funds rate.
At October 31, 1997 and 1998 and April 30, 1999 (unaudited) Waterhouse had drawn
down $16,900, $400 and $182,300 (unaudited), respectively, on these credit
lines. GLIS-Canada has received unsecured letters of credit agreements with TD
Bank on behalf of two clearing organizations totalling $36,955, $47,369, and
$99,897 (unaudited) at October 31, 1997, 1998 and April 30, 1999 (unaudited),
respectively. GLIS-Canada pays an annual fee of 25 basis points on the notional
value of the letters of credit which amounted to $130, $191, $244, $116
(unaudited), and $140 (unaudited) for the years ended October 31, 1996, 1997 and
1998, and the six months ended April 30, 1998 (unaudited) and 1999 (unaudited),
respectively. There were no borrowings outstanding under these lines at October
31, 1997, 1998 and April 30, 1999 (unaudited).

Deposits received for securities loaned primarily represent short term
collateralized financing transactions which bear interest based on prevailing
market rates (rate of 5.28%, 5.02%, and 4.63% (unaudited) at October 31, 1997
and 1998, and April 30, 1999 (unaudited), respectively. In addition, Green Line
acts as an intermediary between lenders and borrowers of securities and earns a
net interest spread on stock loan and stock borrow transactions.

7. STOCK OPTIONS

Certain employees of the Company participate in TD Bank's stock option
plan. Under TD Bank's stock option plan, options on TD Bank common shares are
issued to certain employees of the Company for terms of 10 years, vesting over a
four-year period and exercisable at the market price of the shares on the date
the options were issued. During 1997, the plan was modified to allow employees
to elect to receive cash for the options equal to their intrinsic value, being
the difference between the option exercise price and the current market value of
the shares. Pursuant to SFAS No. 123, Accounting for Stock-Based Compensation,
the Company records compensation expense based on the annual change in the
intrinsic value of the stock options. The Company recorded compensation expense
(income) in the amount of, $5,478, $(117), $2,739 (unaudited) and $5,321
(unaudited) for the years ended October 31, 1997, 1998 and the six month periods
ended April 30, 1998 (unaudited) and 1999 (unaudited), respectively, for
employee stock options. No compensation expense was recognized for fiscal years
prior to 1997. Outstanding options have exercise prices ranging from $11.23 to
$42.00, they have a weighted average remaining contractual life of 8.6 years,
and they expire on dates ranging from April 2003 to December 2008.

F-13
<PAGE> 112
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

A summary of the Company's portion of stock option activity and related
information of TD Bank is as follows:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED WEIGHTED WEIGHTED AVERAGE
OCTOBER AVERAGE OCTOBER AVERAGE OCTOBER AVERAGE APRIL EXERCISE
31, EXERCISE 31, EXERCISE 31, EXERCISE 30, 1998 PRICE
1996 PRICE 1997 PRICE 1998 PRICE (UNAUDITED) (UNAUDITED)
------- -------- ------- -------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number outstanding,
beginning of period....... 208,282 $13.84 291,056 $15.14 410,896 $17.59 410,896 $17.59
Granted.................... 100,400 17.33 194,300 25.33 250,900 41.58 250,900 42.95
Exercised.................. (14,875) 13.54 (69,475) 13.63 (48,650) 14.47 (18,148) 23.81
Forfeited.................. (2,751) 15.27 (4,985) 18.07 (1,049) 20.03 (626) 20.76
------- ------ ------- ------ ------- ------ ------- ------
Number outstanding, end of
period.................... 291,056 $15.14 410,896 $17.59 612,097 $21.47 643,022 $27.28
------- ------ ------- ------ ------- ------ ------- ------
Exercisable, end of
period.................... 89,848 $13.92 178,402 $14.40 227,617 $15.09 244,896 $15.42
======= ====== ======= ====== ======= ====== ======= ======

<CAPTION>
WEIGHTED
AVERAGE
APRIL EXERCISE
30, 1999 PRICE
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Number outstanding,
beginning of period....... 612,097 $21.47
Granted.................... 336,700 33.71
Exercised.................. (35,591) 14.82
Forfeited.................. (4,073) 31.99
------- ------
Number outstanding, end of
period.................... 909,133 $30.59
------- ------
Exercisable, end of
period.................... 275,098 $23.29
======= ======
</TABLE>

8. COMMITMENTS AND CONTINGENT LIABILITIES

The Company leases office space and equipment under noncancellable
operating leases with third parties and affiliates (Note 14) extending for
periods in excess of one year. Future minimum rental commitments under such
leases as of October 31, 1998 and April 30, 1999 are as follows:

<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
1998 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
Year ending October 31, 1999............................... $20,486 $12,337
Year ending October 31, 2000............................... 19,134 19,486
Year ending October 31, 2001............................... 13,718 13,944
Year ending October 31, 2002............................... 11,281 11,501
Year ending October 31, 2003............................... 7,496 7,697
Thereafter................................................. 13,929 16,134
------- -------
$86,044 $81,099
======= =======
</TABLE>

Rental expense amounted to approximately, $11,181, $15,081 and $22,300 for
the years ended October 31, 1996, 1997 and 1998, respectively, and $9,891
(unaudited) and $13,849 (unaudited) for the six months ended April 30, 1998
(unaudited) and 1999 (unaudited), respectively.

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

The Company and several other discount brokers providing online trading
services have received a letter from the New York State Office of the Attorney
General dated February 2, 1999 requesting that WSI provide certain documents and
make certain employees available to discuss complaints that the Attorney
General's office has received regarding system outages or failures of online
brokerage services. The Company has met with representatives of the Attorney
General's office, has provided certain information to them and is continuing to
produce information as requested. In addition, the Company also understands that
the Securities and Exchange Commission ("SEC") and other federal and state
regulatory authorities are conducting inquiries into or reviewing similar
matters.

F-14
<PAGE> 113
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

The Company recently received correspondence from the SEC's Office of
Compliance, Inspections and Examinations, which conducts examinations of
registered broker-dealers, requesting information with respect to the Company's
execution policies and practices regarding the handling of customer orders. The
Company understands that other discount brokerage firms have received similar
correspondence from the SEC. The Company has provided and will continue to
provide information and documentation to the SEC regarding the policies and
practices in this area. In response to concerns raised by the SEC staff
regarding the practices followed by a number of brokerage firms, including the
Company, to obtain best execution of trades for customers, the Company has
engaged in an ongoing review of the Company's practices and policies in the area
in order to assure that it is in compliance with applicable rules.
Communications between the Company and the SEC staff on this subject are
ongoing.

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

9. NET CAPITAL REQUIREMENTS

As registered broker-dealers and members of the New York Stock Exchange,
WSI and NISC are subject to the SEC's Uniform Net Capital Rule (the "Rule")
which requires the maintenance of minimum net capital. At October 31, 1997 and
1998, and April 30, 1999 (unaudited), WSI and NISC were both in compliance with
their respective capital requirements and had net capital of $7,455, $15,339 and
$15,704 (unaudited), and $84,792, $160,314 and $346,677 (unaudited),
respectively, which was $6,352, $13,299 and $12,584 (unaudited), and $61,086,
$118,269 and $257,059 (unaudited), respectively, in excess of their required net
capital.

Subsequent to the reorganization described in Note 17, GLIS-Canada will be
a member of the Investment Dealers Association of Canada ("IDA"), and will be
required to meet the risk adjusted capital rules which require the maintenance
of minimum risk adjusted capital of Cdn. $250 (US$172 at April 30, 1999).
Previously, as a division of TD Securities Inc., GLIS-Canada was not subject to
the IDA risk adjusted capital rules and therefore did not maintain stand alone
minimum risk adjusted capital.

GLIS-UK, GLIS-Australia and GLIS-Hong Kong were all subject to
broker-dealer capital requirements in their respective countries and as of
October 31, 1997 and 1998 and April 30, 1999 (unaudited) were in compliance with
such requirements, as and when applicable.

10. EMPLOYEE BENEFIT PLANS

Substantially all of the Company's full-time U.S. employees are eligible to
participate in the defined contribution profit sharing and 401(K) plans
sponsored by an affiliate. The Company makes discretionary contributions to the
profit sharing plan and makes mandatory matching contributions to the 401(K)
plan based on a percentage of each employee's contribution up to 6% per pay
period of the employee's compensation. The total expense recognized by the
Company for contributions to the U.S. profit sharing and 401(K) plans for the
years ended October 31, 1997 and 1998 and for the six months ended April 30,
1998 (unaudited) and 1999 (unaudited) were $5,035, $6,400, $3,060 (unaudited)
and $4,724 (unaudited), respectively. There were no contributions made to the
plans in 1996.

F-15
<PAGE> 114
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

Substantially all of the Company's Canadian employees are eligible to
participate in TD Bank's pension plan. In TD Bank's pension plan, membership is
voluntary and funding is provided by contributions from TD Bank and members of
the plan. Each year, actuarial valuations are made of the pension plans
maintained by TD Bank to determine the present value of the accrued pension
benefits. Pension plan assets are valued at market values. Pension costs are
determined based upon separate accrued valuations using the projected benefit
method pro-rated on service and TD Bank management's estimates rather than on
valuations for funding purposes. There is no separate actuarial valuation for
the Company but the Company is charged its portion of pension expense from TD
Bank. Pension expense (income) includes the cost of pension benefits for the
current year's service, interest expense on pension liabilities, income on plan
assets and the amortization of pension adjustments on a straight-line basis over
the expected average remaining service life of TD Bank's employee group. The
Company's pro-rata share of TD Bank's pension cost (income) was ($60), ($341),
($182), and ($100) (unaudited) for the years ended October 31, 1996, 1997, 1998
and the six months ended April 30, 1998 (unaudited) and $638 (unaudited) for the
six months ended April 30, 1999 (unaudited), respectively.

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

11. INCOME TAXES

Income tax expense consists of the following:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
----------------------------- ------------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal.............................. $ -- $12,099 $27,392 $ 8,940 $25,064
State................................ -- 2,074 4,696 1,533 4,297
Foreign.............................. 24,230 20,544 21,180 10,093 11,893
------- ------- ------- ------- -------
Total Current........................ 24,230 34,717 53,268 20,566 41,254
------- ------- ------- ------- -------
Deferred:
Federal.............................. -- 6,363 1,149 3,532 1,250
State................................ -- 1,091 197 606 214
Foreign.............................. 326 245 151 250 267
------- ------- ------- ------- -------
Total Deferred....................... 326 7,699 1,497 4,388 1,731
------- ------- ------- ------- -------
Total Income Tax Expense............... $24,556 $42,416 $54,765 $24,954 $42,985
======= ======= ======= ======= =======
</TABLE>

F-16
<PAGE> 115
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

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

<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
------------------ -----------
1997 1998 1999
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred tax assets:
Depreciation and amortization........................... $ 1,206 $ 645 $ 693
Accruals and allowances................................. 1,893 2,269 1,761
------- ------- -------
Total deferred tax assets............................... 3,099 2,914 2,454
------- ------- -------
Deferred tax liabilities:
Goodwill and other...................................... -- (1,312) (2,583)
------- ------- -------
Total deferred tax liabilities.......................... -- (1,312) (2,583)
------- ------- -------
Net deferred tax asset/(liability)........................ $ 3,099 $ 1,602 $ (129)
======= ======= =======
</TABLE>

The Company determined that no valuation allowance against deferred tax
assets at October 31, 1997 and 1998, and April 30, 1999 (unaudited) was
necessary.

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

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED OCTOBER 31, ENDED APRIL 30,
-------------------------------- ------------------
1996 1997 1998 1998 1999
-------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
U.S. Federal statutory income tax rate......... 35.0% 35.0% 35.0% 35.0% 35.0%
State and local income taxes, net of
Federal income tax benefit................... -- 3.5 4.8 3.0 3.2
Foreign Provincial income taxes................ 10.0 6.7 6.7 8.4 4.3
Amortization of goodwill....................... 0.3 8.7 6.4 7.5 3.7
----- ----- ----- ----- -----
45.3% 53.9% 52.9% 53.9% 46.2%
===== ===== ===== ===== =====
</TABLE>

12. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATION OF
CREDIT RISK

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

In the normal course of business, the Company may deliver securities as
collateral in support of various secured financing sources such as bank loans
and deposits received for securities loaned. Additionally, the Company delivers
customer securities as collateral to satisfy margin deposits of various clearing
organizations. In the event the counterparty is unable to meet its contracted
obligation to return customer securities delivered as collateral, the Company
may be obligated to purchase the securities in order to return them to the
owner. In

F-17
<PAGE> 116
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

such circumstances, the Company may incur a loss up to the amount by which the
market value of the securities exceeds the value of the loan or other collateral
received or in the possession or control of the Company.

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

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

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosure about Fair
Value of Financial Instruments, requires the disclosure of the fair value of
financial instruments, including assets and liabilities recognized on the
combined statement of financial condition. Management estimates that the
aggregate net fair value of all other financial instruments recognized on the
combined statements of financial condition (including deposits received for
securities loaned, receivables, payables and accruals, and bank loans and
overdrafts) approximates their carrying value, as such financial instruments are
short term in nature, bear interest at current market rates or are subject to
restrictions or other specific provisions which offset their fair value.

14. RELATED PARTY TRANSACTIONS

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

GENERAL

Directors, officers and employees of the Company maintain cash and margin
accounts with the Company's broker-dealer subsidiaries and execute securities
transactions through these firms in the ordinary course of business. As of
October 31, 1997 and 1998, and April 30, 1999 (unaudited), receivable from
customers includes $6,162, $15,264, and $29,994 (unaudited), respectively,
representing accounts of executive officers and directors. As of October 31,
1997 and 1998, and April 30, 1999 (unaudited), payable to customers

F-18
<PAGE> 117
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

includes $380, $1,621 and $3,607 (unaudited), respectively, representing
accounts of executive officers and directors.

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

As more fully discussed in Note 11, the Company's U.S. operations are
included in the consolidated federal income tax returns and combined state and
local income tax returns of an affiliate filed in the U.S. and its Canadian
operations are included in income tax returns filed by TD Bank or TD Securities
Inc. in Canada. The provisions recorded by the Company for income taxes in the
U.S. and Canada do not differ materially from the provisions that would have
resulted had the Company filed separate income tax returns.

WATERHOUSE

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

WAM also provides investment advisory services to Waterhouse National Bank
("WNB"), an affiliated commercial bank, with respect to WNB's investments in
fixed income securities and receives fees based on the market value of the
assets under management.

Customers of WSI and NISC may elect to sweep their excess cash balances
held in their brokerage accounts into an FDIC insured money market account
offered by WNB. In connection with this arrangement, WSI and NISC provide WNB
with record keeping and shareholder services and as compensation receive a fee
based on the average daily cash balance that their customers maintain at WNB.

Fee income related to the aforementioned transactions and relationships of
Waterhouse have been included in Mutual fund and related revenue in the
accompanying combined statements of income and the corresponding amounts are as
follows:

<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR ENDED SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
-------------------------------- --------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Fees.............................. $ -- $ 17,253 $ 23,719 $ 10,488 $ 21,143
Fees waived....................... -- (1,331) (3,894) (1,611) (5,037)
-------- -------- -------- -------- --------
Fee income........................ $ -- $ 15,922 $ 19,825 $ 8,877 $ 16,106
======== ======== ======== ======== ========
</TABLE>

Commencing in fiscal 1998, NISC provided clearing services to a U.S.
affiliate of TD Bank and received clearing fees, at rates approximating those
charged to third-party introducing brokers. The income from this relationship
was $959 for the year ended October 31, 1998 and $385 (unaudited) and $418
(unaudited) respectively, for the six months ended April 30, 1998 (unaudited)
and 1999 (unaudited) which have been included in commissions and fees.

In addition, the Company, primarily through WSI, provides WNB with various
marketing and administrative support services. These services include the
marketing of WNB's FDIC insured deposit

F-19
<PAGE> 118
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

accounts and various credit products. In addition to these marketing services,
WSI provides WNB with various executive and administrative support services.
These services include providing office space, audit, tax, human resources,
employee benefits and legal. The Company is reimbursed for such services based
on a cost recovery basis, which approximates $50 per month or $600 per annum
which has been included in Other revenue in the combined statements of income.

GREEN LINE

GLIS-Canada sells mutual funds to customers, some of which are managed by
TD Asset Management ("TDAM"). TDAM pays trailer fees to the Company based on the
net asset value of the mutual funds held by GLIS-Canada's customers.

GLIS-Canada also pays TD Bank a referral fee for customers introduced by TD
Bank's retail bank branches.

TDSS provides clearing services to TD Bank. Since TDSS was a division of TD
Bank during the periods presented in the accompanying financial statements, fees
received by TDSS from TD Bank have been determined on a cost recovery basis.
Subsequent to the reorganization and initial public offering, fees for such
services will be renegotiated at commercial rates.

All employees involved in the Green Line businesses are employees of TD
Bank. TD Bank has allocated compensation expense to the Company based on an
estimate of the actual compensation earned by each TD Bank employee that
performs services for Green Line, plus an estimate of the related employment
benefits applicable to these employees which was based on a percentage of total
compensation.

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

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

Professional services such as internal audit and legal are provided by TD
Bank and charged to the Company at an hourly rate for specific work performed on
Green Line's business. TD Bank's systems research and development group works
with the Green Line in-house systems group to provide software solutions.

Overhead costs associated with the following general services are allocated
to the Company based on the proportion of Green Line's revenues to the total
consolidated TD Bank revenues: payroll services and corporate human resource
policy and procedures, financial statement consolidation, business planning,
forecasting and tax planning, official external communications which include
press releases and annual and quarterly reporting and investor, government and
community relations, charitable donations and the costs related to employee
communications, and overall TD Bank marketing expenses which include advertising
and market research. In addition, economic research is provided for Green Line
and used for marketing and client education purposes and the costs to prepare
the research is charged based on usage. Policies and procedures for credit and
market risk management are formulated centrally by TD Bank. Expense allocations
are determined based on the time spent on each business.

F-20
<PAGE> 119
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

TD Bank advances funding in the form of subordinated loans to
GLIS-Australia and GLIS-UK. GLIS-Australia and GLIS-UK maintained available
subordinated debt lines with an affiliate totaling $24,944 and $26,454
(unaudited) and $8,373 and $8,055 (unaudited), respectively, as of October 31,
1998 and April 30, 1999 (unaudited), respectively. At October 31, 1998 and April
30, 1999 (unaudited), GLIS-Australia had drawn down $22,138 and $22,222
(unaudited), respectively, on these lines. GLIS-UK had drawn down $2,416
(unaudited) on its loan as of April 30, 1999 (unaudited).

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
-------------------------------- ------------------------
1996 1997 1998 1998 1999
-------- -------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Commissions and fees.............. $ 8,937 $ 14,706 $ 16,524 $ 8,290 $ 8,430
Mutual Fund and related revenue... 3,336 4,710 5,959 2,895 2,835
Net interest revenue.............. -- -- (1,038) (503) (584)
-------- -------- -------- -------- --------
Total revenues.................... $ 12,273 $ 19,416 $ 21,445 $ 10,682 $ 10,681
======== ======== ======== ======== ========
EXPENSES
Compensation and benefits......... $ 40,432 $ 51,647 $ 52,717 $ 22,124 $ 22,950
Occupancy and equipment........... 13,371 16,783 17,065 8,853 9,033
Professional fees................. 3,139 4,141 3,600 1,863 1,759
Other expenses.................... 4,947 7,054 7,190 3,901 4,313
-------- -------- -------- -------- --------
Total expenses.................... $ 61,889 $ 79,625 $ 80,572 $ 36,741 $ 38,055
======== ======== ======== ======== ========
</TABLE>

F-21
<PAGE> 120
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

15. INTERNATIONAL OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
-------------------------------- ------------------------
1996 1997 1998 1998 1999
-------- -------- -------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues:
United States................... $ -- $250,095 $423,789 $183,512 $343,191
Canada.......................... 167,409 194,028 180,051 93,136 110,938
Other........................... -- 2,509 10,621 5,263 9,904
-------- -------- -------- -------- --------
Total........................... $167,409 $446,632 $614,461 $281,911 $464,033
======== ======== ======== ======== ========
Income before income taxes:
United States................... $ -- $ 35,775 $ 64,243 $ 27,029 $ 66,825
Canada.......................... 54,175 44,290 45,739 20,985 29,807
Other........................... -- (1,444) (6,504) (1,726) (3,618)
-------- -------- -------- -------- --------
Total........................... $ 54,175 $ 78,621 $103,478 $ 46,288 $ 93,014
======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31, APRIL 30,
1997 1998 1999
----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Identifiable assets:
United States............. $1,635,497 $2,800,713 $5,237,650
Canada.................... 1,258,675 1,383,020 2,210,241
Other..................... 52,422 115,003 180,491
---------- ---------- ----------
Total..................... $2,946,594 $4,298,736 $7,628,382
========== ========== ==========
</TABLE>

16. RECONCILIATION OF U.S. AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The combined financial statements of the Company are prepared in accordance
with accounting principles generally accepted in the United States of America
("US GAAP"). Material differences at October 31, 1997 and 1998 and April 30,
1999 (unaudited) and for the fiscal years ended October 31, 1996, 1997 and 1998
and for the six months ended April 30, 1998 (unaudited) and 1999 (unaudited)
between US GAAP and accounting principles generally accepted in Canada
("Canadian GAAP") are described below.

F-22
<PAGE> 121
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

NET INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
----------------------------- --------------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income based on US GAAP........ $29,619 $36,205 $48,713 $21,334 $50,029
Stock-based compensation, net of
tax.............................. -- 3,177 (68) 1,589 3,086
------- ------- ------- ------- -------
Net income based on Canadian GAAP.. $29,619 $39,382 $48,645 $22,923 $53,115
======= ======= ======= ======= =======
</TABLE>

STATEMENT OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31, APRIL 30,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total assets based on US
GAAP....................... $2,946,594 $4,298,736 $7,628,382
Customer transactions as of a
trade date................. 307,425 795,429 1,423,091
---------- ---------- ----------
Total assets based on
Canadian GAAP.............. $3,254,019 $5,094,165 $9,051,473
========== ========== ==========
Total liabilities based on US
GAAP....................... $2,327,075 $3,303,601 $6,437,975
Customer transactions as of
trade date................. 307,425 795,429 1,423,091
---------- ---------- ----------
Total liabilities based on
Canadian GAAP.............. $2,634,500 $4,099,030 $7,861,066
========== ========== ==========
</TABLE>

STOCK-BASED COMPENSATION

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

CUSTOMERS' SECURITIES TRANSACTIONS

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

F-23
<PAGE> 122
TD WATERHOUSE GROUP, INC.
(A COMBINATION OF CERTAIN BUSINESSES OF THE TORONTO-DOMINION BANK)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AT APRIL 30, 1999 AND FOR THE
SIX MONTHS ENDED APRIL 30, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)

17. PROPOSED REORGANIZATION AND INITIAL PUBLIC OFFERING (UNAUDITED)

TD Waterhouse Group, Inc. was organized as an indirect wholly owned
subsidiary of TD Bank. In connection with an initial public offering of TD
Waterhouse Group, Inc.'s common stock, TD Bank will reorganize the entities and
divisions which comprise TD Bank's global discount brokerage business (see Note
1) under the ownership of TD Waterhouse Group, Inc. Management anticipates that
the reorganization will include the following steps:

- TD Bank will transfer all of the stock of WSI, NISC, WAM and WNA to TD
Waterhouse Group, Inc. at their respective net book values.

- TD Bank will transfer the assets and liabilities of GLIS-Canada and TDSS
to a newly formed Canadian subsidiary of TD Waterhouse Group, Inc. in
exchange for a series of exchangeable preference shares of this
subsidiary at their respective net book values. The exchangeable
preference shares will have voting and dividend rights equal to an
equivalent number of shares of TD Waterhouse Group, Inc.'s common stock,
and will be exchangeable at any time, at TD Bank's option, for an
equivalent number of shares of TD Waterhouse Group, Inc.'s common stock.

- TD Bank will transfer all of the stock of GLIS-UK, GLIS-HK and
GLIS-Australia to TD Waterhouse Group, Inc. at their respective net book
values.

- TD Waterhouse Group, Inc. will enter into an inter-company services
agreement with TD Bank and its affiliates for services provided and
received.

F-24
<PAGE> 123

SUPPLEMENTAL INFORMATION

F-25
<PAGE> 124

SUPPLEMENTAL INFORMATION

WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES
OF WATERHOUSE INVESTOR SERVICES, INC.)

COMBINED STATEMENT OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE TWELVE
MONTHS ENDED
OCTOBER 31, 1996
----------------
<S> <C>
REVENUES
Commissions and fees........................................ $165,817
Mutual fund and related revenue............................. 15,227
Net interest revenue........................................ 21,259
Other....................................................... 1,074
--------
TOTAL REVENUES............................................ 203,377
--------
EXPENSES
Employee compensation and benefits.......................... 66,705
Execution and clearing costs................................ 25,556
Occupancy and equipment..................................... 30,107
Advertising and marketing................................... 9,321
Communications.............................................. 9,171
Professional fees........................................... 9,646
Other....................................................... 19,891
--------
TOTAL EXPENSES............................................ 170,397
--------
Income before income taxes.................................. 32,980
Income tax provision........................................ 16,807
--------
NET INCOME................................................ $ 16,173
========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-26
<PAGE> 125

WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES
OF WATERHOUSE INVESTORS SERVICES, INC.)

COMBINED STATEMENT OF CHANGES IN EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
EQUITY
--------
<S> <C>
Balance at October 31, 1995................................. $ 54,824
Net income.................................................. 16,173
Purchase accounting adjustments............................. 389,760
--------
Balance at October 31, 1996................................. $460,757
========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-27
<PAGE> 126

WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES
OF WATERHOUSE INVESTOR SERVICES, INC.)

COMBINED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE TWELVE
MONTHS ENDED
OCTOBER 31, 1996
----------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 16,173
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 9,272
(Increases) decreases in operating assets:
Securities owned....................................... (4,185)
Receivable from brokers and dealers.................... 1,624
Receivable from customers.............................. (118,849)
Deposits with clearing organizations................... (763)
Other assets........................................... (1,600)
Increases (decreases) in operating liabilities:
Bank loans and overdrafts.............................. (22,500)
Deposits received for securities loaned................ 263,314
Payable to brokers and dealers......................... (136,508)
Payable to customers................................... 23,169
Accrued compensation, taxes payable and other
liabilities........................................... 14,802
---------
CASH PROVIDED BY OPERATING ACTIVITIES................ 43,949
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets and leasehold improvements......... (14,458)
---------
CASH USED IN INVESTING ACTIVITIES.................... (14,458)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in advances from affiliates........................ (25,506)
---------
CASH USED IN FINANCING ACTIVITIES.................... (25,506)
---------
INCREASE IN CASH AND CASH EQUIVALENTS................ 3,985
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 14,553
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 18,538
=========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................... $ 13,637
=========
Cash paid for income taxes................................ $ 23,543
=========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.
F-28
<PAGE> 127

WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
OCTOBER 31, 1996
(IN THOUSANDS)

1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS

On March 31, 1999, the Board of Directors of The Toronto-Dominion Bank ("TD
Bank") approved the public offering of TD Bank's global discount brokerage
business, which includes the following subsidiaries of Waterhouse Investor
Services, Inc. ("WISI"):

- Waterhouse Securities, Inc. ("WSI"), a U.S. registered broker-dealer
which provides discount brokerage services to retail customers in the
U.S.

- National Investor Services, Corp. ("NISC"), a U.S. registered
broker-dealer with limited operations as of October 31, 1996.

- Waterhouse Asset Management ("WAM"), a U.S. registered investment
advisor which provides investment advice to a series of affiliated
mutual funds.

- Waterhouse, Nicoll & Associates, Inc. ("WNA"), a U.S. based advertising
firm which places advertising for affiliates.

The aforementioned entities constitute WISI's discount brokerage business
and are collectively hereinafter referred to as "Waterhouse."

Waterhouse provides securities and mutual fund investment services to
retail customers throughout the United States. Waterhouse also acts as an
investment advisor to a series of proprietary mutual funds and provides
execution and clearing services to third-party broker-dealers.

WISI was acquired by TD Bank in October 1996 for cash and TD Bank Common
Stock. The transaction was accounted for under the purchase method and the $390
million excess of the purchase price assigned to Waterhouse's business over the
fair value of the net assets acquired was recorded by Waterhouse as goodwill, to
be amortized over a period of twenty years. For financial reporting purposes the
transaction was accounted for as of October 31, 1996, TD Bank's year end date,
which, in the opinion of management, did not have a material effect on the
accompanying financial statements for the twelve months ended October 31, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the
individual entities comprising Waterhouse on a combined basis. All transactions
and balances between and among the entities within the combined group have been
eliminated.

USE OF ESTIMATES

F-29
<PAGE> 128
WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1996
(IN THOUSANDS)

COMMISSIONS AND FEES

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

MUTUAL FUND AND RELATED REVENUE

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

NET INTEREST REVENUE

Waterhouse reports interest revenue, which primarily arises from margin
loans to customers net of the related financing cost (interest expense).
Interest expense for the twelve months ended October 31, 1996 was $16,197.

ADVERTISING AND MARKETING

Advertising and marketing costs are expensed as incurred.

DEPRECIATION AND AMORTIZATION OF FIXED ASSETS

INCOME TAXES

Waterhouse's results of operations were included in the consolidated income
tax returns filed by WISI. WISI allocated income tax expense to Waterhouse based
on Waterhouse's ratable share of WISI's taxable income as if Waterhouse were to
file separate income tax returns. Deferred tax expenses and benefits were
recognized in the combined statement of income for changes in deferred tax
assets and liabilities.

CASH AND CASH EQUIVALENTS

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

SEGMENT INFORMATION

The nature and extent of Waterhouse's operations are such that it operates
in only one reportable segment as a provider of discount brokerage services and
in one geographic location, the United States.

F-30
<PAGE> 129
WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1996
(IN THOUSANDS)

3. STOCK OPTIONS

Certain employees of Waterhouse participated in WISI's stock option plan,
which provided for the issuance of WISI's stock options at prices equal to the
market value of WISI's stock on the date of grant. WISI accounted for these
options in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees. WISI had not recognized any
compensation expenses relative to Waterhouse's employees; accordingly, no
compensation expense was reflected in Waterhouse's financial statements. As a
result of WISI's acquisition by TD Bank, all outstanding options were exercised
and the plan was terminated. Waterhouse recorded approximately $4.1 million in
compensation expense relating to the termination of certain employee stock
options prior to its acquisition by TD Bank.

4. COMMITMENTS AND CONTINGENT LIABILITIES

Waterhouse leased office space under noncancellable operating leases
extending for periods in excess of one year. Future minimum rental commitments
under such leases were as follows:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING OCTOBER 31,
- --------------------------------
<S> <C>
1997........................................................ $ 6,685
1998........................................................ 6,818
1999........................................................ 6,383
2000........................................................ 5,863
2001........................................................ 5,038
Thereafter.................................................. 10,202
-------
$40,989
=======
</TABLE>

Rent expense for the twelve months ended October 31, 1996 was approximately
$5,485.

5. NET CAPITAL REQUIREMENTS

As registered broker-dealers and members of the New York Stock Exchange,
WSI and NISC are subject to the SEC's Uniform Net Capital Rule (the "Rule")
which requires the maintenance of minimum net capital. At October 31, 1996 WSI
and NISC had net capital of $40,995 and $768, respectively, which was $29,728
and $518, respectively, in excess of required net capital.

6. EMPLOYEE BENEFIT PLANS

WISI had an employee stock ownership plan in which employees of Waterhouse
participated. In connection with this plan, Waterhouse recorded compensation
expense of $1,950 during the twelve months ended October 31, 1996 which equaled
WISI's contributions to the plan on behalf of Waterhouse's employees. As a
result of TD Bank's acquisition of all of WISI's outstanding common stock, the
plan was terminated and the assets were distributed to participants or, at their
election, transferred to a newly created defined contribution plan.

WISI also had a 401k plan in which employees of Waterhouse participated.
Neither Waterhouse nor WISI made contributions to this plan during the twelve
months ended October 1996.

F-31
<PAGE> 130
WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1996
(IN THOUSANDS)

7. INCOME TAXES

The reported amount of income tax expense differs from the amount of income
tax expense that would result from applying Federal statutory rates to pretax
income due primarily to state and local income taxes, accrued expenses and other
items such as nondeductible business development expenses and officers'
nondeductible life insurance premiums. A reconciliation of Waterhouse's
effective tax rate for the twelve months ended October 31, 1996 was as follows:

<S> <C>
Federal statutory income tax rate........................... 35.0%
State and local income taxes, net of Federal income tax
benefit................................................... 7.6
Accrued expenses............................................ 5.9
Other, net.................................................. 2.4
-----
50.9%
=====
</TABLE>

Income tax expense was as follows:

<TABLE>
<S> <C>
Current
Federal................................................... $ 9,626
State..................................................... 1,650
-------
Total Current............................................. 11,276
-------
Deferred
Federal................................................... 4,722
State..................................................... 809
-------
Total Deferred............................................ 5,531
-------
Total Income Tax Expense.................................... $16,807
=======
</TABLE>

8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
CREDIT RISK

In the normal course of business, Waterhouse executes, as agent, securities
transactions on behalf of its customers and the customers introduced by other
broker-dealers. If either the customer or a counterparty fails to perform,
Waterhouse may be required to discharge the obligations of the nonperforming
party. In such circumstances, Waterhouse may sustain a loss if the market value
of the security is different from the contract value of the transaction.

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

For transactions in which Waterhouse extends credit to customers,
Waterhouse seeks to control the risks associated with these activities by
requiring customers to maintain margin collateral in compliance with various
regulatory and internal guidelines. Waterhouse monitors required margin levels
daily and, pursuant to

F-32
<PAGE> 131
WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1996
(IN THOUSANDS)

such guidelines, requests customers to deposit additional collateral or reduce
securities positions, when necessary.

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

9. RELATED PARTY TRANSACTIONS

Waterhouse transacts business and has extensive relationships with WISI and
its affiliates. Due to these relationships, it is possible that the terms of
these transactions were not the same as those that would have resulted from
transactions among unrelated parties. A description of these transactions and
relationships is set forth below:

Directors, officers and employees of Waterhouse maintained cash and margin
accounts with Waterhouse's broker-dealer subsidiaries and executed securities
transactions through these firms in the ordinary course of business.

As more fully discussed in Note 2, Waterhouse was included in the
consolidated federal and combined state and local income tax returns of WISI.

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

WAM also provided investment advisory services to Waterhouse National Bank
("WNB"), an affiliated commercial bank, with respect to WNB's investments in
fixed income securities and received fees based on the market value of the
assets under management.

Customers of WSI and NISC may have elected to sweep their excess cash
balances held in their brokerage accounts into an FDIC insured money market
account offered by WNB. In connection with this arrangement, WSI and NISC
provided WNB with record keeping and shareholder services and as compensation
received a fee based on the average daily cash balance that their customers
maintained at WNB.

Fee income related to the aforementioned transactions and relationships
have been included in Mutual fund and related revenue in the accompanying
combined statement of income and the corresponding amounts were as follows:

<TABLE>
<S> <C>
Fees................................. $ 9,458
Fees waived.......................... (1,926)
-------
Fee income........................... $ 7,532
=======
</TABLE>

F-33
<PAGE> 132
WATERHOUSE SECURITIES GROUP
(A COMBINATION OF CERTAIN BUSINESSES OF WATERHOUSE INVESTOR SERVICES, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1996
(IN THOUSANDS)

In addition, the Company, primarily through WSI, provided WNB with referral
and administrative support services. These services included the marketing of
WNB's FDIC insured deposit accounts and various credit products. In addition to
these marketing services, WSI provided WNB with various executive and
administrative support services. These services included providing office space,
audit, tax, human resources, employee benefits and legal. The Company was
reimbursed for those services based on an estimate of the costs of providing the
services, which approximated $50 per month or $600 per annum and is included in
Other revenue in the combined statement of income.

In the normal course of business, Waterhouse obtained advances from WISI to
finance its operations. The advances were payable on demand and bore interest at
an annual rate of 10%. For the twelve months ended October 31, 1996, WISI
charged Waterhouse interest of approximately $3.2 million.

During the twelve months ended October 31, 1996, WISI charged Waterhouse a
management fee of $600 for management services. In addition, another subsidiary
of WISI charged Waterhouse a fee of $600 for advertising services.

10. RECONCILIATION OF U.S. AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The combined financial statements of the Company were prepared in
accordance with accounting principles generally accepted in the United States of
America ("US GAAP"). For the twelve months ended October 31, 1996 there were no
material differences between net income and equity, as presented in the
accompanying financial statements under U.S. GAAP, and net income and equity
determined by applying accounting principles generally accepted in Canada.

F-34
<PAGE> 133

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of
Waterhouse Investor Services, Inc.

In our opinion, the accompanying combined statements of income, of changes
in equity and of cash flows of Waterhouse Securities Group (a combination of
certain businesses of Waterhouse Investor Services, Inc.) present fairly, in all
material respects, the results of its operations and its cash flows for the year
ended October 31, 1996, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP
New York, New York
April 29, 1999

F-35
<PAGE> 134

LOGO
LOGO

Branch office network
[Graphic: Waterhouse Investor Services Office]

Touch-tone telephone access
[Graphic: Telephone]

Online-web Broker
[Graphic: Laptop Computer with Waterhouse Securities Website on Screen]

24-hour service in U.S. & Canada
[Graphic: Customer Service Representative on Phone with Client]
<PAGE> 135

LOGO
LOGO
<PAGE> 136

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Set forth below is an estimate (except for the SEC, TSE and NYSE fees) of
the fees and expenses payable by us in connection with the offerings of the
common stock:

<TABLE>
<CAPTION>
FEES AND EXPENSES
-----------------
<S> <C>
Registration Fees........................................... $ 278,000
Printing and Engraving Costs................................ 1,000,000
Legal Fees and Expenses..................................... 1,700,000
Accounting Fees and Expenses................................ 1,800,000
NYSE Listing Fee............................................ 504,600
TSE Listing Fee............................................. 36,400
NASD Filing Fees............................................ 30,500
Registrar and Transfer Agent's Fees......................... 8,750
Miscellaneous Fees and Expenses............................. 901,750
----------
Total.................................................. $6,260,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a provision in the certificate of incorporation of each corporation
organized thereunder, eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director.
Waterhouse's Certificate of Incorporation eliminates the personal liability of
directors to the fullest extent permitted by the DGCL.

Section 145 of the DGCL authorizes a Delaware corporation, within certain
limitations, to indemnify its officers, directors, employees and agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by them in connection with any suit
or proceeding other than by or on behalf of the corporation, if they acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to a criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.

With respect to actions by or on behalf of the corporation, Section 145
permits a corporation to indemnify its officers, directors, employees and agents
against expenses (including attorneys' fees) actually and reasonably incurred in
connection with the defense or settlement of such action or suit, provided such
person meets the standard of conduct described in the preceding paragraph,
except that no indemnification is permitted in respect of any claim where such
person has been found liable to the corporation, unless the Court of Chancery or
the court in which such action or suit was brought approves such indemnification
and determines that such person is fairly and reasonably entitled to be
indemnified.

Our charter provides for the indemnification of our officers and directors
(the "Indemnitees") to the fullest extent permitted by applicable law. Delaware
law currently permits a Delaware corporation (i) to indemnify any officer or
director in any third-party or governmental actions against them for expenses,
judgments, fines and amounts paid in settlement and, in derivative actions, for
expenses, if the Indemnitee acted in good faith and in the manner he believed to
be in or not opposed to the best interest of such corporation and (ii) to
advance expenses in any action, provided that such officer or directors agrees
to reimburse the corporation if it is ultimately determined that he was not
entitled to indemnification.

Pursuant to the underwriting agreement between us and the underwriters
filed as an exhibit to this registration statement, the underwriters have agreed
to indemnify each of our officers and directors and each person, if any, who
controls us within the meaning of the Securities Act of 1933, as amended,
against certain liabilities, including liabilities under said Act.

II-1
<PAGE> 137

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since our formation, we have issued the following securities that were not
registered under the Securities Act:

On April 21, 1999, we issued 100 shares of our common stock to Waterhouse
Investor Services, Inc., a wholly-owned subsidiary of TD Bank. Such issuance was
made in reliance upon an exemption from the registration provisions of the
Securities Act set forth in section 4(2) thereof relating to sales by an issuer
not involving a public offering. The foregoing securities are deemed restricted
securities for purposes of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1* Form of U.S. and International Underwriting Agreement
2.1** Form of Transfer and Assumption Agreement between TD Bank
and TD Waterhouse Canada
2.2** Form of Transfer and Assumption Agreement between TD
Securities Inc. and TD Waterhouse Canada
2.3** Form of Share Transfer Agreement between TD Bank and TD
Waterhouse
3.1** Form of Amended and Restated Certificate of Incorporation of
TD Waterhouse
3.2** Form of By-laws of TD Waterhouse
4.1** Specimen common stock certificate
4.2** Form of Support and Exchange Agreement between TD
Waterhouse, TD Waterhouse Canada, TD Bank, Waterhouse
Investor Services, Inc. and TD Securities Inc.
4.3** Form of Exchangeable Preference Share Terms of TD Waterhouse
Canada
4.4** Form of Certificate of Designation creating Special Voting
Preferred Stock of TD Waterhouse
4.5** Specimen Special Voting Preferred stock certificate
5.1** Opinion of Simpson Thacher & Bartlett as to validity of
common stock
8** Opinion of Simpson Thacher & Bartlett regarding certain tax
matters (included in Exhibit 5.1)
10.1** Form of 1999 TD Waterhouse Stock Incentive Plan
10.2** The Toronto-Dominion Bank 1993 Stock Option Plan
10.3** Form of Master Services Agreement between TD Waterhouse and
TD Bank
10.4** Form of Tax Sharing Agreement between TD Waterhouse and
Waterhouse Investor Services, Inc.
21.1** List of subsidiaries
23.1* Consent of PricewaterhouseCoopers LLP
23.2** Consent of Simpson Thacher & Bartlett (included in Exhibit
5.1)
27.1** Financial Data Schedule
99.1** Consent of Nominee Director
99.2** Consent of Nominee Director
99.3** Consent of Nominee Director
99.4** Consent of Nominee Director
</TABLE>

- ---------------

* Filed herewith.

** Previously filed.

(b) All other schedules are omitted as the required information is included
in the Registrant's consolidated financial statements or the related notes or
such schedules are not applicable.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14

II-2
<PAGE> 138

above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of such registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of
this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

(3) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement,
certificates in such denominations registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.

II-3
<PAGE> 139

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 22nd day of June, 1999.

TD WATERHOUSE GROUP, INC.

By: /s/ STEPHEN D. MCDONALD
------------------------------------
Name: Stephen D. McDonald
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed on June 22, 1999 by the
following persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ STEPHEN D. MCDONALD Chief Executive Officer and Deputy
- --------------------------------------------------- Chair of the Board of Directors
Stephen D. McDonald (Principal Executive Officer)

* Executive Vice-President and Chief Financial
- --------------------------------------------------- Officer
B. Kevin Sterns (Principal Financial and Accounting Officer)

* Chairman of the Board of Directors
- ---------------------------------------------------
A. Charles Baillie

* Director
- ---------------------------------------------------
Frank J. Petrilli

* Director
- ---------------------------------------------------
John G. See

* Director
- ---------------------------------------------------
Lawrence M. Waterhouse, Jr.

* By /s/ Stephen D. McDonald
Name: Stephen D. McDonald
Title: Attorney-in-Fact
</TABLE>

II-4
<PAGE> 140

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<C> <S> <C>
1* Form of U.S. and International Underwriting Agreement
2.1** Form of Transfer and Assumption Agreement between TD Bank
and TD Waterhouse Canada
2.2** Form of Transfer and Assumption Agreement between TD
Securities Inc. and TD Waterhouse Canada
2.3** Form of Share Transfer Agreement between TD Bank and TD
Waterhouse
3.1** Form of Amended and Restated Certificate of Incorporation of
TD Waterhouse
3.2** Form of By-laws of TD Waterhouse
4.1** Specimen common stock certificate
4.2** Form of Support and Exchange Agreement between TD
Waterhouse, TD Waterhouse Canada, TD Bank, Waterhouse
Investor Services, Inc. and TD Securities Inc.
4.3** Form of Exchangeable Preference Share Terms of TD Waterhouse
Canada
4.4** Form of Certificate of Designation creating Special Voting
Preferred Stock of TD Waterhouse
4.5** Specimen Special Voting Preferred stock certificate
5.1** Opinion of Simpson Thacher & Bartlett as to validity of
common stock
8** Opinion of Simpson Thacher & Bartlett regarding certain tax
matters (included in Exhibit 5.1)
10.1** Form of 1999 TD Waterhouse Stock Incentive Plan
10.2** The Toronto-Dominion Bank 1993 Stock Option Plan
10.3** Form of Master Services Agreement between TD Waterhouse and
TD Bank
10.4** Form of Tax Sharing Agreement between TD Waterhouse and
Waterhouse Investor Services, Inc.
21.1** List of subsidiaries
23.1* Consent of PricewaterhouseCoopers LLP
23.2** Consent of Simpson Thacher & Bartlett (included in Exhibit
5.1)
27.1** Financial Data Schedule
99.1** Consent of Nominee Director
99.2** Consent of Nominee Director
99.3** Consent of Nominee Director
99.4** Consent of Nominee Director
</TABLE>

- ---------------

* Filed herewith.

** Previously filed.

<PAGE> 1
EXHIBIT 1

24,000,000 SHARES

TD WATERHOUSE GROUP, INC.

COMMON STOCK

U.S. AND INTERNATIONAL UNDERWRITING AGREEMENT

June 22, 1999

Credit Suisse First Boston Corporation
TD Securities (USA) Inc.
As Representatives of the several U.S. Underwriters,
c/o Credit Suisse First Boston Corporation ("CSFBC"),
Eleven Madison Avenue,
New York, N.Y. 100103629

Credit Suisse First Boston (Europe) Limited
THE TORONTO-DOMINION BANK
As Representatives of the several Managers
c/o Credit Suisse First Boston (Europe) Limited ("CSFBL")
One Cabot Square
London, England E14 4QJ

Dear Sirs:

1. Introductory. TD Waterhouse Group, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several Underwriters (as defined
below) 32,000,000 shares of its Common Stock (the "SECURITIES"). It is
understood that, subject to the conditions hereinafter stated: (a) 20,800,000
shares of Securities (the "U.S. FIRM SECURITIES") will be sold to the several
U.S. Underwriters named in Schedule A hereto (the "U.S. UNDERWRITERS") in
connection with the offering (the "U.S. OFFERING") and sale of such U.S. Firm
Securities in the United States to United States Persons (as such terms are
defined in the Agreement Among U.S. Underwriters, Canadian Underwriters and
Managers of even date herewith) and (b) 3,200,000 shares of Securities (the
"INTERNATIONAL FIRM SECURITIES") will be sold to the several Managers named in
Schedule B hereto (the "MANAGERS") in connection with the offering (the
"INTERNATIONAL OFFERING") and sale of such International Firm Securities
outside the United States and Canada to persons other than United States and
Canadian Persons. It is understood that the Company is concurrently entering
into a Canadian Underwriting Agreement, dated the date hereof (the "CANADIAN
UNDERWRITING AGREEMENT"), with Credit Suisse First Boston Securities Canada
Inc. ("CSFBSCI") and TD Securities Inc. ("TD SECURITIES"), and the other
Canadian Underwriters named therein (the "CANADIAN UNDERWRITERS"), relating to
the concurrent offering (the "CANADIAN OFFERING") and sale of 8,000,000 shares
of Securities (the "CANADIAN FIRM SECURITIES") in Canada to Canadian Persons.
CSFBC and TD Securities (USA) Inc. shall act as the representatives (the "U.S.
REPRESENTATIVES") of the several U.S. Underwriters, CSFBL and The
Toronto-Dominion Bank shall act as the representatives (the "INTERNATIONAL
REPRESENTATIVES") of the several Managers and CSFBSCI and TD Securities shall
act as the representatives (the "CANADIAN REPRESENTATIVES" and, together with
the U.S. Representatives and the International Representatives, the
"REPRESENTATIVES") of the several Canadian Underwriters. The U.S.
Underwriters, the Canadian Underwriters and the Managers are hereinafter
collectively referred to as the "UNDERWRITERS ".

In addition, as set forth below the Company proposes to issue and sell:
(a) to the U.S. Underwriters, at the option of the U.S. Representatives, an
aggregate of not more than 3,120,000 additional shares of Securities (the "U.S.
OPTIONAL SECURITIES"), and (b) to the Managers, at the option of the U.S.
Representatives, an aggregate of not more than 480,000 additional shares of
Securities (the "INTERNATIONAL

<PAGE> 2

OPTIONAL SECURITIES"). It is understood that, pursuant to the Canadian
Underwriting Agreement, the Company proposes to issue and sell to the Canadian
Underwriters, at the option of the U.S. Representatives, an aggregate of not
more than 1,200,000 additional shares of Securities (the "CANADIAN OPTIONAL
SECURITIES").

The U.S. Firm Securities and the U.S. Optional Securities are hereinafter
called the "U.S. SECURITIES"; the International Firm Securities and the
International Optional Securities are hereinafter called the "INTERNATIONAL
SECURITIES"; the Canadian Firm Securities and the Canadian Optional Securities
are hereinafter called the "CANADIAN SECURITIES"; the U.S. Firm Securities, the
International Firm Securities and the Canadian Firm Securities are hereinafter
called the "FIRM SECURITIES"; the U.S. Optional Securities, the International
Optional Securities and the Canadian Optional Securities are hereinafter called
the "OPTIONAL SECURITIES". The U.S. Securities, the International Securities
and the Canadian Securities are collectively referred to as the "OFFERED
SECURITIES".

In connection with the issue and sale of the Offered Securities, The
Toronto-Dominion Bank ("TD BANK"), which as of the date hereof owns 100% of the
voting stock of the Company, will complete a reorganization (the
"REORGANIZATION") of its discount brokerage operations as described in the
Prospectuses (as hereinafter defined). In order to effect the Reorganization,
the Company, TD Bank and certain of their respective subsidiaries will enter
into the agreements listed on Schedule C hereto (the "REORGANIZATION
AGREEMENTS").

To provide for the coordination of their activities, the U.S.
Underwriters, the Canadian Underwriters and the Managers have entered into an
Agreement Among U.S. Underwriters, Canadian Underwriters and Managers that
permits them, among other things, to sell the Offered Securities to each other
for purposes of resale.

The Company hereby agrees with the several U.S. Underwriters and the
several Managers as follows:

2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several U.S. Underwriters and the several
Managers that:

(a) A registration statement (No. 333-177521) relating to the Offered
Securities, including a form of prospectus relating to the U.S. Securities
being offered in the U.S. Offering, has been filed with the Securities and
Exchange Commission (the "COMMISSION") and either (i) has been declared
effective under the Securities Act of 1933 (the "ACT") and is not proposed
to be amended or (ii) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "INITIAL
REGISTRATION STATEMENT") has been declared effective, either (A) an
additional registration statement (the "ADDITIONAL REGISTRATION
STATEMENT") relating to the Offered Securities may have been filed with
the Commission pursuant to Rule 462(b) ("RULE 462(b)") under the Act and,
if so filed, has become effective upon filing pursuant to such Rule and
the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (B) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule
462(b) and will become effective upon filing pursuant to such Rule and
upon such filing the Offered Securities will all have been duly registered
under the Act pursuant to the initial registration statement and such
additional registration statement (it being understood that the
International Securities and the Canadian Securities have been registered
under the Act solely for the purposes of resale from time to time in the
United States). If the Company does not propose to amend the initial
registration statement or if an additional registration statement has been
filed and the Company does not propose to amend it, and if any
post effective amendment to either such

<PAGE> 3

registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent amendment (if
any) to each such registration statement has been declared effective by
the Commission or has become effective upon filing pursuant to Rule 462(c)
("RULE 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement,
"Effective Time" with respect to the initial registration statement or, if
filed prior to the execution and delivery of this Agreement, the
additional registration statement means (i) if the Company has advised the
U.S. Representatives and the International Representatives that it does
not propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (ii) if the Company has
advised the U.S. Representatives and the International Representatives
that it proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the
case may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised the U.S.
Representatives and the International Representatives that it proposes to
file one, "Effective Time" with respect to such additional registration
statement means the date and time as of which such registration statement
is filed and becomes effective pursuant to Rule 462(b). "Effective Date"
with respect to the initial registration statement or the additional
registration statement (if any) means the date of the Effective Time
thereof. The initial registration statement, as amended at its Effective
Time, including all information contained in the additional registration
statement (if any) and deemed to be a part of the initial registration
statement as of the Effective Time of the additional registration
statement pursuant to the General Instructions of the Form on which it is
filed and including all information (if any) deemed to be a part of the
initial registration statement as of its Effective Time pursuant to Rule
430A(b) ("RULE 430A(b)") under the Act, is hereinafter referred to as the
"INITIAL REGISTRATION STATEMENT". The additional registration statement,
as amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional registration
statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "ADDITIONAL REGISTRATION STATEMENT". The
Initial Registration Statement and the Additional Registration Statement
are hereinafter referred to collectively as the "REGISTRATION STATEMENTS"
and individually as a "REGISTRATION STATEMENT". The form of prospectus
relating to the U.S. Securities, as first filed with the Commission
pursuant to and in accordance with Rule 424(b) ("RULE 424(b)") under the
Act or (if no such filing is required) as included in the Registration
Statement, is hereinafter referred to as the "U.S. PROSPECTUS", and the
form of prospectus relating to the Canadian Securities and the form of
prospectus relating to the International Securities are hereinafter
referred to as the "CANADIAN PROSPECTUS" and the "INTERNATIONAL
PROSPECTUS", respectively; and the U.S. Prospectus, the International
Prospectus and the Canadian Prospectus are hereinafter collectively
referred to as the "PROSPECTUSES". No document has been or will be
prepared or distributed in reliance on Rule 434 under the Act.

(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all respects to the requirements of
the Act and the rules and regulations of the Commission ("RULES AND
REGULATIONS") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not

<PAGE> 4

include, or will not include, any untrue statement of a material fact and
did not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and (iii) on the date of this Agreement, the Initial Registration
Statement and, if the Effective Time of the Additional Registration
Statement is prior to the execution and delivery of this Agreement, the
Additional Registration Statement each conforms, and at the time of filing
of the U.S. Prospectus pursuant to Rule 424(b) or (if no such filing is
required) at the Effective Date of the Additional Registration Statement
in which the U.S. Prospectus is included, each Registration Statement and
the U.S. Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, and none of such documents
includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is subsequent to
the execution and delivery of this Agreement: on the Effective Date of the
Initial Registration Statement, the Initial Registration Statement and
each of the U.S. Prospectus and the International Prospectus will conform
in all respects to the requirements of the Act and the Rules and
Regulations, none of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and no Additional Registration Statement has been or will be filed. The
two preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the U.S. Prospectus and the
International Prospectus based upon written information furnished to the
Company by any Underwriter through the applicable Representatives
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(b) hereof.

(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectuses; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing would not have, either
individually or in the aggregate, a material adverse effect on the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole ("MATERIAL
ADVERSE EFFECT").

(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectuses; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification, except where the failure to
be so qualified and in good standing would not have, either individually
or in the aggregate, a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects in title.

(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement and the Canadian Underwriting Agreement on each Closing Date (as
defined below), such Offered Securities will have been, validly issued,
fully paid and nonassessable and will

<PAGE> 5

conform in all material respects to the description thereof contained in
the Prospectuses; and the stockholders of the Company have no preemptive
rights with respect to the Securities.

(f) Except as disclosed in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection
with this offering.

(g) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act or a prospectus
under Canadian securities legislation with respect to any securities of
the Company owned or to be owned by such person or to require the Company
to include such securities in the securities registered pursuant to a
Registration Statement or qualified for distribution under the Canadian
Prospectus or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act or being
qualified for distribution under any other prospectus filed by the Company
under Canadian securities legislation.

(h) The Offered Securities have been approved for listing on The New
York Stock Exchange and the Toronto Stock Exchange subject to notice of
issuance and other customary conditions.

(i) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in
connection with the issuance and sale of the Offered Securities by the
Company, except such as may be contemplated by the Reorganization
Agreements in connection with the Reorganization, such as have been
obtained and made under the Act and such as may be required under state
securities laws or applicable Canadian securities legislation.

(j) The execution, delivery and performance of this Agreement and the
Reorganization Agreements and the issuance and sale of the Offered
Securities will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, (ii) any agreement
or instrument to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, except where
such breach, violation or default would not have, either individually or
in the aggregate, a Material Adverse Effect, or (iii) the charter,
articles or bylaws of the Company or any such subsidiary, as applicable,
and the Company has full power and authority to authorize, issue and sell
the Offered Securities as contemplated by this Agreement and the Canadian
Underwriting Agreement.

(k) This Agreement has been duly authorized, executed and delivered
by the Company and the Canadian Underwriting Agreement has been duly
authorized, executed and delivered by the Company.

(l) Except as disclosed in the Prospectuses, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects in title that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by
them; and except as disclosed in the Prospectuses, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere

<PAGE> 6

with the use made or to be made thereof by them.

(m) Outside of Canada, the Company and its subsidiaries possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them; within Canada, the Company and its subsidiaries will,
after the Reorganization, possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business to be operated by them, and no such certificates,
authorities or permits are necessary for the Company to receive the
economic benefits of such businesses as operated by The Toronto-Dominion
Bank; neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect.

(n) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.

(o) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.

(p) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that would have, either
individually or in the aggregate, a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement or the Canadian Underwriting Agreement,
or which are otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are threatened or,
to the Company's knowledge, contemplated.

(q) The financial statements included in each Registration Statement
and the Prospectuses present fairly in all material respects the financial
consolidated position of the Company (as defined in Note 1 to the combined
financial statements) as of the dates shown and the results of its
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the assumptions used in preparing the pro forma financial statements
included in each Registration Statement and the Prospectuses provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and
the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.

(r) Since the date of the latest audited financial statements
included in the Prospectuses there has been no material adverse change,
nor any development or event involving a prospective

<PAGE> 7

material adverse change, in the financial condition, business, properties
or results of operations of the Company and its subsidiaries taken as a
whole, and there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.

(s) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940.

(t) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Securities and
Exchange Act of 1934, as amended (the "EXCHANGE ACT") or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Offered Securities.

(u) Except as disclosed in the Prospectuses, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.

(v) The statements set forth under the captions "Management's
Discussion and Analysis of Results of Operations and Financial
Condition--Year 2000 Compliance" and "Risk Factors--Failure to Achieve Year
2000 Compliance Could Cause Significant Losses" accurately and fairly set
forth the current state of the Company's efforts to address the Year 2000
problem and the risks and costs of the Company relating to the Year 2000
Problem. The "Year 2000 Problem" as used herein means any significant
risk that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, transmission or other
utilization of data or in the operation of mechanical or electrical
systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in
the case of dates or time periods occurring prior to January 1, 2000.

(w) Each of the Reorganization Agreements has been duly authorized by
the Company and each of the other parties thereto and conforms in all
material respects to the description thereof in the Prospectuses and
constitutes a valid and binding obligation of the Company and each of the
other parties thereto enforceable against each of them in accordance with
its terms, except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and (ii) to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).

(x) (i) The Company or its subsidiaries have, pursuant to the
Reorganization Agreements, acquired all of the capital stock of TD Bank's
U.S., United Kingdom, Australia and Hong Kong discount brokerage
subsidiaries (other than capital stock issued as part of the
Reorganization and set forth in the Prospectuses), and (ii) upon
completion of the transactions contemplated by the Reorganization
Agreements, the Company or its subsidiaries will, pursuant to such
Reorganization Agreements and to the extent contemplated thereby, acquire
all of the title to or adequate use of the properties and other assets
(tangible and intangible) constituting TD Bank's Canadian discount
brokerage operations, in each case free and clear of all material liens,
charges and encumbrances and consistent with the description set forth in
the Prospectuses.

(y) The exchangeable preference shares to be issued by TD Waterhouse
Investor Services (Canada) Inc., as described in the Prospectuses, have
been duly authorized and, upon issue and delivery pursuant to the
applicable terms of the Reorganization Agreements, will be validly

<PAGE> 8

issued, fully paid and nonassessable.

(z) The share of special voting preferred stock to be issued by the
Company, as described in the Prospectuses, has been duly authorized and,
upon issue and delivery pursuant to the applicable terms of the
Reorganization Agreements, will be validly issued.

(aa) Outside of Canada, each of the Company and its subsidiaries is
duly registered as a broker-dealer, municipal securities broker or dealer,
investment adviser, or transfer agent, as the case may be, in each
jurisdiction wherein the conduct of its business requires such
registration, and each of the Company and its subsidiaries is in
compliance in all material respects with all applicable laws rules,
regulations, orders, by-laws and similar requirements in connection with
such registrations, except to the extent that the failure to be so
registered or be in compliance would not have a Material Adverse Effect.
Within Canada, each of the Company and its subsidiaries will be duly
registered as a broker-dealer, municipal securities broker-dealer,
investment adviser or transfer agent, as the case may be, in each
jurisdiction wherein the conduct of its business, upon completion of the
Reorganization, will require such registration, and neither the Company
nor any of its subsidiaries will require any such registration as of the
Closing Date.

(bb) The Company and its subsidiaries are members in good standing
of the associations and exchanges indicated in the Prospectuses, the
Company's U.S. brokerage and clearing subsidiaries are registered as a
broker-dealer with the Commission and in all 50 states, the District of
Columbia and Puerto Rico and the Company's Canadian brokerage subsidiaries
are registered as an investment dealer in all provinces and territories in
Canada, in each case except to the extent that the failure to be in good
standing or be so registered would not have a Material Adverse Effect.

3. Purchase, Sale and Delivery of U.S. Offered Securities and
International Offered Securities. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the U.S.
Underwriters and the Managers, and the U.S. Underwriters and the Managers
agree, severally and not jointly, to purchase from the Company, at a purchase
price of U.S.$ o per share, the respective numbers of shares of U.S. Firm
Securities and International Firm Securities set forth opposite the names of
the U.S. Underwriters and the Managers in Schedules A and B hereto, as
applicable.

The Company will deliver the U.S. Firm Securities and International Firm
Securities, as applicable, to the applicable U.S. Representatives and
International Representatives for the accounts of the U.S. Underwriters and the
Managers, against payment of the purchase price in U.S. dollars in Federal
(same day) funds by official wire transfer to an account at a bank acceptable
to CSFBC at the office of Cravath, Swaine & Moore, at 9:00 A.M., New York time,
on June 28, 1999, or at such other time not later than seven full business days
thereafter as CSFBC and the Company determine, as applicable, such time being
herein referred to as the "FIRST CLOSING DATE". For purposes of Rule 15c6-1
under the Exchange Act, the First Closing Date (if later than the otherwise
applicable settlement date) shall be the settlement date for payment of funds
and delivery of securities for all the Offered Securities sold pursuant to the
U.S. Offering and the International Offering, respectively. The certificates
for the U.S. Firm Securities and the certificates for the International Firm
Securities will each be in definitive form, in such denominations and
registered in such names as the applicable U.S. Representatives and
International Representatives request and will be made available for checking
and packaging at the above office at least 24 hours prior to the First Closing
Date.

In addition, upon written notice from the U.S. Representatives given to
the Company from time to time not more than 30 days subsequent to the date of
the Prospectuses, the U.S. Underwriters may purchase

<PAGE> 9

all or less than all of the U.S. Optional Securities and the Managers may
purchase all or less than all of the International Optional Securities at the
purchase price per Security to be paid for the corresponding U.S. Firm
Securities and the International Firm Securities. The U.S. Optional Securities
and the International Optional Securities to be purchased by the U.S.
Underwriters and the Managers, respectively, on any Optional Closing Date shall
be in the same proportion to all the U.S. Optional Securities and the
International Optional Securities to be purchased by the U.S. Underwriters and
the Managers, respectively, on such Optional Closing Date as the U.S. Firm
Securities bear to all the Firm Securities and the International Firm
Securities bear to all the Firm Securities.

The Company agrees to sell to the U.S. Underwriters and the Managers such
U.S. Optional Securities and International Optional Securities and the U.S.
Underwriters and the Managers agree, severally and not jointly, to purchase
such U.S. Optional Securities and International Optional Securities. Such U.S.
Optional Securities or International Optional Securities, as the case may be,
shall be purchased for the account of each U.S. Underwriter or Manager, as
applicable, in the same proportion as the number of shares of U.S. Firm
Securities or International Firm Securities, as applicable, set forth opposite
such U.S. Underwriter's or Manager's name bears to the total number of shares
of U.S. Firm Securities or International Firm Securities (subject to adjustment
by CSFBC to eliminate fractions), as the case may be, and may be purchased by
the U.S. Underwriters and Managers only for the purpose of covering
overallotments made in connection with the sale of the U.S. Firm Securities and
International Firm Securities. No U.S. Optional Securities or International
Optional Securities shall be sold or delivered unless the Firm Securities
previously have been, or simultaneously are, sold and delivered. The right to
purchase the U.S. Optional Securities and International Optional Securities or
any portion thereof may be exercised from time to time and to the extent not
previously exercised may be surrendered and terminated at any time upon notice
by the U.S. Representatives on behalf of the U.S. Underwriters and the Managers
to the Company. It is understood that the U.S. Representatives are authorized
to make payment for and accept delivery of such U.S. Optional Securities and
International Optional Securities on behalf of the U.S. Underwriters and the
Managers pursuant to the terms of the U.S. Representatives' instructions to the
Company.

Each time for the delivery of and payment for the U.S. Optional Securities
and International Optional Securities (being herein referred to as an "OPTIONAL
CLOSING DATE"), which may be the First Closing Date (the First Closing Date and
each Optional Closing Date, if any, being sometimes referred to as a "CLOSING
DATE"), shall be determined by CSFBC but shall be not later than five full
business days after written notice of election to purchase U.S. Optional
Securities or International Optional Securities is given. The Company will
deliver the applicable U.S. Optional Securities or International Optional
Securities being purchased on each Optional Closing Date to the applicable U.S.
Representatives or the applicable International Representatives for the
accounts of the several U.S. Underwriters and Managers, as the case may be,
against payment of the purchase price therefor in Federal (same day) funds by
wire transfer to an account at a bank acceptable to the applicable
Representatives, at the office of Cravath, Swaine & Moore. The certificates
for the U.S. Optional Securities and the International Optional Securities will
each be in definitive form, in such denominations and registered in such names
as the applicable Representatives request upon reasonable notice prior to such
Optional Closing Date and will be made available for checking and packaging at
the above office, at a reasonable time in advance of such Optional Closing
Date.

4. Offerings by U.S. Underwriters and Managers. It is understood that
the several U.S. Underwriters and the several Managers propose to offer the
U.S. Securities and the International Securities for sale to the public as set
forth in the U.S. Prospectus and the International Prospectus.

5. Certain Agreements of the Company. The Company agrees with the
several U.S. Underwriters and several Managers that:

<PAGE> 10

(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the U.S. Prospectus with the Commission pursuant to and in accordance
with subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement. The Company will advise CSFBC promptly of any
such filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement and an additional registration statement is necessary to
register a portion of the U.S. Offered Securities or the International
Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance with
Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, on or prior to the time either Prospectus is
printed and distributed to any U.S. Underwriter or any Manager, or will
make such filing at such later date as shall have been consented to by
CSFBC.

(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the Initial Registration Statement, the Additional
Registration Statement (if any) or any of the Prospectuses and will not
effect such amendment or supplementation without CSFBC's prior consent,
which consent shall not be unreasonably withheld; and the Company will
also advise CSFBC promptly of the effectiveness of each Registration
Statement (if its Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplementation of a
Registration Statement or any of the Prospectuses and of the institution
by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.

(c) If, at any time when a prospectus relating to the U.S. Offered
Securities or the International Offered Securities is required to be
delivered under the Act in connection with sales by any U.S. Underwriter,
Manager or dealer, any event occurs as a result of which either or both of
the U.S. Prospectus and the International Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend either or both of the U.S.
Prospectus and the International Prospectus to comply with the Act, the
Company will promptly notify CSFBC of such event and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
U.S. Underwriters' or the Managers' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.

(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.

<PAGE> 11

(e) The Company will furnish to the Representatives copies of the
Registration Statement (four of which will be signed and will include all
exhibits), each preliminary prospectus relating to the Offered Securities,
and, so long as a prospectus relating to the U.S. Offered Securities and
the International Offered Securities is required to be delivered under the
Act in connection with sales by any U.S. Underwriter, Manager or dealer,
the U.S. Prospectus and the International Prospectus and all amendments
and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectuses shall be so furnished in New York City
on or prior to 3:00 P.M., New York time, on the business day following the
later of the execution and delivery of this Agreement or the Effective
Time of the Initial Registration Statement. All other such documents
shall be so furnished as soon as available. The Company will pay the
expenses of printing and distributing to the Underwriters all such
documents.

(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the United
States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the distribution.

(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Exchange Act, or mailed to stockholders of the
Company, and (ii) from time to time, such other information concerning the
Company as CSFBC may reasonably request.

(h) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, for any filing fees and other
expenses (including fees and disbursements of counsel) in connection with
qualification of the U.S. Securities and the International Securities for
sale under the laws of such jurisdictions as CSFBC designates and the
printing of memoranda relating thereto, for the filing fee incidental to,
and the reasonable fees and disbursements of counsel to the U.S.
Underwriters and the Managers in connection with, the review by the
National Association of Securities Dealers, Inc. of the U.S. Offered
Securities and the International Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses of
the Company in connection with attending or hosting meetings with
prospective purchasers of the U.S. Offered Securities and the
International Offered Securities and for expenses incurred in distributing
preliminary prospectuses and the U.S. Prospectus and the International
Prospectus (including any amendments and supplements thereto) to the U.S.
Underwriters and the Managers.

(i) No action has been or, prior to the completion of the
distribution of the Offered Securities, will be taken by the Company in
any jurisdiction outside the United States and Canada that would permit a
public offering of the Offered Securities, or possession or distribution
of the International Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus issued in connection with the
offering of the Offered Securities, or any other offering material, in any
country or jurisdiction where action for that purpose is required.

(j) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company and TD Bank will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under the
Act relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to

<PAGE> 12

make any such offer, sale, pledge, disposition or filing, without the
prior written consent of the U.S. Representatives except for grants of
employee stock options pursuant to the terms of a plan in effect on the
date hereof, issuances of Securities pursuant to the exercise of such
options or the exercise of any other employee stock options outstanding on
the date hereof or issuances of Securities in connection with the exchange
of Exchangeable Preference Shares of TD Waterhouse Investor Services
(Canada) Inc.

6. Conditions of the Obligations of the U.S. Underwriters and the
Managers. The obligations of the several U.S. Underwriters and the several
Managers to purchase and pay for the U.S. Firm Securities and the International
Firm Securities on the First Closing Date and the U.S. Optional Securities and
the International Optional Securities to be purchased on each Optional Closing
Date will be subject to the accuracy of the representations and warranties on
the part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:

(a) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of PricewaterhouseCoopers LLP
confirming that they are independent accountants within the meaning of the
Act and the applicable published Rules and Regulations thereunder and
stating to the effect that:

(i) in their opinion the financial statements audited by them
and included in the Registration Statements comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;

(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;

(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:

(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all
material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations or
any material modifications should be made to such unaudited
financial statements for them to be in conformity with
generally accepted accounting principles;

(B) the unaudited consolidated total revenues, total
expenses and net income amounts for the six-month periods ended
April 30, 1999 and 1998 included in the Prospectuses do not
agree with the amounts set forth in the unaudited consolidated
financial statements for those same periods or were not
determined on a basis substantially consistent with that of the
corresponding

<PAGE> 13

amounts in the audited statements of income;

(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of such letter,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest
available balance sheet read by such accountants, there was any
decrease in consolidated total assets, as compared with amounts
shown on the latest balance sheet included in the Prospectuses;
or

(D) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year, in consolidated
total revenues, total expenses and or net income,

except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectuses disclose have
occurred or may occur or which are described in such letter; and

(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company (as
defined in Note 1 to the combined financial statements) and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.

For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement
and the additional registration statement as proposed to be filed or as
proposed to be amended by the post-effective amendment to be filed shortly
prior to its Effective Time, and (iii) "Prospectuses" shall mean the U.S.
Prospectus, the International Prospectus and the Canadian Prospectus.

(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or, if earlier, the time
Prospectus is printed and distributed to any Underwriter, or shall have
occurred at such later date as shall have been consented to by CSFBC. If
the Effective Time of the Initial Registration

<PAGE> 14

Statement is prior to the execution and delivery of this Agreement, each
of the U.S. Prospectus and the International Prospectus shall have been
filed with the Commission in accordance with the Rules and Regulations and
Section 5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company, the U.S. Representatives or International
Representatives, shall be contemplated by the Commission.

(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S., Canadian or
international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of a
majority in interest of the Underwriters (including the Representatives),
be likely to prejudice materially the success of the proposed issue, sale
or distribution of the Offered Securities, whether in the primary market
or in respect of dealings in the secondary market, or (ii)(A) any change,
or any development or event involving a prospective change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as one enterprise
which, in the judgment of a majority in interest of the Underwriters
(including the Representatives) is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (B) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating agency or organization" (as
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (C) any material
suspension or material limitation of trading in securities generally on
the New York Stock Exchange or the Toronto Stock Exchange, or any setting
of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
overthecounter market; (D) any banking moratorium declared by U.S.
Federal, Canadian or New York authorities; or (E) any outbreak or
escalation of major hostilities in which the United States or Canada is
involved, any declaration of war by the U.S. Congress, the Canadian
Parliament or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the
Underwriters (including the Representatives), the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the U.S. Offered Securities and
the International Offered Securities.

(d) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received an opinion, dated such
Closing Date, of Simpson Thacher & Bartlett, counsel for the Company, to
the effect that:

(i) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of the
State of Delaware, and has full corporate power and authority to own
its properties and conduct its business as described in the
Prospectuses;

(ii) Each of the Company's U.S. subsidiaries has been duly
incorporated and is validly existing and in good standing as a
corporation under the laws of the jurisdiction of its incorporation,
and has full corporate power and authority to own its properties and

<PAGE> 15

conduct its business as described in the Prospectuses;

(iii) All outstanding shares of the Company's Common Stock,
including the Offered Securities, have been duly authorized, and all
outstanding shares of the Company's Common Stock have been and, upon
payment and delivery in accordance with the Underwriting Agreements,
the Offered Securities will be validly issued, fully paid and
nonassessable;

(iv) The statements made in the Prospectuses insofar as they
purport to constitute summaries of the terms of the Company's capital
stock (including the Offered Securities), constitute accurate
summaries of the terms of such capital stock in all material
respects;

(v) There are no preemptive rights with respect to the Offered
Securities pursuant to the Company's charter or by-laws or any
agreement or other instrument known to such counsel;

(vi) To such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to include any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities to
be registered pursuant to the Registration Statement;

(vii) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectuses, will not be an
"investment company" within the meaning of and subject to regulation
under the Investment Company Act of 1940, as amended;

(viii) No consent, approval, authorization, order, registration
or qualification of or with any federal or New York governmental
agency or body or any Delaware governmental agency or body acting
pursuant to the Delaware General Corporation Law or, to our
knowledge, any federal or New York court or any Delaware court acting
pursuant to the Delaware General Corporation Law is required for the
issue and sale of the Offered Securities by the Company and the
compliance by the Company with all the provisions of this Agreement,
except such as may be contemplated by the Reorganization Agreements
in connection with the Reorganization, the registration under the Act
and the Exchange Act of the Offered Securities, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Offered Securities by the
Underwriters;

(ix) The execution, delivery and performance of this Agreement,
the Canadian Underwriting Agreement and the Reorganization Agreements
and the issuance and sale of the Offered Securities will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any statute, any rule, regulation or
order of any federal or New York governmental agency or body or any
Delaware governmental agency or body acting pursuant to the Delaware
General Corporation Law or any federal or New York court or any
Delaware court acting pursuant to the Delaware General Corporation
Law, or (ii) any agreement or instrument known to such counsel to
which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, except
where such breach, violation or default would not have,

<PAGE> 16

either individually or in the aggregate, a Material Adverse Effect,
or (iii) the charter or bylaws of the Company or such subsidiary, and
the Company has full power and authority to authorize, issue and sell
the Offered Securities as contemplated by this Agreement and the
Canadian Underwriting Agreement;

(x) The Initial Registration Statement has become effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the U.S. Prospectus either was filed with
the Commission pursuant to the subparagraph of Rule 424(b) specified
in such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the knowledge of such
counsel, no stop order suspending the effectiveness of a Registration
Statement has been issued or proceedings for that purpose have been
instituted or threatened by the Commission, and each Registration
Statement and the U.S. Prospectus and each amendment or supplement
thereto, as of their respective effective or issue dates, complied
with as to form in all material respects with the requirements of the
Act and the Rules and Regulations; such counsel have no reason to
believe that any part of a Registration Statement or any amendment
thereto, as of its effective date or the Closing Date, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that any Prospectus or any
amendment or supplement thereto, as of its issue date or the Closing
Date, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made,
not misleading; the descriptions and statements made in the
Registration Statements and Prospectuses, insofar as they purport to
constitute summaries of the terms of New York or federal statutes,
the Delaware General Corporate Law, rules and regulations thereunder
or contracts and other documents, constitute accurate summaries of
the terms of such statutes, rules and regulations, contracts and
other documents or such legal and governmental proceedings in all
material respects; and to such counsel's knowledge, there are not
any legal or governmental proceedings required to be described in a
Registration Statement or the Prospectuses which are not described as
required or any contracts or documents of a character required to be
described in a Registration Statement which are not described and
filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other financial
data contained in the Registration Statements or the Prospectuses;

(xi) This Agreement and the Canadian Underwriting Agreement have
been duly authorized, executed and delivered by the Company;

(xii) Each of the Reorganization Agreements to which the Company
is a party has been duly authorized, executed and delivered by the
Company;

(xiii) Each of the Reorganization Agreements to which the
Company is a party has been duly authorized by the Company and
conforms in all material respects to the description thereof in the
Prospectuses, constitutes a valid and binding obligation of the
Company enforceable against it in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and (ii) to general principles
of equity (regardless of whether

<PAGE> 17

enforcement is considered in a proceeding in equity or at law);

(xiv) The statements made in the Prospectuses, insofar as they
purport to constitute summaries of the terms of the Reorganization
Agreements, constitute accurate summaries of the terms of such
documents in all material respects; and

(xv) (i) The Company or its subsidiaries have, pursuant to the
Reorganization Agreements, acquired all of the capital stock of TD
Bank's U.S., United Kingdom, Australia and Hong Kong discount
brokerage subsidiaries (other than capital stock issued as part of
the Reorganization and set forth in the Prospectuses), and (ii) upon
completion of the transactions contemplated by the Reorganization
Agreements, the Company or its subsidiaries will, pursuant to such
Reorganization Agreements and to the extent contemplated thereby,
acquire all of the title to or adequate use of the properties and
other assets (tangible and intangible) constituting TD Bank's
Canadian discount brokerage operations.

(e) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received an opinion, dated such
Closing Date, of Richard H. Neiman, general counsel for the Company, to
the effect that:

(i) The Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in the U.S.
in which its ownership or lease of property or the conduct of its
business requires such qualification;

(ii) Solely with respect to the operations of the Company and
its subsidiaries conducted in the United States, there are no pending
actions, suits or proceedings against or affecting the Company, any
of its U.S. subsidiaries or any of their respective properties that
would have, either individually or in the aggregate, a Material
Adverse Effect, or would materially and adversely affect the ability
of the Company to perform its obligations under this Agreement, the
Canadian Underwriting Agreement or the Reorganization Agreements, or
which are otherwise material in the context of the sale of the
Offered Securities; and, to such counsel's knowledge, no such
actions, suits or proceedings are threatened;

(iii) The Company and its U.S. subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or
any of its U.S. subsidiaries, would individually or in the aggregate
have a Material Adverse Effect;

(iv) Each of the Company and its U.S. subsidiaries which is
required to be licensed or registered as such is duly licensed
registered as a broker-dealer, municipal securities broker or dealer,
investment adviser, or transfer agent, as the case may be, in each
U.S. jurisdiction wherein the conduct of its business requires such
licensing or registration, and to the best of such counsel's
knowledge each of the Company and its U.S. subsidiaries is in
compliance in all material respects with all applicable laws rules,
regulations, orders, by-laws and similar requirements in connection
with such licenses and registrations, except to the extent that the
failure to be so registered or be in compliance would not have a
Material Adverse Effect; and

<PAGE> 18

(v) The Company and its U.S. subsidiaries are members in good
standing of the associations and exchanges indicated in the
Prospectuses, the Company's U.S. brokerage and clearing subsidiaries
are registered as a brokerdealer with the Commission and in all 50
states, the District of Columbia and Puerto Rico, in each case except
to the extent that the failure to be in good standing or be so
registered would not have Material Adverse Effect.

(f) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received an opinion, dated such
Closing Date, of McCarthy Tetrault, special Canadian counsel for the
Company, to the effect that:

(i) Each of the Company's subsidiaries outside of the U.S. has
been duly incorporated and is validly existing and in good standing as
a corporation under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority to own its
properties and conduct its business as described in the Prospectuses;

(ii) No consent, approval, authorization, order, registration or
qualification of or with any Canadian governmental agency or body, to
our knowledge, any Canadian federal or provincial court is required
for the issue and sale of the Offered Securities by the Company and
the compliance by the Company with all the provisions of this
Agreement and the Canadian Underwriting Agreement, except such as may
be contemplated by the Reorganization Agreements in connection with
the Reorganization, the registration under the Securities Act
(Ontario) of the Offered Securities, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under territorial or provincial securities laws in connection with
the purchase and distribution of the Offered Securities by the
Underwriters;

(iii) The execution, delivery and performance of this Agreement,
the Canadian Underwriting Agreement and the Reorganization Agreements
and the issuance and sale of the Offered Securities will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any statute, any rule, regulation or
order of any provincial or territorial governmental agency or body in
Canada or any court of any Canadian province or territory, or (ii)
any agreement or instrument known to such counsel to which the
Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, except where such breach,
violation or default would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, or (iii)
the charter or bylaws of the Company or such subsidiary, and the
Company has full power and authority to authorize, issue and sell the
Offered Securities as contemplated by the Agreement and the Canadian
Underwriting Agreement;

(iv) Each of the Reorganization Agreements to which TD Bank and
TD Waterhouse Investor Services (Canada) Inc. is a party has been
duly authorized, executed and delivered by TD Bank and TD Waterhouse
Investor Services (Canada) Inc., respectively;

(v) Each of the Reorganization Agreements to which TD Bank and
TD Waterhouse Investor Services (Canada) Inc. are a party has been
duly authorized by TD Bank and TD Waterhouse Investor Services
(Canada) Inc. and conforms in all material respects to the
description thereof in the Prospectuses, constitutes a valid and
binding obligation of TD Bank and TD Waterhouse Securities (Canada)
Inc. enforceable against

<PAGE> 19

each of them in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights
generally and (ii) to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law);

(vi) The Canadian Underwriting Agreement constitutes a legal,
valid and binding obligation of the Company enforceable in accordance
with its terms except as certain provisions may be limited by
applicable laws. The terms and conditions thereof required to be
complied with or fulfilled by the Company prior to the purchase by
the Canadian Underwriters of the Canadian Firm Securities or the
Canadian Optional Securities, as the case may be, have been complied
with or fulfilled.

(vii) All necessary documents and proceedings have been filed
and taken and all other legal requirements have been fulfilled under
the laws of each of the provinces and territories of Canada to
qualify the Offered Securities to be offered and sold to the public
in each province and territory of Canada by or through registrants,
investment dealers or brokers registered under applicable legislation
of such provinces who have complied with the relevant provisions of
such legislation.

(viii) The Toronto Stock Exchange and The New York Stock
Exchange have listed the Offered Securities and conditionally
approved the posting for trading of the Offered Securities at the
opening of trading on the First Closing Date.

(ix) The statements contained in the Canadian Prospectus under
the heading "Canadian Federal Income Tax Considerations" are a fair
summary of the principal Canadian federal income tax considerations
generally applicable to purchasers of Offered Securities who are
resident in Canada.

(x) The Offered Securities are, at the Closing Date, eligible
investments under the statutes listed in the Canadian Prospectus,
subject to compliance with the prudent investor standards and the
general provisions and restrictions of the statutes (and, where
applicable, the regulations thereunder) and, in certain cases subject
to satisfaction of additional requirements relating to investments or
lending policies or goals and, in certain cases, the filing of such
policies or goals.

(g) The U.S. Representatives, International Representatives and the
Canadian Underwriters shall have received an opinion, dated such Closing
Date, of Christopher A. Montague, general counsel for TD Bank, to the
effect that:

(i) Solely with respect to the operations of the Company and its
subsidiaries conducted outside of the United States, there are no
pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
properties that would have, either individually or in the aggregate,
a Material Adverse Effect, or would materially and adversely affect
the ability of the Company to perform its obligations under this
Agreement, the Canadian Underwriting Agreement or the Reorganization
Agreements, or which are otherwise material in the context of the
sale of

<PAGE> 20

the Offered Securities; and, to such counsel's knowledge, no such
actions, suits or proceedings are threatened;

(ii) No consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body outside of
the U.S. or Canada acting pursuant to any applicable law outside of
the U.S. and Canada is required for the issue and sale of the Offered
Securities by the Company and the compliance by the Company with all
the provisions of this Agreement and the Canadian Underwriting
Agreement, except such as may be contemplated by the Reorganization
Agreements in connection with the Reorganization, the registration
under any foreign securities act, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under securities laws outside the U.S. and Canada in connection with
the purchase and distribution of the Offered Securities by the
Underwriters;

(iii) The execution, delivery and performance of this Agreement,
the Canadian Underwriting Agreement and the Reorganization Agreements
and the issuance and sale of the Offered Securities will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any statute, any rule, regulation or
order of any governmental agency or body outside the U.S. or Canada
or any governmental agency or body acting pursuant to laws outside of
the U.S. and Canada, or (ii) any agreement or instrument known to
such counsel to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is
subject, except where such breach, violation or default would not
have, either individually or in the aggregate, a Material Adverse
Effect, or (iii) the charter or bylaws of the Company or such
subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
this Agreement and the Canadian Underwriting Agreement;

(iv) Each of the Company and its subsidiaries outside of the
U.S. which is required to be licensed or registered as such is duly
licensed registered as a broker-dealer, municipal securities broker or
dealer, investment adviser, or transfer agent, as the case may be, in
each jurisdiction outside of the U.S. wherein the conduct of its
business requires such licensing or registration, and to the best of
such counsel's knowledge each of the Company and its subsidiaries
outside of the U.S. is in compliance in all material respects with
all applicable laws rules, regulations, orders, by-laws and similar
requirements in connection with licenses and such licenses and
registrations, except to the extent that the failure to be so
registered or be in compliance would not have a Material Adverse
Effect;

(v) The Company and its subsidiaries outside of the U.S. are
members in good standing of the associations and exchanges indicated
in the Prospectuses, the Company's Canadian brokerage subsidiaries
are registered as an investment dealer in all provinces and
territories in Canada, and the Company's United Kingdom, Australia
and Hong Kong subsidiaries are registered as an investment dealer in
all jurisdictions in the United Kingdom, Australia or Hong Kong, as
the case may be, in each case except to the extent that the failure
to be in good standing or be so registered would not have Material
Adverse Effect; and

(vi) The subsidiaries of the Company outside of the U.S. possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the revocation
or modification of any such certificate, authority or permit that, if

<PAGE> 21

determined adversely to any the subsidiaries of the Company outside
of the U.S., would individually or in the aggregate have a Material
Adverse Effect.

(h) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received from Cravath, Swaine &
Moore, U.S. counsel for the Underwriters and Tory Tory DesLauriers and
Binnington, Canadian counsel for the Underwriters, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of
the Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectuses and other
related matters as the Representatives may require, and the Company shall
have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.

(i) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time any
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectuses,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectuses or as described in such certificate.

(j) The U.S. Representatives, the International Representatives and
the Canadian Underwriters shall have received a letter, dated such Closing
Date, of PricewaterhouseCoopers LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three days prior to such
Closing Date for the purposes of this subsection.

(k) On the Closing Date, the Canadian Underwriters shall have
purchased the Canadian Securities pursuant to the Canadian Underwriting
Agreement.

(l) The Company shall have filed an application and received
approval for the listing, subject to customary conditions, of the Offered
Securities with The New York Stock Exchange and the Toronto Stock Exchange
and has paid the required fees.

The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as the Representatives
reasonably request. CSFBC may in its sole discretion waive on behalf of the
U.S. Underwriters and the Managers compliance with any conditions to the
obligations of the U.S. Underwriters and the Managers hereunder, whether in
respect of an Optional Closing Date or otherwise.

7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each U.S. Underwriter and Manager, its partners, directors and
officers and each person, if any, who controls such U.S. Underwriter or Manager
within the meaning of Section 15 of the Act, against any losses, claims,

<PAGE> 22

damages or liabilities, joint or several, to which such U.S. Underwriter or
Manager may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, either of the U.S. Prospectus and
the International Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each U.S. Underwriter or Manager for any legal or other expenses
reasonably incurred by such U.S. Underwriter or Manager in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any U.S. Underwriter or Manager through the applicable U.S.
Representative or International Representative specifically for use therein, it
being understood and agreed that the only information furnished by any U.S.
Underwriter or Manager consists of the information described as such in
subsection (b) below; provided, however, that with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
any preliminary prospectus the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Underwriter to the extent that any
such loss, claim, damage or liability of such Underwriter results from the fact
that such Underwriter sold Offered Securities to a person as to whom it shall
be established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as
then amended or supplemented in any case where such delivery is required by the
Act if (i) the Company had previously furnished copies thereof in sufficient
quantity to such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement or omission of a material fact
contained in the Preliminary Prospectus which was identified at such time to
such Underwriter and corrected in the Prospectus or in the Prospectus as then
amended or supplemented and (ii) such failure to give or send such final
Prospectus by the Closing Date to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted the sole defense to
the claim asserted by such person.

Insofar as the foregoing indemnity agreement, or the representations and
warranties contained in Section 2(b), may permit indemnification for
liabilities under the Act of any person who is a U.S. Underwriter or Manager or
a partner or controlling person of a U.S. Underwriter or Manager within the
meaning of Section 15 of the Act and who, at the date of this Agreement, is a
director, officer or controlling person of the Company, the Company has been
advised that in the opinion of the Commission such provisions may contravene
Federal public policy as expressed in the Act and may therefore be
unenforceable. In the event that a claim for indemnification under such
agreement or such representations and warranties for any such liabilities
(except insofar as such agreement provides for the payment by the Company of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such a
person, the Company will submit to a court of appropriate jurisdiction (unless
in the opinion of counsel for the Company the matter has already been settled
by controlling precedent) the question of whether or not indemnification by it
for such liabilities is against public policy as expressed in the Act and
therefore unenforceable, and the Company will be governed by the final
adjudication of such issue.

(b) Each U.S. Underwriter and Manager will severally and not jointly
indemnify and hold harmless the Company, its directors and officers and each
person, if any who controls the Company within the meaning of Section 15 of the
Act, against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, any of the Prospectuses, or

<PAGE> 23

any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such U.S. Underwriter or Manager
through the U.S. Representatives or International Representatives specifically
for use therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred, it
being understood and agreed that the only such information furnished by any
U.S. Underwriter or Manager consists of the statements with respect to the
public offering of the Offered Securities on the cover page of and in the
fifth, sixth, eighth, ninth and fifteenth paragraphs under, the caption
"Underwriting" in the Prospectuses furnished on behalf of each U.S. Underwriter
or Manager.

(c) Promptly after receipt by an indemnified party under this Section or
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above or Section 9, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a) or (b) above or
Section 9. In case any such action is brought against any indemnified party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section or Section 9, as the case may be, for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes (i) an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party.

(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the U.S. Underwriters and the Managers on the other from the
offering of the U.S. Offered Securities and the International Offered
Securities, respectively, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the U.S.
Underwriters and the Managers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the U.S. Underwriters and the Managers on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the U.S. Offered Securities and the International
Offered Securities (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the U.S.
Underwriters and the Managers, respectively. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to

<PAGE> 24

state a material fact relates to information supplied by the Company or the
U.S. Underwriters and the Managers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no U.S. Underwriter or
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the U.S. Offered Securities or the International
Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such U.S.
Underwriter or Manager has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The U.S. Underwriters' obligations and
the Managers' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.

(e) The obligations of the Company under this Section and Section 9 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any U.S. Underwriter or Manager or the QIU (as hereinafter defined)
within the meaning of the Act; and the obligations of the U.S. Underwriters and
the Managers under this Section shall be in addition to any liability which the
respective U.S. Underwriters and Managers may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.

8. Default of U.S. Underwriters and Managers. If one or more U.S.
Underwriters or Managers default in their obligations to purchase U.S.
Securities or International Securities hereunder on any Closing Date and the
aggregate number of shares of U.S. Securities or International Securities that
such defaulting U.S. Underwriters or Managers agreed but failed to purchase
does not exceed 10% of the total number of shares of U.S. Securities or
International Securities, as applicable, that the U.S. Underwriters or Managers
are obligated to purchase on such Closing Date, the U.S. Representatives or
International Representatives may make arrangements satisfactory to the Company
for the purchase of such U.S. Offered Securities or International Securities by
other persons, including any of the U.S. Underwriters or the Managers, but if
no such arrangements are made by such Closing Date the non-defaulting U.S.
Underwriters or Managers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the U.S. Securities or the
International Securities that such defaulting U.S. Underwriters or Managers
agreed but failed to purchase on such Closing Date. If one or more U.S.
Underwriters or Managers so default and the aggregate number of shares of U.S.
Securities or International Securities with respect to which such default or
defaults occur exceeds 10% of the total number of shares of U.S. Securities or
International Securities, as applicable, that the U.S. Underwriters or Managers
are obligated to purchase on such Closing Date and arrangements satisfactory to
the applicable Representatives and the Company for the purchase of such U.S.
Offered Securities or International Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting U.S. Underwriter or Manager or the
Company, except as provided in Section 10 (provided that if such default occurs
with respect to the U.S. Optional Securities or International Optional
Securities after the First Closing Date, this Agreement will not terminate as
to the U.S. Firm Securities or International Firm Securities or any U.S.
Optional Securities or International Optional Securities purchased prior to
such termination). As used in this Agreement, the terms "U.S. Underwriter" and
"Manager" include any person substituted for a U.S. Underwriter or Manager
under this Section. Nothing herein will relieve a defaulting U.S. Underwriter
or Manager from liability for its default.

<PAGE> 25

9. Qualified Independent Underwriter. The Company hereby confirms that
at its request CSFBC has without compensation acted as "qualified independent
underwriter" (in such capacity, the "QIU") within the meaning of Rule 2720 of
the Conduct Rules of the National Association of Securities Dealers, Inc. in
connection with the offering of the Offered Securities. The Company will
indemnify and hold harmless the QIU against any losses, claims, damages or
liabilities, joint or several, to which the QIU may become subject, in such
capacity, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
the QIU's acting (or alleged failing to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred.

10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several U.S. Underwriters and the
several Managers set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any U.S. Underwriter, Manager, the
Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the U.S.
Securities and the International Securities. If this Agreement is terminated
pursuant to Section 8 or if for any reason the purchase of the U.S. Securities
or the International Securities by the U.S. Underwriters or the Managers is not
consummated, the Company shall remain responsible for the expenses to be paid
or reimbursed by it pursuant to Section 5 and the respective obligations of the
Company, the U.S. Underwriters and the Managers pursuant to Section 7 and the
obligations of the Company pursuant to Section 9 shall remain in effect and if
any U.S. Securities or any International Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the U.S.
Securities or the International Securities by the U.S. Underwriters or
Managers, respectively, is not consummated for any reason other than solely
because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (C), (D) or (E) of Section
6(c)(ii), the Company will reimburse the U.S. Underwriters or the Managers, as
applicable, for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the U.S. Securities and the International Securities.

11. Notices. All communications hereunder will be in writing and, if
sent to the U.S. Underwriters, will be mailed, delivered or telegraphed and
confirmed to: (a) the U.S. Representatives, c/o Credit Suisse First Boston
Corporation, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention:
Investment Banking Department - Transactions Advisory Group; (b) to the
International Representatives c/o Credit Suisse First Boston (Europe) Limited
at One Cabot Square, London E14 4QJ England, Attention: Company Secretary; and
(c) if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at TD Waterhouse Securities, Inc., 100 Wall Street, New York,
N.Y., Attention: General Counsel; provided, however, that any notice to a U.S.
Underwriter or Manager pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such U.S. Underwriter or Manager.

12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.

13. Representation of U.S. Underwriters and Managers. The U.S.
Representatives will act for the several U.S. Underwriters and the
International Representatives will act for the several Managers, in each case
in connection with this financing. Any action under this Agreement taken by
the U.S. Representatives jointly or by CSFBC will be binding upon all the U.S.
Underwriters. Any action under this Agreement

<PAGE> 26

taken by the International Representatives will be binding upon all the
Managers.

14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.

The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

<PAGE> 27

If the foregoing is in accordance with the U.S. Representatives' and the
International Representatives' understanding of our agreement, kindly sign and
return to the Company one of the counterparts hereof, whereupon it will become
a binding agreement among the Company, the several U.S. Underwriters and the
several Managers in accordance with its terms.

Very truly yours,

TD WATERHOUSE GROUP, INC.,

Name:
Title:

The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above
written.

The U.S. Underwriters

CREDIT SUISSE FIRST BOSTON CORPORATION
TD SECURITIES (USA) INC.

By: CREDIT SUISSE FIRST BOSTON CORPORATION

by
Name:
Title:

Acting on behalf of themselves and as the
Representatives of the several U.S.
Underwriters named in Schedule A hereto.

The International Underwriters

CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
THE TORONTO-DOMINION BANK

By: CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED

by
Name:

<PAGE> 28

Title:

Acting on behalf of themselves and as the Representatives
of the several Managers named in Schedule B hereto.

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SCHEDULE A

NUMBER OF
UNDERWRITER U.S. FIRM SECURITIES

Credit Suisse First Boston Corporation
TD Securities (USA) Inc
Goldman, Sachs & Co
Salomon Smith Barney Inc
Morgan Stanley & Co. Incorporated

___________________
Total 20,800,000
====================

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SCHEDULE B

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITER INTERNATIONAL FIRM SECURITIES
- ------------------------------------------------------- -----------------------------
<S> <C>

Credit Suisse First Boston (Europe) Limited
The Toronto-Dominion Bank
Goldman Sachs International
Salomon Brothers International Limited
Morgan Stanley & Co. International Limited
ABN AMRO Rothschild
Deutsche Bank AG London
UBS AG, acting through its division Warburg Dillon Read

__________________
Total 3,200,000
==================
</TABLE>

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SCHEDULE C

REORGANIZATION AGREEMENTS

1. Transfer and Assumption Agreement between The Toronto-Dominion
Bank and TD Waterhouse Securities (Canada), Inc.

2. Transfer and Assumption Agreement between TD Securities Inc.
and TD Waterhouse Securities (Canada), Inc.

3. Support and Exchange Agreement between TD Waterhouse Group,
Inc. and TD Waterhouse Securities (Canada), Inc.

4. Share Transfer Agreement between The Toronto-Dominion Bank and
TD Waterhouse Group, Inc.

5. Master Services Agreement between The Toronto-Dominion Bank and
TD Waterhouse Group, Inc.

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EXHIBIT A

June 22, 1999

CREDIT SUISSE FIRST BOSTON CORPORATION
TD SECURITIES (USA) INC.
As Representatives of the several U.S. Underwriters
c/o CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010

CREDIT SUISSE FIRST BOSTON SECURITIES CANADA, INC.
TD SECURITIES INC.
As Representatives of the several Canadian Underwriters
c/o CREDIT SUISSE FIRST BOSTON SECURITIES CANADA INC.
First Canadian Place, Suite 3000
P.O. Box 301
Toronto, Ontario M5X 1C9

CREDIT SUISSE FIRST BOSTON (Europe) LIMITED
THE TORONTO-DOMINION BANK
As Representative of the several Managers
c/o CREDIT SUISSE FIRST BOSTON (Europe) LIMITED
One Cabot Square
London, England E14 4QJ

Dear Sirs:

As an inducement to the U.S. Underwriters, the Canadian Underwriters and
the International Managers to execute, respectively, the U.S. and International
Underwriting Agreement and the Canadian Underwriting Agreement (collectively,
the "Underwriting Agreements"), pursuant to which an offering will be made of
the Common Stock, $0.01 par value per share (the "Securities") of TD Waterhouse
Group, Inc. (the "Issuer"), the undersigned hereby agrees that, for a period of
180 days after the date of the Underwriting Agreements (the "Applicable
Period") to which you are or expect to become parties, the undersigned will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or (except pursuant to agreements executed on or prior to the date
hereof) arrange to have declared effective during the Applicable Period a
registration statement under the Securities Act covering the sale by the
undersigned of (a) any shares of Common Stock of the Issuer or any other
capital stock of the Issuer or (b) any other securities which are convertible
into, or exercisable or exchangeable for, Common Stock or other capital stock
of the Issuer (collectively, "Derivative Securities"), without the prior
written consent of Credit Suisse First Boston Corporation and TD Securities
(USA) Inc., except that the foregoing restrictions shall not apply to, in the
case of the Issuer, grants of stock options with respect to its Common Stock to
its officers, directors and employees and issuances of Common Stock in
connection with the exercise of such stock options, and in connection with the
exchange of exchangeable preference shares of TD Waterhouse Securities (Canada)
Inc.

In furtherance of the foregoing, the Issuer and its transfer agent and
registrar are hereby authorized to decline to make any transfer of shares of
Securities if such transfer would constitute a violation or breach of this
Agreement.

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EXHIBIT A

Very truly yours,

This Agreement shall be binding on the undersigned and its respective
successors and assigns. This Agreement shall lapse and become null and void if
the public offering shall not have occurred on or before the date that is o
days after the date of this Agreement.

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EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Amendment No. 3 to the Prospectus
constituting part of this Registration Statement on Form S-1 of our report dated
April 29, 1999 relating to the combined financial statements of TD Waterhouse
Securities, Inc. (a combination of certain businesses of The Toronto-Dominion
Bank), which appears in such Prospectus. We also consent to the use in such
Prospectus of our report dated April 29, 1999 relating to the combined financial
statements of Waterhouse Securities Group (a combination of certain businesses
of Waterhouse Investor Services, Inc.) for the twelve-months ended October 31,
1996, which appears as supplemental information in such prospectus. We also
consent to the reference to us under the heading "Experts" in such prospectus.

PricewaterhouseCoopers LLP

New York, New York
June 22, 1999