IGM Financial Inc. today reported a modest drop in third quarter profits compared with a year ago, despite higher fee and investment income.

Canada’s largest mutual fund firm with its Investors Group and Mackenzie Financial divisions said Friday it earned $159 million, or 58¢ per share, for the three months ended September 30. That compared with a profit of $160.6 million, or 59¢ per share, a year ago.

Total fee and net investment income in the quarter jumped to $527.1 million, up from $474.4 million a year ago.

Total operating expenses rose to $300.57 million, up from $258.7 million a year ago. Commission expenses jumped to $155.3 million from $117.1 million in the prior year period.

“The quarter was marked by strong growth in the number of consultants in the Investors Group network and industry leading mutual fund sales by Mackenzie Financial within the financial advisor channel,” said Jeffrey Orr, the company’s president and CEO, in a release.

Mutual fund assets under management at September 30 were $78.6 billion, including $1.3 billion held by Counsel Group of Funds Inc., a wholly owned subsidiary.

Mackenzie recorded sales of mutual funds of $1.4 billion for the quarter compared to $1.1 billion last year. Mutual fund net sales for the period were $110 million, compared to net redemptions of $39 million in the prior year. Net sales of long-term funds (excluding money market and managed yield funds) were $133 million for the period, compared with net sales of $17 million in 2003.

Mackenzie’s redemption rate for long-term funds was 13.7% at the end of September 2004, compared to 12.5% at the end of September 2003. The corresponding rate at September 30, 2004 for all other members of the Investment Funds Institute of Canada was 14.5%.

Mackenzie’s mutual fund assets under management at September 30, were $35 billion, compared to $31.5 billion one year ago.

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