Restructuring costs and the eroding values of securities caused net income at CI Financial Income Fund to drop 18% to $118.1 million in the third quarter ended Sept. 30, the wealth management company announced on Tuesday.

CI Financial reported that the lower earnings were partially due to $11 million of costs related to its conversion from an income trust to a corporation, planned for Jan. 1, 2009, pending regulatory and unitholder approval. Also recorded during the quarter was an equity-based compensation recovery of $7.6 million and an adjustment to the value of marketable securities of $5 million.

Net sales for the quarter were $463 million, an increase of 211% from $149 million in the third quarter of 2007.

CI products that made important contributions to the increase in sales included the Cambridge Funds, which were launched in January 2008, and the SunWise Elite Plus segregated funds.

Sales of CI’s products continue to be strong, with CI posting positive long-term net sales of $10 million in October (net of $340 million in note rebalancing). This trend has continued into November with month-to-date net sales of long-term funds of $90 million.

CI Financial’s average retail assets under management shrank to $62.9 billion, a 4% drop from $65.2 million in the same quarter last year.

The company’s fee-earning assets dropped 14% to $92.8 billion from $108 billion a year earlier thanks to declining markets, the company said.

Still, CEO Bill Holland said the company’s performance remains strong under the circumstances.

“Given market conditions, CI has fared very well,” Holland said in a statement.

“Over the past few months, we have aggressively taken steps to deal with changes in the level of our assets under management, which resulted in a decline in SG&A expenses from the second quarter to the third quarter of 2008. However, the bulk of our efforts will be apparent in the fourth quarter of 2008 and in fiscal 2009, putting CI in an excellent position to take advantage of a market recovery.”