CI Fund Management Inc. said Wednesday that profit for the third quarter of fiscal 2005 fell 6.7% because of higher stock option expenses.

Net income in the period ended Feb. 28 slipped to $81.2 million (28¢ a share) from $87 million (29¢), a year earlier, Toronto-based CI Fund, Canada’s second-biggest mutual fund company, said in a statement. Option expenses came in at $5.8 million in the quarter, the company said.

Revenue rose almost 9.3% to $278.7 million from $255 million.

For the nine months, net income was up 40% to $203.9 million (69¢ a share) on revenue of $801.2 million, up 38% from a year earlier.

CI said net sales for CI and Assante funds for the quarter were $478.4 million, up 10% from $436.6 million in the third quarter last year. “CI’s sales benefited from its industry-leading lineup of 63 five-star Morningstar rated funds,” the company said. “CI has now maintained the position of either first or second most funds with Morningstar Canada’s five-star rating for 37 consecutive months.”

Shares of CI Funds were down 15¢ to $17.25 in late afternoon trading on Tuesday on the Toronto Stock Exchange.

Meanwhile, CI Fund CEO William Holland said the company is ready to look for sizable acquisitions now that it has fully absorbed other acquisitions it made about 18 months ago. “We’ve amalgamated and integrated the businesses to a point at which we would be quite keen to look at another deal,” Holland told ReutersWednesday.

The company vaulted to the top ranks of Canadian fund managers in late 2003 when it spent nearly $1 billion in cash and stock on the Canadian assets of Assante Corp., as well as smaller money managers Synergy Asset Management and Skylon Capital Corp. Since then, CI has made some small pickups, but has stayed away from big acquisitions.