Investors Group Inc.
Consolidated Liquidity and Capital Resources

LIQUIDITY

The Company’s operating liquidity is required for:

• Financing ongoing operations, including the funding of selling commissions internally.
• Temporarily holding mortgages in its mortgage banking facility.
• Meeting regular interest and dividend obligations related to long-term debt and preferred shares.
• Payment of quarterly dividends on the Company’s outstanding common shares.
• Maintaining liquidity requirements for the Company’s regulated entities.

A key liquidity requirement for the Company is the funding of commissions paid on the sale of mutual funds. Commissions paid continue to be fully funded through management fee revenue earned on mutual fund assets under management and through additional sales charges levied in connection with the early redemption of mutual funds.

The Company also maintains sufficient liquidity to fund and temporarily hold mortgages. Through its mortgage banking operations, most of the mortgages are sold to third parties on a fully serviced basis. In order to effectively manage its overall liquidity, the Company must be active in both the whole loan sale and securitization markets. During 2003, whole loan sales to third parties totaled $847.3 million and proceeds from securitizations were $126.7 million, compared with $1.1 billion and $217.4 million respectively in 2002.

During the year the Company repaid $275 million of the Floating Bankers’ Acceptances due May 30, 2006 which were related to the acquisition of Mackenzie.

On July 10, 2003 the Company purchased, by way of private placement, 2,662,690 common shares of Great-West Lifeco Inc. (GWL), an affiliate of the Company, for total cash consideration of $100 million in support of GWL’s acquisition of Canada Life Financial Corporation.

The Company continues to generate significant cash flows from its operations. Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $1,138.6 million for the year. This compared to $1,148.6 million in 2002. Although overall fee revenues were down 5.5% for the year, the decrease in EBITDA was only 0.9% due to both a decrease in operating expenses and an increase in net investment income.

Other potential sources of liquidity are the Company’s portfolio of securities and lines of credit. At December 31, 2003, the market value of the marketable securities in its portfolios and those of its unregulated subsidiaries was $202.8 million. The Company maintains operating lines of credit totaling $235 million with various Schedule A Canadian chartered banks.

Liquidity can also be provided through the Company’s ability to raise funds in domestic debt and equity markets as evidenced by the funds raised to finance its acquisition of Mackenzie and by the funds raised through the $175 million and the $300 million in debentures issued in December 2002 and March 2003 respectively.

Liquidity requirements for M.R.S. Trust and Investors Group Trust Co. Ltd., which engage in financial intermediary activities, are established by regulatory authorities. As at December 31, 2003, liquidity for both companies was in excess of regulatory requirements.

INTEREST RATE RISK

The objective of the Company’s asset liability management is to control interest rate risk by actively managing its interest rate exposure within limits established by the Investment Committee of the Board of Directors.

The Company manages the re-pricing characteristics of its consolidated assets and liabilities, and as required by regulation, manages interest rate risk on the assets and liabilities of the deposit operations of M.R.S. Trust and Investors Group Trust Co. Ltd. As at December 31, 2003, the total gap between one-year deposit assets and liabilities was well within the Company’s stated guidelines.

CAPITAL RESOURCES

Shareholders’ equity increased to $3.22 billion as at December 31, 2003 from $2.95 billion at December 31, 2002. For outstanding share data, refer to Note 13 of the Consolidated Financial Statements. During 2003, long-term debt increased marginally to $1.40 billion from $1.39 billion at December 31, 2002 as shown in Note 12 to the Consolidated Financial Statements. The Company refinanced a portion of its long-term debt, extending term at attractive interest rates while increasing its financial flexibility

To achieve its strategic objectives, the Company requires a strong capital base. The Company’s capital management objective is to preserve the quality of its financial position by establishing and maintaining a solid capital base and a strong balance sheet.

Independent reviews confirm the continuing quality of the Company’s balance sheet and the strength of its operations. During 2003, both Standard & Poors (S&P) and the Dominion Bond Rating Service (DBRS) reviewed their ratings of the Company’s senior debt and liabilities. The senior debt and liabilities were rated “A” with a stable outlook by both S&P and DBRS.

Management is confident that the Company’s current capital resources are adequate and can support its activities during 2004.

TRANSACTIONS WITH RELATED PARTIES

Refer to Note 19 of the Consolidated Financial Statements.