Investors Group Inc.
Outlook

THE COMPETITIVE LANDSCAPE

To provide financial planning services to Canadians, the Company operates in a highly competitive environment and competes with other mutual fund companies and with other financial services organizations, including banks, brokerage firms and life insurance companies. Merger and acquisition activity in 2003 reflected continued consolidation within the financial services industry.

Banks

The dominant competitive force in retail financial services is the banking industry. Management feels that the banks’ presence has served to accelerate the growth of the mutual fund industry as a whole. During 2003, banks continued to maintain a significant share of the mutual fund market. A substantial portion of their mutual fund assets continue to be concentrated in money market funds. At December 31, 2003, money market funds totaled $41.7 billion compared with $44.7 billion in 2002 and represented 28% and 36% of their total mutual fund assets in the respective periods.

Mutual Fund Dealers and Manufacturers

Mutual fund dealers have also been successful in expanding their distribution network and increasing their penetration of the financial advice market. During 2003, a number of organizations consolidated to form larger companies. Management expects continued consolidation in the industry as smaller participants are acquired by larger, more efficient organizations.

A continuing trend within the mutual fund sector is increased vertical integration, where one firm both manufactures and distributes products. For mutual fund dealers, this has meant increasing their manufacturing capabilities. This business model, which integrates investment management with the distribution of financial products and services, is similar to that which Investors Group has utilized successfully.

Distribution Channels

Within the various mutual fund distribution channels, competition is strong. Management views this as a healthy environment that allows investors to receive high-quality investment management services for reasonable fees. As the number and the variety of mutual funds increase, there is increasing competition among mutual fund manufacturers to access distributors and the limited shelf-space they provide.