Investors Group
Review of the Business

Introduction

Investors Group's core business provides a comprehensive range of financial and investment planning services to Canadians through its dedicated network of highly trained and well-supported Consultants.

Investors Group earns revenue primarily from:

• Management fees charged to its mutual funds.
• Fees charged to its mutual funds for administrative and trustee services.
• Distribution fees charged to mutual fund account holders.

Fee income is also earned from the distribution of insurance products, banking and securities services. Additional revenue is derived from mortgage banking, corporate investments and investment certificate operations.

Revenues depend largely on the value and composition of assets under management. Our comprehensive approach to financial planning, accomplished by our
Consultants through the broad range of financial products and services offered by Investors Group, has resulted in a mutual fund redemption rate significantly lower than the industry average. During periods of equity market decline and reduced investor confidence, this approach mitigates any downward pressure on the asset base. During 2004, Investors Group's redemption rate for long-term funds reflected significant improvement. The redemption rate declined to 9.1% at December 31, 2004 from 10.7% in 2003 while the redemption rate for all other members of the Investment Funds Institute of Canada (IFIC) increased to 15.3% at December 31, 2004 from 14.1% in 2003.