Report to Shareholders

IGM Financial and its operating companies experienced sustained growth in 2006 which once again produced positive financial results for its shareholders. Investors Group Inc. and Mackenzie Financial Corporation, the Company’s principal businesses, continued to generate strong activity in terms of asset growth, sales, product innovation, investment management, and resource development.  The Company is committed to supporting financial advisors as they help investors to reach their financial goals. These strong relationships, and our association with other members of the Power Financial group of companies, have placed the Company in a position of leadership and strength in the industry. Together, these elements enable IGM Financial to create diversified, long-term value for its clients, Consultants, advisors, and shareholders.

Total assets under management at December 31, 2006 totalled $119.4 billion. This compares with total assets under management of $100.2 billion at December 31, 2005, an increase of 19.1%.

Net income for the year ended December 31, 2006, excluding a non-cash income tax benefit described below, was $763.0 million compared to net income of $682.4 million in 2005, an increase of 11.8%. Earnings per share on the same basis were $2.85 compared to earnings per share of $2.56 in 2005, an increase of 11.3%. A non-cash income tax benefit of $13.7 million resulting from decreases in the federal corporate income tax rates was reported in the second quarter of 2006. Net income for the year ended December 31, 2006, including the non-cash income tax benefit, totalled $776.7 million and earnings per share on the same basis were $2.90.

Dividends increased for the 17th consecutive year, rising 20 cents to $1.535 per share for the year.

Industry Perspective

During 2006, strong investment performance in Canadian and global equity markets delivered significant investment returns for Canadian investors. Investors increased their allocation to equity-oriented products and to global/international products after several years of an income-oriented focus. Announced changes to tax legislation provided investors pause in the income trust arena as the favourable tax treatment for this structure will be eliminated in 2011 if the legislation is passed.

The important role of an advisor in helping Canadians with their financial planning needs became more evident in 2006. The Investment Fund Institute of Canada (IFIC) published its first annual mutual fund investor survey in September 2006 indicating that 85% of mutual fund investors preferred to invest through an advisor and they highly rated the support and advice provided by their advisors.

IFIC reported that as at December 31, 2006, mutual fund assets had increased by 15.8% year-over-year to approximately $660 billion.

Operating Highlights

Growth of the Investors Group Consultant network continued through 2006. A further five region offices were opened. Net sales of mutual funds rose significantly from $778 million to $1.35 billion during the period, and combined with strong investment management results, assets under management grew 14.8% to $58.2 billion. Investors Group continued to respond to the complex financial needs of its clients by delivering a diverse range of products and services in the context of personalized financial advice.

Mackenzie maintained its focus on delivering consistent long-term investment performance true to the multiple styles deployed, while emphasizing product innovation and quality through all aspects of its operations.

This quality is evidenced by the strength of Mackenzie's relationships with financial advisors, its commitment to experienced and talented investment management, and its focused service to advisors and investors. Mackenzie was rewarded in 2006 by growth in assets under management in both the retail and institutional channels through net sales, investment performance, and the strategic acquisition of the Cundill Group. Total assets under management were up 23.4% to $61.5 billion.

IGM Financial continues to strengthen its business through a strategic focus on multiple distribution opportunities delivering high-quality advice, products, and service solutions for investors. Our scale and investment in technology and operations continue to help us manage our resources effectively and deliver benefits to our investors and shareholders and growth in our business.

Looking Ahead

The financial planning needs of Canadians are evolving and increasing in complexity as the range of investment choices expands and the baby-boom generation nears retirement. IGM Financial is well positioned to meet this growing need - through our support of investor needs, our commitment to provide quality investment advice and financial products, our service innovation, and our effective management of the Company. Our institutional and sub-advisory business is expanding. We will continue to focus our businesses to deliver strong value to our clients and our shareholders.

On behalf of the Board of Directors,

February 15, 2007