CI Financial Inc. announced today that its board of directors has approved in principle the initiation of a process for the conversion of CI into an income trust.

The move culminates a period of approximately three years in which CI management spent considerable time and effort evaluating the merits of an income trust structure, considering alternative structures designed to optimize any such conversion, and assessing the feasibility of a conversion to an income trust structure from a tax, accounting, securities and corporate perspective.

CI management and its board say that an income trust structure would benefit both CI and its shareholders while the company’s business and operations would be unaffected by the conversion, if implemented, and would continue to be managed by CI’s current senior executives and employees.

CI’s board authorized management to pursue and negotiate the transaction with any and all necessary regulatory authorities and external third parties with a view to developing and submitting to the board a final structure for the conversion for its consideration and approval.

Although tax rulings are generally not required for transactions of this nature, CI has made tax-ruling requests to the Canada Revenue Agency and understands that such requests are being carefully reviewed.

The conversion will be subject to a number of approvals and consents, including court approval, approval of the shareholders of CI and certain regulatory approvals.

The process to convert CI to an income trust structure is in its initial stages and with the difficulty in predicting timing with certainty, there can be no assurance at this time that all approvals and consents required or desirable to effect the conversion will be obtained on a timely basis, or at all. As well, there can be no assurance that the conversion will be completed.

In related news, CI also announced its third quarter results for fiscal 2006, ended Feb. 28, which saw average assets under management rise by 17% to $55.3 billion from $47.1 billion during the same period in fiscal 2005. Total fee-earning assets at Feb. 28 were $73.7 billion, up 6% from $69.6 billion at Feb. 28, 2005.

Gross sales of CI’s managed funds were $2.8 billion for the quarter compared with $2.5 billion for the same period in 2005. Net sales (gross sales less redemptions) were $638 million for the quarter compared with $442 million for the same period in the prior year.

For the nine months ended Feb. 28 gross sales were $7.9 billion and net sales were $2 billion compared with gross and net sales of $5.9 billion and $0.8 billion, respectively, for the same period a year ago.

CI reported net income for the quarter of $73.1 million, a decrease of 10% over the $81.2 million for the same quarter in 2005. On a per share basis, CI earned $0.26, down 7% from $0.28 in the prior year.

CI’s earnings for the quarter included a $28.2 million expense for stock-based compensation that reflects the increase in CI’s share price during the quarter from $24.10 to $28.00. Adjusted for this expense, CI earned $0.32 per share.

For the nine months ended Feb. 28, CI earned $239.8 million or $0.84 per share. This is up 18% from the $203.9 million or $0.69 per share earned in the same period in the prior fiscal year.