C.I. Fund Management Inc. is reporting a loss for the third-quarter ended February 28.

The firm, one of the Canada’s largest independent fund managers, also reported weaker sales saying that falling financial markets cut sharply into the fees it earned from managing money.

The loss for the third quarter was $15.3 millio, or 9¢ a share, compared with net income of $8 million, or 4¢ a share, in the same period last year.

Revenues fell to $125.8 million from $163.6 million

The company says, however, that it will raise raise its quarterly dividend to 5¢ a share from 3¢.

“The quarter was marked by improving optimism on the part of investors in response to increasing evidence that the global economy is beginning to rebound,” says William Holland, president and CEO.

For the quarter, net sales of C.I.’s mutual funds were $128 million, up from $100 million in the preceding quarter. However, this was still significantly below net sales of $764 million achieved in the third quarter of fiscal 2001.

Total fee-earning assets ended the quarter at $26 billion, down 3.9% from the prior year, but up 4.8% from the prior quarter.

Compared with February 28, 2001, total fee-earning assets and mutual fund assets were down 3.9% and 7.0%, respectively, reflecting declines in equity markets over the period. C.I.’s institutional assets at February 28, 2002, were 23.0% higher than at February 28, 2001, as growth from new mandates exceeded the effects of market declines.

Management fees were $93.9 million in the quarter, compared with $113.7 million in the prior year, reflecting the change in mutual fund assets as well as non-mutual fund assets such as labour-sponsored funds and the change in C.I.’s asset mix to a greater percentage of money market funds and Class F and Class I funds.

Administration fees and other income, which represents income from C.I.’s third-party business and institutional assets, was $5.8 million, down from $21.5 million in the prior year due to the $15.3 million securities gain in 2001.

Investment adviser fees declined by 20.0% from $11.5 million in fiscal 2001 to $9.2 million in fiscal 2002, reflecting the lower level of assets and the results of cost control programs.

Trailer fees declined by 16.3% from $28.8 million in fiscal 2001 to $24.1 million in fiscal 2002.