~~Table~~SECURITIES ofAND ~~Contents~~EXCHANGE COMMISSION WASHINGTON, D.C. 20549

~~SECURITIES~~FORM ~~AND EXCHANGE COMMISSION~~10-Q ~~WASHINGTON, D.C. 20549~~

~~FORM~~(Mark ~~10-Q~~One)

(Mark One)


[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





		FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2001





		OR





[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~[X]~~For ~~QUARTERLY~~the ~~REPORT~~transition ~~PURSUANT~~period TOfrom ~~SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~_________to_________

~~For~~Commission ~~the~~File ~~quarterly period ended September~~No. ~~30, 2001~~000-17994

ORMACKENZIE INVESTMENT MANAGEMENT INC.

[(Exact ]name ~~TRANSITION~~of ~~REPORT~~registrant ~~PURSUANT~~as TOspecified ~~SECTION~~in 13its ~~OR 15(d~~charter) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~DELAWARE ~~the~~(State ~~transition~~or ~~period~~other ~~from~~jurisdiction ~~____________~~of toincorporation ~~____________~~ or organization) 59-2522153 (IRS Employer Identification No.)

~~Commission~~925 ~~File~~SOUTH ~~No.~~FEDERAL ~~000-17994~~ HIGHWAY, SUITE 600 BOCA RATON, FL (Address of principal executive offices) 33432 (Zip Code)

~~MACKENZIE~~Registrant’s ~~INVESTMENT~~telephone ~~MANAGEMENT~~number, ~~INC. (Exact~~including ~~name~~area ofcode ~~registrant as specified in its charter~~(561) 393-8900

Delaware		59-2522153
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
925 South Federal Highway, Suite 600
Boca Raton, FL		33432
(Address of principal executive offices)		(Zip Code)

(Former name, former address and former fiscal year, if changed since last report:)

~~Registrant’s~~ Indicate ~~telephone~~by ~~number,~~check ~~including~~mark ~~area~~whether ~~code~~the registrant (~~561~~1) ~~393-8900~~has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~(Former~~YES ~~address~~[X] NO ~~since last report:~~[ ] ~~700 South Federal Highway, Suite 300~~ ~~Boca Raton, FL 33432)~~

~~Indicate~~As byof ~~check mark whether the registrant (1)~~January ~~has~~29, ~~filed~~2002, ~~all~~there ~~reports required~~were to18,655,550 beshares ~~filed by Section 13 or 15(d)~~ of the ~~Securities~~Registrant’s ~~Exchange Act of~~Common ~~1934~~Stock, ~~during~~par ~~the~~value ~~preceding~~$.01 ~~12 months~~per ~~(or~~share ~~for~~issued ~~such shorter period that the registrant was required to file such reports),~~ and ~~(2) has been subject to such filing requirements for the past 90 days~~outstanding.

~~YES~~MACKENZIE ~~[X] NO~~INVESTMENT ~~[ ]~~MANAGEMENT INC.

AsIndex ofto ~~October~~Form ~~29, 2001, there were 18,741,800 shares of the Registrant’s~~10-Q ~~Common Stock, par value $.01 per share issued and outstanding.~~

TABLE OF CONTENTS


		PAGE

	PART I




	FINANCIAL INFORMATION





Item 1.	CONDENSED FINANCIAL STATEMENTS




	Condensed Consolidated Balance Sheets	3




	Condensed Consolidated Statements of Operations	4




	Condensed Consolidated Statement of Changes in




	Stockholders’ Equity	5




	Condensed Consolidated Statements of Cash Flows	6




	Notes to Condensed Consolidated Financial Statements	7-8





Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9-15





Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15-16






	PART II




	OTHER INFORMATION





Item 1.	LEGAL PROCEEDINGS	17





Item 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS	17





Item 3.	DEFAULTS UPON SENIOR SECURITIES	17





Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS	17





Item 5.	OTHER INFORMATION	17





Item 6.	EXHIBITS AND REPORTS ON FORM 8-K	17

Item 1. Condensed Financial Statements
	Condensed Consolidated Balance Sheets
	Condensed Consolidated Statements of Operations
	Condensed Consolidated Statement of Changes in Stockholders’ Equity
	Condensed Consolidated Statements of Cash Flows
	Notes to Condensed Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Securities Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Change in Control Agreement - Stephen Barrett

~~Table~~PART ofI. ~~Contents~~— FINANCIAL INFORMATION

~~MACKENZIE~~ITEM ~~INVESTMENT~~1. ~~MANAGEMENT~~CONDENSED ~~INC.~~FINANCIAL STATEMENTS

~~Index~~MACKENZIE toINVESTMENT ~~Form 10-Q~~ MANAGEMENT INC.

~~Part~~CONDENSED I CONSOLIDATED BALANCE SHEETS

FINANCIAL INFORMATION


			DECEMBER 31,
			2001			MARCH 31,
			(UNAUDITED)			2001

ASSETS:




Cash and cash equivalents			$	46,703,012		$	44,797,238




Marketable securities				2,177,626			2,460,918




Receivables:




	Funds for fees and expense advances			1,488,878			2,422,457




	Other			807,652			1,261,619




Property and equipment, net of accumulated depreciation of $758,104 as of December 31, 2001 and $3,708,793 as of March 31, 2001				2,667,452			748,867




Management contracts, net of accumulated amortization of $10,119,578 as of December 31, 2001 and $9,188,207 as of March 31, 2001				3,345,417			4,276,788




Deferred selling commissions				5,841,022			6,990,800




Other assets				733,038			1,102,545

		TOTAL ASSETS	$	63,764,097		$	64,061,232

LIABILITIES AND STOCKHOLDERS’ EQUITY:




Liabilities:




	Payable to Funds for purchases of Funds’ shares and expense reimbursements		$	198,137		$	148,373




	Sub-advisory fees payable			27,119			39,258




	Dividends payable			186,556			—




	Accounts payable			327,286			658,260




	Restructuring costs			343,284			1,769,355




	Accrued expenses and other liabilities			3,471,204			2,022,529




	Deferred tax			934,062			697,260

		Total liabilities		5,487,648			5,335,035

Commitments and contingencies




Stockholders’ equity:




	Capital stock, $0.01 par value, 100,000,000 shares authorized; 18,655,550 shares as of December 31, 2001 and 18,741,800 shares as of March 31, 2001 issued and outstanding			186,556			187,418




	Additional paid-in capital			38,609,953			39,024,802




	Retained earnings			19,914,458			20,424,882




	Unearned stock compensation			—			(493,757	)




	Accumulated other comprehensive loss, net of tax			(434,518	)		(417,148	)

		Total stockholders’ equity		58,276,449			58,726,197

		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	63,764,097		$	64,061,232

		Page
Item 1.	CONDENSED FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statement of Changes in Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5-6
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	7-13
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	13-15

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Part II~~3

~~OTHER~~MACKENZIE ~~INFORMATION~~INVESTMENT MANAGEMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

~~Table of Contents~~(UNAUDITED)

PART 1. — FINANCIAL INFORMATION


		THREE MONTHS ENDED					NINE MONTHS ENDED
		DECEMBER 31,					DECEMBER 31,

		2001			2000		2001			2000

Revenues:




	Management fees	$	2,719,700		$	5,312,970	$	9,602,986		$	19,728,174




	Sub-advisory fees from Canadian Funds		1,735,650			2,269,957		5,467,546			7,886,255




	12b-1 Service and Distribution fees		877,336			1,766,705		3,184,858			6,211,381




	Transfer agent fees		—			792,537		627,384			2,324,321




	Administrative services fees		305,550			568,695		1,064,046			2,037,569




	Fund accounting fees		173,895			202,529		549,795			613,221




	Underwriting fees		9,664			34,326		43,451			224,154




	Redemption fees		228,155			368,284		776,304			685,563




	Interest, dividends and other		211,366			773,744		1,051,260			2,223,362

			6,261,316			12,089,747		22,367,630			41,934,000

EXPENSES:




	Sales literature, advertising and promotion		347,601			964,185		1,608,977			4,243,608




	12b-1 Service fees		689,466			1,221,148		2,365,888			4,611,694




	Employee compensation and benefits		2,937,661			3,988,454		9,833,825			12,127,028




	Sub-advisory fees		61,756			118,709		225,200			2,122,689




	Amortization of management contracts		310,457			310,457		931,371			922,821




	Amortization of deferred selling commissions		491,836			680,824		1,551,970			2,025,234




	Depreciation		162,165			194,826		463,795			586,233




	General and administrative		635,629			1,783,965		2,478,508			5,351,682




	Occupancy and equipment rental		319,201			448,256		1,087,525			1,185,689




	Reimbursement to Funds for expenses		959,024			607,222		1,932,858			1,710,280

			6,914,796			10,318,046		22,479,917			34,886,958

(Loss) income before income taxes			(653,480	)		1,771,701		(112,287	)		7,047,042




(Benefit) provision for income taxes			(211,599	)		754,468		24,163			2,933,424

NET (LOSS) INCOME		$	(441,881	)	$	1,017,233	$	(136,450	)	$	4,113,618

BASIC (LOSS) EARNINGS PER SHARE		$	(0.02	)	$	0.05	$	(0.01	)	$	0.22

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING USED IN BASIC CALCULATION			18,666,797			18,626,728		18,666,797			18,617,530

DILUTED (LOSS) EARNINGS PER SHARE		$	(0.02	)	$	0.05	$	(0.01	)	$	0.22

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING USED IN DILUTED CALCULATION*			18,666,797			18,711,010		18,666,797			18,732,084

~~Item 1.~~• ~~Condensed~~Weighted ~~Financial~~average ~~Statements~~common stock equivalents of 2,534 for the nine-month period ended December 31, 2001 have been excluded from the diluted calculation, due to their anti-dilutive effect.

~~MACKENZIE~~The ~~INVESTMENT~~accompanying ~~MANAGEMENT~~notes ~~INC~~are an integral part of these condensed consolidated financial statements.

~~Condensed Consolidated Balance Sheets~~4

			September 30,
			2001			March 31,
			(Unaudited)			2001
ASSETS:
Cash and cash equivalents			$	45,755,753		$	44,797,238
Marketable securities				2,114,331			2,460,918
Receivables:
	Funds for fees and expense advances			1,574,450			2,422,457
	Other			698,014			1,261,619
Property and equipment, net of accumulated depreciation of $595,939 as of September 30, 2001 and $3,708,793 as of March 31, 2001				1,956,454			748,867
Management contracts, net of accumulated amortization of $9,809,121 as of September 30, 2001 and $9,188,207 as of March 31, 2001				3,655,874			4,276,788
Deferred selling commissions				6,244,942			6,990,800
Other assets				1,582,770			1,102,545
		Total assets	$	63,582,588		$	64,061,232
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
	Payable to Funds for purchases of Funds’ shares and expense reimbursements		$	183,857		$	148,373
	Sub-advisory fees payable			25,812			39,258
	Accounts payable			246,593			658,260
	Restructuring costs			468,609			1,769,355
	Accrued expenses and other liabilities			3,036,053			2,022,529
	Deferred tax			849,671			697,260
		Total liabilities		4,810,595			5,335,035
Commitments and contingencies
Stockholders’ equity:
	Capital stock, $0.01 par value, 100,000,000 shares authorized; 18,741,800 shares issued and outstanding as of September 30, 2001 and March 31, 2001			187,418			187,418
	Additional paid-in capital			39,089,503			39,024,802
	Retained earnings			20,542,895			20,424,882
	Unearned stock compensation			(413,689	)		(493,757	)
	Accumulated other comprehensive loss, net of tax			(634,134	)		(417,148	)
		Total stockholders’ equity		58,771,993			58,726,197
		Total liabilities and stockholders’ equity	$	63,582,588		$	64,061,232

MACKENZIE INVESTMENT MANAGEMENT INC.

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~STATEMENT ~~are~~OF anCHANGES ~~integral~~IN ~~part~~STOCKHOLDERS’ ~~of these condensed consolidated financial statements.~~ EQUITY

1 FOR THE NINE MONTHS ENDED DECEMBER 31, 2001

~~Table of Contents~~(UNAUDITED)

MACKENZIE INVESTMENT MANAGEMENT INC.


																ACCUMULATED
	CAPITAL STOCK						ADDITIONAL						UNEARNED			OTHER			TOTAL
							PAID-IN			RETAINED			STOCK			COMPREHENSIVE			STOCKHOLDERS'
	SHARES			AMOUNT			CAPITAL			EARNINGS			COMPENSATION			LOSS, NET OF TAX			EQUITY

Balance, March 31, 2001		18,741,800		$	187,418		$	39,024,802		$	20,424,882		$	(493,757	)	$	(417,148	)	$	58,726,197




Tax expense related to partial vesting of stock grant		—			—			(10,926	)		—			—			—			(10,926	)




Amortization of unearned stock compensation		—			—			—			—			13,345			—			13,345




Capital contribution		—			—			75,627			—			—			—			75,627




Other comprehensive loss, net of tax		—			—			—			—			—			(17,370	)		(17,370	)




Retirement of common stock under stock compensation agreement		(86,250	)		(862	)		(479,550	)		—			480,412			—			—




Cash dividends on common stock, $0.01 per share		—			—			—			(373,974	)		—			—			(373,974	)




Net loss for the period		—			—			—			(136,450	)		—			—			(136,450	)

Balance, December 31, 2001		18,655,550		$	186,556		$	38,609,953		$	19,914,458		$	—		$	(434,518	)	$	58,276,449

~~Condensed~~The ~~Consolidated~~accompanying ~~Statements~~notes are an integral part of ~~Operations~~these condensed consolidated financial statements.

~~Unaudited~~5

		Three months ended					Six months ended
		September 30,					September 30,
		2001			2000		2001		2000
Revenues:
	Management fees	$	3,139,254		$	6,859,317	$	6,883,285	$	14,415,204
	Sub-advisory fees from Canadian Funds		1,781,059			2,586,868		3,731,896		5,616,298
	12b-1 Service and Distribution fees		1,057,664			2,146,902		2,307,521		4,444,676
	Transfer agent fees		—			746,915		627,384		1,531,784
	Administrative services fees		346,994			704,807		758,496		1,468,873
	Fund accounting fees		185,219			201,543		375,900		410,692
	Underwriting fees		12,624			77,246		33,787		189,829
	Redemption fees		222,412			172,028		548,149		317,279
	Interest, dividends and other		325,974			776,049		839,896		1,449,618
			7,071,200			14,271,675		16,106,314		29,844,253
Expenses:
	Sales literature, advertising and promotion		457,794			1,552,064		1,261,376		3,279,423
	12b-1 Service fees		757,582			1,601,185		1,676,422		3,390,546
	Employee compensation and benefits		3,273,954			4,033,627		6,896,164		8,138,574
	Sub-advisory fees		72,475			139,732		163,443		2,003,980
	Amortization of management contracts		310,457			309,035		620,914		612,364
	Amortization of deferred selling commissions		519,573			643,991		1,060,135		1,344,411
	Depreciation		140,044			196,194		301,630		391,407
	General and administrative		843,129			1,701,974		1,842,880		3,567,716
	Occupancy and equipment rental		390,187			407,796		768,324		737,433
	Reimbursement to Funds for expenses		532,146			371,101		973,833		1,103,058
			7,297,341			10,956,699		15,565,121		24,568,912
(Loss) income before income taxes			(226,141	)		3,314,976		541,193		5,275,341
	(Benefit) provision for income taxes		(60,141	)		1,367,772		235,762		2,178,956
Net (loss) income		$	(166,000	)	$	1,947,204	$	305,431	$	3,096,385
Basic (loss) earnings per share		$	(0.01	)	$	0.10	$	0.02	$	0.17
Weighted average number of common shares outstanding used in basic calculation			18,667,529			18,606,640		18,667,529		18,605,719
Diluted (loss) earnings per share		$	(0.01	)	$	0.10	$	0.02	$	0.17
Weighted average number of common and common equivalent shares outstanding used in diluted calculation*			18,667,529			18,719,917		18,677,962		18,734,930

MACKENZIE INVESTMENT MANAGEMENT INC.

~~Weighted~~CONDENSED ~~average~~CONSOLIDATED ~~common~~STATEMENTS ~~stock~~OF ~~equivalents~~CASH ~~of 495 for the three month period ended September 30, 2001 have been excluded from the diluted calculation, due to their anti-dilutive effect in a net loss period.~~ FLOWS

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~ (UNAUDITED)


				NINE MONTHS ENDED
				DECEMBER 31,

				2001			2000

Cash flows from operating activities:




	Net (loss) income			$	(136,450	)	$	4,113,618




	Adjustments to reconcile net (loss) income to net cash provided by operating activities:




		Depreciation			463,795			586,233




		Amortization of management contracts			931,371			922,821




		Amortization of deferred selling commissions			1,551,970			2,025,234




		Amortization of unearned compensation			13,345			106,758




		Deferred tax expense			236,356			208,307




		Payment of deferred selling commissions			(402,192	)		(3,314,849	)




		Loss on disposal of property and equipment			66,111			—




		Loss on sale of marketable securities			110,640			243,745




		Change in assets and liabilities:




			Receivables		1,013,326			2,298,553




			Other assets		(66,150	)		23,384




			Payable to Funds for purchases of Funds’ shares and expense reimbursements		49,764			263,349




			Sub-advisory fees payable		(12,139	)		(3,208,882	)




			Restructuring costs		(1,426,071	)		—




			Accounts payable, accrued expenses and other liabilities		1,117,701			2,851,500




			Income taxes payable		—			(129,819	)

Net cash provided by operating activities					3,511,377			6,989,952

Cash flows from investing activities:




	Purchase of management contracts				—			(79,874	)




	Purchases of property and equipment				(2,012,834	)		(274,088	)




	Purchases of marketable securities				(30,269	)		(1,546,549	)




	Proceeds from the sale of marketable securities				175,071			1,602,442

Net cash used in investing activities					(1,868,032	)		(298,069	)

Cash flows from financing activities:




	Capital contribution				449,847			—




	Proceeds from the exercise of stock options				—			59,000




	Dividends paid				(187,418	)		(187,118	)

Net cash provided by (used in) financing activities					262,429			(128,118	)

Net increase in cash and cash equivalents					1,905,774			6,563,765




Cash and cash equivalents, beginning of period					44,797,238			41,095,301

Cash and cash equivalents, end of period				$	46,703,012		$	47,659,066

~~Table~~The accompanying notes are an integral part of ~~Contents~~these condensed consolidated financial statements.

~~MACKENZIE INVESTMENT MANAGEMENT INC.~~6

~~Condensed~~MACKENZIE ~~Consolidated~~INVESTMENT ~~Statement~~MANAGEMENT ~~of Changes in Stockholders’ Equity~~INC.

~~For~~Notes ~~the~~to ~~six~~Condensed ~~months~~Consolidated ~~ended~~Financial ~~September~~Statements December 3031, 2001 (Unaudited)

~~Unaudited~~1. BASIS OF PRESENTATION

														Accumulated
	Capital Stock				Additional						Unearned			Other			Total
					Paid-in			Retained			Stock			Comprehensive			Stockholders'
	Shares		Amount		Capital			Earnings			Compensation			Loss, net of tax			Equity
Balance, March 31, 2001		18,741,800	$	187,418	$	39,024,802		$	20,424,882		$	(493,757	)	$	(417,148	)	$	58,726,197
Tax expense related to partial vesting of stock grant		—		—		(10,926	)		—			—			—			(10,926	)
Amortization of unearned stock compensation		—		—		—			—			80,068			—			80,068
Capital contribution		—		—		75,627			—			—			—			75,627
Other comprehensive loss, net of tax		—		—		—			—			—			(216,986	)		(216,986	)
Cash dividends on common stock, $0.01 per share		—		—		—			(187,418	)		—			—			(187,418	)
Net income for the period		—		—		—			305,431			—			—			305,431
Balance, September 30, 2001		18,741,800	$	187,418	$	39,089,503		$	20,542,895		$	(413,689	)	$	(634,134	)	$	58,771,993

The unaudited interim condensed consolidated financial statements of Mackenzie Investment Management Inc. (“MIMI”) and its consolidated subsidiaries (the “Company”) included herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, these condensed consolidated financial statements include all appropriate adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations for the periods shown. The results of operations for the nine-month period ended December 31, 2001 are not necessarily indicative of the results of operations to be expected for the year ended March 31, 2002. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2001.

~~The~~2. ~~accompanying~~COMPREHENSIVE ~~notes are an integral part of these condensed consolidated financial statements.~~(LOSS) INCOME

Comprehensive (loss) income was $(153,820) and $(242,265) for the nine and three-month periods ended December 31, 2001, respectively, as compared to $3,879,295 and $908,390 for the nine and three-month periods ended December 31, 2000, respectively. Other comprehensive (loss) income for the nine and three-month periods ended December 31, 2001 and 2000 relates to unrealized (depreciation)/appreciation on marketable securities.

~~Table~~3. of(LOSS) EARNINGS ~~Contents~~PER SHARE

~~MACKENZIE~~The ~~INVESTMENT~~following ~~MANAGEMENT~~table ~~INC.~~reconciles the weighted average shares outstanding used to calculate basic and diluted (loss) earnings per share for the three and nine-month periods ended December 31, 2001 and 2000:

Condensed Consolidated Statements of Cash Flows


	THREE MONTHS ENDED				NINE MONTHS ENDED
	DECEMBER 31,				DECEMBER 31,

	2001		2000		2001		2000

Weighted average number of common shares outstanding used in basic calculation		18,666,797		18,626,728		18,666,797		18,617,530




Effect of dilutive stock options		—		84,282		—		114,554

Weighted average number of common and common equivalent shares outstanding used in the diluted calculation		18,666,797		18,711,010		18,666,797		18,732,084

Options to purchase common stock excluded from the computation of diluted earnings per share due to their antidilutive effect		1,399,000		1,281,718		1,399,000		1,251,446

~~Unaudited~~7

				Six months ended
				September 30,
				2001			2000
Cash flows from operating activities:
	Net income			$	305,431		$	3,096,385
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation			301,630			391,407
		Loss on disposal of property and equipment			66,111			—
		Amortization of management contracts			620,914			612,364
		Amortization of deferred selling commissions			1,060,135			1,344,411
		Amortization of unearned compensation			80,068			66,724
		Deferred tax expense			272,400			321,110
		Payment of deferred selling commissions			(314,278	)		(2,758,231	)
		Other			—			148,966
		Change in assets and liabilities:
			Receivables		1,114,764			2,347,165
			Other assets		(480,225	)		(206,528	)
			Payable to Funds for purchases of Funds’ shares and expense reimbursements		35,484			(326,071	)
			Sub-advisory fees payable		(13,446	)		(3,201,155	)
			Restructuring costs		(1,300,746	)		—
			Accounts payable, accrued expenses and other liabilities		601,857			2,220,701
			Income taxes payable		—			387,846
Net cash provided by operating activities					2,350,099			4,445,094
Cash flows from investing activities:
	Purchase of management contracts				—			(79,874	)
	Purchases of property and equipment				(1,575,327	)		(205,205	)
	Purchases of marketable securities				(1,314	)		(941,748	)
	Proceeds from the sale of marketable securities				—			567,145
Net cash used in investing activities					(1,576,641	)		(659,682	)
Cash flows from financing activities:
	Capital contribution				372,475			—
	Proceeds from the exercise of stock options				—			21,500
	Dividends paid				(187,418	)		(187,118	)
Net cash provided by (used in) financing activities					185,057			(165,618	)
Net increase in cash and cash equivalents					958,515			3,619,794
Cash and cash equivalents, beginning of period					44,797,238			41,095,301
Cash and cash equivalents, end of period				$	45,755,753		$	44,715,095

4. RESTRUCTURING

~~The~~During ~~accompanying~~the ~~notes~~fourth ~~are~~quarter anof ~~integral~~fiscal ~~part~~year 2001, the Company recorded a $3,032,000 restructuring charge to cover costs associated with the plan of outsourcing the transfer agency operations and downsizing the sales, marketing and other various support functions. During the same period, the Company made payments totaling approximately $1,263,000 for these ~~condensed~~costs. For ~~consolidated~~the ~~financial~~nine-month ~~statements~~period ended December 31, 2001, the Company made payments totaling approximately $1,426,000. The Company anticipates that the remaining restructuring costs of approximately $343,000, which primarily relates to lease obligations, will be paid from funds provided from operations in the ensuing nine-month period.

45. CASH DIVIDENDS ON COMMON STOCK

~~Table~~In June and December 2001, the Company declared a $0.01 per common share cash dividend to shareholders of ~~Contents~~record on June 27, 2001 and December 28, 2001, respectively. The December dividend was paid in January 2002.

~~MACKENZIE~~6. ~~INVESTMENT~~STOCK ~~MANAGEMENT~~GRANT ~~INC.~~AND DEFERRED COMPENSATION

~~Notes~~In November 2001, a Portfolio Manager and Vice-President resigned from the Company (the “Former Employee”). Pursuant to ~~Condensed~~the ~~Consolidated~~terms ~~Financial~~of ~~Statements~~a stock grant agreement entered into in connection with his employment, the non-vested portion of his stock grant, awarded in May 2000, was forfeited and cancelled. In addition, the Former Employee participated in a deferred compensation arrangement whereby the non-vested portion of the deferred compensation was forfeited upon resignation.

~~September~~The stock grant and deferred compensation that has been forfeited as a result of the Former Employee’s resignation was recorded as a reduction of employee compensation and benefits in the condensed consolidated statement of operations for the three months ended December 3031, 2001 to the extent such amounts were previously recorded as an expense.

~~(Unaudited)~~7. NEW ACCOUNTING PRONOUNCEMENTS

1In June 2001, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standard (“Statement”) No. ~~Basis~~ 142, “Goodwill and Other Intangible Assets”. The Statement, which is effective for fiscal years beginning after December 15, 2001, revises the accounting, amortization, and disclosure of ~~Presentation~~goodwill and other intangible assets. The Company is in the process of assessing the impact of Statement No. 142 on its financial position and results of operations.

~~The~~In ~~unaudited~~August ~~interim~~2001, ~~condensed~~the ~~consolidated~~FASB ~~financial~~issued ~~statements~~Statement ~~of Mackenzie Investment Management Inc~~No. 144, (“~~MIMI”)~~Accounting ~~and~~for ~~its consolidated subsidiaries (~~the Impairment ~~“Company”)~~or ~~included~~Disposal ~~herein have been prepared in accordance with accounting principles generally accepted in the United States~~ of ~~America for interim financial information and with the instructions to Form 10~~Long-QLived ~~and~~Assets”. ~~Rule~~Statement ~~10-01 of Regulation S-X~~No. ~~Accordingly~~ 144, ~~they~~which dois effective ~~not~~for ~~include all footnote disclosures normally included in consolidated~~ financial statements ~~prepared~~for inyears ~~accordance~~beginning ~~with~~after ~~accounting principles generally accepted in the United States of America. In the opinion of management~~December 15, 2001, ~~these~~addresses ~~condensed consolidated~~ financial ~~statements~~accounting ~~include~~and ~~all~~reporting ~~appropriate adjustments, consisting of normal recurring adjustments, necessary~~ for ~~a fair presentation of~~ the ~~financial~~impairment ~~position~~or disposal ~~and results~~ of ~~operations~~certain ~~for~~long-lived ~~the periods shown~~assets. ~~The~~In ~~results~~conjunction ofwith ~~operations for~~ the ~~six-month~~adoption ~~period~~of Statement ~~ended~~No. 142 ~~September 30~~above, ~~2001~~the ~~are~~Company ~~not~~is ~~necessarily~~in ~~indicative of~~ the ~~results~~process of ~~operations~~assessing ~~to be expected for~~ the impact ~~year~~of ~~ended~~Statement ~~March 31, 2002~~No. 144 ~~These~~on ~~interim~~its ~~condensed consolidated~~ financial ~~statements~~position ~~should~~and beresults ~~read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2001~~of operations.

~~2. Comprehensive Income~~8

~~Comprehensive~~ITEM ~~income was $88,445 and $~~2~~,970,905 for the six-month periods ended September 30, 2001 and 2000, respectively~~. ~~Other~~MANAGEMENT’S ~~comprehensive~~DISCUSSION ~~income~~AND ~~(loss)~~ANALYSIS ~~for~~OF ~~the~~FINANCIAL ~~six-month~~CONDITION ~~periods~~AND ~~ended~~RESULTS ~~September~~OF ~~30, 2001 and 2000 relates to unrealized appreciation and depreciation, respectively, on marketable securities.~~OPERATIONS

~~3. Earnings~~FORWARD-LOOKING ~~(loss) Per Share~~STATEMENTS

~~The~~Certain ~~following~~statements ~~table~~in ~~reconciles~~the Quarterly Report on Form 10-Q under the ~~weighted~~caption “Management’s ~~average~~Discussion ~~shares~~and ~~outstanding~~Analysis ~~used~~of Financial Condition and Results of Operations”, and elsewhere in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to ~~calculate~~be ~~basic~~materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and ~~diluted~~business ~~earnings~~conditions; (the loss) ~~per~~of, ~~share~~or ~~for~~the failure to replace, any significant sub-advisory relationships; changes in the ~~three~~relative investment performance; and ~~six~~investor sentiment for international investing. The Company wishes to caution readers not to place undue reliance on such forward-~~month~~looking ~~periods~~statements ~~ended~~and ~~September~~remind 30readers that these forward-looking statements speak only as of the date of this Quarterly Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, ~~2001~~conditions ~~and~~or ~~2000:~~circumstances on which any such statement is based.

	Three months ended				Six months ended
	September 30,				September 30,
	2001		2000		2001		2000
Weighted average number of common shares outstanding used in basic calculation		18,667,529		18,606,640		18,667,529		18,605,719
Effect of dilutive stock options		—		113,277		10,433		129,211
Weighted average number of common and common equivalent shares outstanding used in the diluted calculation		18,667,529		18,719,917		18,677,962		18,734,930
Options to purchase common stock excluded from the computation of diluted earnings per share due to their antidilutive effect		1,446,000		1,360,223		1,435,567		1,344,289

GENERAL

4MIMI is a public company listed on the Toronto Stock Exchange. ~~Restructuring~~ Its majority shareholder, Mackenzie Financial Corporation (“MFC”), a Toronto-based investment counsel and mutual fund management company, owns approximately 86% of the outstanding common shares of MIMI at December 31, 2001. MFC is a wholly owned subsidiary of Investors Group Inc. MIMI is an investment adviser and has three wholly owned subsidiaries, as follows:

~~During~~• ~~the~~Ivy ~~fourth quarter of fiscal year 2001~~Management, ~~the~~Inc. ~~Company recorded a $3~~(“IMI”),~~032,000~~ ~~restructuring~~an ~~charge~~investment toadviser; ~~cover~~• ~~costs~~Ivy ~~associated~~Mackenzie ~~with~~Distributors, ~~the~~Inc. ~~plan~~(“IMDI”), ofa ~~outsourcing~~broker/dealer; ~~the transfer agency operations~~ and ~~downsizing~~• ~~the~~Ivy ~~sales,~~Mackenzie ~~marketing~~Service ~~and other various support functions~~Corp. ~~During the same period~~(“IMSC”), ~~the~~formerly ~~Company~~a ~~made~~transfer ~~payments totaling $1,263,000 for these costs~~agent. ~~For~~(SEE ~~the six~~“OUT-~~month~~SOURCING ~~period~~THE ~~ended~~TRANSFER AGENCY”).

5The Company’s principal business activities are carried on solely in the United States and include:

~~Table~~• Managing public mutual funds offered in the U.S. by Ivy Fund (the “U.S. Funds”) which is a U.S. open-end series investment company registered under the Investment Company Act of ~~Contents~~1940, as amended; • Providing investment advisory services to the U.S. Funds and sub-advisory services to twenty two Universal Funds at December 31, 2001 sold only in Canada and managed by MFC (the “Canadian Funds”); • Providing sub-advisory services to five Premier Funds (the “Premier Funds”) at December 31, 2001 sold in the U.K., Ireland and Luxembourg and managed by Premier Asset Management PLC (“Premier”); MFC has a less than 25% beneficial interest in Premier as of December 31, 2001; • Underwriting, selling and otherwise distributing redeemable shares of the U.S. Funds in the U.S. through various distribution channels; and • Providing administrative and fund accounting services to the U.S. Funds.

September 30, 2001, the Company made payments totaling $1,300,000. The Company completed the outsourcing of the transfer agency operation as of June 30, 2001. The Company anticipates that the remaining restructuring costs of $469,000, which principally relates to lease obligations, will be paid from funds provided from operations in the ensuing twelve-month period.9

5The Company derives its revenues principally from on-going management fees and sub-advisory fees, calculated as a percentage of average daily net assets under management, and from fees related to services performed for the U. ~~New~~S. ~~Accounting~~Funds ~~Pronouncements~~under contracts for administrative and fund accounting services. The level of net assets under management is affected by gross sales, redemptions and changes in market values of the mutual fund’s portfolio of investments. As the level of assets under management fluctuates so does management, sub-advisory, distribution, and administrative services fee revenue.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets”. The Statement, which is effective for fiscal years beginning after December 15, 2001, revises the accounting, amortization, and disclosure of goodwill and other intangible assets. The Company is in the process of assessing the impact of the Statement on its financial position, results of operations and cash flows. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of LongOUT-~~Lived~~SOURCING ~~Assets”.~~THE ~~Statement~~TRANSFER No. 144, which is effective for financial statements for years beginning after December 15, 2001, addresses financial accounting and reporting for the impairment or disposal of certain long-lived assets. In conjunction with the adoption of Statement No. 142 above, the Company is in the process of assessing the impact of Statement No. 144 on its financial position, results of operations and cash flows.AGENCY

6Prior to June 30, 2001, IMSC provided transfer agency services to the U.S. Funds. As part of the Company’s restructuring plans initiated in the fourth quarter of fiscal year 2001, the Company successfully completed the transition of the transfer agency function to the current third party service provider, PFPC Inc., as of June 30, 2001. Effective August 31, 2001, the Company completed the process of de-registering IMSC as a transfer agent with the Securities and Exchange Commission.

~~Table~~VOLUNTARY ofREIMBURSEMENT ~~Contents~~OF OPERATING EXPENSES

~~Item 2.~~In ~~Management’s~~connection ~~Discussion~~with ~~and~~a ~~Analysis~~review of ~~Financial~~the ~~Condition~~overall management relationship between Ivy International Fund (“IIF”) and ~~Results~~the Company (including its affiliates) in December 2001, the Company determined to make and recorded a voluntary reimbursement to IIF’s operating expenses in the amount of ~~Operations~~$400,000.

~~FORWARD-LOOKING~~RESULTS ~~STATEMENTS~~OF OPERATIONS

~~Certain~~NINE ~~statements~~MONTHS inENDED ~~the~~DECEMBER ~~Quarterly Report on Form 10-Q under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”~~31, ~~and~~2001 ~~elsewhere~~COMPARED inTO ~~this~~NINE ~~report~~MONTHS ~~constitute~~ENDED ~~“forward-looking statements”~~DECEMBER ~~within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks~~31, ~~uncertainties~~ ~~and other factors, which may cause the actual results,~~2000 ~~performance or achievements of the Company to be materially different from any~~ future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; the loss of, or the failure to replace, any significant sub-advisory relationships; changes in the relative investment performance; and investor sentiment for international investing. The Company wishes to caution readers not to place undue reliance on such forward-looking statements and remind readers that these forward-looking statements speak only as of the date of this Quarterly Report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

~~GENERAL~~ASSETS UNDER MANAGEMENT

~~MIMI~~Average isnet aassets ~~public~~under ~~company~~management ~~listed~~for on the ~~TSE~~U. ~~Its~~S. ~~majority~~Funds ~~shareholder~~decreased $1,390 ~~Mackenzie~~million, ~~Financial~~or ~~Corporation (“MFC”)~~50%, ato ~~Toronto-based investment counsel and mutual fund management company~~$1,376 million ~~owns~~for ~~approximately 85% of~~ the ~~outstanding common~~nine-month ~~shares~~period ofended ~~MIMI at September~~December 3031, 2001. ~~During~~from $2,766 million for the ~~three~~nine-month period ended ~~June~~December 3031, ~~2001,~~2000. ~~Investors~~The Canadian ~~Group~~Funds’ ~~Inc.~~average ~~completed~~net ~~its~~assets ~~take~~decreased ~~over~~to ~~bid~~$1,963 million for the ~~outstanding~~nine-month ~~shares~~period ofended ~~MFC~~December 31, ~~and~~2001 ~~accordingly~~from $3,198 million asfor ofthe ~~September~~nine-month period ended December 3031, ~~2001~~2000, ~~MFC~~representing is a ~~wholly~~ ~~owned~~decrease ~~subsidiary~~ of ~~Investors Group Inc. MIMI is an investment adviser and has three wholly owned subsidiaries~~$1,235 million ~~as follows:~~or 39%.

•The ~~Ivy~~comparison ~~Management,~~of ~~Inc.~~net ~~(“IMI”),~~assets anunder ~~investment~~management ~~adviser;~~for •the ~~Ivy Mackenzie Distributors, Inc~~U.S. ~~(“IMDI”)~~Funds, aCanadian ~~broker/dealer;~~ Funds and •Premier ~~Ivy~~Funds ~~Mackenzie~~is ~~Service~~as ~~Corp. (“IMSC”), formerly a transfer agent. (see “Out-sourcing the Transfer Agency”).~~follows:

The Company’s principal business activities are carried on solely in the United States and include:


			(IN MILLIONS, EXCEPT PERCENTAGES)

			NINE MONTHS ENDED
			DECEMBER 31,

						DOLLAR			PERCENT
			2001			2000			CHANGE			CHANGE

U.S. FUNDS:




Beginning net assets, March 31st			$	1,587		$	3,512			($1,925	)		(54.8	)




	Period activity:




		Sales		244			583			(339	)		(58.1	)




		Redemptions		(553	)		(1,382	)		(829	)		(60.0	)

		Net Sales (Redemptions)		(309	)		(799	)		490			61.3




		Market Appreciation (Depreciation), less distributions		(96	)		(674	)		578			85.8

Ending net assets, December 31st			$	1,182		$	2,039			($857	)		(42.0	)




CANADIAN FUNDS’ NET ASSETS AS AT DECEMBER 31ST:			$	1,893		$	2,619			($726	)		(27.7	)




PREMIER FUNDS’ NET ASSETS AS AT DECEMBER 31ST:			$	45		$	32		$	13			40.6

• Managing public mutual funds offered in the U.S. by Ivy Fund (the “U.S. Funds”) which is a U.S. open-end series investment company registered under the Investment Company Act of 1940, as amended; • Providing investment advisory services to the U.S. Funds and sub-advisory services to twenty two Universal Funds at September 30, 2001 sold only in Canada and managed by MFC (the “Canadian Funds”); • Providing sub-advisory services to five Premier Funds (the “Premier Funds”) at September 30, 2001 sold in the U.K., Ireland and Luxembourg and managed by Premier Asset Management PLC (“Premier”); MFC has a less than 25% beneficial interest in Premier as of September 30, 2001; • Underwriting, selling and otherwise distributing redeemable shares of the U.S. Funds in the U.S. through various distribution channels; and • Providing administrative and fund accounting services to the U.S. Funds.10

7IIF continues to represent a significant portion of the assets under management and the underlying net redemption activity. The following chart reflects this concentration:


		(IN MILLIONS, EXCEPT PERCENTAGES)

		FOR THE NINE MONTHS
		ENDED DECEMBER 31,						CHANGES

		2001			2000			$			%

U.S. Funds’ net assets at December 31st		$	1,182		$	2,039		$	(857	)		(42.0	)




Ivy International Fund’s net assets at December 31st			525			976			(451	)		(46.2	)




	as a percentage of U.S. Funds’ net assets		44.4	%		47.9	%		0			0




U.S. Funds’ sales		$	244		$	583		$	(339	)		(58.1	)




Ivy International Fund’s sales			132			186			(54	)		(29.0	)




	as a percent of U.S. Funds’ sales		54.1	%		31.9	%




U.S. Funds’ redemptions		$	553		$	1,382		$	(829	)		(60.0	)




Ivy International Fund’s redemptions			304			969			(665	)		(68.6	)




	as a percent of U.S. Funds’ redemptions		55.0	%		70.1	%




Net redemptions excluding Ivy International Fund		$	137		$	16		$	121			756.3

~~The Company derives its revenues principally from on-going management fees and~~REVENUES ~~sub-advisory fees, calculated as a percentage of average daily net assets under~~ management, and from fees related to services performed for the U.S. Funds under contracts for administrative and fund accounting services. The level of net assets under management is affected by gross sales, redemptions and changes in market values of the mutual fund’s portfolio of investments. As the level of assets under management fluctuates so does management, sub-advisory, distribution, and administrative services fee revenue.

~~Out~~As described in further detail below, total revenues decreased by 47% for the nine-~~sourcing~~month period ended December 31, 2001 as compared to the ~~Transfer~~nine-month ~~Agency~~period ended December 31, 2000.

~~During~~Management fees decreased 51% for the ~~three~~nine-month period ended ~~June~~December 3031, 2001~~, IMSC continued to provide~~ ~~transfer~~as ~~agency~~compared ~~services~~ to the ~~U.S.~~nine-month ~~Funds.~~period Asended ~~part~~December 31, of2000 ~~the~~as ~~Company’s restructuring~~a ~~plans~~result ~~initiated in the fourth quarter~~ of ~~fiscal year 2001,~~ the ~~Company~~decrease ~~successfully~~in ~~completed~~ the ~~transition of the transfer agency function to the current third party service provider, PFPC Inc~~U.~~, as of June 30, 2001~~S. ~~Effective~~ ~~August 31,~~Funds’ ~~2001,~~average ~~the~~net ~~Company~~assets ~~completed~~under ~~the process of de-registering IMSC as a transfer agent with the Securities and Exchange Commission~~management.

~~RESULTS~~Sub-advisory OFfees ~~OPERATIONS~~from the Canadian Funds decreased 31% for the nine-month period ended December 31, 2001 as compared to the nine-month period ended December 31, 2000 as a result of the decrease in the average net assets of the Canadian Funds.

~~Six~~12b-1 ~~Months~~Service ~~Ended~~and ~~September~~Distribution fees decreased 49% for the nine-month period ended December 3031, 2001 ~~Compared~~as compared to ~~Six~~the ~~Months~~nine-month ~~Ended~~period ~~September~~ended December 3031, 2000 due to the decrease in the U.S. Funds’ average net assets under management.

~~Assets~~Administrative ~~Under~~service, ~~Management~~fund accounting and transfer agent fees collectively decreased 55% for the nine-month period ended December 31, 2001 as compared to the nine-month period ended December 31, 2000 due principally to the decline in average net assets under management, a decrease in the number of U.S. Funds due to reorganizations and dissolutions in the latter portion of fiscal year 2001 and outsourcing of the Company’s internal transfer agency.

~~The~~For ~~Company continues to experience~~ the turmoil in the world financial markets while the recent terrorist activity has had the effect of intensifying the decline in assets under management. Average net assets under management for the U. S. Funds decreased $1,555 million, or 51%, to $1,475 million for the sixnine-month period ended ~~September~~December 3031, 2001 ~~from~~as ~~$3,030 million~~compared ~~for~~to the ~~six~~nine-month period ended ~~September~~December 3031, 2000., ~~The~~underwriting ~~Canadian~~fees ~~Funds’~~have ~~average net assets~~ decreased ~~to $2~~81%,~~031 million~~ ~~for~~due ~~the~~to decreases ~~six-month~~in ~~period ended September~~Class ~~30,~~A ~~2001 from~~share ~~$3,356 million~~sales ~~for~~and ~~the~~redemption ~~six-month~~fees ~~period~~have ~~ended~~increased ~~September 30,~~13% ~~2000,~~due to ~~representing~~increases ain ~~decrease~~redemptions of ~~$1,325~~Class ~~million~~B orand ~~39%~~C shares.

~~The~~Interest, ~~change~~dividends inand ~~net~~other ~~assets~~revenue ~~under~~decreased ~~management~~53% for the ~~U.S.~~nine-month ~~Funds~~period ended December 31, ~~Canadian~~2001 ~~Funds~~compared to the nine-month period ended December 31, ~~and~~2000 ~~Premier~~due ~~Funds~~to isa decrease in investment income earned as ~~follows:~~a result of declining interest rates and lower distributions from the investments in Ivy Funds.

~~(In Millions, except percentages)~~11

			Six Months Ended September 30,
									Dollar			Percent
U.S. Funds:			2001			2000			Change				Change
Beginning net assets, March 31st			$	1,587		$	3,512		$	(1,925	)			(54.8	)
	Period activity:
		Sales		204			411			(207	)			(50.4	)
		Redemptions		(423	)		(941	)		(518	)			(55.0	)
		Net Sales (Redemptions)		(219	)		(530	)		311				58.7
		Market Appreciation (Depreciation)		(238	)		(366	)		128				35.0
Ending net assets, September 30th			$	1,130		$	2,616		$	(1,486	)			(56.8	)
Canadian Funds’ net assets:			$	1,626		$	3,398		$	(1,772	)			(52.1	)
Premier Funds’ net assets:			$	42		$	29		$	13				44.8

EXPENSES

~~For~~As ~~the~~described ~~six-month~~in ~~period~~further ~~ended~~detail ~~September 30~~below, ~~2001,~~total ~~the~~operating ~~Company’s~~expenses U.for ~~S. Funds~~the ~~experienced~~nine-month ~~net~~period ~~redemptions~~ended ~~of $219~~December ~~million~~31, as2001 decreased 36% compared to the nine-month ~~same~~ period ~~last year~~ended ~~when they had net redemptions of $530~~December ~~million.~~31, ~~Market appreciation for the U~~2000.~~S Funds decreased to $238 million~~

8Sales literature, advertising and promotion decreased 62% for the nine-month period ended December 31, 2001 compared to the nine-month period ended December 31, 2000 due to a re-focused marketing plan.

~~Table~~12b-1 ofService ~~Contents~~fees paid to broker/dealers decreased 49% for the nine-month period ended December 31, 2001 compared to the nine-month period ended December 31, 2000 due to the decrease in net assets under management.

~~depreciation~~Employee compensation and benefits decreased 19% for the ~~six~~nine-month period ended December 31, ~~September~~2001 compared to the nine-month period ended December 3031, 2000. The decrease is due to an overall decrease in the number of employees as of December 31, 2001, which was 84 as compared to ~~$366~~152 at December 31, 2000, a comparative ~~million~~decrease ~~depreciation~~of ~~for~~45%. From May 2000 to December 2001, the ~~same~~Company ~~period~~increased ~~last~~its investment advisory personnel by 35% to 27 professionals, in part as a result of the internalization of the management of IIF. The increase in investment advisory personnel was offset by the reduction in headcount in connection with the restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 — Restructuring, to the condensed consolidated financial statements).

~~Ivy~~Sub-advisory ~~International~~fees ~~Fund~~decreased ~~continues~~89% tofor ~~represent~~the anine-month ~~significant~~period ~~portion~~ended ofDecember 31, 2001 compared to the ~~assets~~ ~~under~~nine-month ~~management~~period ~~and~~ended ~~the~~December 31, ~~underlying~~2000 ~~net~~due ~~redemption~~to ~~activity.~~a ~~The~~decline ~~following~~in ~~chart~~sub-advised ~~reflects~~net ~~this~~assets ~~concentration~~and asthe ~~well~~internalization asof the ~~decline~~portfolio inmanagement of ~~redemptions~~IIF during the first quarter of ~~Ivy~~fiscal ~~International~~year ~~Fund:~~2001.

~~(In~~Amortization ~~Millions~~of deferred selling commissions decreased 23% for the nine-month period ended December 31, ~~except~~2001 ~~percentages)~~compared to the nine-month period ended December 31, 2000 due to weaker Class B and C share sales and the resulting lower Class B and C share asset base.

		For the Six Months
		ended September 30,						Changes
		2001			2000			$			%
U.S. Funds’ net assets at September 30th		$	1,130		$	2,616		$	(1,486	)		(56.8	)
Ivy International Fund’s net assets at September 30th			514			1,286			(772	)		(60.0	)
	as a percentage of U.S. Funds’ net assets		45.5	%		49.2	%
U.S. Funds’ sales		$	204		$	411		$	(207	)		(50.4	)
Ivy International Fund’s sales			105			118			(13	)		(11.0	)
	as a percent of U.S. Funds’ sales		51.5	%		28.7	%
U.S. Funds’ redemptions		$	423		$	941		$	(518	)		(55.0	)
Ivy International Fund’s redemptions			227			669			(442	)		(66.1	)
	as a percent of U.S. Funds’ redemptions		53.7	%		71.1	%
Net sales/(redemptions) excluding Ivy International Fund		$	(97	)	$	21		$	(118	)		(561.9	)

General and administrative expenses decreased 54% for the nine-month period ended December 31, 2001 compared to the nine-month period ended December 31, 2000. The decrease was attributable to the outsourcing of the transfer agency, the general reductions in connection with the restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 — Restructuring, to the condensed consolidated financial statements) as well as the non-recurrence of costs incurred in the prior year in connection with various fund reorganizations.

~~Revenues~~IMI contractually limits total fund expenses for certain U.S. Funds and bears expenses in excess of such limits. The increase of 13% for the nine-month period ended December 31, 2001 compared to the nine-month period ended December 31, 2000 resulted from: (1) an increase in the reimbursement related to decreases in the average net asset values of the funds for which IMI limits expenses; and (2) a voluntary reimbursement of $400,000 in IIF’s operating expenses. Such increases were partially offset by a decrease in the number of funds being reimbursed during the current year over the prior year period as a result of fund reorganizations in the latter half of fiscal year 2001. Excluding the voluntary reimbursement to IIF, fund expense reimbursement for the nine-month period ended December 31, 2001 would have decreased 10% as compared to the nine-month period ended December 31, 2000 (See “Voluntary Reimbursement of Operating Expenses”).

AsTHREE ~~described~~MONTHS inENDED ~~further~~DECEMBER ~~detail below~~31, ~~total revenues decreased by 46% for the six-month period ended September 30,~~ 2001 asCOMPARED ~~compared~~TO toTHREE ~~the~~MONTHS ~~six-month~~ENDED ~~period ended~~DECEMBER ~~September 30~~31, 2000.

~~Management~~ASSETS ~~fees~~UNDER ~~decreased 52% for the six-month period ended September 30, 2001~~MANAGEMENT ~~as compared to the six-month period ended September 30, 2000 as a result of the~~ ~~decrease in the U.S. Funds’ net assets under management.~~

~~Sub-advisory~~Average ~~fees~~net ~~from~~assets under management for the ~~Canadian~~U. S. Funds decreased 34$1,061 million, or 47%, to $1,179 million for the ~~six~~three-month period ended ~~September~~December 3031, 2001 asfrom ~~compared~~$2,240 million tofor the ~~six~~three-month period ended ~~September~~ December 3031, 2000. asThe Canadian aFunds’ ~~result~~average ofnet assets decreased to $1,826 million for the three-month ~~decrease~~period inended December 31, 2001 from $2,885 million for the three-month ~~average~~period ~~net~~ended ~~assets~~December 31, 2000, representing a decrease of ~~the~~$1,059 ~~Canadian~~million ~~Funds~~or 37%.

~~12b-1 Service and Distribution fees decreased 48% for the six-month period~~12 ~~ended September 30, 2001 as compared to the six-month period ended September~~ ~~30, 2000 due to the decrease in the U.S. Funds’ net assets under management.~~

~~Administrative~~The ~~service,~~change ~~fund accounting and transfer agent fees collectively decreased 48% for the six-month period ended September 30, 2001 as compared to the six-month period ended September 30, 2000 due to the decline~~ in net assets under management, ~~outsourcing~~for of the ~~Company’s internal transfer agency and a decrease in the number of~~ U.S. Funds ~~due~~is toas ~~reorganizations and dissolutions in~~follows: ~~the latter portion of fiscal year 2001.~~

For the six-month period ended September 30, 2001 as compared to the six-month period ended September 30, 2000, underwriting fees have decreased 82% and redemption fees have increased 73%, due to decreases in Class A share sales and increases in redemptions of Class B and C shares, respectively.


			(IN MILLIONS, EXCEPT PERCENTAGES)

			THREE MONTHS ENDED DECEMBER 31,
									DOLLAR			PERCENT
			2001			2000			CHANGES			CHANGES

U.S. FUNDS:




Beginning net assets, September 30th			$	1,130		$	2,616			($1,486	)		(56.8	)




	Period activity:




		Sales		41			172			(131	)		(76.2	)




		Redemptions		(130	)		(447	)		(317	)		(70.9	)

		Net Sales (Redemptions)		(89	)		(275	)		186			67.6




		Market Appreciation (Depreciation), less distributions		141			(302	)		443			146.7

Ending net assets, December 31st			$	1,182		$	2,039			($857	)		(42.0	)

9Ivy International Fund continues to represent a significant portion of the assets under management and the underlying net redemption activity. The following chart reflects this concentration:


		(IN MILLIONS, EXCEPT PERCENTAGES)

		FOR THE THREE MONTHS ENDED DECEMBER 31,						CHANGES

			2001			2000		$			%

U.S. Funds’ net assets at December 31st		$	1,182		$	2,039			($857	)	(42.0	)




Ivy International Fund’s net assets at December 31st			525			976			(451	)	(46.2	)




	as a percentage of U.S. Funds’ net assets		44.4	%		47.9	%




U.S. Funds’ sales		$	41		$	172			($131	)	(76.2	)




Ivy International Fund’s sales			27			69			(42	)	(60.9	)




Ivy International Fund’s sales			65.9	%		40.1	%




U.S. Funds’ redemptions		$	130		$	447			($317	)	(70.9	)




Ivy International Fund’s redemptions			77			300			(223	)	(74.3	)




	as a percent of U.S. Funds’ redemptions		59.2	%		67.1	%




Net redemptions excluding Ivy International Fund		$	39		$	44		$	(5	)	(11.4	)

~~Interest, dividends and other revenue decreased 42% for the six-month period~~REVENUES ~~ended September 30, 2001 compared to the six-month period ended September 30,~~ ~~2000 due to a decrease in investment income earned as a result of declining interest rates.~~

~~Expenses~~As described in further detail below, total revenues decreased by 48% for the three-month period ended December 31, 2001 as compared to the three-month period ended December 31, 2000.

AsManagement ~~described~~fees indecreased ~~further~~49% ~~detail below, total operating expenses~~ for the ~~six~~ three-month period ended ~~September~~December 3031, 2001 as ~~decreased 37%~~ compared to the ~~six~~ three-month period ended ~~September~~December 3031, 2000 as a result of the decrease in the U.S. Funds’ average net assets under management.

~~Sales~~Sub-advisory ~~literature,~~fees ~~advertising~~from ~~and~~the ~~promotion~~Canadian Funds decreased 6224% for the ~~six~~three-month period ended ~~September~~December 3031, 2001 as compared to the ~~six~~three-month period ended ~~September~~December 3031, 2000 ~~due~~as to a ~~re-focused~~result ~~marketing~~of ~~plan~~the decrease in the average net assets of the Canadian Funds.

~~12b-1 Service fees paid to broker/dealers decreased 51% for the six-month~~13 ~~period ended September 30, 2001 compared to the six-month period ended~~ ~~September 30, 2000 due to the decrease in net assets under management.~~

~~Employee~~12b-1 ~~compensation~~Service and ~~benefits~~Distribution fees decreased 1550% for the ~~six~~three-month period ~~ended~~ ~~September~~ended December 3031, 2001 as compared to the ~~six~~three-month period ended ~~September~~December 3031, ~~2000.~~ ~~The~~2000 ~~decrease is~~ due to anthe ~~overall~~ decrease in the ~~number of employees as of September 30, 2001, which was 89 as compared to 140 at September 30, 2000, a comparative decrease of 36%~~U.S. ~~During~~Funds’ ~~the~~average ~~course~~net ofassets ~~fiscal~~under ~~year 2001 through September 30, 2001, the Company increased its investment advisory personnel by 40% to 28 professionals, in part as a result of the internalization of the~~ management ~~of Ivy International Fund~~. ~~The increase in investment advisory~~ ~~personnel was offset by the reduction in headcount in connection with the~~ ~~restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 - Restructuring, to the condensed consolidated financial statements).~~

~~Sub-advisory~~Administrative service, fund accounting and transfer agent fees collectively decreased 9269% for the ~~six~~three-month period ended ~~September~~December 3031, 2001 as compared to the ~~six~~three-month period ended ~~September~~December 3031, 2000 due principally to a decline in average ~~sub-advised~~ net assets ~~and~~under management, a decrease in the ~~internalization~~number of ~~the~~U.S. ~~portfolio~~Funds ~~management~~due ofto ~~Ivy~~reorganizations ~~International~~and ~~Fund~~dissolutions ~~during~~in the ~~first~~latter ~~quarter~~portion of fiscal year 2001 and the outsourcing of the Company’s internal transfer agency.

~~Amortization~~For ~~of deferred selling commissions decreased 21% for~~ the ~~six~~three-month period ended ~~September~~December 3031, 2001 as compared to the ~~six~~ three-month period ended ~~September~~ December 3031, 2000, ~~due~~redemption tofees ahave ~~lower~~decreased ~~Class B~~38%, due ~~and~~to Ca ~~share~~decrease ~~asset~~in ~~base~~redemptions ~~and~~of ~~weaker~~ Class B and C ~~share sales~~shares.

~~General~~Interest, dividends and ~~administrative~~other ~~expenses~~revenue decreased 4873% for the ~~six~~three-month period ended ~~September~~December 3031, 2001 compared to the ~~six~~three-month period ended ~~September~~December 3031, 2000. ~~The~~due ~~decrease was attributable~~ to ~~the~~a ~~outsourcing~~decrease ~~of the transfer agency, the general reductions~~ in ~~connection~~investment ~~with~~income ~~the~~earned ~~restructuring initiated in the fourth quarter of fiscal year 2001~~ as ~~well~~a asresult ~~the non-recurrence~~ of ~~costs~~declining ~~incurred~~interest inrates ~~the~~and ~~prior~~lower ~~year~~distributions infrom ~~connection with various fund reorganizations (See Note 4 — Restructuring, to~~ the ~~condensed~~investments ~~consolidated~~in ~~financial~~Ivy ~~statements)~~Funds.

~~IMI contractually limits total fund expenses for certain U.S. Funds and bears~~EXPENSES ~~expenses in excess of such limits. The decrease of 12% for the six-month~~ period ended September 30, 2001 compared to the six-month period ended September 30, 2000 resulted from a decrease in the number of funds requiring reimbursement as a result of various fund reorganizations in the latter half of fiscal year 2001 largely offset by an increase in the reimbursement due to a decrease in net asset value of the funds for which IMI limits expenses.

10As described in further detail below, total operating expenses for the three-month period ended December 31, 2001 decreased 33% compared to the three-month period ended December 31, 2000.

~~Table~~Sales ofliterature, ~~Contents~~advertising and promotion decreased 64% for the three-month period ended December 31, 2001 compared to the three-month period ended December 31, 2000 due to a re-focused marketing plan.

~~Three~~12b-1 ~~Months~~Service ~~Ended~~fees ~~September~~paid to broker/dealers decreased 44% for the three-month period ended December 3031, 2001 ~~Compared~~compared to ~~Three~~the ~~Months~~three-month ~~Ended~~period ~~September 30~~ended December 31, 2000 due to the decrease in average net assets under management.

~~Assets~~Employee ~~Under~~compensation ~~Management~~and benefits decreased 26% for the three-month period ended December 31, 2001 compared to the three-month period ended December 31, 2000. The decrease is due to an overall decrease in the number of employees as of December 31, 2001, which was 84 as compared to 152 at December 31, 2000, a comparative decrease of 45%. From May 2000 to December 2001, the Company increased its investment advisory personnel by 35% to 27 professionals, in part as a result of the internalization of the management of IIF. The increase in investment advisory personnel was offset by the reduction in headcount in connection with the restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 — Restructuring, to the condensed consolidated financial statements).

~~Average~~Amortization ~~net~~of ~~assets~~deferred ~~under~~selling ~~management~~commissions ~~for the U. S. Funds~~ decreased ~~$1,542 million, or 54~~28%, ~~to $1,338 million~~ for the three-month period ended ~~September 30~~December 31, 2001 ~~from~~compared ~~$2,880 million~~to ~~for~~ the three-month period ended ~~September 30,~~December 31, 2000. ~~The~~due ~~Canadian~~to ~~Funds’~~weaker ~~average~~Class B ~~net~~and ~~assets~~C ~~decreased~~share tosales ~~$1,884 million~~and ~~for~~ the ~~three-month~~resulting ~~period~~lower ~~ended September~~Class ~~30, 2001 from $3,470 million for the~~B ~~three-month~~and ~~period~~C ~~ended~~share ~~September 30,~~asset ~~2000, representing a decrease of $1,586 million or 46%~~base.

General and administrative expenses decreased 64% for the three-month period ended December 31, 2001 compared to the three-month period ended December 31, 2000. The ~~change~~decrease was attributable to the outsourcing of the transfer agency and the general reductions in ~~net~~connection ~~assets~~with ~~under~~the ~~management~~restructuring ~~for~~initiated in the fourth ~~U.S.~~quarter ~~Funds~~of isfiscal year 2001 (See Note 4 — Restructuring, to the condensed consolidated financial statements) as ~~follows:~~well as the non-recurrence of costs incurred in the prior year in connection with various fund reorganizations.

~~(In Millions, except percentages)~~14

			Three Months Ended
			September 30						Dollar				Percent
U.S. Funds:			2001			2000				Changes				Changes
Beginning net assets, June 30th			$	1,523		$	3,096			$	(1,573	)			(50.8	)
	Period activity:
		Sales		48			189				(141	)			(74.6	)
		Redemptions		(165	)		(425	)			(260	)			(61.2	)
		Net Sales (Redemptions)		(117	)		(236	)			119				50.4
		Market Appreciation (Depreciation)		(276	)		(244	)			(32	)			(13.1	)
Ending net assets, September 30th			$	1,130		$	2,616			$	(1,486	)			(56.8	)

IMI contractually limits total fund expenses for certain U.S. Funds and bears expenses in excess of such limits. The increase of 58% for the three-month period ended December 31, 2001 compared to the three-month period ended December 31, 2000 resulted from: (1) decreases in the net asset values of funds for which IMI voluntarily limits expenses; and (2) a voluntary reimbursement of $400,000 to IIF’s operating expenses. Excluding the voluntary reimbursement to IIF, fund expense reimbursement for the three-month period ended December 31, 2001 would have decreased 8% as compared to the three-month period ended December 31, 2000 (See “Voluntary Reimbursement of Operating Expenses”).

~~For~~LIQUIDITY ~~the~~AND ~~three-month~~CAPITAL ~~period ended September 30, 2001, the Company’s U. S. Funds~~RESOURCES ~~experienced net redemptions of $117 million as compared to the same period last~~ year when they had net redemptions of $236 million. Market appreciation/ (depreciation) for the U.S Funds increased to $276 million depreciation for the three-month period ended September 30, 2001 as compared to $244 million depreciation for the same period last year.

~~Ivy~~Liquidity ~~International~~and ~~Fund~~capital ~~continues~~resources toare ~~represent~~primarily aderived ~~significant~~from ~~portion~~the ofoperating cash flows received by the Company from managing and providing investment advisory ~~assets~~services ~~under~~to ~~management~~the Ivy Funds and from providing sub-advisory services to the Canadian ~~underlying~~Funds. ~~net~~The ~~redemption~~Company ~~activity~~manages its resources to ensure the availability of sufficient cash flows to meet all of its financial commitments. The Company ~~following~~believes ~~chart~~the ~~reflects~~cash ~~this~~and ~~concentration:~~cash equivalents at December 31, 2001, and cash expected to be generated from operations, will be sufficient to meet working capital requirements and required capital expenditures for at least the next twelve months.

The Company’s cash and cash equivalents increased by approximately $1,906,000 for the nine-month period from March 31, 2001 to December 31, 2001. The increase resulted from: (In1) cash ~~Millions~~provided by operating activities from the Company’s operations of approximately $3,511,000, ~~except~~including ~~percentages~~the impact of a decrease in receivables, an increase in accounts payable and accrued expenses, offset by the payment of amounts related to restructuring costs and deferred selling commissions; (2) cash used in investing activities of approximately $1,868,000, primarily related to purchases of property and equipment; and (3) cash provided by financing activities of approximately $262,000 consisting of a capital contribution from MFC for costs incurred with respect to the change in control of MFC offset by the payment of dividends.

		For the Three Months
		ended September 30,							Changes
			2001			2000			$			%
U.S. Funds’ net assets at September 30th			$	1,130		$	2,616		$	(1,486	)		(56.8	)
Ivy International Fund’s net assets at September 30th				514			1,286			(772	)		(60.0	)
	as a percentage of U.S. Funds’ net assets			45.5	%		49.2	%
U.S. Funds’ sales			$	48		$	189		$	(141	)		(74.6	)
Ivy International Fund’s sales				31			60			(29	)		(48.3	)
	as a percent of U.S. Funds’ sales			64.6	%		31.7	%
U.S. Funds’ redemptions			$	165		$	425		$	(260	)		(61.2	)
Ivy International Fund’s redemptions				87			293			(206	)		(70.3	)
	as a percent of U.S. Funds’ redemptions			52.7	%		68.9	%
Net sales / (redemptions) excluding Ivy International Fund			$	(61	)	$	(3	)	$	(58	)		(1933.3	)

The payment of deferred selling commissions to broker/dealers was approximately $402,000 for the nine-month period ended December 31, 2001 as compared to approximately $3,315,000 for the nine-month period ended December 31, 2000. The decrease reflects a decline in Class B and C fund share sales during the nine-month period ended December 31, 2001. Commission payments made during the nine-month periods ended December 31, 2001 and 2000 were funded internally from operations.

11ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Table of Contents~~COMPETITION

~~Revenues~~The financial services industry is highly competitive and has increasingly become a global industry. There are numerous open-end investment companies of varying sizes, investment policies and objectives whose shares are being offered to the public in the U.S. Given the large number of competitors in the U.S., the Company has focused its efforts on becoming an investment specialist with a worldwide perspective offering mutual funds with an emphasis on international investing. With this focus, the Company considers that it has narrowed the competitive field to a certain extent as it competes primarily with mutual fund managers that provide specialty mutual funds, such as international funds, to investors.

AsThe ~~described~~Company incompetes ~~further~~with ~~detail~~the ~~below,~~financial ~~total~~services ~~revenues~~and ~~decreased~~other investment alternatives offered by ~~50%~~stock ~~for~~brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions. Many of the Company’s competitors have substantially greater ~~three-month~~resources ~~period~~than ~~ended~~the ~~September 30~~Company. In addition, ~~2001~~there ashas ~~compared~~been toa trend of consolidation in the ~~three-month~~mutual fund industry, which has resulted in stronger competitors. Such ~~period~~competition ~~ended~~could ~~September 30~~negatively impact the Company’s market share, ~~2000~~revenues and results of operations.

~~Management fees decreased 54% for the three-month period ended September 30,~~15 ~~2001 as compared to the three-month period ended September 30, 2000 as a result~~ ~~of the decrease in the U.S. Funds’ net assets under management.~~

~~Sub-advisory~~ASSET ~~fees from the Canadian Funds decreased 31% for the three-month~~MIX ~~period ended September 30, 2001 as compared to the three-month period ended~~ ~~September 30, 2000 as a result of the decrease in the average net assets of the Canadian Funds.~~

~~12b-1~~The ~~Service~~Company’s revenues are derived primarily from investment management activities. Broadly speaking, the direction and ~~Distribution~~fluctuation ~~fees~~in ~~decreased~~the ~~51%~~net ~~for~~assets of the ~~three-month~~U.S. ~~period~~Funds and the Canadian Funds (collectively, the “Funds”) depend upon ~~ended~~two ~~September~~factors: (1) ~~30,~~the ~~2001~~level of sales of shares of the Funds as compared to redemptions of the ~~three-month~~shares ~~period~~of ~~ended~~the ~~September 30,~~Funds; ~~2000~~and ~~due~~(2) the toincrease ~~the~~or decrease in the market ~~U.S.~~value of the securities owned by the Funds’. ~~net~~The ~~assets~~Company ~~under~~is subject to an increased risk of volatility from changes in the global equity markets. Despite this volatility, management believes that in the long run the Company is more competitive as a result of greater diversity of global investments available to its customers.

~~Administrative~~Market ~~service,~~values ~~fund~~are ~~accounting~~affected ~~and~~by ~~transfer~~many ~~agent~~things, ~~fees~~including ~~collectively~~the general condition of ~~decreased~~national ~~68%~~and ~~for~~world economics and the ~~three-month~~direction ~~period~~and ~~ended~~volume ~~September 30,~~of ~~2001~~changes asin ~~compared~~interest torates ~~the~~and/or ~~three-month~~inflation ~~period~~rates. ~~ended~~Fluctuations ~~September 30,~~in ~~2000~~interest ~~due~~rates toand ain ~~decline~~the inyield curve will have an effect on fixed-income net assets under management, as well as on the ~~outsourcing~~flow of monies to and from fixed-income funds and, as a result, will affect the Company’s ~~internal~~revenues ~~transfer agency~~from ~~and~~such afunds. ~~decrease~~The ineffects of the ~~number~~foregoing factors ofon ~~U.S.~~equity ~~Funds~~funds ~~due~~and tofixed-income ~~reorganizations~~funds often operate inversely and it ~~dissolutions~~is, intherefore, difficult to predict the ~~latter~~net ~~portion~~effect of ~~fiscal~~any ~~year~~particular ~~2001~~set of conditions on the level of net assets under management.

~~For~~Certain portions of the ~~three-month~~Company’s ~~period~~managed ~~ended~~portfolios ~~September 30~~are invested in various securities of corporations located or doing business in developing regions of the world, ~~2001~~commonly known as ~~compared~~emerging tomarkets. These portfolios and the ~~three-month~~Company’s ~~period~~revenues ~~ended~~derived ~~September 30,~~from ~~2000,~~the ~~underwriting~~management ~~fees~~of ~~have~~such ~~decreased~~portfolios are subject to ~~84%~~significant ~~and~~risks ~~redemption~~of ~~fees~~loss ~~have~~from, ~~increased~~among ~~29%~~other factors, ~~due~~unfavorable topolitical ~~decreases~~and diplomatic indevelopments, ~~Class A~~currency ~~share~~fluctuations, social instability, changes in ~~sales~~governmental policies, expropriation, nationalization, confiscation of assets and ~~increases~~changes in ~~redemptions~~legislation ofrelating ~~Class B~~to ~~and~~foreign Cownership. ~~shares~~Foreign trading markets, ~~respectively~~particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile.

~~Interest,~~INVESTOR ~~dividends~~SENTIMENT ~~and~~FOR ~~other~~INTERNATIONAL ~~revenue decreased 58% for the three-month period~~INVESTING ~~ended September 30, 2001 compared to the three-month period ended September 30,~~ ~~2000 due to a decrease in investment income earned as a result of declining interest rates.~~

~~Expenses~~Given the risk associated with investing in foreign and emerging markets, investors may from time to time be less supportive of investing in international funds than in U.S. equity or fixed income funds and sales of those Funds, which invest in these areas, may decrease.

AsREGULATORY ~~described in further detail below, total operating expenses for the~~ENVIRONMENT ~~three-month period ended September 30, 2001 decreased 33% compared to the~~ ~~three-month period ended September 30, 2000.~~

~~Sales~~Virtually ~~literature,~~all ~~advertising~~aspects of the Company’s business are subject to various federal and ~~promotion~~state ~~decreased~~laws ~~71%~~and ~~for~~regulations. As discussed above, the ~~three-month~~Company and its ~~period~~subsidiaries ~~ended~~are ~~September 30~~registered with federal and state governmental agencies. These supervisory agencies have broad administrative powers, ~~2001~~including ~~compared~~the power to limit or restrict the ~~three-month~~Company ~~period~~from ~~ended~~carrying on its business if it fails to ~~September 30~~comply with applicable laws and regulations. In the event of non-compliance, ~~2000~~the possible ~~due~~sanctions that may be imposed include suspending individual employees, limiting the Company’s ability to aengage rein business for specified periods of time, revoking the investment advisor or broker-~~focused~~dealer ~~marketing~~registrations ~~plan~~and censures and fines.

~~12b-1~~ABSENCE ~~Service~~OF ~~fees~~PUBLIC ~~paid~~TRADING ~~to broker/dealers decreased 53% for the three-month~~MARKET ~~period ended September 30, 2001 compared to the three-month period ended~~ ~~September 30, 2000 due to the decrease in net assets under management.~~

~~Employee~~MFC ~~compensation~~owns ~~and~~approximately ~~benefits decreased 19~~86% ~~for~~of the ~~three-month~~issued ~~period ended~~and ~~September 30,~~outstanding ~~2001~~common ~~compared~~shares toof the ~~three-month period ended September 30,~~ ~~2000.~~Company ~~The~~as ~~decrease is due to an overall decrease in the number~~ of ~~employees as of September~~December 3031, 2001,. ~~which~~The ~~was~~shares 89have asbeen ~~compared~~thinly totraded. ~~140 at September 30~~Further, ~~2000, a~~ ~~comparative~~the ~~decrease~~number of ~~36%.~~common ~~During~~shares ~~the course~~ of ~~fiscal~~MIMI ~~year~~held ~~2001 through September 30, 2001, the Company increased its investment advisory personnel~~ by ~~40%~~ topersons 28other ~~professionals,~~than inMFC ~~part~~is asvery ~~a result of the internalization of the~~small ~~management of Ivy International Fund. The increase in investment advisory personnel was offset~~ by ~~the~~market ~~reduction~~standards inand ~~headcount~~this inmay ~~connection~~have ~~with~~an ~~the restructuring~~adverse ~~initiated~~impact inon ~~the~~liquidity ~~fourth~~and ~~quarter~~ trading of ~~fiscal year 2001 (See Note 4 - Restructuring, to~~ the ~~condensed~~common ~~consolidated financial statements)~~shares.

1216

~~Table~~PART ofII ~~Contents~~— OTHER INFORMATION

~~Sub-advisory~~ITEM ~~fees~~1. ~~decreased~~LEGAL ~~48% for the three-month period ended September 30,~~PROCEEDINGS ~~2001 compared to the three-month period ended September 30, 2000 due to a~~ ~~decline in sub-advised net assets.~~

~~Amortization~~There ofare ~~deferred~~currently ~~selling~~no ~~commissions~~legal ~~decreased~~proceedings ~~19%~~pending ~~for~~to which the ~~three-month~~Company is a party ~~period~~or ~~ended~~of ~~September 30,~~which ~~2001~~any ~~compared~~of toits property is the ~~three-month~~subject. ~~period~~Further, ~~ended~~there are no material ~~September 30~~legal proceedings to which any director, ~~2000~~officer, ~~due~~or toaffiliate of the Company or any associate thereof is a ~~lower~~party ~~Class B~~which ~~and~~is Cadverse ~~share~~to ~~asset~~the ~~base~~Company. ~~and~~There ~~weaker~~are no ~~Class B~~material ~~and~~administrative Cor ~~share~~judicial ~~sales~~proceedings pending or known to be contemplated by any governmental authorities.

~~General~~ITEM ~~and administrative expenses decreased 50% for the three-month period ended September 30, 2001 compared to the three-month period ended September 30, 2000~~2. ~~The~~CHANGES ~~decrease~~IN ~~was~~SECURITIES ~~attributable~~AND toUSE ~~the~~OF ~~outsourcing of the transfer agency~~PROCEEDS ~~and the general reductions in connection with the restructuring initiated in~~ the fourth quarter of fiscal year 2001 reorganizations (See Note 4 - Restructuring, to the condensed consolidated financial statements) as well as the non-recurrence of costs incurred in the prior year in connection with various fund.

~~IMI contractually limits total fund expenses for certain U.S. Funds and bears~~None ~~expenses in excess of such limits. The increase of 43% for the three-month~~ ~~period ended September 30, 2001 compared to the three-month period ended~~ ~~September 30, 2000 resulted from a decrease in the net asset values of funds for which IMI voluntarily limits expense.~~

~~LIQUIDITY~~ITEM ~~AND~~3. ~~CAPITAL~~DEFAULTS ~~RESOURCES~~UPON SENIOR SECURITIES

~~Liquidity and capital resources are primarily derived from the operating cash~~None ~~flows received by the Company from managing and providing investment advisory~~ ~~services to the Ivy Funds and from providing sub-advisory services to the~~ Canadian Funds. The Company manages its resources to ensure the availability of sufficient cash flows to meet all of its financial commitments. The Company believes the cash and cash equivalents at September 30, 2001, and cash expected to be generated from operations, will be sufficient to meet working capital requirements and required capital expenditures for at least the next twelve months.

~~The~~ITEM ~~Company’s cash and cash equivalents increased by $959,000 for the six-month period from March 31, 2001 to September 30, 2001~~4. ~~The~~SUBMISSION ~~increase~~OF ~~resulted~~MATTERS ~~from: (1) cash~~TO ~~provided~~A byVOTE ~~operating~~OF ~~activities~~SECURITIES ~~of $2,350,000, primarily related to~~HOLDERS ~~net income, a decrease in receivables, an increase in accounts payable and~~ accrued expenses and offset by the payment of amounts related to restructuring costs and other assets; (2) cash used in investing activities of $1,577,000, primarily related to purchases of property and equipment; and (3) cash provided by financing activities of $185,000 primarily related to a capital contribution from MFC for costs incurred with respect to the change in control of MFC offset by the payment of dividends.

~~The payment of deferred selling commissions to broker/dealers was approximately~~None ~~$314,000 for the six-month period ended September 30, 2001 as compared to~~ ~~approximately $2,758,000 for the six-month period ended September 30, 2000.~~ The decrease reflects a decline in Class B and C fund share sales during the six-month period ended September 30, 2001. Commission payments made during the six-month periods ended September 30, 2001 and 2000 were funded internally from operations.

~~Item 3~~ITEM 5. ~~Quantitative~~OTHER ~~and Qualitative Disclosures About Market Risk~~INFORMATION

~~Competition~~None

~~The~~ITEM ~~financial services industry is highly competitive and has increasingly become a global industry~~6. ~~There~~EXHIBITS ~~are~~AND ~~numerous~~REPORTS ~~open-end~~ON ~~investment~~FORM ~~companies of~~8-K ~~varying sizes, investment policies and objectives whose shares are being~~ ~~offered to the public in the U.S. Given the large number of competitors in the~~

13 (a) EXHIBITS:

~~Table of Contents~~ None

~~U.S.,~~ (b) REPORTS ~~the~~ON ~~Company~~FORM ~~has focused its efforts on becoming an investment specialist~~8-K: ~~with a worldwide perspective offering mutual funds with an emphasis on~~ international investing. With this focus, the Company considers that it has narrowed the competitive field to a certain extent as it competes primarily with mutual fund managers that provide specialty mutual funds, such as international funds, to investors.

The Company ~~competes~~filed ~~with~~ the ~~financial~~following ~~services~~Current ~~and~~Reports ~~other~~on ~~investment alternatives~~Form 8-K ~~offered~~during ~~by stock brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions. Many of~~ the ~~Company’s competitors have substantially greater~~ ~~resources~~quarter ~~than~~ended ~~the Company. In addition~~December 31, ~~there has been a trend of~~2001: ~~consolidation in the mutual fund industry, which has resulted in stronger~~ ~~competitors. Such competition could negatively impact the Company’s market share, revenues and net income.~~

Asset Mix


1.		On December 10, 2001, the Company filed a Form 8-K under Item 5 announcing the declaration of a dividend of U.S. $0.01 per share to shareholders of record on December 28, 2001, with a payable date of January 7, 2002.




2.		On November 20, 2001, the Company filed a Form 8-K under Item 5 announcing the change of lead manager of the Ivy Funds International Equities Advisory team.

~~The Company’s revenues are derived primarily from investment management~~SIGNATURES ~~activities. Broadly speaking, the direction and fluctuation in the net assets~~ of the U.S. Funds and the Canadian Funds (collectively, the “Funds”) depend upon two factors: (1) the level of sales of shares of the Funds as compared to redemptions of the shares of the Funds; and (2) the increase or decrease in the market value of the securities owned by the Funds. The Company is subject to an increased risk of volatility from changes in the global equity markets. Despite this volatility, management believes that in the long run the Company is more competitive as a result of greater diversity of global investments available to its customers.

~~Market~~Pursuant ~~values~~to ~~are affected by many things, including~~ the ~~general~~requirements ~~condition~~ of ~~national~~ ~~and world economics and~~ the ~~direction~~Securities ~~and~~Exchange ~~volume~~Act of ~~changes in~~1934, ~~interest~~this ~~rates~~report ~~and/or~~has ~~inflation~~been ~~rates.~~signed ~~Fluctuations~~below inby ~~interest rates and in~~ the ~~yield~~following ~~curve~~persons ~~will have an effect~~ on ~~fixed-income~~behalf ~~net assets under management as well as on the flow~~ of ~~monies to and from fixed-income funds and, as a~~ ~~result, will affect~~ the Company’s ~~revenues~~and ~~from~~in ~~such funds. The effects of~~ the ~~foregoing~~ ~~factors~~capacities ~~on equity funds~~ and ~~fixed-income funds often operate inversely and it is, therefore, difficult to predict the net effect of any particular set of conditions~~ on the ~~level~~dates ~~of net assets under management~~indicated.

Certain portions of the Company’s managed portfolios are invested in various securities of corporations located or doing business in developing regions of the world, commonly known as emerging markets. These portfolios and the Company’s revenues derived from the management of such portfolios are subject to significant risks of loss from, among other factors, unfavorable political and diplomatic developments, currency fluctuations, social instability, changes in governmental policies, expropriation, nationalization, confiscation of assets and changes in legislation relating to foreign ownership. Foreign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile.


NAME	CAPACITY	DATE


/s/ KEITH J. CARLSON

Keith J. Carlson	President and Chief Executive Officer	February 1, 2002






/s/ BEVERLY YANOWITCH

Beverly Yanowitch	Vice President and Chief Financial Officer	February 1, 2002

~~Investor Sentiment for International Investing~~17

Given the risk associated with investing in foreign and emerging markets, investors may from time to time be less supportive of investing in international funds than in U.S. equity or fixed income funds and sales of those Funds, which invest in these areas, may decrease.

Regulatory Environment

Virtually all aspects of the Company’s business are subject to various federal and state laws and regulations. As discussed above, the Company and its subsidiaries are registered with federal and state governmental agencies. These supervisory agencies have broad administrative powers, including the power to limit or restrict the Company from carrying on its business if it fails to comply with applicable laws and regulations. In the event of non-compliance, the possible sanctions that may be imposed include

suspending individual employees, limiting the Company’s ability to engage in business for specified periods of time, revoking the investment advisor or broker-dealer registrations and censures and fines.

Absence of Public Trading Market

MFC owns approximately 85% of the issued and outstanding common shares of the Company as of September 30, 2001. The shares have been thinly traded. Further, the number of common shares of MIMI held by persons other than MFC is very small by market standards and this may have an adverse impact on liquidity and trading of the common shares.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are currently no legal proceedings pending to which the Company is a party or of which any of its property is the subject. Further, there are no material legal proceedings to which any director, officer, or affiliate of the Company or any associate thereof is a party which is adverse to the Company. There are no material administrative or judicial proceedings pending or known to be contemplated by any governmental authorities.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Securities Holders

At the Company’s Annual and Special Meeting of Shareholders held on September 19, 2001, the election of the Board of Directors’ nominees was approved and the appointment of the auditors and the authorization of the Board of Directors to fix the remuneration of the auditors was approved.

Item 1: The shareholders voted to elect the nominees for directors as follows:

Name	Votes For		Votes Against		Abstentions
James W. Broadfoot III		17,269,035		—		2,000
Keith J. Carlson		17,269,035		—		2,000
Alan J. Dilworth		17,269,035		—		2,000
James L. Hunter		17,269,035		—		2,000
Neil Lovatt		17,269,035		—		2,000
Alasdair J. McKichan		17,269,035		—		2,000
Allan S. Mostoff		17,269,035		—		2,000
Michael R. Peers		17,269,035		—		2,000

Item 2: The shareholders voted to approve the appointment of PricewaterhouseCoopers LLP as the Company’s auditors and for the directors to fix the remuneration of the auditors as follows:

Votes For	Votes Against					Abstentions
17,270,005			—				1,030

Item 5. Other Information

At a meeting of the Company’s Board of Directors, following the Annual and Special Meeting of Shareholders held on September 19, 2001, the Board re-elected Ed Lill to the Company’s Board of Directors. As denoted in Item 6, the election of Ed Lill to the Board of Directors was announced August

13, 2001, subsequent to the circulation of a shareholder proxy for the September 19th meeting. The re-election was precipitated by the election of a new Board of Directors at the annual shareholder meeting.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

The following exhibit is filed herewith or incorporated by reference as indicated below.

Exhibit #
10.39		Change in Control Agreement – Stephen Barrett		Filed herewith

(b) Reports on Form 8-K:

The Company filed the following Current Reports on Form 8-K during the quarter ended September 30, 2001:

1. On September 13, 2001, the Company filed a Form 8-K under Item 5 announcing the rescheduling of the Company’s Annual and Special Meeting of Shareholders for Wednesday, September 19, 2001. 2. On September 11, 2001, the Company filed a Form 8-K under Item 5 announcing the cancellation of the Company’s Annual and Special Meeting of Shareholders originally scheduled for Thursday, September 13, 2001. 3. On August 13, 2001, the Company filed a Form 8-K under Item 5 announcing a recent change to the Board of Directors of the Company.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Name	Capacity	Date
/s/ KEITH J. CARLSON
Keith J. Carlson	President and Chief Executive Officer	November 2, 2001
/s/ BEVERLY YANOWITCH
Beverly Yanowitch	Vice President and Chief Financial Officer	November 2, 2001

LEGAL PROCEEDINGS

CHANGES IN SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

OTHER INFORMATION

EXHIBITS AND REPORTS ON FORM 8-K

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