##### 



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(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

For the transition period from _________to_________

Commission File No. 000-17994

MACKENZIE INVESTMENT MANAGEMENT INC.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                             
|----------------------------------------------------------------------- |  | --------------------------------------------
|DELAWARE
(State or other jurisdiction of incorporation or organization) |  | 59-2522153
(IRS Employer Identification No.)

|                                                                                             |  |                 
|-------------------------------------------------------------------------------------------- |  | ----------------
|925 SOUTH FEDERAL HIGHWAY, SUITE 600
BOCA RATON, FL
(Address of principal executive offices) |  | 33432
(Zip Code)

Registrants telephone number, including area code (561) 393-8900

---

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


Indicate by check mark whether the registrant (1) 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.

YES [X]    NO [    ]

As of January 29, 2002, there were 18,655,550 shares of the Registrants Common
Stock, par value $.01 per share issued and outstanding.



---



##### 



MACKENZIE INVESTMENT MANAGEMENT INC.

Index to Form 10-Q

|        |  |                                                                                       |  |      
|------- |  | ------------------------------------------------------------------------------------- |  | -----
|        |  |                                                                                       |  | 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   

2



---



##### 



PART I.  FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

MACKENZIE INVESTMENT MANAGEMENT INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


|                                                                                                                                 |                                                                                                                                                                            |                                            |            |              |            |           |            |            |            | 
|-------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ------------ | ---------- | --------- | ---------- | ---------- | ---------- | 
|                                                                                                                                 |                                                                                                                                                                            |                                            |            | 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 | 
|                                                                                                                                 |                                                                                                                                                                            |                                            |            |              |            |           |            |           

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

3



---



##### 



MACKENZIE INVESTMENT MANAGEMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

|                                                                                                        |                                              |   |                    |           |                   |   |            |           |      |   |            |           |  |   |            |            | 
|------------------------------------------------------------------------------------------------------- | -------------------------------------------- | - | ------------------ | --------- | ----------------- | - | ---------- | --------- | ---- | - | ---------- | --------- |  | - | ---------- | ---------- | 
|                                                                                                        |                                              |   | 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 |           
|                                                                                                        |                                              |   |                    |           |                   |   |            |           |      |   |            |           |  |   |            |           



| |  | Weighted average 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.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

4



---



##### 



MACKENZIE INVESTMENT MANAGEMENT INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY


FOR THE NINE MONTHS ENDED DECEMBER 31, 2001


(UNAUDITED)


|                                                              |  |               |            |            |  |          |         |          |  |               |            |                  |  |        |            |   |  |   |          |   |  |             |          |   |  |   |            |  
|------------------------------------------------------------- |  | ------------- | ---------- | ---------- |  | -------- | ------- | -------- |  | ------------- | ---------- | ---------------- |  | ------ | ---------- | - |  | - | -------- | - |  | ----------- | -------- | - |  | - | ---------- | -
|                                                              |  |               |            |            |  |          |         |          |  |               |            |                  |  |        |            |   |  |   |          |   |  | 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 |  
|                                                              |  |               |            |            |  |          |         |          |  |               |            |                  |  |        |            |   |  |   |          |   |  |             |          |   |  |   |            |  

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

5



---



##### 



MACKENZIE INVESTMENT MANAGEMENT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(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 |           
|                                                    |                                                                                          |                                              |                                                                            |            |                   |            |            |           

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

6



---



##### 



MACKENZIE INVESTMENT MANAGEMENT INC.

Notes to Condensed Consolidated Financial Statements
December 31, 2001
(Unaudited)

1. BASIS OF PRESENTATION

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.

2. COMPREHENSIVE (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.

3. (LOSS) EARNINGS PER SHARE

The following table 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:

|                                                                                                                              |  |                    |            |                   |  |      |            |      |  |  |            |  |  |  |            | 
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                                                                                                                              |  | 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  | 
|                                                                                                                              |  |                    |            |                   |  |      |            |      |  |  |            |  |  |  |            | 

7



---



##### 



4. RESTRUCTURING

During the fourth quarter of fiscal 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 costs.
For the nine-month 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.

5. CASH DIVIDENDS ON COMMON STOCK

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

6. STOCK GRANT AND DEFERRED COMPENSATION

In November 2001, a Portfolio Manager and Vice-President resigned from the
Company (the Former Employee). Pursuant to the terms of 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.

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 31, 2001 to the extent
such amounts were previously recorded as an expense.

7. NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (the FASB) issued
Statement of Financial Accounting Standard (Statement) 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 Statement No. 142 on
its financial position and results of operations.

In August 2001, the FASB issued Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Statement 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 and results of
operations.

8



---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements in the Quarterly Report on Form 10-Q under the caption
Managements Discussion and Analysis 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 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

MIMI is a public company listed on the Toronto Stock Exchange. 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:



| |  | Ivy Management, Inc. (IMI), an investment adviser;                                                      
|- |  | ----------------------------------------------------------------------------------------------------------
| 
| |  | Ivy Mackenzie Distributors, Inc. (IMDI), a broker/dealer; and                                           
| 
| |  | Ivy Mackenzie Service Corp. (IMSC), formerly a transfer agent. (SEE
OUT-SOURCING THE TRANSFER AGENCY).

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



| |  | 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 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.                                                                                                                                                                                                          

9



---



##### 



The 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.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-SOURCING THE TRANSFER AGENCY

Prior 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.

VOLUNTARY REIMBURSEMENT OF OPERATING EXPENSES

In connection with a review of the overall management relationship between Ivy
International Fund (IIF) and 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 $400,000.

RESULTS OF OPERATIONS

NINE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 2000

ASSETS UNDER MANAGEMENT

Average net assets under management for the U. S. Funds decreased $1,390
million, or 50%, to $1,376 million for the nine-month period ended December 31,
2001 from $2,766 million for the nine-month period ended December 31, 2000. The
Canadian Funds average net assets decreased to $1,963 million for the
nine-month period ended December 31, 2001 from $3,198 million for the nine-month
period ended December 31, 2000, representing a decrease of $1,235 million or
39%.

The comparison of net assets under management for the U.S. Funds, Canadian Funds
and Premier Funds is as follows:

|                                                |                  |                                                        |       |                                   |      |      |       |        |        |         |         |   |      |   |       |   |       |  
|----------------------------------------------- | ---------------- | ------------------------------------------------------ | ----- | --------------------------------- | ---- | ---- | ----- | ------ | ------ | ------- | ------- | - | ---- | - | ----- | - | ----- | -
|                                                |                  |                                                        |       | (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  |  

10



---



##### 



IIF 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 |  

REVENUES

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

Management fees decreased 51% 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 U.S. Funds average net assets under management.

Sub-advisory fees 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.

12b-1 Service and Distribution fees decreased 49% for the nine-month period
ended December 31, 2001 as compared to the nine-month period ended December 31,
2000 due to the decrease in the U.S. Funds average net assets under management.

Administrative service, 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.

For the nine-month period ended December 31, 2001 as compared to the nine-month
period ended December 31, 2000, underwriting fees have decreased 81%, due to
decreases in Class A share sales and redemption fees have increased 13% due to
increases in redemptions of Class B and C shares.

Interest, dividends and other revenue decreased 53% for the nine-month period
ended December 31, 2001 compared to the nine-month period ended December 31,
2000 due to a decrease in investment income earned as a result of declining
interest rates and lower distributions from the investments in Ivy Funds.

11



---



##### 



EXPENSES

As described in further detail below, total operating expenses for the
nine-month period ended December 31, 2001 decreased 36% compared to the
nine-month period ended December 31, 2000.

Sales 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.

12b-1 Service 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.

Employee compensation and benefits decreased 19% for the nine-month period ended
December 31, 2001 compared to the nine-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).

Sub-advisory fees decreased 89% for the nine-month period ended December 31,
2001 compared to the nine-month period ended December 31, 2000 due to a decline
in sub-advised net assets and the internalization of the portfolio management of
IIF during the first quarter of fiscal year 2001.

Amortization of deferred selling commissions decreased 23% for the nine-month
period ended December 31, 2001 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.

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.

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).

THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2000

ASSETS UNDER MANAGEMENT

Average net assets under management for the U. S. Funds decreased $1,061
million, or 47%, to $1,179 million for the three-month period ended December 31,
2001 from $2,240 million for the three-month period ended December 31, 2000. The
Canadian Funds average net assets decreased to $1,826 million for the
three-month period ended December 31, 2001 from $2,885 million for the
three-month period ended December 31, 2000, representing a decrease of $1,059
million or 37%.

12



---



##### 



The change in net assets under management for the U.S. Funds is as follows:

|                                     |                  |                                                        |       |                                   |      |        |       |         |      |         |         |   |      |   |       |   |       |  
|------------------------------------ | ---------------- | ------------------------------------------------------ | ----- | --------------------------------- | ---- | ------ | ----- | ------- | ---- | ------- | ------- | - | ---- | - | ----- | - | ----- | -
|                                     |                  |                                                        |       | (IN MILLIONS, EXCEPT PERCENTAGES) |      |        |       |        
|                                     |                  |                                                        |       |                                   |      |        |       |         |      |         |         |  
|                                     |                  |                                                        |       | THREE
MONTHS ENDEDDECEMBER 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 | )

Ivy 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 MONTHSENDED 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 | )

REVENUES

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.

Management fees decreased 49% for the three-month period ended December 31, 2001
as compared to the three-month period ended December 31, 2000 as a result of the
decrease in the U.S. Funds average net assets under management.

Sub-advisory fees from the Canadian Funds decreased 24% for the three-month
period ended December 31, 2001 as compared to the three-month period ended
December 31, 2000 as a result of the decrease in the average net assets of the
Canadian Funds.

13



---



##### 



12b-1 Service and Distribution fees decreased 50% for the three-month period
ended December 31, 2001 as compared to the three-month period ended December 31,
2000 due to the decrease in the U.S. Funds average net assets under management.

Administrative service, fund accounting and transfer agent fees collectively
decreased 69% for the three-month period ended December 31, 2001 as compared to
the three-month period ended December 31, 2000 due principally to a 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 the outsourcing of the Companys internal transfer agency.

For the three-month period ended December 31, 2001 as compared to the
three-month period ended December 31, 2000, redemption fees have decreased 38%,
due to a decrease in redemptions of Class B and C shares.

Interest, dividends and other revenue decreased 73% for the three-month period
ended December 31, 2001 compared to the three-month period ended December 31,
2000 due to a decrease in investment income earned as a result of declining
interest rates and lower distributions from the investments in Ivy Funds.

EXPENSES

As 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.

Sales literature, 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.

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

Employee compensation 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).

Amortization of deferred selling commissions decreased 28% for the three-month
period ended December 31, 2001 compared to the three-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.

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 decrease was attributable to the outsourcing of the transfer agency
and 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.

14



---



##### 



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).

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and capital resources are primarily derived from the operating cash
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 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: (1) cash provided by operating activities from the Companys
operations of approximately $3,511,000, including 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.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COMPETITION

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.

The Company competes with the financial services and other investment
alternatives offered 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 than the Company. In addition, there has been a trend of consolidation
in the mutual fund industry, which has resulted in stronger competitors. Such
competition could negatively impact the Companys market share, revenues and
results of operations.

15



---



##### 



ASSET MIX

The Companys revenues are derived primarily from investment management
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 values are affected by many things, including the general condition of
national and world economics and the direction and volume of changes in interest
rates and/or inflation rates. Fluctuations in interest rates and in the yield
curve will have an effect on fixed-income 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 from such funds. The effects of the foregoing
factors 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 of net assets under management.

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.

INVESTOR SENTIMENT FOR INTERNATIONAL INVESTING

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 86% of the issued and outstanding common shares of the
Company as of December 31, 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.

16



---



##### 



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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS:

None

(b)  REPORTS ON FORM 8-K:

The Company filed the following Current Reports on Form 8-K during the
quarter ended December 31, 2001:

|   |  |                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                            

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      |  | February 1, 2002
|                     
|                     
|                     
|                     
|                     
|                     
|/s/ BEVERLY YANOWITCH |  |                                            |  |                 
|                      |  |                                            |  |                 
|Beverly Yanowitch     |  | Vice President and Chief Financial Officer |  | February 1, 2002

17