##### Table of Contents



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 September 30, 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                                                       |  | 59-2522153                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|925 South Federal Highway, Suite 600                           |  |                                  
|Boca Raton, FL                                                 |  | 33432                            
|(Address of principal executive offices)                       |  | (Zip Code)                       

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



---

(Former address since last report:
700 South Federal Highway, Suite 300
Boca Raton, FL 33432)

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 October 29, 2001, there were 18,741,800 shares of the Registrants
Common Stock, par value $.01 per share issued and outstanding.





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TABLE OF CONTENTS



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



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##### Table of Contents

MACKENZIE INVESTMENT MANAGEMENT INC.

Index to Form 10-Q

Part I

FINANCIAL INFORMATION

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

Part II

OTHER INFORMATION

|        |  |                                                       |  | 
|------- |  | ----------------------------------------------------- |  | 
|Item 1. |  | LEGAL PROCEEDINGS                                     |  | 
|       
|       
|       
|       
|Item 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS             |  | 
|       
|       
|       
|       
|Item 3. |  | DEFAULTS UPON SENIOR SECURITIES                       |  | 
|       
|       
|       
|       
|Item 4. |  | SUBMISSION OF MATTERS TO A VOTE OF
SECURITIES HOLDERS |  | 
|       
|       
|       
|       
|Item 5. |  | OTHER INFORMATION                                     |  | 
|       
|       
|       
|       
|Item 6. |  | EXHIBITS AND REPORTS ON FORM 8-K                      |  | 





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##### Table of Contents



PART 1.  FINANCIAL INFORMATION




Item 1. Condensed Financial Statements


MACKENZIE INVESTMENT MANAGEMENT INC.





Condensed Consolidated Balance Sheets


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

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

1



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##### Table of Contents



MACKENZIE INVESTMENT MANAGEMENT INC.




Condensed Consolidated Statements of Operations


Unaudited


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

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

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

2



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##### Table of Contents



MACKENZIE INVESTMENT MANAGEMENT INC.




Condensed Consolidated Statement of Changes in Stockholders Equity


For the six months ended September 30, 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           |  |               |           |            |  |          |        |          |  |               |           |                  |  |        |           |   |  |   | 80,068   |   |  |             |         |   |  |   | 80,068     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Capital contribution                                  |  |               |           |            |  |          |        |          |  |               | 75,627     |                  |  |        |           |   |  |   |         |   |  |             |         |   |  |   | 75,627     |  
|                                                     
|                                                     
|                                                     
|                                                     
|Other comprehensive
loss, net of tax                  |  |               |           |            |  |          |        |          |  |               |           |                  |  |        |           |   |  |   |         |   |  |             | (216,986 | ) |  |   | (216,986   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash dividends on common stock,
$0.01 per share       |  |               |           |            |  |          |        |          |  |               |           |                  |  |        | (187,418   | ) |  |   |         |   |  |             |         |   |  |   | (187,418   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Net income for the period                             |  |               |           |            |  |          |        |          |  |               |           |                  |  |        | 305,431    |   |  |   |         |   |  |             |         |   |  |   | 305,431    |  
|                                                      |  |               |            |            |  |          |         |          |  |               |            |                  |  |        |            |   |  |   |          |   |  |             |          |   |  |   |            |  
|Balance, September 30, 2001                           |  |               | 18,741,800 |            |  | $        | 187,418 |          |  | $             | 39,089,503 |                  |  | $      | 20,542,895 |   |  | $ | (413,689 | ) |  | $           | (634,134 | ) |  | $ | 58,771,993 |  
|                                                      |  |               |            |            |  |          |         |          |  |               |            |                  |  |        |            |   |  |   |          |   |  |             |          |   |  |   |            |  

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

3



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##### Table of Contents



MACKENZIE INVESTMENT MANAGEMENT INC.




Condensed Consolidated Statements of Cash Flows


Unaudited


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

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

4



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##### Table of Contents



MACKENZIE INVESTMENT MANAGEMENT INC.




Notes to Condensed Consolidated Financial Statements


September 30, 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 six-month period ended September 30, 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 Income



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Comprehensive income was $88,445 and $2,970,905 for the six-month periods
ended September 30, 2001 and 2000, respectively. Other comprehensive income
(loss) for the six-month periods ended September 30, 2001 and 2000 relates
to unrealized appreciation and depreciation, respectively, on marketable
securities.

3.     Earnings (loss) Per Share



| |                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following table reconciles the weighted average shares outstanding used
to calculate basic and diluted earnings (loss) per share for the three and
six-month periods ended September 30, 2001 and 2000:

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

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 $1,263,000 for these costs. For the
six-month period ended

5



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##### Table of Contents





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

5.     New Accounting Pronouncements



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, Goodwill and Other Intangible
Assets. The Statement, which is effective for fiscal years beginning after
December 15, 2001, revises the accounting, amortization, and disclosure of
goodwill and other intangible assets. The Company is in the process of
assessing the impact of the Statement on its financial position, results of
operations and cash flows.                                                                                                                               
|
| | In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 144, Accounting for the Impairment or
Disposal of 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, results of operations and cash flows.

6



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##### Table of Contents






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 TSE. Its majority shareholder,
Mackenzie Financial Corporation (MFC), a Toronto-based investment counsel and
mutual fund management company, owns approximately 85% of the outstanding
common shares of MIMI at September 30, 2001. During the three-month period
ended June 30, 2001, Investors Group Inc. completed its take over bid for the
outstanding shares of MFC and accordingly, as of September 30, 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 September 30,
2001 sold only in Canada and managed by MFC (the Canadian Funds);                                                                               
| |  |  | Providing sub-advisory services to five Premier Funds (the Premier
Funds) at September 30, 2001 sold in the U.K., Ireland and Luxembourg
and managed by Premier Asset Management PLC (Premier); MFC has a less
than 25% beneficial interest in Premier as of September 30, 2001;
| |  |  | Underwriting, selling and otherwise distributing redeemable shares
of the U.S. Funds in the U.S. through various distribution channels;
and                                                                                                                                         
| |  |  | Providing administrative and fund accounting services to the U.S.
Funds.                                                                                                                                                                                                            

7



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##### Table of Contents



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

During the three-month period ended June 30, 2001, IMSC continued to provide
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.

RESULTS OF OPERATIONS

Six Months Ended September 30, 2001 Compared to Six Months Ended September 30, 2000

Assets Under Management

The Company continues to experience the turmoil in the world financial markets
while the recent terrorist activity has had the effect of intensifying the
decline in assets under management. Average net assets under management for
the U. S. Funds decreased $1,555 million, or 51%, to $1,475 million for the
six-month period ended September 30, 2001 from $3,030 million for the six-month
period ended September 30, 2000. The Canadian Funds average net assets
decreased to $2,031 million for the six-month period ended September 30, 2001
from $3,356 million for the six-month period ended September 30, 2000,
representing a decrease of $1,325 million or 39%.

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

(In Millions, except percentages)

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

For the six-month period ended September 30, 2001, the Companys U. S. Funds
experienced net redemptions of $219 million as compared to the same period last
year when they had net redemptions of $530 million. Market appreciation for the
U.S Funds decreased to $238 million

8



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##### Table of Contents



depreciation for the six-month period ended September 30, 2001 as compared to $366
million depreciation for the same period last year.

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 as well as the decline in
redemptions of Ivy International Fund:

(In Millions, except percentages)

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

Revenues

As described in further detail below, total revenues decreased by 46% for the
six-month period ended September 30, 2001 as compared to the six-month period
ended September 30, 2000.

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

Sub-advisory fees from the Canadian Funds decreased 34% for the six-month
period ended September 30, 2001 as compared to the six-month period ended
September 30, 2000 as a result of the decrease in the average net assets of the
Canadian Funds.

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

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

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

9



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##### Table of Contents



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

Expenses

As described in further detail below, total operating expenses for the
six-month period ended September 30, 2001 decreased 37% compared to the
six-month period ended September 30, 2000.

Sales literature, advertising and promotion decreased 62% for the six-month
period ended September 30, 2001 compared to the six-month period ended
September 30, 2000 due to a re-focused marketing plan.

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

Employee compensation and benefits decreased 15% for the six-month period ended
September 30, 2001 compared to the six-month period ended September 30, 2000.
The decrease is due to an overall decrease in the number of employees as of
September 30, 2001, which was 89 as compared to 140 at September 30, 2000, a
comparative decrease of 36%. During the course of fiscal year 2001 through
September 30, 2001, the Company increased its investment advisory personnel by
40% to 28 professionals, in part as a result of the internalization of the
management of Ivy International Fund. The increase in investment advisory
personnel was offset by the reduction in headcount in connection with the
restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 -
Restructuring, to the condensed consolidated financial statements).

Sub-advisory fees decreased 92% for the six-month period ended September 30,
2001 compared to the six-month period ended September 30, 2000 due to a decline
in sub-advised net assets and the internalization of the portfolio management
of Ivy International Fund during the first quarter of fiscal year 2001.

Amortization of deferred selling commissions decreased 21% for the six-month
period ended September 30, 2001 compared to the six-month period ended
September 30, 2000 due to a lower Class B and C share asset base and weaker
Class B and C share sales.

General and administrative expenses decreased 48% for the six-month period
ended September 30, 2001 compared to the six-month period ended September 30,
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 as well as the non-recurrence of costs
incurred in the prior year in connection with various fund reorganizations (See
Note 4  Restructuring, to the condensed consolidated financial statements).

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

10



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##### Table of Contents



Three Months Ended September 30, 2001 Compared to Three Months Ended September 30, 2000

Assets Under Management

Average net assets under management for the U. S. Funds decreased $1,542
million, or 54%, to $1,338 million for the three-month period ended September
30, 2001 from $2,880 million for the three-month period ended September 30,
2000. The Canadian Funds average net assets decreased to $1,884 million for
the three-month period ended September 30, 2001 from $3,470 million for the
three-month period ended September 30, 2000, representing a decrease of $1,586
million or 46%.

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

(In Millions, except percentages)

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

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

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

(In Millions, except percentages)

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

11



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Revenues

As described in further detail below, total revenues decreased by 50% for the
three-month period ended September 30, 2001 as compared to the three-month
period ended September 30, 2000.

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

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

12b-1 Service and Distribution fees decreased 51% for the three-month period
ended September 30, 2001 as compared to the three-month period ended September
30, 2000 due to the decrease in the U.S. Funds net assets under management.

Administrative service, fund accounting and transfer agent fees collectively
decreased 68% for the three-month period ended September 30, 2001 as compared
to the three-month period ended September 30, 2000 due to a decline in net
assets under management, the outsourcing of the Companys internal transfer
agency and a decrease in the number of U.S. Funds due to reorganizations and
dissolutions in the latter portion of fiscal year 2001.

For the three-month period ended September 30, 2001 as compared to the
three-month period ended September 30, 2000, underwriting fees have decreased
84% and redemption fees have increased 29%, due to decreases in Class A share
sales and increases in redemptions of Class B and C shares, respectively.

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

Expenses

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

Sales literature, advertising and promotion decreased 71% for the three-month
period ended September 30, 2001 compared to the three-month period ended
September 30, 2000 due to a re-focused marketing plan.

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

Employee compensation and benefits decreased 19% for the three-month period
ended September 30, 2001 compared to the three-month period ended September 30,
2000. The decrease is due to an overall decrease in the number of employees as
of September 30, 2001, which was 89 as compared to 140 at September 30, 2000, a
comparative decrease of 36%. During the course of fiscal year 2001 through
September 30, 2001, the Company increased its investment advisory personnel by
40% to 28 professionals, in part as a result of the internalization of the
management of Ivy International Fund. The increase in investment advisory
personnel was offset by the reduction in headcount in connection with the
restructuring initiated in the fourth quarter of fiscal year 2001 (See Note 4 -
Restructuring, to the condensed consolidated financial statements).

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

Amortization of deferred selling commissions decreased 19% for the three-month
period ended September 30, 2001 compared to the three-month period ended
September 30, 2000 due to a lower Class B and C share asset base and weaker
Class B and C share sales.

General and administrative expenses decreased 50% for the three-month period
ended September 30, 2001 compared to the three-month period ended September 30,
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 reorganizations (See Note 4 -
Restructuring, to the condensed consolidated financial statements) as well as
the non-recurrence of costs incurred in the prior year in connection with
various fund.

IMI contractually limits total fund expenses for certain U.S. Funds and bears
expenses in excess of such limits. The increase of 43% for the three-month
period ended September 30, 2001 compared to the three-month period ended
September 30, 2000 resulted from a decrease in the net asset values of funds
for which IMI voluntarily limits expense.

LIQUIDITY 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 September 30, 2001, and cash expected
to be generated from operations, will be sufficient to meet working capital
requirements and required capital expenditures for at least the next twelve
months.

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

The payment of deferred selling commissions to broker/dealers was approximately
$314,000 for the six-month period ended September 30, 2001 as compared to
approximately $2,758,000 for the six-month period ended September 30, 2000.
The decrease reflects a decline in Class B and C fund share sales during the
six-month period ended September 30, 2001. Commission payments made during the
six-month periods ended September 30, 2001 and 2000 were funded internally from
operations.

Item 3. 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

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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 net income.

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

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##### Table of Contents



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

Absence of Public Trading Market

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

PART II  OTHER INFORMATION




Item 1. Legal Proceedings

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




Item 2. Changes in Securities and Use of Proceeds

None




Item 3. Defaults Upon Senior Securities

None




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

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

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

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

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

|           |               |             |   |  |  |  |       | 
|---------- | ------------- | ----------- | - |  |  |  | ----- | 
|Votes For  | Votes Against | Abstentions
|           |               |            
|17,270,005 |               |             |  |  |  |  | 1,030 | 




Item 5. Other Information

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

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




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

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

|          |  |                                               |  |               
|--------- |  | --------------------------------------------- |  | --------------
|Exhibit # |  |                                               |  |               
|          |  |                                               |  |               
|10.39     |  | Change in Control Agreement  Stephen Barrett |  | Filed herewith

(b)  Reports on Form 8-K:

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



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

16



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##### Table of Contents






SIGNATURES

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

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

17