<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                      ANNUAL REPORT PURSUANT TO SECTION 13
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED                            COMMISSION FILE NUMBER
MARCH 31, 2001                                       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       (I.R.S. EMPLOYER
                    ORGANIZATION)                        IDENTIFICATION NO.)

        700 SOUTH FEDERAL HIGHWAY, SUITE 300
                   BOCA RATON, FL                              33432
      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 393-8900

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

    Securities to be registered pursuant to Section 12(g) of the Act:
    COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (TITLE OF CLASS)

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]

There were 18,741,800 shares of the Company's Common Stock outstanding as of
June 22, 2001. Based on the last sale price of the Registrant's Common Stock on
the Toronto Stock Exchange on June 22, 2001, the aggregate market value of the
shares of such Common Stock held by non-affiliates of the registrant was
approximately $12,460,058.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement (the "Proxy Statement"), to be filed
with the Securities and Exchange Commission relating to the Company's Annual
Meeting of Stockholders to be held on September 13, 2001 (the "Annual Meeting"),
are incorporated by reference in Part III hereof (as indicated therein).


                                       1
<PAGE>   2

                       INDEX TO ANNUAL REPORT ON FORM 10-K

<TABLE>
<CAPTION>
FORM 10-K REQUIRED INFORMATION                                                                    PAGE
------------------------------                                                                    ----
<S>                                                                                               <C>
PART I

     ITEM 1.    BUSINESS                                                                            4

                General Developments of Business                                                    4
                Financial Information about industry Segments                                       7
                Narrative Description of Business                                                   8
                    Investment Management and Advisory Services                                     8
                    The Products                                                                    9
                    Administrative, Transfer Agent and Fund Accounting Services                    16
                    Distribution Services                                                          16
                    Custody and Brokerage                                                          18
                    Restructuring                                                                  18
                    Take-over of MFC                                                               18
                Risk Factors and Cautionary Statements                                             18
                Regulatory Environment                                                             20

     ITEM 2.    PROPERTIES                                                                         21

     ITEM 3.    LEGAL PROCEEDINGS                                                                  22

     ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                SHAREHOLDERS                                                                       22

     ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT                                               22

PART II.

     ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS                                                                23

     ITEM 6.    SELECTED FINANCIAL DATA                                                            24

     ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS                                                25

     ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                MARKET RISK                                                                        29

     ITEM 8.    CONSOLIDATED FINANCIAL STATEMENTS AND
                SUPPLEMENTARY DATA                                                                 29

     ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE                                             30

PART III.

     ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT*                                30

     ITEM 11.   EXECUTIVE COMPENSATION*                                                            31
</TABLE>
<PAGE>   3

<TABLE>
<S>                                                                                               <C>
     ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT*                                                                    31

     ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                     31

PART IV

     ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K                                                                31

     Signatures                                                                                    36

     Table of Contents for Consolidated Financial Statements                                      F-1

     Management's Report to the Shareholders                                                      F-2

     Report of Independent Certified Public Accountants                                           F-3

     Consolidated Financial Statements                                                            F-4

     Notes to Consolidated Financial Statements                                                   F-8
</TABLE>

------------

*        The information called for by Items 10, 11 and 12, to the extent not
         included in this document, is incorporated herein by reference to the
         information to be included under the captions "Election of Directors,"
         "Securities Ownership of Certain Beneficial Owners and Management,"
         "Section 16(a) Beneficial Ownership Compliance," "Named Executive
         Officer Compensation," and "Voting Shares and Principal Ownership" in
         the Company's definitive proxy statement, which will be filed by June
         29, 2001.


                                       3
<PAGE>   4

FORWARD-LOOKING STATEMENTS

         Certain statements in this Form 10-K under the captions "Business",
"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 relationship; changes in the relative
investment performance; and investor sentiment for international investing.
These forward-looking statements speak only as of the date of this Form 10-K.
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.

ITEM 1.  BUSINESS.

General Development of Business

         Mackenzie Investment Management Inc. ("MIMI") was incorporated under
the laws of the State of Delaware by Certificate of Incorporation dated April
18, 1985. MIMI is a majority owned subsidiary of Mackenzie Financial Corporation
("MFC"), a Toronto-based investment counsel and mutual fund management company.
See "Take-over of MFC" under "Narrative Description of Business."

         MIMI provides, through various subsidiaries, investment management,
marketing, distribution, transfer agency and other administrative services to
Ivy Fund which is a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended (the "40 Act"), as a U.S. open-end investment
company, consisting of sixteen separate portfolios as of March 31, 2001.

         Ivy Management, Inc. ("IMI"), a Securities and Exchange Commission
("SEC") registered investment advisor and a wholly owned subsidiary of MIMI,
provides investment advisory services to Ivy Fund and provides sub-advisory
services to twenty-two Universal mutual funds sold only in Canada and managed by
MFC (the "Canadian Funds") as of March 31, 2001. In addition, IMI separately
manages an international equity account for an investment partnership ("Separate
Account").

         The following table provides a summary of net assets under management
and associated revenues. The U.S. mutual funds consist of international equity
funds, domestic equity funds, taxable fixed income funds and a money market
fund. The Canadian Funds consist of the Universal mutual funds. As of March 31,
2001, net assets under management for the U.S. mutual funds and Canadian funds
totaled $3.67 billion.

<TABLE>
<CAPTION>
                                                                             As of March 31,

Net assets under management

                                               2001              2000              1999              1998              1997
                                            ----------        ----------        ----------        ----------        ----------

                                                                              (in thousands)

<S>                                         <C>               <C>               <C>               <C>               <C>
U.S. mutual funds(1)                        $1,615,480        $3,512,187        $3,330,892        $3,917,952        $2,844,544
Canadian Funds                               2,051,468         3,515,816         1,437,379         1,328,136           962,269
                                            ----------        ----------        ----------        ----------        ----------

   Total net assets under management        $3,666,948        $7,028,003        $4,768,271        $5,246,088        $3,806,813
                                            ----------        ----------        ----------        ----------        ----------
</TABLE>


                                       4
<PAGE>   5

<TABLE>
<CAPTION>
                                                                For the years ended March 31,

                                               2001           2000           1999           1998           1997
                                             --------       --------       --------       --------       --------

Revenues                                                    (in thousands, except per share amounts)

<S>                                          <C>            <C>            <C>            <C>            <C>
Management fees                              $ 24,022       $ 32,546       $ 33,813       $ 33,223       $ 18,326
Sub-advisory fees from Canadian Funds          10,012          9,468          5,994          5,556          3,954
12b-1 Service and Distribution fees             7,632          8,924         14,676         14,650          7,096
Transfer Agent fees                             3,007          2,994          3,019          3,013          3,021
Administrative and Other Fee Income             4,594          4,853          7,319          6,583          4,000
Other income                                    2,880          4,721          1,435          2,071            746
                                             --------       --------       --------       --------       --------

   Total revenues                            $ 52,147       $ 63,506       $ 66,256       $ 65,096       $ 37,143
                                             --------       --------       --------       --------       --------

   Net income                                $  2,643       $  6,448       $  8,549       $  9,526       $  7,291

   Earnings per share - basic                $   0.14       $   0.34       $   0.45       $   0.51       $   0.44
   Earnings per share - diluted              $   0.14       $   0.34       $   0.44       $   0.49       $   0.43
</TABLE>

(1) Includes non-Canadian sub-advised funds and a separately managed account,
which represented less than 1% of net assets under management.

         In July 1997, the Board of Directors of MIMI approved a 2-for-1 stock
split of the common shares of MIMI. This stock split was effected by declaring a
stock dividend of one additional common share for each common share of MIMI
issued and outstanding on the dividend record date of August 25, 1997. All
references in this document referring to shares and per share amounts have been
adjusted retroactively to reflect the 2-for-1 stock split.

         In June 1998, MIMI entered into a normal course issuer bid, which was
approved by the Toronto Stock Exchange ("TSE"), to purchase up to 945,000 shares
of its common stock. The bid commenced on June 10, 1998 and terminated on June
9, 1999. During this period, MIMI purchased 400,800 shares of its common stock
at the then market price at the time of acquisition for a total cost of
$1,701,923. In July 1999, MIMI entered into another normal course issuer bid,
which was approved by the TSE, to purchase up to 941,610 shares of its common
stock representing 5% of the issued and outstanding common shares at the date of
the notice. The bid terminated in July 2000, by which time MIMI purchased an
additional 243,400 of its common shares at a total cost of $867,504. All shares
were acquired at market price at the time of acquisition. MIMI believes that, at
the dates of repurchases, its common stock was undervalued at the then market
prices based on its earnings and that the repurchase of the common stock was an
appropriate use of corporate funds that should benefit shareholders.

         In September 1998, the shareholders of MIMI approved, at its annual
meeting, an amendment to its Certificate of Incorporation to increase the number
of authorized common shares from 30 million to 100 million. The additional
authorized common shares benefit MIMI by providing the Board of Directors the
flexibility to respond to business needs and opportunities as they arise, and
for other corporate purposes.

         In July 2000, the Company entered into a normal course issuer bid,
which was approved by the TSE, to repurchase up to 500,000 of the outstanding
shares of the Company's common stock, representing 2.7% of the issued and
outstanding common shares at the date of the notice. The bid will terminate on
the earlier of the date on which the maximum number of common shares have been
purchased, the date the Company provides notice of termination, or July 23,
2001. The Company has purchased no shares since the bid period commenced.


                                       5
<PAGE>   6

         In the last five years, MIMI has positioned itself as an investment
specialist with a worldwide perspective offering mutual funds with an emphasis
on international and emerging growth investing. MIMI intends to concentrate its
marketing efforts on the sale of mutual funds that specialize in the
international and emerging growth areas.

When used in this document, the following terms generally apply unless otherwise
noted:

<TABLE>
         <S>                                <C>
         the "Company"                      MIMI and its consolidated subsidiaries

         the "Funds"                        the separate portfolios of Ivy Fund

         the "Ivy Funds"                    the separate portfolios of Ivy Fund, collectively
</TABLE>

         MIMI is an SEC-registered investment advisor and conducts business
through three Boca Raton, Florida based, wholly-owned subsidiaries as follows:

                  Ivy Management, Inc. ("IMI") is incorporated under the laws of
                  the Commonwealth of Massachusetts and is registered with the
                  SEC under the Investment Advisers Act of 1940. IMI has
                  exclusive management agreements pursuant to which it manages
                  the Ivy Funds and provides sub-advisory services to the
                  Canadian Funds.

                  Ivy Mackenzie Distributors, Inc. ("IMDI") is incorporated
                  under the laws of the State of Florida and is registered as a
                  broker-dealer under the Securities Exchange Act of 1934, as
                  amended, (the "34 Act"). IMDI is a member of the National
                  Association of Securities Dealers, Inc. ("NASD"). Under the
                  terms of exclusive underwriting agreements with Ivy Fund IMDI
                  is entitled to sell the shares of the Funds. In this capacity,
                  IMDI distributes shares of the Funds through broker-dealers,
                  financial planners and registered investment advisers, and to
                  institutional investors such as retirement plans.

                  Ivy Mackenzie Services Corp. ("IMSC") is incorporated under
                  the laws of the State of Florida and is registered as a
                  transfer agent with the SEC under the 34 Act. IMSC, under
                  transfer agency and shareholder services agreements with Ivy
                  Fund serves as transfer agent and dividend paying agent for
                  the Funds and provides certain shareholder and
                  shareholder-related services as requested by the Funds. See
                  "Restructuring" under "Narrative Description of Business."

         The Company's revenues are generated 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 Funds under various contracts for administrative, transfer agent,
investment advisory, distribution and fund accounting services. The level of net
assets under management is affected by gross sales, redemptions and changes in
the market value of the Funds' portfolios of investments. Gross sales and
redemptions are a function of a number of factors including relative performance
and prevailing market conditions. As the level of net assets under management
fluctuates, so does management, sub-advisory, distribution, and administrative
services fee revenue. Mutual funds generally experience higher levels of sales
during and after a period of above-average fund and market performance and
higher levels of redemptions during and after a period of below-average fund and
market performance. While an increase in net assets under management will most
likely increase transfer agent fees, these fees are more directly related to the
number of shareholder accounts in the Funds.

         IMI seeks to achieve a variety of investment objectives on behalf of
the Funds, including capital appreciation, income, and growth and income. In
seeking to achieve such objectives, each Fund's portfolio reflects different
investment strategies. Funds that seek capital appreciation invest primarily in
equity securities in a wide variety of international and U.S. markets; some seek
broad national market exposure,


                                       6
<PAGE>   7

while others focus on narrower sectors such as precious metals, emerging
economies and technologies. Funds seeking income focus on taxable money market
instruments, fixed-income debt securities of corporations and of the U.S.
government and its agencies and instrumentalities such as the Government
National Mortgage Association, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation. Still others focus on investments in
particular countries and regions. A majority of the assets managed by IMI are
equity-oriented.

         IMI's investment style generally favors minimizing risk rather than
attempting to achieve a top performance ranking over a given period. Management
believes that, over the long term, consistent performance that is average to
above average best serves the Funds' shareholders and is most conducive to
developing loyal investors and repeat business from the Funds' distributors. The
chart below shows net assets under management and revenues by broad investment
objective.

<TABLE>
<CAPTION>
                                                                 As of March 31,
Net assets under management
(in thousands)                     2001              2000              1999              1998              1997
                                ----------        ----------        ----------        ----------        ----------
<S>                             <C>               <C>               <C>               <C>               <C>
Fixed Income                    $  418,092        $  457,982        $  612,655        $  528,710        $  385,545
International Equity             1,487,454         5,452,002         3,416,113         3,863,332         2,592,820
Money Market                        25,939            22,117            28,435            23,529            22,345
Tax Exempt Municipal                     0                 0                 0                 0           144,860
U.S. Equity                      1,735,463         1,095,902           711,068           830,517           661,243
                                ----------        ----------        ----------        ----------        ----------
  Total net assets under
     management                 $3,666,948        $7,028,003        $4,768,271        $5,246,088        $3,806,813
                                ----------        ----------        ----------        ----------        ----------
</TABLE>

<TABLE>
<CAPTION>
                                                           For the years ended March 31,

Revenues (in thousands)            2001              2000              1999              1998              1997
                                ----------        ----------        ----------        ----------        ----------
<S>                             <C>               <C>               <C>               <C>               <C>
Fixed Income                    $    2,256        $    3,424        $    4,377        $    3,332        $    2,556
International Equity                30,680            46,223            51,444            49,816            23,775
Money Market                           243               240               243               197               201
Tax Exempt Municipal                     0                 0                 0               600             1,774
U.S. Equity                         16,089             8,898             8,757             9,080             8,091
Other                                2,879             4,721             1,435             2,071               746
                                ----------        ----------        ----------        ----------        ----------

  Total revenues                $   52,147        $   63,506        $   66,256        $   65,096        $   37,143
                                ----------        ----------        ----------        ----------        ----------
</TABLE>

         Shares of the Funds are generally sold at their respective net asset
value per share plus a sales charge, which varies depending on the type of Fund
and the amount purchased. Purchases of Ivy Money Market Fund are not subject to
a sales charge. The Company has implemented a multi-class structure in response
to increasing competition from mutual fund managers offering funds without a
front-end sales charge. All Funds offer Class A, Class B and Class C shares and
all Funds other than Ivy Money Market Fund offer Advisor Class shares. Nine of
the sixteen Ivy Funds also offer Class I shares. Some classes are specifically
designed for institutional investors. See "Multi-Class Share Structure" under
"Narrative Description of Business." In accordance with certain terms and
conditions described in the Prospectuses for such Funds, certain investors are
allowed to purchase shares at net asset value or at a reduced sales charge.
Investors may generally exchange their shares of a Fund at net asset value for
shares within the same class of another Fund within the same trust without the
payment of additional sales charges.

Financial Information about Industry Segments

         All of the operations of the Company are carried on within a single
operating segment.



                                       7
<PAGE>   8

Narrative Description of Business

Investment Management and Advisory Services

         The Company, through its various subsidiaries described above, provides
investment management, marketing, distribution, transfer agency, accounting and
other administrative services to Ivy Fund as well as sub-advisory services to
the Canadian Funds. Such services are provided pursuant to various written
agreements.

         The investment management agreements for the Funds continue in effect,
after an initial two year period, for successive annual periods, providing the
continuance is specifically approved at least annually by a majority of votes
cast in person at a meeting of such Funds' Boards of Trustees called for that
purpose, or by a vote of the holders of a majority of the Funds' outstanding
voting securities. In either event, the continuance must be approved by a
majority of the Funds' trustees who are not parties to the agreement or
interested persons of the Funds or the Company, within the meaning of the 40
Act. The investment management agreements may be terminated upon 60 days'
written notice by a vote of the majority of the outstanding voting securities of
the affected Fund, by a vote of a majority of the Board of Trustees, or by IMI.
If there were to be a termination of a significant number of the investment
management agreements between the Funds and IMI, such termination would have a
material adverse impact upon the Company.

         As of April 20, 2001, Investors Group Inc., ("Investors Group") a
leading Canadian financial services organization acquired through a takeover
bid, 98.2% of the outstanding shares of MFC. See "Take-over of MFC" under
"Narrative Description of Business." Under the Investment Company Act of 1940,
the transaction resulted in a change in control of MFC and IMI and, therefore,
constituted an assignment of the Funds' business management and investment
advisory agreements, resulting in a termination of the agreements. Consequently,
Ivy Fund sought approval of new agreements from the shareholders of each Fund at
a special meeting of the shareholders on May 29, 2001. The new agreements will
remain in effect through September 30, 2001, and unless earlier terminated, will
continue from year to year thereafter if approved by the Board of Trustees.
Until the shareholder meeting, the Funds were operating under interim agreements
which provided that any management and advisory fees earned be held in escrow
and paid upon shareholder approval of the new agreements. The shareholders
approved the new agreements at the May 29, 2001 meeting.

         As the manager of the Funds, IMI is responsible for monitoring the
services provided by third parties, supplying the Funds with office space and
administrative and clerical personnel, supervising the maintenance of books and
records, assisting in the preparation of tax and other governmental returns and
reports and responding to appropriate inquiries from persons such as transfer
agents and fund accounting personnel. The Company pays the salaries of personnel
who serve as officers of the Company, including the President and such other
administrative personnel as are necessary to conduct the Funds' day-to-day
business operations. The Funds generally pay their own expenses, such as legal
and auditing fees, shareholder reporting and board and shareholder meeting
costs, SEC and state registration fees and similar expenses. Generally, each
Fund pays IMI a management fee based upon the Fund's average daily net assets.

         IMI acts as advisor to all Funds other than Ivy Global Natural
Resources Fund and also acts as sub-advisor to the twenty-two Canadian Funds.
IMI has retained Henderson Investment Management Limited ("Henderson") to act as
sub-advisor to the portfolio of Ivy International Small Companies Fund and Ivy
European Opportunities Fund and Peter Cundill & Associates ("Cundill") to act as
sub-adviser to the portfolio of Ivy Cundill Value Fund (name changed to Ivy
Cundill Global Value Fund as of April 30, 2001). MFC acts as advisor to Ivy
Global Natural Resources Fund. Effective May 27, 2000, IMI terminated its
sub-advisory agreement with Northern Cross Investments Limited ("Northern
Cross"), which previously acted as sub-advisor to Ivy International Fund
("IIF"). IMI's investment management personnel are managing IIF.

         IMI (i) determines, with respect to the Funds it advises, which
investments the Funds will purchase and which investments will be sold; (ii)
prepares investment performance reports for the


                                       8
<PAGE>   9

appropriate Trustees of the Funds; and (iii) complies with information
requirements from the Trustees of the Funds with regard to such matters and
filings made with the SEC and state securities commissions. In its capacity as
investment advisor, IMI performs fundamental research and valuation analysis,
industry and company research, and company visits and inspections, and utilizes
sources such as company public records and activities, management interviews,
company prepared information, and other publicly available information, as well
as analyses of suppliers, customers and competitors. Fixed-income research
includes economic analysis, credit analysis and value analysis. The economic
analysis includes an evaluation of certain macro economic variables such as
inflation, employment levels, and industrial production and capacity
utilization. Credit analysis researches the creditworthiness of debt issuers and
their individual short-term and long-term debt issues. Yield spread differential
analysis reviews the relative value of market sectors that represent buying and
selling opportunities.

         The Funds pay management fees to IMI ranging from 0.40% to 1.00% per
annum of a Fund's average daily net assets. IMI receives a sub-advisory fee from
MFC equal to 0.50% per annum of the first Cdn.$50 million of the average daily
net assets of each of the Canadian Funds, calculated daily on each day the TSE
is open for trading, except for those funds that are managed by multiple
portfolio managers, with respect to which IMI receives a sub-advisory fee of
0.50% per annum of the applicable percentage of each respective fund's average
daily net assets. In addition, IMI receives sub-advisory fees on a pool of funds
representing the consolidated net assets of the Canadian Funds in excess of Cdn.
$50 million. As of July 1, 2000, the sub-advisory fees on consolidated net
assets were revised. Further, as of July 1, 2000, IMI began sub-advising
additional funds under a new fee structure. The following table reflects the fee
structures for both existing and new funds at the respective rates and time
periods.

<TABLE>
<CAPTION>
                                                                 EXISTING FUNDS(1)           NEW FUNDS(2)
                                                           ------------------------------    ------------
                                                                            RATE PRIOR TO
                       ASSET BASE                          CURRENT RATE     JULY 1, 2000     CURRENT RATE
                       ----------                          ------------     -------------    ------------
<S>                                                        <C>              <C>              <C>
First Cdn. $50 million of average net assets per fund          0.50%            0.50%            0.40%
Consolidated asset pool:
                                 first Cdn. $1.3 billion       0.50%            0.50%            0.20%
               Cdn. $1.3 billion up to Cdn. $3.0 billion       0.20%            0.35%            0.20%
               Cdn. $3.1 billion up to Cdn. $5.0 billion       0.20%            0.25%            0.20%
              Cdn. $5.1 billion up to Cdn. $10.0 billion       0.20%            0.20%            0.20%
                         in excess of Cdn. $10.0 billion       0.20%            0.15%            0.20%
</TABLE>

(1)  Funds sub-advised as of June 30, 2000.

(2)  Funds sub-advised commencing after June 30, 2000.

         Under the Funds' management agreements, IMI pays all expenses incurred
by it in rendering management and advisory services to the Funds. See the table
of funds and investment objectives, which contains information on management and
sub-advisory fees paid to IMI in "The Products."

         The Funds bear their own operating expenses. However, IMI limits
certain Ivy Funds' total operating expenses (excluding 12b-1 Service and
Distribution Fees and taxes) to annual rates ranging from 0.85% to 1.95% of each
such Ivy Fund's average daily net assets, depending upon the size of the Funds.
These contractual expense limitations are determined annually and are disclosed
in the affected Funds' Prospectuses.

The Products

         As of March 31, 2001, the Company's groups of Funds consisted of
sixteen separate portfolios of Ivy Fund. The business affairs of Ivy Fund are
managed by a Board of Trustees, and the day to day administration of each is
carried out by the Company. Management of a Fund's portfolio is the
responsibility of its portfolio manager. Some Funds may be managed under a team
approach. The table below outlines information related to each Fund's portfolio
management, net asset value, management fees and year of introduction, as well
as the same information for the sub-advised Canadian Funds.


                                       9
<PAGE>   10

<TABLE>
<CAPTION>
         Name of Fund                                                   Net Assets as of     Management          Year
      (Portfolio Manager)                Investment Objective          of March 31, 2001         Fee          Introduced
                                                                        (In Millions of      (% of Fund
                                                                          Dollars)(18)      Average Daily
                                                                                             Net Assets)
<S>                               <C>                                  <C>                  <C>               <C>

                                                INTERNATIONAL EQUITY FUNDS

Ivy European Opportunities Fund   Long-term capital growth by               147.2(1)           1.00(2)           1999
(Stephen Peak, Henderson)         investing in the securities
                                  markets of Europe.

Ivy Global Fund
(co-managed by Sheridan Reilly    Long-term capital growth.                  10.3              1.00(3)           1991
and Paul P. Baran, IMI)

Ivy Global Natural
Resources Fund                    Long-term growth.                           9.0              1.00(4)           1997
(Frederick Sturm, MFC)

Ivy Global Science &
Technology Fund                   Long-term capital growth.                  38.2              1.00              1996
(James W. Broadfoot, IMI)

Ivy International Fund            Long-term capital growth.                 741.8              1.00(5)           1986
(Sheridan Reilly, IMI)

Ivy International Value Fund      Long-term capital growth.                 103.3              1.00              1997
(Sheridan Reilly, IMI)(6)

Ivy International Small
Companies Fund
(Henderson Global Investors       Long-term growth.                          20.4              1.00(7)           1997
smaller companies team)

Ivy International Growth Fund
(managed by Sheridan Reilly,      Long-term growth.                           0.4              1.00              2000
IMI)

Ivy Cundill Global Value Fund     Long-term capital growth.                   0.8              1.00(9)           2000
(Cundill)(8)

                                                     U.S. EQUITY FUNDS

Ivy Growth Fund                  Long-term growth.                          216.6              0.85(10)          1960
(Co-managed by James W.
Broadfoot and Paul P. Baran,
IMI)

Ivy US Blue Chip Fund            Long-term growth.                           65.9(11)          0.75              1998
(Paul P. Baran, IMI)

Ivy US Emerging
Growth Fund
(James W. Broadfoot, IMI)        Long-term growth.                          110.4              0.85              1993

                                                  EMERGING MARKETS FUNDS

Ivy Pacific Opportunities Fund   Long-term capital growth.                   13.9(13)          1.00              1993
(IMI's International Equity
Team)(12)

Ivy Developing
Markets Fund(14)                 Long-term growth.                            7.3(15)          1.00              1994
(Moira A. McLachlan, IMI)
</TABLE>


                                       10
<PAGE>   11

<TABLE>
<CAPTION>
         Name of Fund                                                   Net Assets as of     Management          Year
      (Portfolio Manager)                Investment Objective          of March 31, 2001         Fee          Introduced
                                                                        (In Millions of      (% of Fund
                                                                          Dollars)(18)      Average Daily
                                                                                             Net Assets)
<S>                               <C>                                  <C>                  <C>               <C>

                                                    FIXED INCOME FUNDS

Ivy Bond Fund                    High level of current income.               73.9              0.50(16)          1985
(Richard A. Gluck, IMI)

Ivy Money Market Fund            To obtain as high a level of                25.9              0.40              1987
(Richard A. Gluck, IMI)          current income as is consistent
                                 with the preservation of capital
                                 and liquidity.

                                                      CANADIAN FUNDS

            IMI acts as sub-adviser to the following Canadian Funds which are offered for sale only in Canada.

Universal World Balanced RRSP    Long-term capital growth by                209.8              0.50(17)          1994
Fund                             pursuing both current income and
(Co-managed by Richard A.        capital gains, generally through
Gluck and Sheridan Reilly, IMI)  international fixed income and
                                 equity derivative securities.

Universal World Income RRSP      Long-term capital growth.                  313.6              0.5(017)          1975
Fund
(Richard A. Gluck, IMI)

Universal World Growth RRSP
Fund                             Long-term capital growth.                  179.0              0.50(17)          1994
(Sheridan Reilly, IMI)

Universal Americas Fund
(Co-managed by Paul P. Baran     Long-term capital growth.                   16.8              0.50(17)          1978
and Sheridan Reilly, IMI)

Universal U.S. Emerging Growth
Fund                             Long-term capital growth.                  151.1              0.50(17)          1991
(James W. Broadfoot, IMI)

Universal World Science and      Long-term capital growth.                  125.2              0.50(17)          1996
Technology Fund
(Co-managed by three portfolio
managers from MFC, IMI and
Henderson)

Universal World High Yield
Fund                             Above-average income with the                1.9              0.50(17)          1997
(Richard Gluck, IMI)             potential for capital growth.

Universal Select Managers        Long-term capital growth.                  777.4              0.50(17)          1998
Fund (Co-managed by five
portfolio managers from MIMI,
Henderson and Cundill(19))

Universal World Value Fund
(Co-managed by Paul P. Baran
and Sheridan Reilly, IMI)        Long-term capital appreciation.              7.2              0.50(17)          1997
</TABLE>


                                       11
<PAGE>   12

<TABLE>
<CAPTION>
         Name of Fund                                                   Net Assets as of     Management          Year
      (Portfolio Manager)                Investment Objective          of March 31, 2001         Fee          Introduced
                                                                        (In Millions of      (% of Fund
                                                                          Dollars)(18)      Average Daily
                                                                                             Net Assets)
<S>                               <C>                                  <C>                  <C>               <C>

Mackenzie Yield Advantage        Above-average income with the                8.1              0.50(17)          1999
Fund(20)                         potential for capital growth.
(Richard Gluck, IMI)

Universal U.S. Blue Chip         Long-term capital growth.                  226.2              0.50(17)          1999
Fund
(Paul P. Baran, IMI)

Universal Internet
Technologies Fund (Keith         Long-term capital growth.                   12.0              0.40(17)          2000
Maher, IMI)

Universal Communications Fund
(co-managed by three portfolio
managers from IMI, MFC and       Long-term capital growth.                    2.8              0.40(17)          2000
Henderson)

Mackenzie Universal Select
Managers USA Capital Class
(co-managed by five portfolio    Long-term capital growth.                    2.6              0.40(17)          2000
managers from IMI, Alliance,
Salomon and Credit Suisse)(21)

Mackenzie Universal US Blue
Chip Capital Class (Paul P.      Long-term capital growth.                    1.9              0.40(17)          2000
Baran, IMI)

Mackenzie Universal US
Emerging Growth Capital Class    Long-term capital growth.                    0.9              0.40(17)          2000
(James W. Broadfoot, IMI)

Mackenzie Universal Select
Managers Capital Class
(co-managed by five portfolio    Long-term capital growth.                   11.2              0.40(17)          2000
managers from IMI, Henderson
and Cundill)

Mackenzie Universal Select
Managers International Capital
Class (co-managed by five
portfolio managers from IMI,     Long-term capital growth.                    0.8              0.40(17)          2000
MFC, Henderson and Robert
Fleming)

Mackenzie Universal
Communications Capital Class
(co-managed by three portfolio   Long-term capital growth.                    0.3              0.40(17)          2000
managers from IMI, MFC and
Henderson)

Mackenzie Universal World
Value Capital Class
(co-managed by Paul P. Baran     Long-term capital appreciation.              0.3              0.40(17)          2000
and Sheridan Reilly, IMI)

Mackenzie Universal Internet
Technologies Capital Class       Long-term capital growth.                    1.2              0.40(17)          2000
(Keith Maher, IMI)
</TABLE>


                                       12
<PAGE>   13

<TABLE>
<CAPTION>
         Name of Fund                                                   Net Assets as of     Management          Year
      (Portfolio Manager)                Investment Objective          of March 31, 2001         Fee          Introduced
                                                                        (In Millions of      (% of Fund
                                                                          Dollars)(18)      Average Daily
                                                                                             Net Assets)
<S>                               <C>                                  <C>                  <C>               <C>
Mackenzie Universal World        Long-term capital growth.                    1.4              0.40(17)          2000
Science and Technology Capital
Class (co-managed by three
portfolio managers form IMI,
MFC and Henderson)
</TABLE>

(1)      The net assets of Ivy Pan-Europe Fund were acquired by the Fund on June
         27, 2000.

(2)      Reduced to 0.85% for net assets over $250 million but less than $500
         million and further reduced to 0.75% for net assets over $500 million.
         IMI retains 0.78%; Henderson, as sub-adviser, is paid 0.22%.

(3)      Reduced to 0.75% for average daily net assets over $500 million.

(4)      IMI is paid 0.50%; MFC is paid 0.50%.

(5)      Reduced to 0.90% for net assets over $2.0 billion, further reduced to
         0.80% for net assets over $2.5 billion and further reduced to 0.70% for
         net assets over $3.0 billion. Prior to May 27, 2000, the Fund was
         sub-advised by Northern Cross, who was paid an amount equal to 0.60% of
         the Fund's average daily net assets.

(6)      Effective September 29, 2000, the Fund changed its name from Ivy
         International Fund II.

(7)      IMI retains 0.78%; Henderson, as sub-adviser, is paid 0.22%.

(8)      Effective April 30, 2001, the Fund changed its name from Ivy Cundill
         Value Fund.

(9)      IMI retains 0.50%; Cundill, as sub-adviser, is paid 0.50%.

(10)     Reduced to 0.75% for average daily net assets over $350 million.

(11)     The net assets of Ivy Growth with Income Fund were acquired by the Fund
         on June 27, 2000.

(12)     Effective September 13, 2000, the Fund changed its name from Ivy China
         Region Fund.

(13)     The net assets of Ivy Asia Pacific Fund were acquired by the Fund on
         November 21, 2000.

(14)     Effective April 14, 2000, the Fund changed its name from Ivy Developing
         Nations Fund.

(15)     The net assets of Ivy South America Fund were acquired by the Fund on
         July 21, 2000.

(16)     Reduced to 0.40% for average daily net assets over $500 million. Prior
         to September 1, 2000, the fee was 0.75% of the first $100 million,
         reduced to 0.50% for average daily net assets over $100 million.

(17)     These fees are paid according to a graduated scale. For details see the
         "Investment Management and Advisory Services" section under "Narrative
         Description of Business."

(18)     Excludes net assets of Separate Accounts and other non-Canadian Fund
         sub-advised assets.

(19)     Cundill Investment Research, Inc., Canada

(20)     Effective December 22, 2000, the Fund changed its name from Industrial
         Yield Advantage Fund.

(21)     Alliance Capital Management Corporation, Salomon Smith Barney and
         Credit Suisse Asset Management, LLC.

         Ivy International Fund

         During the first quarter of fiscal year 2001, the Company internalized
the portfolio management of its largest fund, Ivy International Fund.
Previously, Ivy International Fund had been sub-advised by an unrelated third
party under a sub-advisory agreement, which was terminated as of May 27, 2000.
The sub-advisory agreement provided for payment of sub-advisory fees at the rate
of 0.60% of average daily net assets. The Company reopened Ivy International
Fund, which had been closed to new investors, on June 1, 2000.


                                       13
<PAGE>   14

         Fund Reorganizations

         On November 21, 2000, the assets of Ivy Asia Pacific Fund were
reorganized into the assets of Ivy Pacific Opportunities Fund (formerly Ivy
China Region Fund). On July 21, 2000, the assets of Ivy South America Fund were
reorganized into the assets of Ivy Developing Markets Fund. On June 27, 2000,
the assets of Ivy Pan-Europe Fund were reorganized into the assets of Ivy
European Opportunities Fund and the assets of Ivy Growth with Income Fund were
reorganized into the assets of Ivy US Blue Chip Fund. The respective portfolios
in each reorganization had similar investment objectives and policies.

         Management believes that the above reorganizations have the potential
to achieve enhanced investment performance and distribution capabilities, as
well as achieve certain economies of scale and cost savings.

         Fund Introductions

         On December 29, 2000, the Company launched Ivy International Growth
Fund. On April 18, 2000, the Company launched Ivy Cundill Value Fund (name
changed to Ivy Cundill Global Value Fund as of April 30, 2001), which is
sub-advised by Cundill.

         Fund Dissolutions

         Effective December 8, 2000, the Board of Trustees of Ivy Fund approved
the termination and dissolution of Ivy International Strategic Bond Fund
("IISBF"). Management elected to use its discretionary powers to reimburse all
shareholders with their original investment and any up-front fees paid. IISBF
was liquidated on December 15, 2000.

         Effective April 26, 2000, the Board of Trustees of Mackenzie Solutions
approved the termination and dissolution of Mackenzie Solutions Trust and its
five separate portfolios.

         Management believes that the above dissolutions will not have a
material effect on the Company's operations.

         Expansion of Investment Advisory and Sub-Advisory Services

         On October 26, 2000, the Company amended its sub-advisory agreement
with MFC to provide for the Company's managing an additional nine funds,
bringing the total number of mutual funds managed and distributed by MFC that
are sub-advised by the Company as of March 31, 2001 to twenty-two. Fees earned
on these additional funds are consistent with the sub-advisory arrangements,
effective as of July 1, 2000, as described previously.

         On June 1, 2000, the Company entered into a sub-advisory agreement with
Premier Asset Management PLC ("Premier"). Under the terms of the agreement, the
Company provides Premier with investment advisory services for fees similar to
existing sub-advisory arrangements. As of March 31, 2001, five Premier Funds are
being sub-advised by the Company. MFC has a less than 25% beneficial interest in
Premier as of March 31, 2001.

         Fund Management

         In November 2000, the shareholders of Ivy International Small Companies
Fund approved an amendment to the sub-advisory agreement between the Company and
Henderson Investment Management Limited ("Henderson") whereby the percentage of
assets of Ivy International Small Companies Fund managed by Henderson was
increased from 50% to 100%.


                                       14
<PAGE>   15

         Multi-Class Share Structure

         In October 1993, Ivy Fund began offering a multi-class structure which
allows investors to choose an appropriate purchase option based on the amount
purchased and the anticipated duration of the investments. MIMI implemented this
multi-class structure in response to increasing competition from mutual fund
managers offering funds without a front-end sales charge. The multi-class share
structure allows investors to choose between paying a front-end sales charge at
the time of purchase, or not paying a front-end sales charge at the time of
purchase but instead paying a Contingent Deferred Sales Charge ("CDSC") on
redemption. Prior to October 1993, Ivy Fund offered Class A shares only, which
normally bear a front-end sales charge payable by the investor at the time of
purchase and are subject to a 12b-1 Service Fee at an annual rate of up to 0.25%
of a Fund's average daily net assets attributable to its Class A shares.

         A 12b-1 Fee is a fee permitted by Rule 12b-1 under the 40 Act, which a
mutual fund may pay in connection with the distribution of its shares, for costs
such as advertising and commissions paid to broker-dealers. The portion of the
12b-1 Fee payable to a broker-dealer as a distribution fee in connection with
the distribution of a mutual fund's shares is referred to as a 12b-1
Distribution Fee. This fee is limited annually to 0.75% of the mutual fund's
average daily net assets. An additional portion of the 12b-1 Fee, referred to as
a 12b-1 Service Fee, is limited to 0.25% of the mutual fund's average daily net
assets. It is paid to broker-dealers and other sales professionals for their
services in providing ongoing information and assistance to investors.

         Class B shares of the Ivy Funds became available for sale starting in
October 1993. No front-end sales charge on such shares is payable by the
investor at the date of purchase, but there is a deferred selling commission of
4% of the sale price paid by MIMI to the selling broker-dealer when the shares
are purchased and a declining CDSC payable by the investor if the shares are
redeemed within six years from the date of purchase. In addition, Class B shares
are subject to 12b-1 Service and Distribution Fees at a combined annual rate of
up to 1.00% of a Fund's average daily net assets attributable to its Class B
shares. Approximately eight years after the original date of purchase, Class B
shares convert automatically to Class A shares.

         In March 1999, MIMI sold a portion of the Class B deferred selling
commission asset. See the sub-section titled "Distribution Services" below for
more information.

          Class C shares became available for sale starting in May 1996. There
is no front-end sales charge payable by the investor at the date of purchase,
but there is a deferred selling commission of 1% of the sale price paid by MIMI
to the selling broker-dealer when the shares are purchased. A CDSC of 1% is
payable by the investor if the shares are redeemed within one year from the date
of purchase. Class C shares are subject to 12b-1 Service and Distribution Fees
at a combined annual rate of up to 1.00% of the mutual fund's average daily net
assets attributable to its Class C shares. The 12b-1 Service and Distribution
Fees are retained by IMDI in year one; for all subsequent years, the fees are
paid to the selling broker-dealer. Class C shares do not have a conversion
feature.

         Advisor Class shares became available for sale starting in January
1998. The shares are offered at net asset value without the imposition of a
front-end sales charge or CDSC. In addition, Advisor Class shares are not
subject to Rule 12b-1 Fees. Advisor Class shares are offered only to certain
investors, such as those with an account over which a financial planner, trust
company or registered investment adviser has investment discretion, and where
the investor pays such person as compensation for its advice and other services
an annual fee on the net assets in the account. Currently, Advisor Class shares
are offered by all the Funds other than Ivy Money Market Fund.

         Class I shares became available for sale starting in October 1994.
Class I shares are offered only to institutions and are not subject to an
initial sales charge or CDSC, nor to ongoing 12b-1 Service or Distribution Fees.
Class I shares also bear lower fees than Class A, Class B and Class C shares.
Currently, Class I shares are offered by nine of the Ivy Funds.


                                       15
<PAGE>   16

Administrative, Transfer Agent and Fund Accounting Services

         Under administrative services agreements, MIMI provides administrative
services to the Funds including, but not limited to, maintenance of registration
and qualification of Fund shares under state Blue Sky laws, preparation of
federal, state and local income tax returns and preparation of financial and
other information for prospectuses, securities regulatory documents and returns
and periodic reports to shareholders. The administrative service agreements for
the Funds continue in effect, after an initial two year period, for successive
annual periods, providing such continuance is specifically approved at least
annually by a majority of votes cast in person at a meeting the Funds' Boards of
Trustees called for that purpose, or by a vote of the holders of a majority of
the Funds' outstanding voting securities. In either event, the continuance must
be approved by a majority of the Funds' trustees who are not parties to the
agreement or interested persons, within the meaning of the 40 Act, of the Funds
or the Company. The administrative service agreements may be terminated upon 60
days written notice by a vote or written consent of a majority of the Funds'
Board of Trustees, or by MIMI. To date, no administrative service agreements of
the Company with the Funds have been terminated other than in connection with
Fund closings. See "Investment Management and Advisory Services" under
"Narrative Description of Business."

         Under fund accounting services agreements, MIMI also provides certain
accounting and pricing services to the Funds. The fund accounting services
agreements for the Funds continue in effect for successive annual periods,
providing such continuance is specifically approved at least annually by a
majority of votes cast in person at a meeting the Funds' Boards of Trustees
called for that purpose, or by a vote of the holders of a majority of the Funds'
outstanding voting securities. In either event, the continuance must be approved
by a majority of the Funds' trustees who are not parties to such agreement or
interested persons, within the meaning of the 40 Act, of the Funds or the
Company. The fund accounting services agreements may be terminated upon 90 days
written notice by a vote or written consent of a majority of the Board of
Trustees, or by MIMI. To date, no fund accounting services agreements of the
Company with the Funds have been terminated other than in connection with Fund
closings.

         For the administrative services provided to the Funds as described
above, all Ivy Funds pay a monthly fee at an annual rate of 0.10% of the average
daily net assets of the applicable Fund (except with respect to Class I shares).
All Ivy Funds pay a monthly fee at an annual rate of 0.01% of the average daily
net assets for Class I shares. For accounting and pricing services, MIMI
receives a fee ranging from $1,000 to $6,500 per month based on the net asset
value of each of the Ivy Funds at the preceding month end. MIMI is also
reimbursed by the Funds for certain out-of-pocket expenses.

         IMSC serves as transfer agent and dividend paying agent for the Funds
and provides certain shareholder and shareholder-related services as required by
the Funds. For transfer agent services, IMSC receives a per shareholder account
fee ranging from $20 to $22 per year. The shareholder account fee received by
IMSC for Class I shares is $10.25. In addition, the Funds pay IMSC a monthly fee
at an annual rate of $4.86 per account that is closed. IMSC is also reimbursed
by the Funds for certain out-of-pocket expenses. See "Restructuring" under
"Narrative Description of Business".

Distribution Services

         IMDI serves as principal underwriter and exclusive distributor of the
Funds and distributes their shares on a continuous basis in every state in the
U.S. IMDI is not required to sell any specific amount of Fund shares. The Funds'
shares are sold primarily through a large network of independent participating
securities dealers. The Funds' shares are offered to individual investors,
qualified groups, trustees, IRA and profit sharing or money purchase plans,
employee benefit plans, trust companies, bank trust departments and
institutional investors.

         IMDI is assisted in its distribution efforts by a national team of
seven regional representatives who market the Funds to the broker-dealer,
financial planner and registered investment adviser sales channels, supported by
a national sales manager and a team of internal sales personnel, all of whom are
employed by the Company. The broker-dealer and financial planner sales channels
are the traditional channels through


                                       16
<PAGE>   17

which load mutual funds are sold to investors. IMDI has dealer agreements with
1,392 U.S. broker-dealer firms who distribute the Funds' shares through their
regional offices. For the year ended March 31, 2001, two firms were responsible
for 46% of the Company's mutual fund sales. None of the firms are under any
obligation to sell a specific amount of shares of the Funds and some also sell
shares of mutual funds that they sponsor and which are sponsored by unaffiliated
organizations.

         Upon receipt of a purchase order from a broker-dealer, IMDI purchases
shares from the Funds at net asset value per share and re-sells them to the
broker-dealer who in turn sells them to the investor at the public offering
price. As an underwriting fee, IMDI receives a portion of the difference between
the purchase price it paid to the Funds and the public offering price paid by
the investor. The underwriting fee retained by IMDI is typically 15 - 20% of the
front-end sales charge paid by the investor, with the remaining portion being
retained by the selling broker-dealer.

         Over the years, MIMI has gained access to the mutual fund sales network
created by the emergence of registered investment advisers and financial
planners. This network consists of independent registered investment advisers
and financial planners who work with the traditional broker-dealer distribution
network in selling funds to their clients. Firms such as Charles Schwab & Co.,
Inc. and Fidelity Investment Advisor Group act as clearing houses for thousands
of U.S. mutual funds enabling smaller, independent registered investment
advisers and financial planners to have access to mutual fund groups previously
sold only by broker-dealers. Management of MIMI believes that MIMI was one of
the first U.S. mutual fund managers whose funds impose front-end sales charges
or CDSCs to actively participate in this expanding network and has established
selling arrangements with many U.S. registered investment advisers and financial
planner groups.

         Under the terms of the distribution plans between IMDI and the Funds,
IMDI is entitled to receive 12b-1 Distribution Fees from the Funds for
distribution services in respect of certain of the classes of shares offered by
the Funds. The plans are established for an initial term of one year and
thereafter must be approved annually by the Funds' Board of Trustees and by a
majority of disinterested Trustees. All such plans are subject to termination at
any time by a majority vote of the disinterested Trustees or by the Funds'
shareholders. The plans permit the Funds to bear certain expenses relating to
the distribution of their shares.

         IMDI is entitled to be reimbursed by the Funds for 12b-1 Service Fees
paid by it to broker-dealers up to an amount equal to 0.25% of the average daily
net assets of each Fund's Class A shares. This fee is accrued daily and IMDI is
reimbursed monthly.

         Each Fund pays IMDI a 12b-1 Fee at an annual rate of 1.00% of the
average daily net assets of the Class B and Class C shares of the Fund, which is
comprised of a 12b-1 Distribution Fee of 0.75% of the average daily net assets
paid to IMDI as reimbursement for various promotional and sales-related expenses
incurred, and a 12b-1 Service Fee of 0.25% of the average daily net assets which
IMDI pays to the broker-dealer for account maintenance and shareholder services.
This fee is accrued daily and IMDI is paid monthly.

         IMDI is entitled to receive a CDSC on the redemption of Class B and
Class C shares depending on when they are redeemed. For Class B shares, the CDSC
ranges from a maximum 5% in the first year of purchase, and declines over six
years to 1%. There is no CDSC for Class B shares held more than six years. For
Class C shares, there is a 1% CDSC for redemptions during the first year after
purchase.

         MIMI pays the up-front selling commission to broker-dealers on sales of
Class B and Class C shares. The up-front selling commission is 4% and 1% for
Class B and Class C shares, respectively. MIMI funds these up-front selling
commissions from its cash flows from operations, including CDSC and 12b-1
Distribution Fees.

         In March 1999, the Company sold a portion of the deferred selling
commissions related to Class B shares to an unrelated third party (the
"Purchaser"). The sale resulted in the Company receiving cash proceeds of
$21,115,000 and recording a net gain of approximately $41,000 after recording
expenses


                                       17
<PAGE>   18

incurred in connection with the transaction. The Purchaser will receive 12b-1
Distribution Fees and any CDSC upon redemption of the asset sold. The sale of
the deferred selling commissions provided cash to the Company for general
corporate purposes.

         As of March 31, 2001, there were approximately 100,400 shareholder
accounts in the Funds.

Custody and Brokerage

         Custody of individual securities is maintained by banks, trust
companies, brokerage firms or other custodians as appointed by the Company. The
Company generally has the discretion to select brokers or dealers to be utilized
to execute transactions for the Funds' accounts.

Number of Employees

       As of March 31, 2001, the Company had 119 employees, including fifteen
investment professionals, of whom six are portfolio managers, six are research
analysts and three are traders. The average period of employment of these
professionals with the Company is approximately four years and their average
investment experience is approximately fifteen years. The Company considers its
employee relations to be good. See "Restructuring" below.

Restructuring

         As market conditions continued to decline in late calendar year 2000
and early 2001, the Company began assessing strategic restructuring and
reorganization plans. In the last quarter of fiscal year ended March 31, 2001,
the Company recorded a pre-tax charge of $3,032,000 to cover restructuring
costs. The restructuring plans include out-sourcing the transfer agency function
to PFPC, the Company's current remote third party service provider, as well as
downsizing sales and marketing and various support functions. These initiatives
are expected to be fully implemented by July 2001 and result in a total
headcount reduction of approximately fifty-five employees.

         The total restructuring is expected to be immediately accretive to
earnings at an approximate current pre-tax run rate of $3 million annually with
the additional benefit of improving the Company's overall liquidity.

Take-over of MFC

         On April 20, 2001, Investors Group acquired, through a takeover bid,
98.2% of the outstanding shares of MFC. Investors Group extended the expiry time
of its bid to April 30, 2001 to facilitate the purchase of the remaining common
shares of MFC. Effective April 30, 2001, Investors Group filed notice of its
intention to exercise its right under Part XV of the Business Corporations Act
(Ontario) to acquire common shares not purchased by it under the bid which will
permit them to take MFC private.

         In connection with the take-over and change in control of MFC, the
Company will incur costs of approximately $600,000 outside of its normal course
of business. Such costs consist primarily of legal, printing, mailing,
solicitation and other costs related to a proxy statement submitted to the U.S.
Fund's shareholders and other such matters. MFC will reimburse the Company on an
after-tax basis. Such amount will be recorded as a capital contribution.

Risk Factors and Cautionary Statements

         Competition

         The financial services industry is highly competitive and has
increasingly become a global industry. There are over 8,000 open-end investment
companies of varying sizes, investment policies and objectives whose shares are
being offered to the public in the U.S. Given the large number of competitors in
the U.S., the Company has focused its efforts on becoming an investment
specialist with a worldwide


                                       18
<PAGE>   19

perspective offering mutual funds with an emphasis on international and emerging
growth 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 and
emerging market funds, to investors. As of March 31, 2001, the Company's market
share of monthly average net assets under management was 0.02%. However, the
Company's market share of international and emerging market fund monthly average
net assets under management was 0.22%.

         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.

         Distribution

         Securities dealers, whose large retail distribution systems play an
important role in the sale of shares of the Funds, also sponsor competing
proprietary mutual funds. To the extent that these firms limit or restrict the
sale of Ivy Funds through their brokerage systems in favor of their proprietary
mutual funds, future sales may be negatively impacted and the Company's revenues
might be adversely affected. As competition increases in the investment
management industry, greater demands are placed on existing distribution
channels, which has caused distribution costs to increase.

         As investor interest in the mutual fund industry has increased,
competitive pressures have increased on sales charges of broker-dealer
distributed funds. The Company believes that, although this trend will continue,
a significant portion of the investing public still relies on the services of
the broker-dealer community, particularly during weaker market conditions.
However, in response to competitive pressures or for other similar reasons, the
Company might be forced to lower or further adjust sales charges, substantially
all of which are paid by the Company to broker-dealers and other financial
intermediaries. The reduction in such sales charges paid to broker-dealers could
make the sale of shares of the Funds somewhat less attractive to the
broker-dealer community, which could in turn have a material adverse effect on
the Company's revenues.

         Asset Mix

         As discussed above, the Company's revenues are derived primarily from
investment management activities. Broadly speaking, the direction and amount of
change in the net assets of 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.

         Many things affect market values, 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,


                                       19
<PAGE>   20

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.

         Ivy International Fund

         As of March 31, 2001, 20% of the net assets under the Company's
management was represented by IIF. A decline in the performance of IIF could
have an effect on further redemptions of its shares. Net redemptions in IIF for
the Company's fiscal year ended March 31, 2001 were $860 million, based on sales
and redemptions of $292 million and $1,152 million, respectively.

         Absence of Public Trading Market

         MFC owns 85% of the issued and outstanding common shares of MIMI as of
March 31, 2001. The shares have been thinly traded. Further, the number of
common shares of MIMI held by persons other than MFC are very small by market
standards and this may have an adverse impact on liquidity and trading of the
common shares. See "Take-over of MFC" under "Narrative Description of Business."

         Relationship with MFC

         For the year ended March 31, 2001, 19% of MIMI's consolidated revenues
were derived from fees received from MFC for sub-advisory services provided to
the Canadian Funds. Any change in these sub-advisory arrangements between MFC
and MIMI could have an adverse effect on MIMI's revenues. Management of MIMI
understands that MFC intends to continue MIMI's role as a sub-adviser, subject
to MIMI's level of performance and MFC's obligations as manager of the Canadian
Funds.

         As of April 20, 2001, Investors Group acquired through a takeover bid,
98.2% of the outstanding shares of MFC. See "Investment Management and Advisory
Services" and "Take-over of MFC" under "Narrative Description of Business."

         Reliance on Key Employees and Sub-Advisors

         MIMI takes a team approach to the management in some of the Funds'
portfolios and uses sub-advisors for four of its Funds. It is possible that
levels of investment in a Fund may be impacted should the principal portfolio
manager or sub-advisor cease managing that Fund.

Regulatory Environment

         Virtually all aspects of the Company's business are subject to various
federal and state laws and regulations. As discussed above, the Company and its
subsidiaries are registered with federal and state governmental agencies. These
supervisory agencies have broad administrative powers, including the power to
limit or restrict the Company from carrying on its business if it fails to
comply with applicable laws and regulations. In the event of non-compliance, the
possible sanctions that may be imposed include suspending individual employees,
limiting the Company's ability to engage in business for specified periods of
time, revoking the investment advisor or broker-dealer registrations and
censures and fines.


                                       20
<PAGE>   21

         The Company's officers, directors and employees may from time to time
own securities, which are also held by the Funds. The Company's internal
policies with respect to individual investments by certain employees, including
officers and directors who are employed by the Company, require prior clearance
and reporting of certain transactions and restrict or prohibit other
transactions so as to reduce the possibility of conflicts of interest. The
Company's compliance procedures meet the standards outlined in the most recent
Investment Company Institute's guidelines related to securities transactions by
employees, officers and directors of investment companies and recent amendments
to Rule 17j-1 under the 40 Act.

         To the extent that existing or future regulations cause a reduction in
sales of Fund shares or investment products or impair the investment performance
of the Funds or such other investment products, the Company's aggregate net
assets under management and its revenues might be adversely affected. Changes in
regulations affecting free movement of international currencies might also
adversely affect the Company.

         The Company is subject to increased scrutiny and an increasing volume
of compliance reporting related to its plan and activities, as discussed in more
detail in "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations."

         Since 1993, the NASD Conduct Rules have limited the amount of aggregate
sales charges which may be paid in connection with the purchase and holding of
investment company shares sold through brokers. The effect of the rule might be
to limit the amount of fees that could be paid pursuant to a Fund's Rule 12b-1
distribution plan to IMDI. Such limitations would apply in a situation where a
Fund has no, or limited, new sales for a prolonged period of time.

         Under the 40 Act, each of the Funds must file annually a current
Prospectus and Statement of Additional Information with, and pay registration
fees to, the SEC. The public may read and copy any material filed with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. Additionally, each of the Funds must pay
registration fees in some or all of the states.

         Under the 40 Act and rules thereunder, each of the Funds is required to
obtain shareholder approval for certain changes in its operations including
changes to its investment advisory contracts, a change in control of its adviser
or IMDI, its principal underwriter, or a change in its fundamental investment
objective or other fundamental policies. The 40 Act also requires that each of
the Funds' investment advisory contracts be annually approved by the Funds'
Board of Trustees. Absent approval, these contracts, including the fee revenues
from these contracts would terminate.

         As a registered broker-dealer, IMDI is subject to net worth and capital
requirements, bonding requirements and detailed rules of practice as well as
general anti-fraud provisions.

ITEM 2.  PROPERTIES.

         The Company's corporate, research and administrative offices are
located in leased premises, which consist of the following:

-        Approximately 27,000 square feet located at Via Mizner Financial Plaza,
   700 South Federal Highway, Boca Raton, Florida 33432, for an average rent per
   year of approximately $680,000. The lease expires in 2001.

-        Approximately 5,300 square feet located at 1239-1287 East Newport
   Center Drive, Suite 106 and 205, Deerfield Beach, Florida 33442, for an
   average rent per year of $70,000. The lease expires in 2001.


                                       21
<PAGE>   22

-        Approximately 1,800 square feet located at 200 East Broward Boulevard,
   Suite 1100, Fort Lauderdale, Florida 33301, for an average rent per year of
   $51,000. The lease expires in 2001.

         The Company's headquarters are located in the Boca Raton facility.

         All premises are leased from unaffiliated entities.

         The Company has entered into a lease with Boca II Associates, Ltd.,
landlord for First Union Plaza, located at 925 South Federal Highway, Boca
Raton, Florida 33432. The Company intends to move its corporate, research and
administrative offices into approximately 40,000 square feet of office space at
First Union Plaza in July 2001 for an average base rent per year of $969,000.
The lease expires in 2013.

ITEM 3.  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 adverse to the Company. There are no
material administrative or judicial proceedings pending or known to be
contemplated by any governmental authorities.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the Company's most recently completed fiscal year.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below are the names and ages of the executive officers of the
Company, and a description of the positions and offices each holds with the
Company and its significant subsidiaries.

<TABLE>
<CAPTION>
         Name                             Age    Positions with the Company and its Significant Subsidiaries
         ----                             ---    -----------------------------------------------------------
         <S>                              <C>    <C>
         Keith J. Carlson                 Age    President, Chief Executive Officer, and Director since July
                                          45     1999. Prior thereto, Executive Vice President and Chief
                                                 Operating Officer from December 1997 to July 1999. Senior Vice
                                                 President from August 1989 to December 1997. Director from April 1985
                                                 to October 1996. Director of IMDI since June 1993. President and Chief
                                                 Executive Officer of IMDI since December 1994. Chairman of IMI since
                                                 January 1992. Director of IMI since November 1992. Senior Vice
                                                 President of IMI since January 1992. Chairman and Director of IMSC
                                                 since June 1993. President of IMSC from June 1993 to February 1996 and
                                                 from February 2001 to the present. Chairman and Trustee of Ivy Fund
                                                 since July 1999. Prior thereto, President of Ivy Fund since December
                                                 1996.
</TABLE>


                                       22
<PAGE>   23

<TABLE>
         <S>                              <C>    <C>
         James W. Broadfoot III           Age    Senior Vice President and Portfolio Manager since August 1990.
                                          58     Director since June 1995. President, IMI since October 1997.
                                                 President and Trustee of Ivy Fund since July 1999. Prior thereto, Vice
                                                 President of Ivy Fund since June 1996. Director of IMDI and IMSC since
                                                 January 2001.

         Sheridan P. Reilly               Age    Vice President and Chief Investment Officer (CIO): International
                                          49     Equities since May 2000. Senior Vice President and CIO: International
                                                 Equities of IMI since May 2000. Prior thereto, Senior Portfolio
                                                 Manager: Core International Team Leader for Scudder Kemper Investment
                                                 from March 1995 through April 2000.

         Beverly J. Yanowitch             Age    Chief Financial Officer since January 2000. Vice President since
                                          51     December 1999. Treasurer since September 2000. Senior Vice President of
                                                 IMDI since October 1997 and Vice President of IMDI since December 1993.
                                                 Treasurer of IMDI since September 2000. Senior Vice President of IMI
                                                 and IMSC since September 2000. Treasurer of IMI and IMSC since
                                                 September 2000. Prior thereto, Controller from January 1993 to December
                                                 1999. Treasurer of Ivy Fund since January 2001.

         Paul P. Baran                    Age    Vice President since December 1999. Portfolio  Manager and Senior Vice
                                          50     President of IMI since July 1998. Prior thereto, Senior Vice President
                                                 and Chief Investment Officer for Central Fidelity National Bank from
                                                 September 1987 to June 1998.

         Thomas H. Bivin, Jr.             Age    Vice President since September 1999. Executive Vice President and
                                          62     National Sales Manager for Ivy Mackenzie Distributors, Inc. since
                                                 September 1999. Senior Vice President and Wholesaler of Ivy Mackenzie
                                                 Distributors, Inc. from July 1994 to September 1999.
</TABLE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's common shares are traded on the TSE under the ticker
symbol MCI. The current bylaws of the TSE require every TSE listed company
incorporated under the laws of Canada or any province to disclose to
shareholders, on an annual basis, its corporate governance practices. That
statement of corporate governance practices must indicate whether the Company
complies with the guidelines for effective corporate governance contained in the
TSE Guidelines and, if not, the reasons for the differing practices. As the
Company is a foreign issuer in Canada, it is not technically required to comply
with the TSE Guidelines. However, the Company has adopted the same approach to
corporate governance as its majority shareholder, MFC, which follows the TSE
Guidelines.


                                       23
<PAGE>   24

         The following table sets forth the high and low sales prices for the
Company's common stock in U.S. dollars. The prices were obtained from the TSE in
Canadian dollars and translated at each respective day's spot rate to U.S
dollars.

<TABLE>
<CAPTION>
                                    2001 Fiscal Year                              2000 Fiscal Year
       Quarter                    High             Low                         High              Low
   ----------------              -----            -----                       -----             -----
   <S>                           <C>              <C>                         <C>               <C>
   April-June                    $6.48            $4.76                       $5.34             $4.03
   July-September                 5.73             4.98                        4.72              3.73
   October-December               6.15             4.11                        4.29              3.08
   January-March                  5.98             4.19                        6.46              3.19
</TABLE>

         MIMI's stock option plan was adopted by the Board of Directors on
August 31, 1994 (the "1994 Plan"). In accordance with the rules of the TSE,
effective September 9, 1999, MIMI amended the 1994 Plan to fix the maximum
number of shares issuable under the 1994 Plan at 3,114,220 common shares,
representing 10% of the issued and outstanding common shares of MIMI's then
outstanding shares less the common shares issued on the exercise of options
within the preceding year. On March 31, 2001, there were 1,322,000 options
outstanding.

         There are approximately 149 registered shareholders of the Company. As
of March 31, 2001, MFC was the primary shareholder holding 15,987,910 shares, or
85% of the Company.

          In the past, MIMI has retained its earnings for use in the operation
and expansion of its business. Commencing in fiscal year 2001, it began paying a
semi-annual cash dividend of $0.01 per common share. Total common share
dividends paid during the year ended March 31, 2001 approximated $375,000.

ITEM 6.  SELECTED FINANCIAL DATA.

         The tables below indicate selected consolidated financial information
for MIMI as of and for each of the five years in the period ended March 31,
2001. The selected consolidated financial data have been derived from the
Company's consolidated financial statements. The following data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and notes thereto included elsewhere in this document. (Note: all figures are in
US dollars except where otherwise stated.)

<TABLE>
<CAPTION>
                                                                     For the year ended March 31,
                                                 2001            2000            1999            1998            1997
                                               --------        --------        --------        --------        --------
                                                         (In thousands of dollars, except per share amounts)

                  <S>                          <C>             <C>             <C>             <C>             <C>
                  Revenues                     $ 52,147        $ 63,506        $ 66,256        $ 65,096        $ 37,143
                  Net income                      2,643           6,448           8,549           9,526           7,291
                  Per common share:
                   Net income - basic              0.14            0.34            0.45            0.51            0.44
                   Net income - diluted            0.14            0.34            0.44            0.49            0.43
                   Dividends declared
                   and paid                        0.02            0.00            0.00            0.00            0.00
</TABLE>


                                       24
<PAGE>   25

<TABLE>
<CAPTION>
                                                                                  As of March 31,

                                                   2001              2000              1999              1998              1997
                                                ----------        ----------        ----------        ----------        ----------
                                                                             (In thousands of dollars)
                  <S>                           <C>               <C>               <C>               <C>               <C>
                  Total Net Assets Under
                  Management                    $3,666,948        $7,028,003        $4,768,271        $5,246,088        $3,806,813
                  Total Assets                      64,061            64,072            68,169            61,925            64,406
                  Total Liabilities                  5,335             7,777            15,865            18,475            32,836
                  Stockholders' Equity              58,726            56,295            52,304            43,450            31,569
</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

YEAR ENDED MARCH 31, 2001 COMPARED WITH YEAR ENDED MARCH 31, 2000

         Average net assets under management, exclusive of net assets of the
Canadian Funds and other sub-advised funds, decreased 25% to $2,542 million for
the twelve-month period ended March 31, 2001 from $3,391 million for the
twelve-month period ended March 31, 2000.

         Sales of the U.S. Funds for the twelve-month period ended March 31,
2001 increased by $13 million compared to the twelve-month period ended March
31, 2000, while redemptions increased by $441 million for the twelve-month
period ended March 31, 2001 compared to the twelve-month period ended March 31,
2000. Ivy International Fund accounted for 38% and 67% of the sales and
redemptions, respectively, for the twelve-month period ended March 31, 2001 and
42% and 71% of the sales and redemptions, respectively, for the twelve-month
period ended March 31, 2000.

Revenues

         Total revenues decreased 18% to $52.1 million for the year ended March
31, 2001 from $63.5 million for the year ended March 31, 2000 due principally to
the decrease in the net assets of the U.S. Funds and the fees derived therefrom.
The following is an explanation of increase or decrease in each major category.

         Management fees decreased 26%, or $8.5 million, to $24.0 million for
the year ended March 31, 2001 from $32.5 million for the year ended March 31,
2000 primarily as a result of the decrease in the U.S. Funds' net assets under
management.

         Sub-advisory fees from the Canadian Funds increased 6%, or $0.5
million, to $10.0 million for the year ended March 31, 2001 from $9.5 million
for the year ended March 31, 2000. This increase is attributable to a 35%
increase in the Canadian Funds' average net assets to $3,011 million for the
year ended March 31, 2001 from $2,229 million for the year ended March 31, 2000.
The increase in the Canadian Funds' average net assets is attributable to the
addition of eleven new funds, which were primarily introduced in the third
quarter of fiscal year 2001.

         12b-1 Service and Distribution fees decreased 15%, or $1.3 million, to
$7.6 million for the year ended March 31, 2001 from $8.9 million for the year
ended March 31, 2000 due to the decrease in the U.S. Funds' net assets under
management.

         Administrative service, fund accounting and transfer agent fees
decreased 11%, or $0.8 million, to $6.3 million for the year ended March 31,
2001 from $7.1 million for the year ended March 31, 2000 due to


                                       25
<PAGE>   26

a decline in net assets under management and a decrease in the number of Ivy
Funds due to reorganizations and dissolutions.

         Underwriting fees decreased 50%, or $0.2 million, to $0.2 million for
the year ended March 31, 2001 from $0.4 million for the year ended March 31,
2000 due to a decline in class A share sales during fiscal year 2001.

         Redemption fees increased 150%, or $0.6 million, to $1.0 million for
the year ended March 31, 2001 from $0.4 million for the year ended March 31,
2000 due to an increase in redemptions of Class B and C shares.

         Interest, dividends and other revenues of $3.1 million for the year
ended March 31, 2001 were comparable to fiscal year 2000 amounts.

         Net realized gain (loss) on marketable securities decreased 113% or
$1.7 million for the year ended March 31, 2001 primarily as a result of: (1)
approximately $0.3 million in losses incurred on the dissolution of Mackenzie
Solutions and Ivy International Strategic Bond Fund and (2) the non-recurrence
of approximately $1.5 million in gains realized in fiscal year 2000 as a result
of a liquidation in the Company's investment in Ivy European Opportunities Fund.

Expenses

         Total operating expenses of $47.5 million for the year ended March 31,
2001 decreased 10%, or $5.1 million, from $52.6 million for the year ended March
31, 2000.

         Sales literature, advertising and promotion expenses were comparable to
the corresponding period last year.

         12b-1 Service fees paid to broker/dealers decreased 28%, or $2.2
million to $5.7 million for the year ended March 31, 2001 from $7.9 million for
the year ended March 31, 2000 due to the decrease in U.S. Funds' net assets
under management.

         Employee compensation and benefits increased 17%, or $2.3 million, to
$15.6 million for the year ended March 31, 2001 from $13.3 million for the year
ended March 31, 2000. This increase is due to cost of living increases and an
increase in staffing levels for the year ended March 31, 2001 as compared to the
year ended March 31, 2000. The increased staffing levels primarily relate to the
internalization of the portfolio management function of Ivy International Fund
in May 2000. See "Ivy International Fund" under "The Products."

         Sub-advisory fees decreased 84%, or $11.4 million, to $2.2 million for
the year ended March 31, 2001 from $13.6 million for the year ended March 31,
2000 due to the internalization of the portfolio management of Ivy International
Fund.

         Amortization of deferred selling commissions increased 136%, or $1.5
million, to $2.6 million for the year ended March 31, 2001 from $1.1 million for
the year ended March 31, 2000 due to a higher Class B share asset base.

         General and administrative expenses increased 15%, or $1.0 million, to
$7.5 million for the year ended March 31, 2001 from $6.5 million for the year
ended March 31, 2000 due primarily to costs incurred in connection with the
change in control of MFC and costs related to reorganizations and dissolutions
of certain funds.

         Restructuring costs of $3.0 million were accrued in the year ended
March 31, 2001. The restructuring plans include out-sourcing the transfer agency
function and downsizing sales and marketing departments and various support
functions. See "Restructuring" under "Narrative Description of Business."


                                       26
<PAGE>   27

         Occupancy and equipment rental expense increased 80%, or $0.8 million
to $1.8 million for the year ended March 31, 2001 from $1.0 million for the year
ended March 31, 2000 as a result of: (1) expanding the Company's leased office
space to meet the needs of increased staffing levels prior to the March 2001
restructuring and (2) additional lease expense in connection with an early
termination of the present office lease.

         IMI contractually limits total fund expenses for certain Funds and
bears expenses in excess of such limits. The decrease of $0.5 million, to $2.1
million for the year ended March 31, 2001 from $2.6 million for the year ended
March 31, 2000 in the reimbursement to the Funds for expenses is due to the
decrease in the number of Funds reimbursed resulting from the reorganization and
dissolution of certain funds.

YEAR ENDED MARCH 31, 2000 COMPARED WITH YEAR ENDED MARCH 31, 1999

         Net assets under management, exclusive of net assets of the Canadian
Funds, for which MIMI provided sub-advisory services to MFC, increased 5% to
$3,512 million at March 31, 2000 from $3,331 million at March 31, 1999. Of the
$181 million increase, $689 million was attributable to market appreciation and
$(508) million was attributable to net redemptions (sales less redemptions). Net
redemptions decreased by $15 million compared to the year ended March 31, 1999
due to (i) a $246 million increase in sales primarily due to increased interest
in international investing, in addition to the reopening of Ivy European
Opportunities Fund and (ii) a $231 million increase in redemptions over the
prior year of which redemptions in Ivy International Fund represented 71% of the
total redemptions.

         At March 31, 2000, the net assets of the Canadian Funds for which MIMI
provides sub-advisory services to MFC totaled approximately $3,516 million as
compared to $1,437 million at March 31, 1999, representing a 145% increase.

Revenues

         Total revenues decreased 4% to $63.5 million for the year ended March
31, 2000 from $66.3 million for the year ended March 31, 1999. The decrease is
primarily due to (i) the sale of the Class B deferred selling commission asset
and (ii) the decrease in average net assets under management and the fees
derived therefrom. The following is an explanation of the increase or decrease
in each major category.

         Management fees decreased 4%, or $1.3 million, to $32.5 million for the
year ended March 31, 2000 from $33.8 million for the year ended March 31, 1999,
solely attributable to the decrease in average net assets under management.

         Sub-advisory fees from the Canadian Funds increased 58%, or $3.5
million, to $9.5 million for the year ended March 31, 2000 from $6.0 million for
the year ended March 31, 1999. This increase can be attributed to (i) the growth
in net assets of the Canadian Funds as discussed above and (ii) an increase in
the number of funds to 11 from 9 for which sub-advisory services were rendered
in fiscal year 2000 as compared to fiscal year 1999, respectively.

         12b-1 Service and Distribution Fees received from the Funds decreased
39%, or $5.8 million, to $8.9 million for the year ended March 31, 2000 from
$14.7 million for the year ended March 31, 1999, attributable to the sale of the
Class B deferred selling commission asset in March 1999.

         Administrative, fund accounting and transfer agent fees during fiscal
year 2000 of $7.1 million were comparable with fiscal year 1999 amounts.

         Underwriting fees increased 300%, or $0.3 million, to $0.4 million for
the year ended March 31, 2000 from $0.1 million for the year ended March 31,
1999, due to the overall increase in sales volume.


                                       27
<PAGE>   28

         Redemption fees in the form of CDSCs, decreased 87%, or $2.7 million,
to $0.4 million for the year ended March 31, 2000 from $3.1 million for the year
ended March 31, 1999. This decrease can be attributed to the sale of the
deferred selling commission asset in March 1999.

         Interest, dividends, and other revenue increased 129%, or $1.8 million,
to $3.2 million for the year ended March 31, 2000 from $1.4 million for the year
ended March 31, 1999, primarily due to MIMI's higher cash balances resulting
from the sale of the deferred selling commission asset, as discussed previously,
and dividends earned on the Company's investment in Ivy European Opportunities
Fund.

         Net realized gain on marketable securities increased $1.5 million for
the year ended March 31, 2000 primarily due to the Company's liquidation of its
investment in Ivy European Opportunities Fund.

Expenses

         Total operating expenses of $52.6 million for the year ended March 31,
2000 were comparable to the prior year.

         Sales literature, advertising and promotion expenses increased 100%, or
$2.4 million, to $4.8 million for the year ended March 31, 2000 from $2.4
million for the year ended March 31, 1999 due to sales force and related
marketing expenditure increases for the promotion of new and existing products.

         12b-1 Service Fees paid to broker/dealers decreased 12%, or $1.1
million, to $7.9 million for the year ended March 31, 2000 from $9.0 million for
the year ended March 31, 1999 due to a decrease in Class B sales and assets.

         Employee compensation and benefits increased 29%, or $3 million, to
$13.3 million for the year ended March 31, 2000 from $10.3 million for the year
ended March 31, 1999 due to (i) an increase in the number of employees to 129 at
March 31, 2001 from 123 at March 31, 1999; (ii) salary and cost-of-living
adjustments; and (iii) a retirement allowance made to the former President and
Chief Executive Officer who resigned in July 1999.

         Sub-advisory fees paid decreased 8%, or $1.2 million, to $13.6 million
for the year ended March 31, 2000 from $14.8 million for the year ended March
31, 1999 due to a decrease in average net assets in Ivy International Fund.

         Amortization of deferred selling commissions decreased 82%, or $5.1
million, to $1.1 million for the year ended March 31, 2000 from $6.2 million for
the year ended March 31, 1999. This decrease was attributable to the sale of the
deferred selling commission asset in March 1999.

         General and administrative expenses increased 30%, or $1.5 million, to
$6.5 million for the year ended March 31, 2000 from $5 million for the year
ended March 31, 1999 primarily due to increases in (i) expensing of Fund
organization costs resulting from the adoption of Statement of Position No.
98-5, Reporting on the Costs of Start-up Activities; (ii) the outsourcing of
certain technology-related services; (iii) travel costs related to new product
development and recruiting activities; and (iv) costs, including office and
computer supplies, and other general operating expenses.

         In fiscal year 2000, there was no interest expense as the bank line of
credit used to fund the payment of sales commissions paid to broker/dealers for
the sale of Class B and C shares was repaid when the deferred selling commission
asset was sold in March 1999.

         Occupancy and equipment rental increased 8%, or $81,000, to $1,044,000
for the year ended March 31, 2000 from $963,000 for the year ended March 31,
1999 due to the expansion of office space to accommodate the increase in staff
and the escalation clauses in the leases.

         IMI contractually limits total fund expenses for certain Funds and
bears expenses in excess of such limits. The increase of $0.9 million, to $2.6
million for the year ended March 31, 2000 from $1.7


                                       28
<PAGE>   29

million for the year ended March 31, 1999 in the reimbursement to the Funds for
expenses is attributable to: (i) the increase in the number of Funds reimbursed;
and (ii) a decrease in the average net assets of many of the Funds that IMI
reimburses.

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 mutual funds offered in the U.S. 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.

         At March 31, 2001, the Company's position in cash and cash equivalents
increased to $44.8 million from $41.1 million at March 31, 2000. This $3.7
million increase for the year ended March 31, 2001 resulted from (i) cash
provided by operating activities of $4.5 million, primarily related to a
decrease in accounts receivable, increase in accrued expenses and other
liabilities, offset by payments of deferred selling commissions and sub-advisory
fees; (ii) cash used in investing activities of $0.5 million, primarily related
to purchases of property and equipment and purchases and sales of marketable
securities; and (iii) cash used in financing activities of $0.3 million,
primarily related to the payment of dividends.

         On October 12, 2000, the Company renewed a $10 million line of credit
with First Union National Bank. The line of credit has a term of 364 days and is
available for general working capital and short-term capital expenditure needs.
There are no immediate plans to draw on the line of credit as the Company
maintains sufficient cash balances to meet its financial commitments.

         Capital expenditures for fiscal years 2001 and 2000 were internally
funded and primarily consisted of computer equipment and software enhancements.
The Company anticipates investing approximately an additional $1.6 million
during the year ended March 31, 2002 in equipment, technology and furniture and
furnishings. Additionally, in the next fiscal year, as a result of the
restructuring initiated in March 2001, the Company anticipates approximately
$2.5 - $3.0 million in additional liquidity.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Reference is made to the information contained under the heading
"Business - Risk Factors and Cautionary Statements."

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The table below indicates selected financial information for MIMI on a
consolidated basis for the last eight fiscal quarters.

<TABLE>
<CAPTION>
     FISCAL 2001 FOR THE QUARTER ENDED                             JUN 30        SEPT 30          DEC 31         MAR 31
                                                                   ------        -------          ------         ------

     (In thousands of dollars, except per share amounts)            U.S.$          U.S.$           U.S.$          U.S.$
     amounts)

     <S>                                                           <C>            <C>             <C>            <C>
     Revenues                                                      15,573         14,272          12,089         10,213

     Expenses**                                                    13,612         10,957          10,318         12,656

     Provision (benefit) for income taxes                             811          1,368             754           (972)

     Net income (loss)                                              1,150          1,947           1,017         (1,471)
     Earnings (loss) per share - basic                               0.06           0.10            0.05          (0.08)
     Earnings (loss) per share - diluted*                            0.06           0.10            0.05          (0.08)
</TABLE>


                                       29
<PAGE>   30

*        Weighted average common stock equivalents of 65,551 shares for the
         quarter ended March 31, 2001 have been excluded from the diluted
         calculation due to their anti-dilutive effect in a net loss period.

**       Expenses for the quarter ended March 31, 2001 include restructuring
         costs of $3,032. See "Restructuring" under "Narrative Description of
         Business."

<TABLE>
<CAPTION>
     FISCAL 2000 FOR THE QUARTER ENDED                     JUN 30        SEPT 30          DEC 31         MAR 31
                                                           ------        -------          ------         ------

     (In thousands of dollars, except per share             U.S.$          U.S.$           U.S.$          U.S.$
     amounts)

     <S>                                                   <C>            <C>             <C>            <C>
     Revenues                                              14,873         14,661          16,157         17,815

     Expenses                                              12,715         13,646          12,907         13,326

     Provision for income taxes                               963            535           1,375          1,591

     Net income                                             1,195            480           1,875          2,898
     Earnings per share - basic                              0.06           0.03            0.10           0.16
     Earnings per share - diluted                            0.06           0.03            0.10           0.16
</TABLE>

         The financial statements required by this item appear beginning on page
F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         Not Applicable

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The Company incorporates by reference the information contained under
the captions "Election of Directors," "Securities Ownership of Certain
Beneficial Owners and Management" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in our Definitive Proxy Statement (the "Proxy Statement")
relative to our annual meeting of shareholders, to be filed within 120 days
after the end of the year covered by this Form 10-K Report pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended. We also
incorporate by reference "Executive Officers of the Registrant" as set forth
under Item 4A of this Report on Form 10-K.


                                       30
<PAGE>   31

ITEM 11. EXECUTIVE COMPENSATION

         Information called for by this item is set forth under "Named Executive
Officer Compensation" in the Proxy Statement and incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Information called for by this item is set forth under "Voting Shares
and Principal Ownership" in the Proxy Statement and incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         None

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)      The following documents are filed as part of this report:

1.       FINANCIAL STATEMENTS:

         Consolidated Financial Statements and Report of Independent Certified
         Public Accountants included herein: See Index on page F-1.

2.       FINANCIAL STATEMENT SCHEDULES:

         All schedules are omitted because they are inapplicable, not required,
         or the information is included elsewhere in the Consolidated Financial
         Statements or the notes thereto.

EXHIBITS:

The following exhibits are filed herewith or incorporated by reference as
indicated below.

<TABLE>
<CAPTION>
EXHIBIT #         DESCRIPTION                                          DOCUMENT IF INCORPORATED BY REFERENCE
---------         -----------                                          -------------------------------------
<S>               <C>                                                  <C>
3.1.1             Certificate of Incorporation -                       Exhibit 3.1.1 to the Company's
                  Mackenzie Investment Management Inc.                 Form 10 filed with the Commission on Oct. 13, 1999

3.1.2             Articles of Organization - Ivy Management, Inc.      Exhibit 3.1.2 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

3.1.3             Articles of Incorporation -                          Exhibit 3.1.3 to the Company's
                  Ivy Mackenzie Distributors, Inc.                     Form 10 filed with the Commission
                                                                       on Oct. 13, 1999
</TABLE>


                                       31
<PAGE>   32

<TABLE>
<S>               <C>                                                  <C>
3.1.4             Articles of Incorporation -                          Exhibit 3.1.4 to the Company's
                  Ivy Mackenzie Services Corp.                         Form 10 filed with the Commission
                                                                       on Oct. 13, 1999


3.2.1             By-Laws -                                            Exhibit 3.2.1 to the Company's
                  Mackenzie Investment Management Inc.                 Form 10 filed with the Commission
                                                                       on Oct. 13, 1999.

3.2.2             By-Laws - Ivy Management, Inc.                       Exhibit 3.2.2 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

3.2.3             By-Laws - Ivy Mackenzie Distributors, Inc.           Exhibit 3.2.3 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

3.2.4             By-Laws - Ivy Mackenzie Services Corp.               Exhibit 3.2.4 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

3.2.5             Amended and Restated By-Laws -                       Exhibit 3.2.5 to the Company's
                  Mackenzie Investment Management Inc.                 Form 10-Q filed with the
                                                                       Commission on October 27, 2000

4.1               Stock Certificate - Mackenzie Investment             Exhibit 4.1 to the Company's
                  Management Inc.                                      Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.1              Revolving Credit and Term Loan Agreement             Exhibit 10.1 to the Company's
                  dated February 11, 1994 between Mackenzie            Form 10 filed with the Commission
                  Investment Management Inc. and The First             on Oct. 13, 1999
                  National Bank of Boston, as amended

10.2              Mackenzie Program Master Agreement Dated             Exhibit 10.2 to the Company's
                  as of March 16, 1999 among Mackenzie                 Form 10 filed with the Commission
                  Investment Management Inc, as Parent, Ivy            on Oct. 13, 1999
                  Management, Inc. and Mackenzie Investment
                  Management Inc. as Advisor, Ivy Mackenzie
                  Distributors, Inc. as Distributor, Ivy Mackenzie
                  Services Corp., as Program Service Agent,
                  Putnam Lovell Finance L.P. as Purchaser, Putnam,
                  Lovell, De Guardiola & Thornton Inc. as Program
                  Administrator and Bankers Trust Company, not in
                  its individual capacity but solely as Collection Agent,
                  except as otherwise expressly provided.

10.3              Lease Agreement between Via Mizner Associates        Exhibit 10.3 to the Company's
                  (Landlord) and Mackenzie Investment Management       Form 10 filed with the Commission
                  Inc. (Tenant)                                        on Oct. 13, 1999

10.4              Sublease Agreement between Buenos Aires              Exhibit 10.4 to the Company's
                  Embotelladora S.A. as Lessor and Mackenzie           Form 10 filed with the Commission
                  Investment Management Inc. as Lessee.                on Oct. 13, 1999
</TABLE>


                                       32
<PAGE>   33

<TABLE>
<S>               <C>                                                  <C>
10.5              First Amendment to Sublease Between Buenos           Exhibit 10.5 to the Company's
                  Aires Embotelladora S.A. (Lessor) and Mackenzie      Form 10 filed with the Commission
                  Investment Management Inc., (Lessee)                 on Oct. 13, 1999

10.6              Lease Agreement Between Via Mizner Associates        Exhibit 10.6 to the Company's
                  and Ivy Management, Inc.                             Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.7              First Amendment to Lease Agreement Between           Exhibit 10.7 to the Company's
                  Via Mizner Associates and Ivy Management, Inc.       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.8              Mackenzie Investment Management, Inc.                Exhibit 10.8 to the Company's
                  1994 Stock Option Plan                               Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.9              Mackenzie Investment Management Inc.                 Exhibit 10.9 to the Company's
                  Profit Sharing Plan, as amended                      Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.10             Master Administrative Services Agreement -           Exhibit 10.10 to the Company's
                  Ivy Fund                                             Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.11             Master Business Management and Investment            Exhibit 10.11 to the Company's
                  Advisory Agreement - Ivy Fund                        Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.12             Master Fund Accounting Services Agreement -          Exhibit 10.12 to the Company's
                  Ivy Fund                                             Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.13             Master Business Management and Investment            Exhibit 10.13 to the Company's
                  Advisory Agreement - Mackenzie Solutions             Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.14             Master Fund Accounting Services Agreement -          Exhibit 10.14 to the Company's
                  Mackenzie Solutions                                  Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

10.15             Subadvisory Agreement dated July 1, 1999,            Exhibit 10.15 to the Company's
                  between Ivy Management, Inc. and Garmaise            Form 10 filed with the Commission
                  Investment Technologies (US) Inc.                    on Oct. 13, 1999

10.16             Credit Agreement dated October 13, 1999              Exhibit 10.16 to the Company's
                  between Mackenzie Investment Management and          Form 10-K filed with the
                  its Subsidiaries, and First Union National Bank      Commission  on June 29, 2000.

10.17             Lease Agreement dated March 20, 2000 between         Exhibit 10.17 to the Company's
                  Boca II Associates, Ltd. (Landlord) and Mackenzie    Form 10-K filed with the
                  Investment Management Inc. (Tenant)                  Commission on June 29, 2000.

10.18             Master Mackenzie Dealer Agreement for the Sale       Exhibit 10.18 to the Company's of
                  Shares of The Mackenzie Group of Funds               Form 10-K filed with the
                                                                       Commission on June 29, 2000.
</TABLE>


                                       33
<PAGE>   34

<TABLE>
<S>               <C>                                                  <C>
10.19             Ivy Fund Amended and Restated Distribution           Exhibit 10.19 to the Company's
                  Agreement dated October 23, 1993                     Form 10-K filed with the
                                                                       Commission on June 29, 2000.

10.20             Subadvisory Contract between Ivy Fund, Ivy           Exhibit 10.20 to the Company's
                  Management, Inc. and Boston Overseas                 Form 10-K filed with the
                  Investors, Inc. dated December 31, 1991              Commission on June 29, 2000.

10.21             Assignment Agreement between Northern Cross          Exhibit 10.21 to the Company's
                  Investments Limited, Boston Overseas Investors,      Form 10-K filed with the Inc., Ivy
                  Fund and Ivy Management, Inc. dated                  Commission on June 29, 2000.
                  April 1, 1993

10.22             Investment Advisory Agreement between Ivy Fund       Exhibit 10.22 to the Company's
                  and Mackenzie Financial Corporation                  Form 10-K filed with the
                                                                       Commission on June 29, 2000.

10.23             Transfer Agency and Shareholder Services             Exhibit 10.23 to the Company's
                  Agreement between Ivy Fund and Ivy Management,       Form 10-K filed with the
                  Inc. dated January 1, 1992                           Commission on June 29, 2000.

10.24             Assignment Agreement between Mackenzie Ivy           Exhibit 10.24 to the Company's
                  Investor Services Corp., Ivy Fund and Ivy            Form 10-K filed with the
                  Management, Inc. dated October 1, 1993               Commission on June 29, 2000.

10.25             Ivy Fund Addendum to Transfer Agency and             Exhibit 10.25 to the Company's
                  Shareholder Services Agreement dated                 Form 10-K filed with the
                  October 1, 1993                                      Commission on June 29, 2000.

10.26             Subadvisory Agreement between Ivy Management,        Exhibit 10.26 to the Company's
                  Inc. and Henderson Investment Management             Form 10-K filed with the
                  Limited dated February 1, 1999                       Commission on June 29, 2000.

10.27             Amendment to Schedule A to Subadvisory               Exhibit 10.27 to the Company's
                  Agreement between Ivy Management, Inc. and           Form 10-K filed with the
                  Henderson Investment Management Limited              Commission on June 29, 2000
                  dated April 30, 1999.

10.28             Subadvisory Agreement between Ivy Management,        Exhibit 10.28 to the Company's
                  Inc. and Peter Cundill and Associates, Inc. dated    Form 10-K filed with the
                  March 1, 2000                                        Commission on June 29, 2000.


10.29             Change in Control Agreement -                        Exhibit 10.29 to the Company's
                  Paul Baran                                           Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.30             Change in Control Agreement -                        Exhibit 10.30 to the Company's
                  Thomas Bivin                                         Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.31             Change in Control Agreement -                        Exhibit 10.31 to the Company's
                  Tom Bracco                                           Form 10-Q filed with the
                                                                       Commission on January 23, 2001.
</TABLE>


                                       34
<PAGE>   35

<TABLE>
<S>               <C>                                                  <C>
10.32             Change in Control Agreement -                        Exhibit 10.32 to the Company's
                  James Broadfoot                                      Form 10-Q filed with the
                                                                       Commission on January 23, 2001.


10.33             Change in Control Agreement -                        Exhibit 10.33 to the Company's
                  Keith J. Carlson                                     Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.34             Change in Control Agreement -                        Exhibit 10.34 to the Company's
                  William Ferris                                       Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.35             Change in Control Agreement -                        Exhibit 10.35 to the Company's
                  Robert Perry                                         Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.36             Change in Control Agreement -                        Exhibit 10.36 to the Company's
                  Sheridan Reilly                                      Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.37             Change in Control Agreement -                        Exhibit 10.37 to the Company's
                  Beverly Yanowitch                                    Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

10.38             Employee Retention Plan                              Exhibit 10.38 to the Company's
                                                                       Form 10-Q filed with the
                                                                       Commission on January 23, 2001.

21.1              Subsidiaries                                         Exhibit 21.1 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

24.1              Powers of Attorney                                   Exhibit 24.1 to the Company's
                                                                       Form 10 filed with the Commission
                                                                       on Oct. 13, 1999

</TABLE>

(B)      REPORTS ON FORM 8-K:

         On June 18, 2001, the Company filed a Form 8-K under Item 5 announcing
the declaration of a dividend of U.S. $0.01 per share to shareholders of record
on June 27, 2001 with a payable date of July 6, 2001.

         On June 18, 2001, the Company filed a Form 8-K under Item 5 announcing
its financial results for the fourth quarter and year ended March 31, 2001.

         On February 13, 2001, the Company filed a Form 8-K under item 5
announcing a change to the Board of Directors of Company.


                                       35
<PAGE>   36

         On January 29, 2001, the Company filed a Form 8-K under Item 5
announcing that the parent company, MFC had reached a definitive agreement with
Investors Group Inc. (IGI) respecting the proposed sale of MFC to IGI.

         On January 26, 2001, the Company filed a Form 8-K under Item 5
announcing that the parent company, MFC, was in the advance stages of finalizing
a transaction respecting the sale of MFC.

         On December 15, 2000, the Company filed a Form 8-K under Item 5
announcing the declaration of a dividend of U.S. $0.01 per share to shareholders
of record on December 28, 2000 with a payable date of January 5, 2001.

         On August 3, 2000, the Company filed a Form 8-K under Item 5 announcing
the declaration of a dividend of U.S. $0.01 per share to shareholders of record
on August 15, 2000, with a payable date of August 24, 2000.

         On July 20, 2000, the Company filed a Form 8-K under Item 5 announcing
the intention to enter into a normal course issuer bid to purchase up to 500,000
shares of its common shares. The bid commenced on July 24, 2000.

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


MACKENZIE INVESTMENT MANAGEMENT INC.


By:  /s/ Keith J. Carlson
     -------------------------------
     Keith J. Carlson
     President, Chief Executive Officer and Director
     Date: June 29, 2001

         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.

<TABLE>
<CAPTION>
Name                                Capacity                                            Date
----                                --------                                            ----

<S>                                 <C>                                                 <C>
/s/ Keith J. Carlson
---------------------------
Keith J. Carlson                    President, Chief Executive Officer and              June 29, 2001
                                    Director


/s/ Beverly J. Yanowitch
---------------------------
Beverly J. Yanowitch                Vice President and Chief Financial Officer          June 29, 2001


/s/ Neil Lovatt
---------------------------
Neil Lovatt                         Chairman and Director                               June 29, 2001


/s/ James W. Broadfoot III
---------------------------
James W. Broadfoot III              Senior Vice President and Director                  June 29, 2001
</TABLE>


                                       36
<PAGE>   37

<TABLE>
<S>                                 <C>                                                 <C>
/s/ Alan J. Dilworth
---------------------------
Alan J. Dilworth                    Director                                            June 29, 2001


/s/ Allan S. Mostoff
---------------------------
Allan S. Mostoff, Esq.              Director                                            June 29, 2001



/s/ James L. Hunter
----------------------------
James L. Hunter                     Director                                            June 29, 2001


/s/ Alasdair J. McKichan
---------------------------
Alasdair J. McKichan                Director                                            June 29, 2001


/s/ Michael R. Peers
---------------------------
Michael R. Peers                    Director                                            June 29, 2001


/s/ Paul P. Baran
---------------------------
Paul P. Baran                       Vice President                                      June 29, 2001


/s/ Thomas H. Bivin, Jr.
---------------------------
Thomas H. Bivin, Jr.                Vice President                                      June 29, 2001


/s/ Sheridan P. Reilly
---------------------------
Sheridan P. Reilly                  Vice President                                      June 29, 2001
</TABLE>


                                       37
<PAGE>   38

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001 AND 2000 AND
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999

<PAGE>   39


TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         PAGES
<S>                                                                                                    <C>
Management's Report to Shareholders                                                                       F - 2

Report of Independent Certified Public Accountants                                                        F - 3

Financial Statements:

    Consolidated Statements of Financial Condition as of
     March 31, 2001 and 2000                                                                              F - 4

    Consolidated Statements of Operations for the years ended
    March 31, 2001, 2000 and 1999                                                                         F - 5

    Consolidated Statements of Changes in Stockholders' Equity
    for the years ended March 31, 2001, 2000 and 1999                                                     F - 6

    Consolidated Statements of Cash Flows for the years ended
    March 31, 2001, 2000 and 1999                                                                         F - 7

    Notes to Consolidated Financial Statements                                                         F - 8-22
</TABLE>


                                      F-1
<PAGE>   40

                     MANAGEMENT'S REPORT TO THE SHAREHOLDERS

         The accompanying consolidated financial statements and all information
in the Form 10-K have been prepared by management and approved by the Board of
Directors of Mackenzie Investment Management Inc. (the "Company"). The
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States and, where appropriate,
reflect management's best estimates and judgments. The Company has reviewed its
consolidated financial statements for the periods presented for compliance with
accounting principles generally accepted in Canada and has determined that there
are no material differences between the amounts reported in these financial
statements and the amounts which would be reported in accordance with accounting
principles generally accepted in Canada.

         Management is responsible for the accuracy, integrity and objectivity
of the consolidated financial statements within reasonable limits of materiality
and for the consistency of financial data included in the text of the Form 10-K
with that contained in the consolidated financial statements.

         Management is responsible for the maintenance of a system of internal
controls designed to provide reasonable assurance that the Company's assets are
safeguarded; that only valid and authorized transactions are executed; and that
accurate, timely, and comprehensive financial information is prepared.

         The Company's Audit, Finance and Risk Committee is appointed by the
Board of Directors annually and is comprised of three non-management directors.
The Audit, Finance and Risk Committee meets with management as well as with the
independent certified public accountants to satisfy itself that management is
properly discharging its financial reporting responsibilities and to review the
consolidated financial statements and the report of independent certified public
accountants. The Audit, Finance and Risk Committee reports its findings to the
Board of Directors for consideration in approving the consolidated financial
statements for presentation to the shareholders. The independent certified
public accountants have direct access to the Audit, Finance and Risk Committee
of the Board of Directors.

         The consolidated financial statements have been independently audited
by PricewaterhouseCoopers LLP on behalf of the shareholders, in accordance with
auditing standards generally accepted in the United States. Their report
outlines the nature of their audit and expresses their opinion on the
consolidated financial statements of the Company.

<TABLE>
<S>                                        <C>
/s/ Keith J. Carlson                       /s/ Beverly J. Yanowitch
--------------------                       -------------------------------------------
Keith J. Carlson                           Beverly J. Yanowitch
President and Chief Executive Officer      Vice President and Chief Financial Officer
</TABLE>


May 18, 2001

                                      F-2
<PAGE>   41

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
  Mackenzie Investment Management Inc.

In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations, of changes in
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Mackenzie Investment Management Inc. and its
subsidiaries at March 31, 2001 and 2000, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 2001
in conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
May 18, 2001


                                      F-3
<PAGE>   42

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                        MARCH 31,
                                                                           -----------------------------------
                                                                               2001                   2000
<S>                                                                        <C>                    <C>
                                    ASSETS
Cash and cash equivalents                                                  $ 44,797,238           $ 41,095,301
Marketable securities                                                         2,460,918              3,388,768
Receivables:
    Funds for fees and expense advances                                       2,422,457              4,725,964
    Other                                                                     1,261,619              1,893,628
Property and equipment, net                                                     748,867              1,084,212
Management contracts, net                                                     4,276,788              5,430,191
Deferred selling commissions                                                  6,990,800              5,828,749
Other assets                                                                  1,102,545                624,964
                                                                           ------------           ------------

        Total assets                                                       $ 64,061,232           $ 64,071,777
                                                                           ------------           ------------

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
    Payable to Funds for purchases of Funds' shares and
      expense reimbursements                                               $    148,373           $    488,920
    Sub-advisory fees payable                                                    39,258              3,249,994
    Accounts payable                                                            658,260                760,636
    Restructuring costs                                                       1,769,355                     --
    Accrued expenses and other liabilities                                    2,022,529              1,311,084
    Income taxes payable                                                             --                275,650
    Deferred tax                                                                697,260              1,690,899
                                                                           ------------           ------------

        Total liabilities                                                     5,335,035              7,777,183
                                                                           ------------           ------------

Commitments and contingencies

Stockholders' equity:
    Capital stock, $.01 par value, 100,000,000 shares authorized,
      18,741,800 and 18,591,800 shares issued and outstanding                   187,418                185,918
    Additional paid-in capital                                               39,024,802             37,952,532
    Retained earnings                                                        20,424,882             18,156,144
    Unearned stock compensation                                                (493,757)                    --
    Accumulated other comprehensive loss, net of tax                           (417,148)                    --
                                                                           ------------           ------------

        Total stockholders' equity                                           58,726,197             56,294,594
                                                                           ------------           ------------

        Total liabilities and stockholders' equity                         $ 64,061,232           $ 64,071,777
                                                                           ------------           ------------
</TABLE>

                                          The accompanying notes are an integral

                                             part of these financial statements.

<TABLE>
<S>                                           <C>                           <C>
                                              /s/ Neil Lovatt               /s/ Alan J. Dilworth
                                              ---------------------         ---------------------------
Signed on behalf of the Board of Directors    Neil Lovatt                   Alan J. Dilworth

                                              Chairman                      Director, Chairman of Audit

                                                                            Finance and Risk Committee
</TABLE>


                                      F-4
<PAGE>   43

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                             FOR THE YEARS ENDED MARCH 31,
                                                               ---------------------------------------------------------
                                                                   2001                   2000                  1999
<S>                                                            <C>                    <C>                   <C>
Revenues:
    Management fees                                            $ 24,022,072           $ 32,546,397          $ 33,812,998
    Sub-advisory fees from Canadian Funds                        10,012,381              9,468,542             5,994,295
    12b-1 Service and Distribution fees                           7,632,165              8,923,631            14,675,809
    Transfer agent fees                                           3,007,280              2,993,736             3,018,847
    Administrative service fees                                   2,502,927              3,251,215             3,415,947
    Fund accounting fees                                            819,402                819,391               707,358
    Underwriting fees                                               243,245                394,970               140,940
    Redemption fees                                               1,028,859                387,025             3,054,426
    Interest, dividends and other                                 3,122,788              3,206,366             1,435,261
    Net realized (loss) gain on marketable securities              (243,745)             1,514,857                    --
                                                               ------------           ------------          ------------
                                                                 52,147,374             63,506,130            66,255,881
                                                               ------------           ------------          ------------
Expenses:
    Sales literature, advertising and promotion                   4,958,612              4,751,567             2,429,708
    12b-1 Service fees                                            5,680,189              7,897,998             9,036,835
    Employee compensation and benefits                           15,572,667             13,327,869            10,335,240
    Sub-advisory fees                                             2,231,502             13,603,911            14,826,319
    Amortization of management contracts                          1,233,278              1,123,262             1,081,895
    Amortization of deferred selling commissions                  2,647,670              1,113,821             6,202,132
    Depreciation                                                    756,019                696,535               549,930
    General and administrative                                    7,518,988              6,451,071             4,990,050
    Interest                                                             --                     --               473,842
    Restructuring costs                                           3,031,702                     --                    --
    Occupancy and equipment rental                                1,790,652              1,044,229               962,903
    Reimbursement to Funds for expenses                           2,121,718              2,584,021             1,667,174
                                                               ------------           ------------          ------------
                                                                 47,542,997             52,594,284            52,556,028
                                                               ------------           ------------          ------------
    Income before income taxes                                    4,604,377             10,911,846            13,699,853
        Provision for income taxes                                1,961,103              4,463,950             5,151,197
                                                               ------------           ------------          ------------
    Net income                                                 $  2,643,274           $  6,447,896          $  8,548,656
                                                               ------------           ------------          ------------
    Basic earnings per share                                   $       0.14           $       0.34          $       0.45
                                                               ------------           ------------          ------------
        Weighted average number of common
            shares outstanding used in basic
            calculation                                          18,631,729             18,781,410            19,137,480
                                                               ------------           ------------          ------------
    Diluted earnings per share                                 $       0.14           $       0.34          $       0.44
                                                               ------------           ------------          ------------
        Weighted average number of common and
            common equivalent shares outstanding
            used in diluted calculation                          18,734,520             18,817,070            19,267,093
                                                               ------------           ------------          ------------
</TABLE>

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


                                      F-5
<PAGE>   44

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>

                                                            COMMON STOCK               ADDITIONAL
                                                     --------------------------         PAID-IN          RETAINED
                                                        SHARES          AMOUNT          CAPITAL          EARNINGS
                                                     -----------      ---------      ------------      ------------
<S>                                                  <C>              <C>            <C>               <C>
Balance, March 31, 1998                               18,917,000      $ 189,170      $ 40,101,057      $  3,159,592

Issuance of common stock under stock option
  plan                                                   316,000          3,160           410,740                --

Purchase and retirement of common stock                  (22,800)          (228)         (108,309)               --

Net income for the year                                       --             --                --         8,548,656
                                                     -----------      ---------      ------------      ------------

Balance, March 31, 1999                               19,210,200        192,102        40,403,488        11,708,248

Issuance of common stock under stock option plan           3,000             30             3,720                --

Purchase and retirement of common stock                 (621,400)        (6,214)       (2,454,676)               --

Net income for the year                                       --             --                --         6,447,896
                                                     -----------      ---------      ------------      ------------

Balance, March 31, 2000                               18,591,800        185,918        37,952,532        18,156,144

Issuance of common stock under stock option
  plan                                                    35,000            350            58,650                --

Issuance of common stock under stock
   compensation agreement                                115,000          1,150           639,400                --

Amortization of unearned stock compensation                   --             --                --                --

Capital contribution (Note 6)                                 --             --           374,220                --

Other comprehensive loss, net of tax                          --             --                --                --

Cash dividends on common stock, $0.01 per share               --             --                --          (374,536)

Net income for the year                                       --             --                --         2,643,274
                                                     -----------      ---------      ------------      ------------

Balance, March 31, 2001                               18,741,800      $ 187,418      $ 39,024,802      $ 20,424,882
                                                     -----------      ---------      ------------      ------------

<CAPTION>

                                                                         ACCUMULATED
                                                       UNEARNED             OTHER              TOTAL
                                                         STOCK          COMPREHENSIVE       STOCKHOLDERS'
                                                     COMPENSATION     LOSS, NET OF TAX         EQUITY
                                                     ------------     -----------------     ------------
<S>                                                  <C>              <C>                   <C>
Balance, March 31, 1998                                $      --         $      --           $ 43,449,819

Issuance of common stock under stock option
  plan                                                        --                --                413,900

Purchase and retirement of common stock                       --                --               (108,537)

Net income for the year                                       --                --              8,548,656
                                                       ---------         ---------           ------------

Balance, March 31, 1999                                       --                --             52,303,838

Issuance of common stock under stock option plan              --                --                  3,750

Purchase and retirement of common stock                       --                --             (2,460,890)

Net income for the year                                       --                --              6,447,896
                                                       ---------         ---------           ------------

Balance, March 31, 2000                                       --                --             56,294,594

Issuance of common stock under stock option
  plan                                                        --                --                 59,000

Issuance of common stock under stock
   compensation agreement                               (640,550)               --                     --

Amortization of unearned stock compensation              146,793                --                146,793

Capital contribution (Note 6)                                 --                --                374,220

Other comprehensive loss, net of tax                          --          (417,148)              (417,148)

Cash dividends on common stock, $0.01 per share               --                --               (374,536)

Net income for the year                                       --                --              2,643,274
                                                       ---------         ---------           ------------

Balance, March 31, 2001                                $(493,757)        $(417,148)          $ 58,726,197
                                                       ---------         ---------           ------------
</TABLE>

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


                                      F-6
<PAGE>   45

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                FOR THE YEARS ENDED MARCH 31,
                                                                      ------------------------------------------------
                                                                          2001              2000              1999
<S>                                                                   <C>               <C>               <C>
Cash flows from operating activities:
    Net income                                                        $  2,643,274      $  6,447,896      $  8,548,656
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
      Depreciation                                                         756,019           696,535           549,930
      Amortization of management contracts                               1,233,278         1,123,262         1,081,895
      Amortization of deferred selling commissions                       2,647,670         1,113,821         6,202,132
      Amortization of unearned compensation                                146,793                --                --
      Deferred tax (benefit) expense                                      (741,960)        1,687,923        (4,656,197)
      Payment of deferred selling commissions                           (3,809,722)       (5,181,570)       (3,876,736)
      Other                                                                243,745        (1,850,898)           51,229
      Change in assets and liabilities:
        Receivables                                                      3,309,736          (392,616)          518,444
        Other assets                                                      (477,581)          126,378          (313,377)
        Payable to Funds for purchases of Funds' shares and
          expense reimbursements                                          (340,547)          330,555            65,687
        Sub-advisory fees payable                                       (3,210,736)         (197,165)         (316,788)
        Accounts payable, accrued expenses and other liabilities           609,069          (943,282)         (143,980)
        Restructuring costs                                              1,769,355                --                --
        Income taxes payable                                              (275,650)       (8,966,267)        9,241,917
                                                                      ------------      ------------      ------------
Net cash provided by (used in) operating activities                      4,502,743        (6,005,428)       16,952,812
                                                                      ------------      ------------      ------------
Cash flows from investing activities:
    Purchase of management contracts                                       (79,874)         (910,169)               --
    Purchases of property and equipment                                   (420,674)         (474,049)         (696,410)
    Proceeds from the sale of marketable securities                      1,602,442         2,515,446                --
    Purchases of marketable securities                                  (1,587,164)       (2,605,582)         (506,219)
    Proceeds from the sale of deferred selling commissions, net                 --                --        20,816,896
                                                                      ------------      ------------      ------------
Net cash (used in) provided by investing activities                       (485,270)       (1,474,354)       19,614,267
                                                                      ------------      ------------      ------------
Cash flows from financing activities:
    Note payable repayments                                                     --                --        (6,800,000)
    Purchase and retirement of common stock                                     --        (2,460,890)         (108,537)
    Proceeds from the exercise of stock options                             59,000             3,750           413,900
    Dividends paid                                                        (374,536)               --                --
                                                                      ------------      ------------      ------------
Net cash used in financing activities                                     (315,536)       (2,457,140)       (6,494,637)
                                                                      ------------      ------------      ------------
Net increase (decrease) in cash and cash equivalents                     3,701,937        (9,936,922)       30,072,442
Cash and cash equivalents, beginning of year                            41,095,301        51,032,223        20,959,781
                                                                      ------------      ------------      ------------

Cash and cash equivalents, end of year                                $ 44,797,238      $ 41,095,301      $ 51,032,223
                                                                      ------------      ------------      ------------

Supplemental disclosures:
    Interest paid                                                     $         --      $         --      $    490,783
                                                                      ------------      ------------      ------------
    Income taxes paid                                                 $  3,592,000      $ 11,740,000      $    495,000
                                                                      ------------      ------------      ------------
</TABLE>

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


                                      F-7
<PAGE>   46

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Mackenzie Investment Management Inc. ("MIMI") is a majority-owned
         subsidiary of Mackenzie Financial Corporation of Toronto, Ontario
         ("MFC") (see Note 19). 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 Services Corp. ("IMSC"), a transfer
         agent. MIMI and IMI (the "Advisers") are registered with the Securities
         and Exchange Commission ("SEC") as investment advisers. IMDI is
         registered with the SEC as a broker-dealer and is a member of the
         National Association of Securities Dealers, Inc. IMSC is registered
         with the SEC as a transfer agent.

         The Advisers are engaged in the management of Ivy Fund (the "Funds"), a
         registered investment company consisting of 16 funds at March 31, 2001.
         The Advisers have exclusive management agreements entitling them to
         manage the Funds. The Advisers also provide sub-advisory services to
         twenty-two Universal mutual funds at March 31, 2001 sold only in Canada
         and managed by MFC (the "Canadian Funds").

         IMDI, as the broker-dealer, has underwriting agreements with the Funds
         entitling IMDI to the exclusive right to sell redeemable shares of the
         Funds. In addition, IMDI also receives distribution fees from certain
         of the Funds for purposes of advertising and marketing the shares of
         such Funds. IMDI is subject to net worth and capital requirements and
         bonding requirements imposed by the Securities and Exchange Commission.

         IMSC serves as transfer agent and dividend paying agent for the Funds
         and provides certain shareholder and shareholder related services as
         are required by the Funds (see Note 16).

         MIMI also provides certain additional services for the Funds, such as
         fund accounting and administrative services.

         BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of MIMI and
         subsidiaries (the "Company"). All intercompany accounts and
         transactions have been eliminated in consolidation.

         The financial statements of the Company have been prepared in
         accordance with accounting principles generally accepted in the United
         States of America and are denominated in U. S. currency. The following
         is a summary of significant accounting policies consistently followed
         by the Company in the preparation of its consolidated financial
         statements.

         CASH EQUIVALENTS

         The Company includes as cash equivalents: demand deposits in interest
         bearing bank accounts, short-term investments, repurchase agreements,
         and investments in U.S. Government Securities with original maturities
         of three months or less when purchased.


                                      F-8
<PAGE>   47

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
         CONTINUED

         MARKETABLE SECURITIES

         Marketable securities are recorded at fair value. Realized gains and
         losses are based on the specific identification method. For the year
         ended March 31, 2001, comprehensive income was $2,226,126, comprised of
         net income of $2,643,274 and accumulated unrealized loss on marketable
         securities of $417,148 (net of tax). At March 31, 2001, gross
         unrealized gains and losses on marketable securities were $17,764 and
         $686,591, respectively. The Company's marketable securities at March
         31, 2001 and 2000 are principally invested in the Funds.

         PROPERTY AND EQUIPMENT

         Property and equipment, which are stated at cost, are depreciated on a
         straight-line basis over the estimated useful lives of the related
         assets, which range from three to five years except for leasehold
         improvements. Leasehold improvements are amortized over the lesser of
         the initial or remaining term of the building lease.

         Additions and improvements that significantly extend the useful life of
         an asset are capitalized. Other expenditures for repairs and
         maintenance are charged to operations in the period incurred. The cost
         and accumulated depreciation of assets sold or retired are removed from
         the accounts and any related gains or losses are included in operations
         for the period.

         MANAGEMENT CONTRACTS

         Management contracts, consisting principally of the cost of investment
         advisory and service contracts, are being amortized over periods not
         exceeding ten years from their date of inception. Management contracts
         are shown net of accumulated amortization of $9,188,207 and $7,954,929
         at March 31, 2001 and 2000, respectively. Management periodically
         assesses the value of its management contracts by considering the
         future economic benefit associated with the revenue capacity of the
         contracts.

         During September 1999, the Company acquired the assets of the Hudson
         Capital Appreciation Fund (the "Hudson Fund"), which were merged into
         the assets of the Ivy US Emerging Growth Fund. Through March 31, 2000,
         the Company paid approximately $764,000 to obtain the rights to the
         management contract for such assets. In accordance with the terms of
         the agreement, a final payment of $76,000 was made by the Company in
         September 2000 based on the net asset value of the shares outstanding
         in the Ivy US Emerging Growth Fund from the Hudson Fund acquisition.

         REIMBURSEMENT TO FUNDS FOR EXPENSES

         The Company reimburses certain of the Funds' expenses on a contractual
         basis. The Company records this commitment on an accrual basis. The
         expense limitation may be terminated or revised, upon 90 day's prior
         written notice, by either party without payment or penalty.


                                      F-9
<PAGE>   48

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
         CONTINUED

         REVENUE RECOGNITION

         Revenues for services rendered are recognized on an accrual basis when
         the services are performed. Such revenues from services rendered
         include management, underwriting, distribution, fund accounting,
         administrative services and transfer agent fees.

         INCOME TAXES

         Deferred income taxes are recognized for the tax consequences in future
         years of differences between the tax basis of assets and liabilities
         and their financial reporting amounts. Deferred tax assets are also
         established for the future tax benefits of loss and credit
         carryforwards. Deferred tax assets are reduced by a valuation allowance
         when, in the opinion of management, it is more likely than not that all
         or some portion of the deferred tax assets will not be realized.
         Deferred tax assets and liabilities are adjusted for the effects of
         changes in tax laws and rates on the date of enactment.

         EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income available
         to common stockholders by the weighted-average number of common shares
         outstanding during the period. Diluted earnings per share reflects the
         potential dilution that could occur if securities or other contracts to
         issue common stock were exercised and resulted in the issuance of
         common stock.

         DEFERRED SELLING COMMISSIONS

         In conjunction with the sale of certain Class A shares sold at net
         asset value and Class B and C shares, MIMI pays dealers a deferred
         selling commission. MIMI then amortizes these amounts over periods
         ranging from five to six years for commissions paid on Class A and B
         shares and one year for commissions paid on Class C shares.

         USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make some
         estimates and assumptions that may affect the reported amounts of
         assets and liabilities, disclosure of contingent assets and liabilities
         at the date of the financial statements and the reported amounts of
         revenues and expenses during the reporting periods. Actual results
         could differ from those estimates.


                                      F-10
<PAGE>   49

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
         CONTINUED

         LONG-LIVED ASSETS

         Long-lived assets, principally management contracts and deferred
         selling commissions, are reviewed and evaluated for impairment whenever
         events or changes in circumstances indicate that the carrying value of
         the assets may not be fully recoverable. The recoverability of such
         assets is measured by comparing the carrying value to the potential
         future cash flows to be generated by the respective assets. If these
         factors indicate that the assets are considered impaired, the
         impairment to be recognized is measured as the excess of the carrying
         value over the calculated potential future discounted cash flows. The
         Company does not believe there are any indicators that would suggest an
         adjustment to such assets or their estimated periods of recovery is
         considered necessary at March 31, 2001.

         ADVERTISING

         The Company expenses the cost of advertising as incurred.

         STOCK OPTIONS

         The Company has elected to disclose pro forma net income and earnings
         per share based on fair value accounting rules and not to apply those
         rules in the consolidated statements of operations. No amounts have
         been reflected in the consolidated statements of operations as a result
         of the grant of stock options as the exercise price of the stock
         options equals or exceeds the market value of the Company's stock on
         the business day prior to the date of grant. The Company records
         amounts received upon the exercise of options by crediting common stock
         and additional paid-in capital. To the extent that the Company realizes
         an income tax benefit from the exercise or early disposition of certain
         stock options, this benefit results in a decrease in the current or
         deferred tax liability and an increase in additional paid-in capital.

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash and cash equivalents, receivables,
         accounts payable, accrued expenses, restructuring costs and the
         payables to Funds for purchases of Funds' shares approximate fair value
         due to the short-term maturities of these items.

         SEGMENT REPORTING

         The Company has determined that it operates in a single operating
         segment for purposes of presenting financial information and evaluating
         performance. As such, the accompanying consolidated financial
         statements present financial information in a format that is consistent
         with the financial information used by management for internal use.


                                      F-11
<PAGE>   50

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
         CONTINUED

         NEW ACCOUNTING PRONOUNCEMENTS

         In September 2000, the Financial Accounting Standards Board ("FASB")
         issued Statement of Financial Accounting Standards ("Statement") No.
         140, "Accounting for Transfers and Servicing of Financial Assets and
         Extinguishments of Liabilities, a replacement of FASB No. 125".
         Statement No. 140 revises the standards for accounting and reporting of
         securitizations, other transfers of financial assets and
         extinguishments of liabilities. Statement No. 140 is effective for
         transfers and servicing of financial assets and extinguishments of
         liabilities occurring after March 31, 2001.

         In June 2000, the FASB issued Statement No. 138, "Accounting for
         Certain Derivative Instruments and Certain Hedging Activities - an
         amendment of Financial Accounting Standards Board Statement No. 133".
         Statement No. 138 expands the normal purchases and sales exception,
         redefines identified specific risks, recognizes that
         foreign-currency-denominated assets and liabilities may be the hedged
         item in fair value or cash flow hedges, and allows the designation of
         inter-company derivatives as hedging instruments in certain cash flow
         hedges. Statement No. 133 and 138 are effective for fiscal years
         beginning after June 15, 2000.

         The implementation of these statements did not have a material effect
         on the Company's financial position, results of operations or cash
         flows.

         RECLASSIFICATIONS

         Certain amounts in the 2000 and 1999 consolidated financial statements
         have been reclassified to conform with the 2001 presentation.

2.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                             MARCH 31,
                                                -----------------------------------
                                                    2001                   2000
         <S>                                    <C>                    <C>
         Furniture and equipment                $  1,096,457           $  1,035,462
         Computer hardware                         2,196,529              1,905,302
         Computer software                           649,189                594,430
         Leasehold improvements                      515,485                507,323
                                                ------------           ------------

               Total                               4,457,660              4,042,517

         Less accumulated depreciation            (3,708,793)            (2,958,305)
                                                ------------           ------------

                                                $    748,867           $  1,084,212
                                                ============           ============
</TABLE>


                                      F-12
<PAGE>   51

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       INCOME TAXES

         The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                            YEAR ENDED MARCH 31,
                                         ----------------------------------------------------------
                                             2001                   2000                   1999
         <S>                             <C>                    <C>                    <C>
         Current income taxes:
             Federal                     $  2,307,983           $  2,367,741           $  8,360,277
             State                            395,080                408,286              1,447,117
                                         ------------           ------------           ------------

                                            2,703,063              2,776,027              9,807,394
                                         ------------           ------------           ------------

         Deferred income taxes:
             Federal                         (633,515)             1,443,757             (3,985,948)
             State                           (108,445)               244,166               (670,249)
                                         ------------           ------------           ------------

                                             (741,960)             1,687,923             (4,656,197)
                                         ------------           ------------           ------------

                                         $  1,961,103           $  4,463,950           $  5,151,197
                                         ============           ============           ============
</TABLE>

         A reconciliation of the statutory federal income tax rate to the
         effective rate is as follows:

<TABLE>
<CAPTION>
                                                              YEAR ENDED MARCH 31,
                                                       -----------------------------------
                                                       2001            2000           1999
         <S>                                           <C>             <C>            <C>
         Statutory federal income tax rate             34.0%           34.0%          34.0%
         State taxes, net of federal benefit            4.2             3.7            3.3
         Amortization of management contracts           6.7             2.8            2.3
         Other                                         (2.3)            0.4           (2.0)
                                                       ----            ----           ----

                                                       42.6%           40.9%          37.6%
                                                       ====            ====           ====
</TABLE>

         At March 31, 2001 and 2000, deferred income taxes consist of the
         following:

<TABLE>
<CAPTION>
                                                                    MARCH 31, 2001                       MARCH 31, 2000
                                                                    DEFERRED TAXES                       DEFERRED TAXES
                                                             ----------------------------        -----------------------------
                                                               ASSETS         LIABILITIES          ASSETS          LIABILITIES
                                                             ----------       -----------        ----------        -----------
         <S>                                                 <C>              <C>                <C>               <C>
         Accrued payables not yet deducted for
             tax purposes, including the tax-effected
             restructuring costs of $457,581                 $  856,259       $        --        $   70,407        $        --
         Prepaid Class B and C share commissions                     --         1,851,902                --          1,563,892
         Other                                                  298,383                --           173,329            370,743
                                                             ----------       -----------        ----------        -----------

                                                             $1,154,642       $ 1,851,902        $  243,736        $ 1,934,635
                                                             ==========       ===========        ==========        ===========

         Net deferred tax                                                     $   697,260                          $ 1,690,899
                                                                              ===========                          ===========
</TABLE>

4.       MANAGEMENT, UNDERWRITING, ADMINISTRATIVE SERVICES, FUND ACCOUNTING AND
         TRANSFER AGENT AGREEMENTS


                                      F-13
<PAGE>   52

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company is the manager of the Funds and, as such, furnishes the
         Funds with accounting and various other services and office facilities
         in Boca Raton and Fort Lauderdale, Florida. In addition, the Advisers
         act as investment adviser for certain of the Funds. For these services
         and facilities, the Funds pay the Advisers monthly management fees at
         annual rates ranging from .40% to 1.00% of the Funds' average daily net
         assets. The Management Agreements may be terminated upon 60 days
         written notice by a vote of the majority of the outstanding voting
         securities of the Funds, by vote of a majority of the Fund's entire
         Board of Trustees, or by the Advisers.

         Sub-advisory fees from the Canadian Funds represent fees earned for
         certain management services rendered to mutual funds managed by MFC.

         IMDI is the principal underwriter and national distributor of the
         Funds' shares and, as such, purchases shares from the Funds at net
         asset value to fill orders received from investment dealers. IMDI is
         permitted to resell such shares at the public offering price, allowing
         for discounts to dealers, if any. The differences in the purchase price
         and the resale price constitutes underwriting fee income to IMDI.

         MIMI has entered into Administrative Services Agreements with the Funds
         wherein MIMI provides various services, including maintenance of
         registration or qualification of Fund shares under state "Blue Sky"
         laws, assisting in the preparation of U.S. Federal, state and local
         income tax returns and preparing financial and other information for
         prospectuses, statements of additional information, and periodic
         reports to shareholders. For these services, the Funds pay MIMI monthly
         fees at an annual rate of .10% of the Funds' average daily net assets.
         The Administrative Services Agreement may be terminated by MIMI upon 60
         days written notice, or by the Funds upon 60 days written notice and
         authorization by the Fund's Board of Trustees.

         MIMI has entered into Fund Accounting Services Agreements with the
         Funds wherein MIMI provides certain accounting and pricing services for
         the Funds. As compensation for those services, each Fund pays MIMI a
         monthly fee plus certain out-of-pocket costs. The monthly fee is based
         upon the net assets of each Fund at the preceding month end at rates
         ranging from $1,000 to $6,500. The Fund Accounting Services Agreements
         may be terminated by MIMI upon 90 days written notice, or by the Funds
         upon 60 days written notice and authorization by the Fund's Board of
         Trustees.

         IMSC provides services to the Funds under Transfer Agency and
         Shareholder Services Agreements. The agreements provide compensation on
         a per account basis plus reimbursement for out-of-pocket costs. The
         compensation range on a per account basis per year is $20 to $22. The
         Transfer Agency and Shareholder Services Agreements may be terminated
         by IMSC upon 90 days written notice, or by the Funds upon 60 days
         written notice and authorization by the Fund's Board of Trustees (see
         Note 16).


                                      F-14
<PAGE>   53

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.       DISTRIBUTION FEES

         Pursuant to distribution plans adopted by certain of the Funds, IMDI
         receives distribution fees at annual rates ranging from .25% to 1.00%
         of certain of the Funds' average daily net assets attributable to the
         respective classes of shares, subject to the respective distribution
         plan, for the advertising and marketing of such Funds. The plans may be
         terminated at any time. If such termination occurs, the Funds will owe
         no payments to IMDI, other than any portion of the distribution fees
         accrued through the effective date of termination, but unpaid as of
         such date.

6.       ACCRUED EXPENSES AND OTHER LIABILITIES

         Accrued expenses and other liabilities consist of the following:

<TABLE>
<CAPTION>
                                                               MARCH 31,
                                                    ------------------------------
                                                       2001                2000
         <S>                                        <C>                 <C>
         Accrued compensation and benefits          $  409,049          $  245,241
         Due to Purchaser (Note 13)                    297,477             554,029
         Accrued lease expense                         419,867              95,815
         Other                                         896,136             415,999
                                                    ----------          ----------

                                                    $2,022,529          $1,311,084
                                                    ==========          ==========
</TABLE>

         In connection with the takeover bid by Investors Group Inc. (see Note
         19), the Company has incurred costs outside of its normal course of
         business. The takeover bid has caused what is deemed to be a change in
         control of the Company pursuant to the Management Agreements with the
         Funds. As a result of the change in control, the Funds are required to
         solicit approval from the shareholders of the Funds of interim
         management agreements which are under the same terms and conditions as
         the Management Agreements (see Note 4) that were previously in place.

         As a result of the solicitation of the shareholders of the Funds and
         other costs incurred by the Company in connection with the takeover of
         MFC, the Company will incur approximately $600,000 in costs. Such costs
         consist principally of legal, printing, mailing, solicitation and other
         costs related to the proxy statement submitted to the Funds'
         shareholders and other such matters. The Company has recorded such
         costs as general and administrative expenses in the accompanying
         consolidated statement of operations for the year ended March 31, 2001.
         Approximately $520,000 of such costs is included in accrued expenses
         and other liabilities in the accompanying consolidated statement of
         financial condition at March 31, 2001. MFC will reimburse the Company
         for the amounts, on an after-tax basis, that the Company has incurred
         in connection with matters described above.


                                      F-15
<PAGE>   54

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.       ACCRUED EXPENSES AND OTHER LIABILITIES, CONTINUED

         The Company has recorded as additional paid-in-capital at March 31,
         2001 approximately $374,000 in amounts due from MFC. Such amounts,
         which have been included in other receivables in the accompanying
         consolidated statement of financial condition, will be reimbursed to
         the Company.

7.       LINE OF CREDIT

         During October 2000, the Company renewed a $10,000,000 line of credit
         (the "Agreement"), with a maturity date of October 11, 2001, to provide
         for the Company's general working capital and short-term capital
         expenditure needs. The original agreement was entered into during
         October 1999. The Agreement provides for interest and principal on
         advances outstanding until maturity. The advances bear interest at a
         fluctuating rate equal to the LIBOR Market Index Rate plus 1.50%. The
         Agreement requires the Company to maintain a specified consolidated
         tangible net worth. As of March 31, 2001 and 2000, the Company had no
         amounts outstanding under the Agreement.

8.       COMMITMENTS

         The Company has various lease agreements for office space and
         equipment. The Company entered into a new lease effective March 1, 2001
         for its corporate offices. The new lease extends through 2013 and has
         renewal options through 2023. The Company intends to move its corporate
         offices in July 2001.

         Under operating leases with remaining non-cancelable terms in excess of
         one year at March 31, 2001, aggregate annual rental payments for office
         space and equipment are as follows:

<TABLE>
                  <S>                                 <C>
                  YEARS ENDING MARCH 31,

                         2002                         $   1,020,000
                         2003                             1,430,000
                         2004                             1,417,000
                         2005                             1,412,000
                         2006                             1,446,000
                         Thereafter                      11,104,000
                                                      -------------

                                                      $  17,829,000
                                                      =============
</TABLE>

         Rent expense for the years ended March 31, 2001, 2000 and 1999 was
         approximately $1,722,000, $992,000 and $899,000, respectively. A
         portion of these amounts represent the payment of common area operating
         expenses in connection with the Company's office leases. Total common
         area operating expenses were approximately $210,000, $157,000 and
         $136,000 for the years ended March 31, 2001, 2000 and 1999,
         respectively.

9.       STOCK OPTION PLANS


                                      F-16
<PAGE>   55

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The Company has a stock option plan (the "Option Plan") which provides
         for the granting of non-incentive and incentive stock options. The
         maximum number of shares reserved for issuance under the Option Plan is
         3,114,220 common shares. Options are granted to key employees of the
         Company. The Option Plan is administered by the Human Resource and
         Corporate Governance Committee (the "Committee"), which reports its
         recommendations to the Board of Directors for specific option grants.
         Option vesting generally range from one to five years. The exercise
         price of the options shall not be less than the market price per common
         share on the Toronto Stock Exchange on the business day prior to the
         date of the grant.

         Non-incentive options granted under the Option Plan shall expire five
         years after the date of grant and incentive options shall expire not
         later than ten years after the date of grant. Information regarding the
         above options for fiscal years ended March 31, 2001, 2000 and 1999 is
         as follows:

<TABLE>
<CAPTION>
                                                                                YEAR ENDED
                                               ----------------------------------------------------------------------------
                                                   MARCH 31, 2001             MARCH 31, 2000             MARCH 31, 1999
                                               ----------------------     ----------------------     ----------------------
                                                             WEIGHTED                   WEIGHTED                   WEIGHTED
                                                             AVERAGE                    AVERAGE                    AVERAGE
                                                             EXERCISE                   EXERCISE                   EXERCISE
                                                SHARES        PRICE        SHARES        PRICE        SHARES        PRICE
                                               ---------     --------     ---------     --------     ---------     --------
         <S>                                   <C>           <C>          <C>           <C>          <C>           <C>
         Options outstanding, beginning
             of year                           1,505,500      $ 7.07      1,372,500      $ 8.04      1,119,500      $ 7.54
         Options granted                         101,000        5.57        547,000        5.40        674,000        5.81
         Options exercised                       (35,000)       1.69         (3,000)       1.25       (316,000)       1.31
         Options expired                        (249,500)       7.54       (411,000)       8.14       (105,000)       8.61
                                               =========                  =========                  =========
         Options outstanding, end of year      1,322,000        7.01      1,505,500        7.07      1,372,500        8.04
                                               =========                  =========                  =========
         Options exercisable, end of year        767,500        8.09        958,500        8.02        709,500       10.19
                                               =========                  =========                  =========
</TABLE>

       Significant option groups outstanding as of March 31, 2001 and related
       price and life information follows:

<TABLE>
<CAPTION>
                                                        OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                                              ----------------------------------------    ------------------------
                                                                            WEIGHTED
                                                               WEIGHTED      AVERAGE                      WEIGHTED
                                                               AVERAGE      REMAINING                     AVERAGE
                                                               EXERCISE    CONTRACTUAL                    EXERCISE
         RANGE OF EXERCISE PRICES             OUTSTANDING       PRICE         LIFE        EXERCISABLE      PRICE
                                              -----------      --------    -----------    -----------     --------
         <S>                                  <C>              <C>         <C>            <C>             <C>

              $1.25-$4.91                        385,500        $ 4.19        3.20          228,000        $ 4.30
              $5.40-$9.62                        718,400          6.64        3.10          321,400          7.31
              $10.92-$12.35                      137,100         12.35        1.40          137,100         12.35
              $14.02-$18.63                       81,000         14.62        1.90           81,000         14.62
                                               ---------        ------        ----          -------        ------
                                               1,322,000        $ 7.01        2.90          767,500        $ 8.09
                                               =========        ======        ====          =======        ======
</TABLE>


                                      F-17
<PAGE>   56

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.       STOCK OPTION PLANS, CONTINUED

         Effective April 20, 2001, all previously unvested options became fully
         vested and exercisable in accordance with the provisions of the plan,
         as a result of the change in control of MFC (see Note 19).

         The Company utilizes the "intrinsic value based method" of accounting
         for stock options issued to employees. Had compensation costs been
         determined based on the "fair value based method" at the grant date for
         stock options it would have produced the following results:

<TABLE>
<CAPTION>
                                                            YEAR ENDED MARCH 31,
                                             --------------------------------------------------
                                                2001                2000                1999
         <S>                                 <C>                 <C>                 <C>
         Pro forma net income                $2,090,859          $5,575,611          $6,343,184
         Basic earnings per share                  0.11                0.30                0.33
         Diluted earnings per share                0.11                0.30                0.33
</TABLE>

         The fair value of each option grant is estimated on the date of grant
         using the Black-Scholes option-pricing model with the following
         weighted average assumptions:

<TABLE>
<CAPTION>
                                                                      MARCH 31,
                                                        -----------------------------------
                                                        2001           2000            1999
         <S>                                            <C>            <C>             <C>
         Dividend yield                                 0.02%          0.00%           0.00%
         Expected volatility                              63%            66%             69%
         Risk free interest rates                       6.54%          6.24%           5.50%
         Expected lives in years                            5              5               5
</TABLE>

10.      STOCK COMPENSATION

         In May 2000, the Company awarded a grant of 115,000 shares of the
         Company's common stock to a key salaried employee. The shares vest in
         three installments over three years provided the employee remains in
         the Company's employ on each of the vesting dates. In the event the
         employment terminates for any reason, all shares, which on the date of
         such termination have not vested, shall be forfeited and cancelled. The
         shares issued were recorded at their fair market value on the date of
         the grant with a corresponding reduction of stockholders' equity, which
         will be amortized as compensation expense over the related vesting
         period. Compensation expense of approximately $147,000 was recorded for
         the year ended March 31, 2001 in connection with this grant.


                                      F-18
<PAGE>   57

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.      CAPITAL TRANSACTIONS

         In July 2000, the Company entered into a normal course issuer bid,
         which was approved by the Toronto Stock Exchange ("TSE"), to repurchase
         up to 500,000 of the outstanding shares of the Company's common stock,
         representing 2.7% of the issued and outstanding common shares at the
         date of the notice. The bid will terminate on the earlier of the date
         on which the maximum number of common shares have been purchased, the
         date the Company provides notice of termination, or July 23, 2001. The
         Company has purchased no shares since the bid period commenced.

         In June 1998, the Company entered into a normal course issuer bid,
         which was approved by the Toronto Stock Exchange, to repurchase up to
         5% of the outstanding shares of the Company's common stock. In July
         1999, the Company entered into another normal course issuer bid on
         similar terms. During the years ended March 31, 2000 and 1999, the
         Company repurchased, 621,400 and 22,800 shares, respectively, at a cost
         of approximately $2,461,000 and $109,000, respectively. The shares were
         acquired at market price at the time of the acquisition and were
         immediately retired. No shares relative to these bids were purchased
         during the year ended March 31, 2001.

12.      EARNINGS PER SHARE

         The following table reconciles the weighted average shares outstanding
         used to calculate basic and diluted earnings per share for the years
         ended March 31, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                               2001                2000                1999
         <S>                                                <C>                 <C>                 <C>
         Weighted average number of common shares
         outstanding used in basic calculation              18,631,729          18,781,410          19,137,480

         Effect of dilutive stock options                      102,791              35,660             129,613
                                                            ----------          ----------          ----------

         Weighted average number of common and
         common equivalent shares outstanding used
         in the diluted calculation                         18,734,520          18,817,070          19,267,093
                                                            ==========          ==========          ==========
</TABLE>


                                      F-19
<PAGE>   58

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.      SALE OF DEFERRED SELLING COMMISSIONS

         In March 1999, the Company sold the portion of the deferred selling
         commissions related to Class B shares to an unrelated third party (the
         "Purchaser"). The sale resulted in the Company receiving cash proceeds
         of $21,115,000 and recording a net gain of approximately $41,000 after
         recording expenses incurred in connection with the transaction for the
         year ended March 31, 1999.

         As a result of the sale, the Purchaser is entitled to receive 12b-1
         Distribution fees of .75% on average daily assets of the mutual funds
         shares represented by the deferred selling commissions sold ("Eligible
         Shares"). In addition, the Purchaser will receive any contingent
         deferred sales charges upon redemption of the Eligible Shares.

14.      PROFIT SHARING PLAN

         MIMI maintains a 401(k) profit sharing plan (the "401(k) Plan") in
         which all eligible, full-time employees may participate. MIMI
         contributes to a trust 100% of the first 6% of pay that each employee
         contributes. Participants are, at all times, fully vested in their
         contributions, and Company contributions become fully vested to the
         participants after six years of continued employment. Additionally, on
         an annual basis, the Board of Directors may vote to make an additional
         contribution to the 401(k) Plan. MIMI's total contributions for the
         years ended March 31, 2001, 2000 and 1999 were approximately $443,000,
         $309,000 and $369,000, respectively.

15.      CONCENTRATION OF RISK

         As of March 31, 2001 and 2000, the Company had approximately
         $11,794,000 and $10,475,000, respectively, in cash and cash equivalents
         in excess of Federal deposit insurance limits. The Company's policy is
         to only have funds on deposit with reputable financial institutions.

         A significant percentage of the Company's assets under management are
         represented by one fund, Ivy International Fund. A decline in the
         performance of the Ivy International Fund or the securities markets in
         general could have an adverse affect on the Company's revenues.

         The Company has dealer agreements with several hundred broker-dealer
         firms; however, during the years ended March 31, 2001, 2000 and 1999,
         two firms were responsible for approximately 46%, 60% and 71%,
         respectively, of the Company's mutual fund sales.


                                      F-20
<PAGE>   59

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.      RESTRUCTURING

         During the year ended March 31, 2001, the Company recorded a pre-tax
         charge of $3,032,000 to cover restructuring costs. The restructuring
         plans include out-sourcing the transfer agency function as well as
         downsizing sales and marketing and various support functions. These
         initiatives are expected to be implemented by July 2001 and result in a
         total headcount reduction of approximately fifty-five employees. The
         charges included $2,352,000 related to employee severance compensation
         and benefits and $680,000 related to lease obligations. As of March 31,
         2001, the restructuring accrual has been reduced by a cash payment of
         twenty-nine severance compensation packages totaling $1,262,000.

17.      EMPLOYMENT AGREEMENTS

         The Board of Directors of MIMI approved Change in Control Employment
         Agreements (the "Agreements") with corporate officers (hereinafter
         referred to as "key employees") and an Employee Retention Plan (the
         "Retention Plan") for all eligible employees. Under the terms of the
         Agreements, if, at any time within two years of a change in control, as
         defined in the Agreement, the key employees' position, salary, bonus,
         place of work, or company-provided benefits are modified, or employment
         is terminated for any reason other than cause, as defined in the
         Agreements, then the key employee is entitled to receive a severance
         payment. Such severance payment is equal to one to two times the key
         employee's salary and, in most cases, the average of the bonuses
         received by the key employee for the prior two years. Under the terms
         of the Retention Plan, in the event of a change in control, as defined
         in the Retention Plan, each employee of MIMI whose employment is
         terminated will receive compensation income over a period which will be
         the greater of: (1) compensation income from the date of termination to
         November 15, 2001 or (2) one month of compensation income per year of
         service (to a maximum of 24 months).

18.      DIFFERENCES FROM CANADIAN ACCOUNTING PRINCIPLES

         The Company has reviewed its consolidated financial statements for the
         periods presented for compliance with accounting principles generally
         accepted in Canada and has determined that there are no material
         differences between the amounts reported in these consolidated
         financial statements and the amounts which would be reported in
         accordance with accounting principles generally accepted in Canada.


                                      F-21
<PAGE>   60

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19.    SUBSEQUENT EVENT

       On April 20, 2001, Investors Group Inc. ("Investors Group"), a leading
       Canadian financial services organization acquired, through a takeover
       bid, 98.2% of the outstanding shares of MFC (see Note 6). Investors Group
       extended the expiry time of its bid to April 30, 2001 to facilitate the
       purchase of the remaining common shares of MFC. Effective April 30, 2001,
       Investors Group filed notice of its intention to exercise its right under
       Part XV of the Business Corporation Act (Ontario) to acquire common
       shares not purchased by it under the bid which will permit them to take
       MFC private.


                                      F-22