SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 29, 2001
	OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from  _____________ to  _____________

Commission file number 1-14947

JEFFERIES GROUP, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	95-4719745
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

11100 Santa Monica Blvd., Los Angeles, California	90025
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (310) 445-1199

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Yes [X] No [   ]

As of June 29, 2001, the registrant had 25,837,656 common shares, $.0001 par value, outstanding.

Page 1 of 18

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
		CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
		CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE

JEFFERIES GROUP, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JUNE 29, 2001

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition - June 29, 2001 (unaudited) and December 31, 2000		3
	Consolidated Statements of Earnings (unaudited) - Three Months and Six Months Ended June 29, 2001 and June 30, 2000		4
	Consolidated Statement of Changes in Stockholders’ Equity (unaudited) - Six Months Ended June 29, 2001		5
	Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 29, 2001 and June 30, 2000		6
	Notes to Consolidated Financial Statements (unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		17
Item 2.	Changes in Securities and Use of Proceeds		17
Item 4.	Submission of Matters to a Vote of Security Holders		17
Item 6.	Exhibits and Reports on Form 8-K		17

Page 2 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share amounts)

					June 29,			December 31,
					2001			2000
					(unaudited)
ASSETS
Cash and cash equivalents					$	78,083		$	24,996
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations						168,337			206,444
Receivable from brokers and dealers						2,953,825			2,860,677
Receivable from customers, officers and directors						180,921			254,562
Securities owned						261,904			224,738
Securities pledged to creditors						99,195			96,324
Investments						157,613			136,047
Premises and equipment						49,576			43,635
Other assets						131,617			110,446
					$	4,081,071		$	3,957,869
LIABILITIES AND STOCKHOLDERS’ EQUITY
Payable to brokers and dealers					$	2,773,739		$	2,423,488
Payable to customers						294,409			501,786
Securities sold, not yet purchased						152,854			171,685
Accrued expenses and other liabilities						199,402			249,918
						3,420,404			3,346,877
Long-term convertible debt						3,985			2,963
Long-term debt						149,631			149,582
						3,574,020			3,499,422
Stockholders’ equity:
	Preferred stock, $.0001 par value. Authorized 10,000,000 shares; none issued					—			—
	Common stock, $.0001 par value. Authorized 100,000,000 shares; issued 26,579,754 shares in 2001 and 25,177,419 shares in 2000					3			3
	Additional paid-in capital					114,524			86,004
	Retained earnings					414,568			384,846
	Less:
		Treasury stock, at cost, 742,098 shares in 2001 and 489,039 shares in 2000				(17,452	)		(10,383	)
		Accumulated other comprehensive loss:
			Currency translation adjustments			(3,454	)		(885	)
			Additional minimum pension liability			(1,138	)		(1,138	)
		Total accumulated other comprehensive loss				(4,592	)		(2,023	)
				Total stockholders’ equity		507,051			458,447
					$	4,081,071		$	3,957,869

See accompanying unaudited notes to consolidated financial statements.

Page 3 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands, except per share amounts)

			Three Months Ended				Six Months Ended
			June 29,		June 30,		June 29,		June 30,
			2001		2000		2001		2000
Revenues:
	Commissions		$	53,859	$	54,070	$	114,407	$	112,650
	Principal transactions			72,404		59,037		159,230		138,420
	Corporate finance			44,077		19,657		61,089		34,874
	Interest			38,332		46,962		78,276		84,651
	Asset management			5,811		2,214		10,540		4,308
	Other			1,414		678		2,063		2,475
		Total revenues		215,897		182,618		425,605		377,378
Interest expense				34,453		38,277		67,256		69,376
Revenues, net of interest expense				181,444		144,341		358,349		308,002
Non-interest expenses:
	Compensation and benefits			111,244		87,530		218,728		188,217
	Floor brokerage and clearing fees			11,183		9,309		22,088		18,765
	Communications			12,230		11,598		23,568		23,710
	Occupancy and equipment rental			6,135		4,605		11,627		9,165
	Travel and promotional			5,703		4,960		11,312		9,762
	Other			6,375		4,958		15,321		10,801
		Total non-interest expenses		152,870		122,960		302,644		260,420
Earnings before income taxes				28,574		21,381		55,705		47,582
Income taxes				12,022		9,009		23,469		20,186
		Net earnings	$	16,552	$	12,372	$	32,236	$	27,396
Earnings per share:
	Basic		$	0.68	$	0.51	$	1.34	$	1.14
	Diluted		$	0.65	$	0.51	$	1.27	$	1.13
Weighted average shares:
	Basic			24,206		24,052		24,124		24,000
	Diluted			25,564		24,258		25,321		24,217

See accompanying unaudited notes to consolidated financial statements.

Page 4 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
SIX MONTHS ENDED JUNE 29, 2001
(Dollars in thousands, except per share amounts)

												Accumulated			Total
				Additional								Other			Stock-
		Common		Paid-in		Retained			Treasury			Comprehensive			holders’
		Stock		Capital		Earnings			Stock			Loss			Equity
Balance, December 31, 2000		$	3	$	86,004	$	384,846		$	(10,383	)	$	(2,023	)	$	458,447
Exercise of stock options, including tax benefits (74,256 shares)			—		1,771		—			—			—			1,771
Purchase of treasury stock (237,000 shares)			—		—		—			(6,741	)		—			(6,741	)
Issuance of ESPP shares (122,485 shares)			—		2,405		—			—			—			2,405
Issuance of restricted stock (1,189,535 shares), net of forfeitures, and additional vesting of restricted stock shares, including tax benefits			—		22,796		—			(328	)		—			22,468
Employee stock ownership plan amortization and stock purchases, net			—		1,548		—			—			—			1,548
Quarterly dividends ($.05 per share per quarter)			—		—		(2,514	)		—			—			(2,514	)
Comprehensive income:
	Net earnings		—		—		32,236			—			—			32,236
	Other comprehensive loss, net of tax:
	Translation adjustment		—		—		—			—			(2,569	)		(2,569	)
Comprehensive income			—		—		—			—			—			29,667
Balance, June 29, 2001		$	3	$	114,524	$	414,568		$	(17,452	)	$	(4,592	)	$	507,051

See accompanying unaudited notes to consolidated financial statements.

Page 5 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)

					Six Months Ended
					June 29,			June 30,
					2001			2000
Cash flows from operating activities:
	Net earnings				$	32,236		$	27,396
	Adjustments to reconcile net earnings to net cash provided by (used in) operations:
		Depreciation and amortization				7,971			5,697
		(Increase) decrease in cash and securities segregated and on deposit for regulatory purposes				38,107			(44,693	)
		(Increase) decrease in receivables:
			Brokers and dealers			(93,148	)		(1,326,672	)
			Customers, officers and directors			73,641			9,593
		(Increase) decrease in securities owned				(37,166	)		101,618
		Increase in securities pledged to creditors				(2,871	)		—
		Increase in investments				(21,566	)		(11,402	)
		Increase in other assets				(21,766	)		(1,898	)
		Increase (decrease) in operating payables:
			Brokers and dealers			350,251			1,154,217
			Customers			(207,377	)		41,546
		Increase (decrease) in securities sold, not yet purchased				(18,831	)		6,926
		Decrease in accrued expenses and other liabilities				(50,516	)		(17,492	)
				Total adjustments		16,729			(82,560	)
				Net cash provided by (used in) operating activities		48,965			(55,164	)

Continued on next page.

See accompanying unaudited notes to consolidated financial statements.

Page 6 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — CONTINUED (Unaudited)
(Dollars in thousands)

				Six Months Ended
				June 29,			June 30,
				2001			2000
Cash flows from financing activities:
	Net proceeds from (payments on):
	Bank loans				—			77,000
	Subordinated loans on consolidated subsidiary				1,300			—
	Repurchase of treasury stock				(6,741	)		(7,931	)
	Dividends paid				(2,514	)		(2,432	)
	Exercise of stock options				1,771			1,274
	Issuance of ESPP shares				2,405			3,402
	Issuance of restricted stock				22,468			5,269
	Employee Stock Ownership Plan stock purchases				—			(349	)
			Net cash provided by financing activities		18,689			76,233
Cash flows from investing activities - purchase of premises and equipment					(11,720	)		(3,297	)
Effect of foreign currency translation on cash					(2,847	)		(937	)
			Net increase in cash and cash equivalents		53,087			16,835
Cash and cash equivalents — beginning of period					24,996			77,197
Cash and cash equivalents — end of period				$	78,083		$	94,032
Supplemental disclosures of cash flow information:
	Cash paid during the period for:
		Interest		$	73,688		$	66,786
		Income taxes		$	29,893		$	1,051

See accompanying unaudited notes to consolidated financial statements.

Page 7 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Consolidated Financial Statements

     The accompanying consolidated financial statements include the accounts of Jefferies Group, Inc. (“Group”) and all its subsidiaries (“Company”), including Jefferies & Company, Inc. (“JEFCO”). The accounts of W & D Securities, Inc. (“W & D”) are consolidated because of the nature and extent of Group’s ownership interest in W & D. The Company and its subsidiaries operate and are managed as a single business segment, that of a securities broker-dealer, which includes several types of financial services, such as principal and agency transactions in equity, convertible debt and high yield, as well as corporate finance activities. Since the Company’s services are provided using the same distribution channels, support services and facilities and all are provided to meet client needs, the Company does not identify assets or allocate all expenses to any service, or class of service as a separate business segment.

     All significant intercompany accounts and transactions are eliminated in consolidation. The consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for the fair statement of the results for the interim periods and should be read in conjunction with the Company’s annual report for the year ended December 31, 2000.

Securities Transactions

     All transactions in securities, commission revenues and related expenses are recorded on a trade-date basis.

     Securities owned and securities sold, not yet purchased, are valued at market, and unrealized gains or losses are reflected in revenues from principal transactions.

Reclassifications

     Certain reclassifications have been made to the prior period’s amounts to conform to the current period’s presentation.

Receivable from, and Payable to, Brokers and Dealers

     Receivable from and payable to brokers and dealers consists of the following as of June 29, 2001 (in thousands of dollars):

Receivable from brokers and dealers:
	Securities borrowed	$	2,802,034
	Other		151,791
		$	2,953,825
Payable to brokers and dealers:
	Securities loaned	$	2,722,523
	Other		51,216
		$	2,773,739

Page 8 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

Securities Owned, Securities Pledged to Creditors and Securities Sold, Not Yet Purchased

     The following is a summary of the market value of major categories of securities owned and securities sold, not yet purchased, as of June 29, 2001 (in thousands of dollars):

			Securities
			Sold,
	Securities		Not Yet
	Owned		Purchased
Corporate equity securities	$	91,739	$	133,580
High-yield securities		113,347		4,788
Corporate debt securities		56,075		14,474
Options		743		12
	$	261,904	$	152,854

     The following is a summary of the market value of major categories of securities pledged to creditors as of June 29, 2001 (in thousands of dollars):

	Securities
	Pledged
	To Creditors
Corporate equity securities	$	61,186
High yield securities		13,851
Corporate debt securities		24,158
	$	99,195

Investments

     Investments consist of the following as of June 29, 2001 (in thousands of dollars):

Debt and equity investments	$	19,375
Partnership interests		57,704
Equity and debt interests in affiliates		80,534
	$	157,613

Cash and Cash Equivalents

     Cash and cash equivalents include cash in banks and short term investments. Cash equivalents are part of the cash management activities of the Company and generally mature within 90 days. The following is a summary of cash and cash equivalents as of June 29, 2001 (in thousands of dollars):

Cash in banks	$	16,515
Short term investments		61,568
	$	78,083

Page 9 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

Earnings per Share

     The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three month and six month periods ended June 29, 2001 and June 30, 2000 (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2001		2000		2001		2000
Net earnings	$	16,552	$	12,372	$	32,236	$	27,396
Shares for basic and diluted calculations:
Average shares used in basic computation		24,206		24,052		24,124		24,000
Stock options		529		147		472		155
Restricted stock		829		59		725		62
Average shares used in diluted computation		25,564		24,258		25,321		24,217
Earnings per share:
Basic	$	0.68	$	0.51	$	1.34	$	1.14
Diluted	$	0.65	$	0.51	$	1.27	$	1.13

Asset Management

     The following summarizes revenues from asset management for the three month and six month periods ended June 29, 2001 and June 30, 2000 (in thousands of dollars):

	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2001		2000		2001		2000
High Yield (HY)
Performance based	$	4,489	$	1,509	$	7,875	$	3,010
Asset based		537		349		1,037		427
Non-HY Employee Funds
Asset based		84		—		165		—
International		701		356		1,463		871
Total	$	5,811	$	2,214	$	10,540	$	4,308

Other Comprehensive Loss

     The following summarizes other comprehensive income and accumulated other comprehensive income at June 29, 2001 and for the three months then ended (in thousands of dollars):

	Before-Tax			Income Tax		Net-of-Tax
	Amount			or Benefit		Amount
Currency translation adjustments	$	(143	)	$	—	$	(143	)
Minimum pension liability adjustment		—			—		—
Other comprehensive loss	$	(143	)	$	—	$	(143	)

Page 10 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

				Minimum			Accumulated
	Currency			Pension			Other
	Translation			Liability			Comprehensive
	Adjustments			Adjustment			Income (Loss)
Beginning at March 30, 2001	$	(3,311	)	$	(1,138	)	$	(4,449	)
Change in second quarter of 2001		(143	)		—			(143	)
Ending at June 29, 2001	$	(3,454	)	$	(1,138	)	$	(4,592	)

     The following summarizes other comprehensive income and accumulated other comprehensive income at June 30, 2000 and for the three months then ended (in thousands of dollars):

	Before-Tax			Income Tax		Net-of-Tax
	Amount			or Benefit		Amount
Currency translation adjustments	$	(771	)	$	—	$	(771	)
Minimum pension liability adjustment		—			—		—
Other comprehensive loss	$	(771	)	$	—	$	(771	)

				Minimum			Accumulated
	Currency			Pension			Other
	Translation			Liability			Comprehensive
	Adjustments			Adjustment			Income (Loss)
Beginning at March 31, 2000	$	70		$	(183	)	$	(113	)
Change in second quarter of 2000		(771	)		—			(771	)
Ending at June 30, 2000	$	(701	)	$	(183	)	$	(884	)

     Comprehensive income for the three months ended June 29, 2001 and June 30, 2000 was as follows:

	June 29,			June 30,
	2001			2000
Net earnings	$	16,552		$	12,372
Other comprehensive loss		(143	)		(771	)
Comprehensive income	$	16,409		$	11,601

     The following summarizes other comprehensive income and accumulated other comprehensive income at June 29, 2001 and for the six months then ended (in thousands of dollars):

	Before-Tax			Income Tax		Net-of-Tax
	Amount			or Benefit		Amount
Currency translation adjustments	$	(2,569	)	$	—	$	(2,569	)
Minimum pension liability adjustment		—			—		—
Other comprehensive loss	$	(2,569	)	$	—	$	(2,569	)

				Minimum			Accumulated
	Currency			Pension			Other
	Translation			Liability			Comprehensive
	Adjustments			Adjustment			Income (Loss)
Beginning at December 31, 2000	$	(885	)	$	(1,138	)	$	(2,023	)
Change in first half of 2001		(2,569	)		—			(2,569	)
Ending at June 29, 2001	$	(3,454	)	$	(1,138	)	$	(4,592	)

Page 11 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

     The following summarizes other comprehensive income and accumulated other comprehensive income at June 30, 2000 and for the six months then ended (in thousands of dollars):

	Before-Tax			Income Tax		Net-of-Tax
	Amount			or Benefit		Amount
Currency translation adjustments	$	(937	)	$	—	$	(937	)
Minimum pension liability adjustment		—			—		—
Other comprehensive loss	$	(937	)	$	—	$	(937	)

				Minimum			Accumulated
	Currency			Pension			Other
	Translation			Liability			Comprehensive
	Adjustments			Adjustment			Income (Loss)
Beginning at December 31, 1999	$	236		$	(183	)	$	53
Change in first half of 2000		(937	)		—			(937	)
Ending at June 30, 2000	$	(701	)	$	(183	)	$	(884	)

     Comprehensive income for the six months ended June 29, 2001 and June 30, 2000 was as follows:

	June 29,			June 30,
	2001			2000
Net earnings	$	32,236		$	27,396
Other comprehensive loss		(2,569	)		(937	)
Comprehensive income	$	29,667		$	26,459

Net Capital Requirements

     As registered broker-dealers, JEFCO and W & D are subject to the Securities and Exchange Commission’s Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. JEFCO and W & D have elected to use the alternative method permitted by the Rule, which requires that they each maintain minimum net capital, as defined, equal to the greater of $250,000 or 2% of the aggregate debit balances arising from customer transactions, as defined.

     Net capital changes from day to day, but as of June 29, 2001, JEFCO’s and W & D’s net capital was $144.7 million and $2.4 million, respectively, which exceeded minimum net capital requirements by $141.0 million and $2.1 million, respectively.

Quarterly Dividends

     In 1988, the Company instituted a policy of paying regular quarterly dividends. There are no restrictions on the Company’s present ability to pay dividends on common stock, other than the governing provisions of the Delaware General Corporation Law.

Dividends per Common Share (declared and paid):

	1st Qtr.		2nd Qtr.
2001	$	.05	$	.05
2000	$	.05	$	.05

Page 12 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

Off-Balance Sheet Risk

     In the normal course of business, the Company had letters of credit outstanding aggregating $32.8 million at June 29, 2001, to satisfy various collateral requirements in lieu of depositing cash or securities.

Segment Reporting

     The company’s operations have been classified into a single business segment, a securities broker-dealer, which includes several types of financial services. This segment includes the traditional securities brokerage and investment banking activities of the Company. The Company’s business is predominantly in the United States with less than 10% of revenues and 2% of assets attributable to international operations.

New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued two Statements: Statement No. 141, “Business Combinations”, and Statement No. 142, “Goodwill and Other Intangible Assets”.

     Those Statements will change the accounting for business combinations and goodwill in two significant ways. First, Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method will be prohibited. Second, Statement 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Thus, amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of that Statement, which for companies with calendar year ends, will be January 1, 2002. The implementation of these statements is not expected to have a material impact on the Company.

Goodwill

     Goodwill, which represents the excess of cost over net assets acquired, is amortized on a straight-line basis over ten years and relates to the acquisition of The Europe Company Ltd. in the third quarter of 2000. At June 29, 2001, excess of purchase price over net assets acquired remaining was $11.7 million, net of accumulated amortization of $1.2 million and is included in other assets.

Page 13 of 18

JEFFERIES GROUP, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Analysis of Financial Condition

     Total assets and total liabilities as of June 29, 2001 were $4.1 billion and $3.6 billion, respectively, and were relatively unchanged from December 31, 2000.

Second Quarter 2001 Versus Second Quarter 2000

     Revenues, net of interest expense, increased 26% to $181.4 million, compared to $144.3 million for the second quarter of 2000. The increase was due primarily to a $24.4 million, or 124%, increase in corporate finance, a $13.4 million, or 23%, increase in principal transactions, a $3.6 million, or 162%, increase in asset management, and a $736,000, or 109%, increase in other income, partially offset by a $4.8 million, or 55%, decrease in net interest income (interest revenues less interest expense). Commissions revenues remained relatively unchanged. Principal transactions revenue increased mostly due to the High Yield and Equities Divisions. Corporate finance revenues increased due mostly to an increase in debt and equity underwriting. Net interest income was down mostly due to decreased securities borrowed and loaned matched book business. Asset management increased due to more assets under management and greater profitability. Other income increased mostly due to several miscellaneous items.

     Total non-interest expenses increased 24% to $152.9 million, compared to $123.0 million for the second quarter of 2000. Compensation and benefits increased $23.7 million, or 27%, mostly due to an increase in incentive based compensation accruals, as well as increased headcount. Floor brokerage and clearing fees increased $1.9 million, or 20%, due to increased volume of business executed on the various exchanges. Occupancy and equipment rental increased $1.5 million, or 33%, mostly due to office expansion. Other expense increased $1.4 million or 29%, largely due to higher legal expense. Travel and promotional increased $743,000, or 15%, largely due to an increase in business travel. Communications were increased $632,000 or 5%, mostly due to an increase in trade volume and headcount.

     Earnings before income taxes were up 34% to $28.6 million, compared to $21.4 million for the same prior year period. The effective tax rate was approximately 42.1% for the second quarter of 2001 and 2000. Net earnings were up $4.2 million to $16.6 million, compared to $12.4 million for the same prior year period.

     Basic net earnings per share were $0.68 for the second quarter of 2001 on 24,206,000 shares compared to $0.51 in the 2000 period on 24,052,000 shares. Diluted net earnings per share were $0.65 for the second quarter of 2001 on 25,564,000 shares compared to $0.51 in the comparable 2000 period on 24,258,000 shares.

First Half 2001 Versus First Half 2000

     Revenues, net of interest expense, increased 16% to $358.3 million, compared to $308.0 million for the first half of 2000. The increase was due primarily to a $26.2 million, or 75%, increase in corporate finance, a $20.8 million, or 15%, increase in principal transactions, a $6.2 million, or 145%, increase in asset management, and a $1.8 million, or 2%, increase in commissions, partially offset by a $4.3 million, or 28%, decrease in net interest income (interest revenues less interest expense), and a $412,000, or 17%, decrease in other income. Commissions and principal transactions revenue increased mostly due to the Equities, High Yield and Convertibles Divisions. Corporate finance revenues increased due mostly to an increase in debt and equity underwriting. Net interest income was down mostly due to decreased securities borrowed and loaned matched book business. Asset management increased due to more assets under management and greater profitability. Other income decreased mostly due to a decrease in correspondent income.

     Total non-interest expenses increased 16% to $302.6 million, compared to $260.4 million for the first half of 2000. Compensation and benefits increased $30.5 million, or 16%, mostly due to an increase in incentive based compensation accruals, as well as increased headcount. Other expense increased $4.5 million or 42%, largely due to higher legal expense. Floor brokerage and clearing fees increased $3.3 million, or 18%, due to increased volume of business executed on the various exchanges. Occupancy and equipment rental increased $2.5 million, or 27%, mostly due to office

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JEFFERIES GROUP, INC. AND SUBSIDIARIES

expansion. Travel and promotional increased $1.6 million, or 16%, largely due to an increase in business travel. Communications were unchanged from the same prior year period.

     Earnings before income taxes were up 17% to $55.7 million, compared to $47.6 million for the same prior year period. The effective tax rate was approximately 42.1% for the first half of 2001 compared to 42.4% for the first half of 2000. Net earnings were up $4.8 million, to $32.2 million, compared to $27.4 million for the same prior year period.

     Basic net earnings per share were $1.34 for the first half of 2001 on 24,124,000 shares compared to $1.14 in the 2000 period on 24,000,000 shares. Diluted net earnings per share were $1.27 for the first half of 2001 on 25,321,000 shares compared to $1.13 in the comparable 2000 period on 24,217,000 shares.

Revenues by Source

     The following provides a breakdown of total revenues by source for the three months and six months ended June 29, 2001 and June 30, 2000.

		Three Months Ended
		June 29, 2001					June 30, 2000
				% of					% of
				Total					Total
		Amount		Revenues			Amount		Revenues
				(Dollars in thousands)
Commissions and principal transactions:
	Equities	$	84,274		39	%	$	77,450		43	%
	International		15,659		7			19,764		11
	High Yield		17,897		8			7,928		4
	Convertible		6,718		3			6,060		3
	Other proprietary trading		1,715		1			1,905		1
	Total		126,263		58			113,107		62
Corporate finance			44,077		20			19,657		11
Interest			38,332		18			46,962		26
Asset management			5,811		3			2,214		1
Other			1,414		1			678		—
	Total revenues	$	215,897		100	%	$	182,618		100	%

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JEFFERIES GROUP, INC. AND SUBSIDIARIES

		Six Months Ended
		June 29, 2001					June 30, 2000
				% of					% of
				Total					Total
		Amount		Revenues			Amount		Revenues
				(Dollars in thousands)
Commissions and principal transactions:
	Equities	$	185,305		44	%	$	169,559		45	%
	International		35,099		8			44,517		12
	High Yield		34,079		8			20,616		6
	Convertible		17,104		4			13,042		3
	Other proprietary trading		2,050		1			3,336		1
	Total		273,637		65			251,070		67
Corporate finance			61,089		14			34,874		9
Interest			78,276		18			84,651		22
Asset management			10,540		2			4,308		1
Other			2,063		1			2,475		1
	Total revenues	$	425,605		100	%	$	377,378		100	%

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JEFFERIES GROUP, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Many aspects of the Company’s business involve substantial risks of liability. In the normal course of business, the Company and its subsidiaries have been named as defendants or co-defendants in lawsuits involving primarily claims for damages. The Company’s management believes that pending litigation will not have a material adverse effect on the Company.

Item 2. Changes in Securities and Use of Proceeds

     During March 2001, the Company issued 83,314 shares of restricted common stock to Quarterdeck Investment Partners, Inc. in connection with the Company’s strategic alliance with Quarterdeck Investment Partners, LLC and as partial consideration for the acquisition of 16 2/3% interest in Quarterdeck Investment Partners, LLC. The securities were issued in a transaction not involving a public offering and were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

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

     An annual meeting of the Company’s shareholders was held on June 7, 2001. At the meeting, with respect to the matters under consideration, the following votes were cast in the following manner:

	For		Withheld		Non-vote
Election of Directors
Frank E. Baxter		20,555,266		1,661,156		—
W. Patrick Campbell		21,645,576		570,846		—
Richard G. Dooley		21,949,108		267,314		—
Richard B. Handler		20,554,176		1,662,246		—
Sheldon B. Lubar		21,936,708		279,714		—
Frank J. Macchiarola		21,950,208		266,214		—
John C. Shaw, Jr.		20,852,357		1,364,065		—

Item 6. Exhibits and Reports on Form 8-K

(b)	Reports on Form 8-K.
	None.

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JEFFERIES GROUP, INC. AND SUBSIDIARIES

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			JEFFERIES GROUP, INC. (Registrant)
Date:	August 10, 2001	By:	/s/	Joseph A. Schenk
				Joseph A. Schenk Chief Financial Officer

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