July 8, 2002

Dear Unitholders:

The net asset value of the Fund as of June 30, 2002 was $3,438.99 per unit. This represents an 18.9% decrease for the quarter in Canadian dollars or a 14.7% decrease in US dollars.

As illustrated by the popular indexes above, it was an ugly second quarter and there was nowhere to hide. The Fund's results were in line with the average mid-cap U.S. growth fund which fell 14.6% during the quarter. There is little doubt that we are experiencing a prolonged bear market. The bull market party of the bubble years is clearly over and the hangover isn't going away quickly. In fact, this is the first quarter end since December 1975 that the average stock fund has shown a three-year negative return.

As we begin the second half, we are convinced that small and mid-cap growth stocks are very well positioned. These companies generally outperform following bear markets due to their greater operating flexibility and nimbleness. Like a large ship, it is more difficult to turn a mega cap company around. Furthermore, in a market environment that is consumed with the past transgressions of the Enrons and Worldcoms, investors' appetite for smaller firms should increase because their businesses (and usually their financial statements) are easier to understand.

Aside from the imponderable threats of terrorism and war, there are many issues in the headlines that are weighing on the market. It has been our experience that by the time the issues reach the popular media, they are usually reflected in the price of the stocks.

We feel one risk to the market that might be under-appreciated is a deepening of corporate America's Wall Street "Watergate". We fear that Washington may try to legislate confidence and trust instead of letting business leaders rebuild it. It is our strong belief that the vast majority of corporate America is honest and that the system is not dysfunctional or broken. There is no question that very important companies have disappointed investors and employees. Yet the headlines do not carry the untold stories of the thousands of upstanding management teams doing an honest job everyday. These are the managements we strive to meet and invest with. Our many recent contacts with these companies serve to increase our conviction in the soundness of the American system.

In conclusion, we'd like to remind you of a statement Mark Twain made a hundred years ago that the stock market is a difficult place in which to speculate. In a free market, stocks offer no "money-back" guarantees. Investors, as opposed to speculators, need to be careful and they need to do their homework. Patience, due diligence and courage are the watchwords of sound investing. It is important to remember that the stock market attempts to discount the future and, as a result, it is seldom precise in the short term though rewarding over the long-term. The purging of the excesses of the late 1990's continues and is providing both a lesson and a fertile hunting ground for patient investors.

For our taxable Canadian residents there are no realized capital gains so far this year. We will provide an update in the next quarterly letter.

Yours truly,