July 6, 2005

Dear Unitholder:

The net asset value of Formula Growth Fund as of June 30, 2005 was $3,781.12 per unit. For the quarter, this represents a 9.3% increase in Canadian dollars and a 7.9% increase in U.S. dollars.

In the second quarter, the Fund's 7.9% U.S. dollar return was significantly ahead of all the major U.S. stock market indexes listed in the table above. The Fund also nicely outperformed on a year to date basis. For the first half, the Fund has climbed back into positive territory due to the strong second quarter results while U.S. markets remain under water for the year. As well, our performance is ahead of the average small-cap growth manager who returned 3.8% during the second quarter and lost 1.7% for the year.

The months of May and June were particularly strong for Formula Growth Fund rising in U.S. dollars 6.5% and 5.2% respectively. These returns represent a continuation of the solid gains that we have been exhibiting overall since the low of March 11, 2003. Since that time, the Fund is up more than 100% in U.S. dollars to $3,085. We point out for our Canadian customers, if the Canadian and U.S. dollar exchange rate had held constant since March 2003, the Fund would be $4,542 per unit at the end of June. Over the last 24 months, since June of 2003, the Fund has compounded at 19% in U.S. dollars per year.

While worries still exist in the U.S. markets and investors continue to fret, we feel strongly that we have emerged from the troubled times of the aftermath of the 2000 Internet bubble. Since the recession of 2002, which severely hammered U.S. corporate profits as well as our own results, we have seen the holdings in the portfolio deliver for the most part on sales and earnings expectations. As one would expect, the Fund's returns are reflecting this solid operating performance over the past two years.

We remain confident that Formula Growth Fund should continue to do well going forward as our returns revert to our longer term average of around 15%. Over our 45 year history, this reversion to the mean normally occurs after poor performance in bear market periods and persists for a number of years. We believe that it is no different this time as the portfolio is inexpensive, exciting and loaded with growth.

For those unitholders who were unable to attend our annual general meeting on May 25th, the presentation is available here. The presentation includes additional qualitative and quantitative information that may be of interest.

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,