April 5, 2005

Dear Unitholder:

The net asset value of the Formula Growth Fund as of March 31, 2005 was $3,458.68 per unit. In Canadian dollars, this represents a 4.9% decrease for the quarter and a 5.3% decrease in U.S. dollars. Our performance was more or less in line with the U.S. indexes listed below and with the average Small Cap Growth Fund which declined 5.4% in the quarter.

After a very strong revival in the stock market in 2003, the investment landscape in 2004 offered little opportunity except for the cyclical boom in the resource sectors. This lacklustre environment changed suddenly with a surprisingly strong fourth quarter which saw the stock market broaden out nicely. As a result, the majority of investors exited 2004 in a decidedly more upbeat mood.

Unfortunately, developments during the first quarter of 2005 have caused yet another shift in psychology. Many of the issues that plagued the first three quarters of 2004 came back to haunt investors and clouded the investment horizon. Once again, we have the prospects of a weak U.S. dollar, a U.S. Administration unable to balance the budgets and CEO scandals unsettling investors. Oil prices and many other commodities have resumed their rise, surpassing last year's peak levels. In addition, the prices for other products and services, like food, have also shown signs of rising. As a result, what were fears of disinflation a year ago have instead turned into current fears of inflation.

Predictably at this stage of the economic cycle, the Federal Reserve has raised short term interest rates. The increases started from the unprecedented low interest rate levels of 1% in the post September 11th era. Since June 2004, the Fed has increased rates seven times to 2.75% in a very gradual way. The expectation is for a continuation of these measured increases to an ultimate goal of approximately 4%.

There is no doubt that rising prices and rising interest rates can act as a brake on corporate profits, especially if the change is sudden. A quick rise in the cost of doing business can make it difficult for management teams to plan for or to pass on price increases in a timely way to their customers. Our feeling today, given the Fed's measured approach, is that much of any anticipated slowdown in the economy is largely priced into the stock market. In other words, corporate profit growth for 2005 is now estimated to be a healthy 8% and the current multiple for the S&P 500 is around 16 times earnings. Neither metric seems unreasonable to us given current overall business conditions or the projected interest rate environment. More importantly, we feel our own investment portfolio is very well positioned with the stocks growing, on average, at twice the rate of the S&P yet still trading at less than the S&P 500 multiple.

Formula Growth Fund has typically done well when the macro climate is slow-growing and moderately inflationary. Investors seeking returns eventually realize they need exposure to the smaller, niche companies who can continue to grow in this type of environment. Finding these small cap companies is not easy. After all, it is never easy to predict the future and anticipate changes in businesses. We feel that it takes plenty of experience and a 100% focus to know which stocks have the management and market opportunity to grow their business. Given Formula Growth Fund's 45 year record of finding growth stocks and our ability to translate this into a 14.2% compounded annual return over this time, we feel confident that we are up to the task.

As of March 31st there are no realized capital gains. This year's unitholders' meeting will be held on Wednesday the 25th of May at the Atwater Club (see attached). We hope to see you there!

Yours truly,