April 9, 2007

Dear Unitholder:

The net asset value of the Formula Growth Fund as of March 31, 2007 was $4,228.08 per unit. For the quarter, this represents a +1.4% increase in Canadian dollars and a +2.5% increase in U.S. dollars.

For the first quarter, our results were modestly ahead of the U.S. market indexes listed in the table above and in line with the average U.S. small-cap growth manager who returned 3.1%.

The first quarter of 2007 marked the return of volatility to the markets. For example, the NASDAQ went from being up 5% during the quarter to down 3%, only to finish essentially flat at quarter end. Our own results had similar amplitude during the quarter, yet we managed to hold on to more of the January and February gains. Given the roller coaster nature of the quarter, we are satisfied with the results.

The catalyst for the unnerving late February sell-off in the market was a steep drop in the Chinese stock market. Investors in the U.S. were also reminded that a soft landing for the U.S. economy was not a sure thing. Fears over mortgage defaults and the housing downturn took center stage and debates are raging over the ultimate impact these will have on the economy. Additionally, stubborn signs of inflation have caused lingering uncertainty over the Fed's next move.

A great deal of worry still prevails in the U.S. markets. This uncertainty has driven U.S. equity valuations over the past few years to 25 year lows against alternatives such as U.S. Treasuries. For example, the S&P 500 earnings yield (the inverse of its price earnings multiple) is almost 7% while the yield on the 10 year U.S. Treasury is 4.6%. This signals good opportunities in U.S. stocks relative to other financial assets. Formula Growth Fund's earnings yield is higher than the S&P's and therefore our portfolio is even less expensive.

When uncertainty is high, investors are willing to look beyond the higher potential returns of equities and opt for the lower, safer, risk free returns of Treasuries (or other asset classes where the perception of risk is low). Remember though, over the long term, as the cloak of uncertainty rises, money will flow to where the upside potential is greatest. We continue to feel that we are well positioned to benefit from this eventuality.

As of March 31, 2007, there are no realized capital gains for tax purposes. This year's unitholders' meeting will be held on Tuesday, May 15th at the University Club (see the details below) on Mansfield Street just below Sherbrooke. Please note that this represents a change from our traditional location on Atwater Avenue. As we have found parking and access to the Atwater Club somewhat difficult, we thought we would try a downtown location for ease and simplicity. We hope to see you there and trust that we are not inconveniencing anyone!

Yours truly,