October 7, 2003

Dear Unitholder:

The net asset value of Formula Growth Fund as of September 30, 2003 was $3,304.33 Canadian per unit. This price reflects a 12.1% increase for the third quarter and a 20.3% increase for the year to date period. In U.S. dollars, it represents a 12.5% increase for the third quarter and a 40.7% increase for the first nine months of 2003. Strength in the Canadian dollar during the first half of the year has muted the Fund's superb year to date U.S. returns.

We are very pleased with this year's results in both currencies. During the third quarter, we continued to significantly outperform the popular U.S. indexes noted above as well as the majority of other money managers. According to the Lipper Index Service, the average small-cap growth fund returned 9.2% in the third quarter while the average mid-cap growth fund returned 5.5%. The Fund's 40.7% increase this year goes a long way towards clawing back last year's losses. We reiterate how important it is to remain fully invested and always on the field as turnarounds usually occur unexpectedly in furious bursts.

Clearly this year's stock market is anticipating a recovery in the economy. Based on 2003 estimates of operating earnings, the S&P 500 appears somewhat expensive with a multiple of 19 times. Forecasted increases in operating earnings for 2004 drops the S&P price earnings multiple modestly to 17 times for next year. The Fund, by contrast, owns a portfolio of companies growing earnings considerably faster than the S&P yet trading at a more attractive valuation of 16 times 2004 estimated earnings.

As can be seen from the enclosed performance review, many of our stocks are up substantially on a year to date basis. The fact that the companies are meeting earnings expectations coupled with extremely cheap valuations at the start of the year are the main reasons we have had such solid performance. More importantly, our holdings continue to deliver on expectations for superior earnings growth in their respective businesses.
If the economy and corporate profits weaken from here, gains in the market would likely deteriorate. Our own concern these days is the increasing regulation that continues to be layered on U.S. businesses as though these rules are an antidote to the snake bites of the past few years. Over-regulation is an additional tax the U.S. capitalist society can ill afford, especially in weak economic times. Despite these worries, we are confident that 2003 will be the first up year of the new century for the market. Only once before, in 1934 has the market been down for four consecutive years.

For our Canadian residents, there are no realized capital gains for tax purposes so far this year. Please feel free to call the office towards the end of the fourth quarter for an update.

Yours truly,