October 8, 2007

Dear Unitholder:

The net asset value of Formula Growth Fund as of September 30, 2007 was $3,892.67 per unit. In U.S. dollars, the Fund decreased 1.3% in the third quarter and has increased 9.2% year to date. Unfortunately, when we express our returns in Canadian dollars, the otherwise healthy results for the year are wiped out. In Canadian dollars, the Fund decreased 7.6% for the third quarter and 6.6% for the first nine months of 2007.

We are pleased with our 9.2% U.S. dollar return so far in 2007. This is especially true given the wrenching, credit induced collapse and recovery of the equity markets through the summer. The Fund is near all time highs in U.S. dollars and is up 156% since the post-bubble lows. The table below shows that, in U.S. dollars, we have outperformed the U.S. Indexes and our U.S. peers over the past five years. We are proud of this outperformance and feel it demonstrates the strength of our investment process during a very uneven time for the United States economy, stock market and political system.

We like the U.S. market because it is very broad, innovative and highly entrepreneurial and we feel it will always produce exciting stock ideas. Our core strength is identifying these opportunities. As U.S. investors, we will always be exposed to the vagaries of currency fluctuations. Since 1960, the U.S. dollar has worked for and against us with varying intensity. Clearly this year, the U.S. dollar has been against us again; having dropped an unprecedented 6% in September alone and 17% since January 1, 2007. Without this most recent drop, the Fund would be at $4,553 Canadian per unit at the end of September. The U.S. dollar weakness has been a serious issue for all foreign investors for almost six years. We are well into this bear market for the US. dollar and we sense that it is likely drawing to a close here at Canadian dollar parity.

We are confident that the lagging U.S. market continues to offer tremendous value. The chart below shows just how cheap the U.S. stock market remains vis-à-vis interest rates in the United States. Typically, the relationship between the 10 year Treasury bill and the S&P 500 is far closer than it is today which signals compelling opportunities for U.S. equities. When viewed in Canadian dollar terms, the U.S. market is cheaper still. Formula Growth Fund’s valuation and holdings are even more exciting. Now is the time to take advantage of corporate America on sale. In the long term, it will prove to be far more rewarding than cross-border shopping!

For our taxable Canadian residents, there are no realized capital gains so far this year but it is likely there will be a minor tax allocation by year end. Please do not hesitate to contact the office towards the end of the year for tax planning purposes and clarification.

Yours truly,