Formula Growth - Quarterly report

Quarterly report - June 30th, 2001

July 6, 2001

Dear Unitholders:

The net asset value of the Fund as of June 30, 2001 was $4,460.32 per unit. This represents a 16.4% increase for the quarter in Canadian dollars or a 21.2% increase in US dollars.

	June 30/01	March 31/01	Dec. 31/00	2nd Quarter	1st Half
Fund Canadian	$4,460.32	$3,830.90	$4,015.52	+16.4%	+11.1%
Fund U.S.	$2,946.05	$2,430.47	$2,678.09	+21.2%	+10.0%
DJIA	10,502.40	9,878.78	10,786.80	+6.3%	-2.6%
S&P 500	1,224.38	1,160.33	1,320.28	+5.5%	-7.3%
Russell 2000	515.60	450.53	483.53	+14.4%	+6.6%

We are very pleased with our performance in the second quarter. The 21.2% U.S. dollar increase compares very favourably with all the indexes listed above. This strong second quarter has more than made up for a weak first quarter. As a result, we are up 10% year-to-date in U.S. dollars. This six month result is also comfortably ahead of all the major indexes. The average small cap growth fund manager is down 8% this year. Overall, it has been a tough and volatile stock market and we feel that we have navigated quite well.

The last fifteen months have seen large declines in the popular stock market indexes such as the S&P 500 and the NASDAQ. These indexes are weighted by market capitalization and, therefore, large cap companies like Nortel or Cisco have a disproportionate effect on performance. Dramatic price increases in these stocks drove the indexes to exceptional heights while the recent precipitous declines in these same stocks are having an equal but opposite effect. Clearly, this unraveling is being felt in the economy and the daily headlines are causing consternation in the market. However, beneath the surface, there is growing evidence that the broad stock market is actually healthier than it might appear.

An illustration of this broadening would be the increase in the ratio of advancing stocks versus declining stocks. This year's 10% increase in the arithmetic Value Line Index (an unweighted index) also points to the fact that the "average" stock is behaving reasonably well. We hope our out-performance in the second quarter is evidence of a sustainable shift in favour of small stocks and away from the larger caps. As you know, the universe of smaller cap stocks is our sweet spot.

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.