The Toronto Investment Club

w w w . t i c o n l i n e . c o m

Last Updated: May 5, 2000.

Since our last update on February 14, 2000 the Fund has performed exceptionally well, particularly given the extreme levels of volatility in the marketplace. Over the past three months we have increased approximately 4.0%, which compares favorably to the S&P 500 and the NASDAQ, which returned approximately 3.0% and -13.6% respectively. Since inception the Fund is up by 42.0%, which is significantly ahead of any relevant benchmark. We continue to scour the market for new opportunities and at the same time continue to closely monitor existing investments to ensure that they are performing up to the levels expected from them.

Overall the U.S. economy continues to advance at a pace that will probably lead to further interest rate increases. This in turn should provide us with good investment opportunities as the market focuses on the short-term interest rate changes and not the strength of underlying businesses. We will jump on any opportunity, which takes advantage of large price swings in the market. Recently we took advantage of the volatility and added to positions in Chase Manhattan, Goldman Sachs, Corning and Johnson & Johnson.

The objective of the Georgian Global 24 Fund is to achieve long-term capital appreciation by investing in a diversified portfolio of outstanding companies operating in strong growth industries. The Fund is currently focusing on six main industry sectors. These are the consumer, financial services, healthcare, media/telecommunications, technology and industrial sectors. Our task is to ferret out the very best companies in these industries and build substantial positions for our investors. (In the next section we have highlighted for you 12 of our core holdings.)

When evaluating a business we focus a great deal of attention on the key fundamental drivers of a business. These include: franchise value, growth prospects, barriers to entry, return on capital, free cash flow generation and management's ability to execute a cogent business plan. When we find a business that exhibits these qualities, operating in a strong growth industry we take a position in the business.

Since our last report, we added a new position to our portfolio, American Tower. The Company owns, operates and develops wireless communications and broadcast towers throughout the United States and recently entered both Mexico and Canada. This Company provides our investors with an excellent way to profit from the tremendous growth in wireless data and voice transmissions, continued expansion in the radio industry, new opportunities as a result of the development of digital T.V. and increased demand from satellite use. All of the aforementioned sectors need to lease space from companies like American Tower, which increasingly control a significant portion of the infrastructure supporting these industries, namely the communications and broadcast towers.

As we stated in our last report, while we are excited with the overall prospects for technology companies we are very concerned with the elevated prices of many leading technology firms. Any investments we make in this sector will be evaluated using the same disciplined approach we apply to all our investments. Investors must always remember that the final determinant of value over time of any business, regardless of the industry it may be operating in, is the present value of the future cash flow of the business. Given the exceptional companies we have in the Georgian Global 24 Fund we are very optimistic concerning its ability to generate above average returns for our investors, while maintaining an acceptable level of risk.

Northern 24

The Fund opened for business and began making investments on February 8th of this year. This was at the same time that Canadians were pouring billions of dollars into foreign markets as a result of their negative view on many Canadian companies, and on the overall Canadian economy. As we stated in our previous update we disagree with this analysis and see tremendous value and growth in our home market.

In the last decade Canada has been paying the price for the substantial spending and protectionism of the 1970s and 1980s. As a result our relative standard of living has declined. From 1990 to 1999, per-capita GDP growth has averaged only 0.9% annually compared to 2.0% in the U.S. During this period, however, Canada has initiated substantial structural reform (privatization, deregulation, government austerity). The benefits of these reforms are beginning to be felt. Some of these benefits are listed below:

Canadian economy is expected to grow at 4% in 2000

The country's current account is now in surplus

Canada has now run budget surpluses two years in a row

Corporate profitability continues to improve

Emerging pockets of entrepreneurial global technology players

Overall, these factors acting as a backdrop to our Canadian market should provide our investors in this Fund with long-term capital appreciation opportunities.

The objective of the Georgian Northern 24 Fund is to achieve long-term capital appreciation by investing in a diversified portfolio of outstanding Canadian based businesses, operating in strong growth industries. It is important to point out that many of the Canadian companies we are investing in have substantial global franchises and are not limited simply to the Canadian economy. The Fund is currently focusing on six main industry sectors. These are the consumer, financial services, healthcare, media/telecommunications, and technology and industrial sectors. Our ongoing challenge is to search for the very best companies in these sectors and build substantial positions for our investors. (In the next section we have highlighted for you 10 of our core Canadian holdings.)

Since inception on February 8th through May 5th the Fund has performed well increasing by 17.1% versus the TSE 300, which increased by 3.2%. We were able to log this return despite a significant weighting in cash and no exposure to both Nortel and BCE, which continue to power the overall TSE 300 index. Given the current valuations of both these companies we are looking elsewhere for our returns.

We believe that large cap names like Bombardier, Power Financial, George Weston, Dupont Canada, TD Bank and Thomson Corp offer exceptional long-term value along with the strong growth prospects that should translate into significant future capital gains. We also believe that smaller cap companies like ATI Technologies, MDS Inc. and Patheon are uniquely positioned businesses participating in the technology revolution so many people are talking about, yet can be purchased at attractive prices given their current and future market opportunities. Canadians should realize that in a number of areas in Canada clusters of entrepreneurial technology companies are emerging to compete in, and in some cases dominate their respective niches on a global scale.

During the last two months we added several new companies to the portfolio, these include American Tower, Investor's Group, Magna International and Onex Corporation. Each of these companies are leaders in their respective industries and have track records of creating substantial wealth for their shareholders. Most importantly, we were able to make investments in each of these businesses at very attractive prices given their future prospects. Given the outstanding collection of businesses in the Fund we are very bullish on the prospects for this portfolio.