Front Street Capital 2004 is proposing to further streamline its fund line-up with the merger of Front Street Performance Fund II into Front Street Canadian Equity Fund, a corporate class of Front Street Mutual Funds Ltd., the company announced Friday.

The merger remains subject to securityholder approval and any applicable regulatory approval.

Front Street Performance Fund II is an investment trust whose units are listed on the Toronto Stock Exchange under the symbol FPF.UN. Front Street Mutual Funds Ltd. offers a multiple share class structure providing investors with the ability to switch their investments between the different mutual funds within Front Street Mutual Funds Ltd. on a tax-deferred basis. The funds being merged have similar investment objectives and the same portfolio investment adviser, Front Street Investment Management Inc.

Front Street Capital believes that the mergers should benefit investors of Front Street Performance Fund II:

> by providing daily liquidity and redemption at NAV without any discount;

> by gaining the ability to switch tax-free between the classes of Front Street Mutual Funds Ltd. with different investment strategies and objectives, within the context of a more focussed and cost-effective structure;

> by achieving economies of scale through the merger of the two funds; and

> by providing a larger investment pool.

A special meeting of the unitholders of Front Street Performance Fund II will be held in Toronto early in 2009, at which unitholders will be entitled to vote on the proposed merger. If approved, it is expected that the merger will take effect in the first quarter of 2009.

IE