December 23, 2004

Dear Member of the Legislative Assembly:

We are writing to express our confidence in the Crocus Investment Fund and to ask for your understanding and support while we complete important voluntary initiatives to advance stakeholders' interests.

On December 10, 2004, the Fund announced that it had initiated an organizational review and comprehensive assessment of the value of its portfolio. Further it announced it had requested and received regulatory approval to halt sales and suspend redemptions of its shares during the review. The Fund also announced that it anticipates that the overall initiative be completed by the end of January and that it intends to resume trading as soon as possible.

While halting trading is unusual, this is not the first time a fund has requested cessation of redemptions. It is the only way to ensure that all shareholders are treated equitably and fairly. The share price was frozen at $10.45 with a Net Asset Value of $154.3 million for the portfolio.

The Office of the Auditor General has stated it will be undertaking a limited examination of the Crocus Investment Fund. The Fund announced that it will fully co-operate with the Auditor General in its limited examination of the Fund.

Contrary to some speculation, there can be no "run on the bank" when shares resume trading:

• In Manitoba, labour-sponsored investment fund (LSIF) shares must be held for the duration of the legislated hold period (there is no provision to elect to redeem early and repay the tax credits).
• Further, prior to the 1998 RRSP sales season, legislation changed from a seven to an eight-year mandatory hold period for investors. As a result, with minor exception, there are no new shares becoming eligible for redemption until February 2006.
• Crocus currently holds $34 million in cash and marketable securities, well in excess of the legislated liquid reserve level of about $22 million or 15% of our invested assets.

It is normal practice of the Fund to engage external valuators. Valuation teams from large, international accounting firms have been engaged to assist in the voluntary portfolio valuation review we are now undertaking. We are also reporting regularly to the Manitoba Securities Commission on the progress of the review.

The Crocus Investment Fund has enjoyed bipartisan political support since its inception in 1992. At that time, as you may recall, there were very few sources of venture capital in Manitoba available to small and growing Manitoba businesses.

There have been numerous studies on the positive benefits of LSIFs as a source of venture capital in Canada, creating and sustaining jobs, increasing exports and research and development and as a catalyst to economic and fiscal growth.

Enclosed is the Executive Summary of the most recent Ontario study, released December 6, 2004, which demonstrated that the cost to government (by way of foregone revenue due to LSIF tax credits) is recovered in a payback period between one and two years.

It is no different in Manitoba - Business and Labour have together used this vehicle to create and sustain thousands of Manitoba jobs and support many companies in several economic sectors.

While proactively initiating this review was a difficult decision to take, it is the necessary and appropriate action in the interest of shareholders and all stakeholders.

Once again, Crocus is co-operating with its regulators and expects to complete the valuation work by the end of January.

We greatly appreciate your positive consideration in the meantime.

Should shareholders in your constituency have questions, they may call their financial advisor or call Crocus directly at 925-7777 in Winnipeg or toll-free 1-800-361-7777.

Thank you for your consideration on this matter.

Sincerely,

Encls.

Note: The information provided is for your reference, and has been compiled from public information made available through news releases, our website, www.crocusfund.com as well as letters and communications to shareholders and financial advisors. Additional background Facts on the Crocus Investment Fund are also included with this letter.

Background Facts on Crocus Investment Fund

• Crocus Investment Fund is a labour-sponsored venture capital corporation created by the Crocus Act. Sponsored by the Manitoba Federation of Labour, Crocus started active operations in 1993.
• The Fund was established to raise capital primarily through the sale of its Common Shares and to invest the proceeds in qualified Manitoba businesses.
• The Fund strives to be the pre-eminent private sector economic development organization in Manitoba. To achieve this goal it seeks to:
• To provide a competitive rate of return for our Crocus shareholders through investments in socially responsible businesses that strive to operate in accordance with ethical policies with respect to employment practices, workplace safety, environmental suitability and other matters;
• To maintain continuity of local ownership of Manitoba businesses
• To help ensure local capital is available for investment in Manitoba
• To maintain existing jobs and to create new ones in Manitoba
• To promote employee ownership and employee participation in Manitoba companies.
• The investment approach is balanced across established Manitoba businesses and entrepreneurial growth companies, as well as guaranteed fixed income investments. Investments are diversified across a wide range of industry sectors including science, medical and technology, entertainment and hospitality, manufacturing, financial services, transportation and service industries.
• Crocus investments have helped create or maintain more than 14,000 jobs in the province.
• Individuals who purchase Common Shares are eligible for a Manitoba Tax Credit and a Federal Tax Credit, each equal to 15% of the purchase price.
• Common shares were initially issued at $10.00. The share price has fluctuated over the past twelve years, as equity investment prices often do. The current share price is $10.45 and Net Asset Value is $154.3 million.
• Crocus shares are subject to a mandatory 8-year hold period – making it a long-term investment.
• It is important to note that a given share price reflects a point in time value of the portfolio and the ultimate financial result will only be known when the investment position is sold.
• Crocus shares are sold through the traditional financial advisory distribution network, and augmented by sales through the wholly owned subsidiary Crocus Capital Inc. Both distribution networks are licensed to sell Crocus shares through courses approved by the Manitoba Securities Commission, in addition to other credentials they may have.
• There are currently 33,678 Crocus Fund shareholders.
• Today, Crocus has investments in 50 Manitoba companies, including some great Manitoba businesses that hold tremendous value.
• As of November 30, 2004 Crocus had a legislated reserve requirement of $22 million in cash and marketable securities. Currently Crocus has $34 million in cash and marketable securities.
• With minor exception, there are no new shares becoming eligible for redemption until February, 2006.