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Davis + Henderson Income Fund Reports Growth in Revenue and Cash Flow in Fourth Quarter; Announces Intention to Increase Distributions

TSX Stock Symbol: "DHF.UN".
Website: www.dhltd.com

TORONTO, Feb. 27 /CNW/ - Davis + Henderson Income Fund today reported
year-over-year growth in revenue and cash flow for the three and twelve months
ended December 31, 2006.
The Trustees of the Fund also announced their intention to increase
distributions for the month of March 2007, payable on April 30, 2007, to
$0.132 per unit (equivalent to $1.58 per unit annualized), subject to normal
course regulatory requirements. This represents a 3.1% increase over
distributions declared for the month of February 2007, which were equivalent
to $1.54 per unit annualized.

<<
Fourth Quarter Highlights

- Revenue increased by $18.7 million, or 27.0%, compared to the same
quarter in 2005. Of this increase, $13.2 million, related to the
inclusion of Filogix mortgage and real estate technology services
with the balance of the increase attributable to organic growth.

- Net income increased by $1.5 million, or 9.9% to $16.5 million
compared to the fourth quarter of 2005. This increase reflected
the benefit of higher revenue, largely offset by a $2.5 million
($0.057 per unit) increase in amortization of intangible assets
related to the Filogix acquisition completed June 15, 2006. Net
income per unit decreased by 5.2%, or $0.020 to $0.375.

- Declared distributions in the fourth quarter of 2006 of $0.381 per
unit were 4.1% higher than in the fourth quarter of 2005.

2006 Highlights

- Revenue increased by $47.2 million, or 17.1%, compared to 2005
with $30.7 million of this growth related to the addition of
Filogix and the remaining $16.5 million related to organic growth.

- Net income increased by $5.8 million, or 9.5%, compared to 2005.
Net income per unit increased 0.4% to $1.608 per unit. Net income
included an increase in expense related to amortization of
intangible assets recorded upon the acquisition of Filogix of
$5.4 million, or $0.122 per unit.

- Declared distributions for 2006 of $1.50 per unit were 3.4% higher
than 2005.
>>

Management Commentary

"We're very pleased with the results of both the fourth quarter and all
of 2006," said Bob Cronin, Chief Executive Officer, "and the fact that these
results enabled the Trustees to announce an increase in the Fund's
distributions - the ninth increase since 2001. Looking at these results from a
strategic perspective, we made good progress in evolving our programs to the
chequing account and, in the case of Filogix, adding important service
capabilities that are highly relevant to Canada's financial services industry.
"From a performance perspective, we benefited from the inclusion of the
Filogix results and from several important organic initiatives. Organic growth
in sales and cash flow for 2006 was driven by positive results from our
iDefense® and BizAssist™ programs, stronger than expected cheque order
volumes and improvements in margins gained through effective cost management."
Looking forward, Mr. Cronin said, "Davis + Henderson remains committed to
our financial objective of delivering stable and modestly growing
distributions. The addition of Filogix and AVS, together with the progression
of our programs to the chequing account, have significantly strengthened our
capabilities and the breadth of services we offer to the Canadian financial
services marketplace. From these strong and established platforms, we look to
increase value for our customers and owners as we seek to build these leading
capabilities."
For a more detailed discussion of fourth quarter results and management's
outlook for 2007, please see Management's Discussion and Analysis.

Caution Concerning Forward-Looking Statements

Forward-looking statements may also include, without limitation, any
statement relating to future events, conditions or circumstances. Davis +
Henderson cautions you not to place undue reliance upon any such forward-
looking statements, which speak only as of the date they are made. Risks
related to forward-looking statements include, among other things, challenges
presented by declines in the use of cheques by consumers; the Fund's
dependence on a limited number of large financial institutions and dependence
on their acceptance of new programs; exposure to fluctuations in residential
real estate and mortgage activity; strategic initiatives being undertaken to
meet the Fund's financial objective as well as general market conditions,
including economic and interest rate dynamics and investor interest in, and
government regulations relating to income trusts.
Forward-looking statements are based on management's current plans,
estimates, projections, beliefs and opinions, and Davis + Henderson does not
undertake any obligation to update forward-looking statements should
assumptions related to these plans, estimates, projections, beliefs and
opinions change.

Conference Call

Davis + Henderson will discuss its financial results for the fourth
quarter ended December 31, 2006 via conference call at 10:00 a.m. EST (Toronto
time) on Wednesday February 28, 2007. The number to use for this call is 416-
644-3414 for Toronto area callers or 1-800-796-7558 for all other callers. The
conference call will be hosted by Bob Cronin, Chief Executive Officer and by
Catherine Martin, Chief Financial Officer. The conference call will also be
available on the web by accessing CNW Group's website
www.newswire.ca/webcast/. For anyone unable to listen to the scheduled call,
the rebroadcast number is: 416-640-1917 for Toronto area callers, or
1-877-289-8525 for all other callers, with reservation number 21208571
followed by the number sign. The rebroadcast will be available until Wednesday
March 14, 2007. An archive recording of the conference call will also be
available at the above noted web address for one month following the call and
a text version of the call will be available at www.dhltd.com

ADDITIONAL INFORMATION

Additional information relating to the Fund, including the Fund's most
recently filed Annual Information Form and the Short Form Prospectus dated
May 30, 2006, is available on SEDAR at www.sedar.com.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's Discussion and Analysis ("MD&A") for the fourth quarter of
2006 should be read in conjunction with MD&A in the Fund's Annual Report for
the year ended December 31, 2005, dated February 28, 2006, the Short Form
Prospectus, dated May 30, 2006, and the attached unaudited consolidated
financial statements. External economic and industry factors remain
substantially unchanged from the annual MD&A and the Short Form Prospectus,
unless otherwise stated.

STRATEGY

The Fund's financial goal is to deliver stable and modestly growing cash
distributions to unitholders by targeting annual revenue growth in the range
of 3% to 5% and maintaining margins. The Fund has three primary strategies to
meet this financial goal. These are to: enhance the value of the Business'
cheque supply program; offer additional programs to serve the chequing
account; and deliver programs within the lending services market. The Fund
advances its strategies through internal (or organic) initiatives, as well as
by partnering with third parties and by way of selective acquisitions.
In growing its cheque supply program, Davis + Henderson is focused on
increasing value by continuously introducing product design alternatives,
enhancing security components and combining other logical products and
services into convenient and valuable packages for chequing account holders.
Other Davis + Henderson programs that serve the chequing account include
a deposit program, which is directed towards small business account holders,
and eSwitch®, a service that allows financial institutions to more easily
move electronic pre-authorized payments and direct deposit authorizations
between chequing accounts on behalf of account holders at the time of new
account openings.
To advance its third key strategy, the Business acquired Filogix and
Advanced Validation Systems Limited Partnership ("AVS" or "AVS L.P."). Among
other services, Filogix provides processing services related to the
origination and underwriting of mortgages in Canada. AVS provides lenders
with, among other offerings, personal property search and registration
programs across Canada. The addition of these business interests has created
another business platform for Davis + Henderson. For a more detailed
description of the Filogix business, see the Short Form Prospectus dated
May 30, 2006, filed on SEDAR in connection with the Fund's offering of units
in June 2006.
Late in 2006, the Minister of Finance released draft legislation which,
if enacted, would result in certain income trusts, including the Fund, paying
taxes after fiscal 2010, similar to those paid by Canadian taxable
corporations. The payment of such taxes would reduce the cash flow of the
Fund, thereby reducing the amount available for distributions to unitholders.
The proposed changes, at the time of the report, have caused uncertainty
in the capital markets and have negatively impacted the unit prices of many
income trusts, including the Fund. This uncertainty and the related impacts
may affect the Fund's ability to make future acquisitions.
Since the announcement of the proposed changes, management and the
Trustees have been monitoring the changes in the income trust environment and
are continuing to review potential impacts on the Fund's current strategy and
the alternatives available to the Fund, consistent with protecting and
enhancing unitholder value. The tax proposals are not law, but may become law
at any time.

FINANCIAL INFORMATION PRESENTATION

The Fund's results for the year ended December 31, 2006, include the
results of the Filogix business acquired on June 15, 2006. The inclusion of
Filogix had a significant impact on the financial results and has also
resulted in changes to the form of Davis + Henderson's disclosures.
Historically, the Fund has reported expenses related to cost of sales and
operating expenditures separately within the income statement. This
classification was reflective of the historical product manufacturing
orientation of the cheque programs offered to customers. With the evolution of
the Business, including the offering of electronic services introduced through
the acquisitions of AVS and Filogix, management believes this historical
presentation is no longer appropriate. Starting in the third quarter of 2006,
costs of sales and operating expenditures have been combined and amortization
of depreciable and other assets and amortization of intangible assets have
been presented separately within the income statement. The comparative numbers
for previous periods have been reclassified to conform to this new
presentation format. There is no impact on net income related to the new
expense classifications.
With the acquisition of Filogix, the Fund now operates in two business
segments, the "Davis + Henderson Segment" and the "Filogix Segment". The Davis
+ Henderson Segment includes the cheque supply program, deposit program,
eSwitch and the personal property search and registration programs, among
other offerings. The Filogix Segment includes services related to the
origination and underwriting of mortgages in Canada, among other offerings.
Corporate expenses have also been segmented and include expenditures related
to public company activities, a share of executive corporate management costs
and certain other corporation-wide costs.

<<
OPERATING RESULTS FOR THE FOURTH QUARTER

Consolidated Statement of Income
(in thousands of Canadian dollars, except per unit amounts, unaudited)

Quarter ended December 31,
2006 2005
-------------------------------------------------------------------------
Revenue $ 87,932 $ 69,232
Cost of sales and operating expenses 62,034 49,586
Amortization of capital and other assets 3,902 3,258
-------------------------------------------------------------------------
21,996 16,388

Interest expense 2,186 760
Amortization of intangible assets 3,254 646
Minority interest 89 -
-------------------------------------------------------------------------
Net income $ 16,467 $ 14,982
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per unit, basic and diluted $ 0.3747 $ 0.3951
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Operating Results by Business Segment
(in thousands of Canadian dollars, unaudited)

Quarter ended December 31, 2006
-------------------------------------------------------------------------
Davis + Henderson Filogix Consoli-
Segment Segment Corporate dated
-------------------------------------------------------------------------
Revenue $ 74,730 $ 13,202 $ - $ 87,932
Cost of sales and operating
expenses 52,720 8,794 520 62,034
Amortization of capital and
other assets 2,421 1,481 - 3,902
-------------------------------------------------------------------------
19,589 2,927 (520) 21,996

Revenue

Revenue for the fourth quarter of 2006 was $87.9 million, an increase of
$18.7 million, or 27.0%, when compared to the fourth quarter of 2005. The
inclusion of the Filogix Segment accounted for $13.2 million of the increase
with the balance of the increase, $5.5 million, attributable to the Davis +
Henderson Segment.
Revenue for the Davis + Henderson Segment increased by 7.9% year-over-
year. This is higher than the Business' overall long-term objective of growing
revenue in the 3% to 5% range and is a result of successful program
initiatives, including products and service enhancements such as iDefence and
BizAssist, and stronger than expected cheque order volume.
Historically, cheque order volumes have, on average, been declining by
low single digit percentages annually as a result of declining cheque usage.
In 2006, the Davis + Henderson Segment did not experience this decline and
overall cheque order volume was comparable to 2005 levels. These stronger than
anticipated order volumes are believed to be the result of increased customer
promotional activities and programs, the continuing movement of consumers to
orders with fewer cheques and increased orders related to branch mergers or
system conversion activities. These items combined, largely mitigated the
impact of reduced cheque usage. Management continues to believe that declining
cheque usage will continue to contribute to declining cheque orders as it has
in the past.
As well, during the fourth quarter of 2006, the Business benefited from
its increased ownership of the AVS business, the expansion of the personal
property search and registration programs to two additional financial
institutions, and continued growth in eSwitch volume related to customer
promotional programs. These initiatives, while still small relative to the
cheque program and Filogix revenue, continue to grow and enhance the value of
the Business' service offerings.
Revenue for the Filogix Segment was consistent with management's
expectations and, as compared to the third quarter of 2006, reflected reduced
customer implementation revenues and normal seasonality.

Cost of Sales and Operating Expenses

Cost of sales and operating expenses for the fourth quarter of 2006 were
$62.0 million, an increase of $12.4 million, or 25.1%, over the comparable
prior year period. The Filogix Segment accounted for $8.8 million of the
increase, with the balance of $3.6 million attributable to the Davis +
Henderson Segment and corporate expenses. The increase in the Davis +
Henderson Segment and corporate expenses represents an increase of 7.4% year-
over-year of which more than half of the increase can be attributable to
direct costs associated with the increase in revenue, as previously described.
The balance of the increase was primarily related to increased spending on
information technology in support of the infrastructure upgrade, including
increased support costs to enhance the Business' computing environment,
partially offset by savings on the purchase of third-party products and
services. The infrastructure upgrade project is expected to continue until
mid-year of 2007.
Cost of sales and operating expenses of the Filogix Segment during the
fourth quarter were consistent with expectations and reflected decreased
spending on customer implementations as compared to the third quarter of 2006,
which had the net impact of increasing margins as compared to the third
quarter of 2006.

Other Expenses and Net Income

Amortization of capital and other assets increased by $0.6 million when
comparing the fourth quarters of 2006 and 2005. Approximately $1.5 million in
additional amortization as a result of the inclusion of the Filogix Segment
was partially offset by a $0.8 million decrease in the Davis + Henderson
Segment as certain capital and other assets became fully amortized.
Net interest expense increased by $1.4 million in the fourth quarter of
2006 compared to the fourth quarter of 2005. This increase reflected the net
drawdown of additional debt for the acquisition of the Filogix business later
in the second quarter of 2006.
Amortization of intangibles increased by $2.6 million to $3.3 million for
the fourth quarter of 2006 when compared to the same period in 2005. This
increase was primarily related to incremental intangible assets arising on the
purchase of the Filogix business. These intangible assets consist of rights
related to customer relationships, brand names and proprietary software and
are amortized on a straight-line basis over periods ranging from 10 to
15 years.
The minority interest recognized in the fourth quarter of 2006 represents
the 25% interest in the earnings of AVS that do not accrue to the Business.
This minority interest was recognized by the Fund with the increase in its
ownership of AVS to 75% during the second quarter of 2006.
Net income of $16.5 million for the quarter ended December 31, 2006,
represents an increase of $1.5 million, or 9.9%, when compared to the same
quarter in the previous year. On a per unit basis, net income decreased by
$0.020 per unit to $0.375 per unit. The per unit decrease is attributable to
an increase in amortization of intangible assets of $0.057 per unit related to
the acquisition of Filogix.

CASH FLOW AND LIQUIDITY FOR THE FOURTH QUARTER

Non-GAAP Measures

The following table is derived from, and should be read in conjunction
with, the consolidated statement of cash flows. Management believes this
supplementary disclosure provides useful additional information related to the
cash flows of the Business including the amount of cash available for
distribution to unitholders, repayment of debt and other investing activities.
Certain subtotals presented within the cash flows table below, such as
"Adjusted cash flows from operating activities", "Distributable cash after
maintenance capital and contract payments", "Distributable cash after all
capital and contract payments" and "Distributable cash after all capital,
contract payments and distributions paid", are not defined terms under
Canadian generally accepted accounting principles ("GAAP"). These subtotals
are used by management as measures of internal performance and as a supplement
to the statement of cash flows. Investors are cautioned that these measures
should not be construed as an alternative to using net income as a measure of
profitability or as an alternative to the GAAP statement of cash flows.
Further, the Fund's method of calculating each measure may not be comparable
to calculations used by other income trusts bearing the same description. In
prior periods, the Fund provided a table entitled Distributable Cash, which
reconciled net income and cash flow from operating activities to Distributable
Cash. The supplementary table below replaces the Distributable Cash table
previously presented and provides a full reconciliation to GAAP measures.

<<
Summary of Cash Flows

Quarter ended December 31,
(in thousands of Canadian dollars, unaudited) 2006 2005
-------------------------------------------------------------------------

Cash flows from operating activities $ 22,110 $ 19,631

Add (deduct):
Changes in non-cash working capital and
other items 1,512 (745)
-------------------------------------------------------------------------

Adjusted cash flows from operating activities(2) 23,622 18,886

Less:
Expenditures on maintenance capital 1,911 1,828
Contract payments, maintenance 20 645
-------------------------------------------------------------------------

Distributable cash after maintenance capital
and contract payments(1) 21,691 16,413

Less:
Expenditures on growth capital 34 -
Contract payments, non-maintenance - 200
-------------------------------------------------------------------------

Distributable cash after all capital and
contract payments(1) 21,657 16,213

Less:
Distributions paid during period 16,732 13,880
-------------------------------------------------------------------------

Distributable cash after all capital, contract
payments and distributions paid 4,925 2,333

Changes in non-cash working capital and
other items(2) (1,512) 745
Cash flows used in repayment of long-term
indebtedness (5,000) (4,000)
Cash flows used in acquisition of businesses (1,518) (448)
-------------------------------------------------------------------------

Decrease in cash and cash equivalents
for the period $ (3,105) $ (1,370)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) Maintenance capital expenditures are defined by the Fund as capital
expenditures necessary to maintain and sustain the current productive
capacity of the Business or generally improve the efficiency of the
Business. Maintenance expenditures also include recurring fixed
customer contract payments that are made annually over the life of
the contract. Growth capital expenditures are defined by the Fund as
capital expenditures that increase the productive capacity of the
Business with a reasonable expectation of an increase in cash flow.
Non-maintenance capital expenditures are defined as expenditures,
which are expected to increase future operating cash flows of the
Business, that are infrequent and include non-maintenance contract
payments, which are payment obligations under certain long-term
customer contracts.

(2) Changes in non-cash working capital and certain other balance sheet
items have been excluded from cash flows from operating activities so
as to remove the effects of timing differences in cash receipts and
cash disbursements, which generally reverse themselves but can vary
significantly across quarters. Minority interest, future income taxes
and changes to other long-term liabilities are deducted from adjusted
cash flow from operations. For details, see Changes in Non-Cash
Working Capital and Other Items.

Summary of Cash Flows per Unit
(in Canadian dollars, unaudited)
Quarter ended December 31,
2006 2005 % Change
-------------------------------------------------------------------------
Adjusted cash flows from operating
activities $ 0.5375 $ 0.4980 7.9%
Distributable cash after maintenance
capital and contract payments $ 0.4936 $ 0.4328 14.0%
Distributable cash after all capital
and contract payments $ 0.4928 $ 0.4275 15.3%
Distributions paid during period $ 0.3780 $ 0.3660 3.3%
Distributions declared during period $ 0.3810 $ 0.3660 4.1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
During the fourth quarter of 2006, the Business generated $23.6 million
in adjusted cash flow from operating activities, an increase of $4.7 million,
or 25.1%, compared to the same quarter in 2005. This increase is primarily due
to the inclusion of the Filogix business and, in general, increases in cash
flow from the organic growth initiatives of the Davis + Henderson Segment. On
a per unit basis, adjusted cash flow from operating activities increased by
7.9% over the same period in 2005.

Summary of Capital Expenditures by Segment

Capital expenditures presented in the table below are part of the 2006
capital program for the full year.

<<
Quarter ended December 31,
(in thousands of Canadian dollars, unaudited) 2006 2005
-------------------------------------------------------------------------
DAVIS + HENDERSON SEGMENT
Maintenance capital expenditures $ 1,057 $ 1,828
Maintenance contract payments 20 645
Growth capital expenditures - -
Non-maintenance capital expenditures - -
Non-maintenance contract payments - 200
-------------------------------------------------------------------------
$ 1,077 $ 2,673
-------------------------------------------------------------------------
-------------------------------------------------------------------------

FILOGIX SEGMENT
Maintenance capital expenditures $ 854 $ -
Maintenance contract payments - -
Growth capital expenditures 34 -
Non-maintenance capital expenditures - -
Non-maintenance contract payments - -
-------------------------------------------------------------------------
$ 888 $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CONSOLIDATED
Maintenance capital expenditures $ 1,911 $ 1,828
Maintenance contract payments 20 645
Growth capital expenditures 34 -
Non-maintenance capital expenditures - -
Non-maintenance contract payments - 200
-------------------------------------------------------------------------
$ 1,965 $ 2,673
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

The table above sets out capital expenditures and payments under customer
contracts. The Business has various payment obligations under customer
contracts. Certain long-term customer contracts provide for fixed contract or
program initiation payments to be made and these are treated as non-
maintenance capital because they are not regularly recurring disbursements.
Other fixed customer contract payments are made annually over the life of the
contract and therefore are treated as recurring maintenance capital. The
aggregate of all contract payments, both fixed and variable, reflects, among
other things, the high degree of integration and sharing between Davis +
Henderson and the financial institutions of the many activities related to
ordering, data handling, customer service and other activities undertaken by
financial institutions related to the operation of the cheque supply and other
programs.
For the Davis + Henderson Segment, the fourth quarter expenditures were
significantly less than in the comparable 2005 period. This is consistent with
the full-year expenditure program, which was $7.2 million in fiscal 2006
compared with $10.7 million in 2005. For a more complete description of the
changes in the annual capital program, see Summary of Capital Expenditures by
Segment in the 2006 Cash Flow and Liquidity section. Including the Filogix
Segment, the full 2006 capital program was $9.9 million. The Business' 2007
capital program is expected to be approximately $12.0 million to $13.0
million, of which $2.0 million to $3.0 million is expected to be growth
capital. Most of the increase arises as a result of including a full-year
capital program for the Filogix business.

Distributions

During the fourth quarter of 2006, the Business paid distributions of
$16.7 million. On a per unit basis, distributions paid were $0.378 compared to
$0.366 paid during the fourth quarter of 2005, representing a 3.3% year-over-
year increase.

<<
Changes in Non-Cash Working Capital and Other Items

Quarter ended December 31,
(in thousands of Canadian dollars, unaudited) 2006 2005
-------------------------------------------------------------------------
Minority interest $ 89 $ -
Decrease (increase) in non-cash
working capital items (1,671) 719
Changes in other operating assets and liabilities 70 26
-------------------------------------------------------------------------
Changes in non-cash working
capital and other items $ (1,512) $ 745
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Changes in non-cash working capital for the quarter ended December 31,
2006, reflect the settlement of certain purchase price obligations and the
reversal of timing differences from earlier quarters.

Cash Flows Provided by Financings and Used in Business Acquisitions

Cash flows used in other financing activities reflect a $5.0 million
paydown of debt. Cash flows used in investing activities relate to a
$1.0 million purchase price adjustment for the increased investment in AVS, a
$1.8 million (of which $1.1 million are current receivables which have been
collected) relating to the acquisition of customer contracts to provide
personal property search and registration programs, partially offset by a
final purchase price adjustment for the acquisition of the Filogix business of
$1.3 million.

<<
2006 OPERATING RESULTS

Consolidated Statement of Income
(in thousands of Canadian dollars, except per unit amounts)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------
Revenue $ 323,716 $ 276,537 $ 275,586
Cost of sales and operating expenses 228,793 196,956 196,789
Amortization of capital and other assets 13,940 13,107 13,509
-------------------------------------------------------------------------
80,983 66,474 65,288

Interest expense 6,016 3,301 4,193
Amortization of intangible assets 8,236 2,422 2,333
Income taxes - - 4,494
Minority interest 202 - -
-------------------------------------------------------------------------
Net income $ 66,529 $ 60,751 $ 54,268
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per unit, basic and diluted $ 1.6081 $ 1.6020 $ 1.4311
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Operating Results by Business Segment
(in thousands of Canadian dollars)

Year ended December 31, 2006
-------------------------------------------------------------------------
Davis + Henderson Filogix Consoli-
Segment Segment(1) Corporate dated
-------------------------------------------------------------------------
Revenue $ 292,981 $ 30,735 $ - $ 323,716
Cost of sales and
operating expenses 205,442 21,365 1,986 228,793
Amortization of capital
and other assets 11,168 2,772 - 13,940
-------------------------------------------------------------------------
76,371 6,598 (1,986) 80,983

Interest expense - - 6,016 6,016
Amortization of
intangible assets 2,884 5,352 - 8,236
Minority interest 202 - - 202
-------------------------------------------------------------------------
Net Income $ 73,285 $ 1,246 $ (8,002) $ 66,529
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) Filogix Segment includes results for the Filogix business from date
of acquisition June 15, 2006 to December 31, 2006.
>>

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

Revenue

Total revenue for the year ended December 31, 2006 was $323.7 million, an
increase of $47.2 million, or 17.1%, compared to 2005. The inclusion of the
Filogix Segment accounted for $30.7 million of the increase, with the balance
of the increase, $16.5 million, attributable to the Davis + Henderson Segment.
Revenue for the Davis + Henderson Segment increased by 5.9% year-over-
year. This is higher than the Business' overall long-term objective of growing
revenue in the 3% to 5% range and is a result of successful program
initiatives introduced late in 2005 and early 2006, including products and
service enhancements such as iDefence® and BizAssist™ and stronger than
expected cheque order volume.
Historically, cheque order volumes have, on average, been declining by
low single digit percentages annually as a result of declining cheque usage.
In 2006, the Davis + Henderson Segment did not experience this decline and
overall cheque order volume was comparable to 2005 levels. These stronger than
anticipated order volumes are believed to be the result of increased customer
promotional activities and programs, the continuing movement of consumers to
orders with fewer cheques and increased orders related to branch mergers or
system conversion activities. These items combined, largely mitigated the
impact of reduced cheque usage. Management continues to believe that declining
cheque usage will continue to contribute to declining cheque orders as it has
in the past.
As well, during 2006, the Business also benefited from its increased
ownership of the AVS business, the expansion of the personal property search
and registration programs to two additional financial institutions and
continued growth in eSwitch volume related to customer promotional programs.
These initiatives, while still small relative to the cheque program and
Filogix revenue, continue to grow and enhance the value of the Business'
service offerings.
Revenue for the Filogix Segment was consistent with management's
expectations and continued to reflect increasing fees related to mortgage
origination and underwriting services, including fees for implementation
services. Including 2006 revenue prior to its acquisition by Davis +
Henderson, total 2006 revenue for the Filogix business was $51.7 million,
which represents an increase of $10.9 million, or 26.6%, over the prior year.
Origination services revenue, which makes up more than 70% of Filogix revenue,
increased by 18% year-over-year.

Cost of Sales and Operating Expenses

On a consolidated basis, cost of sales and operating expenses for 2006
increased by $31.8 million, or 16.2%, when compared to 2005. The addition of
the Filogix Segment accounted for $21.4 million of the increase. The remaining
$10.4 million is related to the Davis + Henderson Segment and to corporate
expenses.
Of the 5.3% year-over-year increase for the Davis + Henderson Segment and
corporate expenses, approximately half were related to increased revenues as
described above. The balance of the increase was primarily a result of
increased spending on information technology, increased performance-based
compensation expenses and a specific compensation charge of $1.1 million.
Increased technology costs related to infrastructure upgrade initiatives and
increased support costs related to enhancing the Business' overall computing
environment. Partially offsetting these increases were efficiency improvements
related to the purchasing of third party products and services.
Cost of sales and operating expenses of the Filogix Segment during the
period since acquisition were consistent with expectations and reflected
increased spending on product enhancement and deployment and on customer
implementations in support of revenue growth.
While Davis + Henderson operates primarily in Canada, the Business also
services a U.S. subsidiary of one of our Canadian customers. All revenue and
substantially all expenses relating to our U.S. cheque supply program are
contracted for in U.S. dollars. As the net U.S. dollar contribution from this
activity is relatively modest, the change in relative dollar valuations has
not had a meaningful impact on the results of the Business.

Other Expenses and Net Income

Amortization of capital and other assets on a consolidated level
increased by $0.8 million, or 6.4%, to $13.9 million when comparing 2006 to
2005. The inclusion of the Filogix Segment, which contributed $2.8 million to
the increase, was partially offset by a decline in expense in the Davis +
Henderson Segment of $1.9 million, relating to certain capital and other
assets having become fully amortized.
Net interest expense of $6.0 million incurred in 2006 increased by
$2.7 million compared to 2005. This increase reflected the drawdown of
additional debt for the acquisition of the Filogix business late in the second
quarter of 2006. The incremental interest expense related to the acquisition
was partially offset by reduced interest expense associated with lower average
loan balances outstanding during the first five months of 2006 compared to
2005.
Amortization of intangibles increased by $5.8 million to $8.2 million
when comparing 2006 to 2005. This increase was primarily related to
incremental intangible assets arising on the purchase of the Filogix business.
These intangible assets consist of rights related to customer relationships,
brand names and proprietary software and are amortized on a straight-line
basis over periods ranging between 10 and 15 years. For more information on
the acquisition of Filogix, see note 1 to the consolidated financial
statements.
Income earned by the Business and distributed annually to unitholders is
not subject to taxation in the Business, but is taxed at the individual
unitholder level. The Fund and its subsidiaries are not anticipated to be
subject to taxes as long as all taxable income generated by the Fund is paid
to unitholders in the form of distributions. Accordingly, there are no
provisions for income taxes recorded. In 2006, the Ministry of Finance
released draft legislation that could result in the Fund paying taxes on
distributions made, starting in 2011.
With respect to delivery of products and services under its U.S. cheque
supply contract, the Business does not have a permanent establishment in the
U.S. for the purposes of determining tax liability and therefore does not have
U.S. income tax liability.
During the second quarter of 2006, the Fund increased its ownership in
AVS to 75%. The acceleration of the ownership interest in AVS was initiated by
the Business so as to better serve customers on an integrated basis. With the
increased ownership, the Business now fully consolidates the results of AVS.
The minority interest recorded in the consolidated statement of income
represents the 25% interest in the earnings of AVS that do not accrue to the
Business.
Net income of $66.5 million for 2006 represents an increase of
$5.8 million, or 9.5%, when compared to 2005. On a per unit basis, net income
increased by $0.006 per unit to $1.608 per unit. The per unit increase is
negatively affected by an increase in amortization of intangible assets of
$0.122 per unit related to intangible assets recorded on the acquisition of
Filogix.

<<
EIGHT QUARTER CONSOLIDATED STATEMENT OF INCOME - SUMMARY
(in thousands of Canadian dollars, except per unit amounts, unaudited)

2006
Q4 Q3 Q2 Q1
-------------------------------------------------------------------------
Revenue $ 87,932 $ 87,966 $ 75,900 $71,918
Cost of sales and
operating expenses 62,034 62,754 52,989 51,016
Amortization of capital
and other assets 3,902 3,752 3,286 3,000
-------------------------------------------------------------------------
21,996 21,460 19,625 17,902
Interest expense 2,186 2,248 887 695
Amortization of
intangible assets 3,254 3,339 996 647
Minority interest 89 88 25 -
-------------------------------------------------------------------------
Net income $ 16,467 $ 15,785 $ 17,717 $ 16,560
-------------------------------------------------------------------------
Net income per unit $ 0.3747 $ 0.3592 $ 0.4477 $ 0.4367
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
units outstanding 43,947 43,947 39,576 37,921
-------------------------------------------------------------------------
-------------------------------------------------------------------------

2005
Q4 Q3 Q2 Q1
-------------------------------------------------------------------------
Revenue $ 69,232 $ 69,845 $ 71,226 $ 66,234
Cost of sales and
operating expenses 49,586 49,791 50,585 46,994
Amortization of capital
and other assets 3,258 3,339 3,298 3,212
-------------------------------------------------------------------------
16,388 16,715 17,343 16,028
Interest expense 760 813 839 889
Amortization of
intangible assets 646 610 582 584
Minority interest - - - -
-------------------------------------------------------------------------
Net income $ 14,982 $ 15,292 $ 15,922 $ 14,555
-------------------------------------------------------------------------
Net income per unit $ 0.3951 $ 0.4033 $ 0.4199 $ 0.3838
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average
units outstanding 37,921 37,921 37,921 37,921
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

The Fund has generally reported quarterly revenues that are stable and
growing on a year-over-year basis. The significant increases in revenue in the
third and fourth quarter of 2006 are primarily a result of the inclusion of
the Filogix Segment revenue beginning in mid-June 2006.
Net income has been trending consistently with changing revenue. Net
income per unit has generally increased consistent with increases in revenue,
except, commencing in the third quarter of 2006 and continuing thereafter,
when as a result of the acquisition of Filogix, as previously described, the
Business incurred increased amortization of intangible assets expense.
Going forward, management believes that the combined Davis + Henderson
results will be subject to seasonality with the inclusion of revenue from the
Filogix Segment. Historically, Filogix has recorded stronger results in the
second and third quarters, with lower results in the first quarter of each
year.

<<
SELECTED BALANCE SHEET INFORMATION
(in thousands of Canadian dollars, unaudited)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------
Total assets $ 642,273 $ 425,303 $ 430,595
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total long-term liabilities $ 149,715 $ 55,302 $ 67,603
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Total assets of $642.3 million at December 31, 2006 increased by
$217.0 million compared with these at December 31, 2005, primarily as a result
of the acquisition of the Filogix business and the increased investment in
AVS. The decrease in total assets between December 31, 2005 and December 31,
2004 was primarily a result of a reduction in the balances for capital and
other assets.
Long-term liabilities increased by $94.4 million as $100.0 million of
debt was drawn during 2006 to finance the acquisition of the Filogix business.
This was partially offset by $5.0 million of repayments of debt made
subsequent to the drawdown in June 2006. The change between December 31, 2005
and December 31, 2004 was a result of repayments made totalling $10.0 million
during 2005 and a reduction in disbursement obligations under long-term
customer contracts.
Disbursement obligations under long-term customer contracts are future
fixed payment obligations. When a customer contract is entered into or
renewed, any contractual payment obligation is recorded on the consolidated
balance sheet both as a liability and as an asset. The asset is amortized over
the term of the contract and the liability is reduced as payments are made in
accordance with the contract.

<<
2006 CASH FLOW AND LIQUIDITY

Summary of Cash Flows
(in thousands of Canadian dollars, unaudited)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------
Cash flows from operating activities $ 89,753 $ 76,844 $ 77,271

Less:
Changes in non-cash working capital
and other items 1,048 564 3,616
-------------------------------------------------------------------------

Adjusted cash flows from
operating activities(2) 88,705 76,280 73,655

Less:
Expenditures on maintenance capital 5,831 6,729 7,179
Contract payments, maintenance 2,695 3,145 3,145
-------------------------------------------------------------------------

Distributable cash after maintenance
capital and contract payments(1) 80,179 66,406 63,331

Less:
Expenditures on growth capital 1,329 - -
Expenditures on other
non-maintenance capital - - 354
Contract payments, non-maintenance - 800 1,250
-------------------------------------------------------------------------

Distributable cash after all capital
and contract payments(1) 78,850 65,606 61,727

Less:
Distributions paid during year 61,311 54,910 53,066
-------------------------------------------------------------------------

Distributable cash after all capital,
contract payments and distributions paid 17,539 10,696 8,661

Changes in non-cash working capital
and other items(2) 1,048 564 3,616
Cash flows provided by (used in) other
financing activities 202,749 (10,000) (7,000)
Cash flows used in acquisition
of businesses (223,852) (3,214) -
-------------------------------------------------------------------------

Increase (decrease) in cash and cash
equivalents for the year $ (2,516) $ (1,954) $ 5,277
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Note 1: Maintenance capital expenditures are defined by the Fund as
capital expenditures necessary to maintain and sustain the
current productive capacity of the Business or generally improve
the efficiency of the Business. Maintenance expenditures also
include recurring fixed customer contract payments that are made
annually over the life of the contract. Growth capital
expenditures are defined by the Fund as capital expenditures that
increase the productive capacity of the Business with a
reasonable expectation of an increase in cash flow. Non-
maintenance capital expenditures are defined as expenditures,
which are expected to increase future operating cash flows of the
Business, that are infrequent and include non-maintenance
contract payments, which are payment obligations under certain
long-term customer contracts.

Note 2: Changes in non-cash working capital and certain other balance
sheet items have been excluded from cash flows from operating
activities so as to remove the effects of timing differences in
cash receipts and cash disbursements, which generally reverse
themselves but can vary significantly across quarters. Minority
interest, future income taxes and changes to other long-term
liabilities are deducted from adjusted cash flow from operations.

Summary of Cash Flows Per Unit
(in Canadian dollars, unaudited)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------
Adjusted cash flows from
operating activities $ 2.1441 $ 2.0116 $ 1.9423
Distributable cash after maintenance
capital and contract payments $ 1.9380 $ 1.7512 $ 1.6701
Distributable cash after all
capital and contract payments $ 1.9059 $ 1.7301 $ 1.6278
Distributions paid during year $ 1.4940 $ 1.4480 $ 1.3994
Distributions declared during year $ 1.5000 $ 1.4500 $ 1.4044
-------------------------------------------------------------------------
-------------------------------------------------------------------------

2006 2005
vs. 2005 vs. 2004
% Change % Change
-------------------------------------------------------------------------
Adjusted cash flows from operating activities 6.6% 3.6%
Distributable cash after maintenance
capital and contract payments 10.7% 4.9%
Distributable cash after all capital
and contract payments 10.2% 6.3%
Distributions paid during year 3.2% 3.5%
Distributions declared during year 3.4% 3.2%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

During 2006, the Business generated $88.7 million in adjusted cash flow
from operating activities, an increase of $12.4 million compared to 2005. This
increase is primarily due to the inclusion of the Filogix business and, in
general, increases in cash flow from the organic growth initiatives of the
Davis + Henderson Segment, as previously discussed. On a per unit basis, after
reflecting the impact of additional units issued on acquiring Filogix,
adjusted cash flow from operating activities increased by 6.6% over the same
period in 2005.

<<
Summary of Capital Expenditures by Segment
(in thousands of Canadian dollars, unaudited)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------

DAVIS + HENDERSON SEGMENT
Maintenance capital expenditures $ 4,551 $ 6,729 $ 7,179
Maintenance contract payments 2,695 3,145 3,145
Growth capital expenditures - - -
Non-maintenance capital expenditures - - 354
Non-maintenance contract payments - 800 1,250
-------------------------------------------------------------------------
$ 7,246 $ 10,674 $ 11,928
-------------------------------------------------------------------------
-------------------------------------------------------------------------

FILOGIX SEGMENT
Maintenance capital expenditures $ 1,280 $ - $ -
Maintenance contract payments - - -
Growth capital expenditures 1,329 - -
Non-maintenance capital expenditures - - -
Non-maintenance contract payments - - -
-------------------------------------------------------------------------
$ 2,609 $ - $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

CONSOLIDATED
Maintenance capital expenditures $ 5,831 $ 6,729 $ 7,179
Maintenance contract payments 2,695 3,145 3,145
Growth capital expenditures 1,329 - -
Non-maintenance capital expenditures - - 354
Non-maintenance contract payments - 800 1,250
-------------------------------------------------------------------------
$ 9,855 $ 10,674 $ 11,928
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

The table above sets out capital expenditures and payments under customer
contracts. The Business has various payment obligations under customer
contracts. Certain long-term customer contracts provide for fixed contract or
program initiation payments to be made, and these are treated as non-
maintenance capital because they are not regularly recurring disbursements.
Other fixed customer contract payments are made annually over the life of the
contract and therefore are treated as recurring maintenance capital. The
aggregate of all contract payments, both fixed and variable, reflects, among
other things, the high degree of integration and sharing between Davis +
Henderson and the financial institutions of the many activities related to
ordering, data handling, customer service and other activities undertaken by
financial institutions related to the operation of the cheque supply and other
programs.
Maintenance capital expenditures in the Davis + Henderson Segment for the
year ended December, 31, 2006 have decreased year-over-year by $2.2 million,
due to the substantial completion of the capital component of an
infrastructure upgrade project and a reduction of expenditures applied to our
call centre technology infrastructure. Maintenance capital expenditures in the
Filogix Segment for the period since acquisition were consistent with
expectations.
Growth expenditures of $1.3 million made in the Filogix Segment in 2006
relates to hardware and software acquired to support the implementation of new
underwriting service customers and to develop new service offerings for
existing customers.
The Business' capital program provides for continued expenditures to be
funded by cash flows from operations. The Business' 2007 capital program is
expected to be approximately $12 million to $13 million of which $2 million to
$3 million is expected to be growth capital. Most of the increase arises as a
result of including a full-year capital program for the Filogix business. The
level of investment in 2007 to maintain and sustain the productive capacity of
the Business is expected to be comparable to the annualized expenditures in
2006.

Distributions

The Fund paid distributions of $61.2 million ($1.494 per unit) during
2006 compared to $54.9 million ($1.448 per unit) in 2005. In June 2006, the
Fund issued 6,026,000 additional units to finance the Filogix acquisition. On
a per unit basis, distributions paid increased by 3.2% when comparing 2006 to
2005.
Distributions paid can be different than distributions declared during a
period. Monthly distributions are declared by the Fund for unitholders of
record on the last business day of each month and are paid within 31 days
following each month end. On a declared basis, the year-over-year increase in
distributions per unit was 3.4% for year ended December 31, 2006.
On an annualized basis, the monthly distribution rate for December 2006
was $1.54 per unit as compared to $1.46 per unit annualized in December 2005,
representing an increase of 4.9%.
The estimated tax allocation of distributions declared for 2006 is 100%
"other income." The 2005 tax allocation was 91.6% "other income," and 8.4%
return of capital.
The Fund may issue an unlimited number of trust units. Each trust unit
is transferable and represents an equal, undivided beneficial interest in any
distribution from the Fund and the net assets of the Fund. All units are of
the same class with equal rights and privileges and are not subject to future
calls or assessments. Each unit entitles the holder to one vote at all
meetings of unitholders.
As at December 31, 2006 and February 27, 2007, 43,946,792 trust units
were outstanding. This reflects an issuance of an additional 6,026,000 trust
units on June 15, 2006 in exchange for subscription receipts issued on June 6,
2006, which was the first new issuance of units by the Fund since April 2,
2002.

<<
Changes in Non-Cash Working Capital and Other Items
(in thousands of Canadian dollars, unaudited)

Year ended December 31,
2006 2005 2004
-------------------------------------------------------------------------
Minority interest $ 202 $ - $ -
Increase in non-cash working capital items 610 220 2,803
Changes in other operating
assets and liabilities 236 344 813
-------------------------------------------------------------------------
Changes in non-cash working
capital and other items $ 1,048 $ 564 $ 3,616
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

In 2004, working capital levels decreased primarily due to a decline in
inventory levels of $1.1 million. In 2005 and 2006, working capital levels
continued to improve slightly.

Cash Flows Provided by (Used in) Other Financing Activities

During the year ended December 31, 2006, the Fund received $109.2 million
of net proceeds from issuance of new trust units and $98.5 million from a new
debt facility, net of financing fees, to fund the acquisition of Filogix. This
drawdown of debt was partially offset by a $5.0 million repayment late in
2006. For the year ended December 31, 2005, the Fund repaid $10.0 million of
long-term indebtedness. Repayments of the debt facility are not subject to
penalties.

Cash Flows Used in Acquisition of Business

In June 2006, the Fund significantly advanced its strategy of providing
services to the consumer-lending marketplace by acquiring 100% of Filogix Inc.
for total cash consideration of $212.5 million plus $1.7 million of balance
sheet adjustments. As described above, the cash required to fund this
acquisition was raised by drawing $100.0 million from a newly expanded credit
facility and $109.2 million from net proceeds on the issuance of new trust
units, with the balance funded from cash generated by the operating activities
of the Business.
In May 2006, the Fund entered into an amending agreement to accelerate
its purchase obligation and its first option related to partnership units of
AVS. The Fund now has a 75% interest in AVS. The purchase price paid for both
the accelerated purchases and the option are based on a formula that
references the earnings of AVS up to and including earnings for the year ended
December 31, 2006.

Cash Balances and Long-term Indebtedness

The Business has continued to generate operating cash flow in excess of
distributions. For 2006, this excess cash flow, together with cash on hand,
was applied to make voluntary repayments of bank debt and to fund the AVS
acquisition obligations and some of the Filogix purchase. Management expects
to continue to use excess cash flow to pay down debt during 2007.
At December 31, 2006, cash and cash equivalents totalled $5.8 million,
compared to $8.3 million at December 31, 2005.
Total debt facilities available at December 31, 2006 were $170.0 million
and include a $120.0 million non-revolving term loan and a $50.0 million
revolving term credit facility. As of December 31, 2006, the Business had
drawn $120.0 million under the non-revolving term loan and $25.0 million under
the revolving term credit facility. The Business is permitted to draw on the
revolving facility's available balance of $25.0 million to fund capital
expenditures or for other general corporate purposes.
The Credit Agreement for the Business contains a number of covenants and
restrictions including the requirement to meet certain financial ratios and
financial condition tests. The financial covenants include a leverage test, a
fixed charge coverage ratio test, a minimum net worth test and a limit on the
maximum amount of distributions that may be made by Davis + Henderson L.P. to
the Fund during each rolling, four-quarter period. Davis + Henderson was in
compliance with all of its financial covenants and financial condition tests
as of the end of its latest quarterly period. A copy of the Credit Agreement
is available at www.sedar.com.
As of December 31, 2006, the Fund had interest-rate swap hedge contracts
in place with certain of its lenders, such that the borrowing rates on 91% of
outstanding indebtedness are effectively fixed at the interest rates and for
the time periods ending as follows:

<<
(in thousands of Canadian dollars, unaudited)

Notional Fair Interest
Maturity Date Amount Value Rate(1)
-------------------------------------------------------------------------
June 30, 2007 $ 12,000 $ 25 5.140%
June 30, 2008 12,000 5 5.410%
January 4, 2009 10,000 122 4.880%
July 15, 2009 20,000 (328) 6.063%
July 15, 2010 33,000 (719) 6.065%
June 15, 2011 45,000 (913) 5.935%
-------------------------------------------------------------------------
$ 132,000 $ (1,808) -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) The listed interest rates are inclusive of banker's acceptance fees
currently in effect. Such fees could increase or decrease depending
on the Fund's financial leverage as compared to certain levels
specified in the Credit Agreement.
>>

The Fund would have to pay the fair value of $1.8 million if it were to
close out the contracts as at December 31, 2006, compared to $0.1 million as
at December 31, 2005. It is not the present intention of the Fund to close out
these contracts.
The Fund's remaining indebtedness is subject to floating interest rates
that may be funded either by way of prime-rate loans or through the issuance
of banker's acceptance with maturities, and thus interest rates, resetting
typically in the one-month to three-month range. The average effective
interest rate applicable to the Fund's total indebtedness was 5.77% as at
December 31, 2006.
Cash flows from operations together with cash balances on hand and
unutilized term credit facilities are expected to be sufficient to fund the
Business' operating requirements, capital expenditures, contractual
obligations and anticipated distributions.

Contractual Obligations - Payments Due by Period

The table below presents the contractual obligations of the Business as
at December 31, 2006 and the timing of the expected payments.

<<
(in thousands of
Canadian dollars, Less than 1 - 3 4 - 5 After 5
unaudited) Total 1 year years years years
-------------------------------------------------------------------------

Long-term
indebtedness $ 145,000 $ - $ - $ 145,000 $ -

Disbursement
obligations on
customer contracts 4,390 2,195 2,195 - -

Operating leases 14,493 4,267 8,571 1,072 583

Employee future
benefits 861 147 294 294 126

Obligations relating
to a deferred
compensation
program 1,659 - 1,659 - -
-------------------------------------------------------------------------
$ 166,403 $ 6,609 $ 12,719 $ 146,366 $ 709
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Cumulative Summary of Cash Flows

The table below provides an analysis of cash flows of the Fund since
inception through December 31, 2006, excluding the transactions pertaining to
the purchase of the original Davis + Henderson business by the Fund.

December 20, 2001 to
(in thousands of Canadian dollars, unaudited) December 31, 2006
-------------------------------------------------------------------------

Cash flows from operating activities $ 385,038

Less:
Expenditures on maintenance capital and contract payments 45,278
-------------------------------------------------------------------------

Distributable cash after maintenance
capital and contract payments 339,760

Less:
Expenditures on growth capital and non-maintenance
capital and contract payments 11,050
-------------------------------------------------------------------------

Distributable cash after all capital and contract payments 328,710

Less:
Distributions paid to unitholders
and non-controlling interest 268,556
-------------------------------------------------------------------------

Distributable cash after all capital,
contract payments and distributions paid 60,154

Cash flows provided by (used in) other financing activities
Net proceeds from issuance of trust units 109,200
Proceeds from long-term indebtedness net of issuance costs 98,549
Repayments of long-term indebtedness (35,000)
-------------------------------------------------------------------------
172,749

Cash flows used in acquisition of businesses
Acquisition of Filogix business (214,150)
Acquisition of other businesses (12,965)
-------------------------------------------------------------------------
(227,115)
-------------------------------------------------------------------------
Increase in cash and cash equivalents for the period 5,788
Cash and cash equivalents, beginning of period -
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 5,788
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cumulative Distributions paid as a % of Distributable
cash after maintenance and contract payments 79.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cumulative Distributions paid as a % of Distributable
cash after all capital and contract payments 81.7%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>

Distributable cash, after deducting all capital expenditures and all
distributions, of $60.2 million was retained by the Business and used to
contribute to the funding of acquisitions and to pay down debt.
In general, mutual fund trusts, like the Fund, must distribute all their
taxable income to their unitholders in order not to pay income taxes in the
trust. Taxable income may be less than distributable cash if the Business has
excess tax deductions it can utilize to reduce taxable income.
The Fund intends to make monthly cash distributions of its distributable
cash, as defined in the Fund's Declaration of Trust, subject to working
capital requirements, debt repayments and other reserves. On a cumulative
basis since inception, Davis + Henderson has distributed approximately 82% of
distributable cash generated. It has been possible to pay less than 100% of
its distributable cash generated to unitholders and not pay taxes within the
trust as the Business had excess tax deductions available to reduce taxable
income. These excess tax deductions diminish each year and if the Business
continues to generate growing cash flow, the Fund will need to pay out a
higher proportion of the distributable cash it generates to unitholders in
order not to pay taxes in the trust.
At December 31, 2006, the tax value of the Fund's assets and liabilities
exceeds book value by $45.8 million. For more information see note 2 to the
consolidated financial statements.

OUTLOOK

Davis + Henderson's overall long-term objective is to deliver stable and
modestly growing distributions through growing revenue in the 3% to 5% range
and maintaining margins. In 2007, revenues are expected to grow in excess of
the targeted range as a result of the consolidation of the Filogix business
acquired on June 15, 2006.
As set out in the Fund's statement of strategy, the objective is to grow
profits and cash flow by enhancing the value of our cheque supply program,
offering additional programs to serve the chequing account and delivering
programs within the lending services market.
In 2006, Davis + Henderson made a significant investment with the
acquisition of the Filogix business. This strategically aligned acquisition
adds another significant platform for the Business and is expected to
contribute to growth in the overall business of the Fund.
The Business' operational plans include many initiatives which, when
combined, are intended to allow us to meet our objectives. Examples include
further implementations and enhancements of our iDefence, BizAssist and
eSwitch programs relating to the chequing account. Relating to lending
markets, the Business looks to gain market share from its personal property
search and registration programs and by increasing volumes related to mortgage
origination and underwriting services.
The Business' capital program provides for continued expenditures to be
funded by cash flows from operations. The Business' 2007 capital program is
expected to be approximately $12 million to $13 million, of which $2 million
to $3 million is expected to be growth capital. Most of the increase over the
2006 expenditures of $9.9 million arises as a result of including a full year
capital program for the Filogix business.
Davis + Henderson intends to increase its distributions for the month of
March 2007, payable on April 30, 2007, to $0.132 per unit (equivalent to
$1.584 per unit annualized), subject to normal course regulatory requirements.
This represents a 3.1% increase over distributions declared for the month of
February 2007, which were equivalent to $1.536 per unit annualized.
Late in 2006, the Minister of Finance released draft legislation which,
if enacted, would result in certain income trusts, including the Fund, paying
taxes after fiscal 2010, similar to those paid by Canadian taxable
corporations. The payment of such taxes would reduce the cash flow of the
Fund, thereby reducing the amount available for distributions to unitholders.
The proposed changes, at the time of the report, have caused uncertainty
in the capital markets and have negatively impacted the unit prices of many
income trusts, including the Fund. This uncertainty and the related impacts
may affect the Fund's ability to make future acquisitions.
Since the announcement of the proposed changes, management and the
Trustees have been monitoring the changes in the income trust environment and
are continuing to review potential impacts on the Fund's current strategy and
the alternatives available to the Fund, consistent with protecting and
enhancing unitholder value. The tax proposals are not law, but may become law
at any time.

Caution Concerning Forward-looking Statements

This MD&A contains certain statements that constitute forward-looking
information within the meaning of applicable securities laws ("forward-looking
statements") including those set out in the Outlook above. Such forward-
looking statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of the
Business, or developments in Davis + Henderson's industry, to differ
materially from the anticipated results, performance, achievements or
developments expressed or implied by such forward-looking statements. Forward-
looking statements include all disclosure regarding possible events,
conditions or results of operations that are based on assumptions about future
economic conditions and courses of action. Forward-looking statements may also
include, without limitation, any statement relating to future events,
conditions or circumstances. Davis + Henderson cautions you not to place undue
reliance upon any such forward-looking statements, which speak only as of the
date they are made.
Risks related to forward-looking statements include, among other things,
challenges presented by declines in the use of cheques by consumers; the
Fund's dependence on a limited number of large financial institutions and
dependence on their acceptance of new programs; strategic initiatives being
undertaken to meet the Fund's financial objective, as well as general market
conditions, including economic and interest rate dynamics and investor
interest in, and government regulations relating to income trusts. Forward-
looking statements are based on management's current plans, estimates,
projections, beliefs and opinions, and Davis + Henderson does not undertake
any obligation to update forward-looking statements should assumptions related
to these plans, estimates, projections, beliefs and opinions change.

ADDITIONAL INFORMATION

Additional information relating to the Fund, including the Fund's most
recently filed Annual Information Form, is available on SEDAR at
www.sedar.com.

<<
Davis + Henderson Income Fund
Consolidated Balance Sheets
December 31, 2006 and 2005
(in thousands of Canadian dollars, unaudited)

-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------

ASSETS
Current Assets:
Cash and cash equivalents $ 5,788 $ 8,304
Accounts receivable 18,299 10,232
Inventory 5,238 5,158
Prepaid expenses 3,920 1,686
-------------------------------------------------------------------------
33,245 25,380
Capital assets (note 3) 32,567 22,376
Other assets (note 4) 7,369 8,297
Intangible assets (note 5) 130,546 7,962
Goodwill (note 6) 438,546 361,288
-------------------------------------------------------------------------
$ 642,273 $ 425,303
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 36,600 $ 27,894
Distributions payable to unitholders 5,625 4,626
Current portion of disbursement
obligations on customer contracts (note 7) 2,195 3,145
-------------------------------------------------------------------------
44,420 35,665
Disbursement obligations on
customer contracts (note 7) 2,195 2,790
Long-term indebtedness (note 8) 145,000 50,000
Other long-term liabilities (note 9) 2,520 2,512
Minority interest 263 -
-------------------------------------------------------------------------
194,398 90,967
Unitholders' Equity:
Trust units (note 10) 474,585 365,385
Deficit (26,710) (31,049)
-------------------------------------------------------------------------
447,875 334,336
Commitments (note 11)
-------------------------------------------------------------------------
$ 642,273 $ 425,303
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.

Davis + Henderson Income Fund
Consolidated Statements of Income
(in thousands of Canadian dollars, except per unit amounts, unaudited)

-------------------------------------------------------------------------
Quarter ended Year ended
December 31, December 31,
2006 2005 2006 2005
-------------------------------------------------------------------------

Revenue $ 87,932 $ 69,232 $ 323,716 $ 276,537
Cost of sales and
operating expenses 62,034 49,586 228,793 196,956
Amortization of capital
and other assets 3,902 3,258 13,940 13,107
-------------------------------------------------------------------------
21,996 16,388 80,983 66,474

Interest expense 2,186 760 6,016 3,301
Amortization of
intangible assets 3,254 646 8,236 2,422
Minority interest 89 - 202 -
-------------------------------------------------------------------------
Net income $ 16,467 $ 14,982 $ 66,529 $ 60,751
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per unit,
basic and diluted $ 0.3747 $ 0.3951 $ 1.6081 $ 1.6020
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.

Davis + Henderson Income Fund
Consolidated Statements of Deficit
(in thousands of Canadian dollars, unaudited)
-------------------------------------------------------------------------
Quarter ended Year ended
December 31, December 31,
2006 2005 2006 2005
-------------------------------------------------------------------------

Deficit, beginning of period $ (26,433) $ (32,151) $ (31,049) $ (36,815)
Net income 16,467 14,982 66,529 60,751
Distributions (16,744) (13,880) (62,190) (54,985)
-------------------------------------------------------------------------
Deficit, end of period $ (26,710) $ (31,049) $ (26,710) $ (31,049)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.

Davis + Henderson Income Fund
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars, unaudited)

Cash and cash equivalents
provided by (used in):

OPERATING ACTIVITIES
Net income $ 16,467 $ 14,982 $ 66,529 $ 60,751
Add:
Amortization of
capital assets 3,442 2,177 10,639 8,692
Amortization of
other assets 459 1,081 3,301 4,415
Amortization of
intangible assets 3,254 646 8,236 2,422
Minority interest 89 - 202 -
-------------------------------------------------------------------------
23,711 18,886 88,907 76,280

Decrease in non-cash
working capital items (1,671) 719 610 220
Changes in other operating
assets and liabilities 70 26 236 344
-------------------------------------------------------------------------
22,110 19,631 89,753 76,844
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Gross proceeds from
issuance of trust units - - 116,000 -
Issuance costs - - (6,800) -
Proceeds from (repayment of)
long-term indebtedness (5,000) (4,000) 95,000 (10,000)
Financing fees - - (1,451) -
Distributions paid to
non-controlling interest (120) - (120) -
Distributions paid
to unitholders (16,612) (13,880) (61,191) (54,910)
-------------------------------------------------------------------------
(21,732) (17,880) 141,438 (64,910)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures on capital assets (1,945) (1,828) (7,160) (6,729)
Payments pursuant to
long-term supply contracts (20) (845) (2,695) (3,945)
Acquisition of Filogix
business (note 1a) 1,290 - (214,150) -
Acquisition of AVS
business (note 1b) (1,043) (448) (7,937) (3,214)
Acquisition of customer
service contracts (1,765) - (1,765) -
-------------------------------------------------------------------------
(3,483) (3,121) (233,707) (13,888)
Decrease in cash and cash
equivalents for the period (3,105) (1,370) (2,516) (1,954)
Cash and cash equivalents,
beginning of period 8,893 9,674 8,304 10,258
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 5,788 $ 8,304 $ 5,788 $ 8,304
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplementary information:
Cash interest paid $ 2,058 $ 517 $ 6,526 $ 3,807
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.

Davis + Henderson Income Fund
Notes to Consolidated Financial Statements
Three Months and Years ended December 31, 2006 and 2005
(in thousands of Canadian dollars, except unit and per unit amounts,
unaudited)

1. ACQUISITION

a. FILOGIX BUSINESS

On June 15, 2006, the Fund completed an agreement to indirectly acquire
all the outstanding partnership units of Filogix L.P. through the
acquisition of Filogix Holdings Inc. The Filogix L.P. provides, among
other offerings, processing services related to the origination and
underwriting of mortgages in Canada. The assets acquired and
consideration given were as follows:

2006
-------------------------------------------------------------------------
Net assets acquired, at fair value:
Assets $ 22,704
Intangibles 128,087
Liabilities (8,581)
-------------------------------------------------------------------------
142,210
Goodwill 71,940
-------------------------------------------------------------------------
Total $ 214,150
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consideration for 100% ownership:
Cash $ 214,150
-------------------------------------------------------------------------
Total $ 214,150
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Intangibles consist of proprietary software, brand names and customer
relationships. The purchase price and related transaction costs were
financed with net proceeds of $109.2 million from the issuance of Trust
units and $98.5 million from the drawdown of debt net of financing fees,
with the balance from cash on hand.

b. AVS BUSINESS

On April 28, 2005, the Fund entered into an agreement to acquire a 50%
interest in AVS through a step-by-step acquisition over 20 months ending
January 2007. On May 25, 2006, the Fund entered into an amending
agreement to accelerate its remaining obligation as well as exercising
its option to acquire a further 25% interest in the AVS business. As at
December 31, 2006, the Fund owns a 75% interest in AVS. The purchase
price paid for the additional ownership was based on a formula that
reference the earnings of AVS up to and including earnings for the year
ended December 31, 2006. The Fund has adopted the consolidation method of
accounting in respect of AVS. The remaining 25% of the outstanding
partnership units is recognized as minority interest. The assets acquired
and consideration given were as follows:

2006 2005
-------------------------------------------------------------------------
Net assets acquired, at fair value:
Assets $ 1,005 $ 197
Intangibles 3,498 1,129
Liabilities (335) (15)
Minority interest (238) -
-------------------------------------------------------------------------
3,930 1,311
Goodwill 7,221 1,903
-------------------------------------------------------------------------
Total $ 11,151 $ 3,214
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consideration for 75% ownership
(2005 - 22.5%):
Cash $ 11,151 $ 3,214
-------------------------------------------------------------------------
Total $ 11,151 $ 3,214
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Intangibles include proprietary software and customer service contracts.
The purchases were made with available cash on hand.

2. INCOME TAXES

Income earned by the Fund that is distributed annually to unitholders is
not subject to taxation in the Fund, but is taxed at the individual
unitholder level.

The Fund does not recognize any future tax assets or liabilities on
temporary differences between the carrying amount of the balance sheet
items and their corresponding tax basis because the Fund is committed to
distribute to its unitholders, all or virtually all of its taxable income
and taxable gains. The Fund intends to continue to meet the "mutual fund
trust" requirements under the Income Tax Act (Canada) and there is no
indication that the Fund will fail to meet those requirements. As at
December 31, 2006, the excess of the carrying value of the Fund's assets
and liabilities, excluding goodwill, over their tax basis is
approximately $112.0 million (2005 - ($6.3) million) of which
$130.5 million (2005 - $6.9 million) is related to the carrying value of
intangible assets over their tax basis. The tax basis of goodwill as at
December 31, 2006 was $157.8 million (2005 - $169.7 million).

On December 21, 2006 the Minister of Finance (Canada) released draft
legislation (the "Proposals") relating to the federal income taxation of
publicly-traded trusts and partnerships. The Proposals are contemplated
to apply to a publicly-traded trust that is a specified investment flow-
through entity (a "SIFT") which existed before November 1, 2006
("Existing Trust") commencing with taxation years ending in or after
2011.

Certain distributions attributable to a SIFT will not be deductible in
computing the SIFT's taxable income, and the SIFT will be subject to tax
on such distributions at a rate that is substantially equivalent to the
general tax rate applicable to Canadian corporations. Distributions paid
by a SIFT as returns of capital will not be subject to this tax. There
will be circumstances where an Existing Trust may lose its transitional
relief where its equity capital grows beyond certain dollar limits
measured by reference to the Existing Trust's market capitalization at
the close of trading on October 31, 2006.

The Fund is a SIFT as defined in the Proposals. If enacted, the Fund
would be subject to taxes on certain income earned from investments in
its subsidiaries. The Fund would also be required to recognize future
income tax assets and liabilities with respect to the temporary
differences of its assets and liabilities and those of its subsidiaries
that are expected to reverse in or after 2011.

3. CAPITAL ASSETS

2006
-------------------------------------------------------------------------
Accumulated
Cost amortization Net
-------------------------------------------------------------------------
Machinery and equipment $ 15,014 $ 6,689 $ 8,325
Computer equipment and software 36,211 14,827 21,384
Furniture, fixtures and leasehold
improvements 7,774 4,916 2,858
-------------------------------------------------------------------------
$ 58,999 $ 26,432 $ 32,567
-------------------------------------------------------------------------
-------------------------------------------------------------------------

2005
-------------------------------------------------------------------------
Accumulated
Cost amortization Net
-------------------------------------------------------------------------
Machinery and equipment $ 14,289 $ 5,502 $ 8,787
Computer equipment and software 22,917 11,353 11,564
Furniture, fixtures and leasehold
improvements 6,199 4,174 2,025
-------------------------------------------------------------------------
$ 43,405 $ 21,029 $ 22,376
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Amortization during the quarter ended December 31, 2006 was $3,442
(Q4 2005 - $2,177) and during the year ended December 31, 2006 was
$10,639 (2005 - $8,692). Fully amortized capital assets totalling $5,236
were removed from the accounts during the year ended December 31, 2006
(2005 - $5,897).

4. OTHER ASSETS

2006 2005
-------------------------------------------------------------------------
Cost:
Long-term supply contracts $ 9,750 $ 12,903
Deferred finance costs 1,451 -
Other 370 370
-------------------------------------------------------------------------
11,571 13,273

Accumulated amortization (4,202) (4,976)
-------------------------------------------------------------------------
$ 7,369 $ 8,297
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Amortization during the quarter ended December 31, 2006 on long-term
supply contracts and deferred finance fees was $459 (Q4 2005 - $1,081)
and $131 (Q4 2005 - nil) respectively and during the year ended
December 31, 2006 was $3,301 (2005 - $4,415) and $228 (2005 - nil),
respectively. Amortization of deferred finance fees is recognized as
interest expense. Fully amortized other assets totalling $4,303 were
removed from the accounts during the year ended December 31, 2006 (2005 -
$5,584).

5. INTANGIBLE ASSETS

2006 2005
-------------------------------------------------------------------------
Cost:
Cheque supply outsourcing contracts $ 16,329 $ 16,329
Customer service contracts 3,669 1,059
Proprietary software 41,993 70
Brand names 8,400 -
Customer relationships 77,887 -
-------------------------------------------------------------------------
148,278 17,458
Accumulated amortization (17,732) (9,496)
-------------------------------------------------------------------------
$ 130,546 $ 7,962
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Amortization during the quarter ended December 31, 2006 was $3,254
(Q4 2005 - $646) and during the year ended December 31, 2006 was $ 8,236
(2005 - $2,422).

6. GOODWILL

2006 2005
-------------------------------------------------------------------------
Balance, beginning of year $ 361,288 $ 359,385
Goodwill acquired during the year:
AVS acquistion 5,318 1,903
Filogix acquistion 71,940 -

-------------------------------------------------------------------------
Balance, end of year $ 438,546 $ 361,288
-------------------------------------------------------------------------
-------------------------------------------------------------------------

7. DISBURSEMENT OBLIGATIONS ON CUSTOMER CONTRACTS

2006 2005
-------------------------------------------------------------------------
Current portion $ 2,195 $ 3,145
Long-term portion 2,195 2,790
-------------------------------------------------------------------------
Total disbursement obligations on customer
contracts $ 4,390 $ 5,935
-------------------------------------------------------------------------

The Fund has fixed customer contract disbursement obligations payable as
of December 31, 2006 as follows:

2007 $ 2,195
2008 2,195
-------------------------------------------------------------------------
$ 4,390
-------------------------------------------------------------------------
-------------------------------------------------------------------------

8. LONG-TERM INDEBTEDNESS

2006 2005
-------------------------------------------------------------------------
Non-revolving term loan $ 120,000 $ 50,000
Revolving credit facility 25,000 -
-------------------------------------------------------------------------
$ 145,000 $ 50,000
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The Fund has $170.0 million of available term credit facilities due
June 15, 2011 (December 31, 2005 - $90.0 million), consisting of a
$120.0 million non-revolving term loan and a $50.0 million revolving
credit facility. The facilities bear interest at rates that depend on
certain financial ratios of the Fund and vary in accordance with
borrowing rates in Canada and the United States. The credit facilities,
including any hedge contracts with the lenders, are secured in first
priority by a pledge of substantially all of the Fund's assets and by a
pledge of the Fund's indirect ownership interests in Davis + Henderson
L.P. The fair value of long-term indebtedness approximates its carrying
value.

The Credit Agreement for the Fund contains a number of covenants and
restrictions including the requirement to meet certain financial ratios
and financial condition tests. As at December 31, 2006, the Fund was in
compliance with all of its financial covenants and financial condition
tests. As of December 31, 2006, the Fund has entered into interest-rate
swap hedge contracts with its lenders, such that the borrowing rates on
$132.0 million, or 91.0%, of its outstanding term indebtedness are
effectively fixed at interest rates of between 4.880% and 6.065% per
annum for terms ending between June 30, 2007 and June 15, 2011.

As of December 31, 2006, the net unrealized and unrecorded loss on the
outstanding interest-rate swaps was approximately $2.2 million, and the
net fair value was $1.8 million, which the Fund would have to pay if it
were to close out the contracts (December 31, 2005 - the net fair value
of the outstanding interest-rate swaps was approximately $0.1 million,
which the Fund would be required to pay if it were to close out the
contracts).

9. OTHER LONG-TERM LIABILITIES

2006 2005
-------------------------------------------------------------------------
Deferred compensation program $ 1,659 $ 1,373
Employee future benefits 861 1,139

-------------------------------------------------------------------------
$ 2,520 $ 2,512
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The deferred compensation program is a five-year long-term incentive plan
for management, subject to certain performance criteria and vesting
terms, payable after December 31, 2008.

Employee future benefits consist of defined contribution pension plans
and a non-pension postretirement benefit plan. Obligations relating to
employee future benefits relate to the non-pension postretirement benefit
plan.

The Fund's principal pension plans are defined contribution pension plans
that provide pensions to substantially all eligible employees. Total
expense for the Fund's defined contribution pension plan for the year
ended December 31, 2006 was $1.3 million (2005 - $1.1 million).

The Fund's non-pension post-retirement benefit plan provides certain
health care, life insurance and dental benefits to eligible employees.
Terms of the plan were amended effective January 1, 2005, resulting in a
reduction in obligations of $1.8 million and actuarial losses of
$1.6 million. Reductions in obligations from the plan amendment are being
amortized over three-and-one- half years and the actuarial losses are
being amortized over six years.

10. TRUST UNITS

An unlimited number of trust units may be issued by the Fund pursuant to
the Fund's Declaration of Trust. Each unit is transferable and represents
an equal, undivided beneficial interest in any distributions from the
Fund and in the net assets of the Fund. All units are of the same class
with equal rights and privileges and are not subject to future calls or
assessments. Each unit entitles the holder to one vote at all meetings of
unitholders and a pro rata share of distributions declared by the Fund.

The Fund intends to make monthly cash distributions of its distributable
cash, as defined in the Fund's Declaration of Trust, subject to working
capital requirements and other reserves. The net proceeds from the
issuance of trust units and the number of units outstanding is as
follows:

2006 2005
-------------------------------------------------------------------------

Balance, beginning of year $ 365,385 $ 365,385
Units issued 109,200 -
-------------------------------------------------------------------------
Balance, end of year $ 474,585 $ 365,385
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Units outstanding, end of year 43,946,792 37,920,792
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The weighted average number of units outstanding during 2006 was
41,371,297 (2005 - 37,920,792).

11. COMMITMENTS

As of December 31, 2006, the Fund has annual lease obligations with
respect to real estate, vehicles and equipment as follows for the years
ending:

2007 $ 4,267
2008 3,405
2009 2,589
2010 2,577
2011 1,072
Thereafter 583
-------------------------------------------------------------------------
$ 14,493
-------------------------------------------------------------------------
-------------------------------------------------------------------------

12. RELATED PARTY TRANSACTIONS

A Trustee of the Fund serves as Chairman of the Board of Canada Post
Corporation, one of the Company's major suppliers. Total purchases from
this supplier during the quarter ended December 31, 2006 were $6,005 (Q4
2005 - $6,484) and during the year ended December 31, 2006 were $23,504
(2005 - $25,162). As at December 31, 2006, $1,285 (December 31, 2005 -
$2,123) was owing to Canada Post Corporation. This amount has been
included in accounts payable and accrued liabilities.

13. SIGNIFICANT CUSTOMERS

For the year ended December 31, 2006, the Fund earned 79% (2005 - 83%) of
its revenue from its seven largest customers.

Four of these customers individually accounted for greater than 10% but
not more than 17% of the Fund's total revenue.

14. SEGMENTED INFORMATION

The Fund operates its business in two segments, organized on the basis of
products, services and markets served. The Davis + Henderson Segment
includes the cheque supply program, deposit bags program, eSwitch® and
the personal property search and registration programs, among other
offerings. The Filogix Segment includes services related to the
origination and underwriting of mortgages in Canada, among other
offerings.

Segment assets include goodwill and intangible assets recognized with the
acquisition of businesses included with each respective Segment.

Corporate costs include costs incurred by the Fund for the operation of a
public entity. Corporate assets consist primarily of cash and cash
equivalents.

Prior to June 15, 2006, the Fund operated in one segment, the Davis +
Henderson Segment. Summarized financial information for the quarter and
year ended December 31, 2006 are as follows:

Quarter ended December 31, 2006
-------------------------------------------------------------------------
Davis+Henderson Filogix
Segment Segment Corporate Consolidated
-------------------------------------------------------------------------
Revenue $ 74,730 $ 13,202 $ - $ 87,932
Cost of sales and
operating expenses 52,720 8,794 520 62,034
Amortization of capital
and other assets 2,421 1,481 - 3,902
-------------------------------------------------------------------------
19,589 2,927 (520) 21,996

Interest expense - - 2,186 2,186
Amortization of
intangible assets 771 2,483 - 3,254
Minority interest 89 - - 89
-------------------------------------------------------------------------
Net income $ 18,729 $ 444 $ (2,706) $ 16,467
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital and other
assets expenditures $ 1,077 $ 888 $ - $ 1,965
Intangible assets $ 7,810 $ 122,736 $ - $ 130,546
Goodwill $ 366,606 $ 71,940 $ - $ 438,546
Total assets $ 419,594 $ 216,891 $ 5,788 $ 642,273
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Year Ended December 31, 2006
-------------------------------------------------------------------------
Davis+Henderson Filogix
Segment Segment Corporate Consolidated
-------------------------------------------------------------------------
Revenue $ 292,981 $ 30,735 $ - $ 323,716
Cost of sales and
operating expenses 205,442 21,365 1,986 228,793
Amortization of capital
and other assets 11,168 2,772 - 13,940
-------------------------------------------------------------------------
76,371 6,598 (1,986) 80,983
Interest expense - - 6,016 6,016
Amortization of
intangible assets 2,884 5,352 - 8,236
Minority interest 202 - - 202
-------------------------------------------------------------------------
Net income $ 73,285 $ 1,246 $ (8,002) $ 66,529
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital and other
assets expenditures $ 7,246 $ 2,609 $ - $ 9,855
Intangible assets $ 7,810 $ 122,736 $ - $ 130,546
Goodwill $ 366,606 $ 71,940 $ - $ 438,546
Total assets $ 419,594 $ 216,891 $ 5,788 $ 642,273
-------------------------------------------------------------------------
-------------------------------------------------------------------------

For the Davis + Henderson Segment, five customers individually accounted
for greater than 10% but not more than 19% of the Davis + Henderson
Segment revenue. For the Filogix Segment, two customers individually
accounted for greater than 10% but not more than 13% of the Filogix
Segment revenue.

SUPPLEMENTARY FINANCIAL INFORMATION

Consolidated Operating Results by Period
-------------------------------------------------------------------------
(in thousands of Three Three Three Three
Canadian dollars, Year months months months months
except per unit ended ended ended ended ended
amounts, December December September June March
unaudited) 31, 2006 31, 2006 30, 2006 30, 2006 31, 2006
-------------------------------------------------------------------------

Revenue $ 323,716 $ 87,932 $ 87,966 $ 75,900 $ 71,918
Cost of sales and
operating
expenses 228,793 62,034 62,754 52,989 51,016
Amortization of
capital and other
assets 13,940 3,902 3,752 3,286 3,000
-------------------------------------------------------------------------
80,983 21,996 21,460 19,625 17,902
Interest expense 6,016 2,186 2,248 887 695
Amortization of
intangible assets 8,236 3,254 3,339 996 647
Income Taxes - - - - -
Minority interest 202 89 88 25 -
-------------------------------------------------------------------------
Net income $ 66,529 $ 16,467 $ 15,785 $ 17,717 $ 16,560
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows from
operating
activities $ 89,753 $ 22,110 $ 22,786 $ 26,498 $ 18,359
Change in non-cash
working capital
items (610) 1,671 268 (4,424) 1,875
Minority interest (202) (89) (88) (25) -
Changes in other
operating assets
and liabilities (236) (70) (90) (50) (26)
-------------------------------------------------------------------------
Adjusted cash flows
from operations(2) 88,705 23,622 22,876 21,999 20,208
Less:
Expenditures on
maintenance
capital 5,831 1,911 997 1,377 1,546
Contract payments,
maintenance 2,695 20 800 625 1,250
-------------------------------------------------------------------------
Distributable cash
after maintenance
capital and
contract
payments(1) 80,179 21,691 21,079 19,997 17,412
Less:
Expenditures on
growth capital(3) 1,329 34 884 411 -
Expenditures on
non-maintenance
capital - - - - -
Contract payments,
non-maintenance - - - - -
-------------------------------------------------------------------------
Distributable cash
after all capital
and contract
payments $ 78,850 $ 21,657 $ 20,195 $ 19,586 $ 17,412
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Summary of Cash Flows Per Unit

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted cash flows
from operating
activities $ 2.1441 $ 0.5375 $ 0.5205 $ 0.5559 $ 0.5329
Distributable cash
after maintenance
capital and
contract payments $ 1.9380 $ 0.4936 $ 0.4796 $ 0.5053 $ 0.4592
Distributable cash
after all capital
and contract
payments $ 1.9059 $ 0.4928 $ 0.4595 $ 0.4949 $ 0.4592
Distributions
paid during
period $ 1.4940 $ 0.3780 $ 0.3750 $ 0.3750 $ 0.3660
Distributions
declared during
period $ 1.5000 $ 0.3810 $ 0.3750 $ 0.3750 $ 0.3690
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
(in thousands of Three Three Three Three
Canadian dollars, Year months months months months
except per unit ended ended ended ended ended
amounts, December December September June March
unaudited) 31, 2005 31, 2005 30, 2005 30, 2005 31, 2005
-------------------------------------------------------------------------

Revenue $ 276,537 $ 69,232 $ 69,845 $ 71,226 $ 66,234
Cost of sales and
operating
expenses 196,956 49,586 49,791 50,585 46,994
Amortization of
capital and other
assets 13,107 3,258 3,339 3,298 3,212
-------------------------------------------------------------------------
66,474 16,388 16,715 17,343 16,028
Interest expense 3,301 760 813 839 889
Amortization of
intangible assets 2,422 646 610 582 584
Income Taxes - - - - -
Minority interest - - - - -
-------------------------------------------------------------------------
Net income $ 60,751 $ 14,982 $ 15,292 $ 15,922 $ 14,555
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows from
operating
activities $ 76,844 $ 19,629 $ 19,634 $ 24,175 13,406
Change in non-cash
working capital
items (220) (717) (293) (4,232) 5,022
Minority interest - - - - -
Changes in other
operating assets
and liabilities (344) (26) (100) (141) (77)
-------------------------------------------------------------------------
Adjusted cash flows
from operations(2) 76,280 18,886 19,241 19,802 18,351
Less:
Expenditures on
maintenance
capital 6,729 1,828 1,645 1,737 1,519
Contract payments,
maintenance 3,145 645 625 625 1,250
-------------------------------------------------------------------------
Distributable cash
after maintenance
capital and
contract
payments(1) 66,406 16,413 16,971 17,440 15,582
Less:
Expenditures on
growth capital(3) - - - - -
Expenditures on
non-maintenance
capital - - - - -
Contract payments,
non-maintenance 800 200 - 600 -
-------------------------------------------------------------------------
Distributable cash
after all capital
and contract
payments $ 65,606 $ 16,213 $ 16,971 $ 16,840 $ 15,582
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Summary of Cash Flows Per Unit

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted cash flows
from operating
activities $ 2.0116 $ 0.4980 $ 0.5074 $ 0.5222 $ 0.4839
Distributable cash
after maintenance
capital and
contract payments $ 1.7512 $ 0.4328 $ 0.4475 $ 0.4599 $ 0.4109
Distributable cash
after all capital
and contract
payments $ 1.7301 $ 0.4276 $ 0.4475 $ 0.4441 $ 0.4109
Distributions
paid during
period $ 1.4480 $ 0.3660 $ 0.3620 $ 0.3600 $ 0.3600
Distributions
declared during
period $ 1.4500 $ 0.3660 $ 0.3640 $ 0.3600 $ 0.3600
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-------------------------------------------------------------------------
(in thousands of Three Three Three Three
Canadian dollars, Year months months months months
except per unit ended ended ended ended ended
amounts, December December September June March
unaudited) 31, 2004 31, 2004 30, 2004 30, 2004 31, 2004
-------------------------------------------------------------------------

Revenue $ 275,586 $ 69,068 $ 69,065 $ 68,864 $ 68,589
Cost of sales and
operating
expenses 196,789 49,124 49,451 49,428 48,786
Amortization of
capital and other
assets 13,509 3,305 3,264 3,390 3,550
-------------------------------------------------------------------------
65,288 16,639 16,350 16,046 16,253
Interest expense 4,193 958 1,105 1,045 1,085
Amortization of
intangible assets 2,333 583 583 583 584
Income Taxes 4,494 - 955 1,873 1,666
Minority interest - - - - -
-------------------------------------------------------------------------
Net income $ 54,268 $ 15,098 $ 13,707 $ 12,545 $ 12,918
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows from
operating
activities $ 77,271 $ 19,427 $ 19,786 $ 19,561 $ 18,497
Change in non-cash
working capital
items (2,803) (60) (1,367) (1,463) 87
Minority interest - - - - -
Changes in other
operating assets
and liabilities (813) (381) (120) (143) (169)
-------------------------------------------------------------------------
Adjusted cash flows
from operations(2) 73,655 18,986 18,299 17,955 18,415
Less:
Expenditures on
maintenance
capital 7,179 2,715 1,451 1,317 1,696
Contract payments,
maintenance 3,145 645 625 625 1,250
-------------------------------------------------------------------------
Distributable cash
after maintenance
capital and
contract
payments(1) 63,331 15,626 16,223 16,013 15,469
Less:
Expenditures on
growth capital(3) - - - - -
Expenditures on
non-maintenance
capital 354 49 82 126 97
Contract payments,
non-maintenance 1,250 1,000 50 - 200
-------------------------------------------------------------------------
Distributable cash
after all capital
and contract
payments $ 61,727 $ 14,577 $ 16,091 $ 15,887 $ 15,172
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Summary of Cash Flows Per Unit

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted cash flows
from operating
activities $ 1.9423 $ 0.5007 $ 0.4826 $ 0.4735 $ 0.4856
Distributable cash
after maintenance
capital and
contract payments $ 1.6701 $ 0.4121 $ 0.4278 $ 0.4223 $ 0.4079
Distributable cash
after all capital
and contract
payments $ 1.6278 $ 0.3844 $ 0.4243 $ 0.4190 $ 0.4001
Distributions,
paid during
period $ 1.3994 $ 0.3536 $ 0.3504 $ 0.3504 $ 0.3450
Distributions,
declared during
period $ 1.4044 $ 0.3568 $ 0.3504 $ 0.3504 $ 0.3468
-------------------------------------------------------------------------
-------------------------------------------------------------------------

-----------------------------------------
(in thousands of Year
Canadian dollars, Year ended
except per unit ended December
amounts, December 31, 2002(4)
unaudited) 31, 2003 (pro forma)
-----------------------------------------

Revenue $ 251,783 $ 228,259
Cost of sales and
operating
expenses 177,704 158,287
Amortization of
capital and other
assets 14,065 14,212
-----------------------------------------
60,014 55,760
Interest expense 4,630 4,527
Amortization of
intangible assets 2,332 2,408
Income Taxes 4,595 3,314
Minority interest - -
-----------------------------------------
Net income $ 48,457 $ 45,511
-----------------------------------------
-----------------------------------------
Cash flows from
operating
activities $ 68,569 $ 56,867
Change in non-cash
working capital
items (66) 8,858
Minority interest - -
Changes in other
operating assets
and liabilities (66) (1,289)
-----------------------------------------
Adjusted cash flows
from operations(2) 68,437 64,436
Less:
Expenditures on
maintenance
capital 5,210 5,006
Contract payments,
maintenance 3,145 3,145
-----------------------------------------
Distributable cash
after maintenance
capital and
contract
payments(1) 60,082 56,285
Less:
Expenditures on
growth capital(3) - -
Expenditures on
non-maintenance
capital 2,137 2,628
Contract payments,
non-maintenance 700 1,850
-----------------------------------------
Distributable cash
after all capital
and contract
payments $ 57,245 $ 51,807
-----------------------------------------
-----------------------------------------

Summary of Cash Flows Per Unit

-----------------------------------------
-----------------------------------------
Adjusted cash flows
from operating
activities $ 1.8047 $ 1.9739
Distributable cash
after maintenance
capital and
contract payments $ 1.5844 $ 1.7242
Distributable cash
after all capital
and contract
payments $ 1.5096 $ 1.5871
Distributions
paid during
period $ 1.3566 $ 1.2510
Distributions
declared during
period $ 1.3599 $ 1.3200
-----------------------------------------
-----------------------------------------

(1) Maintenance capital expenditures are defined by the Fund as capital
expenditures necessary to maintain and sustain the current productive
capacity of the Business or generally improve the efficiency of the
Business. Maintenance expenditures also include recurring fixed
customer contract payments that are made annually over the life of
the contract. Growth capital expenditures are defined by the Fund as
capital expenditures that increase the productive capacity of the
Business with a reasonable expectation of an increase in cash flow.
Non-maintenance capital expenditures are defined as expenditures,
which are expected to increase future operating cash flows of the
Business, that are infrequent and include non-maintenance contract
payments which are payment obligations under certain long-term
customer contracts.

(3) For the quarter ending June 30, 2006, approximately $0.4 million
pertaining to Filogix capital expenditures have been classified as
growth capital rather than maintenance capital, as reported in the
second quarter Management's Discussion and Analysis.

(4) The year ended December 31, 2002 was compiled from proforma
financial statements adjusted to remove the twelve-day period ended
December 31, 2001. The proforma balances presented are based on the
actual statements of the Fund adjusted to remove the expense related
to the distributions paid to the non-controlling owner and to
increase the number of units outstanding to 37,920,792 as at
December 20, 2001 (versus the 17,235,000 units outstanding from
December 20, 2001 to January 9, 2002; 19,955,000 units outstanding
from January 10, 2002 to April 1, 2002; and 37,920,792 units
outstanding subsequent to April 1, 2002).

Condensed Consolidated Balance Sheet

-------------------------------------------------------------------------
(in thousands of
Canadian dollars, December September June March December
unaudited) 31, 2006 30, 2006 30, 2006 31, 2006 31, 2005
-------------------------------------------------------------------------

Cash and cash
equivalents $ 5,788 $ 8,893 $ 4,607 $ 9,441 $ 8,304
Other current
assets 27,457 27,384 28,834 17,136 17,076
Future income
taxes - - - - -
Capital and
other assets 39,936 41,908 42,701 29,220 30,673
Goodwill and
other intangible
assets 569,092 572,215 575,635 369,131 369,250
-------------------------------------------------------------------------
$ 642,273 $ 650,400 $ 651,777 $ 424,928 $ 425,303
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Payables and
other current
liabilities $ 44,420 $ 47,100 $ 48,064 $ 32,697 $ 35,665
Other long-term
liabilities 4,715 4,797 4,604 5,328 5,302
Long-term
indebtedness 145,000 150,000 150,000 50,000 50,000
Minority
interest 263 351 263 - -
Unitholders'
equity 447,875 448,152 448,846 336,903 334,336
-------------------------------------------------------------------------
$ 642,273 $ 650,400 $ 651,777 $ 424,928 $ 425,303
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Condensed Consolidated Balance Sheet

-------------------------------------------------------------------------
(in thousands of
Canadian dollars, September June March December September
unaudited) 30, 2005 30, 2005 31, 2005 31, 2004 30, 2004
-------------------------------------------------------------------------

Cash and cash
equivalents $ 9,674 $ 9,660 $ 4,243 $ 10,258 $ 11,647
Other current
assets 18,245 17,009 16,826 15,352 15,744
Future income
taxes - - - - 28,170
Capital and
other assets 31,401 33,093 34,652 36,345 36,888
Goodwill and
other intangible
assets 369,538 369,610 368,056 368,640 369,223
-------------------------------------------------------------------------
$ 428,858 $ 429,372 $ 423,777 $ 430,595 $ 461,672
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Payables and
other current
liabilities $ 35,703 $ 34,181 $ 30,373 $ 34,422 $ 35,632
Other long-term
liabilities 5,921 6,446 6,930 7,603 7,867
Long-term
indebtedness 54,000 57,000 57,000 60,000 63,000
Minority
interest - - - - -
Unitholders'
equity 333,234 331,745 329,474 328,570 355,173
-------------------------------------------------------------------------
$ 428,858 $ 429,372 $ 423,777 $ 430,595 $ 461,672
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Condensed Consolidated Balance Sheet

--------------------------------------------------------------
(in thousands of
Canadian dollars, June March December December
unaudited) 30, 2004 31, 2004 31, 2003 31, 2002
--------------------------------------------------------------

Cash and cash
equivalents $ 7,357 $ 7,152 $ 4,981 $ 12,046
Other current
assets 16,672 15,898 15,779 16,142
Future income
taxes 28,915 30,352 31,715 35,298
Capital and
other assets 32,643 34,589 35,396 39,614
Goodwill and
other intangible
assets 369,806 370,389 370,973 373,305
--------------------------------------------------------------
$ 455,393 $ 458,380 $ 458,844 $ 476,405
--------------------------------------------------------------
--------------------------------------------------------------

Payables and
other current
liabilities $ 33,473 $ 31,235 $ 31,136 $ 32,778
Other long-term
liabilities 4,167 4,650 4,980 4,789
Long-term
indebtedness 63,000 67,000 67,000 80,000
Minority
interest
Unitholders'
equity 354,753 355,495 355,728 358,838
--------------------------------------------------------------
$ 455,393 $ 458,380 $ 458,844 $ 476,405
--------------------------------------------------------------
--------------------------------------------------------------

Distribution History
-------------------------------------------------------------------------
Distributions
per unit(1)
Month 2006 2005 2004 2003 2002 2001
-------------------------------------------------------------------------

January $ 0.1220 $ 0.1200 $ 0.1150 $ 0.1117 $ 0.1083 $ -
February 0.1220 0.1200 0.1150 0.1117 0.1083 -
March 0.1250 0.1200 0.1168 0.1117 0.1083 -
April 0.1250 0.1200 0.1168 0.1133 0.1083 -
May 0.1250 0.1200 0.1168 0.1133 0.1083 -
June 0.1250 0.1200 0.1168 0.1133 0.1083 -
July 0.1250 0.1200 0.1168 0.1133 0.1117 -
August 0.1250 0.1220 0.1168 0.1133 0.1117 -
September 0.1250 0.1220 0.1168 0.1133 0.1117 -
October 0.1250 0.1220 0.1168 0.1150 0.1117 -
November 0.1280 0.1220 0.1200 0.1150 0.1117 -
December(2) 0.1280 0.1220 0.1200 0.1150 0.1117 0.0427

-------------------------------------------------------------------------
$ 1.5000 $ 1.4500 $ 1.4044 $ 1.3599 $ 1.3200 $ 0.0427
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Monthly distributions are made to unitholders of record on the last
business day of each month and are paid within 31 days following each
month end.

(2) Distributions paid in 2001 are in respect of the 12 calendar days
from December 20, 2001 to December 31, 2001.

Tax Allocation of Distributions
-------------------------------------------------------------------------
2006 2005 2004 2003 2002

-------------------------------------------------------------------------

Dividend income 0.0% 0.0% 15.0% 19.5% 16.9%
Other income 100.0% 91.6% 75.2% 69.5% 71.5%
Return of capital 0.0% 8.4% 9.8% 11.0% 11.6%
-------------------------------------------------------------------------
Total distributions
for the period 100.0% 100.0% 100.0% 100.0% 100.0%
-------------------------------------------------------------------------

The above tax allocation of distributions for 2006 represents an
estimate based on the total expected distributions for the year ended
December 31, 2006. As a result of the July 2004 reorganization to a
trust-on-trust-on-partnership structure, the 2005 and 2006 distributions
do not have a dividend component.

Other Statistics
(in thousands, except per unit amounts)

Number of
Trading price range units Market
of units (TSX: "DHF.UN") Average outstanding capitalization
Quarter -------------------------- daily at quarter at quarter
ended High Low Close volume end end
-------------------------------------------------------------------------
2006 - Q4 $ 19.80 $ 13.80 $ 15.46 143 43,947 679,417
- Q3 19.49 17.21 19.19 96 43,947 843,339
- Q2 21.99 16.99 17.70 100 43,947 777,858
- Q1 23.18 19.50 21.50 61 37,921 815,297
2005 - Q4 24.00 16.32 23.19 92 37,921 879,383
- Q3 24.07 19.50 21.19 88 37,921 803,542
- Q2 22.85 19.58 20.92 61 37,921 793,303
- Q1 23.25 19.65 22.00 67 37,921 834,257
2004 - Q4 23.25 18.80 22.70 81 37,921 860,802
- Q3 19.62 16.75 19.45 58 37,921 737,559
- Q2 19.34 15.05 18.00 93 37,921 682,574
- Q1 19.40 16.71 19.40 92 37,921 735,663
2003 - Q4 17.50 15.10 17.45 67 37,921 661,718
- Q3 15.65 14.52 15.30 99 37,921 580,188
- Q2 15.20 12.91 15.00 82 37,921 568,812
- Q1 13.69 12.48 12.94 92 37,921 490,695
2002 - Q4 13.25 11.22 12.86 139 37,921 487,661
- Q3 12.13 10.45 12.10 165 37,921 458,842
- Q2 11.25 10.00 10.95 176 37,921 415,233
- Q1 11.20 10.11 10.51 149 18,955 199,217
>>

ABOUT DAVIS + HENDERSON

Davis + Henderson and its predecessors have been serving the Canadian
financial services industry since 1875. Through integrated service
offerings, Davis + Henderson is a market leader in providing programs to
customers who offer chequing account and lending services within Canada.
Davis + Henderson Income Fund is listed on the Toronto Stock Exchange,
symbol DHF.UN. Further information can be found in the disclosure
documents filed by Davis + Henderson Income Fund with the securities
regulatory authorities, available at www.sedar.com.
%SEDAR: 00017092EF

For further information: Bob Cronin, Chief Executive Officer, Davis + Henderson, Limited Partnership, (416) 696-7700, extension 5301, bob.cronin@dhltd.com; Catherine Martin, Chief Financial Officer, Davis + Henderson, Limited Partnership, (416) 696-7700, extension 5265, catherine.martin@dhltd.com