Davis + Henderson Reports First Quarter 2009 Results

Davis + Henderson reported solid financial results for the three months ended March 31, 2009.

First Quarter Highlights

    -   Revenue was $88.5 million, an increase of $1.1 million, or 1.3%, as
        compared to the same quarter in 2008. This increase was attributed to
        the inclusion of the Cyence business, acquired in December 2008.

    -   EBITDA(1) was $28.4 million, an increase of $1.3 million, or 4.8%, as
        compared to the same quarter in 2008.

    -   Adjusted income(1) was $22.9 million, an increase of $1.2 million, or
        5.7%, as compared to the same quarter in 2008.

    -   Net income was $19.2 million, an increase of $3.4 million, or 21.4%,
        as compared to the same quarter in 2008. Included in net income for
        the first quarter is a non-cash mark-to-market interest-rate swap
        loss of $0.2 million, as compared to a $2.3 million loss in the same
        quarter last year.

    -   Cash distributions declared were $0.4599 per unit compared to $0.4290
        per unit during the first quarter of 2008, a 7.2% increase.
    >>

Management Commentary

Overall, we are pleased with the results of the first quarter of 2009 in the context of a challenging economic environment. On a year-over-year basis, the Business reported increases in revenue (due to the inclusion of the acquired Cyence business), EBITDA and net income. Revenue growth for the quarter was below our long-term objective of 3% to 5% as the current economic conditions have affected fees related to our lending origination services (down 16% on a year over year basis), and have also reduced cheque order volumes related to small business consumers. These reductions were offset by the inclusion of revenues from our Cyence International acquisition, which was completed in late 2008. In response to these challenges, we implemented many expense reduction measures and, going forward, we will continue to be diligent in managing costs. We believe that the combination of our revenue base, business model and capital position will allow us to manage through these challenging economic conditions, which are expected to prevail for the remainder of 2009.

In addition, during the quarter, the Business continued to build on and evolve its programs to the chequing and lending accounts, invested in product progression, and is now benefiting from the expansion of its product offering as a result of the acquisition of Cyence International in late 2008.

For a more detailed discussion of first quarter results and management’s outlook and caution concerning forward-looking statements in this quarterly report, please see the Management’s Discussion and Analysis below.

    <<
    (1) Davis + Henderson reports several non-GAAP measures, including EBITDA
        and Adjusted income used above. Adjusted income is calculated as net
        income, adjusted to remove the non-cash impacts of certain fair value
        and purchase accounting items and future tax recoveries or expenses.
        These items are excluded in calculating Adjusted income as they are
        non-cash items and are not considered indicative of the financial
        performance of the Business for the period being reviewed. Any non-
        GAAP measures should be considered in context with the GAAP financial
        presentation and should not be considered in isolation or as a
        substitute for GAAP net earnings or cash flow. Further, Davis +
        Henderson's measures may be calculated differently from similarly
        titled measures of other companies. A reconciliation of these non-
        GAAP measures to related GAAP measures is included in the attachments
        to this quarterly report.
    >>

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 institution customers 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 objectives 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 first quarter ended March 31, 2009 via conference call at 10:00 a.m. EST (Toronto time) on Tuesday April 28, 2009. The number to use for this call is 416-644-3415 for Toronto area callers or 1-800-732-9303 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 21302775 followed by the number sign. The rebroadcast will be available until Tuesday May 12, 2009. 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 first quarter of 2009 should be read in conjunction with MD&A in Davis + Henderson Income Fund’s (the “Fund” or the “Company” or the “Business” or “Davis + Henderson”) Annual Report for the year ended December 31, 2008, dated February 24, 2009, and the attached interim unaudited consolidated financial statements. External economic and industry factors remain substantially unchanged from the annual MD&A and the Fund’s most recently filed Annual Information Form, 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 Davis + Henderson cheque supply program, to offer additional programs to serve the chequing and credit card accounts, and to deliver services and solutions 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 and/or credit card account include a deposit program, which is directed towards small business chequing account holders, and eSwitch(R), a service that allows financial institutions to more easily move electronic pre-authorized payments and direct deposit authorizations between chequing accounts or credit card accounts on behalf of account holders at the time of new account openings.

With the acquisition of Filogix in 2006, Davis + Henderson significantly expanded its offerings to the lending services market. Currently, Davis + Henderson, through Filogix, offers a comprehensive range of technology and other business solutions, which together the Company refers to as credit lifecycle management services. These offerings include technology, processing and professional services related to the mortgage, consumer, small business, commercial and industrial finance areas.

In 2007, changes were made to the Income Tax Act that will require certain income trusts, including the Fund, to pay taxes after fiscal 2010, similar to those paid by taxable Canadian corporations. The payment of such taxes will, in the future, reduce the cash flow of the Fund, thereby reducing the amount available for distribution to unitholders. Since the announcement of this change in tax legislation, management and the Trustees have monitored the changes in the income trust environment and capital markets and continue to review potential impacts on the Fund’s current strategies and the alternatives available to the Fund, consistent with protecting and enhancing unitholder value.

FINANCIAL INFORMATION PRESENTATION

The Fund operates in two business segments, the “Davis + Henderson or D+H Segment” and the “Filogix Segment”. The Davis + Henderson Segment includes the cheque supply program, deposit program, and eSwitch, among other offerings. The Filogix Segment includes services related to the origination and underwriting of mortgages in Canada, the personal property, search and registration (“PPSA”) program, and, with the addition of Cyence in late 2008, technology solutions related to consumer, small business, commercial and industrial finance loans, among other offerings. Corporate expenses have also been segmented and include expenditures related to public company activities, a share of executive corporate management costs, corporate development costs and certain other business-wide costs.

Effective December 31, 2008, the D+H Segment ceased providing service under a U.S. cheque supply contract. As a result, the 2008 revenues and expenses related to the U.S. operations have been removed from the operating results of continuing operations and have been reclassified as discontinued operations for the comparative prior periods presented.

OPERATING RESULTS FOR THE FIRST QUARTER – CONSOLIDATED

The following table is derived from and should be read in conjunction with, the Consolidated Statements of Income and includes non-GAAP measures. Management believes this supplementary disclosure provides useful additional information. See Non-GAAP Measures section for a discussion of non-GAAP terms used.

    <<
    Operating and Financial Results
    (in thousands of Canadian dollars, except per unit amounts, unaudited)

                                                                Three months
                                                              ended March 31,
                                                           2009         2008
    -------------------------------------------------------------------------
    Revenue                                          $   88,529   $   87,412
    Expenses                                             60,091       60,267
    -------------------------------------------------------------------------
    EBITDA(1)                                            28,438       27,145

    Amortization of capital assets
     and non-acquisition intangibles                      3,819        3,748
    Interest Expense                                      1,747        1,756
    -------------------------------------------------------------------------

    Adjusted income(1)                                   22,872       21,641

    Amortization of mark-to-market adjustment
     of interest-rate swaps                                 136          107
    Net unrealized loss (gain) on
     interest-rate swaps(2)                                 191        2,344
    Future income tax expense (recovery)                    (64)           -
    Amortization of intangibles from acquisition          3,374        3,448
    -------------------------------------------------------------------------
    Income from continuing operations                    19,235       15,742
    Income from discontinued operations(3)                    -           98
    -------------------------------------------------------------------------
    Net income                                       $   19,235   $   15,840
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted income per unit, basic and diluted(1)   $   0.5204   $   0.4924

    Net income per unit, basic and diluted           $   0.4377   $   0.3604
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                Three months
                                                              ended March 31,
                                                             2009 vs. 2008
                                                               % change
    -------------------------------------------------------------------------

    Revenue                                                             1.3%
    EBITDA(1)                                                           4.8%
    Adjusted income per unit(1)                                         5.7%
    Net income per unit                                                21.4%

    -------------------------------------------------------------------------
    (1) EBITDA and Adjusted income are non-GAAP terms. Please see Non-GAAP
        Measures section for a more complete description of these terms.
    (2) The Business enters into contracts to fix the interest rates on a
        significant portion of its outstanding bank debt. For accounting
        purposes, these interest-rate swaps are not considered hedges and,
        accordingly, any change in the fair value of these contracts is
        recorded through income. Provided the Business does not cancel its
        contracts, the amounts represent a non-cash unrealized gain or loss
        that will subsequently reverse through income.
    (3) Effective December 31, 2008, the Fund ceased providing services under
        a U.S. cheque supply contract. As a result, the U.S. operations
        related to the service of this contract have been classified as
        discontinued operations.
    >>

Revenue

Total consolidated revenue for the quarter ended March 31, 2009 was $88.5 million, an increase of $1.1 million, or 1.3%, compared to the same quarter in 2008. This increase reflects the inclusion of the results of the Cyence business acquired late in 2008, partially offset by a decrease within the D+H Segment and other areas within our Filogix Segment. Results for both segments are discussed in more detail in the sections that follow.

Expenses

On a consolidated basis, expenses for the first quarter of 2009 decreased by $0.2 million, or 0.3%, compared to the same quarter in 2008. The decrease was due to reduced costs related to company-wide cost reduction initiatives and decreases in business volume which in combination exceeded expense increases from the inclusion of the expense base of the Cyence business, as more fully described below.

Amortization of Capital and Non-acquisition Intangible Assets

Amortization of capital and non-acquisition intangible assets increased by $0.1 million when compared to the first quarter of 2008.

Other Expenses

Interest expense was substantially unchanged for the first quarter of 2009 compared to the same quarter in the prior year with the impact of an increase in the level of outstanding debt offset by lower interest rates. The Business partially financed its acquisition of Cyence by borrowing on its credit facility.

Amortization of mark-to-market adjustment of interest-rate swap refers to the amortization of net losses in fair market value of interest-rate swaps that were deferred prior to January 1, 2007. Commencing January 1, 2007, the Business no longer designated its interest-rate swaps as hedges for accounting purposes.

An unrealized loss on interest-rate swaps of $0.2 million was recognized in the first quarter of 2009 (Q1 2008 – $2.3 million), reflecting mark-to-market adjustments related to generally lower interest rates at March 31 as compared to December 31. These unrealized gains and losses are recognized in income as these swaps are not designated as hedges for accounting purposes. Provided the business does not cancel its contracts, the amounts represent a non-cash unrealized gain or loss that will subsequently reverse through income.

Income earned by the Business and distributed annually to unitholders is not subject to taxation in the Fund, but is taxed at the individual unitholder level. The Fund and its subsidiaries do not anticipate being subject to taxes until 2011, as long as all taxable income generated by the Fund is paid to unitholders in the form of distributions. In 2011 and subsequent years, the Fund will pay a tax on its income that is distributed to its unitholders at a rate similar to that paid by taxable corporations. However, the Fund does recognize future income tax assets and liabilities, with a corresponding impact on future income tax expense or recovery based on temporary differences expected to reverse after December 31, 2010 and for temporary differences in businesses in corporate form. These include the entities purchased with the acquisition of the Cyence business. In the first quarter of 2009, the Fund recorded a future tax recovery of $0.1 million (first quarter 2008 – nil).

Amortization of acquisition related intangibles for the first quarter of 2009 was comparable to the first quarter of 2008. The increase in amortization related to the incremental intangible assets arising on the acquisition of the Cyence business were offset by reductions related to certain intangible assets having become fully amortized.

Income from Discontinued Operations

Effective December 31, 2008, the Fund ceased providing services under a U.S. cheque supply contract. As a result, the 2008 operating results from the U.S. operations related to the service of this contract have been classified as discontinued operations. As the service commitments for the contract was primarily outsourced to a third party, the termination of this contract has not disrupted business operations.

Net Income

Net income of $19.2 million for the first quarter of 2009 increased by $3.4 million, or 21.4%, compared to the same period in 2008. On a per unit basis, net income per unit of $0.4377 increased by $0.0773 over the first quarter of 2008. Excluding the non-cash impacts of amortization of mark-to-market adjustments on interest-rate swaps, mark-to-market gains and losses on interest-rate swaps, future income taxes and amortization of intangibles from acquisitions, Adjusted income increased by $1.2 million, or 5.7%, in the first quarter of 2009 over the same period in the prior year.

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

    MDA - Business Segments

                                                                Three months
                                                              ended March 31,
    -------------------------------------------------------------------------
                             Davis + Henderson Segment       Filogix Segment
                             ------------------------- ----------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Revenue                       $  72,827  $  73,048  $  15,702  $  14,364
    Expenses                         48,031     48,604     11,181     11,071
    -------------------------------------------------------------------------
    EBITDA(1)                        24,796     24,444      4,521      3,293

    Amortization of capital
     assets and non-acquisition
     intangibles                      2,044      2,511      1,775      1,237
    Interest expense                      -          -          -          -
    -------------------------------------------------------------------------

    Adjusted income (loss)(1)        22,752     21,933      2,746      2,056

    Amortization of mark-to-market
     adjustment of
     interest-rate swaps                  -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps(2)            -          -          -          -
    Future income tax
     expense (recovery)                   -          -          -          -
    Amortization of intangibles
     from acquisition                   140        724      3,234      2,724
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      22,612     21,209       (488)      (668)
    Income (loss) from
     discontinued operations(3)           -         98          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  22,612  $  21,307  $    (488) $    (668)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                Three months
                                                              ended March 31,
    -------------------------------------------------------------------------
                                     Corporate Segment          Consolidated
                             ------------------------- ----------------------
                                       2009       2008        2009      2008
    -------------------------------------------------------------------------
    Revenue                       $       -  $       -  $   88,529 $  87,412
    Expenses                            879        592      60,091    60,267
    -------------------------------------------------------------------------
    EBITDA(1)                          (879)      (592)     28,438    27,145

    Amortization of capital
     assets and non-acquisition
     intangibles                          -          -       3,819     3,748
    Interest expense                  1,747      1,756       1,747     1,756
    -------------------------------------------------------------------------

    Adjusted income (loss)(1)        (2,626)    (2,348)     22,872    21,641

    Amortization of mark-to-market
     adjustment of
     interest-rate swaps                136        107         136       107
    Net unrealized loss (gain)
     on interest-rate swaps(2)          191      2,344         191     2,344
    Future income tax
     expense (recovery)                 (64)         -         (64)        -
    Amortization of intangibles
     from acquisition                     -          -       3,374     3,448
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      (2,889)    (4,799)     19,235    15,742
    Income (loss) from
     discontinued operations(3)           -          -           -        98
    -------------------------------------------------------------------------
    Net income (loss)             $  (2,889) $  (4,799) $   19,235 $  15,840
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EBITDA and Adjusted income are non-GAAP terms. Please see Non-GAAP
        Measures section for a more complete description of these terms.
    (2) The Business enters into contracts to fix the interest rates on a
        significant portion of its outstanding bank debt. For accounting
        purposes, these interest-rate swaps are not considered hedges and,
        accordingly, any change in the fair value of these contracts is
        recorded through income. Provided the Business does not cancel its
        contracts, the amounts represent a non-cash unrealized gain or loss
        that will subsequently reverse through income.
    (3) Effective December 31, 2008, the Fund ceased providing services under
        a U.S. cheque supply contract. As a result, the U.S. operations
        related to the service of this contract have been classified as
        discontinued operations.
    >>

Operating Results – D+H Segment

Revenue

Revenue within the Davis + Henderson Segment for the first quarter of 2009 decreased by $0.2 million, or 0.3%, compared with the same period in 2008. Revenue decreased due to lower cheque order volumes, particularly related to small business demand for our cheque products, substantially offset by annual program changes and product and service enhancements, such as IDefence(R) and BizAssist(R), which positively impacted revenues in the first quarter of 2009. Management believes that cheque orders from small business consumers were negatively impacted by the economic downturn, which in turn reduced cheque usage by existing businesses and reduced the number of small business start-ups. In general, management believes that the long-term historical trend related to cheque order decline is unchanged and is in the low single digits.

Expenses

Expenses within the Davis + Henderson Segment for the first quarter of 2009 decreased by $0.6 million, or 1.2%, compared to the same period in 2008. This decrease was primarily the result of reduced costs related to the decline in cheque order volumes, the implementation of expense reduction measures, and reduced compensation related to long-term compensation incentive plans. In addition, a greater proportion of executive corporate management costs and certain other business-wide costs have been allocated to the Corporate Segment, reflecting the centralization of selected corporate functions and a reallocation of resources to focus on corporate development activities.

Operating Results – Filogix Segment

Revenue

Revenue in the Filogix Segment for the first quarter of 2009 increased by $1.3 million, or 9.3%, over the same period in 2008. Revenue for the first quarter included the results of the Cyence business which was acquired in late 2008. Excluding the Cyence business, revenue decreased approximately 16% compared with the same period in 2008 primarily as a result of the reduced activities in the mortgage markets and, to a lesser extent, a decrease in revenues from project implementation and customization services. Increasingly, the Cyence business is being operated on an integrated basis within the Filogix Segment.

A significant component of the Filogix Segment revenue is derived from services related to the origination of mortgages. The volume of origination transactions is driven by new mortgages and, in the case of broker-originated transactions, also by refinancing and renewal of existing mortgages. As such, while the Filogix Segment revenue is impacted by changes in housing market activity; negative market impacts are partially mitigated by refinancing and renewal activity. Consistent with reduced activities in the real estate and mortgage markets, origination services revenues were down 16% compared to the same period last year. Revenues for the Cyence business were consistent with management’s expectations.

Expenses

Expenses for the Filogix Segment increased by $0.1 million, or 1.0%, in the first quarter of 2009 compared with the same period last year primarily due to the inclusion of the Cyence expense base, partially offset by expense reduction measures including fewer personnel and reduced variable partner fees, partially offset by higher fixed contract payments.

Operating Results – Corporate Segment

Expenses within the Corporate Segment increased by $0.3 million for the first quarter of 2009 compared with the same period in the prior year. The increase reflects centralization of selected corporate functions and an increase in corporate development activities.

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

                                       2009
                                         Q1         Q4         Q3         Q2
    -------------------------------------------------------------------------
    Revenue                       $  88,529  $  89,357  $  95,055  $  95,407
    Expenses                         60,091     62,413     61,664     61,334
    -------------------------------------------------------------------------
    EBITDA(1)                        28,438     26,944     33,391     34,073

    Amortization of capital
     assets and non-acquisition
     intangibles                      3,819      3,800      4,219      3,771
    Interest expense                  1,747      1,647      1,690      1,754
    Minority interest                     -          -          -          -
    -------------------------------------------------------------------------
    Adjusted income(1)               22,872     21,497     27,482     28,548

    Amortization of
     mark-to-market adjustment
     of interest-rate swaps             136        151        151        152
    Net unrealized loss (gain)
     on interest-rate swaps(2)          191      3,653        728     (1,034)
    Future income tax
     expense (recovery)                 (64)       399         52        766
    Amortization of intangibles
     from acquisition                 3,374      3,409      3,412      3,447
    -------------------------------------------------------------------------
    Income from continuing
     operations                      19,235     13,885     23,139     25,217
    Income from discontinued
     operations(3)                        -         51        167        149
    -------------------------------------------------------------------------
    Net income                    $  19,235  $  13,936  $  23,306  $  25,366
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted income per unit,
     basic and diluted(1)         $  0.5204  $  0.4892  $  0.6253  $  0.6496

    Net income per unit,
     basic and diluted            $  0.4377  $  0.3171  $  0.5303  $  0.5772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                       2008                             2007
                                         Q1         Q4         Q3         Q2
    -------------------------------------------------------------------------
    Revenue                       $  87,412  $  88,641  $  92,724  $  99,250
    Expenses                         60,267     62,075     61,695     64,450
    -------------------------------------------------------------------------
    EBITDA(1)                        27,145     26,566     31,029     34,800

    Amortization of capital
     assets and non-acquisition
     intangibles                      3,748      3,970      3,809      3,670
    Interest expense                  1,756      1,713      1,819      1,945
    Minority interest                     -       (139)       205        204
    -------------------------------------------------------------------------
    Adjusted income(1)               21,641     21,022     25,196     28,981

    Amortization of
     mark-to-market adjustment
     of interest-rate swaps             107        163        163        176
    Net unrealized loss (gain)
     on interest-rate swaps(2)        2,344        823        957     (2,196)
    Future income tax
     expense (recovery)                   -        137          -      1,454
    Amortization of intangibles
     from acquisition                 3,448      3,386      3,347      3,271
    -------------------------------------------------------------------------
    Income from continuing
     operations                      15,742     16,513     20,729     26,276
    Income from discontinued
     operations(3)                       98        109        147        244
    -------------------------------------------------------------------------
    Net income                    $  15,840  $  16,622  $  20,876  $  26,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted income per unit,
     basic and diluted(1)         $  0.4924  $  0.4783  $  0.5733  $  0.6595

    Net income per unit,
     basic and diluted            $  0.3604  $  0.3782  $  0.4750  $  0.6035
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) EBITDA and Adjusted income are non-GAAP terms. Please see Non-GAAP
        Measures section for a more complete description of these terms.
    (2) The Business enters into contracts to fix the interest rates on a
        significant portion of its outstanding bank debt. For accounting
        purposes, these interest-rate swaps are not considered hedges and,
        accordingly, any change in the fair value of these contracts is
        recorded through income. Provided the Business does not cancel its
        contracts, the amounts represent a non-cash unrealized gain or loss
        that will subsequently reverse through income.
    (3) Effective December 31, 2008, the Fund ceased providing services under
        a U.S. cheque supply contract. As a result, the U.S. operations
        related to the service of this contract have been classified as
        discontinued operations.
    >>

Historically, the Fund has generally reported quarterly revenues that are stable and growing when measured on a year-over-year basis. Measured on a quarter-over-quarter basis, revenues can vary as they are subject to seasonality and are generally stronger in the second and third quarter of each year. The quarterly results in 2007 and 2008 were additionally impacted by (1) for the first three quarters of 2007, higher than expected cheque order volume, and (2) stronger mortgage origination fees. As a result of the change in cheque reorder patterns in 2007, management believes that the Business received fewer cheque orders in the first two quarters of 2008 than would normally be expected. The Business also experienced reduced mortgage origination fees and lower volumes as it relates to small business demand for our cheque order products beginning in the later part of 2008 and continuing into the first quarter of 2009.

Adjusted income per unit has generally been trending consistently with changing revenue. Net income has been more variable as it has been significantly affected by the variability in the changes in non-cash items such as mark-to-market adjustments on interest rate swaps and future income tax provisions.

CASH FLOW AND LIQUIDITY

The following table is derived from, and should be read in conjunction with, the Consolidated Statements of Cash Flows and includes non-GAAP measures. Management believes this supplementary disclosure provides useful additional information related to the cash flows of the Fund, repayment of debt and other investing activities. See Non-GAAP Measures section for a discussion of non-GAAP terms used.

    <<
    Summary of Cash Flows(1)
    (in thousands of Canadian dollars, unaudited)

                                                          Three months ended
                                                         March 31,  March 31,
                                                             2009       2008
    -------------------------------------------------------------------------

    Cash flows from operating activities                $  13,015  $  16,523

    Add:
      Changes in non-cash working capital
       and other items(2)                                  13,676      9,037
    -------------------------------------------------------------------------

    Adjusted cash flows from operating activities          26,691     25,560

    Less:
      Maintenance asset expenditures(3)                     1,302      1,017
      Growth asset expenditures(3)                            544          -
      Contract payments(4)                                  2,517      1,517
    -------------------------------------------------------------------------

    Adjusted cash flows after capital expenditures and
     contract payments(3)                                  22,328     23,026

    Less:
      Distributions paid to unitholders                    20,211     18,853
    -------------------------------------------------------------------------
                                                            2,117      4,173

    Cash flows used in acquisition
     of Cyence business                                        60          -
    Cash flows used in other acquisitions                       -     (4,250)
    Changes in non-cash working capital and
     other items(2)                                       (13,676)    (9,037)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash
     equivalents for the period                         $ (11,499) $  (9,114)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The subtotals in this table are not consistent with GAAP and
        accordingly are considered non-GAAP measures. Please see Non-GAAP
        Measures section for a more complete discussion of non-GAAP terms.
    (2) Changes in non-cash working capital and certain other balance sheet
        items have been excluded from adjusted 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. For details, see the
        Changes in Non-Cash Working Capital and Other Items section.
    (3) Maintenance asset expenditures are defined by the Fund as asset
        expenditures necessary to maintain and sustain the current productive
        capacity of the Business or generally improve the efficiency of the
        Business. Growth asset expenditures are defined by the Fund as asset
        expenditures that increase the productive capacity of the Business
        with a reasonable expectation of an increase in cash flow.
    (4) The Business has various payment obligations under customer and
        partner contracts, which include fixed contract or program initiation
        payments and annual payments payable over the life of the contract.
        The aggregate of all contract payments, both fixed and variable,
        reflects, among other things, the high degree of integration and
        sharing between Davis + Henderson its customers and partners of
        the many activities related to ordering, data handling, customer
        service, customer access and other activities.

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

                                `                         Three months ended
                                          March 31,    March 31,
                                              2009         2008     % change
    -------------------------------------------------------------------------
    Adjusted cash flows from operating
     activities                         $   0.6073   $   0.5816         4.4%
    Adjusted cash flows after capital
     expenditures and contract payments $   0.5081   $   0.5240        -3.0%
    Distributions paid to unitholders   $   0.4599   $   0.4290         7.2%
    Cash distributions declared during
     period                             $   0.4599   $   0.4290         7.2%
    -------------------------------------------------------------------------

    Cash Flows, Income and Distributions Paid

    The following table compares cash flows from operating activities and
    income to distributions paid:
                                      Three months         Year         Year
                                             ended        ended        ended
    (in thousands of Canadian dollars,    March 31, December 31, December 31,
     unaudited)                               2009         2008         2007
    -------------------------------------------------------------------------

    Cash flows from operating
     activities                         $   13,015   $  116,062   $  117,401

    Net income                          $   19,235   $   78,448   $   82,239

    Adjusted income(1)                  $   22,872   $   99,168   $   96,499

    Distributions paid during period    $   20,211   $   78,580   $   78,357

    Excess (shortfall) of cash flows
     from operating activities over
     cash distributions paid            $   (7,196)  $   37,482   $   39,044

    Excess (shortfall) of net income
     over cash distributions paid       $     (976)  $     (132)  $    3,882

    Excess (shortfall) of adjusted
     income over cash distributions
     paid                               $    2,661   $   20,588   $   18,142
    -------------------------------------------------------------------------
    (1) Adjusted income is a non-GAAP term. See Non-GAAP Measures section for
        a more complete description of this term.
    >>

Historically, excess cash flows from operating activities over cash distributions paid have been used to fund capital expenditures, pay down debt and to fund acquisitions. In the first quarter of 2009, cash flow from operating activities was less than cash distributions paid as $13.8 million of cash was applied to fund reductions in non-cash working capital. The application of this cash largely reflects the reversing of the growth in cash balances from the fourth quarter of 2008, and also includes payments made pursuant to multi-year incentive compensation plans.

Expenditures on Capital Assets and Contract Payments

Total capital asset expenditures for the first quarter of 2009 were $1.8 million, an increase of $0.8 million compared to the same period in 2008. The Filogix Segment expenditures increased $1.4 million over the same period last year, while the Davis + Henderson Segment expenditures were down $0.6 million. Additionally, fixed contract payments related to Filogix partners increased in the first quarter of 2009. The net increase over 2008, relates to the timing of capital project expenditures, and does not reflect a change in the expected overall capital expenditures program for the year.

The level of investment in 2009, for both capital assets and contract payments that is required to maintain, sustain and grow the productive capacity of the Business, is expected to be in the range of $12.0 million to $14.0 million, similar to the level of expenditures made in fiscal 2008. The Business’ capital program provides for continued expenditures to be funded by cash flows from operations.

Distributions

The Trustees of the Fund establish distribution levels of the Fund with reference to its financial position, the historical results, projected performance of the business and funds required for potential acquisitions. The Fund intends to make monthly cash distributions of its adjusted cash flows after capital asset and contract expenditures, subject to working capital requirements, debt repayments and other reserves.

The Fund paid cash distributions of $20.2 million ($0.4599 per unit) during the first quarter of 2009 compared to $18.9 million ($0.4290 per unit) in the same period in 2008, an increase of 7.2%.

On an annualized basis, the monthly cash distribution rate for March 2009 was $1.84 per unit as compared to $1.72 per unit annualized in March 2008, representing an increase of 7.0%.

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. In the first quarter of 2009, these amounts were the same.

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. Historically, Davis + Henderson has paid distributions below the level of adjusted cash flows after capital asset and contract expenditures generated and has not paid taxes as the Business had excess tax deductions available to eliminate taxable income.

The estimated tax allocation of distributions to be declared for 2009 is 100% “other income”, as was the case for all of 2008.

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 March 31, 2009 and December 31, 2008, 43,946,792 trust units were outstanding.

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

                                                          Three months ended
                                                        March 31,   March 31,
                                                            2009        2008
    -------------------------------------------------------------------------
    Decrease (increase) in non-cash working
     capital items                                    $  (13,885)  $  (9,092)
    Decrease (increase) in other operating assets and
     liabilities                                             209          55
    -------------------------------------------------------------------------
    Decrease (increase) in non-cash working capital
     and other items                                  $  (13,676)  $  (9,037)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

The increase in non-cash working capital items for the first quarter of 2009 was primarily related to decreases in payables reflecting normal course timing differences of when payments are made, to payments under certain multi-year compensation programs and to severance payments made during the quarter. Most of the reduction in payables reflects a reversal of the growth in payables in the fourth quarter of 2008.

Cash Balances and Long-term Indebtedness

At March 31, 2009, cash and cash equivalents totalled $0.6 million, compared to $12.1 million at December 31, 2008. This decrease relates primarily to the reduction of non-cash working capital as described above.

Total debt facilities available at March 31, 2009 were $170.0 million and included a $120.0 million non-revolving term loan and a $50.0 million revolving term credit facility. As of March 31, 2009, the Business had drawn $120.0 million under the non-revolving term loan and $28.0 million under the revolving term credit facility. The Business is permitted to draw on the revolving facility’s available balance of $22.0 million to fund capital expenditures or for other general purposes.

The Credit Agreement 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 March 31, 2009, the Fund had interest-rate swap hedge contracts in place with certain of its lenders, such that the borrowing rates on 81.1% of outstanding indebtedness are effectively fixed at the interest rates and for the time periods ending as follows:

    <<
    (in thousands of Canadian dollars, unaudited)
    -------------------------------------------------------------------------
                                      Fair value of interest-rate swaps
                                      ---------------------------------
    Maturity Date               Notional                            Interest
                                  Amount      Asset      Liability    Rate(1)
    -------------------------------------------------------------------------

    July 15, 2009            $   20,000     $    -      $     396      5.688%

    July 15, 2010                33,000          -          2,034      5.690%

    January 5, 2011              22,000          -            483      2.855%

    June 15, 2011                20,000          -          1,794      5.560%

    June 15, 2011                25,000          -          2,243      5.560%
    -------------------------------------------------------------------------
                             $  120,000     $    -      $   6,950
    -------------------------------------------------------------------------
    (1) The listed interest rates are inclusive of bankers' 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.
    >>

As at March 31, 2009, the Fund would have to pay the fair value of $6.9 million, the liability on the balance sheet if it were to close out the interest-rate swap contracts. It is not the present intention of management to close out these contracts. The Fund expects to continue to enter into interest-rate swaps for the purpose of hedging interest rates.

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 bankers’ 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 4.45% as at March 31, 2009.

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, asset expenditures, contractual obligations and anticipated distributions. The Company believes that its customers, suppliers and lenders, while impacted by the current economic recession, will continue to operate with the Company on similar terms to those currently in place. As well, while the Company’s products and services will be impacted by the changing economic environment, the Company expects to remain profitable and generate positive cash flow. The Company has expanded into the lending services marketplace over the past several years through acquisitions and we expect to continue to use an acquisition strategy to expand in the future. Weak capital and credit markets may negatively impact the Company’s ability in the near term to expand by way of acquisition.

Non-GAAP Measures

The information presented within the above tables include certain adjusted financial measures such as Earnings before income taxes, depreciation and amortization (“EBITDA”) and “Adjusted income” (net income before certain non-cash charges), “Adjusted cash flow after capital expenditures and contract payments”, all of which are not defined terms under Canadian generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are derived from, and should be read in conjunction with, the Consolidated Statements of Income and the Consolidated Statements of Cash Flow. Management believes these supplementary disclosures provide useful additional information related to the operating results of the Fund.

Management uses these subtotals as measures of financial performance and as a supplement to the Consolidated Statements of Income and Consolidated Statements of Cash Flow. 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 Consolidated Statements of Income or other GAAP statements. Further, the Fund’s method of calculating each balance may not be comparable to calculations used by other income trusts bearing the same description.

EBITDA

In addition to its use by management as an internal measure of financial performance, EBITDA is used to measure (with adjustments) compliance with certain financial covenants under the Fund’s credit facility. EBITDA is also widely used by the Fund and others in assessing performance and value of a business. EBITDA has limitations as an analytical tool, and the reader should not consider it in isolation or as a substitute for analysis of results as reported under GAAP.

Adjusted Income

Adjusted income is used as a measure of internal performance similar to net income, but is calculated after removing the non-cash impacts of certain fair value and purchase accounting items and future tax recoveries or expenses. These items are excluded in calculating adjusted income as they are non-cash items and not considered indicative of the financial performance of the Business for the period being reviewed.

    <<
    Adjusted Cash Flows from Operating Activities and Adjusted Cash Flows
    after Capital Expenditures and Contract Payments
    >>

Certain subtotals presented within the cash flows table above, such as “Adjusted cash flows from operating activities” and “Adjusted cash flows after capital expenditures and contract payments”, are not defined terms under GAAP. Management uses these subtotals as measures of internal performance and as a supplement to the Consolidated Statements of Cash Flows.

CHANGES IN ACCOUNTING POLICY

The Fund reviews all revisions to the Canadian Institute of Chartered Accountants (“CICA”) Handbook when issued. All revisions are considered and applied by the effective date or earlier if practical. Effective January 1, 2009, the Fund adopted CICA Handbook Section 3064, Goodwill and Intangible Assets. This section, which replaces Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. The provisions relating to the definition and initial recognition of intangible assets are equivalent to the corresponding provision of International Financial Reporting Standard IAS 38, Intangible Assets. The new standard also provides guidance for the recognition of internally developed intangible assets, including assets developed from research and development activities, ensuring consistent treatment of all intangible assets, whether separately acquired or internally developed. The Fund has evaluated the impact of adopting Section 3064 and has reclassified all software and its related amortization from capital assets to intangible assets.

Future Accounting and Reporting Changes

International Financial Reporting Standards – The Accounting Standards Board of Canada (AcSB) plans to converge Canadian GAAP for publicly accountable enterprises with International Financial Reporting Standards (IFRS) over a transition period that will end effective January 1, 2011 with the adoption of IFRS. The AcSB announced on February 13, 2008 that IFRS will be required in 2011 for publicly accountable profit-oriented enterprises. The changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Fund is in the process of establishing a changeover plan to convert to these new standards according to the timetable set with these new rules. An implementation team has been created, and third party advisors have been engaged to provide training to staff. The implementation team has started the process of assessing accounting policy choices and elections that are allowed under IFRS. The Fund is also assessing the impact of the conversion on business activities including the effect on information technology and data systems, internal controls over financial reporting and disclosure controls. The Fund will continually review and adjust the changeover plan to ensure the implementation process properly addresses the key elements of the plan.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS

The Fund and its subsidiaries have designed and maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported within the time periods specified in the Canadian Securities Administrators’ rules and forms.

The Fund and its subsidiaries have also designed and maintain a set of internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with Canadian GAAP.

There have been no changes in the Fund’s internal controls over financial reporting during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

OUTLOOK

Davis + Henderson’s overall long-term objective is to deliver stable and modestly growing cash distributions through growing revenue in the 3% to 5% range and maintaining margins.

Revenues, earnings and cash flow over the past two years have been more variable than those experienced historically due to (1) changes in the imaging standards on cheques in Canada that affected the D+H cheque reordering cycle, and (2) dramatic growth followed by cyclical contraction within the real estate and mortgage origination market. More recently, the Business has been operating in a recessionary environment. Historically, it has not been the Business’ experience that cheque order volumes, which currently contribute approximately 80% of the consolidated revenues of the overall Business, vary significantly with changes in the economic environment. However, the Company believes that the current, more dramatic recessionary period has reduced the demand for small business cheque orders. Revenues related to small business cheque orders represent approximately 40% of consolidated revenues. As well, the Business’ revenues from mortgage origination fees have been impacted by changes in the real estate and mortgage markets and the slowing economic activity. In 2008, origination services revenue represent approximately 13% of the consolidated revenues of the Business.

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.

Management’s operational plans include many initiatives which, when combined, are intended to allow the Fund to meet its objective. Examples include further implementations and enhancements of IDefence, BizAssist and eSwitch programs. Relating to lending markets, the Business looks to grow revenues related to services directed toward underwriting activities, PPSA activities and, generally, the inclusion of and growth of services attributable to the newly acquired Cyence business.

The Business’ capital program provides for continued expenditures to be funded by cash flows from operations. The 2009 capital program is expected to be in the range of $12.0 million to $14.0 million as compared to $13.4 million and $15.5 million in 2008 and 2007, respectively.

As we move through 2009, it is apparent that the economic environment is likely to continue to be difficult. This in turn will affect our revenues related to lending origination and underwriting services, and will likely continue to have some impact on our cheque program as it relates to small business demand for our products. Throughout 2008 and into 2009, we implemented many expense reduction measures, and going forward we will continue to be diligent in managing costs. In summary, we believe the combination of our revenue base, business model and capital structure positions the Business to deal with the challenges we face.

Changes made to the Income Tax Act require certain income trusts, including the Fund, to pay taxes after fiscal 2010, similar to those paid by taxable Canadian corporations. The payment of such taxes will, in the future, reduce the cash flow of the Fund, thereby reducing the amount available for distributions to unitholders. Since the announcement of this change in tax legislation, management and the Trustees have monitored the changes in the income trust environment and capital markets and continue to review potential impacts on the Fund’s current strategies and the alternatives available to the Fund, consistent with protecting and enhancing unitholder value.

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 institution customers and dependence on their acceptance of new programs; strategic initiatives being undertaken to meet the Fund’s financial objective; stability and growth in the real estate and mortgage markets; 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.

    <<
    CONSOLIDATED BALANCE SHEETS
    (in thousands of Canadian dollars, unaudited)

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    ASSETS
    Current assets:
      Cash and cash equivalents                    $       567   $    12,066
      Accounts receivable                               19,304        16,180
      Inventory (note 3)                                 4,571         4,475
      Prepaid expenses                                   3,262         2,813
    -------------------------------------------------------------------------
                                                        27,704        35,534

    Future income tax asset (note 12)                    2,894         3,162
    Capital assets (note 4)                             19,878        20,464
    Other assets (note 5)                                1,082         1,082
    Intangible assets (note 6)                         140,902       144,675
    Goodwill (note 7)                                  459,037       458,989
    -------------------------------------------------------------------------
                                                   $   651,497   $   663,906
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities     $    30,707   $    40,827
      Distributions payable to unitholders               6,737         6,737
      Current portion of disbursement obligations
       on customer contracts (note 8)                       20         1,537
    -------------------------------------------------------------------------
                                                        37,464        49,101

    Disbursement obligations on customer
     contracts (note 8)                                     30            30
    Long-term indebtedness (note 9)                    147,400       147,331
    Interest-rate swaps (note 10)                        6,950         6,759
    Other long-term liabilities (note 11)                  952           812
    Future income tax liability (note 12)                9,872        10,204
    -------------------------------------------------------------------------
                                                       202,668       214,237

    Unitholders' equity:
      Trust units (note 13)                            476,343       476,343
      Deficit                                          (26,690)      (25,714)
      Accumulated other comprehensive income
       (loss)                                             (824)         (960)
    -------------------------------------------------------------------------
                                                       448,829       449,669

    Commitments (note 15)
    -------------------------------------------------------------------------
                                                   $   651,497   $   663,906
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.

    CONSOLIDATED STATEMENTS OF INCOME
    (in thousands of Canadian dollars, except per unit amounts, unaudited)

                                                          Three months ended
                                                      March 31,     March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Revenue                                        $    88,529   $    87,412
    Cost of sales and operating expenses (note 3)       60,401        60,701
    Amortization of capital assets                       1,098           982
    -------------------------------------------------------------------------
                                                        27,030        25,729

    Interest expense                                     1,883         1,863
    Net unrealized loss (gain) on interest-rate
     swaps                                                 191         2,344
    Amortization of intangible assets                    5,785         5,780
    -------------------------------------------------------------------------
    Income from continuing operations before
     income taxes                                       19,171        15,742
    Future income tax expense (recovery)                   (64)            -
    -------------------------------------------------------------------------
    Income from continuing operations                   19,235        15,742
    Income from discontinued operations (note 18)            -            98
    -------------------------------------------------------------------------
    Net income                                     $    19,235   $    15,840
    -------------------------------------------------------------------------
    Net income per unit, basic and diluted         $    0.4377   $    0.3604
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (in thousands of Canadian dollars, unaudited)

                                                          Three months ended
                                                      March 31,     March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Net income                                     $    19,235   $    15,840

    Other comprehensive income:
    Amortization of mark-to-market adjustment of
     interest-rate swaps                                   136           107
    -------------------------------------------------------------------------
    Total comprehensive income                     $    19,371   $    15,947
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.

    CONSOLIDATED STATEMENTS OF DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE
    INCOME (LOSS)
    (in thousands of Canadian dollars, unaudited)

                                                          Three months ended
                                                      March 31,     March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    DEFICIT
    Deficit, beginning of period                   $   (25,714)  $   (23,371)
    Net income                                          19,235        15,840
    Distributions                                      (20,211)      (18,853)
    -------------------------------------------------------------------------
    Deficit, end of period                             (26,690)      (26,384)
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
    Accumulated other comprehensive income (loss),
     beginning of period                                  (960)       (1,521)
    Other comprehensive income:
    Amortization of mark-to-market adjustment
     of interest-rate swaps                                136           107
    -------------------------------------------------------------------------
    Accumulated other comprehensive income
     (loss), end of period                                (824)       (1,414)
    -------------------------------------------------------------------------

    Deficit and accumulated other comprehensive
     income (loss), end of period                  $   (27,514)  $   (27,798)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands of Canadian dollars, unaudited)

                                                          Three months ended
                                                      March 31,     March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Cash and cash equivalents provided by (used in):

    OPERATING ACTIVITIES
    Net income                                     $    19,235   $    15,840
    Add:
      Amortization of capital assets                     1,098         1,040
      Amortization of capital assets included
       in cost of sales                                    310           434
      Amortization of intangible assets                  5,785         5,795
      Amortization of mark-to-market adjustment
       of interest-rate swaps                              136           107
      Net unrealized loss (gain) on interest-rate
       swaps                                               191         2,344
      Future income tax expense (recovery)                 (64)            -
    -------------------------------------------------------------------------
                                                        26,691        25,560

    Decrease in non-cash working capital items         (13,885)       (9,092)
    Changes in other operating assets and
     liabilities                                           209            55
    -------------------------------------------------------------------------
                                                        13,015        16,523
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Distributions paid to unitholders                  (20,211)      (18,853)
    -------------------------------------------------------------------------
                                                       (20,211)      (18,853)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Expenditures on capital assets,
     non-acquisition intangible assets and
     long term contracts                                (4,363)       (2,534)
    Acquisition of businesses (note 2)                      60        (4,250)
    -------------------------------------------------------------------------
                                                        (4,303)       (6,784)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash
     equivalents for the period                        (11,499)       (9,114)
    Cash and cash equivalents, beginning of period      12,066        13,148
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period       $       567   $     4,034
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
      Cash interest paid                           $     1,100   $     1,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these consolidated
    financial statements.

    Notes to Consolidated Financial Statements
    Three months ended March 31, 2009 and 2008
    (in thousands of Canadian dollars, except unit and per unit amounts,
    unaudited)

    1.  SIGNIFICANT ACCOUNTING POLICIES

    The consolidated financial statements have been prepared using accounting
    policies generally accepted in Canada and follow the same accounting
    policies and their method of application as the Fund's consolidated
    financial statements for the year ended December 31, 2008, which are
    included in the 2008 Annual Report along with changes in accounting
    policies that became effective January 1, 2009. They do not conform in
    all respects with disclosures required for annual financial statements
    and should be read in conjunction with the audited consolidated financial
    statements of the Fund for the year ended December 31, 2008.

    2.  ACQUISITIONS

    a. Cyence Business

    On December 19, 2008, the Fund completed an agreement to acquire a 100%
    interest in Cyence International Inc., an international provider of
    credit lifecycle management software and service solutions to financial
    institutions in Canada, United States and Australia. The assets acquired
    and consideration given were as follows:

    Net assets acquired, at fair value:
      Assets                                                     $     5,092
      Intangible assets                                               24,800
      Liabilities                                                     (9,920)

    -------------------------------------------------------------------------
                                                                      19,972
    Goodwill                                                          17,844

    -------------------------------------------------------------------------
    Total                                                        $    37,816
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consideration for 100% ownership:
      Cash                                                       $    37,816
    -------------------------------------------------------------------------
    Total                                                        $    37,816
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The purchase price and related transaction costs were financed with
    $28 million from the drawdown of the existing credit facility, and the
    balance from cash on hand. The Fund has not completed its assessment and
    valuation of the assets acquired and liabilities assumed for this
    acquisition. As a result, the amount of the purchase price in excess of
    the carrying value of the acquired assets and liabilities has not been
    fully allocated to the acquired assets and liabilities in the
    consolidated balance sheet.

    The results of the Cyence operations have been reported as part of the
    Filogix Segment for segment reporting purposes.

    b. AVS Business

    On April 28, 2005, the Fund entered into an agreement to acquire a 50%
    interest in AVS L.P. 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. Total
    consideration paid for the 75% interest in the AVS business was
    $11.1 million of which $3.5 million was allocated to intangible assets,
    $7.2 million to goodwill and the remaining balance to net assets.

    Effective January 2, 2008, the Fund acquired the remaining 25% of
    interest in the AVS business for a consideration of $4.2 million of which
    $1.4 million was allocated to intangible assets, $2.7 million to
    goodwill, and the remaining balance to net assets.

    Each step acquisition was made with available cash on hand.

    3.  INVENTORY

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    Raw materials                                  $     2,066   $     1,988
    Work-in-process                                      1,472         1,503
    Finished goods                                       1,033           984
    -------------------------------------------------------------------------
                                                   $     4,571   $     4,475
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Raw materials primarily consist of paper but also include foil, hologram
    and ink. Work-in-process consists of base stock which refers to sheets of
    cheque stock with non-personalized background print. Finished goods
    primarily consist of retail products, labels, accessories and security
    bags.

    Inventory that was recognized as cost of sales during the three months
    ended March 31, 2009 was $10,467 (Q1 2008 - $12,488). The amount of
    write-down of inventories recognized as an expense during the three
    months ended March 31, 2009 was $43 (Q1 2008 - $87).

    4.  CAPITAL ASSETS

                                                              March 31, 2009
    -------------------------------------------------------------------------
                                                   Accumulated
                                            Cost  amortization           Net
    -------------------------------------------------------------------------
    Machinery and equipment          $    15,600   $     8,803   $     6,797
    Computer equipment                    17,594         6,778        10,816
    Furniture, fixtures and leasehold
     improvements                          8,781         6,516         2,265
    -------------------------------------------------------------------------
                                     $    41,975   $    22,097   $    19,878
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                           December 31, 2008
    -------------------------------------------------------------------------
                                                   Accumulated
                                            Cost  amortization           Net
    -------------------------------------------------------------------------
    Machinery and equipment          $    15,589   $     8,609   $     6,980
    Computer equipment                    18,492         7,439        11,053
    Furniture, fixtures and leasehold
     improvements                          9,048         6,617         2,431
    -------------------------------------------------------------------------
                                     $    43,129   $    22,665   $    20,464
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Commencing January 1, 2009, in accordance with Section 3064, Goodwill and
    Intangible Assets, the Fund reclassified software costs previously
    recorded in capital assets to intangible assets. Accordingly, net book
    value of $10,816 at December 31, 2008 was reclassified from computer
    equipment and software to intangible assets.

    Amortization during the three months ended March 31, 2009 was $1,408
    (Q1 2008 - $1,474), of which $310 was included in cost of sales
    (Q1 2008 - $434). For the three months ended March 31, 2008, amortization
    of $1,426 was reclassified from capital assets to intangible assets.
    Fully amortized capital assets removed from the accounts during the three
    months ended March 31, 2009 were $1,973 (Q1 2008 - $4,143).

    5.  OTHER ASSETS

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    Investments                                    $     1,000   $     1,000
    Other                                                   82            82
    -------------------------------------------------------------------------
                                                   $     1,082   $     1,082
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Commencing January 1, 2009, the Fund reclassified long-term supply
    contracts previously recorded in other assets to intangible assets.
    Accordingly, net book value of $3,347 at December 31, 2008 was
    reclassified from other assets to intangible assets.

    On December 19, 2008, the Fund acquired a portfolio investment in a
    technology services company for a cash consideration of $1 million. This
    investment has been accounted for using the cost method.

    6.  INTANGIBLE ASSETS

                     Three months ended March 31, 2009
    ---------------------------------------------------
                       Contracts              Software
                      ----------- ---------------------
                                            Internally
                                  Purchased  Developed
    ---------------------------------------------------
    Cost
    At January 1, 2009  $  8,761   $ 21,727   $ 10,676
    Additions              1,000        482        535
    Other movements(1)    (3,162)    (2,516)    (1,508)
    ---------------------------------------------------
    At March 31, 2009   $  6,599   $ 19,693   $  9,703
    ---------------------------------------------------
    ---------------------------------------------------

    Amortization and
     impairment loss
    At January 1, 2009  $  5,414   $ 17,393   $  4,194
    Amortization             917      1,074        421
    Other movements(1)    (3,162)    (2,516)    (1,503)
    ---------------------------------------------------
    At March 31, 2009   $  3,169   $ 15,951   $  3,112
    ---------------------------------------------------
    ---------------------------------------------------

    Net carrying amount
    At March 31, 2009   $  3,430   $  3,742   $  6,591
    At December 31,
     2008               $  3,347   $  4,334   $  6,482
    ---------------------------------------------------
    ---------------------------------------------------

                                           Three months ended March 31, 2009
    -------------------------------------------------------------------------
                                        Acquisition of businesses      Total
                      -------------------------------------------- ----------
                                                         Customer
                                  Proprietary    Brand   relation-
                       Contracts     software    names      ships
    -------------------------------------------------------------------------
    Cost
    At January 1, 2009  $  1,201   $ 56,093   $ 10,900   $107,064   $216,422
    Additions                  -          -          -          -      2,017
    Other movements(1)         -       (193)         -    (16,329)   (23,708)
    -------------------------------------------------------------------------
    At March 31, 2009   $  1,201   $ 55,900   $ 10,900   $ 90,735   $194,731
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization and
     impairment loss
    At January 1, 2009  $    864   $ 11,017   $  1,452   $ 31,413   $ 71,747
    Amortization             140      1,397        182      1,654      5,785
    Other movements(1)         -       (193)         -    (16,329)   (23,703)
    -------------------------------------------------------------------------
    At March 31, 2009   $  1,004   $ 12,221   $  1,634   $ 16,738   $ 53,829
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net carrying amount
    At March 31, 2009   $    197   $ 43,679   $  9,266   $ 73,997   $140,902
    At December 31,
     2008               $    337   $ 45,076   $  9,448   $ 75,651   $144,675
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                     Three months ended March 31, 2008
    ---------------------------------------------------
                       Contracts              Software
                      ----------- ---------------------
                                            Internally
                                  Purchased  Developed
    ---------------------------------------------------
    Cost
    At January 1, 2008  $ 12,581   $ 20,509   $ 10,230
    Additions                  -         48        577
    Other movements(1)    (3,718)    (1,742)    (2,470)
    ---------------------------------------------------
    At March 31, 2008   $  8,863   $ 18,815   $  8,337
    ---------------------------------------------------
    ---------------------------------------------------

    Amortization and
     impairment loss
    At January 1, 2008  $  6,757   $ 14,875   $  5,018
    Amortization             906      1,040        386
    Other movements(1)    (3,588)    (1,742)    (2,470)
    ---------------------------------------------------
    At March 31, 2008   $  4,075   $ 14,173   $  2,934
    ---------------------------------------------------
    ---------------------------------------------------

    Net carrying amount
    At March 31, 2008   $  4,788   $  4,642   $  5,403
    ---------------------------------------------------
    ---------------------------------------------------

                                           Three months ended March 31, 2008
    -------------------------------------------------------------------------
                                        Acquisition of businesses      Total
                       ------------------------------------------- ----------
                                                         Customer
                                  Proprietary    Brand   relation-
                       Contracts     software    names      ships
    -------------------------------------------------------------------------
    Cost
    At January 1, 2008  $  1,201   $ 41,993   $  8,400   $ 97,521   $192,435
    Additions                  -          -          -      1,343      1,968
    Other movements(1)         -          -          -          -     (7,930)
    -------------------------------------------------------------------------
    At March 31, 2008   $  1,201   $ 41,993   $  8,400   $ 98,864   $186,473
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization and
     impairment loss
    At January 1, 2008  $    303   $  6,773   $    887   $ 23,067   $ 57,680
    Amortization(2)          140      1,067        140      2,101      5,780
    Other movements(1)         -          -          -          -     (7,800)
    -------------------------------------------------------------------------
    At March 31, 2008   $    443   $  7,840   $  1,027   $ 25,168   $ 55,660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net carrying amount
    At March 31, 2008   $    758   $ 34,153   $  7,373   $ 73,696   $130,813
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Other movements primarily relate to fully amortized assets removed
        from the accounts during the period.
    (2) Amortization for the three months ended March 31, 2008 does not
        include $15 of amortization that is related to discontinued
        operations.

    7.  GOODWILL

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    Balance, beginning of period                   $   458,989   $   438,502
    Goodwill acquired during the period:
      AVS acquisition                                        -         2,691
      Cyence acquisition                                    48        17,796
    -------------------------------------------------------------------------
    Balance, end of period                         $   459,037   $   458,989
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8.  DISBURSEMENT OBLIGATIONS ON CUSTOMER CONTRACTS

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Current portion                                $        20   $     1,537
    Long-term portion                                       30            30
    -------------------------------------------------------------------------
    Total disbursement obligations on customer
     contracts                                     $        50   $     1,567
    -------------------------------------------------------------------------

    The Fund has fixed customer contract disbursement obligations payable as
    of March 31, 2009 as follows:

    2009                                                         $        20
    2010                                                                  15
    2011                                                                  10
    2012                                                                   5

    -------------------------------------------------------------------------
                                                                 $        50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    9.  LONG-TERM INDEBTEDNESS

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Non-revolving term loan                        $   120,000   $   120,000
    Revolving credit facility                           28,000        28,000
    -------------------------------------------------------------------------
                                                       148,000       148,000
    Deferred finance costs                                (600)         (669)
    -------------------------------------------------------------------------
                                                   $   147,400   $   147,331
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund has $170.0 million of available term credit facilities due
    June 15, 2011 (December 31, 2008 - $170.0 million), consisting of a
    $120.0 million non-revolving term loan and a $50.0 million revolving
    credit facility. The credit facilities do not require the Fund to make
    any principal payments prior to their maturity. 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 interest
    in Davis + Henderson L.P. The carrying value of long-term indebtedness
    approximates its fair value as it bears interest at floating rates that
    reset in most cases within three months and in all cases within one year.

    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 March 31, 2009, the Fund was in
    compliance with all of its financial covenants and financial condition
    tests.

    Deferred finance costs relate to the renewal and amendment of long-term
    indebtedness on June 15, 2006. Amortization of deferred finance costs
    during the three months ended March 31, 2009 was $69 (Q1 2008 - $69).
    Amortization of deferred finance costs is recognized over the term of the
    facilities as interest expense using the effective interest method.

    10. FINANCIAL INSTRUMENTS

    Recognition and Measurement
    The Fund's financial instruments consist of cash and cash equivalents,
    accounts receivable, accounts payable and accrued liabilities,
    disbursement obligations on customer contracts, distributions payable to
    unitholders, interest-rate swaps and long-term indebtedness. The Fund
    does not enter into financial instruments for trading or speculative
    purposes.  Financial assets are classified as available for sale, held to
    maturity, held for trading, or loans and receivables. Financial
    liabilities are recorded at amortized cost. Initially, all financial
    assets and financial liabilities must be recorded on the balance sheet at
    fair value. Subsequent measurement is determined by the classification of
    each financial asset and financial liability. Unrealized gains and losses
    on financial assets that are held as available for sale are recorded in
    other comprehensive income until realized, at which time they will be
    recorded in the consolidated statement of income. All derivatives,
    including embedded derivatives that must be separately accounted for, are
    recorded at fair value in the consolidated balance sheet. Transaction
    costs related to financial instruments are generally capitalized and then
    amortized over the expected life of the financial instrument using the
    effective yield method.

    Credit Risk
    The Fund's financial assets that are exposed to credit risk consist
    primarily of cash and cash equivalents, accounts receivable and
    interest-rate swaps. The Fund, in its normal course of business, is
    exposed to credit risk from its customers. The Fund is exposed to credit
    loss in the event of non-performance by counterparties to the
    interest-rate swaps. Risks associated with concentrations of credit risk
    with respect to accounts receivable and interest-rate swaps are limited
    due to the credit rating of customers and swap counterparties serviced by
    the Fund and the generally short payment terms and frequent settlement of
    swap differences.

    Market Risk
    The Fund is subject to interest-rate risks as its credit 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 following table presents a sensitivity analysis to changes in market
    interest rates and their potential impact on the Fund for the three
    months ended March 31, 2009. As the sensitivity is hypothetical, it
    should be used with caution.

    -------------------------------------------------------------------------
                                                      +100 bps      -100 bps
    -------------------------------------------------------------------------

    Increase (decrease) in interest expense        $        69   $       (69)
    Change to net unrealized (gain) loss on
     interest-rate swaps                                (1,800)        1,800
    -------------------------------------------------------------------------

    Increase (decrease) in net income              $     1,731   $    (1,731)
    -------------------------------------------------------------------------

    Increase (decrease) in total comprehensive
     income                                        $     1,731   $    (1,731)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund manages its interest-rate risks through the use of interest-rate
    swaps for most of its outstanding long-term indebtedness. As of March 31,
    2009, the Fund has entered into interest-rate swap contracts with its
    lenders, such that the floating borrowing rates on $120.0 million, or
    81.1%, of its outstanding term indebtedness are effectively fixed at
    interest rates and for periods shown in the following table:

    -------------------------------------------------------------------------
                                                 Fair value of
                                           interest-rate swaps
                                    ---------------------------     Interest
    Maturity date  Notional Amount         Asset     Liability        rate(1)
    -------------------------------------------------------------------------
    July 15, 2009       $   20,000    $        -    $      396        5.688%
    July 15, 2010           33,000             -         2,034        5.690%
    January 5, 2011         22,000             -           483        2.855%
    June 15, 2011           20,000             -         1,794        5.560%
    June 15, 2011           25,000             -         2,243        5.560%
    -------------------------------------------------------------------------
                        $  120,000    $        -    $    6,950
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The listed interest rates are inclusive of bankers' 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.

    Liquidity Risk
    The Fund has long-term indebtedness with a maturity date of June 15,
    2011. The degree to which the Fund is leveraged may reduce its ability to
    obtain additional financing for working capital and to finance
    investments to maintain and grow the current levels of cash flows from
    operations. The Fund may be unable to extend the maturity date of the
    credit facilities or to refinance outstanding indebtedness.

    Management, to reduce liquidity risk, has historically renewed the terms
    of the Fund's long-term indebtedness in advance of its maturity dates and
    the Fund has maintained financial ratios that are conservative compared
    to financial covenants applicable to the credit facilities. Further, the
    Fund has made numerous voluntary payments on its outstanding long-term
    indebtedness and a portion of its committed term credit facilities
    remains undrawn.

    Management measures liquidity risk through comparisons of current
    financial ratios with financial covenants contained in the Credit
    Agreement.

    Hedge Accounting
    Where derivatives are held for risk management purposes or when
    transactions meet the criteria, including documentation requirements,
    specified in the CICA Handbook Section 3865, hedge accounting is applied
    to the risks being hedged. When hedge accounting is not applied, the
    change in the fair value of the derivative is recognized in income,
    including instruments used for economic hedging purposes that do not meet
    the requirements for hedge accounting.

    Effective January 1, 2007, the Fund ceased applying hedge accounting on
    the interest-rate swaps outstanding at December 31, 2006.

    Derivative Financial Instruments
    Derivatives are carried at fair value and are reported as assets where
    they have a positive fair value and liabilities where they have a
    negative fair value. Derivatives may be embedded in other financial
    instruments or contracts. Derivatives embedded in other financial
    instruments are valued as separate derivatives when their economic
    characteristics and risks are not clearly and closely related to those of
    the host contract unless such contracts relate to normal course
    operations and qualify for the normal purchase and sale exemption in
    accordance with the standards.

    Accumulated Other Comprehensive Income (Loss)
    When applicable, changes in the fair value of cash flow hedging
    instruments are recorded in accumulated other comprehensive income (loss)
    until recognized in the consolidated statement of income. Accumulated
    other comprehensive income (loss) forms part of unitholders' equity.

    11. OTHER LONG-TERM LIABILITIES

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Deferred compensation program                  $       195   $         -
    Employee future benefits                               679           707
    Capital lease                                           78           105
    -------------------------------------------------------------------------
                                                   $       952   $       812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The deferred compensation program, which commenced on January 1, 2009, is
    a long-term incentive plan that includes a cash award component and a
    cash-settled unit-based payment component. Both the cash component and
    the cash-settled unit-based payment component awarded at the grant date
    are subject to a 3-year performance target for compound annual growth in
    adjusted income. The units awarded will earn distributions through the
    3 years equal to the actual per unit distributions declared on the units
    of Davis + Henderson during the fiscal periods that form the performance
    period. The cash-settled unit-based payment is determined based on the
    average trading price for the units in the 30 days following the release
    of the results for the last fiscal year in the performance period, along
    with the annualized growth rate achieved and the distributions earned.
    The employee must remain an employee throughout the three-year
    performance period in order for the plan to vest. The first possible
    payment under this program is in 2012.

    Employee future benefits consist of defined contribution pension plans
    and a non-pension post-retirement benefit plan. Obligations relating to
    employee future benefits relate to the non-pension post-retirement
    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 three
    months ended March 31, 2009 was $0.5 million (Q1 2008 - $0.5 million).

    12. INCOME TAXES

    The Fund is a mutual fund trust for income tax purposes and will be a
    specified investment flow through trust ("SIFT") for years commencing
    after 2010. As such, the Fund is subject to current income taxes on any
    taxable income not distributed to unitholders prior to January 1, 2011
    and on all taxable income subsequent to December 31, 2010. If the Fund's
    equity capital grows beyond certain dollar limits prior to January 1,
    2011, the Fund would become a SIFT and would commence in that year being
    subject to tax on income distributed. The Fund expects that its income
    distributed will not be subject to tax prior to 2011 and accordingly has
    not provided for future income taxes on its temporary differences and
    those of its flow-through subsidiary trust and partnerships expected to
    reverse prior to 2011 as it is considered tax exempt for accounting
    purposes.

    Taxable income distributed by the Fund to its unitholders will be taxable
    income of those unitholders.

    Significant components of the Fund's future tax assets and liabilities
    with respect to the consolidated carrying values related to its
    investments in certain partnership and trust subsidiaries and their
    corporate subsidiaries are as follows:

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    Future income tax assets:
      Capital assets less than tax values          $     2,894   $     3,121
      Intangible assets less than tax values            11,174        10,979
      Loss carryforwards                                 1,356         1,677
      Valuation allowance                              (12,530)      (12,615)

    -------------------------------------------------------------------------
      Total future tax assets                            2,894         3,162
    -------------------------------------------------------------------------

    Future income tax liabilities:
      Capital assets greater than tax values             2,594         2,849
      Intangible assets greater than tax values          7,278         7,355
    -------------------------------------------------------------------------
      Total future tax liabilities                       9,872        10,204
    -------------------------------------------------------------------------
    Net future income tax liabilities              $     6,978   $     7,042
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund does not expect the temporary differences between the carrying
    amount and tax base of certain intangible assets to reverse in the
    foreseeable future and accordingly has reduced the related future income
    tax asset by a valuation allowance for the portion that is not expected
    to reverse. The Fund also does not expect to realize the benefit of
    certain loss carryforwards of certain corporate subsidiaries in the
    foreseeable future and accordingly has reduced the related future income
    tax asset by a valuation allowance for the portion that is not expected
    to be realized.

    With the acquisition of the Cyence business, the Fund recognized a future
    income tax asset of $3,121 relating to capital assets that are less than
    their tax values and a future income tax liability of $7,355 relating to
    intangible assets that are greater than their tax values. Both the future
    income tax asset and the future income tax liability are expected to
    reverse in the foreseeable future.

    No future tax liability has been provided for the taxable temporary
    difference related to goodwill since this amount is not deductible for
    tax purposes and is therefore specifically exempt from the recognition
    requirements.

    The provision for future income taxes in the consolidated statement of
    income represents the change in the consolidated net future income tax
    liabilities, after giving effect to the increase in the future income tax
    liability arising on the acquisition of Cyence International Inc. The
    effective tax rate for the period differs from the expected tax rate of
    nil due to the change in temporary differences of the Fund and its
    flow-through trust and partnership subsidiaries expected to reverse after
    2010 and the results of operations of its corporate subsidiaries.

    13. 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 are as
    follows:

                                                      March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Balance, beginning of period                   $   476,343   $   474,585
    Non-cash distribution                                    -         1,758
    -------------------------------------------------------------------------
    Balance, end of period                         $   476,343   $   476,343
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Units outstanding, end of period                43,946,792    43,946,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The weighted average number of units outstanding during the three months
    ended March 31, 2009 was 43,946,792 (Q1 2008 - 43,946,792).

    14. CAPITAL

    The Fund views its capital as the combination of its indebtedness and
    equity balances. In general, the overall capital of the Fund is evaluated
    and determined in the context of its financial objectives and its
    strategic plan.

    While the Fund carries a level of cash on hand, this amount is modest in
    relation to its overall capital and is generally in an amount determined
    in reference to its pending distribution obligations and short-term
    changes in non-cash working capital balances.

    With respect to its level of indebtedness, the Fund determines the
    appropriate level in the context of its cash flow and overall business
    risks. Generally, the Fund has maintained a low level of indebtedness
    relative to cash flow in order to provide increased financial flexibility
    and to provide increased protection for unitholders relative to their
    expectation of distributions. Additionally, the Fund has historically
    generated cash flow in excess of distributions and has used a portion of
    such excess to pay down indebtedness. The Fund would consider increasing
    its level of indebtedness relative to cash flow to assist in the
    financing of an acquisition. As well, the Fund will review its level of
    indebtedness in the context of the change in taxation impacting the Fund
    commencing 2011.

    The Fund's indebtedness is subject to a number of covenants and
    restrictions including the requirement to meet certain financial ratios
    and financial condition tests at a subsidiary level. One such ratio is
    the "Total Funded Debt/EBITDA Ratio" as defined in the Credit Agreement.
    The maximum ratio allowed for a 12-month trailing period is 2.50. For the
    three months ended March 31, 2009, this ratio was calculated at 1.25
    (12-month trailing period ended March 31, 2008 - 1.11). Management also
    uses this ratio as a key indicator in managing the Fund's capital.

    With respect to its equity, the current level of capital is considered
    adequate in the context of current operations and the present strategic
    plan of the Fund. The equity component of capital increases primarily
    based upon the income of the business less the distribution paid. Any
    major acquisition would be financed in part with additional equity. The
    Fund will also review its level of equity in the context of the change in
    taxation impacting the Fund commencing in 2011.

    15. COMMITMENTS

    As of March 31, 2009, the Fund has annual lease obligations with respect
    to real estate, vehicles and equipment as follows:

    2009                                                         $     4,193
    2010                                                               4,040
    2011                                                               2,502
    2012                                                               1,353
    2013                                                                 619
    Thereafter                                                           351
    -------------------------------------------------------------------------
                                                                 $    13,058
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    16. SIGNIFICANT CUSTOMERS

    For the three months ended March 31, 2009, the Fund earned 76% of its
    consolidated revenue from its seven largest customers (Q1 2008 - 80%).
    For the three months ended March 31, 2009, four of these customers
    individually accounted for greater than 10%, but not more than 17% of the
    Fund's total revenue (for the three months ended March 31, 2008, four of
    these customers individually accounted for greater than 10%, but not more
    than 17% of the Fund's total revenue).

    17. 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 and eSwitch(R),
    among other offerings. The Filogix Segment includes services related to
    the credit lifecycle management, including origination and underwriting
    of mortgages in Canada, and the personal property, search and
    registration programs, among other offerings.

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

    Corporate costs include expenditures related to public company
    activities, a share of executive corporate management costs, corporate
    development costs and certain other business-wide costs. Corporate assets
    consist primarily of cash and cash equivalents.

    Summarized financial information for the three months ended March 31,
    2009 and 2008 are as follows:

                                                 Three months ended March 31,
    -------------------------------------------------------------------------
                                               Davis +
                                     Henderson Segment       Filogix Segment
                                  --------------------- ---------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenue                        $ 72,827   $ 73,048   $ 15,702   $ 14,364
    Cost of sales and
     operating expenses              48,341     49,038     11,181     11,071
    Amortization of capital assets      449        470        649        512
    -------------------------------------------------------------------------
                                     24,037     23,540      3,872      2,781

    Interest expense                      -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps               -          -          -          -
    Amortization of
     intangible assets                1,425      2,331      4,360      3,449
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations before income taxes  22,612     21,209       (488)      (668)
    Future income tax
     expense (recovery)                   -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      22,612     21,209       (488)      (668)
    Income (loss) from discontinued
     operations                           -         98          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  22,612  $  21,307   $   (488)  $   (668)

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

    Asset expenditures             $  1,829   $  2,465   $  2,534   $     69

    Intangible assets              $  6,002   $ 13,374   $134,900   $117,441
    Goodwill                       $359,385   $359,385   $ 99,652   $ 81,808
    Total assets                   $460,189   $427,494   $190,741   $190,290
    -------------------------------------------------------------------------

                                             Corporate          Consolidated
                                  --------------------- ---------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenue                        $      -   $      -   $ 88,529   $ 87,412
    Cost of sales and
     operating expenses                 879        592     60,401     60,701
    Amortization of capital assets        -          -      1,098        982
    -------------------------------------------------------------------------
                                       (879)      (592)    27,030     25,729

    Interest expense                  1,883      1,863      1,883      1,863
    Net unrealized loss (gain)
     on interest-rate swaps             191      2,344        191      2,344
    Amortization of
     intangible assets                    -          -      5,785      5,780
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations before income taxes  (2,953)    (4,799)    19,171     15,742
    Future income tax expense
     (recovery)                         (64)         -        (64)         -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      (2,889)    (4,799)    19,235     15,742
    Income (loss) from discontinued
     operations                           -          -          -         98
    -------------------------------------------------------------------------
    Net income (loss)              $ (2,889)  $ (4,799)  $ 19,235   $ 15,840

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

    Asset Expenditures             $      -   $      -   $  4,363   $  2,534

    Intangible assets              $      -   $      -   $140,902   $130,815
    Goodwill                       $      -   $      -   $459,037   $441,193
    Total assets                   $    567   $  4,034   $651,497   $621,818
    -------------------------------------------------------------------------

    For the three months ended March 31, 2009, the Davis + Henderson Segment
    had six customers  that individually accounted for greater than 10% but
    not more than 18% of the Davis + Henderson Segment revenue and the
    Filogix Segment had two customers that individually accounted for greater
    than 10% but not more than 13% of the Filogix Segment revenue (for the
    three months ended 2008 - Davis + Henderson Segment had six customers
    that individually accounted for greater than 10% but not more than 20% of
    the Davis + Henderson Segment revenue and the Filogix Segment had three
    customers that individually accounted for greater than 10% but not more
    than 19% of the Filogix Segment revenue).

    18. DISCONTINUED OPERATIONS

    Effective December 31, 2008, the Fund ceased servicing a U.S. cheque
    supply contract. As a result, the U.S. operations were classified as
    discontinued operations at December 31, 2008.

    Revenue attributable to the discontinued operations during the three
    months ended March 31, 2009 was nil (Q1 2008 - $1,676). Earnings per
    share information relating to the discontinued operations is as follows:

                                                          Three months ended
    -------------------------------------------------------------------------
                                              March 31, 2009  March 31, 2008
    -------------------------------------------------------------------------

    Income from discontinued operations,
     per unit, basic and diluted                  $       -        $  0.0022
    Income from continuing operations,
     per unit, basic and diluted                     0.4377           0.3582
    -------------------------------------------------------------------------
    Net income per unit, basic and diluted        $  0.4377        $  0.3604
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The results of the U.S. operations were reported as part of the Davis +
    Henderson Segment in both current and prior periods.

    19. COMPARATIVE FIGURES

    Certain comparative figures have been reclassified to conform to the
    current period's presentation.

    SUPPLEMENTARY FINANCIAL INFORMATION

    Consolidated Operating Results by Period

    -------------------------------------------------------------------------
                                      Three      Three
                           Three     months     months      Three      Three
                          months      ended      ended     months     months
    (in thousands of       ended   December  September      ended      ended
     Canadian dollars,  March 31,        31,        30,   June 30,  March 31,
     unaudited)             2009       2008       2008       2008       2008
    -------------------------------------------------------------------------

    Revenue            $  88,529  $  89,357  $  95,055  $  95,407  $  87,412
    Expenses              60,091     62,413     61,664     61,334     60,267
    -------------------------------------------------------------------------
    EBITDA                28,438     26,944     33,391     34,073     27,145

    Amortization of
     capital assets and
     non-acquisition
     intangibles           3,819      3,800      4,219      3,771      3,748
    Interest expense       1,747      1,647      1,690      1,754      1,756
    -------------------------------------------------------------------------

    Adjusted income       22,872     21,497     27,482     28,548     21,641

    Amortization of
     mark-to-market
     adjustment
     of interest-rate
     swaps                   136        151        151        152        107
    Net unrealized
     loss (gain) on
     interest-rate
     swaps                   191      3,653        728     (1,034)     2,344
    Future income tax
     expense (recovery)      (64)       399         52        766          -
    Amortization of
     intangibles from
     acquisition           3,374      3,409      3,412      3,447      3,448
    -------------------------------------------------------------------------

    Income from
     continuing
     operations           19,235     13,885     23,139     25,217     15,742
    Income from
     discontinued
     operations                -         51        167        149         98
    -------------------------------------------------------------------------

    Net income         $  19,235  $  13,936  $  23,306  $  25,366  $  15,840

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

    Cash flows from
     operating
     activities        $  13,015  $  31,806  $  35,110  $  32,623  $  16,523
    Changes in
     non-cash working
     capital and
     other items(1)       13,676     (6,380)    (3,169)       (82)     9,037
                       ------------------------------------------------------
    Adjusted cash
     flows from
     operating
     activities           26,691     25,426     31,941     32,541     25,560

    Less:
      Asset
       expenditures
       and contract
       payments(2)         4,363      4,915      3,027      2,962      2,534

    -------------------------------------------------------------------------
    Adjusted cash flows
     after capital
     asset expenditures
     and contract
     payments             22,328     20,511     28,914     29,579     23,026

    Distributions paid
     to unitholders       20,211     20,211     20,211     19,305     18,853

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

                           2,117        300      8,703     10,274      4,173

    Cash flows provided
     by (used in) other
     financing
     activities                -     28,000     (5,000)    (5,000)         -
    Cash flows used in
     acquisition of
     Cyence business          60    (37,876)         -          -          -
    Cash flows used in
     other acquisitions        -     (1,000)         -          -     (4,250)
    Changes in non-cash
     working capital and
     other items(1)      (13,676)     6,380      3,169         82     (9,037)
    -------------------------------------------------------------------------

    Increase (decrease)
     in cash and cash
     equivalents for
     the period        $ (11,499) $  (4,196) $   6,872  $   5,356  $  (9,114)

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

    Summary of Cash Flows Per Unit
    -------------------------------------------------------------------------
                                      Three      Three
                           Three     months     months      Three      Three
                          months      ended      ended     months     months
    (in Canadian           ended   December  September      ended      ended
     dollars,           March 31,        31,        30,   June 30,  March 31
     unaudited)             2009       2008       2008       2008       2008
    -------------------------------------------------------------------------
    Adjusted income
     per unit, basic
     and diluted       $  0.5204  $  0.4892  $  0.6253  $  0.6496  $  0.4924
    Net income per
     unit, basic
     and diluted       $  0.4377  $  0.3172  $  0.5303  $  0.5772  $  0.3604
    Adjusted cash
     flows from
     operating
     activities        $  0.6073  $  0.5786  $  0.7268  $  0.7405  $  0.5816
    Adjusted cash
     flows after
     capital asset
     expenditures and
     contract
     payments          $  0.5081  $  0.4667  $  0.6579  $  0.6731  $  0.5240
    Distributions
     paid to
     unitholders       $  0.4999  $  0.4599  $  0.4599  $  0.4393  $  0.4290
    Distributions
     declared
     during period     $  0.4599  $  0.4999  $  0.4599  $  0.4496  $  0.4290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Changes in non-cash working capital and certain other balance sheet
        items have been excluded from adjusted 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. Changes to other
        long-term liabilities are deducted to arrive at adjusted cash flows.
    (2) Asset expenditures include expenditure on capital asset, contract
        payments and non-acquisition intangibles.
    (3) Certain comparative figures have been reclassified to conform to
        the current period's presentation.

     Condensed Consolidated Balance Sheet

    -------------------------------------------------------------------------
    (in thousands of               December  September
     Canadian dollars,  March 31,        31,        30,   June 30,  March 31,
     unaudited)             2009       2008       2008       2008       2008
    -------------------------------------------------------------------------

     Cash and cash
     equivalents       $     567  $  12,066  $  16,262  $   9,390  $   4,034
     Other current
      assets              27,137     23,468     25,604     26,847     25,382
     Capital and other
      assets              23,854     24,708     18,883     19,977     20,394
     Goodwill and
      intangible assets  599,939    603,664    564,463    568,096    572,008

    -------------------------------------------------------------------------
                       $ 651,497  $ 663,906  $ 625,212  $ 624,310  $ 621,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Payables and
      other current
      liabilities      $  37,464  $  49,101  $  44,119  $  42,427  $  38,491
     Other long-term
      liabilities         17,804     17,805      6,038      5,143      7,417
     Long-term
     indebtedness        147,400    147,331    119,262    124,193    129,123
     Unitholders'
      equity             448,829    449,669    455,793    452,547    446,787

    -------------------------------------------------------------------------
                       $ 651,497  $ 663,906  $ 625,212  $ 624,310  $ 621,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distribution History
    -------------------------------------------------------------------------
                                                    Distributions per unit(1)
    Month                       2009      2008      2007      2006      2005
    -------------------------------------------------------------------------

    January                 $ 0.1533  $ 0.1430  $ 0.1280  $ 0.1220  $ 0.1200
    February                  0.1533    0.1430    0.1280    0.1220    0.1200
    March                     0.1533    0.1430    0.1320    0.1250    0.1200
    April                               0.1430    0.1320    0.1250    0.1200
    May                                 0.1533    0.1320    0.1250    0.1200
    June                                0.1533    0.1320    0.1250    0.1200
    July                                0.1533    0.1320    0.1250    0.1200
    August                              0.1533    0.1320    0.1250    0.1220
    September                           0.1533    0.1320    0.1250    0.1220
    October                             0.1533    0.1320    0.1250    0.1220
    November(2)                         0.1533    0.3430    0.1280    0.1220
    December(3)                         0.1933    0.1430    0.1280    0.1220

    -------------------------------------------------------------------------
                            $ 0.4599  $ 1.8384  $ 1.7980  $ 1.5000  $ 1.4500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                    Distributions per unit(1)
    Month                                 2004      2003      2002      2001
    -------------------------------------------------------------------------

    January                           $ 0.1150  $ 0.1117  $ 0.1083  $      -
    February                            0.1150    0.1117    0.1083         -
    March                               0.1168    0.1117    0.1083         -
    April                               0.1168    0.1133    0.1083         -
    May                                 0.1168    0.1133    0.1083         -
    June                                0.1168    0.1133    0.1083         -
    July                                0.1168    0.1133    0.1117         -
    August                              0.1168    0.1133    0.1117         -
    September                           0.1168    0.1133    0.1117         -
    October                             0.1168    0.1150    0.1117         -
    November(2)                         0.1200    0.1150    0.1117         -
    December(3)                         0.1200    0.1150    0.1117    0.0427

    -------------------------------------------------------------------------
                                      $ 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) November 2007 declared distributions included a special distribution
        of $0.20 for unitholders of record on November 15, 2007 and was paid
        November 30, 2007.
    (3) Distributions in 2001 are in respect of the 12 calendar days from
        December 20, 2001 to December 31, 2001. December 2008 declared
        distributions included a non-cash special distribution of $0.04 for
        unit holders of record on December 31, 2008 and was paid December 31,
        2008.

    Tax Allocation of Distributions
    -------------------------------------------------------------------------
                                             2009     2008     2007     2006

    -------------------------------------------------------------------------
    Dividend income                          0.0%     0.0%     0.0%     0.0%
    Other income                           100.0%   100.0%   100.0%   100.0%
    Return of capital                        0.0%     0.0%     0.0%     0.0%
    -------------------------------------------------------------------------
                                           100.0%   100.0%   100.0%   100.0%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                             2005     2004     2003     2002

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

    The above tax allocation of distributions for 2009 represents an estimate
    based on the total expected distributions for the year ended December 31,
    2009.

    Other Statistics
    (in thousands, except per unit amounts)

                                                            Number    Market
                 Trading price range of units             of units   capital-
                        (TSX: "DHF.UN")                   outstand-  ization
                 ----------------------------   Average     ing at        at
    Quarter       High        Low      Close      daily    quarter   quarter
                                                 volume        end       end
    -------------------------------------------------------------------------

    2009 - Q1    16.76      10.40      11.92        104     43,947   523,846
    2008 - Q4    17.15      10.30      16.79        117     43,947   737,867
         - Q3    16.40      13.50      15.47         93     43,947   679,857
         - Q2    17.85      15.53      15.58         83     43,947   684,691
         - Q1    21.75      15.77      17.19        107     43,947   755,445
    2007 - Q4    22.00      18.75      21.00         98     43,947   922,883
         - Q3    20.10      17.14      19.80         78     43,947   870,146
         - Q2    19.79      16.30      19.31         90     43,947   848,613
         - Q1    17.19      15.00      16.60         87     43,947   729,517
    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 uses its market-leading capabilities to meet the evolving needs of the financial services industry in Canada and abroad. Founded in 1875, the company today provides innovative programs to customers who offer chequing and credit card accounts, and a comprehensive array of technology-based solutions to support our customers’ credit lifecycle management services. Davis + Henderson Income Fund is listed on the Toronto Stock Exchange under the 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

SOURCE: Davis + Henderson Income Fund

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