Davis + Henderson Income Fund Reports Fourth Quarter and Full Year 2008 Results



    TSX Stock Symbol: "DHF.UN"

    Website: www.dhltd.com

    TORONTO, Feb. 24 /CNW/ - Davis + Henderson Income Fund reported modest
increases in revenue and cash flow for the fourth quarter ended December 31,
2008.

    Fourth Quarter Highlights

    
    -   Revenue increased by $0.7 million, or 0.8%, to $89.4 million compared
        to the same quarter in 2007.

    -   EBITDA(1) increased $0.4 million, or 1.4%, to $26.9 million compared
        to the same quarter in 2007.

    -   Adjusted income(1) increased by $0.5 million, or 2.3%, to $21.5
        million compared to the same quarter in 2007.

    -   Net income decreased by $2.7 million, or 16.2%, to $13.9 million
        compared to the same quarter in 2007. Included in 2008, is a non-cash
        mark-to-market loss on interest-rate swaps of $3.7 million.

    -   Cash distributions declared were $0.4599 per unit compared to $0.6180
        per unit during the fourth quarter of 2007. Included in 2007, is a
        special cash distribution paid in November 2007 of $0.20 per unit.

    2008 Highlights

    -   Revenue for the year ended December 31, 2008 was $367.2 million, a
        decrease of $2.5 million, or 0.7%, compared to $369.7 million in the
        same period in 2007 due to lower revenues in the D+H Segment in the
        first six months of 2008. The lower level of revenue within the D+H
        Segment was primarily attributable to reduced cheque order volumes as
        compared to unusually strong order volumes in 2007.

    -   EBITDA(1) increased by $2.1 million, or 1.7%, to $121.6 million
        compared to the prior year.

    -   Adjusted income(1) increased by $2.7 million, or 2.8%, to $99.2
        million compared to the prior year.

    -   Net income decreased by $3.8 million, or 4.6%, to $78.4 million
        compared to the prior year. Included in 2008, is a non-cash mark-to-
        market loss on interest-rate swaps of $5.7 million.

    -   Cash distributions declared were substantially unchanged at $1.7984
        per unit compared to $1.7980 per unit declared during the prior year.

    (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 release.
    

    Management Commentary

    Davis + Henderson had a solid year in 2008 in the context of a
challenging economic environment. Although full-year revenue was down slightly
compared to 2007, which was an unusually strong year, the Fund reported modest
growth in EBITDA, Adjusted income and cash flow and increased its monthly cash
distributions.
    In addition to satisfactory financial results, the Business continued to
build on and evolve its programs to the chequing and lending accounts,
invested in product progression, and in late 2008 expanded its product
offering within the credit lifecycle management services area through the
acquisition of Cyence International.
    As we move through the early part of 2009, it is apparent that the
economic environment is likely to be more difficult than it was in 2008. This
in turn will affect our lending service revenues, specifically origination and
underwriting revenues, and may 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 that
the combination of our revenue base, business model and capital structure
positions the Business to deal with the challenges we face.
    For a more detailed discussion of fourth quarter and full year results
and management's outlook, please see the Management's Discussion and Analysis
below.

    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 fourth
quarter ended December 31, 2008 via conference call at 10:00 a.m. EST (Toronto
time) on Wednesday February 25, 2009. The number to use for this call is
416-644-3418 for Toronto area callers or 1-800-732-0232 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 21295610
followed by the number sign (No.). The rebroadcast will be available until
Wednesday March 11, 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 fourth quarter of
2008 and year ended December 31, 2008 should be read in conjunction with MD&A
in the Fund's Annual Report for the year ended December 31, 2007, dated
February 26, 2008, the Short Form Prospectus, dated May 30, 2006, and the
attached unaudited consolidated financial statements. External economic and
industry factors remain substantially unchanged from the annual MD&A and the
Short Form Prospectus, unless otherwise stated.

    STRATEGY

    The Fund's financial goal is to deliver stable and modestly growing cash
distributions to unitholders by targeting annual revenue growth in the range
of 3% to 5% and maintaining margins. The Fund has three primary strategies to
meet this financial goal. These are to enhance the value of the 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 and certain other
business-wide costs.
    Effective January 1, 2008, the PPSA business has been operated and
reported as part of the Filogix Segment. Prior to this date, this program was
operated and reported as part of the Davis + Henderson Segment. The
comparative segmented information for previous years has not been reclassified
as the operational integration of the PPSA business in previous periods does
not make a separation of these costs practical.
    Effective December 31, 2008, the D+H Segment ceased providing service
under a U.S. cheque supply contract. As a result, the 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.
Comparative figures for prior periods have been similarly restated.
    The Filogix Segment results include the financial results of the Cyence
business for the twelve-day period from the date of acquisition to December
31, 2008.

    OPERATING RESULTS FOR THE FOURTH QUARTER

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

                                                   Quarter ended December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Revenue                                        $    89,357   $    88,641
    Expenses                                            62,413        62,075
    -------------------------------------------------------------------------
      EBITDA(1)                                         26,944        26,566

    Amortization of capital and other assets             3,800         3,970
    Interest expense                                     1,647         1,713
    Minority interest                                        -          (139)
    -------------------------------------------------------------------------

      Adjusted income(1)                                21,497        21,022

    Amortization of mark-to-market adjustment
     of interest-rate swaps                                151           163
    Net unrealized loss (gain) on interest-rate
     swaps(2)                                            3,653           823
    Future income tax expense (recovery)                   399           137
    Amortization of intangibles from acquisition         3,409         3,386
    -------------------------------------------------------------------------
    Income from continuing operations                   13,885        16,513
    Income from discontinued operations(3)                  51           109
    -------------------------------------------------------------------------
    Net income                                     $    13,936   $    16,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted income per unit, basic and diluted(1) $    0.4892   $    0.4783

    Net income per unit, basic and diluted         $    0.3171   $    0.3782
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                   Quarter ended December 31,
                                                       2008 vs. 2007% change
    -------------------------------------------------------------------------

    Revenue                                                              0.8%
    EBITDA(1)                                                            1.4%
    Adjusted income per unit(1)                                          2.3%
    Net income per unit                                                -16.2%

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

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

                                                   Quarter ended December 31,
    -------------------------------------------------------------------------
                         Davis + Henderson Segment(4)      Filogix Segment(4)
                         ---------------------------- -----------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue                   $   73,013  $   73,066  $   16,344  $   15,575
    Expenses                      50,675      50,979      11,185      10,437
    -------------------------------------------------------------------------
      EBITDA(1)                   22,338      22,087       5,159       5,138

    Amortization of capital
     and other assets              2,143       2,547       1,657       1,423
    Interest expense                   -           -           -           -
    Minority interest                  -           -           -           -
    -------------------------------------------------------------------------
      Adjusted income (loss)(1)   20,195      19,540       3,502       3,715

    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                647         903       2,762       2,483
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                   19,548      18,637         740       1,232
    Income (loss) from
     discontinued
     operations(3)                    51         109           -           -
    -------------------------------------------------------------------------
    Net income (loss)         $   19,599  $   18,746  $      740  $    1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                   Quarter ended December 31,
    -------------------------------------------------------------------------
                                           Corporate            Consolidated
                         ---------------------------- -----------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue                   $        -  $        -  $   89,357  $   88,641
    Expenses                         553         659      62,413      62,075
    -------------------------------------------------------------------------
      EBITDA(1)                     (553)       (659)     26,944      26,566

    Amortization of capital
     and other assets                  -           -       3,800       3,970
    Interest expense               1,647       1,713       1,647       1,713
    Minority interest                  -        (139)          -        (139)
    -------------------------------------------------------------------------
      Adjusted income (loss)(1)   (2,200)     (2,233)     21,497      21,022

    Amortization of mark-to-
     market adjustment of
     interest-rate swaps             151         163         151         163
    Net unrealized loss (gain)
     on interest-rate swaps(2)     3,653         823       3,653         823
    Future income tax expense
     (recovery)                      399         137         399         137
    Amortization of
     intangibles
     from acquisition                  -           -       3,409       3,386
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                   (6,403)     (3,356)     13,885      16,513
    Income (loss) from
     discontinued
     operations(3)                     -           -          51         109
    -------------------------------------------------------------------------
    Net income (loss)         $   (6,403) $   (3,356) $   13,936  $   16,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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.
    (3) Effective December 31, 2008, the Fund ceased a servicing 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.
    (4) Effective January 1, 2008, the results of the PPSA program are
        included in the Filogix Segment. Prior to this date, the results were
        included in the Davis + Henderson Segment.
    

    Revenue

    Revenue for the fourth quarter of 2008 was $89.4 million, relatively
unchanged compared to 2007. Small increases in revenue in several areas of the
Business offset a decline in origination revenues within Filogix. Results for
both segments are discussed in more detail in the sections that follow.

    Expenses

    On a consolidated basis, expenses for the fourth quarter of 2008 were up
0.5% to $62.4 million, generally consistent to the fourth quarter of 2007,
with increases in the Filogix Segment offset by other modest reductions.
Results for both segments are discussed more in detail in the sections that
follow.

    Amortization of Capital and Other Assets

    Amortization of capital and other assets decreased by $0.2 million 
compared to the fourth quarter of 2007 as a result of certain capital and
other assets having become fully amortized.

    Other Expenses

    Interest expense decreased by $0.1 million in the fourth quarter of 2008
compared to the fourth quarter of 2007 as a result of lower average borrowing
balances in 2008.
    An unrealized loss on interest rate swaps of $3.7 million was recognized
in the fourth quarter of 2008 (Q4 2007 - $0.8 million), reflecting
mark-to-market adjustments related to generally lower interest rates at
December 31, 2008 compared to September 30, 2008. These unrealized gains and
losses are recognized in income as these swaps are no longer 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.
    Amortization of intangibles was $3.4 million for the fourth quarter of
2008, unchanged from the same period in 2007.

    Net Income

    Net income of $13.9 million for the quarter ended December 31, 2008,
decreased by $2.7 million, or 16.2%, when compared to the same quarter in the
previous year, primarily as a result of the unrealized mark-to-market losses
on interest rate swaps. Excluding the non-cash impacts of mark-to-market gains
and losses on interest-rate swaps, the charge for future income taxes and
amortization of intangibles, Adjusted income per unit of $0.4892 increased by
$0.0108, or 2.3%, over the same quarter last year.

    Operating Results - D+H Segment

    Revenue

    Total revenue for the fourth quarter of 2008 decreased by $0.1 million,
or 0.1%, compared to the same period in 2007. This decrease is net of a $0.6
million reclassification of the PPSA business to the Filogix Segment, which
during 2007 was operated and reported within the Davis + Henderson Segment.
Excluding the impact of this reclassification, there was a $0.5 million, or
0.7%, increase in revenues in the fourth quarter of 2008, compared to the same
period in 2007. This increase was driven by successful cheque program
initiatives, including annual program changes and product and service
enhancements such as IDefence and BizAssist partially offset by the impact of
lower than expected small business cheque order volumes as compared to the
same quarter of the previous year.

    Expenses

    Expenses within the Davis + Henderson Segment for the fourth quarter of
2008 were $50.7 million and were $0.3 lower than the fourth quarter of 2007 as
reductions related to the transfer the PPSA business to the Filogix Segment
were partially offset by increased selling and project implementation costs.

    Operating Results - Filogix Segment

    Revenue

    Revenue during the fourth quarter of 2008 within the Filogix Segment
increased by $0.8 million, or 4.9%, over the same period in 2007. Excluding
the impact of the reclassification of the PPSA program, revenue decreased by
$0.2 million, or 1.2%, compared with the same quarter in 2007. The decrease is
primarily a result of a decline in origination fees, which fell 13% in the
fourth quarter of 2008 compared with the same period in 2007, partially offset
by a number of positive increases including the inclusion of the Cyence
revenues for the last twelve days of December and from a recovery of $1.4
million related to the resolution of a customer contract item.

    Expenses

    Expenses for the Filogix Segment increased by $0.7 million, or 7.2%, in
the fourth quarter of 2008 compared with the same period last year primarily
due to the inclusion of the PPSA program, the inclusion of Cyence expenses
after the December 19, 2008 acquisition, and a severance charge related to
staff reductions of approximately $1.1 million, partially offset by cost
savings in other areas. Staff reductions, and other cost savings actions were
initiated in response to reduced activity in the real estate and mortgage
markets.

    Operating Results - Corporate Segment

    Expenses within the Corporate Segment decreased by $0.1 million, or
16.1%, for the quarter ended December 31, 2008 compared with same period in
the prior year primarily as a result of decreased consulting and legal costs.

    Summary of Cash Flows(1)

    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.

    
                                                   Quarter ended December 31,
    (in thousands of Canadian dollars, unaudited)         2008          2007
    -------------------------------------------------------------------------

    Cash flows from operating activities           $    31,806   $    32,141

    Add:
      Changes in non-cash working capital and
       other items(2)                                   (6,380)       (6,959)
    -------------------------------------------------------------------------
    Adjusted cash flows from operating activities       25,426        25,182

    Less:
      Maintenance capital expenditures(3)                2,791         4,204
      Growth capital expenditures(3)                     1,731             -
      Contract payments(4)                                 393           150
    -------------------------------------------------------------------------
    Adjusted cash flows after capital expenditures
     and contract payments(3)                           20,511        20,828

    Less:
      Distributions paid to unitholders                 20,211        26,676
    -------------------------------------------------------------------------
                                                           300        (5,848)

    Cash flows provided by (used in) other
     financing activities                               28,000             -
    Cash flows used in acquisition of Cyence
     business                                          (37,876)            -
    Cash flows used in other acquisitions               (1,000)            -
    Changes in non-cash working capital and other
     items(2)                                            6,380         6,959
    Distributions paid to minority interest                  -          (187)
    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash
     equivalents for the period                    $    (4,196)  $       924
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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. Minority interest and
        changes to other long-term liabilities are deducted to arrive at
        adjusted cash flows. For details, see the Changes in Non-Cash
        Working Capital and Other Items section.

    (3) Maintenance capital expenditures are defined by the Fund as capital
        expenditures necessary to maintain and sustain the current productive
        capacity of the Business or generally improve the efficiency of the
        Business. Growth capital expenditures are defined by the Fund as
        capital expenditures that increase the productive capacity of the
        Business with a reasonable expectation of an increase in cash flow.

    (4) The Business has various payment obligations under customer
        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 and the financial institutions of
        the many activities related to ordering, data handling, customer
        service and other activities undertaken by financial institutions
        related to the operation of the cheque supply and other programs.



    Summary of Cash Flows per Unit

    (in Canadian dollars, unaudited)

                                                   Quarter ended December 31,
                                                2008        2007    % change
    -------------------------------------------------------------------------
    Adjusted cash flows from operating
     activities                           $   0.5786  $   0.5730         1.0%
    Adjusted cash flows after capital
     expenditures and contract payments   $   0.4667  $   0.4739        -1.5%
    Distributions paid to unitholders     $   0.4599  $   0.6070       -24.2%
    Cash distributions declared during
     period                               $   0.4599  $   0.6180       -25.6%
    -------------------------------------------------------------------------

    Cash Flows, Income and Distributions Paid

    The following table compares cash flows from operating activities and
income to distributions paid for the fourth quarter and year ended December
31, 2008.

                                       Quarter ended              Year ended
    (in thousands of Canadian            December 31,            December 31,
    dollars, unaudited)             2008        2007        2008        2007
    -------------------------------------------------------------------------
    Cash flows from operating
     activities               $   31,806  $   32,141  $  116,062  $  117,401

    Net income                $   13,936  $   16,622  $   78,448  $   82,239

    Adjusted income           $   21,497  $   21,022  $   99,168  $   96,499

    Distributions paid during
     period                   $   20,211  $   26,676  $   78,580  $   78,357

    Excess (shortfall) of
     cash flows from
     operating activities
     over cash
     distributions paid       $   11,595  $    5,465  $   37,482  $   39,044

    Excess (shortfall) of
     net income over cash
     distributions paid       $   (6,275) $  (10,054) $     (132) $    3,882

    Excess (shortfall) of
     Adjusted income over
     cash distributions
     paid                     $    1,286  $   (5,654) $   20,588  $   18,142
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Adjusted income is a non-GAAP measure. See non-GAAP measures section
        for a more complete description of this term.
    

    Excess cash flows from operating activities over cash distributions paid
have historically been used to fund capital expenditures, reduce debt and to
fund acquisitions. In the fourth quarter of 2008, distributions exceeded net
income as a result of the non-cash charges for mark-to-market adjustments and
future income taxes. In the fourth quarter of 2007, distributions included a
payment of a special cash distribution of $8.8 million, funded by cash
balances on hand accumulated from prior periods resulting in distributions
exceeding net income.

    Expenditures on Capital Assets and Contract Payments

    Total capital asset expenditures for the fourth quarter of 2008 increased
modestly by $0.3 million over the same quarter in 2007. Total capital asset
expenditures for the year ended December 31, 2008 were $10.2 million, a
decrease of $1.8 million compared to the same period in 2007. Most of the
decrease in 2008 over 2007 reflects a generally lower level of spending on
technology infrastructure following a heavier investing period in 2007. Within
the Filogix Segment, additional capital was spent in support of new customer
initiatives.
    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 as compared to $13.4 million and $15.5 million in 2008 and 2007
respectively. The Business' capital program provides for continued
expenditures to be funded by cash flows from operations.

    Distributions

    During the fourth quarter of 2008, the Fund paid distributions of $20.2
million ($0.4599 per unit), a decrease of $6.5 million over the same period in
the prior year which included an $8.8 million special cash distribution.
    On December 31, 2008, a non-cash special distribution at the rate of
$0.04 per unit was paid to unitholders of record on that date. The purpose of
the special distribution was to ensure no taxable income remained in the Fund
in 2008. Immediately after the declaration of the unit distribution, the
number of outstanding Fund units was consolidated such that each unitholder
held, following the consolidation, the same number of units as before the
non-cash distribution.
    On an annualized basis, the monthly cash distribution rate for December
2008 was $1.84 per unit as compared to $1.72 per unit annualized in December
2007, representing an increase of 7.2%.

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

                                                   Quarter ended December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Minority interest                              $         -   $      (139)
    Decrease (increase) in non-cash working
     capital items                                       6,022         6,963
    Decrease (increase) in other operating assets
     and liabilities                                       358           135
    -------------------------------------------------------------------------
    Decrease (increase) in non-cash working
     capital and other items                       $     6,380   $     6,959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    The decrease in non-cash working capital for the quarter ended December
31, 2008, a source of cash flow, reflects a decrease in the level of
receivables and an increase in the level of payables, both of which are
considered timing differences that are expected to reverse in future quarters.
The decrease in non-cash working capital for the quarter ended December 31,
2007, reflected a decrease in the level of receivables and an increase in the
level of payables, including those related to capital purchases made in the
later portion of 2007, both of which were the result of timing differences
that largely reversed in the first quarter of 2008.

    Cash Flows Provided by Financings and Used in Business Acquisitions

    During the fourth quarter of 2008, the Fund advanced its strategy of
providing services to the credit lifecycle management market by acquiring 100%
of Cyence for total cash consideration of $37.9 million. The acquisition was
funded by drawing $28.0 million from the existing debt facility, with the
balance funded from cash on hand. The Business also made a $1.0 million
portfolio investment in a technology services company.

    2008 OPERATING RESULTS

    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)

                                                      Year ended December 31,
                                                2008        2007      2006(4)
    -------------------------------------------------------------------------
    Revenue                               $  367,231  $  369,726  $  317,967
    Expenses                                 245,678     250,237     223,562
    -------------------------------------------------------------------------
    EBITDA(1)                                121,553     119,489      94,405

    Amortization of capital and other
     assets                                   15,538      15,080      13,040
    Interest expense                           6,847       7,531       6,016
    Minority interest                              -         379         202
    -------------------------------------------------------------------------
    Adjusted income(1)                        99,168      96,499      75,147

    Amortization of mark-to-market
     adjustment of interest-rate swaps           561         678           -
    Net unrealized loss (gain) on
     interest-rate swaps(2)                    5,691        (740)          -
    Future income tax expense (recovery)       1,217       1,591           -
    Amortization of intangibles from
     acquisition                              13,716      13,298       8,236
    -------------------------------------------------------------------------
    Income from continuing operations         77,983      81,672      66,911
    Income (loss) from discontinued
     operations(3)                               465         567        (382)
    -------------------------------------------------------------------------
    Net income                                78,448      82,239      66,529
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted income per unit, basic and
     diluted(1)                           $   2.2565  $   2.1958  $   1.8164
    Net income per unit, basic and
     diluted                              $   1.7851  $   1.8713  $   1.6081
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                       2008 vs. 2007           2007 vs. 2006
                                            % change                % change
    -------------------------------------------------------------------------

    Revenue                                     -0.7%                   16.3%
    EBITDA(1)                                    1.7%                   26.6%
    Adjusted income per unit(1)                  2.8%                   28.4%
    Net income per unit                         -4.6%                   23.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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.
    (4) The 2006 results include the results for the Filogix business from
        the date of acquisition June 15, 2006, to December 31, 2006.
    

    Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

    Revenue

    Total consolidated revenue for the year ended December 31, 2008 was
$367.2 million, a decrease of $2.5 million, or 0.7%, compared to 2007. This
decline reflected reduced revenues within the D+H Segment partially offset by
increased revenues within the Filogix Segment. During the first half of 2008,
the D+H Segment experienced increased cheque order volume declines due to a
shift in reorder cycles resulting from accelerated volumes within the first
six months of 2007, as further discussed below. While generally cheque order
volumes during the last six months of 2008 returned to levels directionally
more in line with those historically experienced, cheque program revenues were
lower in 2008 compared with 2007. Results for both segments are discussed in
more detail in the sections that follow.

    Expenses

    On a consolidated basis, expenses for 2008 decreased by $4.6 million, or
1.8%, compared to 2007 with cost reductions within the D+H Segment offsetting
cost increases within the Filogix Segment and with both business units
continuing to focus on cost containment initiatives. The decline of expenses
within the D+H Segment was primarily driven by reduced costs related to the
decline in cheque order volumes as referenced above and more fully described
below.

    Amortization of Capital and Other Assets

    Amortization of capital and other assets on a consolidated basis during
2008 increased by $0.5 million, or 3.0%, to $15.5 million compared to the same
period in 2007. The increased amortization was primarily a result of capital
additions within the Business.

    Other Expenses

    Interest expense decreased by $0.7 million for 2008 compared to the prior
year due primarily to the lower level of outstanding debt prevailing
throughout most of the year. Prior to drawing $28.0 million from existing debt
facilities in December 2008 to finance the acquisition of the Cyence business,
the Fund had made debt repayments of $10.0 million in 2008 and $15.0 million
in 2007.
    Effective January 2, 2008, the Fund increased its ownership in AVS to
100%. As AVS is now a wholly-owned subsidiary, the Business no longer
recognizes minority interest as all earnings accrue to the Business.
    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.
    For 2008, an unrealized loss on interest-rate swaps of $5.7 million (2007
- $0.7 million unrealized gain) was recorded, reflecting mark-to-market
adjustments related to generally lower interest rates at December 31, 2008
compared to December 31, 2007. 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. As the new tax rules were
enacted in June 2007, the Fund was required under Canadian GAAP to recognize
future income tax assets and liabilities, with a corresponding impact on
future income tax expense or recovery based on the temporary differences
expected to reverse after the date the tax is effective. Accordingly, the Fund
recognized a future income tax liability and the related expense of $1.2
million during 2008 (2007 - $1.6 million).
    Amortization of intangibles increased by $0.4 million in 2008, compared
to 2007. The increase was primarily related to the incremental intangible
assets arising on the acquisition of the remaining 25% interest in the AVS
business discussed above, and to the purchase of a customer service contract.

    Income from Discontinued Operations

    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. As
the service commitments for the contract were primarily outsourced to a third
party, the termination of this contract has not disrupted business operations.

    Net Income
    Net income of $78.4 million for 2008 decreased by $3.8 million, or 4.6%,
compared to the same period in 2007. The decrease was primarily the result of
the $5.7 million unrealized loss on interest rate swaps referred to above.
Excluding the non-cash impacts of amortization of market-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 $2.7 million, or 2.8%, in 2008 over the prior
year.


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

                                                      Year ended December 31,
    -------------------------------------------------------------------------
                         Davis + Henderson Segment(4)      Filogix Segment(4)
                         ---------------------------- -----------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue                   $  298,335  $  306,179  $   68,896  $   63,547
    Expenses                     201,266     210,937      41,904      36,726
    -------------------------------------------------------------------------

    EBITDA(1)                     97,069      95,242      26,992      26,821

    Amortization of capital
     and other assets              9,591       9,483       5,947       5,597
    Interest expense                   -           -           -           -
    Minority interest                  -           -           -           -
    -------------------------------------------------------------------------

    Adjusted income (loss)(1)     87,478      85,759      21,045      21,224

    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              2,818       3,366      10,898       9,932
    -------------------------------------------------------------------------
    Income (loss) from
     continuing operations        84,660      82,393      10,147      11,292
    Income (loss) from
     discontinued
     operations(3)                   465         567           -           -

    -------------------------------------------------------------------------
    Net income (loss)         $   85,125  $   82,960  $   10,147  $   11,292

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


                                                      Year ended December 31,
    -------------------------------------------------------------------------
                                           Corporate            Consolidated
                         ---------------------------- -----------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue                   $        -  $        -  $  367,231  $  369,726
    Expenses                       2,508       2,574     245,678     250,237
    -------------------------------------------------------------------------

    EBITDA(1)                     (2,508)     (2,574)    121,553     119,489

    Amortization of capital
     and other assets                  -           -      15,538      15,080
    Interest expense               6,847       7,531       6,847       7,531
    Minority interest                  -         379           -         379
    -------------------------------------------------------------------------

    Adjusted income (loss)(1)     (9,355)    (10,484)     99,168      96,499

    Amortization of mark-to-
     market adjustment of
     interest-rate swaps             561         678         561         678
    Net unrealized loss (gain)
     on interest-rate swaps(2)     5,691        (740)      5,691        (740)
    Future income tax expense
     (recovery)                    1,217       1,591       1,217       1,591
    Amortization of
     intangibles
     from acquisition                  -           -      13,716      13,298
    -------------------------------------------------------------------------
    Income (loss) from
     continuing operations       (16,824)    (12,013)     77,983      81,672
    Income (loss) from
     discontinued
     operations(3)                     -           -         465         567

    -------------------------------------------------------------------------
    Net income (loss)         $  (16,824) $  (12,013) $   78,448  $   82,239

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

    (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.
    (4) Effective January 1, 2008, the results of the PPSA program are
        included in the Filogix Segment. Prior to this date, the results were
        included in the Davis + Henderson Segment.
    

    Operating Results - D+H Segment

    Revenue

    Revenue within the Davis + Henderson Segment for the year ended December
31, 2008 decreased by $7.8 million, or 2.6%, compared with the same period in
2007. This decrease is net of a $4.1 million reclassification of the PPSA
business to the Filogix Segment, which during 2007 was operated and reported
within the Davis + Henderson Segment. Excluding the impact of this
reclassification, there was a $3.8 million, or 1.3%, decrease in revenues in
2008, compared to the same period in 2007. This decrease is primarily
attributed to elevated declines in cheque order volumes during the first half
of 2008 as a result of a shift in reorder cycles as more fully discussed
below. The impact of reduced order volumes was partially offset by annual
program changes and product and service enhancements, such as IDefence(R) and
BizAssist(R), which positively impacted revenues in 2008.
    Historically, cheque order volumes have, on average, declined annually by
low single digit percentages as a result of declining cheque usage. In the
first half of 2008, this decline was in excess of historical declines due to
changes in the imaging standards required for cheques produced in Canada,
which generated incremental and accelerated reorders during the first six
months of 2007. Management believes that many of these accelerated reorders
received in 2007 would otherwise have been received in 2008 pursuant to normal
reorder cycles. In the second half of 2008, cheque order volume declines were
directionally more in line with historical experience, although cheque order
volumes related to small business were below anticipated levels.

    Expenses

    Expenses within the Davis + Henderson Segment decreased by $9.7 million,
or 4.6%, during the year ended December 31, 2008 compared to the same period
in 2007. A large part of the year-over-year decrease was related to the cheque
order volume declines due to the shift in reorder cycles and other revenue
related reductions, including the transfer of the PPSA business to the Filogix
Segment, and an overall reduction in project and other costs generally related
to the PPSA business.

    Operating Results - Filogix Segment

    Revenue

    Revenue in the Filogix Segment for the year ended December 31, 2008
increased by $5.3 million, or 8.4%, over the same period in 2007. Excluding
the PPSA program, revenue increased by $1.2 million, or 1.9%, compared with
the same period in 2007.
    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. Year-over-year origination services revenues within Filogix
were down 4.1%, with the largest portion of the reduction occurring in the
later part of the year.
    The total revenue increase of $1.2 million over 2007 reflects the reduced
origination services revenues as described above, offset by increased revenues
from the licensing of the Business' underwriting technology in Australia and
New Zealand marketplaces, and in the fourth quarter of 2008 from the recovery
related to the resolution of a customer contract item.

    Expenses

    Expenses for the Filogix Segment increased by $5.2 million, or 14.1%, for
the year ended December 31, 2008 compared with the same period last year.
These increases were primarily attributed to the inclusion of the PPSA expense
base, planned increases in expenditures in support of product enhancements and
strengthening the general delivery capabilities of the Business, and, in the
fourth quarter of 2008, the recording of severance costs related to staff
reductions. Commencing in the second half of the 2008 year, in response to the
changing market conditions and reduced mortgage transaction volumes, the
Business reduced expenses and personnel. Excluding the inclusion of the PPSA
expense base and certain unusual employee-related expenses, expenses increased
 by 3.5% over the 2007 levels.

    Operating Results - Corporate Segment

    Expenses within the Corporate Segment were substantially unchanged with a
decrease of $0.1 million for the year ended December 31, 2008 compared with
the prior year.

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

                                                                        2008
                                         Q4         Q3         Q2         Q1
    -------------------------------------------------------------------------
    Revenue                        $ 89,357   $ 95,055   $ 95,407   $ 87,412
    Expenses                         62,413     61,664     61,334     60,267

    EBITDA(1)                        26,944     33,391     34,073     27,145

    Amortization of capital
     and other assets                 3,800      4,219      3,771      3,748
    Interest expense                  1,647      1,690      1,754      1,756
    Minority interest                     -          -          -          -
    -------------------------------------------------------------------------
    Adjusted income(1)               21,497     27,482     28,548     21,641

    Amortization of mark-to-market
     adjustment of interest-rate
     swaps                              151        151        152        107
    Net unrealized loss (gain)
     on interest-rate swaps(2)        3,653        728     (1,034)     2,344
    Future income tax expense
     (recovery)                         399         52        766          -
    Amortization of intangibles
     from acquisition                 3,409      3,412      3,447      3,448
    -------------------------------------------------------------------------
    Income from continuing
     operations                      13,885     23,139     25,217     15,742
    Income from discontinued
     operations(3)                       51        167        149         98

    -------------------------------------------------------------------------
    Net income                       13,936     23,306     25,366     15,840
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Adjusted income per unit,
     basic and diluted(1)            0.4892     0.6253     0.6496     0.4924

    Net income per unit,
     basic and diluted               0.3171     0.5303     0.5772     0.3604


                                                                        2007
                                         Q4         Q3         Q2         Q1
    -------------------------------------------------------------------------

    Revenue                        $ 88,641   $ 92,724   $ 99,250   $ 89,111
    Expenses                         62,075     61,695     64,450     62,017

    EBITDA(1)                        26,566     31,029     34,800     27,094

    Amortization of capital
     and other assets                 3,970      3,809      3,670      3,631
    Interest expense                  1,713      1,819      1,945      2,054
    Minority interest                  (139)       205        204        109
    -------------------------------------------------------------------------
    Adjusted income(1)               21,022     25,196     28,981     21,300

    Amortization of mark-to-market
     adjustment of interest-rate
     swaps                              163        163        176        176
    Net unrealized loss (gain)          823        957     (2,196)      (324)
    Future income tax expense
     (recovery)                         137          -      1,454          -
    Amortization of intangibles
     from acquisition                 3,386      3,347      3,271      3,294
    -------------------------------------------------------------------------
    Income from continuing
     operations                      16,513     20,729     26,276     18,154
    Income from discontinued
     operations(3)                      109        147        244         67

    -------------------------------------------------------------------------
    Net income                       16,622     20,876     26,520     18,221

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

    Adjusted income per unit,
     basic and diluted(1)            0.4783     0.5733     0.6595     0.4847

    Net income per unit,
     basic and diluted               0.3782     0.4750     0.6035     0.4146
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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, by higher than expected cheque order
volume, and (2) by stronger mortgage origination fees, both as described
previously. The impact of the higher than expected cheque order volume was
most pronounced in the second quarter of 2007. As a result of this change in
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 in
2008 as compared to 2007, particularly in the later part of the year.
    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.

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

                                                      Year ended December 31,
                                                2008        2007        2006
    -------------------------------------------------------------------------
    Total assets                           $ 663,906   $ 634,152   $ 641,051
    -------------------------------------------------------------------------
    Total long-term liabilities            $ 165,136   $ 135,143   $ 148,493
    -------------------------------------------------------------------------
    

    Total assets of $663.9 million at December 31, 2008 increased by $29.8
million compared with total assets at December 31, 2007, primarily as a result
of the acquisition of Cyence and the increased investment in AVS in 2008. The
decrease in total assets between December 31, 2007 and December 31, 2006 was
primarily a result of the amortization of intangible assets.
    Long-term liabilities increased by $30.0 million as a result of debt
drawn to fund the Cyence acquisition and adjustments to the fair value of
interest rate swaps and future tax liabilities. The decrease in long-term
liabilities between December 31, 2006 and December 31, 2007 was principally
the result of the Business making $15.0 million in voluntary debt payments in
2007 (2008 - $10.0 million).

    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)

                                                      Year ended December 31,
                                              2008         2007         2006
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                         $  116,062   $  117,401   $   89,753
    Add (deduct):
      Changes in non-cash working
       capital and other items(2)             (594)      (4,949)      (1,048)
    -------------------------------------------------------------------------
    Adjusted cash flows from operating
     activities                            115,468      112,452       88,705

    Less:
      Maintenance capital expenditures(3)    6,852       11,753        5,831
      Growth capital expenditures(3)         3,366          251        1,329
      Contract payments(4)                   3,220        3,492        2,695
    -------------------------------------------------------------------------
    Adjusted cash flows after capital
     expenditures and contract payments(3) 102,030       96,956       78,850

    Distributions paid to unitholders       78,580       78,357       61,191
    -------------------------------------------------------------------------
    Adjusted cash flows after capital,
     contract payments and distributions
     paid                                   23,450       18,599       17,659

    Cash flows provided by (used in)
     other financing activities             18,000      (15,000)     202,749
    Cash flows used in acquisition
     of Cyence business                    (37,876)           -            -
    Cash flows used in other
     acquisitions                           (5,250)        (746)    (223,852)
    Changes in non-cash working capital
     and other items(2)                        594        4,949        1,048
    Distributions paid to minority
     interest                                    -         (442)        (120)
    -------------------------------------------------------------------------
    Increase (decrease) in cash and
     cash equivalents for the year      $   (1,082)  $    7,360  $    (2,516)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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. Minority interest and changes to
    other long-term liabilities are deducted to arrive at adjusted cash
    flows. For details, see the Changes in Non-Cash Working Capital and Other
    Items section.

    (3) Maintenance capital expenditures are defined by the Fund as capital
    expenditures necessary to maintain and sustain the current productive
    capacity of the Business or generally improve the efficiency of the
    Business. Growth capital expenditures are defined by the Fund as capital
    expenditures that increase the productive capacity of the Business with a
    reasonable expectation of an increase in cash flow.

    (4) The Business has various payment obligations under customer
    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 and the financial institutions of the many activities related
    to ordering, data handling, customer service and other activities
    undertaken by financial institutions related to the operation of the
    cheque supply and other programs.



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

                                                      Year ended December 31,
                                              2008         2007         2006
    -------------------------------------------------------------------------
    Adjusted cash flows from
     operating activities               $   2.6275   $   2.5588   $   2.1441
    Adjusted cash flows after
     capital expenditures and
     contract payments                  $   2.3217   $   2.2062   $   1.9059
    Distributions paid to unitholders   $   1.7881   $   1.7830   $   1.4940
    Cash distributions declared
     during year                        $   1.7984   $   1.7980   $   1.5000
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                        2008 vs.     2007 vs.
                                                           2007         2006
                                                       % change     % change
    -------------------------------------------------------------------------
    Adjusted cash flows from operating activities          2.7%        19.3%
    Adjusted cash flows after capital expenditures
     and contract payments                                 5.2%        15.8%
    Distributions paid to unitholders                      0.3%        19.3%
    Cash distributions declared during year                0.0%        19.9%
    -------------------------------------------------------------------------



    Cash Flows, Income and Distributions Paid

    The following table compares cash flows from operating activities and
income to distributions paid:


    (in thousands of Canadian                         Year ended December 31,
     dollars, unaudited)                      2008         2007         2006
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                         $  116,062   $  117,401   $   89,753

    Net income                          $   78,448   $   82,239   $   66,529

    Adjusted income(1)                  $   99,168   $   96,499   $   75,147

    Distributions paid during year      $   78,580   $   78,357   $   61,191

    Excess (shortfall) of cash flows
     from operating activities over
     cash distributions paid            $   37,482   $   39,044   $   28,562

    Excess (shortfall) of net income
     over cash distributions paid       $     (132)  $    3,882   $    5,338

    Excess (shortfall) of adjusted
     income over cash distributions
     paid                               $   20,588   $   18,142   $   13,956
    -------------------------------------------------------------------------

    (1) Adjusted income is a non-GAAP term. See non-GAAP measures section for
        a more complete description of this term.
    

    Excess cash flows from operating activities over cash distributions paid
have been used to fund capital expenditures, pay down debt and to fund
acquisitions.

    Expenditures on Capital Assets and Contract Payments

    Total capital asset expenditures for the year ended December 31, 2008
were $10.2 million, a decrease of $1.8 million compared to the same period in
2007. The Davis + Henderson Segment accounted for $2.6 million of the decrease
partially offset by a $0.8 million increase in the Filogix Segment. Most of
the decrease in 2008 reflects lower capital spending after a period of higher
capital spending in 2007. In 2008, a higher proportion of Filogix capital was
expended to support the development and implementation of new customer service
contracts that will generate revenue in future periods. 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 as
compared to $13.4 million and $15.5 million in 2008 and 2007, respectively.
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 $78.6 million ($1.7881 per unit)
during 2008 compared to $78.4 million ($1.7830 per unit) in 2007, an increase
of 0.3%. Included in 2007 was a special distribution of $8.8 million ($0.20
per unit) that was paid to unitholders to ensure no taxable income remained in
the fund and in recognition of the strong and higher than expected financial
results of the Business in 2007.
    In 2008, a non-cash special distribution of $0.04 per unit was paid to
unitholders of record on December 31. The purpose of the special distribution
was to ensure no taxable income remained in the Fund in 2008. Immediately
after the declaration of the unit distribution, the number of outstanding Fund
units was consolidated such that each unitholder held, following the
consolidation, the same number of units as before the non-cash distribution.
    On an annualized basis, the monthly cash distribution rate for December
2008 was $1.84 per unit as compared to $1.72 per unit annualized in December
2007, representing an increase of 7.2%.
    Distributions paid can be different than distributions declared during a
period. Monthly distributions are declared by the Fund for unitholders of
record on the last business day of each month and are paid within 31 days
following each month end. On a declared basis, total cash distributions per
unit (both monthly and special) were $1.80 per unit for both 2008 and 2007.
    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 declared for 2008 is 100%
"other income", as was the case for all of 2007. The non-cash special
distribution is included in a unitholder's taxable income for 2008 and the
adjusted cost base for tax purposes for the units held increases by the same
amount.
    The Fund may issue an unlimited number of trust units. Each trust unit is
transferable and represents an equal, undivided beneficial interest in any
distribution from the Fund and the net assets of the Fund. All units are of
the same class with equal rights and privileges and are not subject to future
calls or assessments. Each unit entitles the holder to one vote at all
meetings of unitholders. As at December 31, 2008 and February 24, 2009,
43,946,792 trust units were outstanding.

    Cash Flows Provided by (Used in) Other Financing Activities

    During the year ended December 31, 2008, the Fund repaid $10.0 million of
long-term indebtedness prior to drawing $28.0 million from its debt facility
to finance the acquisition of the Cyence business. During the year ended
December 31, 2007, the Fund repaid $15.0 million of long-term indebtedness.

    Cash Flows Used in Acquisition of Business

    During the fourth quarter of 2008, the Fund advanced its strategy of
providing services to the credit lifecycle management market by acquiring 100%
of Cyence International Inc. for total cash consideration of $37.9 million.
    As well, during 2008, the Fund acquired 25% of the outstanding units of
AVS L.P., taking its interest to 100%, and made a $1.0 million portfolio
investment in a technology service company.

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

                                                      Year ended December 31,
                                              2008         2007         2006
    -------------------------------------------------------------------------
    Minority interest                   $        -   $      379   $      202
    Change in non-cash working
     capital items                           1,933        4,256          610
    Changes in other operating assets
     and liabilities                        (1,339)         314          236
    -------------------------------------------------------------------------
    Changes in non-cash working
     capital and other items            $      594   $    4,949   $    1,048
    -------------------------------------------------------------------------
    

    The decrease in non-cash working capital items for the year ended
December 31, 2008 was primarily related to a reclassification to current from
long-term liabilities of amounts owing under a deferred compensation program.
The decrease in non-cash working capital items for the year ended December 31,
2007, a source of cash flow, was primarily related to an increase in trade
payables and other current liabilities.

    Cash Balances and Long-term Indebtedness

    The Business has continued to generate operating cash flow in excess of
distributions. For 2008, this excess cash flow, together with cash on hand,
was applied primarily to make voluntary repayments of bank debt and finance
acquisitions.
    At December 31, 2008, cash and cash equivalents totalled $12.1 million,
compared to $13.1 million at December 31, 2007.
    Total debt facilities available at December 31, 2007 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 December 31, 2008, 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 December 31, 2008, 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
                              -----------------------------------
                             Notional                               Interest
    Maturity Date              Amount        Asset    Liability       Rate(1)
    -------------------------------------------------------------------------
    July 15, 2009          $   20,000   $        -   $      444        5.688%
    July 15, 2010              33,000            -        1,999        5.690%
    January 5, 2011            22,000            -          397        2.855%
    June 15, 2011              20,000            -        2,177        5.560%
    June 15, 2011              25,000            -        1,742        5.560%
    -------------------------------------------------------------------------
                           $  120,000   $        -   $    6,759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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 December 31, 2008, the Fund would have to pay the fair value of
$6.8 million, the liability on the balance sheet ($1.2 million at December 31,
2007) 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 4.77% as at December 31, 2008.
    Cash flows from operations, together with cash balances on hand and
unutilized term credit facilities, are expected to be sufficient to fund the
Business' operating requirements, capital expenditures, contractual
obligations and anticipated distributions. 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.

    Contractual Obligations - Payments Due by Period

    The table below presents the contractual obligations of the Business as
at December 31, 2008 and the timing of the expected payments.

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

    Long-term
     indebtedness      $ 148,000  $       -  $ 148,000  $       -  $       -

    Disbursement
     obligations on
     customer
     contracts             1,567      1,537         25          5          -

    Operating leases      13,016      4,151      6,542      1,972        351

    Employee future
     benefits                707         67        148        100        392

    Obligations
     relating to a
     deferred
     compensation
      program              1,892      1,892          -          -          -
    -------------------------------------------------------------------------
                       $ 165,182  $   7,647  $ 154,715  $   2,077  $     743
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    Cumulative Summary of Cash Flows(1)

    The table below provides an analysis of cash flows of the Fund since
inception through December 31, 2008, excluding the transactions pertaining to
the purchase of the original Davis + Henderson business by the Fund.

    
    (in thousands of
     Canadian dollars,
     unaudited)                       December 20, 2001 to December 31, 2008
    -------------------------------------------------------------------------
    Cash flows from operating activities                          $  618,501

    Less:
      Expenditures on capital assets and contract payments            85,262
    -------------------------------------------------------------------------
    Adjusted cash flows after capital expenditures and
     contract payments                                               533,239

    Less:
      Distributions paid to unitholders                              425,373
    -------------------------------------------------------------------------
    Adjusted cash flows after capital, contract payments
     and distributions paid                                          107,866

    Cash flows provided by (used in) other financing activities
      Net proceeds from issuance of trust units                      109,200
      Proceeds from long-term indebtedness net of issuance costs     126,549
      Distributions paid to minority interest                           (562)
      Repayments of long-term indebtedness                           (60,000)
    -------------------------------------------------------------------------
                                                                     175,187
    Cash flows used in acquistion of businesses                     (270,987)
    -------------------------------------------------------------------------
    Increase in cash and cash equivalents for the period              12,066
    Cash and cash equivalents, beginning of period                         -
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period                      $   12,066
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cumulative distributions paid as a % of adjusted cash
     flows after capital expenditures and contract payments             79.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    (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.

    Adjusted cash flows after capital, contract payments and distributions
paid of $107.9 million was retained by the Business and used to contribute to
the funding of acquisitions and to pay down debt.
    In general, mutual fund trusts, including the Fund, must distribute all
their taxable income to their unitholders in order not to pay income taxes in
the trust. Taxable income may be less than cash generated if the Business has
excess tax deductions it can utilize to reduce taxable income.

    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.

    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 contraction within the real estate and
mortgage origination market. 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, a more dramatic
recessionary period may impact the demand for small business cheque orders.
Recent changes in the real estate and mortgage markets and the slowing
economic activity have impacted, and are expected to continue to impact, the
origination and underwriting services revenue which represent approximately
15% of the 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 underwriting services, PPSA services and the newly added
Cyence offerings.
    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.
    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.
    Davis + Henderson had a solid year in 2008 in the context of a
challenging economic environment. Although full-year revenue was down slightly
compared to 2007, which was an unusually strong year, the Fund reported modest
growth in EBITDA, Adjusted income and cash flow and increased its monthly cash
distributions.
    As we move through the early part of 2009, it is apparent that the 
economic environment is likely to be more difficult than it was in 2008. This
in turn will affect our lending service revenues, specifically origination and
underwriting revenues, and may 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 that
the combination of our revenue base, business model and capital structure
positions the Business to deal with the challenges we face.

    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
    December 31, 2008 and 2007
    (in thousands of Canadian dollars)

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

                                                          2008          2007
    -------------------------------------------------------------------------

    ASSETS
    Current assets:
      Cash and cash equivalents                    $    12,066   $    13,148
      Accounts receivable                               16,180        17,860
      Inventory (note 3)                                 4,475         5,316
      Prepaid expenses                                   2,813         2,973
    -------------------------------------------------------------------------
                                                        35,534        39,297

    Future income tax asset (note 12)                    3,162             -
    Capital assets (note 4)                             31,280        32,199
    Other assets (note 5)                                4,429         5,964
    Interest-rate swaps (note 10)                            -           105
    Intangible assets (note 6)                         130,512       118,085
    Goodwill (note 7)                                  458,989       438,502

    -------------------------------------------------------------------------
                                                   $   663,906   $   634,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities     $    40,827   $    39,870
      Distributions payable to unitholders               6,737         6,284
      Current portion of disbursement obligations
       on customer contracts (note 8)                    1,537         2,962
    -------------------------------------------------------------------------
                                                        49,101        49,116

    Disbursement obligations on customer
     contracts (note 8)                                     30           767
    Long-term indebtedness (note 9)                    147,331       129,054
    Interest-rate swaps (note 10)                        6,759         1,173
    Other long-term liabilities (note 11)                  812         2,558
    Future income tax liability (note 12)               10,204         1,591
    Minority interest                                        -           200

    -------------------------------------------------------------------------
                                                       214,237       184,459

    Unitholders' equity:
      Trust units (note 13)                            476,343       474,585
      Deficit                                          (25,714)      (23,371)
      Accumulated other comprehensive
       income (loss)                                      (960)       (1,521)
    -------------------------------------------------------------------------
                                                       449,669       449,693

    Commitments (note 15)
    -------------------------------------------------------------------------
                                                   $   663,906   $   634,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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)

                                       Quarter ended              Year ended
                                         December 31,            December 31,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue                   $   89,357  $   88,641  $  367,231  $  369,726
    Cost of sales and
     operating
     expenses (note 3)            62,773      62,479     247,215     251,771
    Amortization of capital
     and other assets              3,440       3,566      14,001      13,546
    -------------------------------------------------------------------------
                                  23,144      22,596     106,015     104,409

    Interest expense               1,798       1,876       7,408       8,209
    Net unrealized loss (gain)
     on interest-rate swaps        3,653         823       5,691        (740)
    Amortization of
     intangible assets             3,409       3,386      13,716      13,298
    Minority interest                  -        (139)          -         379
    -------------------------------------------------------------------------

    Income from continuing
     operations before
     income taxes                 14,284      16,650      79,200      83,263
    Future income tax expense        399         137       1,217       1,591
    -------------------------------------------------------------------------
    Income from continuing
     operations                   13,885      16,513      77,983      81,672
    Income from discontinued
     operations (note 18)             51         109         465         567
    -------------------------------------------------------------------------
    Net income                $   13,936  $   16,622  $   78,448  $   82,239
    -------------------------------------------------------------------------
    Net income per unit,
     basic and diluted        $   0.3171  $   0.3782  $   1.7851  $   1.8713
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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



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

                                       Quarter ended              Year ended
                                         December 31,            December 31,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    Net income                $   13,936  $   16,622  $   78,448  $   82,239
    Other comprehensive
     income:
    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps             151         163         561         678
    -------------------------------------------------------------------------
    Total comprehensive
     income                   $   14,087  $   16,785  $   79,009  $   82,917
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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)

                                       Quarter ended              Year ended
                                         December 31,            December 31,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    DEFICIT
    Deficit, beginning of
     period                   $  (17,681) $  (12,834) $  (23,371) $  (26,710)
    Mark-to-market adjustment
     of interest-rate swaps            -           -           -         116
    Net income                    13,936      16,622      78,448      82,239
    Distributions                (21,969)    (27,159)    (80,791)    (79,016)
    -------------------------------------------------------------------------
    Deficit, end of period       (25,714)    (23,371)    (25,714)    (23,371)
    -------------------------------------------------------------------------

    ACCUMULATED OTHER
     COMPREHENSIVE INCOME
     (LOSS)
    Accumulated other
     comprehensive income
     (loss), beginning of
     period                       (1,111)     (1,684)     (1,521)          -
    Mark-to-market adjustment
     of interest-rate swaps            -           -           -      (2,199)
    Other comprehensive income :
    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps             151         163         561         678
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive income
     (loss), end of period(1)       (960)     (1,521)       (960)     (1,521)
    -------------------------------------------------------------------------
    Deficit and accumulated
     other comprehensive
     income (loss), end of
     period                   $  (26,674) $  (24,892) $  (26,674) $  (24,892)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Accumulated other comprehensive income (loss) consists of cumulative
        net gains and losses that were deferred prior to January 1, 2007 when
        hedge accounting was used by the Fund.

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



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

                                       Quarter ended              Year ended
                                         December 31,            December 31,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Cash and cash equivalents provided by (used in):

    OPERATING ACTIVITIES
    Net income                $   13,936  $   16,622  $   78,448  $   82,239
    Add:
      Amortization of capital
       assets                      2,843       2,698      10,835      10,838
      Amortization of capital
       assets included in cost
       of sales                      360         404       1,537       1,534
      Amortization of other
       assets                        675         949       3,463       3,014
      Amortization of
       intangible assets           3,409       3,386      13,716      13,298
      Amortization of
       mark-to-market
       adjustment of
       interest-rate swaps           151         163         561         678
      Net unrealized loss
       (gain) on
       interest-rate swaps         3,653         823       5,691        (740)
      Future income tax
       expense                       399         137       1,217       1,591
      Minority interest                -        (139)          -         379
    -------------------------------------------------------------------------
                                  25,426      25,043     115,468     112,831

    Decrease in non-cash
     working capital items         6,022       6,963       1,933       4,256
    Changes in other operating
     assets and liabilities          358         135      (1,339)        314
    -------------------------------------------------------------------------
                                  31,806      32,141     116,062     117,401
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Net proceeds from
     (repayment of) long-term
     indebtedness                 28,000           -      18,000     (15,000)
    Distributions paid to
     minority interest                 -        (187)          -        (442)
    Distributions paid to
     unitholders                 (20,211)    (26,676)    (78,580)    (78,357)
    -------------------------------------------------------------------------
                                    7,789    (26,863)    (60,580)    (93,799)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Expenditures on capital
     assets                       (4,522)     (4,204)    (10,218)    (12,004)
    Payments pursuant to
     long-term supply
     contracts                      (393)       (150)     (3,220)     (3,492)
    Acquisition of businesses
     (note 2)                    (37,876)          -     (42,126)         91
    Acquisition of
     investments (note 5)         (1,000)          -      (1,000)          -
    Acquisition of customer
     service contracts                 -           -           -        (837)
    -------------------------------------------------------------------------
                                 (43,791)     (4,354)    (56,564)    (16,242)
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash equivalents
     for the period               (4,196)        924      (1,082)      7,360
    Cash and cash equivalents,
     beginning of period          16,262      12,224      13,148       5,788
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period            $   12,066  $   13,148  $   12,066  $   13,148
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Cash interest paid        $    1,633  $    1,886  $    6,398  $    7,810
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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



    Davis + Henderson Income Fund
    Notes to Consolidated Financial Statements
    Years ended December 31, 2008 and 2007
    (in thousands of Canadian dollars, except unit and per unit amounts,
    unaudited)

    NATURE OF BUSINESS

    Davis + Henderson Income Fund (the "Fund") is a limited-purpose trust,
    formed under the laws of the Province of Ontario by a declaration of
    trust dated November 6, 2001 and as amended and restated on July 23,
    2004. The Fund holds indirectly all of the partnership units of Davis +
    Henderson, Limited Partnership ("Davis + Henderson L.P.") and its
    subsidiaries Filogix Limited Partnership ("Filogix L.P."), Filogix Inc.,
    Cyence International Inc. ("Cyence") and Advanced Validation System
    Limited Partnership ("AVS L.P.").

    1.  SIGNIFICANT ACCOUNTING POLICIES

    The consolidated financial statements have been prepared using Canadian
    generally accepted accounting principles.

    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, expanding the
    current customer offering. The assets acquired and consideration given
    were as follows:

                                                                        2008
    -------------------------------------------------------------------------
    Net assets acquired, at fair value:
      Assets                                                       $   5,132
      Intangible assets                                               24,800
      Liabilities                                                     (9,852)
    -------------------------------------------------------------------------
                                                                      20,080

    Goodwill                                                          17,796

    -------------------------------------------------------------------------
    Total                                                          $  37,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consideration for 100% ownership:

      Cash                                                         $  37,876
    -------------------------------------------------------------------------
    Total                                                          $  37,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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

                                                          2008          2007
    -------------------------------------------------------------------------
    Raw materials                                    $   1,988     $   2,202
    Work-in-process                                      1,503         2,152
    Finished goods                                         984           962

    -------------------------------------------------------------------------
                                                     $   4,475     $   5,316
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 year ended
    December 31, 2008 was $48,541 (2007 - $51,874). The amount of write-down
    of inventories recognized as an expense during the year ended
    December 31, 2008 was $222 (2007 - $144).

    4.  CAPITAL ASSETS

                                                                        2008
    -------------------------------------------------------------------------
                                                   Accumulated
                                            Cost  amortization           Net
    -------------------------------------------------------------------------
    Machinery and equipment            $  15,589     $   8,609     $   6,980
    Computer equipment and software       50,895        29,026        21,869
    Furniture, fixtures and leasehold
     improvements                          9,048         6,617         2,431
    -------------------------------------------------------------------------
                                       $  75,532     $  44,252     $  31,280
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                        2007
    -------------------------------------------------------------------------
                                                   Accumulated
                                            Cost  amortization           Net
    -------------------------------------------------------------------------
    Machinery and equipment            $  15,191     $   7,679     $   7,512
    Computer equipment and software       47,044        24,887        22,157
    Furniture, fixtures and leasehold
     improvements                          8,324         5,794         2,530
    -------------------------------------------------------------------------
                                       $  70,559     $  38,360     $  32,199
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization during the quarter ended December 31, 2008 was $3,203
    (Q4 2007 - $3,102) of which $360 was included in cost of sales
    (Q4 2007 - $404). Amortization during the year ended December 31, 2008
    was $12,372 (2007 - $12,372), of which $1,537 was included in cost of
    sales (2007 - $1,534). Fully amortized capital assets removed from the
    accounts during the quarter ended December 31, 2008 were $50
    (Q4 2007 - $223) and during the year ended December 31, 2008 were $6,480
    (2007 - $444).

    5.  OTHER ASSETS

                                                          2008          2007
    -------------------------------------------------------------------------
    Long-term supply contracts                       $   8,761     $  12,581
    Less: Accumulated amortization                      (5,414)       (6,987)
    -------------------------------------------------------------------------
                                                         3,347         5,594

    Investments                                          1,000             -
    Other                                                   82           370
    -------------------------------------------------------------------------
                                                     $   4,429     $   5,964
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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.

    Amortization during the quarter ended December 31, 2008 on long-term
    supply contracts was $675 (Q4 2007 - $949) and during the year ended
    December 31, 2008 was $3,463 (2007 - $3,014). Fully amortized assets
    removed from the accounts during the quarter ended December 31, 2008 were
    $1,448 (Q4 2007 - nil) and during the year ended December 31, 2008 were
    $5,036 (2007 - $nil).

    6.  INTANGIBLE ASSETS

                                                          2008          2007
    -------------------------------------------------------------------------
    Cost:
      Cheque supply outsourcing contracts            $  16,329     $  16,329
      Customer service contracts                         5,849         4,506
      Proprietary software                              56,093        41,993
      Brand names                                       10,900         8,400
      Customer relationships                            86,087        77,887
    -------------------------------------------------------------------------
                                                       175,258       149,115
    Accumulated amortization                           (44,746)      (31,030)
    -------------------------------------------------------------------------
                                                     $ 130,512     $ 118,085
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amortization during the quarter ended December 31, 2008 was $3,409
    (Q4 2007 - $3,386) and during the year ended December 31, 2008 was
    $13,716 (2007 - $13,298).

    7.  GOODWILL

                                                          2008          2007
    -------------------------------------------------------------------------
    Balance, beginning of year                       $ 438,502     $ 438,546
    Goodwill acquired during the year:
      AVS acquistion                                     2,691           (44)
      Cyence acquisition                                17,796             -
    -------------------------------------------------------------------------
    Balance, end of year                             $ 458,989     $ 438,502
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8.  DISBURSEMENT OBLIGATIONS ON CUSTOMER CONTRACTS

                                                          2008          2007
    -------------------------------------------------------------------------
    Current portion                                  $   1,537     $   2,962
    Long-term portion                                       30           767
    -------------------------------------------------------------------------
    Total disbursement obligations on customer
     contracts                                       $   1,567     $   3,729
    -------------------------------------------------------------------------

    The Fund has fixed customer contract disbursement obligations payable as
    of December 31, 2008 as follows:

    2009                                                           $   1,537
    2010                                                                  15
    2011                                                                  10
    2012                                                                   5
    -------------------------------------------------------------------------
                                                                   $   1,567
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    9.  LONG-TERM INDEBTEDNESS

                                                          2008          2007
    -------------------------------------------------------------------------
    Non-revolving term loan                          $ 120,000     $ 120,000
    Revolving credit facility                           28,000        10,000
    -------------------------------------------------------------------------
                                                       148,000       130,000
    Deferred finance costs                                (669)         (946)
    -------------------------------------------------------------------------
                                                     $ 147,331     $ 129,054
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund has $170.0 million of available term credit facilities due
    June 15, 2011 (December 31, 2007 - $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 December 31, 2008, 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 quarter ended December 31, 2008 was $69 (Q4 2007 - $69) and
    during the year ended December 31, 2008 was $277 (2007 - $276).
    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 year ended
    December 31, 2008. As the sensitivity is hypothetical, it should be used
    with caution.

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

    Increase (decrease) in interest expense          $     280     $    (280)
    Change to net unrealized (gain) loss on
     interest-rate swaps                                (2,100)        2,100
    -------------------------------------------------------------------------

    Increase (decrease) in net income                $   1,820     $  (1,820)
    -------------------------------------------------------------------------

    Increase (decrease) in total comprehensive
     income                                          $   1,820     $  (1,820)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Fund manages its interest-rate risks through the use of interest-rate
    swaps for most of its outstanding long-term indebtedness. As of
    December 31, 2008, 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
                                  -----------------------------------
                            Notional                                Interest
    Maturity date             Amount         Asset     Liability     rate(1)
    -------------------------------------------------------------------------
    July 15, 2009       $     20,000             -  $        444      5.688%
    July 15, 2010             33,000             -         1,999      5.690%
    January 5, 2011           22,000             -           397      2.855%
    June 15, 2011             20,000             -         2,177      5.560%
    June 15, 2011             25,000             -         1,742      5.560%
    -------------------------------------------------------------------------
                        $    120,000  $          -  $      6,759
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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

                                                          2008          2007
    -------------------------------------------------------------------------
    Deferred compensation program                    $       -     $   1,997
    Employee future benefits                               707           561
    Capital lease                                          105             -
    -------------------------------------------------------------------------
                                                     $     812     $   2,558
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The deferred compensation program, which commenced in 2003, is a
    five-year long-term incentive plan for management, subject to certain
    performance criteria and vesting terms, payable after December 31, 2008.
    The balance has been reclassified to current liabilities as it is payable
    in 2009.

    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 year
    ended December 31, 2008 was $2.0 million (2007 - $1.8 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:

                                                          2008          2007
    -------------------------------------------------------------------------
    Future income tax assets:
      Capital assets less than tax values            $   3,121     $       -
      Intangible assets less than tax values            10,979        10,854
      Loss carryforwards                                 1,677         1,636
      Valuation allowance                              (12,615)      (12,490)
    -------------------------------------------------------------------------
      Total future tax assets                            3,162             -
    -------------------------------------------------------------------------

    Future income tax liabilities:
      Capital assets greater than tax values             2,849         1,591
      Intangible assets greater than tax values          7,355             -
    -------------------------------------------------------------------------
      Total future tax liabilities                      10,204         1,591
    -------------------------------------------------------------------------
    Net future income tax liabilities                $   7,042     $   1,591
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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. during
    the year. 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:

                                                          2008          2007
    -------------------------------------------------------------------------
    Balance, beginning of year                        $474,585      $474,585
    Non-cash distribution                                1,758             -
    -------------------------------------------------------------------------
    Balance, end of year                              $476,343      $474,585
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Units outstanding, end of year                  43,946,792    43,946,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    A non-cash special distribution at the rate of $0.04 per unit was made to
    the unitholders on December 31, 2008, to unitholders of record on
    December 31, 2008. The special distribution, payable in the form of
    additional units, was intended to ensure that, as required by its
    Declaration of Trust, the fund will not be liable to pay income taxes in
    respect of its current taxation year ending December 31, 2008.
    Immediately after the unit distribution, the number of outstanding Fund
    units was consolidated, such that each unitholder will hold, following
    the consolidation, the same number of Fund units as before the non-cash
    distribution.

    The weighted average number of units outstanding during the year ended
    December 31, 2008 was 43,946,792 (2007 - 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 (as compared to many corporate entities) 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 12-month trailing period ended December 31, 2008, this
    ratio was calculated at 1.26 (12-month trailing period ended December 31,
    2007 - 1.09). 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 December 31, 2008, the Fund has annual lease obligations with
    respect to real estate, vehicles and equipment as follows:

    2009                                                           $   4,151
    2010                                                               4,040
    2011                                                               2,502
    2012                                                               1,353
    2013                                                                 619
    Thereafter                                                           351
    -------------------------------------------------------------------------
                                                                   $  13,016
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    16. SIGNIFICANT CUSTOMERS

    For the quarter ended December 31, 2008, the Fund earned 77% of its
    consolidated revenue from its seven largest customers (Q4 2007 - 79%).
    For the quarter ended December 31, 2008, three of these customers
    individually accounted for greater than 10%, but not more than 17% of the
    Fund's total revenue (Q4 2007 - four of these customers individually
    accounted for greater than 10%, but not more than 18% of the Fund's total
    revenue).

    For the year ended December 31, 2008, the Fund earned 78% of its
    consolidated revenue from its seven largest customers (2007 - 78%). For
    the years ended December 31, 2008 and 2007, 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 costs incurred by the Fund for the operation of a
    public entity. Corporate assets consist primarily of cash and cash
    equivalents.

    Prior to January 1, 2008, the personal property, search and registration
    programs were operated and reported as part of the Davis + Henderson
    Segment. Effective January 1, 2008, these programs are operated and
    reported as part of the Filogix Segment.

    In circumstances where there is a change in the composition of reportable
    segments, CICA Handbook Section 1701, Segment Disclosures, requires
    restatement of corresponding information for earlier periods if
    practical. If information is not restated, the entity is required to
    disclose the results for the current period under both the old basis and
    the new basis of segmentation. As it is not practical to extract costs
    relating to the personal property, search and registration programs for
    periods prior to January 1, 2008, the Fund has presented the segment
    information for the current period both under the old basis and the new
    basis of segmentation.

    Summarized financial information for the quarters ended December 31, 2008
    and 2007 are as follows:

                                                   Quarter ended December 31,
    -------------------------------------------------------------------------
                                     Davis + Henderson
                                               Segment       Filogix Segment
                                  --------------------- ---------------------
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------

    Revenue                       $  73,013  $  73,066  $  16,344  $  15,575
    Cost of sales and operating
     expenses                        51,035     51,383     11,185     10,437
    Amortization of capital and
     other assets                     1,783      2,143      1,657      1,423
    -------------------------------------------------------------------------
                                     20,195     19,540      3,502      3,715

    Interest expense                      -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps               -          -          -          -
    Amortization of intangible
     assets                             647        903      2,762      2,483
    Minority interest                     -          -          -          -
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations before income
     taxes                           19,548     18,637        740      1,232
    Future income tax expense             -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      19,548     18,637        740      1,232
    Income (loss) from
     discontinued operations             51        109          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  19,599  $  18,746  $     740  $   1,232
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other assets
     expenditures                 $   1,791  $   2,660  $   3,124  $   1,694
    Intangible assets             $     337  $   5,282  $ 130,175  $ 112,803
    Goodwill                      $ 359,385  $ 366,562  $  99,604  $  71,940
    Total assets                  $ 425,727  $ 452,012  $ 226,113  $ 168,992
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                             Corporate         Consolidated
                                  --------------------- ---------------------
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------

    Revenue                       $       -  $       -  $  89,357  $  88,641
    Cost of sales and operating
     expenses                           553        659     62,773     62,479
    Amortization of capital and
     other assets                         -          -      3,440      3,566
    -------------------------------------------------------------------------
                                       (553)      (659)    23,144     22,596

    Interest expense                  1,798      1,876      1,798      1,876
    Net unrealized loss (gain)
     on interest-rate swaps           3,653        823      3,653        823
    Amortization of intangible
     assets                               -          -      3,409      3,386
    Minority interest                     -       (139)         -       (139)
    -------------------------------------------------------------------------

    Income (loss) from continuing
     operations before income
     taxes                           (6,004)    (3,219)    14,284     16,650
    Future income tax expense           399        137        399        137
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      (6,403)    (3,356)    13,885     16,513
    Income (loss) from
     discontinued operations              -          -         51        109
    -------------------------------------------------------------------------
    Net income (loss)             $  (6,403) $  (3,356) $  13,936  $  16,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other assets
     expenditures                 $       -  $       -  $   4,915  $   4,354
    Intangible assets             $       -  $       -  $ 130,512  $ 118,085
    Goodwill                      $       -  $       -  $ 458,989  $ 438,502
    Total assets                  $  12,066  $  13,148  $ 663,906  $ 634,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effective January 1, 2008, the results of the personal property, search
    and registration programs are included as part of the results of the
    Filogix Segment. Prior to this date, the results were included as part of
    the Davis + Henderson Segment. Current period results under both the new
    and old basis of segmentation have been presented separately.



    For the quarter ended December 31, 2008, the Davis + Henderson Segment
    had four customers that individually accounted for greater than 10% but
    not more than 21% of the Davis + Henderson Segment revenue and the
    Filogix Segment had two customers that individually accounted for greater
    than 10% but not more than 14% of the Filogix Segment revenue (Q4 2007 -
    Davis + Henderson Segment had five customers that individually accounted
    for greater than 10% but not more than 21% of the Davis + Henderson
    Segment revenue and the Filogix Segment had three customers that
    individually accounted for greater than 10% but not more than 18% of the
    Filogix Segment revenue).

    The following table illustrates the reporting under the new and old basis
    of segmentation for the quarter ended December 31, 2008.


                                                   Quarter ended December 31,
    -------------------------------------------------------------------------

                                     Davis + Henderson
                                               Segment       Filogix Segment
                                  --------------------- ---------------------
                                  New Basis  Old Basis  New Basis  Old Basis
                                  ---------- ---------- ---------- ----------
                                       2008       2008       2008       2008
    -------------------------------------------------------------------------
    Revenue                       $  73,013  $  73,961  $  16,344  $  15,396
    Cost of sales and operating
     expenses                        51,035     51,647     11,185     10,573
    Amortization of capital and
     other assets                     1,783      1,783      1,657      1,657
    -------------------------------------------------------------------------
                                     20,195     20,531      3,502      3,166
    Interest expense                      -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps               -          -          -          -
    Amortization of intangible
     assets                             647        867      2,762      2,542
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                           19,548     19,664        740        624
    Future income tax expense             -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      19,548     19,664        740        624
    Income (loss) from
     discontinued operations             51         51          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  19,599  $  19,715  $     740  $     624
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $   1,791  $   1,791  $   3,124  $   3,124
    Intangible assets             $     337  $   2,900  $ 130,175  $ 127,612
    Goodwill                      $ 359,385  $ 369,253  $  99,604  $  89,736
    Total assets                  $ 425,727  $ 447,524  $ 226,113  $ 204,316
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                             Corporate          Consolidated
                                  --------------------- ---------------------
                                  New Basis  Old Basis  New Basis  Old Basis
                                  ---------- ---------- ---------- ----------
                                       2008       2008       2008       2008
    -------------------------------------------------------------------------
    Revenue                       $       -  $       -  $  89,357  $  89,357
    Cost of sales and operating
     expenses                           553        553     62,773     62,773
    Amortization of capital and
     other assets                         -          -      3,440      3,440
    -------------------------------------------------------------------------
                                       (553)      (553)    23,144     23,144
    Interest expense                  1,798      1,798      1,798      1,798
    Net unrealized loss (gain)
     on interest-rate swaps           3,653      3,653      3,653      3,653
    Amortization of intangible
     assets                               -          -      3,409      3,409
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                           (6,004)    (6,004)    14,284     14,284
    Future income tax expense           399        399        399        399
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      (6,403)    (6,403)    13,885     13,885
    Income (loss) from
     discontinued operations              -          -         51         51
    -------------------------------------------------------------------------
    Net income (loss)             $  (6,403) $  (6,403) $  13,936  $  13,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $       -  $       -  $   4,915  $   4,915
    Intangible assets             $       -  $       -  $ 130,512  $ 130,512
    Goodwill                      $       -  $       -  $ 458,989  $ 458,989
    Total assets                  $  12,066  $  12,066  $ 663,906  $ 663,906
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The results presented under the old basis for the Davis + Henderson and
    Filogix Segments remove the impact of the change in the reporting of the
    personal property, search and registration programs from the current
    period results.



    Summarized financial information for the years ended December 31, 2008
    and 2007 are as follows:

                                                      Year ended December 31,
    -------------------------------------------------------------------------

                                     Davis + Henderson
                                               Segment       Filogix Segment
                                  --------------------- ---------------------
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------

    Revenue                       $ 298,335  $ 306,179  $  68,896  $  63,547
    Cost of sales and operating
     expenses                       202,803    212,471     41,904     36,726
    Amortization of capital and
     other assets                     8,054      7,949      5,947      5,597
    -------------------------------------------------------------------------
                                     87,478     85,759     21,045     21,224

    Interest expense                      -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps               -          -          -          -
    Amortization of intangible
     assets                           2,818      3,366     10,898      9,932
    Minority interest                     -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                           84,660     82,393     10,147     11,292
    Future income tax expense             -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      84,660     82,393     10,147     11,292
    Income (loss) from
     discontinued operations            465        567          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  85,125  $  82,960  $  10,147  $  11,292
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $   7,034  $   9,766  $   6,404  $   5,730
    Intangible assets             $     337  $   5,282  $ 130,175  $ 112,803
    Goodwill                      $ 359,385  $ 366,562  $  99,604  $  71,940
    Total assets                  $ 425,727  $ 452,012  $ 226,113  $ 168,992
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                             Corporate          Consolidated
                                  --------------------- ---------------------
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------

    Revenue                       $       -  $       -  $ 367,231  $ 369,726
    Cost of sales and operating
     expenses                         2,508      2,574    247,215    251,771
    Amortization of capital and
     other assets                         -          -     14,001     13,546
    -------------------------------------------------------------------------
                                     (2,508)    (2,574)   106,015    104,409

    Interest expense                  7,408      8,209      7,408      8,209
    Net unrealized loss (gain)
     on interest-rate swaps           5,691       (740)     5,691       (740)
    Amortization of intangible
     assets                               -          -     13,716     13,298
    Minority interest                     -        379          -        379
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                          (15,607)   (10,422)    79,200     83,263
    Future income tax expense         1,217      1,591      1,217      1,591
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                     (16,824)   (12,013)    77,983     81,672
    Income (loss) from
     discontinued operations              -          -        465        567
    -------------------------------------------------------------------------
    Net income (loss)             $ (16,824) $ (12,013) $  78,448  $  82,239
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $       -  $       -  $  13,438  $  15,496
    Intangible assets             $       -  $       -  $ 130,512  $ 118,085
    Goodwill                      $       -  $       -  $ 458,989  $ 438,502
    Total assets                  $  12,066  $  13,148  $ 663,906  $ 634,152
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effective January 1, 2008, the results of the personal property, search
    and registration programs are included as part of the results of the
    Filogix Segment. Prior to this date, the results were included as part of
    the Davis + Henderson Segment. Current year results under both the new
    and old basis of segmentation have been presented separately.



    For the year ended December 31, 2008, the Davis + Henderson Segment had
    five customers that individually accounted for greater than 10% but not
    more than 21% of the Davis + Henderson Segment revenue and the Filogix
    Segment had three customers that individually accounted for greater than
    10% but not more than 18% of the Filogix Segment revenue (2007 - Davis +
    Henderson Segment had five 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 17% of the Filogix
    Segment revenue).

    The following table illustrates the reporting under the new and old basis
    of segmentation for the year ended December 31, 2008.

                                                      Year ended December 31,
    -------------------------------------------------------------------------

                                    Davis + Henderson
                                              Segment       Filogix Segment
                                  --------------------- ---------------------
                                  New Basis  Old Basis  New Basis  Old Basis
                                  ---------- ---------- ---------- ----------
                                       2008       2008       2008       2008
    -------------------------------------------------------------------------

    Revenue                       $ 298,335  $ 302,478  $  68,896  $  64,753
    Cost of sales and operating
     expenses                       202,803    205,599     41,904     39,108
    Amortization of capital and
     other assets                     8,054      8,054      5,947      5,947
    -------------------------------------------------------------------------
                                     87,478     88,825     21,045     19,698

    Interest expense                      -          -          -          -
    Net unrealized loss (gain)
     on interest-rate swaps               -          -          -          -
    Amortization of intangible
     assets                           2,818      3,725     10,898      9,991
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                           84,660     85,100     10,147      9,707
    Future income tax expense             -          -          -          -
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                      84,660     85,100     10,147      9,707
    Income (loss) from
     discontinued operations            465        465          -          -
    -------------------------------------------------------------------------
    Net income (loss)             $  85,125  $  85,565  $  10,147  $   9,707
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $   7,034  $   7,034  $   6,404  $   6,404
    Intangible assets             $     337  $   2,900  $ 130,175  $ 127,612
    Goodwill                      $ 359,385  $ 369,253  $  99,604  $  89,736
    Total assets                  $ 425,727  $ 447,524  $ 226,113  $ 204,316
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                            Corporate          Consolidated
                                  --------------------- ---------------------
                                  New Basis  Old Basis  New Basis  Old Basis
                                  ---------- ---------- ---------- ----------
                                       2008       2008       2008       2008
    -------------------------------------------------------------------------

    Revenue                       $       -  $       -  $ 367,231  $ 367,231
    Cost of sales and operating
     expenses                         2,508      2,508    247,215    247,215
    Amortization of capital and
     other assets                         -          -     14,001     14,001
    -------------------------------------------------------------------------
                                     (2,508)    (2,508)   106,015    106,015
    Interest expense                  7,408      7,408      7,408      7,408
    Net unrealized loss (gain)
     on interest-rate swaps           5,691      5,691      5,691      5,691
    Amortization of intangible
     assets                               -          -     13,716     13,716
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations before income
     taxes                          (15,607)   (15,607)    79,200     79,200
    Future income tax expense         1,217      1,217      1,217      1,217
    -------------------------------------------------------------------------
    Income (loss) from continuing
     operations                     (16,824)   (16,824)    77,983     77,983
    Income (loss) from
     discontinued operations              -          -        465        465
    -------------------------------------------------------------------------
    Net income (loss)             $ (16,824) $ (16,824) $  78,448  $  78,448
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Capital and other asset
     expenditures                 $       -  $       -  $  13,438  $  13,438
    Intangible assets             $       -  $       -  $ 130,512  $ 130,512
    Goodwill                      $       -  $       -  $ 458,989  $ 458,989
    Total assets                  $  12,066  $  12,066  $ 663,906  $ 663,906
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The results presented under the old basis for the Davis + Henderson and
    Filogix Segments remove the impact of the change in the reporting of the
    personal property, search and registration programs from the current year
    results.

    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 year ended
    December 31, 2008 was $8,148 (2007 - $9,025). Earnings per share
    information relating to the discontinued operations is as follows:

                                                          2008          2007
    -------------------------------------------------------------------------
    Income from discontinued operations, per unit,
     basic and diluted                               $  0.0106     $  0.0129
    Income from continuing operations, per unit,
     basic and diluted                                  1.7745        1.8584
    -------------------------------------------------------------------------
    Net income per unit, basic and diluted           $  1.7851     $  1.8713
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 year's presentation.


    SUPPLEMENTARY FINANCIAL INFORMATION


    Consolidated Operating Results by Period
    -------------------------------------------------------------------------
                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
    (in thousands of        December  December September      June     March
     Canadian dollars,            31,       31,       30,       30,       31,
     unaudited)                 2008      2008      2008      2008      2008
    -------------------------------------------------------------------------

    Revenue                 $367,231  $ 89,357  $ 95,055  $ 95,407  $ 87,412
    Expenses                 245,678    62,413    61,664    61,334    60,267
    -------------------------------------------------------------------------
    EBITDA                   121,553    26,944    33,391    34,073    27,145

    Amortization of capital
     and other assets         15,538     3,800     4,219     3,771     3,748
    Interest expense           6,847     1,647     1,690     1,754     1,756
    Minority interest              -         -         -         -         -
    Current income tax
     expense                       -         -         -         -         -
    -------------------------------------------------------------------------

    Adjusted income           99,168    21,497    27,482    28,548    21,641

    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps         561       151       151       152       107
    Net unrealized loss
     (gain) on
     interest-rate swaps       5,691     3,653       728    (1,034)    2,344
    Future income tax
     expense                   1,217       399        52       766         -
    Amortization of
     intangibles from
     acquisition              13,716     3,409     3,412     3,447     3,448
    -------------------------------------------------------------------------

    Income from continuing
     operations               77,983    13,885    23,139    25,217    15,742
    Income from discontinued
     operations                  465        51       167       149        98
    -------------------------------------------------------------------------

    Net income                78,448    13,936    23,306    25,366    15,840

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

    Cash flows from
     operating activities   $116,062   $31,806   $35,110   $32,623   $16,523
    Changes in non-cash
     working capital and
     other items(1)             (594)   (6,380)   (3,169)      (82)    9,037
    -------------------------------------------------------------------------
    Adjusted cash flows from
     operating activities    115,468    25,426    31,941    32,541    25,560

    Less:
      Expenditures on
       maintenance capital
        Capital asset
         expenditures and
         contract payments    13,438     4,915     3,027     2,962     2,534

    -------------------------------------------------------------------------
    Adjusted cash flows
     after capital asset
     expenditures
     and contract payments   102,030    20,511    28,914    29,579    23,026

    Distributions paid to
     unitholders              78,580    20,211    20,211    19,305    18,853

    -------------------------------------------------------------------------
                              23,450       300     8,703    10,274     4,173

    Cash flows provided by
     (used in) other
     financing activities     18,000    28,000    (5,000)   (5,000)        -
    Cash flows used in
     acquisition of Cyence
     business                (37,876)  (37,876)        -         -         -
    Cash flows used in other
     acquisitions             (5,250)   (1,000)        -         -    (4,250)
    Changes in non-cash
     working capital and
     other items(1)              594     6,380     3,169        82    (9,037)
    Distributions paid to
     minority interest             -         -         -         -         -
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash and cash
     equivalents for the
     period                 $ (1,082) $ (4,196) $  6,872  $  5,356  $ (9,114)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
    (in thousands of        December  December September      June     March
     Canadian dollars,            31,       31,       30,       30,       31,
     unaudited)               2007(2)   2007(2)   2007(2)   2007(2)   2007(2)
    -------------------------------------------------------------------------

    Revenue                 $369,726  $ 88,641  $ 92,724  $ 99,250  $ 89,111
    Expenses                 250,237    62,075    61,695    64,450    62,017
    -------------------------------------------------------------------------
    EBITDA                   119,489    26,566    31,029    34,800    27,094

    Amortization of capital
     and other assets         15,080     3,970     3,809     3,670     3,631
    Interest expense           7,531     1,713     1,819     1,945     2,054
    Minority interest            379      (139)      205       204       109
    Current income tax
     expense                       -         -         -         -         -
    -------------------------------------------------------------------------

    Adjusted income           96,499    21,022    25,196    28,981    21,300

    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps         678       163       163       176       176
    Net unrealized loss
     (gain) on
     interest-rate swaps        (740)      823       957    (2,196)     (324)
    Future income tax
     expense                   1,591       137         -     1,454         -
    Amortization of
     intangibles from
     acquisition              13,298     3,386     3,347     3,271     3,294
    -------------------------------------------------------------------------

    Income from continuing
     operations               81,672    16,513    20,729    26,276    18,154
    Income from discontinued
     operations                  567       109       147       244        67

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

    Net income                82,239    16,622    20,876    26,520    18,221

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

    Cash flows from
     operating activities   $117,401  $ 32,141   $28,802  $ 34,784  $ 21,674
    Changes in non-cash
     working capital and
     other items(1)           (4,949)   (6,959)      425    (1,814)    3,399
    -------------------------------------------------------------------------
    Adjusted cash flows from
     operating activities    112,452    25,182    29,227    32,970    25,073

    Less:
      Expenditures on
       maintenance capital
        Capital asset
         expenditures and
         contract payments    15,496     4,354     4,598     2,955     3,589

    -------------------------------------------------------------------------
    Adjusted cash flows
     after capital asset
     expenditures
     and contract payments    96,956    20,828    24,629    30,015    21,484

    Distributions paid to
     unitholders              78,357    26,676    17,403    17,403    16,875

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

                              18,599    (5,848)    7,226    12,612     4,609

    Cash flows provided by
     (used in) other
     financing activities    (15,000)        -    (5,000)  (10,000)        -
    Cash flows used in
     acquisition of Cyence
     business                      -         -         -         -         -
    Cash flows used in other
     acquisitions               (746)        -      (837)        -        91
    Changes in non-cash
     working capital and
     other items(1)            4,949     6,959      (425)    1,814    (3,399)
    Distributions paid to
     minority interest          (442)     (187)     (255)        -         -
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash
     equivalents for the
     period                 $  7,360   $   924  $    709  $  4,426  $  1,301
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
    (in thousands of        December  December September      June     March
     Canadian dollars,            31,       31,       30,       30,       31,
     unaudited)               2006(2)   2006(2)   2006(2)   2006(2)   2006(2)
    -------------------------------------------------------------------------

    Revenue                 $317,967  $ 86,489  $ 86,603  $ 74,482  $ 70,393
    Expenses                 223,562    60,676    61,500    51,740    49,646
    -------------------------------------------------------------------------
    EBITDA                    94,405    25,813    25,103    22,742    20,747

    Amortization of capital
     and other assets         13,040     3,677     3,527     3,061     2,775
    Interest expense           6,016     2,186     2,248       887       695
    Minority interest            202        89        88        25         -
    Current income tax
     expense                       -         -         -         -         -
    -------------------------------------------------------------------------

    Adjusted income           75,147    19,861    19,240    18,769    17,277

    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps           -         -         -         -         -
    Net unrealized loss
     (gain) on
     interest-rate swaps           -         -         -         -         -
    Future income tax
     expense                       -         -         -         -         -
    Amortization of
     intangibles from
     acquisition               8,236     3,254     3,339       996       647
    -------------------------------------------------------------------------

    Income from continuing
     operations               66,911    16,607    15,901    17,773    16,630
    Income from discontinued
     operations                 (382)     (140)     (116)      (56)      (70)
    -------------------------------------------------------------------------

    Net income                66,529    16,467    15,785    17,717    16,560

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

    Cash flows from
     operating activities   $ 89,753  $ 22,111  $ 22,786  $ 26,498  $ 18,358
    Changes in non-cash
     working capital and
     other items(1)           (1,048)    1,512        90    (4,499)    1,849
    -------------------------------------------------------------------------
    Adjusted cash flows from
     operating activities     88,705    23,623    22,876    21,999    20,207

    Less:
      Expenditures on
       maintenance capital
        Capital asset
         expenditures and
         contract payments     9,855     1,966     2,681     2,413     2,795

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

    Adjusted cash flows
     after capital asset
     expenditures
     and contract payments    78,850    21,657    20,195    19,586    17,412

    Distributions paid to
     unitholders              61,311    16,732    16,479    14,221    13,879

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

                              17,539     4,925     3,716     5,365     3,533

    Cash flows provided by
     (used in) other
     financing activities    202,749    (5,000)        -   207,749         -
    Cash flows used in
     acquisition of Cyence
     business                      -         -         -         -         -
    Cash flows used in other
     acquisitions           (223,852)   (1,518)      660  (222,447)     (547)
    Changes in non-cash
     working capital and
     other items(1)            1,048    (1,512)      (90)    4,499    (1,849)
    Distributions paid to
     minority interest             -         -         -         -         -
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash
     equivalents for the
     period                 $ (2,516) $ (3,105) $  4,286  $ (4,834) $  1,137
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                Year      Year      Year      Year
                               ended     ended     ended     ended
                            December  December  December  December
    (in thousands of              31,       31,       31,       31,
     Canadian dollars,        2005(2)   2004(2)   2003(2)   2002(3)
     unaudited)                                          (proforma)
    ---------------------------------------------------------------

    Revenue                 $270,470  $268,323  $251,748  $228,259
    Expenses                 191,401   190,024   177,656   158,287
    ---------------------------------------------------------------
    EBITDA                    79,069    78,299    74,092    69,972

    Amortization of capital
     and other assets         12,206    12,574    14,065    14,212
    Interest expense           3,301     4,193     4,630     4,527
    Minority interest              -         -         -         -
    Current income tax
     expense                       -       949     1,012     1,009
    ---------------------------------------------------------------

    Adjusted income           63,562    60,583    54,385    50,224

    Amortization of
     mark-to-market
     adjustment of
     interest-rate swaps           -         -         -         -
    Net unrealized loss
     (gain) on
     interest-rate swaps           -         -         -         -
    Future income tax
     expense                       -     3,545     3,583     2,305
    Amortization of
     intangibles from
     acquisition               2,422     2,333     2,332     2,408
    ---------------------------------------------------------------

    Income from continuing
     operations               61,140    54,705    48,470    45,511
    Income from discontinued
     operations                 (389)     (437)      (13)        -
    ---------------------------------------------------------------

    Net income                60,751    54,268    48,457    45,511

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

    Cash flows from
     operating activities   $ 76,844  $ 77,271  $ 68,569  $ 64,786
    Changes in non-cash
     working capital and
     other items(1)             (564)   (3,616)     (132)     (352)
    ---------------------------------------------------------------

    Adjusted cash flows from
     operating activities     76,280    73,655    68,437    64,434

    Less:
      Expenditures on
       maintenance capital
        Capital asset
         expenditures and
         contract payments    10,674    11,928    11,192    12,597

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

    Adjusted cash flows
     after capital asset
     expenditures
     and contract payments    65,606    61,727    57,245    51,837

    Distributions paid to
     unitholders              54,910    53,066    51,442    47,827

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

                              10,696     8,661     5,803     4,010

    Cash flows provided by
     (used in) other
     financing activities    (10,000)   (7,000)  (13,000)        -
    Cash flows used in
     acquisition of Cyence
     business                      -         -         -         -
    Cash flows used in other
     acquisitions             (3,214)        -         -         -
    Changes in non-cash
     working capital and
     other items(1)              564     3,616       132       352
    Distributions paid to
     minority interest             -         -         -         -
    ---------------------------------------------------------------

    Increase (decrease) in
     cash and cash
     equivalents for the
     period                 $ (1,954) $  5,277  $ (7,065) $  4,362
    ---------------------------------------------------------------
    ---------------------------------------------------------------



    Summary of Cash Flows Per Unit

                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
                            December  December September      June     March
    (in Canadian dollars,         31,       31,       30,       30,       31,
     unaudited)                 2008      2008      2008      2008      2008
    -------------------------------------------------------------------------
    Adjusted income per
     unit, basic and
     diluted                $ 2.2565  $ 0.4892  $ 0.6253  $ 0.6496  $ 0.4924
    Net income per unit,
     basic and diluted      $ 1.7851  $ 0.3172  $ 0.5303  $ 0.5772  $ 0.3604
    Adjusted cash flows
     from operating
     activities             $ 2.6275  $ 0.5786  $ 0.7268  $ 0.7405  $ 0.5816
    Adjusted cash flows
     after capital asset
     expenditures and
     contract payments      $ 2.3217  $ 0.4667  $ 0.6579  $ 0.6731  $ 0.5240
    Distributions paid to
     unitholders            $ 1.7881  $ 0.4599  $ 0.4599  $ 0.4393  $ 0.4290
    Distributions declared
     during period          $ 1.8384  $ 0.4999  $ 0.4599  $ 0.4496  $ 0.4290



                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
                            December  December September      June     March
    (in Canadian dollars,         31,       31,       30,       30,       31,
     unaudited)               2007(2)   2007(2)   2007(2)   2007(2)   2007(2)
    -------------------------------------------------------------------------
    Adjusted income per
     unit, basic and
     diluted                $ 2.1959  $ 0.4784  $ 0.5733  $ 0.6595  $ 0.4847
    Net income per unit,
     basic and diluted      $ 1.8713  $ 0.3782  $ 0.4750  $ 0.6035  $ 0.4146
    Adjusted cash flows
     from operating
     activities             $ 2.5588  $ 0.5730  $ 0.6651  $ 0.7502  $ 0.5705
    Adjusted cash flows
     after capital asset
     expenditures and
     contract payments      $ 2.2062  $ 0.4739  $ 0.5604  $ 0.6830  $ 0.4889
    Distributions paid to
     unitholders            $ 1.7830  $ 0.6070  $ 0.3960  $ 0.3960  $ 0.3840
    Distributions declared
     during period          $ 1.7980  $ 0.6180  $ 0.3960  $ 0.3960  $ 0.3880




                                         Three     Three     Three     Three
                                Year    months    months    months    months
                               ended     ended     ended     ended     ended
                            December  December September      June     March
    (in Canadian dollars,         31,       31,       30,       30,       31,
     unaudited)               2006(2)   2006(2)   2006(2)   2006(2)   2006(2)
    -------------------------------------------------------------------------
    Adjusted income per
     unit, basic and
     diluted                $ 1.8164  $ 0.4519  $ 0.4378  $ 0.4742  $ 0.4556
    Net income per unit,
     basic and diluted      $ 1.6081  $ 0.3747  $ 0.3592  $ 0.4477  $ 0.4367
    Adjusted cash flows
     from operating
     activities             $ 2.1441  $ 0.5375  $ 0.5205  $ 0.5559  $ 0.5329
    Adjusted cash flows
     after capital asset
     expenditures and
     contract payments      $ 1.9059  $ 0.4928  $ 0.4595  $ 0.4949  $ 0.4592
    Distributions paid to
     unitholders            $ 1.4940  $ 0.3780  $ 0.3750  $ 0.3750  $ 0.3660
    Distributions declared
     during period          $ 1.5000  $ 0.3810  $ 0.3750  $ 0.3750  $ 0.3690



                                Year      Year      Year      Year
                               ended     ended     ended     ended
                            December  December  December  December
                                  31,       31,       31,       31,
    (in Canadian dollars,     2005(2)   2004(2)   2003(2)   2002(3)
     unaudited)                                          (proforma)
    -------------------------------------------------------------------------
    Adjusted income per
     unit, basic and
     diluted                $ 1.6762  $ 1.5976  $ 1.4342  $ 1.3244
    Net income per unit,
     basic and diluted      $ 1.6020  $ 1.4311  $ 1.2778  $ 1.2002
    Adjusted cash flows
     from operating
     activities             $ 2.0116  $ 1.9423  $ 1.8047  $ 1.6992
    Adjusted cash flows
     after capital asset
     expenditures and
     contract payments      $ 1.7301  $ 1.6278  $ 1.5096  $ 1.3670
    Distributions paid to
     unitholders            $ 1.4480  $ 1.3994  $ 1.3566  $ 1.2510
    Distributions declared
     during period          $ 1.4500  $ 1.4044  $ 1.3599  $ 1.3200



    Condensed Consolidated Balance Sheet


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

    Cash and cash
     equivalents             $ 12,066     $ 16,262     $  9,390     $  4,034
    Other current assets       23,468       25,604       26,847       25,382
    Capital and other assets   38,871       33,032       34,347       35,229
    Goodwill and other
     intangible assets        589,501      550,314      553,726      557,173

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

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

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


    (in thousands of         December    September         June       March
     Canadian dollars,             31,          30,          31,         31,
     unaudited)                  2007         2007         2007        2007
    -------------------------------------------------------------------------

    Cash and cash
     equivalents             $ 13,148     $ 12,224     $ 11,515     $  7,089
    Other current assets       26,149       29,644       29,772       26,332
    Capital and other assets   38,268       38,049       39,303       39,532
    Goodwill and other
     intangible assets        556,587      559,973      562,483      565,754

    -------------------------------------------------------------------------
                             $634,152     $639,890     $643,073     $638,707
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Payables and other
     current liabilities     $ 49,116     $ 45,165     $ 45,994     $ 41,034
    Other long-term
     liabilities                6,289        5,673        6,732        6,688
    Long-term indebtedness    129,054      128,985      133,916      143,847
    Unitholders' equity       449,693      460,067      456,431      447,138

    -------------------------------------------------------------------------
                             $634,152     $639,890     $643,073     $638,707
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Cash and cash
     equivalents             $  5,788     $ 8,893      $  4,607     $  9,441
    Other current assets       27,457       27,384       28,834       17,136
    Capital and other assets   38,714       40,554       41,275       29,220
    Goodwill and other
     intangible assets        569,092      572,215      575,635      369,131

    -------------------------------------------------------------------------
                             $641,051     $649,046     $650,351     $424,928
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Payables and other
     current liabilities     $ 44,420     $ 47,100     $ 48,064     $ 32,697
    Other long-term
     liabilities                4,978        5,148        4,867        5,328
    Long-term indebtedness    143,778      148,646      148,574       50,000
    Unitholders' equity       447,875      448,152      448,846      336,903

    -------------------------------------------------------------------------
                             $641,051     $649,046     $650,351     $424,928
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    (in thousands of         December     December     December     December
     Canadian dollars,             31,          31,          31,          31,
     unaudited)                  2005         2004         2003         2002
    -------------------------------------------------------------------------

    Cash and cash
     equivalents             $  8,304     $ 10,258     $  4,981     $ 12,046
    Other current assets       17,076       15,352       15,779       16,142
    Capital and other assets   30,673       36,345       67,111       74,912
    Goodwill and other
     intangible assets        369,250      368,640      370,973      373,305

    -------------------------------------------------------------------------
                             $425,303     $430,595     $458,844     $476,405
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Payables and other
     current liabilities     $ 35,665     $ 34,422     $ 31,136     $ 32,778
    Other long-term
     liabilities                5,302        7,603        4,980        4,789
    Long-term indebtedness     50,000       60,000       67,000       80,000
    Unitholders' equity       334,336      328,570      355,728      358,838

    -------------------------------------------------------------------------
                             $425,303     $430,595     $458,844     $476,405
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Distribution History
    -------------------------------------------------------------------------

    Month                        2008         2007         2006         2005
    -------------------------------------------------------------------------

    January                   $0.1430      $0.1280      $0.1220      $0.1200
    February                   0.1430       0.1280       0.1220       0.1200
    March                      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

    -------------------------------------------------------------------------
                              $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

    -------------------------------------------------------------------------
                        2008    2007    2006    2005    2004    2003    2002
    -------------------------------------------------------------------------
    Dividend income     0.0%    0.0%    0.0%    0.0%   15.0%   19.5%   16.9%
    Other income      100.0%  100.0%  100.0%   91.6%   75.2%   69.5%   71.5%
    Return of capital   0.0%    0.0%    0.0%    8.4%    9.8%   11.0%   11.6%
    -------------------------------------------------------------------------
                      100.0%  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The above tax allocation of distributions for 2008 represents an estimate
    based on the total expected distributions for the year ended December 31,
    2008.


    Other Statistics
    (in thousands, except per unit amounts)

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

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

    %SEDAR: 00017092EF




For further information:

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


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