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For the year ended December 31, 2005, Filogix generated revenue of $40.8 million, approximately 14% higher than the prior year. For the year ended December 31, 2005, Filogix generated EBITDA(1) of approximately [$14.6] million, an increase of some [26]% over the prior year. Filogix has experienced growth in its business primarily attributed to:

  • increasing use of mortgage intermediaries by borrowers and lenders in the Canadian mortgage market;
  • growing adoption of the Filogix origination and underwriting systems by residential mortgage lenders; and
  • increasing overall residential mortgage funding activity.

Acquisition Financing
Davis + Henderson Income Fund has entered into an agreement with a syndicate of underwriters co-led by BMO Nesbitt Burns Inc. and Scotia Capital under which the underwriters have agreed to buy _ Subscription Receipts from Davis + Henderson Income Fund for sale to the public at a price of $_ per Subscription Receipt, representing an aggregate issue of $_ million (the “Offering”). Each Subscription Receipt represents the right of the holder to receive one trust unit of Davis + Henderson Income Fund upon closing of the acquisition of Filogix. Such funds will be used by the Fund to acquire, indirectly, the Filogix business. The remainder of the purchase price will be funded by Davis + Henderson through committed credit facilities provided by Scotia Capital and BMO Nesbitt Burns Inc. and a syndicate of lenders to be determined.

The securities to be offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Conference call
Davis + Henderson Income Fund will hold an investor call at 4:00 p.m. (Eastern Time) on Thursday May 18, 2006 to discuss this acquisition. The call may be accessed by dialing 416-644-3433 within the Toronto area, or 1-800-814-4860 outside of Toronto. A playback of the call can also be accessed from May 18 to June 1, 2006 by dialing 416-640-1917 or 1-877-289-8525, and entering the access code 21189529#.

About Davis + Henderson
Davis + Henderson and its predecessors have been serving Canadian financial institutions and their account holders since 1875. Through an integrated service offering, Davis + Henderson is the market leading company in Canada assisting financial institutions with the operations of programs to their chequing and lending accounts. Davis + Henderson Income Fund is listed on the Toronto Stock Exchange, under the trading symbol DHF.UN.

Caution Concerning Forward-Looking Statements
This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Davis + Henderson, Davis + Henderson Income Fund, Filogix, or developments in each of its respective business’ industries, 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 Income Fund cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and Davis + Henderson Income Fund does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

Risks related to Davis + Henderson Income Fund have been summarized in the Fund’s latest Annual Information Form and quarterly financial reports available on www.Sedar.com or the Fund’s web site at www.dhltd.com. With respect to the proposed acquisition of Filogix, additional risks include, among other things, exposure to potential loss of mortgage intermediaries and lenders as customers and exposure to fluctuation in mortgage and real estate activity due to economic conditions and other factors.

Contacts
For further information please contact: Bob Cronin, Chief Executive Officer at 416-696-7700, extension 5301 or Catherine Martin, Chief Financial Officer at 416-696-7700, extension 5265 or visit our web site at www.dhltd.com .

Notes
“Filogix” is a registered Canadian trademark of Filogix Inc.
® eSwitch is a registered Canadian and U.S. trademark of Davis + Henderson, Limited Partnership and patents pending. All other trademarks noted in this news release belong to their respective owners.
(1) “EBITDA” is not a defined term under Canadian generally accepted accounting principles. With respect to Filogix, it is determined by Davis + Henderson Income Fund as earnings before interest, taxes, depreciation, amortization expenses, reorganization expenses and stock option expenses. Investors are cautioned that EBITDA should not be construed as an alternative to using net income as a measure of profitability or as an alternative to the statement of cashflows. Further the Fund’s method of calculating EBITDA may not be comparable to calculations used by other issuers.