Income Portfolio July 15, 2007:

The income portfolio has seen very little change in value over the past couple of months. The decision to shorten term on the bonds and increase the cash position has turned out to be an appropriate move to reduce volatility.

The Income trust units have been increasing in value about as much as the preferred shares have declined. Both of these sectors have consistently been producing higher income stream than the bonds, but I would not be surprised to see the bond yields move considerably higher over the next year or so as that happened the trusts and preferreds will loss value and we will have to decide if it still makes sense to hold those investments.

Income Portfolio July 15, 2007:

Original Cost: April 15, 2004: $200,663.00

Bond holdings:

Canadian Housing Trust 3.55% March 15, 2009, purchased April 15, 2005 at $100.66 to yield 3.40%

Government of Canada 4.25% September 24, 2009, 5.25 year bond issued by the Government of Canada. Original cost $101.80 to yield 3.91%

Preferred Shares:

Bank of Nova Scotia preferred series 12, straight preferred redeemable @$25.00 on October 29, 2013. original cost: $26.90 to yield 4.87%

PNG.PR.A: Pacific Northern Gas series A, straight preferred callable on 30 days notice @ $26.00. Original cost; $26.26 to yield 6.44%

ENB.PR.A: Enbridge preferred series A, straight preferred callable @ $25.00 on 30days notice. Original cost $25.05 to Yield: 5.49%

W.PR.H: WestCoast Energy preferred series 7, straight preferred redeemable on October 15, 2013 @ $25.00, original cost $26.71 to yield 5.17%

CPD: Claymore S&P/TSX CDN Preferred Share ETF: Holds 52 individual preferred shares with 63% of the issues from Banks and Insurance companies. MER 0.45%, Dividend yield 4.86%

Income Trust:

AW.UN: A&W Revenue Royalties Income Fund. Units receive 3% of the revenue for A&W restaurants. Original cost $11.60 to Yield: 9.3%

NPI.UN: Northland Power Income Fund owns a cogeneration power plant at Iroquois Falls Ontario. Sell power to Ontario Hydro. Original cost $11.70 to Yield: 8.62%

YLO.UN: Yellow Pages Income Fund printing and publishing of Telephone directories across Canada. Original cost $13.28 to yield 8.21%

PIF.UN: Pembina Pipeline Income Fund operates an OIL & Gas pipeline transporting from Western Canada to Eastern markets. Original cost $12.27 to Yield: 8.56%.