A Message to Unitholders of UE Waterheater Income Fund

On June 14, 2007, UE Waterheater Income Fund announced at its Annual and Special Meeting that a majority of Fund unitholders voted in favour of the special resolution approving the sale of substantially all assets of UE Waterheater Operating Trust and certain assets of UE Waterheater Income Fund to 3216444 Nova Scotia Company, an affiliate of Alinda Capital Partners LLC.  The vote also authorized the redemption of all outstanding units of the Fund at $23.00 in cash per Fund unit effective with the transaction close on June 28, 2007.

All media releases associated with this transaction are posted on SEDAR. More informations regarding the redemption of units and the related tax implications for unitholders are posted here (for 2003-2006) and here (for 2007).

From the time of our Initial Public Offering in December, 2003, UE Waterheater Income Fund’s mandate was to provide our unitholders with a dependable and growing stream of cash distributions, sourced from the cash flow of our business. Over the 41 months we were an income trust, we delivered on this mandate.

Ultimately for you as investors, it’s about maximizing your total return – distributions received plus capital gains earnings – over the life of your investment. The total return we generated for our unitholders was exceptional. Assuming the reinvestment of distribution received in new units of the fund: for every $100 invested in our units at the IPO, that initial investment’s total value was worth more than $283 effective with Alinda Capital Partners LLC’s acquisition of the Fund. This represents a compound annual return on investment of approximately 35%.

On behalf of our team, I’m proud of that record and thank our unitholders for your confidence in us.

Sincerely,

Roger Rossi
President and CEO