Foremost Income Fund
TSX : FMO.UN

Foremost Income Fund

December 11, 2008 15:09 ET

Foremost Income Fund Announces Special Non-Cash Distribution

CALGARY, ALBERTA--(Marketwire - Dec. 11, 2008) - On December 4, 2008, Foremost Income Fund (TSX:FMO.UN) (the "Fund"), announced its fourth quarter (Q4-2008) cash distribution of $0.25 per trust unit, the details of which were contained in a press release issued on that date.

In addition to the declaration of such cash distribution, the Fund announces, consistent with past practice, a special non-cash distribution estimated to be approximately $0.52 per unit to unitholders of record on December 31, 2008. This non-cash distribution will be in the form of trust units to be distributed on a pro-rata basis to unitholders of record on December 31, 2008 and will be included in unitholders' income for the 2008 calendar year. The number of trust units to be issued will be established by dividing the total amount of the special non-cash distribution, once determined, by the closing price of the trust units on the said record date. Immediately after this pro-rata distribution of trust units, the number of outstanding trust units will be consolidated, such that each unitholder holds, following the consolidation, the same number of trust units as before the non-cash distribution.

The special non-cash distribution is being made to ensure the Fund, as required by its Deed of Trust, is not liable to pay income taxes in respect of its current taxation year ending December 31, 2008.

The 2008 taxable income per unit will, therefore, be the total of the cash and special non-cash distributions, which is estimated to be $1.52 (comprised of four quarters of cash distributions @ $0.25 per quarter plus the estimated special non-cash distribution of $0.52). Units held in non-taxable investment vehicles such as RRSPs will not incur a tax liability of the cash and special non-cash distributions, however, individuals or taxable entities will incur a tax liability for both the cash and non-cash distributions. As mentioned several times previously, we encourage all unitholders to strongly consider holding their units in an RRSP to avoid these tax consequences. Ultimately this decision will rest with the unitholders and their professional advisors.

The exact amount of the special non-cash distribution will be based on the taxable income of the Fund for the financial year ended December 31, 2008 and will be announced via a press release once the taxable income is determined in February, 2009.

On behalf of the Trustees

Foremost Income Fund

James T. Grenon, Trustee

FORWARD-LOOKING STATEMENT

"Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this news release. These forward-looking statements involve a number of risks and uncertainties, including: the impact of general economic conditions, industry conditions, changes in laws and regulations, increased competition, fluctuations in commodity prices and foreign exchange, and interest rates and stock market volatility.

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