CALGARY, ALBERTA–(Marketwired – Nov. 7, 2017) – Foremost Income Fund (“Foremost” or the “Fund“) announces the financial results for the three and nine months ended September 30, 2017.

Overview

The Fund is an unincorporated open end mutual fund trust conducting its business through two operating segments, Foremost Energy Equipment (“FEE”) and Foremost Mobile Equipment (“FME”). FEE’s overall business is focused on the oil and gas industry and includes activity from four manufacturing sites throughout Alberta. FME manufactures off‐highway large wheeled and tracked vehicles, hydrovac and vacuum trucks, equipment for custom drilling, construction, water wells, and mining sectors. FME has three manufacturing facilities located in Alberta.

Message to Unitholders

Dear Unitholders,

The third quarter of 2017 was disappointing from an earnings perspective but in context still resulted in a steady revenue performance. Moderately lower revenues in high margin product lines impacted the bottom line negatively. Administrative and fixed costs remain well in control, and discretionary spending is being closely monitored.

Despite continued headwinds in some of Foremost’s markets revenue was relatively stable. Q3 revenue came in at .3 million, an increase of 7.9% year over year, but a decrease of 5.1% over the previous quarter. Gross profit was 8% ‐ lower than the average run rate in 2017 of about 11.5% ‐ because of the product mix and an adjustment in foreign exchange losses. EBIDTA was negative {$content}.4 million; 2017 YTD EBIDTA stands at {$content}.6 million.

Sales of vacuum trucks, mining tools, DRs, and shop tanks remain strong. Sales of energy equipment product lines saw some strength in Q3 but margins remain depressed in this very competitive market. Foremost’s vacuum truck product line hit a landmark by achieving a monthly production run rate of 15 trucks. This was made possible by diligent supply chain work, a realignment of the shop processes for smoother workflow, and better supply management of chassis.

Foremost continues to rationalize its business operations to align with market signals. The Calgary South facility is being prepared for sale; a major auction of materials and equipment related to the legacy compression business is being planned for November 2017. After the auction the building will be listed for sale.

As we progress through 2017 a few things are becoming clearer about Foremost’s business. The Western Canadian Market is strengthening, albeit slowly, the worldwide mining sector is getting back on its feet, and the US and Canadian market for vac trucks remains quite strong. This provides a good base for Foremost to start planning for 2018 to grow revenues and strengthen the bottom line.

Kevin Johnson, President

Quarter‐to‐Date Q3 2017 Highlights

• Revenue increased by .4 million, or 7.9%, when comparing the third quarter of 2017 over the same quarter in 2016. More information can be found in the Segmented Results of Operations section of the MD&A.
• Gross profit as a percentage of revenue dropped slightly from 9% in Q3 2016 to 8% in Q3 2017. Included in gross profit is an inventory allowance recovery of {$content}.1 million for the third quarter of 2017 compared with an expense of {$content}.2 million in 2016.
• Administration costs decreased {$content}.1 million, from .0 million in the third quarter of 2016 to .9 million in the third quarter of 2017. This value has levelled off and has remained at a consistent 9% of revenue in 2017.
• During the three months ended September 30, 2017 and 2016, the Fund recognized a {$content}.1 million foreign exchange loss, which is consistent with the same period end in 2016.

Trust Unit Redemptions and Distributions

The Fund redeemed 27,160 Trust Units during the nine months ended September 30, 2017, through its normal redemption program resulting in promissory notes payable of {$content}.2 million. During the same period ended 2016 the Fund redeemed 36,352 Trust Units resulting in promissory notes payable equal to {$content}.2 million.

The Trustees have determined that, as of November 6, 2017, the Fund will redeem tendered Trust Units at tangible book value of .75 per unit.

Temporary Reduction of Monthly Limit for Fund Unit Redemptions Pursuant to Section 6.4(ii)(A) and (B) of the Deed of Trust

Pursuant to section 6.4(ii)(A) and (B) of the Deed of Trust of the Fund dated November 12, 2005 as amended (the “Deed of Trust”), the Trustees of the Fund have discretion, in any calendar month, to reduce the monthly limit for cash redemptions of units of the Fund due to a material change, or concerns as to the current working capital or debt of the Fund. The exercise of such discretion may result in all or a portion (on a pro rata basis, depending on notices of redemption received) of the amount payable for units redeemed being paid by unsecured promissory notes in accordance with section 6.5 of the Deed of Trust.

As disclosed by prior press releases, effective May 1, 2014 and applying to all notices of redemption received in the months of May through October 2014, inclusive, and February 2015 through November 2017, inclusive, the Trustees of the Fund exercised their discretion pursuant to section 6.4(ii)(B) to reduce the monthly limit for cash redemptions from ,500,000.00 to {$content}.00, and to 0,000.00 for the months of November and December 2014 and January 2015 (in each case the subject redemptions being payable by the end of the following month). The Trustees undertook to review the revised monthly limit in respect of the month of November 2017 no later than November 15, 2017.

With respect to the month of November 2017, the Trustees have determined that the monthly limit for cash redemptions will be set at {$content}.00 due to concerns as to current working capital and debt of the Fund, having regard to the Board’s views on the potential impact of current and expected market conditions on the Fund’s performance. The Trustees have undertaken to review the revised monthly limit in respect of the month of December 2017 no later than December 15, 2017.

In accordance with the Deed of Trust, unitholders that submit or have submitted notices of redemption during the month of
November 2017, such that the Fund is obligated to pay the redemption price in respect of the subject units on or before
December 29, 2017, will be contacted individually and provided with the opportunity to elect to withdraw all or any part of such notices of redemption. Any unitholders not electing to withdraw their redemption notices, in whole or in part, will be paid the redemption price in respect of the units that they submit for redemption by unsecured promissory notes.

This discussion is intended for summary purposes only and is subject in all respects to the Deed of Trust. The income and other tax consequences of holding, redeeming or disposing of units and acquiring promissory notes will vary depending on the unitholder’s particular circumstances, including the jurisdiction(s) in which the unitholder resides or carries on business, and whether the unitholder is an RRSP, RESP, RRIF, PPSP or TFSA. Accordingly, this summary is of a general nature only and is not intended to be legal or tax advice to any prospective purchaser or any unitholder. All unitholders should consult their own legal and tax advisors prior to redeeming units of the Fund.

On behalf of the Trustees

Foremost Income Fund

Bevan May, 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 include statements the Fund’s intention to proceed with a Unitholders’ meeting and information regarding the Trustees’ views of the future prospects and tax treatment of the Fund and tax treatment of the Special Redemption, the Fund’s expectations regarding the future availability of cash to meet redemption requests and the Trustee’s expectations for redemption prices in December 2011 and January 2012. 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.