NOVEMBER PORTFOLIO UPDATE

MIDDLEFIELD CANADIAN INCOME PCC (LON:MCT)

All information is at 30 November 2021 and unaudited

¹ Based on four quarterly interim dividends of 1.275p per share paid 29 January 2021, 30 April 2021, 30 July 2021, 29 October 2021 and based on the share price as at close of business on 30 November 2021.

² Ongoing charges represent the management fee and all other operating expenses excluding interest as a % of average shareholders' funds for the year ended 31 December 2020.

Performance with Net Income Reinvested

Source: Middlefield, Bloomberg.

Dean Orrico, representing the Investment Manager, noted:

Markets performed well leading up to the American Thanksgiving holiday. Post-thanksgiving, news of the Omicron variant sent stocks tumbling, causing major indices to finish the month with negative returns. In British Pounds, the TSX Composite Index and the Fund's benchmark declined 1.9% and 2.7%, respectively, while the Fund's share price fell by 2.1%.

Notwithstanding near-term risks presented by Omicron, we think interest rates will continue their upward trajectory over the medium-to-long term. Recent commentary from central bank leaders in both the U.S. and Canada supports this view. Federal Reserve Chair Jerome Powell modified his language on inflation this month by dropping the use of the word "transitory" and signaled that an acceleration in the pace of tapering is possible next year. Bank of Canada Governor Tiff Macklem introduced cautionary language associated with inflation in his most recent address and reiterated guidance of rate increases beginning as early as April 2022. Markets are now pricing in 6 overnight rate hikes in Canada by the end of next year.

Given the outlook for Canadian interest rates, we expect fundamentals for Canadian financials to continue improving. Rate increases should boost net interest margins as credit products such as loans and mortgages generate higher levels of interest income. Canada's banks are among the safest in the world with diversified business that lead their global peers in ESG initiatives, yet they are trading at just 10.6x forward earnings - below their five-year average. Canadian Financials remain some of our highest conviction portfolio holdings and represent the Fund's biggest sector exposure.

Canada's top six banks, all holdings in MCT, re-initiated dividend increases and share buybacks after a nearly two-year hiatus. Restrictions were imposed by Canada's financial system regulator, the Office of the Superintendent of Financial Institutions (OFSI), in March 2020 as a safety provision during the pandemic. Restrictions on capital returns were lifted in November and the banks were quick to respond by announcing significant dividend bumps and buybacks in conjunction with their Q4 earnings releases. Bank of Montreal and National Bank led the group with increases of 25% and 23% while TD, CIBC, Bank of Nova Scotia and RBC all announced dividend increases in the low-double-digits. Canadian insurance companies also participated with Sun Life Financial and Manulife announcing 20% and 18% bumps, respectively. Canadian financial service companies currently hold higher-than-average balance sheet reserve ratios and are well-positioned for further dividend hikes next year.

Real Estate was a detractor this month, with Retail REITs in particular selling-off on Omicron concerns. While it is too early to fully understand the defining characteristics of the Omicron variant and its impact, we have reasons to be optimistic and continue to believe the pandemic remains on a positive trajectory. Preliminary evidence from around the world suggests that individuals who have contracted the Omicron strain thus far have exhibited mild symptoms relative to previous strains. Meanwhile, initial data from Pfizer-BioNTech shows its booster shot appears to provide strong protection against Omicron. In addition, therapeutics from Pfizer and Merck are expected to perform similarly in preventing severe illness against Omicron as previous strains. We think governments are unlikely to re-introduce widespread lockdowns against general populations in response to the Omicron variant which bodes well for retail REITs. Canadian retail REITs are still trading at a steep discount relative to their U.S. peers and we continue to see significant capital appreciation potential from these positions in the Fund.

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Notes to Editors

Middlefield Canadian Income PCC aims to provide long term returns through dividend income and capital growth from a diversified portfolio of predominantly Canadian equity income securities and US stocks. The Company has been listed since 2006 as London's only listed Canadian equity income fund.

For more information on the Company, please visit our website:

http://www.middlefield.co.uk/mcit.htm