OCTOBER PORTFOLIO UPDATE

MIDDLEFIELD CANADIAN INCOME PCC (LON:MCT)

All information is at 31 October 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 29 October 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:

Equity markets rebounded in October, brushing aside worries about inflation, rising interest rates and profit margins. In British Pounds, the TSX Composite, S&P 500 and MSCI World Index returned 5.6%, 3.7%, and 2.9%, respectively. The Fund's net asset value appreciated by 6.1% in October, bringing its year-to-date total return to 36.6%. With markets hitting fresh highs as we enter a seasonally strong period for equities, we are constructive on the market setup heading into year end.

COVID-19 concerns are diminishing alongside improving economic data and robust corporate earnings. 81% of S&P 500 constituents have exceeded earnings expectations by an average of 10% while 88% have reported positive sales growth of 18.7%. Better-than-expected results can be attributed to robust demand as well as prudent expense control with management teams successfully protecting margins in a difficult operating environment. In Canada, the September employment report yielded an impressive 157,000 new jobs, bringing the Canadian employment rate back above its pre-pandemic peak. Canada's economic output is still catching up with the resurgence in employment and we expect the country to demonstrate solid growth in 2022 as companies guide to increasing capital expenditures and a ramp up in hiring plans.

Real estate outperformed the broader markets this month and was the biggest contributor to the Fund's performance. Industrial REITs performed particularly well, underpinned by record-high occupancy and rent growth. Granite REIT, one of the Fund's longstanding core holdings, returned 11.7% in October. The company reported Q3 operating results which included several positive updates, including raising expectations for overall leasing spreads in 2022 to 10 to 11%, an increase of 300 basis points relative to last quarter. Elevated expectations are being driven by spreads in the greater Toronto area of more than 38% and high-single digit spreads throughout the rest of its portfolio. Higher market rents, together with compressing cap rates, led to a record-high fair value gain of $432 million, or $6.60 per unit. Granite ended the quarter with $1.8 billion of available liquidity and we are confident in management's ability to sustain growth via acquisition and development.

The Fund recently added to its position in Canadian Natural Resources (CNQ). The stock returned 13.6% in October and finished the month as a top 5 holding. On 4 November, CNQ reported solid Q3 results and increased its dividend 25% -- a move that reflects shareholder alignment and is a testament to its confidence in operating performance. The company exited the quarter with net debt of $15.9 billion, down from $21.3 billion at the start of the year and within range of its year-end target of $15 billion. With debt/EBITDA of just 1.0x in the current price environment, we expect more of its free cash flow will be allocated to share repurchases going forward. At current levels, CNQ is trading at an above-average free cash flow yield of 23% and we see further upside in the share price given its long-life asset base, solid balance sheet and free cash flow generation.

Canadian financials received good news on 4 November when Canada's top banking regulator, OFSI, declared that banks and insurers are free to raise dividends, increase executive compensation and buy back shares. The restrictions were first announced in March 2020 to make financial institutions preserve capital and ensure the country's financial system could withstand the impacts of the pandemic. Companies have since seen their capital reserves climb well above required levels and we expect significant dividend hike and buyback announcements in the coming weeks. Sun Life Financial and Manulife, two holdings in the MCT portfolio, have already announced dividend increases of 20% and 18%, respectively. Canada's big banks report earnings in late November and early December which is when their plans for dividend increases and share buybacks are expected to be announced.

Enquiries:

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