Annual Report and Accounts

For the year ended 31 December 2023

Middleeld

Canadian

Income Trust

Focusing on high levels of stable and increasing

income together with capital growth, this Fund

invests in Canada’s highest quality, large

capitalisation businesses. Middleﬁeld Limited,

the Fund’s investment manager, is a private

and independent ﬁrm located in Toronto,

Canada, is a member of Canada’s Responsible

Investment Association and is regulated by the

Ontario Securities Commission.

LON: MCT

A Responsible Investment Association Member

Further details about the Responsible Investment Association are

available on the website at www.riacanada.ca

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

2020 ANNUAL REPORT & ACCOUNTS | FINANCIAL STATEMENTS

2023 Annual Report & Accounts

Financial

Highlights

2023 DIVIDENDS PAID

5.2p per share

1.3p per share quarterly

5.3p per share New Dividend Guidance for 2024

YIELD

5.1%

SHARE PRICE

101.10p

NAV PER SHARE

121.55p

NET ASSETS

£129.4m

2023 Annual Report & Accounts

1. This is a target only and does not constitute, nor should it be interpreted

as, a proﬁt forecast.

Why Middleﬁeld Canadian

Income PCC?

A member of the Association of Investment Companies

Further details about the Company, including the latest annual and half yearly ﬁnancial reports, fact sheets and

stock exchange announcements, are available on the website at www.middleﬁeld.co.uk/mcit.htm

Reasons to buy

Unique

The UK’s only listed Canadian

equity fund focused on high

income – admitted to the FTSE UK

All-Share Index in 2011.

High Income

Canadian equities offer a higher

yield compared to other developed

markets and MCT has consistently

paid per share dividends in excess

of 5p per annum since 2017.

Diversiﬁcation

UK investors are underexposed

to Canadian equities – Canada

is one of the largest investable

economies in the developed

world.

Proven

Outperformance over the

period since inception in 2006.

Middleﬁeld is a private and

independent investment manager

based in Toronto, Canada.

Stability

Canada is a member of the G7

and offers one of the most stable

political and ﬁnancial systems in

the world.

Governance

Experienced Board of Directors

with an independent majority,

re-elected annually by

shareholders to protect their

interests.

Who is this fund for?

This Fund is for long-term investors seeking dividends and capital appreciation from a diversiﬁed

portfolio of stable, proﬁtable businesses domiciled primarily in Canada.

2023 Annual Report & Accounts

Contents

Strategic Report

Key Information 4

Historical Performance 5

Chairman’s Statement 6

Investment Manager’s Report 11

Top Holdings 13

ESG Policy 16

Business Model 22

Biographies 26

Corporate Information 29

Report of the Directors 35

Corporate Governance

Statement of Directors Responsibilities 40

Directors’ Remuneration Report 41

Corporate Governance Statement 43

Report of the Audit Committee 48

General Shareholder Information 51

General Data Key Investor Document and

Related Data 52

Independent Auditor’s Report on the Fund 53

Financial Statements

Statement of Financial Position of the Fund 60

Statement of Comprehensive Income

of the Fund 61

Statement of Changes in Redeemable Participating

Preference Shareholders’ Equity of the Fund 62

Statement of Cash Flows of the Fund 63

Notes to the Financial Statements of the Fund 64

Independent Auditor’s Report on the Company 79

Statement of Financial Position of the Company 82

Notes to the Financial Statements of the Company 83

Deﬁnitions 84

Alternative Performance Measures 85

10 %

15 %

20 %

25 %

30 %

35 %

Real Estate

Financials

Utilities

Energy

Pipelines

Communication Services

Industrials

Materials

Debt

Consumer Discretionary

Health Care

Consumer Staples

Geographic Mix

US Equity Canadian Equity

Sector Allocation

MCT

Benchmark

Key Data

as at 31 Dec 2023

Real Estate

Canada has the highest population

growth rate in the developed

world. Skilled-worker immigration,

a highly educated workforce and

insufﬁcient levels of new supply in

the multi-family, retail and industrial

real estate sectors are positive

catalysts for rental increases and

real estate asset values.

Financials

One of the world’s most

sophisticated and well-capitalised

banking systems, Canada’s banks

are well-positioned to consistently

grow their dividends over

time. Canadian ﬁnancials have

historically demonstrated less

volatility than peers during periods

of market uncertainty.

Energy and Power

North American energy is expected

to play a vital role in energy security

and the energy transition over the

coming decades. The domestic

power market beneﬁts from an

abundance of renewable energy

sources and robust demand for

electricity driven by immigration

and growing corporate demand.

Key

Information

This Fund invests in larger capitalisation Canadian and U.S. high yield equities

with a focus on companies that pay and grow dividends.

Exposure to Key Canadian Themes & Industries

Canadian companies are amongst the world leaders across the real estate, ﬁnancial and energy

and power sectors.

100%

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Historical

Performance

As at 31 December 2023

Notes:

1. Net asset value total returns (in Sterling, net of fees and including the reinvestment of dividends).

2. The Fund’s benchmark, the S&P/TSX High Dividend Index (“Benchmark”), has been currency adjusted to reﬂect the Canadian Dollar (“CAD”) returns

from inception to October 2011 (while the Fund was CAD hedged) and Sterling (“GBP”) returns thereafter.

Performance Since Inception to 31 December 2023

Recent Performance 1 Mth 3 Mth 6 Mth YTD 1 Year

Share Price 5.0% -0.5% 0.2% -10.7% -10.7%

NAV 5.8% 3.2% 1.9% -1.4% -1.4%

Benchmark 5.7% 5.3% 3.5% 3.9% 3.9%

S&P/TSX Composite Index 5.7% 6.0% 5.5% 8.6% 8.6%

Long-term Performance

3 Year

annualised

5 year

annualised

7 Year

annualised

10 year

annualised

Since Inception

annualised

Share Price 8.1% 8.8% 5.0% 5.0% 6.1%

NAV 10.0% 9.4% 4.8% 5.9% 6.8%

Benchmark 14.9% 12.0% 7.1% 7.1% 6.6%

S&P/TSX Composite Index 10.9% 12.0% 7.7 % 8.1% 6.3%

Sources: Middleﬁeld, Bloomberg. As at 29 December, 2023

Long-term Performance

3 Year

cumulative

5 year

cumulative

7 Year

cumulative

10 year

cumulative

Since Inception

cumulative

Share Price 26.2% 52.4% 40.4% 62.2% 181.1%

NAV 32.9% 5 7.0% 39.3% 7 7.7% 215.2%

Benchmark 51.5% 75.9% 61.5% 97.9 % 206.5%

S&P/TSX Composite Index 36.4% 76.4% 67. 6 % 118.1% 189.9%

Sources: Middleﬁeld, Bloomberg. As at 31 December 2023.

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full

amount invested. All price information is indicative only.

1. Total returns including the reinvestment of dividends for all returns. Fund returns are net of fees.

2. Composite of monthly total returns for the S&P/TSX Income Trust Index from inception to 31 December 2010 and the S&P/TSX Composite High Dividend

Index (formerly named the S&P TSX Equity Income Index) thereafter.

3. Currency adjusted to reﬂect CAD$ returns from inception of MCT to Oct 2011 and GBP returns thereafter since MCT was CAD$ hedged from inception

to Oct 2011.

£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

£40,000

£45,000

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

MCT NAV Total Return S&P/TSX Composite High Dividend Index Total Return S&P/TSX Composite Index Total Return

Chairman’s

Statement

It is my pleasure to introduce the 2023

Annual Financial Report for Middleeld

Canadian Income PCC (“MCT” or the

“Company”) and its closed-ended cell

known as Middleeld Canadian Income –

GBP PC (the “Fund”). The Fund invests

primarily in dividend-paying Canadian

equities, with the objective of providing

shareholders with a high level of dividend

as well as capital growth over the longer

term.

Michael Phair

Chairman

Investment Performance

Dividend stocks faced continuing high inﬂation and resultant

high interest rates with increased competition throughout

2023 from lower-risk income alternatives such as money

market funds. Against this backdrop, MCT’s share price

total return fell 10.7 per cent and its net asset value total

return was a more modest -1.4 per cent, underperforming

the benchmark total return of 3.9percent. Notwithstanding

the recent underperformance, on a total return basis, the

Fund’s net asset value has still outperformed both the TSX

Composite Index and the Benchmark since the Fund’s

inception, generating an annualised total return of 6.8 per

cent. Notably, the Fund has paid 92p per share to investors

over this period, providing a reliable and steady stream of

dividend income to investors. On a related point, in January

2023, the Fund’s dividend was increased from 5.1p to 5.2p

per share per annum.

The Fund’s share price discount to its net asset value

widened during the year. This was a noticeable trend

across income-oriented investment trusts in the U.K. in

2023. We believe the recent peaking in interest rates is

creating a more positive backdrop in 2024. The Board is

looking to improved performance by the Fund and this

being reﬂected in a narrowing of the share price discount

over the remainder of this year.

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Shareholder Engagement

Increasing investor interest in the Fund

remains one of the Board’s highest

priorities. The Board continues to

promote the Company through the

Investment Manager’s investor relations

initiative which is dedicated to keeping

our shareholders well-informed,

especially in times of market turmoil.

The Investment Manager provides

regular updates through commentaries,

articles, webinars and videos, allowing

investors to get their perspectives

directly. This content is accessible on

the Investment Manager’s website,

where it generates regular insights

into the portfolio’s outlook and the

decision-making process: Middleﬁeld

Canadian Income Trust Content. In

addition, the Trust remains engaged

with Kepler Partners. Kepler continues

to introduce the Investment Manager to

new investors throughout London and

surrounding regions, while consistently

producing research aimed at raising the

proﬁle of the Fund. Kepler’s coverage

of the Fund can be accessed here:

Middleﬁeld Canadian Income Research.

The Board also works with Buchanan,

a public relations ﬁrm tasked with

enhancing the Fund’s reputation among

retail investors. The Fund’s ongoing

press engagements are featured on

our website under “Featured Press”.

Alternatively, you can subscribe to

email updates on Middleﬁeld Canadian

Income Fund’s website to be updated

regularly: Middleﬁeld Canadian Income

Trust | Middleﬁeld Group.

Gearing

Beginning in May 2023, in its monthly

fact sheet, the Fund reported its gearing

relative to net and total assets. Gearing

can be a useful tool to enhance returns

and increase dividend income, but

these beneﬁts were offset by higher

borrowing costs in 2023. With interest

rates at multi-year highs, the Fund

prudently reduced its use of gearing

from an average level of 19.5% (net)

during the ﬁrst three quarters to 13.5%

(net) at year end.

The cost of borrowing has started

to decrease in 2024. The Board

continues to believe the use of gearing

is warranted at prevailing interest rates

due to an expected total return that

exceeds total borrowing costs. The

Board will continue to weigh the beneﬁts

of gearing against the costs and monitor

the spread between interest expenses

and the yield of the portfolio to ensure

the use of leverage remains in the best

interest of shareholders.

Earnings and Dividends

In light of the excess revenue earnings

generated by the Fund this year,

together with the prospect of dividend

growth from the underlying portfolio,

the Board approved a 0.1p increase

to the annual dividend target in early

2024. Quarterly interim dividends each

of 1.30p per share were paid on 31

January 2023, 28 April 2023, 28 July

2023 and 31 October 2023 representing

a 2% increase to quarterly payments

made in the previous ﬁnancial year.

Consistent dividend growth is a core

consideration for the Fund’s security

selection process and factored into

the Board’s decision to increase the

dividend. The Company’s revenue

earnings per share totalled 5.57p for

the current year, reﬂecting a dividend

coverage ratio of 1.07. This compares to

dividend coverage ratios of 1.16 in 2022

and 0.95 in 2021. These ﬁgures are

targets only and do not constitute, nor

should they be interpreted as a proﬁt

Sector Allocation MCT Benchmark

Over/

Underweight

Financials 29.5% 29.7% -0.2%

Real Estate 24.7% 5.7% 19.0%

Pipelines 16.1% 15.9% 0.2%

Energy 15.1% 16.0% -0.9%

Utilities 10.4% 16.6% -6.2%

Communication Services 4.2% 11.2% -7.0%

Industrials 0.0% 1.1% -1.1%

Materials 0.0% 1.8% -1.8%

Consumer Discretionary 0.0% 1.3% -1.3%

Consumer Staples 0.0% 0.3% -0.3%

Healthcare 0.0% 0.6% -0.6%

Total 100.0% 100.0%

Source: Middleﬁeld, Bloomberg

The background to the Fund’s performance is explained in depth by Mr Dean Orrico

in the Investment Manager’s accompanying report.

Investment Management

Middleﬁeld Limited, the Fund’s Investment

Manager, has over 40 years of investing

experience. The Investment Manager uses

an actively managed strategy, allowing it

to tactically shift the portfolio’s asset mix as

market dynamics evolve. At the beginning

of 2023, inﬂation was falling faster in Canada

than the United States and the U.S. Federal

Reserve’s monetary policy was more

restrictive. In response, the Fund increased

its exposure to Canadian equities to 100% of

the portfolio. In June 2023, as longer dated

government bond yields were rising, the

Bank of Canada surprised markets with an

increase in overnight interest rates, causing

rate-sensitive stocks to sell-off during the

third quarter. The Fund tactically rebalanced

its portfolio to mitigate market volatility while

maintaining overall dividend income. In Q4

2023, against the backdrop of an improving

outlook for the Canadian economy as

well as a peaking of 10-year government

bond yields in the U.S. and Canada, the

Fund increased its exposure in Canadian

ﬁnancials from c. 21% to c. 29% which is in-

line with the benchmark.

Fund Sector Weights Compared to Benchmark as at 31 December 2023

forecast. The Board regularly reviews

the Fund’s dividend coverage and,

subject to market conditions as well

as the Fund’s earnings, it will continue

to consider whether further dividend

increases are warranted in the future.

Despite a challenging lending

environment, Canadian banks have

announced dividend raises of c.3% in

2024.

Directors’ Remuneration

As reported in the annual report for the

year ended 31 December 2022, the NRC

reviewed the directors’ remuneration in

March 2023, benchmarking the fees

against other listed companies of a

similar size to the Company in its peer

group and agreed that an increase in

the directors’ remuneration would be

appropriate. Accordingly, with effect

from 1 July 2023, 18 months since

the last increase, the directors’ fees

were set at £36,000 per annum for the

chairman of the Board, £32,000 per

annum for the chairman of the audit

committee and £29,000 per annum for

all other directors bar Mr Orrico who has

waived his entitlement for remuneration

for acting as a director.

Related Party Transactions

The Company’s related parties are

its directors and the Investment

Manager. There were no related party

transactions (as deﬁned in the Listing

Rules) during the year under review, nor

up to the date of this report. Details of

the remuneration paid to the directors

and the Investment Manager during the

year under review are shown in note 13.

Material Events

The Board is not aware of any signiﬁcant

event or transaction which has occurred

between 1 January 2024 and the date

of publication of this statement which

could have a material impact on the

ﬁnancial position of the Fund.

Company and Fund

Annual General Meetings

At each of the Company and Fund

Annual General Meetings held on

1 June 2023, all resolutions, relating

to both ordinary business and special

business were duly passed on a poll.

Board Composition and

Succession Planning

The Board frequently reviews its

succession planning strategy and has

taken multiple steps in recent years

to refresh its composition. We are

pleased with the signiﬁcant progress

made to ensure the highest standards

of good corporate governance. These

steps include the appointment of

four new non-executive directors over

the past ﬁve years: Mr Michael Phair

(on 13 June 2019), Ms Kate Anderson

(on 12 April 2021), Ms Janine Fraser (on

13 September 2022) and Mr Andrew

Zychowski (on 30 June 2023). In

addition to recent appointments, two

non-executive directors have retired

over the past year, Mr Bisson and Mr

Hughes (on 1 June 2023). The Board

joins me in expressing our thanks to

both for their considerable and valued

contributions throughout their tenure.

Following these retirements, the Board

comprises ﬁve non-executive directors,

of whom four will be independent and

40% are female, including the senior

independent director.

Contact

Shareholders can write to the

Company at its registered ofﬁce

or by email to the Secretary at

middleﬁeld.cosec@JTCGroup.com.

Principal Risks and

Uncertainties

Persistently high inﬂation poses several

risks to ﬁnancial markets. It erodes

the purchasing power of consumers

which can harm demand for goods

and services. It has the potential to

exacerbate income inequality as those

on lower, ﬁxed incomes are typically

the most impacted by higher prices.

It can also disrupt long-term business

strategies by adding uncertainty to

ﬁnancial forecasts. In Canada, year-

on-year CPI growth declined from 5.9%

in January 2023 to 3.4% in December

2023 which is still above the Bank of

Canada’s target range of 1 per cent

to 3 per cent. Shelter costs, driven

by Canada’s housing shortage, now

represent the most signiﬁcant risk to

inﬂation remaining elevated in 2024.

Global central banks have been explicit

in their intentions to maintain restrictive

monetary policy until inﬂation has been

tamed for a sustained period. Markets

are currently pricing in multiple rate cuts

from central banks this year in addition

to a slowdown in quantitative tightening

measures. Interest rates could remain

higher for longer than investors

expect if inﬂation does not continue its

current downward trajectory. Under

this scenario, corporate cash ﬂows

could contract by a signiﬁcant amount

and this may cause a credit crunch

and potentially trigger a pronounced

slowdown in economic activity or an

outright economic recession.

Government debt has also reached

record highs and will require additional

borrowing from governments to service

the interest expenses on their debt. This

has the potential to increase the supply

of government debt being issued and

put additional upward pressure on

bond yields. It also impacts the ability

of governments to ﬁnance their ﬁscal

budgets and could result in less ﬁscal

support for the economy. The risk of a

global recession will increase if interest

rates remain elevated for an extended

period.

Geopolitical concerns in 2023 centred

on the war in Ukraine, friction between

China and a number of its principal

trading partners and latterly, the crisis

in the Middle East.

The uncertainty surrounding geopolitical

risks can lead to heightened volatility

in the stock market as investors adjust

their positions in response to changing

geopolitical dynamics. Investors may

become cautious and risk-averse in

such environments, leading to reduced

investment activity and capital ﬂight

Chairman’s

Report

continued

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

from affected regions or sectors.

Geopolitical events can directly impact

the operations and proﬁtability of

multinational corporations, particularly

those with signiﬁcant exposure

to regions experiencing turmoil.

Additionally, trade disputes, sanctions,

or geopolitical crises can disrupt supply

chains, increase operating costs, and

hamper revenue growth for affected

companies, all of which can weigh on

share prices.

Geopolitical risks can increase the

level of risk and unpredictability in the

stock market as investors navigate the

uncertain geopolitical landscape.

Managing Risks

The Board places signiﬁcant emphasis

on the Company’s risk assessment

and the management of substantial

risks. The Board prioritises this aspect,

guided by its evaluation of the risks

inherent in the Company’s operations.

It oversees the controls implemented

by the Board, the Investment Manager

and other service providers. These

evaluations and oversight activities are

documented in the Company’s business

risk matrix, which remains an effective

instrument for identifying and tracking

primary risks.

The directors consider the principal risks

of the Company to be those risks, or a

combination thereof, that may materially

threaten the Company’s ability to meet

its investment objectives, its solvency,

liquidity, or viability. In assessing the

principal risks, the directors consider the

Company’s exposure to and likelihood

of factors that they believe would result

in signiﬁcant erosion of value such as

the possibility of a recession, the ability

of Canada to diversify its economy

away from natural resources, ongoing

geopolitical tensions, the impact

of climate change risk on investee

companies, foreign exchange rates and

the impact of higher interest rates on the

Company and investor sentiment.

At the time of this report, higher interest

rates continue to have an impact on

markets at both macro and micro levels.

Growing geopolitical tensions can

increase the risk of supply chain shocks

and spikes in commodity prices. While

the long-term severity and the impact

on the Company’s principal risks and

viability cannot currently be predicted

with any accuracy, it is expected that

a prolonged war in the Middle East

would have detrimental effects on

market sentiment which could affect the

Company’s asset values.

Outlook

The outlook for Canadian equities

is positive in 2024. Canada has the

highest population growth rate in the

developed world, underpinned by

its points-based immigration system

that attracts skilled labour. Population

growth supports consumer demand

and, indirectly, commercial real estate

in the retail, industrial and multi-family

sectors. The country’s abundance

of natural resources remain in high

demand as global supply chains are

being reshaped in real-time. Canada is

a major exporter of oil, natural gas, and

several critical minerals that represent

important inputs for the global energy

transition. Moreover, Canadian equities

offer a hedge against geopolitical risks

and inﬂation which fall at the top of

investors’ market concerns today.

The Fund’s unique focus on Canadian

dividend paying companies is a key

differentiator versus other investment

funds. We believe our strategy has

the potential to produce outstanding

performance in 2024 as cash yields fall.

In addition to near-term tailwinds from

declining rates, ageing populations

and associated demand for investment

income are expected to provide secular

tailwinds for dividend mandates.

Rising rates caused Canada’s dividend-

paying companies to lag the broader

market in 2023, resulting in a substantial

valuation discount to global peers. Our

conviction in dividend-growers remains

steadfast, reﬂected in the Company’s

increased dividend target of 5.3p per

share to be paid in 2024.

As the period

of central bank tightening has likely

completed, we expect investor interest

to grow in the Fund’s strategy and for

the discount at which its share price

trades relative to its net asset value to

narrow.

The Board joins me in thanking you for

your continued support.

Michael Phair

Chairman

18 April 2024

2 These ﬁgures are targets only and do not constitute, nor should they be interpreted as a proﬁt forecast.

Middleﬁeld Group is a private and

independent asset manager focused

on equity income investment

strategies. Located in Toronto,

Canada, the company oversees a

suite of funds, many of which have

been recognised for excellence

in various investment categories.

Middleﬁeld specialises in managing

diversiﬁed equity income strategies

for UK and Canadian investors with

a particular focus on delivering

stable distributions and capital

appreciation over the long term.

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

Investment Manager’s

Report

Although the S&P 500 closed 2023 near all-time highs, many areas of the market, such as

dividend payers and small-caps, did not participate in the 2023 market rally. Technology

and communications stocks led to the upside while cyclical and value sectors lagged. In

British Pounds, the NASDAQ Composite, S&P 500 and the TSX Composite returned 37.2%,

19.7% and 8.6%, respectively. In local currencies, the TSX lagged the S&P 500 by 14% in

2023, representing a bottom 11

percentile year of relative performance since 1927. The

Fund’s benchmark, which is more concentrated in higher-yielding dividend stocks than the

TSX, returned 3.9%, lagging the TSX by nearly 5 per cent. Price-to-earnings multiples are

near their lowest levels in 25 years, resulting in the TSX’s relative dividend yield versus the

S&P 500 at a record high of 2.3x.

We are encouraged by several trends that started to emerge in late 2023. First, 10-year

bond yields fell by more than 100 basis points from their highs as markets began pricing in

less restrictive monetary policy from central banks. While it is possible that markets may be

over-estimating the extent to which central banks will ease policy in 2024, we do agree with

the general notion that monetary policy will become less restrictive this year and that rates

will trend lower. Second, market breadth improved as companies and sectors that lagged

throughout 2023 beneﬁtted from a relief rally. We believe this could represent the early

stages of a prolonged recovery in dividend-paying stocks that should continue throughout

2024. Finally, the economic growth outlook improved with hard-landing scenarios becoming

increasingly unlikely. In January 2024, the IMF raised its global growth outlook for 2024 to

3.1%, above its previous estimates.

In British Pounds, the Fund’s net asset value generated a total return of -1.4 per cent. Stock

selection within the energy sector was the biggest detractor to performance in 2023 with

Whitecap Resources and Topaz Energy having the biggest negative contributions. Utilities

were the next biggest detractor. Capital Power Corp, which was a consistent top 10 holding

in the Fund and relatively large overweight position relative to the benchmark, generated a

total return of -13.3% primarily due to an unforeseen project delay. The Fund’s underweight

exposure to communications services and security selection within the real estate sector

provided an offset to these detractors. Canada’s two largest industrial REITs, Dream

Industrial REIT and Granite REIT were top performers, generating total returns of 25.6%

and 15.2% respectively.

When analysing the Fund’s performance over longer periods and its underperformance

versus the benchmark, it is important to highlight the following. In an effort to dampen overall

portfolio volatility, the Fund has averaged an underweight position in energy which was the

top performing sector in the TSX Composite in both 2021 and 2022. This has resulted in

negative sector allocation effects over a ﬁve-year period. In light of the historical volatility of

the energy sector, we have chosen to be more tactical in our allocation to energy producers

in particular. Currently, the macro backdrop, together with a ubiquitous commitment from

management teams to return free cash ﬂow to shareholders, supports our positive stance

on the sector. The Fund’s exposure to energy was in-line with the benchmark at the end of

2023 for both pipelines and energy producers. The Fund has also averaged an underweight

position in ﬁnancials relative to the benchmark over the past 5 years and this has caused

negative attribution. Royal Bank of Canada, which returned 11.9% annualized over 5 years,

was the biggest detractor to performance. These impacts have been partially offset by

allocation decisions over the period.

Dean Orrico

The Fund has added to performance by

averaging an underweight position in less

attractive sectors such as communication

services and consumer discretionary

relative to the benchmark. The utilities

sector has also been a positive contributor

to performance over 5 years, however,

this has been driven by selection effects

as the Fund’s exposure to the sector

has consistently been in-line with the

benchmark. AltaGas has been a notable

performer for the Fund, generating a

portfolio return of 118 per cent.

Recession risks have abated in recent

months, largely due to the resilience of

consumer spending and tight conditions

in the labour market. The global economy’s

current trajectory is for a soft-landing

and slowing but positive growth. The U.S.

economy remains on solid-footing and

may ultimately experience a “no-landing”

scenario. This bodes well for the portfolio’s

exposure to Canadian cyclicals such as

energy and ﬁnancials. The U.S. represents

over 75% of Canadian exports and is

an extremely important end-market for

these sectors. The Canadian dollar is also

expected to beneﬁt from strong demand

for Canadian exports which would be a

tailwind for MCT’s U.K. investors.

Our base assumption regarding inﬂation

is that it will continue trending lower

throughout the year. This is supported

by inﬂation expectations from consumers

and businesses, a historically reliable

indicator of future inﬂation, coming down

in recent months. That said, geopolitical

tensions have been mounting since war

broke out in the Middle East and elevates

the risk of inﬂation caused by supply chain

disruptions and higher commodity prices.

Canada is uniquely insulated from these

risks given its proximity and longstanding

relationship with the United States. While it

is certainly our hope that the conﬂict in the

Middle East is resolved soon, a drawn-out

war in the region will likely cause investors

to seek hedges against inﬂation. Canadian

equities offer a hedge against inﬂation

risk and could attract capital inﬂows if

geopolitical tensions worsen.

We remain constructive on the Canadian

real estate sector in 2024. For the past two

years, despite solid fundamentals in many

real estate sectors (i.e., vacancy rates

below 2% in industrial and multi-family and

signiﬁcant re-leasing spreads in retail),

REIT stock prices have lagged.

Investor sentiment for the broader real

estate sector has been disaffected by

the rise in interest rates, high vacancies

in the ofﬁce property sector as well as

high yields available in cash or near-cash

alternatives. With bond yields declining

and central bankers looking to cut rates

later this year, we believe certain REITs are

extremely well-positioned to outperform.

Despite consensus NAV estimates

having declined 10-15% over the past

year in response to higher interest rates,

Canadian REITs are trading at a further

20% discount. We expect quality REITs that

generate stable and growing cash ﬂows

to narrow this discount throughout 2024.

The Fund’s active management strategy is

a key advantage in this sector. We favour

REITs in the industrial, retail, multi-family

and senior housing sub-industries.

As geopolitical tensions mount, energy

security has become a paramount issue

for many countries. Canada’s oil and

natural gas reserves rank in the top 5

globally, positioning it well relative to other

nations. Canada stands to beneﬁt from

foreign countries demanding more energy

imports, driving consistent growth in the

Canadian energy sector for decades.

The next two years will mark a pivotal

change in Canadian energy’s access

to global markets. The Trans Mountain

pipeline project, which is expected to

come online in Q2 2024, will provide

western Canadian crude oil producers

with an additional 590,000 barrels per

day of crude oil transportation capacity

and tidewater access. In addition, LNG

Canada, the largest private infrastructure

project in Canada’s history, will become

operational in 2025. With an export

capacity of 1.8 Bcf/d, LNG Canada will

provide Canadian gas producers with a

material boost to production egress. These

large infrastructure projects are expected

to stimulate signiﬁcant investments from

energy producers as well as midstream

companies that will need to add necessary

processing and handling capabilities.

Canada’s leadership in sustainability

further enhances the narrative. Members

of the Pathways Alliance are at the forefront

of net zero emissions initiatives through

carbon capture & storage. The Alliance

plans to invest $24.1 billion by 2030 with

anticipated co-funding from governments.

The Fund added to its ﬁnancials exposure

in Q4, making it the largest sector weight

in the portfolio at the end of 2023. The

decision stemmed from our growing

conﬁdence in the economic landscape

both in Canada and the U.S. Throughout

the year, Canadian banks faced several

challenges, including increased capital

requirements, double-digit expense growth

and a sluggish capital markets environment.

We believe these risks are starting to fade

considering banks have adjusted their

capital ratios to comply with regulatory

requirements. They have announced

signiﬁcant cost-cutting initiatives, and

capital markets activity has started to re-

accelerate. Credit cycle concerns have

also been at the forefront, particularly in

the Canadian housing market. With bond

yields having fallen approximately 100

basis points from their October peak, and

recent policy changes from the provincial

and federal governments to boost housing

supply, we have become less concerned

by this risk but continue to monitor credit

quality closely. With forward P/E ratios for

Canada’s Big 6 banks averaging 9.9x,

below the 15-year average of 10.7x, we

believe the current risk/reward setup for the

group is attractive. Our highest weighted

names include Bank of Montreal, Royal

Bank of Canada, and TD Bank, all of which

have well-capitalised balance sheets and

adequately covered dividends.

The Canadian utilities sector experienced

a myriad of challenges in 2023 including

cost inﬂation, higher ﬁnancing expenses,

project delays, cancellations and hedging

issues. Despite its traditionally defensive

characteristics, the sector was the third-

worst performer on the TSX last year with

a total return of just 0.2% (local currency).

Utilities stocks are currently cheap,

trading at a nearly two standard deviation

discounts to their 5-year average forward

P/E multiples. We expect the sector to re-

rate over time as interest rates decline and

we remain constructive on the sector. We

are encouraged by companies’ recent

commitments to project execution and

a renewed focus on capital allocation

efﬁciency. Over the long-term, we expect

heightened demand for electricity driven

by the proliferation of artiﬁcial intelligence

and decarbonization trends. Our preferred

picks in the sector include AltaGas, Capital

Power, and Emera.

Investment Manager’s

Report

continued

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

Top Holdings as at 31 December 2023

Company Sector

% of

Equities

Bank of Montreal

Bank of Montreal, which was founded in 1817, has grown to be Canada’s fourth largest bank. For

over two centuries, BMO has maintained a consistent record of dividend payments. It has a well-

established commercial banking business that it plans to grow through new product offerings and

superior customer experience. BMO conducts its business in the US through its subsidiary, BMO

Harris Bank which has over 500 branches.

Financials 5.8%

Royal Bank of Canada

Established in 1864, RBC stands as Canada’s largest bank by market capitalization. With a robust

presence globally, RBC excels in providing diverse ﬁnancial products and services through

branches, ATMs, and cutting-edge online platforms. Renowned for its customer-centric approach,

RBC’s strategic focus on the Capital Markets division enhances its standing, marking the bank as

a key player in international ﬁnance.

Financials 4.9%

AltaGas Ltd.

AltaGas is a North American energy infrastructure company that operates regulated gas distribution

business in the United States and a fast-growing midstream business in Western Canada. It has

consistently generated cash ﬂow growth which has supported recent dividend increases. The

company is actively investing in technologies for efﬁcient leak detection and management, and

operational efﬁciency.

Utilities 4.8%

Canadian Natural Resource Ltd.

Canadian Natural Resource is one of the largest independent producers of oil and natural gas

in Canada. The company is focused on maximising shareholder value through a combination of

organic growth initiatives, dividend payments and share buybacks. It has grown its dividend by

approximately 23% per annum over the past 5 years and has never cut its dividend.

Energy 4.6%

TD Bank

The Toronto-Dominion Bank is the second largest bank in Canada by market capitalisation. Together

with its subsidiaries, TD provides various ﬁnancial products and services through a network of

branches, ATMs and online and mobile banking services in Canada and the US. The bank places a

strong emphasis on customer satisfaction, a strategy that has resulted in the bank’s outperformance

and consistent growth. TD ranks among the world’s leading online ﬁnancial services ﬁrms.

Financials 4.5%

Top Holdings

Company Sector

% of

Equities

Manulife Financial

Founded in 1887, Manulife Financial is a leading insurance provider in Canada’s ﬁnancial

sector. Offering a comprehensive range of ﬁnancial solutions, the company operates through

a widespread network and digital platforms. With a focus on insurance, wealth management,

and investments, Manulife’s commitment to innovation and customer satisfaction cements its

prominent position in the global ﬁnancial landscape.

Financials 4.4%

Enbridge Inc.

Enbridge is one of the largest energy infrastructure companies in North America with an

extensive delivery network of crude oil, natural gas, natural gas liquids and renewable energy.

The company also provides gas utility services in Ontario, Quebec, and New Brunswick. It

is actively investing in low carbon technologies such as solar, wind and hydroelectric power

generation facilities. Enbridge’s goal is to achieve net-zero emissions by 2050 and reduce its

greenhouse gas emissions by 30% by 2025.

Energy 4.2%

BCE Inc.

As a telecommunications and media conglomerate, Bell Inc has played a pivotal role in shaping

Canada’s connectivity landscape. With roots in the country’s telecom history, Bell offers

diverse services, including wireless and wireline communications, internet, television, and

media. Grounded in a legacy of innovation, Bell Inc remains at the forefront of technological

advancements, providing cutting-edge solutions that cater to the evolving needs of consumers

and businesses.

Communication

Services

4.2%

Pembina Pipelines Corp.

Pembina is a well-established and reputable transportation and midstream service provider

with over 65 years of operational history. Its assets are diversiﬁed across the hydrocarbon

value chain, including pipelines, gathering & processing, and NGL midstream operations

in Canada and the US. The company is actively investing in low-carbon and sustainability

solutions such as carbon capture and storage to offset greenhouse gas emissions.

Pipelines 4.1%

Suncor Energy

Suncor Energy is a Canadian integrated energy company. Its key business segments include

Oil Sands, E&P, and petroleum reﬁning in Canada and the US. Their national Petro-Canada

retail distribution network now includes the Electric Highway network of fast-charging EV

stations. Their continuous involvement with the Indigenous community and progress towards

decarbonization make Suncor a key player in the Canadian energy sector’s push towards

sustainable operations.

Energy 3.4%

Top Holdings continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Outlook

We have a bullish outlook on the North

American economy in 2024. We expect

a soft landing in the U.S., supported by

inﬂation continuing its gradual decline

alongside modest increases to the

unemployment rate. We also expect

the Canadian economy to avoid a

recession, driven by increasing demand

for Canadian exports and the highest

population growth rate in the developed

world. We believe stable economic

conditions will support earnings growth

within the Fund’s allocation to cyclical

sectors such as ﬁnancials and energy.

Soft-landing conditions should support

rate cuts from central banks this year

and a favourable environment for

dividend investors. Dividend-paying

stocks are expected to outperform as

they offer steady streams of income that

become increasingly attractive amidst

lower interest rates. MCT’s portfolio is

positioned to beneﬁt from these tailwinds

given its allocation to historically rate-

sensitive sectors including real estate,

utilities and pipelines. The Fund will

continue to emphasize high-quality

companies with growing free cash

ﬂow and an established track record of

increasing their dividends.

Middleﬁeld Limited

18 April 2024

Environment, Social and

Governance (“ESG”)

Policy and Stewardship

Principles:

ESG Policy

As Investment Manager, Middleﬁeld

Limited (“Middleﬁeld”) has a duty to

maximise investment returns for the

shareholders of the Fund without undue

risk of loss. Middleﬁeld does this within

the investment limits of the Fund’s

investment mandate. Although the Fund

is not an ESG-focused or sustainable

fund, Middleﬁeld is increasingly

incorporating ESG considerations into

its investment process to aid decision

making, identify potential risks and

opportunities and to enhance long-term,

risk-adjusted returns. In September

2021, Middleﬁeld appointed Stephen

Erlichman, one of the foremost experts

on governance and ESG in Canada

as Chair, ESG to augment its ESG

capabilities and processes.

It is Middleﬁeld’s responsibility to employ

a disciplined investment process that

seeks to identify attractive investment

opportunities and evaluate material

risks that could impact portfolio returns.

Middleﬁeld believes that ESG factors

have become an important component

of a thorough investment analysis and

that the integration of ESG factors

will result in a more comprehensive

understanding of a company’s strategy,

culture and sustainability. Consistent

with these objectives, Middleﬁeld

integrates ESG considerations into

its investment process and these

considerations are signiﬁcant factors

in selecting portfolio companies for its

ESG-focused mandates. Our current

ESG integration process includes the

following:

1. Middleﬁeld incorporates ESG

scores and other ESG data in

its multi-disciplined investment

process to evaluate investments. Its

methodology includes a qualitative

review and assignment of ESG

scores to individual holdings. Each

company is analysed on an absolute

basis and measured relative to its

peers. The ESG scores and other

ESG data are not the sole factors

that govern its investment decisions,

however, but rather constitute part

of the information it reviews and

consider alongside its fundamental,

quantitative and qualitative

research.

2. The ESG scoring framework

considers the average ESG scores

from several reputable third-party

data providers. In addition, it cross-

references potential investments

with the constituents of relevant ESG

indices to assess their eligibility

in ESG-focused mandates. The

data providers it has chosen to

incorporate into its ESG analysis

currently are Sustainalytics, S&P,

Bloomberg and Reﬁnitiv.

3. ESG considerations also are

integrated into our investment

process by, among other things:

• reviewing companies’ public

disclosure, including annual

reports, proxy circulars, and, if

available, sustainability or ESG

reports;

• conducting research and

analysis on companies’ ESG

policies and practices;

• obtaining third party research

on companies;

• engaging with companies,

including from time to time having

discussions with management

teams (both before purchasing

shares for the portfolios and

while our portfolios own such

shares) on topics such as

what initiatives and strategies

have been put in place by the

companies to deal with ESG

considerations material to such

companies; and

• monitoring shareholder

meetings and voting proxies.

Many countries have established or

are in the process of establishing ESG

disclosure requirements for corporate

issuers. When enacted, these are

expected to enhance the efﬁciency of

the ongoing review and monitoring of a

company’s ESG practices.

Middleﬁeld’s approach to ESG

integration may evolve over time as

more ESG and sustainability research

and data become available.

Middleﬁeld has adopted Stewardship

Principles and activities as set out

below which are complementary to its

ESG integration process.

Middleﬁeld’s Stewardship

Principles

Middleﬁeld, as a Canadian asset

manager, understands it has the

responsibility to be an effective steward

of the assets it manages for its clients

in order to enhance the value of those

assets for the beneﬁt of its clients.

The Canadian Coalition for Good

Governance (“CCGG”) has published

a set of seven stewardship principles

which have become recognised

as Canada’s stewardship code for

institutional asset owners and asset

managers.

Middleﬁeld believes that CCGG’s

stewardship principles should be

tailored for asset managers depending

on various factors, such as the size

of the asset manager and the type of

assets managed. Set out below are

CCGG’s seven stewardship principles

and a description of how Middleﬁeld,

as an independent Canadian asset

manager whose predominant assets

are public and private investment funds

that invest in Canadian and international

equities, carries out or intends to carry

out such principles.

Principle 1.

Develop an approach to stewardship:

Institutional investors should develop,

implement and disclose their approach

to stewardship and how they meet their

stewardship responsibilities.

ESG

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

Middleﬁeld integrates stewardship into

its investment process. Such integration

includes:

• a procedure for voting proxies (see

Principle 3 below);

• monitoring companies (see Principle

2 below);

• engaging with companies (see

Principle 4 below);

• outsourcing stewardship activities

(by, inter alia, utilising a proxy

advisory ﬁrm to assist in monitoring

companies and voting proxies);

• reporting to its clients (as required

by law); and

• managing potential conﬂicts

of interest (via Middleﬁeld’s

Independent Review Committee

mandated by National Instrument

81-107, as well as Middleﬁeld’s

Code of Conduct).

Principle 2.

Monitor companies: Institutional

Investors should monitor the companies

in which they invest.

Middleﬁeld monitors the companies in

which it invests, including as follows:

• it reviews companies’ public

disclosures, including annual

reports and proxy circulars;

• it conducts research and analysis

on companies;

• it obtains third party research on

companies;

• it engages with companies (see

Principle 4 below); and

• it monitors formal shareholder

meetings and, if there is a particularly

important matter and it believes it

is practical and appropriate to do

so, it attends formal shareholder

meetings.

Principle 3.

Report on voting activities: Institutional

investors should adopt and publicly

disclose their proxy voting guidelines

and how they exercise voting rights.

Middleﬁeld exercises voting rights

attached to the securities held by the

funds it manages as follows:

• Middleﬁeld uses the following proxy

voting guidelines:

A. proxies will be voted in a manner

that seeks to enhance the long-

term sustainable value of the

funds it manages; and

B. proxies will be voted in a manner

consistent with leading Canadian

and international corporate

governance practices.

• on routine matters, Middleﬁeld

generally supports management

and the board unless there are

unusual circumstances; and

• Middleﬁeld uses the services of

a proxy advisory ﬁrm to assist in

voting proxies. Middleﬁeld assesses

the voting recommendations of the

proxy advisory ﬁrm but Middleﬁeld

also monitors leading Canadian

and international corporate

governance practices. Middleﬁeld

does not automatically follow the

recommendations of the proxy

advisory ﬁrm, but in most cases, it

votes as recommended. Middleﬁeld

retains ultimate responsibility for all

proxy voting decisions.

In addition, the public funds managed

by Middleﬁeld follow the proxy voting

requirements of Part 10 of National

Instrument 81-106 in regard to

establishing policies and procedures

for proxy voting and in regard to

preparing and disclosing their proxy

voting records.

Principle 4.

Engage with companies: Institutional

investors should engage with portfolio

companies.

Middleﬁeld engages with portfolio

companies as follows:

• Middleﬁeld engages with

management of portfolio companies

regularly, both before shares are

purchased for the funds it manages

and also while its funds own shares

of the portfolio companies; and

• When Middleﬁeld believes it

is warranted, it may escalate

engagement activities by engaging

with directors, by voting against or

withholding votes from directors or

by voting against companies’ “say

on pay” resolutions.

Principle 5.

Collaborate with other institutional

investors: Institutional investors should

collaborate with other institutional

investors where appropriate.

Middleﬁeld collaborates with other

institutional investors through investor

associations to which Middleﬁeld

belongs such as the Responsible

Investment Association (RIA).

Principle 6.

Work with policy makers: Institutional

investors should engage with regulators

and other policy makers where

appropriate.

Middleﬁeld’s professional advisors,

such as the law ﬁrms and accounting

ﬁrms it retains, assist to keep it up to

date on developments that are material

to it as an asset manager. It utilises its

professional advisors, and it also relies

on the organisations to which it belongs,

to engage on its behalf with regulators

and policy makers where appropriate.

Principle 7.

Focus on long-term sustainable value:

Institutional investors should focus on

promoting the creation of long-term

sustainable value.

Middleﬁeld focuses on a portfolio

company’s long-term success and

sustainable value creation, including as

follows:

• Middleﬁeld focuses on a company’s

management and strategy, as well

as its risks (both company speciﬁc

and systemic); and

• Middleﬁeld considers environmental,

social and governance factors

that are relevant to a company

and integrates such factors into its

investment activities.

ESG continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

ESG Case Studies

RioCan REIT (3.01% of the portfolio as at 31 December 2023)

Summary:

RioCan REIT is a retail-focused Canadian REIT that owns, manages, and

develops mixed-use property. The company is committed to embedding ESG

across its business as part of a ﬁve-year strategic plan which emphasizes a

resilient business, purposeful impact, and strategic partnerships. Through

its best-in-class governance and collaborations with key partners, RioCan

is committed to addressing challenges facing society by optimizing tenant

wellbeing and experience, as well as participating in initiatives and groups

to advocate for change. The company has received various accolades and

recognition for its sustainability initiatives and commitment to sustainability.

Highlights:

• Ranked 1st among Canadian peers in the GRESB Real Estate and

Disclosure Assessments

• Recognized as one of Canada’s Greenest Employers in 2022 as part of

Canada’s Top 100 Employers project

• Conducted a comprehensive materiality assessment with key

stakeholders and revised ESG strategy

Top ESG Issues:

• Affordability concerns for residential tenants at RioCan Living have

impacted vulnerable populations and contributed to unrest within the

wider community

• Prioritizing tenant well-being and satisfaction through proactive

communication and investing in the latest innovative and sustainable

amenities are key to ensuring a vibrant and functioning community

Sources: S&P, Sustainalytics, Bloomberg.

ESG Ranking Relative to the Fund’s

Benchmark:

25%

Median

75%

Percentile Rank

100%

RioCan REIT Top 8%

ESG continued

Gibson Energy (2.64% of the portfolio as at 31 December 2023)

Summary:

Gibson Energy is a Canadian-based liquids infrastructure company

with its core businesses including storage, optimization, processing,

and gathering of liquids and reﬁned products. Gibson already has

the lowest emissions intensity in the sector among core peers

and has set ambitious targets to achieve net zero Scope 1 and 2

emissions by 2050. The company continues to enhance its ESG

strategy through implementing strong governance and sustainable

operations to complement its existing corporate strategy.

Highlights:

• Completed the acquisition of the South Texas Gateway

Terminal while maintaining their sustainability proﬁle and

further reducing carbon intensity

• Top ESG rankings from third-party providers, including

MSCI and Sustainalytics, with continued progress towards

sustainability targets

• Key partner in Pathways Alliance committed to delivering

responsible energy while reducing emissions through

sustainable operations

Top ESG Issues:

• Prioritising worker safety and well-being through proper

training and protocols to ensure alignment with corporate

strategy

• Continuing to establish and strengthen meaningful

relationships with the Indigenous People through open

communication channels

Sources: S&P, Sustainalytics, Bloomberg.

ESG Ranking Relative to the Fund’s

Benchmark:

25%

Median

75%

Percentile Rank

100%

Gibson Energy Top 3%

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

The Company’s Status

Middleﬁeld Canadian Income – GBP PC is a protected cell of

Middleﬁeld Canadian Income PCC, a Jersey-incorporated

protected cell company.

The Fund is a closed-ended fund, whose shares have been

admitted to the premium segment of the Ofﬁcial List of the FCA

and to trading on the London Stock Exchange’s Main Market for

listed securities. The Fund is regulated in Jersey by the Jersey

Financial Services Commission (“JFSC”).

JTC Fund Solutions (Jersey) Limited acts as the Company’s

secretary and administrator. The Fund’s NAV is calculated using

the bid prices of the securities held within its portfolio. Prior to

29 December 2023, the investments in the Company’s portfolio

were valued on a closing price basis and the change to a bid

price basis was made to bring the valuation methodology in

line with that used in the Company’s accounts. The Company

publishes the NAV of a share in the Fund on a daily basis.

Investment Objective and Policy

The Fund seeks to provide shareholders with a high level of

dividends as well as capital growth over the longer term. The

Fund intends to pay dividends on a quarterly basis each year.

Investment Portfolio

The Fund seeks to achieve its investment objective by investing

predominantly in the securities of companies and REITs

domiciled in Canada and listed on a Canadian Stock Exchange

that the Investment Manager believes will provide an attractive

level of distributions, together with the prospect for capital

growth. It is expected that the Fund’s portfolio will generally

comprise between 35 and 70 investments.

The Fund may also hold cash or cash equivalents.

The Fund may utilise derivative instruments including index-

linked notes, contracts for differences, covered options and

other equity-related derivative instruments for the purposes of

efﬁcient portfolio management.

The Fund will at all times invest and manage its assets in a

manner which is consistent with the objective of spreading

investment risk.

Investment restrictions

The Fund will not at the time of making an investment:

(a) have more than 10 per cent. of the value of its portfolio

assets invested in the securities of any single issuer; or

(b) have more than 50 per cent. of the value of its portfolio

assets comprised of its ten largest security investments by

value; or

assets invested in securities listed on a recognised stock

exchange outside Canada; or

(d) have more than 10 per cent. of the value of its portfolio

assets invested in securities listed on a recognised stock

exchange outside Canada and the United States; or

(e) have more than 10 per cent. of the value of its portfolio

assets invested in unquoted securities; or

(f) purchase securities on margin or make short sales

of securities or maintain short positions in excess of

10 per cent. of the Fund’s NAV.

Hedging

The Board reserves the right to employ currency hedging but,

other than in exceptional circumstances, does not intend to

hedge.

Gearing

The Fund has the power to borrow up to 25 per cent. of the value

of its total assets at the time of drawdown. In the normal course

of events, and subject to Board oversight, the Fund is expected

to employ gearing in the range of 0 to 20 per cent. of the value

of its total assets in order to enhance returns. At year end, the

Fund’s net borrowings represented 11.9 per cent. of total assets.

Net gearing, which represents net borrowings as a percentage

of net assets, is the AIC standard measure of gearing. At year

end, the Fund’s net gearing was 13.5 per cent.

Promoting the Company’s Success –

Section 172 Statement

The AIC Code requires that the Company should understand the

views of the Company’s key stakeholders and describe in the

Business

Model

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

annual report how their interests and the matters set out in section

172 of the UK’s Companies Act 2006 have been considered in

Board discussions and decision-making.

The Company has no employees and all of the directors are non-

executive, so the Board considers that its key stakeholders are

its shareholders, its service providers, society, the government,

and regulators.

The Board’s engagement with stakeholders is described in the

section “Engagement with Stakeholders” below.

The Board considers that the Company, as an externally-

managed investment trust, with no employees, premises, nor

manufacturing or other physical operations, therefore has no

material, direct impact on the community and the environment.

However, the Board considers social, community, environmental

and human rights matters to be of signiﬁcant importance and,

in this respect, takes soundings from the Investment Manager

as to how these matters are taken into consideration in respect

of portfolio construction and its ongoing management. The

Investment Manager is tasked with assessing how companies

deal with and report on social and environmental risks and

issues speciﬁc to the industry. It aims to incorporate ESG criteria

into the Investment Manager’s processes when making stock

selection decisions and promoting ESG disclosure.

The Investment Manager is mindful of the impact which it can

have upon shaping the consideration given to ESG matters

by the Fund’s investee companies. In addition to considering

ESG matters in portfolio construction decisions, the Investment

Manager conducts ongoing investee company monitoring, and

this engagement process may include voting and communication

with management and company board members. Although the

Company does not take a controlling stake in its investees, the

Board also considers the interests of those stakeholders and

oversees the activities of the Investment Manager, as explained

in this Section 172 Statement. The Board ascribes to the highest

standards of business conduct and has policies in place to

ensure compliance with all applicable laws and regulations. In

this respect, it also interacts with governmental organisations

providing public services for society, and ﬁnancial services

regulators (such as the FCA and JFSC). In addition to monitoring

the Company’s compliance with its own obligations, the

Management Engagement Committee also monitors compliance

by its service providers with their own obligations and; the work

of the Management Engagement Committee during the year is

explained in more detail later in this report on pages 44 and 45.

The Company has an unlimited life and as described in detail

in the Company’s viability statement, the Board considers the

prospects of the Company for at least the next three years

whenever it considers the Company’s long-term sustainability.

All strategic decisions are therefore taken with the long-term

success of the Company in mind and the Board takes external

advice whenever it considers that such would be beneﬁcial to

its decision-making process, primarily from its retained service

providers (including legal counsel), but also from other external

consultants.

The Board encourages openness and transparency and

promotes proactive compliance with new regulations. The

Company, through its Investment Manager and Administrator,

ﬁles Jersey regulatory statistics on a quarterly basis and assists

the Administrator in collecting data for provision to the JFSC to

conduct a national risk assessment of money laundering and

terrorist ﬁnancing threats to Jersey.

Engagement with Stakeholders

As regards the Board’s engagement with shareholders, all

shares in issue rank pari passu, all shareholders are treated

equally and no shareholder receives preferential treatment.

When making decisions of relevance to shareholders, the

Board considers ﬁrst and foremost the likely consequences of

its decisions in light of its duty to act in the best interests of the

Company. The Board also considers what is likely to be in the

best interests of shareholders as a whole but does not consider

individual shareholders’ speciﬁc circumstances or desires when

making its decisions.

In addition to the regular reporting provided by key service

providers, the Board’s primary formal engagement with

its service providers is via the Management Engagement

Committee, which issues questionnaires to all of its service

providers and considers the detailed feedback received on

an annual basis, reporting to the Board on its conclusions.

The services provided by the key third-party service providers

are critical to the ongoing operational performance of the

Company. The Board believes that fostering constructive and

collaborative relationships with the Company’s service providers

will assist in their promotion of the success of the Company for

the beneﬁt of all shareholders.

The Company’s Chairman, Mr Phair visited the ofﬁce of the

Investment Manager in June of 2023 and also met with the

Fund’s lender, the Royal Bank of Canada, at the ofﬁces of the

Investment Manager.

Management

The Company is an Alternative Investment Fund (“AIF”) in

accordance with the provisions of the AIFMD. For the purposes

of the AIFMD, which was implemented into UK law with effect

from 22 July 2013, the Company has been classiﬁed as a

non-EU AIF managed by a non-EU AIFM. As such, the Company

is not subject to the full scope of the AIFMD and therefore does

not incur the additional costs, such as those incurred in having

to appoint a depositary, that would have been applicable had it

been deemed to be managed by an EU AIFM.

The Board is responsible for setting the Company’s Investment

Objective and Investment Policy, subject to shareholders’

approval of any proposed material changes, and has a schedule

of investment matters reserved for the directors’ resolution. The

Board has contractually delegated to external agencies the

management of the investment portfolio, the custodial services

and the day-to-day accounting and secretarial requirements.

Each of these contracts is only entered into after proper

consideration by the Board of the quality of services being

offered.

The Board also receives and considers, together with

representatives of the Investment Manager, reports in relation

to the operational controls of the Investment Manager,

Administrator, Custodian and Registrar. These reviews identiﬁed

no issues of signiﬁcance.

The Board meets at least quarterly to review the overall business

of the Company and to consider matters speciﬁcally reserved for

its review. At these meetings, the Board monitors the investment

performance of the Fund. The directors also review the Fund’s

activities every quarter to ensure that it adheres to the Fund’s

investment objective and policy or, if appropriate, to consider

changes to that policy. Additional ad hoc reports are received

as required and directors have access at all times to the advice

and services of the Secretary, which is responsible for guiding

the Board on procedures and applicable rules and regulations.

Relationship with the Investment Manager

and Performance

The Company has no employees, premises, assets other than

ﬁnancial assets or operations. The Board engages reputable

third-party suppliers with established track records to deliver

day-to-day operations. The most important of these is the

Investment Manager, which is responsible for the management

of the Company’s assets in accordance with its investment

objective and policy. The Board maintains a close working

relationship with the Investment Manager and holds it to account

for the smooth running of the Company’s day-to-day business.

There is continuous engagement and dialogue between Board

meetings, with communication channels remaining open and

information, ideas and advice ﬂowing freely between the Board

and the Investment Manager.

The Board retains responsibility for decisions over corporate

strategy, corporate governance, risk and internal control

assessment, determining the overall limits and restrictions of

the portfolio and in respect of gearing and asset allocation,

investment performance monitoring, dividend policy and setting

marketing budgets.

The Investment Manager and Investment Advisor promote the

Company with the support of the Corporate Broker and the

Board makes additional funds available to support marketing

activities aimed at raising the proﬁle of the Company among

investors in the UK.

As the Investment Manager holds the overall day-to-day

relationship with the Company’s other third-party suppliers,

the Board places reliance on the Investment Manager in this

regard. The Board is conﬁdent that the Investment Manager has

developed and maintains good working relationships with all

of the Company’s third-party suppliers. To ensure the chosen

service providers continue to deliver the expected level of

service, the Board receives regular reports from them, evaluates

Business

Model

continued

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

2023 Annual Report & Accounts

the control environments in place at each service provider and

formally assesses their appointment annually.

By doing so, the Board seeks to ensure that the key service

providers continue to be appropriately remunerated to deliver

the level of service that it demands of them.

The Company has appointed the Investment Manager as its

AIFM. The Investment Manager is regulated by the Ontario

Securities Commission. The Company has a formal schedule of

the areas of decision making reserved for the Board and those

over which the Investment Manager has discretion, and it is

available for inspection on the Company’s website.

A review of the Investment Manager’s performance is included in

the Chairman’s Statement and the Investment Manager’s Report.

The Board receives formal reports from the Investment Manager

at each of its Board meetings, at which meetings representatives

of the Investment Manager are present to answer the Board’s

questions.

Such reporting and the ensuing discussions cover all areas within

the Investment Manager’s remit, including portfolio performance,

portfolio risk, asset allocation and gearing, compliance with the

Company’s investment objective and policy and investment

restrictions and the outlook for the market and the Company’s

prospects, as well as a comparison with the Company’s peer

group provided by the Company’s corporate broker. In between

meetings, the Investment Manager provides updates to the

directors on any material events. The Investment Manager’s

performance is assessed on an ongoing basis and includes the

Fund’s performance relative to appropriate benchmarks and its

peer groups.

The Board and Investment Manager also discuss the marketing

and investor relations work performed by the Investment

Manager and Investment Advisor, which is an afﬁliate of the

Investment Manager, in each quarterly Board meeting. The

Investment Advisor and the Investment Manager are paid an

additional fee for investor relations services totalling the lesser of

15 basis points of the market value of the Fund or £200,000 per

annum, with the fee to be calculated daily based on the closing

market value of the Fund and payable quarterly in arrears, and

its performance is measured by reference to an agreed set of

metrics.

The Board has delegated voting on matters proposed to the

Company by its investees and a report on the Investment

Manager’s institutional voting policy for the Company is included

in the Directors’ Report. The Board and the Investment Manager

also consider social, community, environmental and human

rights issues to be important and a report on the Investment

Manager’s policies for the Company is also included in the

Directors’ Report.

As required by the Listing Rules and recommended by the AIC

Code, the following additional information is provided:

During the year under review and up to the date of this report,

Middleﬁeld Limited has acted as the Company’s discretionary

investment manager. Middleﬁeld International Limited (“the

Investment Advisor”) provides investment advisory services to

the Company and the Investment Manager. The Company pays

an annual fee of 0.70 per cent. of NAV to the Investment Manager

to cover its services and those provided to it by the Investment

Advisor and the agreement can be terminated by either party on

90 days’ written notice. The Investment Manager and Investment

Advisor are also paid an additional fee for investor relations

services as previously mentioned and disclosed in note 2u.

Having reviewed the investment management and advisory

services provided by the Investment Manager and the

Investment Advisor and having regard to the Fund’s investment

performance since the Fund’s launch in May 2006, the directors

are of the view that the portfolio should remain managed by the

Investment Manager for the foreseeable future.

Janine Fraser

Ms Fraser is the Financial Director and owner of Harmony

Business Partnering in Jersey. She holds membership of the

Institute of Directors, is a Fellow of the Association of Chartered

Certiﬁed Accountants having qualiﬁed in 1999, and possesses

a Master’s Degree in E-Commerce from the University of

Westminster. With a career spanning over a decade at

Triton Partners, an international investment ﬁrm, as a Group

Financial Controller, and with extensive global experience in

diverse sectors including retail and merchant banking, travel,

manufacturing, and oil, Ms Fraser brings a wealth of industry

knowledge to her role. Her previous roles have included

signiﬁcant positions at RBS, Lloyds TSB, Hill Samuel, British

Airways, Ultra Electronics Ltd, and Anadarko LLP, underscoring

her broad expertise and dynamic approach to ﬁnance.

Kate Anderson

Ms Anderson is the managing partner of Voisin Law in Jersey

and head of the regulatory and collective investment fund

practices. Her regulatory and funds practice specialises

in the legal, regulatory and corporate governance aspects

of investment funds, holding companies and managers. In

recent years she has joined a number of working groups

related to these areas, including the consultation group for

the restatement of the Jersey Law of Contract, the working

group tasked with updating the Limited Partnership (Jersey)

Law to improve its functionality when used with funds and the

Jersey Finance Community of Interest group on sustainable

investment. Since 2008 Ms Anderson has sat on a number of

collective investment fund and fund manager/general partner

boards.

Biographies

As at 31 December 2023, the

Board of Directors comprised

ﬁve non-executive directors,

four of whom were independent

of the Investment Manager and

its afﬁliates. On 30 June 2023

Mr Andrew Zychowski was

appointed as an additional director.

Directors

Michael Phair, Chair

Mr Phair has over 30 years’ investment banking

experience at World Bank Group, Rothschild and UBS

with a focus on privatisations, telecoms and media.

He has lived and worked in Canada, Latin America,

the United States, Europe and is a British citizen and

resident in London since 1988. He is the Founder, former

CEO and currently director of REG (UK) Ltd. which is a

leading software solutions provider for counter-party risk

management in the UK and global insurance market. He

is the Chair of Children and Families Across Borders,

a UK-based charity which is part of the International

Social Services Network operating in over 130 countries

worldwide. A successful private equity investor, Mr

Phair is the former Managing Member of Boston Capital

Management (VP) LLC.

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Dean Orrico

Mr Orrico, President, Chief Executive Ofﬁcer of Middleﬁeld

Limited and President of Middleﬁeld International Limited, has

been employed by the ﬁrm since 1996.

Mr Orrico is currently responsible for overseeing the creation

and ongoing management of all of Middleﬁeld’s investment

funds including mutual funds, Toronto and London Stock

Exchange-listed funds and ﬂow-through funds. He graduated

with a Bachelor of Commerce degree from the Rotman School

of Management (University of Toronto) and holds an MBA from

the Schulich School of Business (York University). Mr Orrico is

a registered Portfolio Manager.

Mr Orrico has developed expertise in both equity and ﬁxed

income securities. Having spent many years managing

equity portfolios and meeting with international companies

and investors, Mr Orrico has overseen the diversiﬁcation of

Middleﬁeld’s portfolios into global equity income securities.

Andrew Zychowski

Mr Zychowski has over 30 years’ investment banking

experience, providing corporate advisory services to

investment company boards. Until June 2019, he was the

Head of the Investment Companies corporate department at

Canaccord Genuity Limited. Prior to that he was the Head of

the Investment Companies corporate department at Dresdner

Kleinwort. Mr Zychowski is currently a non-executive director

of The Ralph Veterinary Referral Centre Plc, a state of the art,

multidisciplinary, small animal specialist referral veterinary

hospital. He is a qualiﬁed accountant and holds a BSc in

Physics from Imperial College.

2023 Annual Report & Accounts 29

Corporate

Information

Registered Ofﬁce

28 Esplanade

St Helier

Jersey JE2 3QA

Directors

Michael Phair (Chairman)

Kate Anderson

Philip Bisson (resigned 1 June 2023)

Janine Fraser

Richard Hughes (resigned 1 June 2023)

Dean Orrico

Andrew Zychowski (appointed 30 June 2023))

Service Providers

Administrator and Secretary

JTC Fund Solutions (Jersey) Limited

28 Esplanade

St. Helier

Jersey, JE2 3QA

Investment Advisor

Middleﬁeld International Limited

288 Bishopsgate

London, EC2M 4QP

Investment Manager

Middleﬁeld Limited

Suite 3100

8 Spadina Ave

Toronto, Ontario

Canada, M5V 0S8

Legal Advisers

In Jersey

Carey Olsen Jersey LLP

47 Esplanade

St. Helier

Jersey, JE1 0BD

In Canada

Fasken Martineau DuMoulin LLP

Bay Adelaide Centre

Box 20, Suite 2400

333 Bay Street

Toronto, Ontario

Canada, M5H 2T6

Broker and Corporate

Advisor

Investec Bank plc

30 Gresham Street

London

EC2V 7QP

Custodian

RBC Investor Services Trust

155 Wellington Street West

2nd Floor

Toronto, Ontario

Canada, M5V 3L3

Registrar

Link Market Services (Jersey) Limited

12 Castle Street

St. Helier

Jersey, JE2 3RT

CREST Agent, UK Paying Agent and

Transfer Agent

Link Market Services Limited

10th Floor Central Square

29 Wellington Street

Leeds, LS1 4DL

Independent Auditor

RSM Channel Islands (Audit) Limited

13-14 Esplanade

St Helier

Jersey, JE4 9RJ

Financial Calendar

Annual Results

Announced April 2024

Dividend Payment Dates

Last Business Day of January, April, July and

October

Annual General Meetings

13 June 2024

Half-Yearly Results

Announced September 2024

Information Sources

For more information about the Company

and Fund, visit the website https://

middlefield.com/funds/uk-funds/

middleﬁeld-canadian-income-trust/

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Corporate

Information

continued

Managing Risks

The Company’s risk assessment and the way in which signiﬁcant risks are managed is a key focus for the Board. It is guided by the

Board’s assessment of the risks arising in the Company’s operations and identiﬁcation and oversight of the controls exercised by

the Board and its delegates, the Investment Manager and other service providers. This information is documented in the Company’s

business risk matrix, a valuable tool for identifying and monitoring principal risks.

The directors consider the primary risks facing the Company as those that could substantially jeopardise its capacity to achieve

its investment objectives, maintain solvency, liquidity, or viability. In evaluating these key risks, the directors analyse the Company’s

vulnerability to various factors that could lead to signiﬁcant devaluation, such as potential recession, geopolitical instability, commodity

price shocks, persistent inﬂation, supply chain interruptions, the effects of climate risk on investee ﬁrms, foreign exchange ﬂuctuations,

the consequences of restrictive monetary policies, and the inﬂuence of increased interest rates on both the Company and investor

sentiment.

At the time of this report, geopolitical tensions and corresponding disruption to global supply chains are having an impact at both

macro and micro levels. While the long-term severity and the impact on the Company’s principal risks and viability cannot currently be

predicted with any accuracy, it is expected that an escalation in ongoing geopolitical conﬂicts would have detrimental effects.

1. Strategy Risks

Risk Mitigants Change from 2022

Macroeconomic and political environment

Unfavourable changes to the macro political and

economic environment including global trade

tensions, and climate risk pressures, causes the

investment objective to become obsolete with

reduced investor demand.

The Board has established guidelines to ensure

that the investment policy is pursued by the

Investment Manager. The Board reviews the

Investment Manager’s compliance with the agreed

investment restrictions, investment performance

and risk against investment objectives and strategy,

the portfolio’s risk proﬁle and appropriate strategies

employed to mitigate any negative impact of

substantial changes in markets.

Conﬂict in Middle

East

Inﬂation and Interest Rates

Inﬂation has been trending lower but has the potential

to re-accelerate. Central banks have maintained

restrictive monetary policy to ensure this does not

occur. A prolonged period of restrictive monetary

policy could result in a global recession.

The Investment Manager monitors the portfolio daily

and considers the portfolio’s sensitivity to interest

rates. The Investment Manager also monitors the

borrowing rates and weighs the beneﬁts of gearing

against its costs.

Inﬂation outlook

has improved

Rates no longer

rising, but risk they

remain higher-for-

longer

Share price discount to NAV

Continued trading of the Company’s share price

at a level below that of its NAV reﬂects a lack

of liquidity and/or lack of investor interest in the

Company’s shares. A share price discount to NAV

will prevent the Company from growing via the issue

of additional shares and may cause a persistent

discount to widen further.

The Board, the Investment Manager and the Broker

monitor the share price and level of discount on a

regular basis.

During the year, the Investment Manager and Broker

have spent considerable time engaging with existing

and potential shareholders to understand investors’

needs and best interests and to help improve investor

interest in the Company’s shares.

In assessing whether to conduct buybacks, the

directors take into account market factors, the

discounts of comparable funds and the size of

the Company and the shrinkage in its asset base

which would necessarily result from the Company

repurchasing its own shares.

Unchanged

Gearing

The utilisation of gearing increases the impacts

of adverse movements in equity prices or interest

rates and may require the Company to liquidate

positions at inopportune times in order to maintain

the correct levels of gearing.

The Company maintains a prudent level of gearing

and the loan to value ratio is monitored on a daily

basis as part of the valuation process, so that

in falling markets the Company will be able to

take proactive steps to reduce gearing to avoid

breaching its investment policy and any loan to

value covenants.

Unchanged

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

312023 Annual Report & Accounts

2. Portfolio Risks

Risk Mitigants Change from 2022

Regulatory & Legal Risks

The Company is primarily focused on Canadian

companies that may have operations in, or

be exposed to, regulatory risks in many other

countries. These have the potential of negatively

impacting the efﬁciency and structure of the

Company.

The Investment Manager and the Board are kept

abreast of changes to all relevant laws by the

Company’s legal and tax advisers, secretary,

Administrator and Auditor.

Canadian focused

Income/Dividend

The Company sets its target dividend at a rate it

expects to earn from the dividends received from

its underlying equity investments based upon

robust modelling and assumptions.

Failure by those investments to meet expectations

due to, for example, decreased operating margins,

changes in tax treatment of dividends, increased

borrowing costs or poor underlying performance,

may prevent the Company from being able to meet

its target dividend.

The Investment Manager’s allocation process

seeks to select investments capable of producing

strong reliable dividends and future capital growth

across a diverse range of sectors. Day to day risk

management techniques seek to diversify risk and

monitor high levels of volatility. The Board monitors

the income received on investments and available

for distribution prior to the declaration of each

dividend.

Unchanged

3. Operational Risks

Risk Mitigants Change from 2022

Key man Risks

The Company is reliant on key individuals of

the Investment Manager to meet its investment

objective and for growing the Company’s

shareholder base.

The Company’s portfolio is managed by a team of

investment professionals led by Dean Orrico and

Rob Lauzon.

Unchanged

Service provider performance

The Company is reliant on the performance,

safe custody of assets and data and internal

controls of its service providers for its day-to-day

activities. Poor performance or failure to meet their

contractual obligations, including the absence

of adequate business continuity plans and data

and cyber security, could negatively impact the

operations, reputation, governance and cost

efﬁciency of the Company.

Due diligence is carried out on all service providers

prior to their appointment, with their level of service

monitored continually and assessed formally by

the Management Engagement Committee on an

annual basis.

The Board monitors the performance of the

Investment Manager at every Board meeting and

otherwise as appropriate.

Unchanged

Corporate

Information

continued

Emerging Risks

The risk of an escalation in geopolitical tensions is an emerging

risk to monitor. Hamas’ attack on October 7th and Israel’s ensuing

military response have created a great deal of instability and

uncertainty throughout the region. The conﬂict has potential to

spread to other countries with interests in the region and could

result in a larger war between more powerful countries, most

notably the United States and Iran. Signs of escalation have

already started to emerge in other areas in the region. Since the

war began, the Iranian-backed Houthis have been ﬁring drones

and missiles at Israel in addition to commercial shipping vessels

in the Red Sea. These attacks pose a threat to global supply

chains. Major shipping companies have stopped using the Red

Sea which accounts for nearly 15% of global seaborne trade. In

response, U.S.-led forces have started carrying out air strikes

on Houthi targets. Tensions in the Middle East add to existing

issues in the South China Sea and Eastern Europe. Geopolitical

events can impact commodity prices, currency exchange rates,

and interest rates, further complicating investment decisions

and contributing to market ﬂuctuations.

In March 2023, risks of a banking crisis emerged in the United

States. Three U.S. regional banks failed shortly thereafter

and the Federal Reserve stepped in with a rescue funding

mechanism to guarantee that depositors would have access to

their money. Credit Suisse was also acquired by UBS Group AG

in a forced sale. In January 2024, New York Community Bancorp,

which purchased assets from the failed Signature Bank in 2023,

reported a surprise quarterly loss and slashed its dividend.

The risk of contagion and more banks becoming insolvent is

an emerging risk we are monitoring. So far, risks appear to be

concentrated in banks with exposure to commercial real estate

loans, particularly in the ofﬁce and multi-family asset classes. In

response to these emerging risks, lenders may tighten lending

standards which would make access to credit more difﬁcult.

2024 is an unusually busy year for elections. More than 60

countries including the United States, France, Taiwan, Mexico,

and the UK are expected to hold national elections this year.

It is expected that more voters will head to the polls this year

than ever before in history. Elections have the potential to

inject uncertainty into the stock market. The anticipation of

policy changes created by rhetoric and campaign promises

surrounding future government policies such as tax reforms,

trade agreements, or changes in regulations can cause

market volatility. Investors are likely to adjust their investment

strategies in response to the perceived risks and opportunities

associated with different political scenarios which may cause

market ﬂuctuations. As we saw with Brexit, the impacts from

political regime change can be far-reaching and the uncertainty

introduces risks to markets.

Emerging risks, along with all other risks the directors have

identiﬁed the Company to be exposed to, are monitored via

the Company’s risk register. During the year, as part of their

regular review and assessment of risk, the directors have also

considered the impact of the emerging risk of climate change

on the Company’s business model and long-term viability and

do not consider this to be a material risk to the Company at this

time. The fund is a closed-ended investment fund and thus is

not required to comply with LR 9.8.4R(14) or LR 9.8.6R(8) due

to LR15.4.29.

Going Concern and Viability

The performance of the investments held by the Fund over the

reporting year is reﬂected in the Statement of Comprehensive

Income and in notes 3 and 20 to the ﬁnancial statements

and the outlook for the future is described in the Chairman’s

Report and the Investment Manager’s Report. The Company’s

ﬁnancial position, its cash ﬂows and liquidity position are set

out in the ﬁnancial statements and the Company’s ﬁnancial risk

management objectives and policies, details of its ﬁnancial

instruments and its exposures to market price risk, credit risk,

liquidity risk, interest rate risk, currency risk and country risk are

set out in note 16 to the ﬁnancial statements. The Company’s

long-term viability and assessment of longer-term risks to

which the Company is exposed are also reported upon in the

Company’s long-term viability statement included below.

The ﬁnancial statements have been prepared on a going

concern basis, supported by the directors’ current assessment

of the Company’s position based on the following factors:

4. Financial Risks

Risk Mitigants Change from 2022

Market Risks

The Company may generate a loss on its investments

at realisation due to adverse movements in their

share prices, currency or interest rate movements.

The directors monitor the Investment Manager’s

compliance with the Company’s stated investment

policy and review the investment performance.

Unchanged

Liquidity Risk

The Company may hold positions, long or short, in

securities that may not be able to be sold or bought

quickly enough so as to prevent or minimise a loss.

The Fund primarily invests in securities that are

readily realisable, mainly issued by Canadian

companies and REITS listed on a Canadian Stock

Exchange and are actively traded.

Mainly Canadian

Companies

332023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

• ongoing shareholder interest in the continuation of the

Fund;

• the Fund has sufﬁcient liquidity in the form of cash assets to

meet all on-going expenses;

• should the need arise, the directors have the option to

reduce dividend payments in order to positively affect the

Fund’s cash ﬂows;

• the Fund’s investments in Canadian and U.S. securities

are readily realisable to meet liquidity requirements, if

necessary; and

• assuming the Fund’s trading in a security represented 30%

of the average daily trading volume of that security, 100%

of portfolio’s holdings can be liquidated in under 5 working

days.

Based on the above, in the opinion of the directors, there is

a reasonable expectation that the Company has adequate

resources to continue in operational existence for the

foreseeable future.

The directors have also considered the application of the

SORP for Financial Statements of Investment Trust Companies

and Venture Capital Trusts, whereby the going concern

basis of preparation of the ﬁnancial statements is considered

appropriate until a vote is passed to discontinue the Fund or

Company. There is no requirement under the Company’s and

Fund’s articles of association to propose any continuation vote in

respect of either the Company as a whole or the Fund itself and

the directors have no intention of proposing any continuation

vote in the foreseeable future, subject to unforeseen future

events. For these reasons, the ﬁnancial statements have been

prepared using the going concern basis.

Viability Statement

Provision 36 of the AIC Code includes a recommendation that

the directors publish a long-term viability statement and this

statement is intended to meet that requirement.

The Board of directors regularly assesses the viability of the

Company for at least the three years following the date of that

review. The Board believes that this three-year period remains

the appropriate period over which to assess the Company’s

viability because the Company’s shareholders and other

stakeholders desire long-term certainty as to the Company’s

viability. The Board does not consider it feasible to anticipate

with any reasonable degree of certainty the viability of the

Company for a period longer than three years. In considering

the Company’s viability, the Board considers the Company’s

current position and the principal and emerging risks to which

it is exposed, as set out on pages 30 to 32, the viability of its

investment objective and policy, market risks, the ongoing

charges ratio, the liquidity of its investments, the ability to

use hedging as a portfolio management tool, gearing and the

reduction in reliance of the Canadian economy on energy as it

diversiﬁes into promising growth industries, such as healthcare

and technology.

The Board considers the impacts on the Company’s business

plan and viability if severe Principal and Emerging risks are

applied. Certain ﬁnancial risks were considered under a

scenario analysis that stress tests the portfolio against historic

market shocks, including the 2008 Lehman Default, the 2011

Debt Ceiling Crisis and the 2015 Greece Financial Crisis. It

is expected that the value of the Fund’s total investments as

at 31 December 2023 would have experienced drawdowns of

23.8 per cent, 15.0 per cent and 1.9 per cent, respectively.

Strategy, portfolio and market risks were also considered

under a stress tested scenario where adverse movements in

currency of 15 per cent are experienced, operating expenses

increase by 20 per cent and gearing is reduced to zero due to

higher interest rates. Under this scenario, the Fund’s revenue

is expected to decline by approximately £2,455,049, its net

proﬁt is expected to decline by £1,929,198 and the dividend

coverage of the Fund is expected to decline to 70 per cent.

This analysis is relative to ﬁscal 2023 results and incorporates

the dividend increase announced in January 2024.

The directors have made a robust assessment of principal risks

and, together with the Company’s Investment Manager, have

adopted procedures and strategies to mitigate these risks. The

Fund has an established Investment Policy, which has been

approved and is monitored by the directors. The Investment

Manager regularly updates the directors on the Company’s

portfolio and the overall status of the market. The directors

engage tax accountants to perform an investment trust test (for

compliance with the requirement to distribute at least 85% of

investment income received) on an annual basis). A solvency

test is also undertaken (in compliance with Jersey company law)

before any dividend is declared.

Notwithstanding the ongoing uncertainty caused by geopolitical

events, higher interest rates and inﬂation, if the Company’s

income, expenses and dividends remain substantially

unchanged in 2023 and 2024, the Company will hold sufﬁcient

cash to pay all of its expenses and the current rate of dividends

for at least the next 12 months following the date of approval

of this annual ﬁnancial report. In addition, the Board reviews

the liquidity of the Company’s investments on a quarterly basis

and the Company’s investment portfolio remains extremely

liquid. The Board is conﬁdent, based on its regular monitoring

of liquidity, that additional cash can be raised very quickly if

needed.

The Fund has a Credit Facility Agreement with RBC whereby

RBC provides the credit facility, with a maximum principal

amount of the lesser of CAD 75,000,000 and 25 per cent. of the

total asset value of the Fund. Based on the Fund’s total assets

of GBP 151,730,819 as at 31 December 2023, a decrease in

total assets of GBP 63,875,300, or 42.10 per cent of assets,

would be required for the principal amount to exceed 25 per

cent of the total asset value of the fund.

In 2023, the level of gearing was kept relatively consistent until

October when it was reduced from an average level of 16.4

per cent to below 13 per cent. At the year-end it stood at 13.5

per cent (net).

Following careful consideration and analysis of all material risk

factors, the Board conﬁrms its belief that the Company will

remain viable as a closed-ended investment company for at

least the three years following the date of this report.

Key Performance Indicators At each Board meeting, the

Board considers several performance measures to assess

the Company’s success in achieving its objectives. The key

performance indicators (KPIs) used to measure the progress

and performance of the Company, and which are comparable

to other investment trusts, are set out below.

In addition, the Board regularly reviews the performance of the

portfolio from both a net asset value and share price perspective

and compares this against various companies and indices. The

Board also reviews the performance of the portfolio against

its benchmark; the S&P TSX High Dividend Index. Information

on the Company’s performance is given in the Chairman’s

Statement and Investment Manager’s Report.

Corporate

Information

continued

Key performance indicator

2023

Value

2022

Value

NAV per share 121.55 pence 128.31 pence

NAV total return performance for

the year (1.4%) (2.9%)

Benchmark Index* 3.9% 5.3%

Share price 101.10 pence 118.75 pence

Discount to NAV (16.84%) ( 7.4 5%)

Dividend paid in the year 5.2 pence 5.1 p ence

Ongoing charges** 1.33% 1.30%

* S&P/TSX High Dividend Index, total return basis.

** refer to page 42

Borrowings

At 31 December 2023, the amount drawn down under the Credit

Facility was CAD 37 million (GBP equivalent at amortised cost

of £21,831,966). Interest is calculated at an annual percentage

equal to, in the case of Prime Loans, the Prime Rate minus 0.35

per cent. In the case of a Banker’s Acceptance, a stamping fee

of 0.60 per cent. per annum is payable. As at 31 December 2023,

the Prime Rate was 7.20 per cent.

Future Developments

Details of the main trends and factors likely to affect the future

development, performance and position of the Company’s

business can be found in the Investment Manager’s Report

on pages 11 to 15. Further details as to the risks affecting the

Company are set out on pages 30 to 32.

Environmental, Social and

Governance Matters (‘ESG’)

The Board and the Investment Manager believe that companies

should operate in a socially responsible manner. Day-to-day

decisions regarding the Company’s investment portfolio have

been delegated to the Investment Manager. While MCT is not

explicitly focused on ESG or sustainability, it acknowledges the

increasing importance that non-ﬁnancial factors including social

and environmental issues can have on the share price, as well

as the reputation of companies. Specialists at the Investment

Manager are responsible for evaluating how companies

address and report on social and environmental risks speciﬁc

to their industries. Their goal is to integrate ESG criteria into the

Investment Manager’s decision-making processes for stock

selection and to promote ESG disclosure. The Investment

Manager is mindful of its inﬂuence on the consideration of ESG

matters by the Fund’s investee companies. Alongside portfolio

construction decisions, the Investment Manager continuously

monitors investee companies for ESG compliance. Company

monitoring, including engagement processes such as voting

and communication with management and Company board

members, is part of the Investment Manager’s responsibilities.

The Investment Manager’s ESG policy can be found on pages16

to 20.

Institutional Voting Policy

The Company’s policy is that a decision on whether to vote

on matters proposed by its investees is to be based on the

nature of the matter being proposed. In the ordinary course

of business, voting decisions have been delegated to the

Investment Manager.

The Investment Manager’s proxy voting policies are designed

to be general in nature and the Investment Manager aims

to exercise its proxy voting on all securities held. When

exercising voting rights, the Investment Manager will generally

vote with management of the issuer. For each proxy, the

Investment Manager incorporates research and considers the

recommendations provided by Glass Lewis, the Investment

Manager’s proxy advisor, in exercising its voting rights. All

proxy UK voting is conducted through Glass Lewis Viewpoint

and proxy voting is a key element of the Investment Manager’s

stewardship of the assets it manages, which is adjunct to the

integration of ESG factors into its investment process.

On a monthly basis, the Investment Manager’s portfolio managers

generate a list of issuers whose weightings represent more than

3% of the Fund’s net assets at the month-end preceding the

voting date. For each of these issuers, the Investment Manager

will record comments which support the rationale for the proxy

decision made. For example, comments would be registered in

Glass Lewis Viewpoint if the Investment Manager’s proxy voting

decision differs from the recommendation from management or

Jersey Glass Lewis. Copies of all proxy records are retained

and available in Glass Lewis Viewpoint.

Board Diversity and Experience

Following the changes in Board composition which took place in

2023, the Company’s affairs are overseen by a Board comprised

of ﬁve non-executive directors, two of whom are female. The

directors’ biographies are included on pages 26 to 27 above,

demonstrating the diversity of their experience including, but

not limited to, investment management, corporate governance,

corporate law, banking, accounting and audit and ESG matters.

The directors regularly consider the leadership needs and

speciﬁc skills required to manage the Company’s affairs in the

best interests of its shareholders and other stakeholders and

take account of diversity recommendations in their succession

planning. The Board supports the recommendations of the

Hampton-Alexander review on gender diversity on Boards and

the Parker Review about ethnic representation on Boards. The

Board is not currently fully compliant with all recommendations,

because none of the directors is from a minority ethnic

background, but will continue to work towards compliance in

a structured and orderly manner. Progress in this regard has

been made more difﬁcult by, inter alia, the JFSC’s requirement

that two of the directors be Jersey-residents. The directors

have decided that in future, in order to reach a broader range

of diverse candidates, they will consider using one or more

UK external search agents to assist with the search for new

directors.

352023 Annual Report & Accounts

REPORT OF DIRECTORS

The Directors present their report and the audited ﬁnancial

statements of the Company for the year ended 31 December

2023.

Results and Dividend Policy

The results for the year are shown in the Statement of

Comprehensive Income on page 61 and related notes on

pages 64 to 78. Four interim dividends of 1.3 pence per share

were declared and paid on account during the year ended

31 December 2023. In early 2024, a dividend of 1.325 pence

per share was paid on 31 January 2024.

The Board is aware of the current circumstances surrounding

inﬂation, higher interest rates and the war in Ukraine and their

signiﬁcant impact on economies and ﬁnancial markets. As a

result, we will be keeping the future level of dividends under

close review.

Currently, we remain conﬁdent that our dividend can be paid

based on the solvency and future viability of the Fund.

In light of the excess revenue earnings generated by the Fund

this year, together with the prospect of dividend growth from the

underlying portfolio, the board approved a 0.1p increase to the

total dividends payable in 2024. This results in a new dividend

rate of 5.3 pence per share payable in 2024 on a quarterly basis

The following table represents the gender identity of the Board as of the date of approval of this annual ﬁnancial report and includes

the information required by Listing Rule 9.8.6(9) and Annex 2 to Listing Rule 9, this data having been obtained by polling the directors:

Number of

Board Members

Percentage of

the Board

Number

of Senior

Positions on

the Board (CEO,

CFO, SID and

Chair)

Number in

Executive

Management

Percentage

of Executive

Management

Men 3 60%

N/A – No executive

Management

N/A – No executive

Management

Women 2 40%

N/A – No executive

Management

N/A – No executive

Management

Not speciﬁed/prefer not to

say

0 0% 0 N/A – No executive

Management

N/A – No executive

Management

The following table represents the ethnic background of the Board as of the date of approval of this annual ﬁnancial report and

includes the information required by Listing Rule 9.8.6(10) and Annex 2 to Listing Rule 9, this data having been obtained by polling

the directors:

Number of

Board Members

Percentage of

the Board

Number

of Senior

Positions on

the Board (CEO,

CFO, SID and

Chair)

Number in

Executive

Management

Percentage

of Executive

Management

White British or other White

(including minority-white

groups)

5 100%

N/A – No executive

Management

N/A – No executive

Management

Mixed/Multiple Ethnic

Groups

0 0%

N/A – No executive

Management

N/A – No executive

Management

Asian/Asian British 0 0% 0 N/A – No executive

Management

N/A – No executive

Management

Black/African/Caribbean/

Black British

0 0% 0 N/A – No executive

Management

N/A – No executive

Management

Other ethnic group,

including Arab

0 0% 0 N/A – No executive

Management

N/A – No executive

Management

Not speciﬁed/prefer not to

say

0 0% 0 N/A – No executive

Management

N/A – No executive

Management

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

Corporate

Information

continued

in equal instalments. These ﬁgures are targets only and do not

constitute, nor should they be interpreted as, a proﬁt forecast.

In addition, this is a target only and should not be treated as

an assurance or guarantee of performance. If the Company’s

results permit it, the Board may consider further increases to the

rate of dividends paid to shareholders at the appropriate time.

The current dividend rate of 1.325 pence per share per quarter is

expected to be supported by capital and dividend and interest

income earned by the Fund.

Directors’ Conﬂicts of Interest

A director must avoid a situation where he or she has or might

have a direct or indirect interest that either conﬂicts with or

has the potential to conﬂict with the Company’s interests.

The Company’s and Fund’s Articles of Association give the

directors authority to authorise potential conﬂicts of interest

and there are safeguards in place which will apply whenever

the directors decide that such are necessary or desirable.

Firstly, only directors who have no interest in the matter being

considered are able to vote upon the relevant decision, and

secondly, in voting on the decision, the directors must act in

a way they consider, in good faith, will be in the best interests

of the Company. The directors can impose limits or conditions

when giving authorisation if they consider this to be appropriate.

The directors declare any potential conﬂicts of interest to the

Board at each Board meeting. Any actual or potential conﬂicts

of interest are entered into the Company’s register of such

conﬂicts, which register is reviewed regularly by the Board.

The register of conﬂicts of interest is kept at the Company’s

registered ofﬁce. The directors advise the Secretary as soon as

they become aware of any new actual or potential conﬂicts of

interest or any material changes to an existing conﬂict.

Share Capital

The Fund has the power to issue an unlimited number of shares of

no par value which may be issued as redeemable participating

preference shares or otherwise and which may be denominated

in Sterling or any other currency.

There are currently 2 Management Shares of no par value in

the Company (issued on incorporation) and 124,682,250 Fund

Shares in issue. As at 31 December 2023, 18,195,000 (2022:

18,195,000) Fund Shares were held in treasury. Since the ﬁnancial

year end and up to the date of this report, no Fund Shares had

been sold out of or repurchased into treasury, and there remain

18,195,000 Fund Shares held in treasury, which may in future be

sold out of treasury to satisfy market demand. Accordingly, the

number of Fund Shares in issue and with voting rights attached

is currently 106,487,250 (2022: 106,487,250) and this ﬁgure may

be used by shareholders as the denominator for calculations

by which they will determine if they are required to notify their

interest in, or a change to their interest in, the Company under

FCA’s Disclosure Guidance and Transparency Rules.

Further issues and Repurchases of

Fund Shares

The Fund’s Articles of Association provide the Board of directors

with authority to issue further Fund Shares without seeking

shareholders’ approval, although, unless otherwise authorised

by shareholders, such Fund Shares must be issued on a

pre-emptive basis. However, at the Cell AGM held on 1 June

2023, the Fund’s shareholders authorised the issue or sale out

of treasury of Fund Shares representing up to 10 per cent. of

the Fund’s issued share capital as at the date of the Cell AGM

on a non-pre-emptive basis. Such issues or sales will only be

effected in the event of investor demand which cannot be met

through the market and will only be conducted at a price equal

to or above the prevailing NAV.

The aforementioned authority expires on the earlier of

30September 2024 or the conclusion of the next Cell AGM.

The Fund’s Articles of Association also provide the Board of

directors with authority to repurchase Fund Shares, provided

that such repurchases are made with shareholders’ prior

approval.

At the Cell AGM held on 1 June 2023, the Fund’s shareholders

authorised the Board to make market purchases of up to

15,962,438 Fund Shares (representing 14.99 per cent. of the

Fund’s issued share capital as at the date of the Cell AGM),

provided that no such purchases may be made at a price above

the prevailing net asset value per Fund Share on the date of any

such purchase.

The aforementioned authority also expires on the earlier of

30 September 2024 or the conclusion of the next Cell AGM.

At the next Cell AGM, the Board will be seeking renewal of

its authority to issue or sell out of treasury additional Fund

Shares and to make market acquisitions of Fund Shares.

Notwithstanding the fact that the Fund conducted no share

buybacks during 2023, the Board believes that it is important to

retain the authority to buyback where appropriate (which, in turn

is likely to depend on, inter alia, the prevailing discount rating

of the Fund Shares, the ﬁnancial resources that the Company

has at its disposal, liquidity levels in the Fund Shares and the

size of the Company). Buybacks can confer several beneﬁts

on remaining shareholders: they are accretive to NAV and can

provide additional useful liquidity.

Holdings in the Company’s Shares

As at the year end and as at 31 March 2024, being the most

recent practicable date prior to the publication of this Annual

Financial Report, the Company had received notiﬁcation in

accordance with the Financial Conduct Authority’s Disclosure

and Transparency Rule 5 of the following interests in 5per cent

or more of the Fund’s issued share capital with voting rights

attached, where the Board has been advised that the holder

retains a holding in excess of 5 per cent.

372023 Annual Report & Accounts

Reappointment of Auditor

RSM Channel Islands (Audit) Limited has expressed its

willingness to continue in ofﬁce as auditor and a resolution to

re-appoint it will be proposed at the Company’s and Fund’s

forthcoming AGMs.

Related Party Transactions

The Company’s related parties are its directors and the

Investment Manager. There were no related party transactions

(as deﬁned in the Listing Rules) during the year under review,

nor up to the date of this report. Details of the remuneration paid

to the directors and the Investment Manager during the year

under review are shown in note 13.

Annual General Meetings (‘AGMs’)

This year’s AGMs will be held on 13 June 2024. Shareholders

are welcome to attend the AGMs in person. The AGM Notices

and details of the resolutions to be proposed are being sent to

shareholders with this annual ﬁnancial report. Shareholders can

also write to the Company for further details at its registered

ofﬁce or by e-mail to the Secretary at Middleﬁeld.Cosec@

JTCGroup.com.

Directors’ Statement as to Disclosure of

Information to the Auditor

Each of the persons who is a director at the date of approval of

this annual ﬁnancial report conﬁrms that:

• so far as the director is aware, there is no relevant audit

information of which the Company’s auditor is unaware; and

• the director has taken all steps that he should have taken

as a director in order to make himself aware of any relevant

audit information and to establish that the Company’s

auditor is aware of that information.

Approval

This Strategic Report was approved by the Board on 18 April

2024 and is signed on their behalf by:

Michael Phair Andrew Zychowski

Director Director

Name

Redeemable Participating

Preference Shares

31 December 2023

Redeemable Participating

Preference Shares

31 December 2023

Redeemable Participating

Preference Shares

31 March 2024

Number of Shares % of Shares in issue Number of Shares

Allspring Global Investments Holdings, LLC 10,934,451 10.27% 10,934,451

1607 Capital Partners

10,539,526 9.90% 10,539,526

M&G PLC 9,79 4,16 2 9.20% 9,79 4,16 2

EFG Private Bank Limited 5,574,875 5.24% 5,574,875

Fund Shares are redeemable at the sole option of the directors and therefore classiﬁed as equity in the Statement of Financial

Position.

MIDDLEFIELD CANADIAN INCOME TRUST | STRATEGIC REPORT

This page has intentionally been left blank.

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

372022 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

Corporate

Governance

Directors’ Responsibility Statement

The directors are responsible for preparing the annual ﬁnancial

report in accordance with applicable law and regulations. The

Companies (Jersey) Law 1991, as amended (the “Companies

Law”) requires the directors to prepare ﬁnancial statements for

each ﬁnancial year which gives a true and fair view of the state of

affairs of the Company and Fund as at the end of the ﬁnancial

year and of the proﬁt or loss for that year. The directors have

elected to prepare the ﬁnancial statements under UK-adopted

IFRS.

International Accounting Standard 1 requires that ﬁnancial

statements present fairly for each ﬁnancial period the Company’s

and Fund’s ﬁnancial position, ﬁnancial performance and cash

ﬂows. This requires the faithful representation of the effects of

transactions, other events and conditions in accordance with the

deﬁnitions and recognition criteria for assets, liabilities, income

and expenses set out in the International Accounting Standards

Board’s ‘Framework for the preparation and presentation of

ﬁnancial statements’. In virtually all circumstances, a fair

presentation will be achieved by compliance with all applicable

IFRS. However, directors are also required to:

• properly select and apply accounting policies;

• present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and

understandable information;

• provide additional disclosures when compliance with the

speciﬁc requirements in IFRS are insufﬁcient to enable users

to understand the impact of particular transactions, other

events and conditions on the Company’s and Fund’s ﬁnancial

position and performance; and

• make an assessment on the Company’s and Fund’s ability to

continue as a going concern.

The directors are responsible for keeping proper accounting

records that disclose with reasonable accuracy at any time the

ﬁnancial position of the Company and enable them to ensure that

the ﬁnancial statements comply with the Companies Law. They are

also responsible for safeguarding the assets of the Company and

Fund, and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of

the corporate and ﬁnancial information included on the

Company’s website https://middleﬁeld.com/funds/uk-funds/

middleﬁeld-canadian-income-trust/

Legislation in Jersey and the United Kingdom governing the

preparation and dissemination of ﬁnancial statements may differ

from legislation in other jurisdictions. Having taken advice from the

Audit Committee, the Board considers the report and accounts,

taken as a whole, as fair, balanced and understandable and that

it provides the information necessary for shareholders to assess

the Company’s and Fund’s performance, business model and

strategy.

We conﬁrm that to the best of our knowledge:

1. the Financial Statements, prepared in accordance with under

UK-adopted IFRS, give a true and fair view of the assets,

liabilities, ﬁnancial position and proﬁt or loss of the Company

and Fund;

2. the Chairman’s Report, Investment Manager’s Report and

Notes to the Financial Statements incorporated herein by

reference include a fair review of the development,

performance and position of the Company and Fund,

together with a description of the principal risks and

uncertainties that it faces; and

3. the Annual Report and Financial Statements, taken as a

whole, are fair, balanced and understandable and provide

the information necessary for shareholders to assess the

Company’s and Fund’s position and performance, business

model and strategy.

By order of the Board:

Michael Phair Andrew Zychowski

Director Director

Date: 18 April 2024

Statement of Directors

Responsibilities

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

Directors’ Remuneration

Report

Remuneration Report

Remuneration policy

The Company’s remuneration policy is designed to ensure that the remuneration of directors is set at a reasonable level commensurate

with the duties and responsibilities of each director and the time commitment required to carry out their roles effectively. Rem

uneration

will be such that the Company and Fund are able to attract and retain directors of appropriate experience and quality. The fees paid

to directors will reﬂect the experience of the Board as a whole, will be fair, and will take account of the responsibilities attac

hing to

each role given the nature of the Company’s interests, as well as the level of fees paid by comparable investment trusts and companies

Directors will be reimbursed for travel and subsistence expenses incurred in attending meetings or in carrying out any other duties

incumbent upon them as directors of the Company or Fund. The level of directors’ fees paid will not exceed the limit set out in the

Company’s and Fund’s Articles of Association.

Directors’ Remuneration

No director has a service contract with the Company or Fund and details of the directors’ fees are disclosed in note 13. The

non-executive directors each earned the following fees in the 2023 and 2022 ﬁnancial years:

Director 2023 Fees 2022 Fees

Philip Bisson (Resigned 1 June 2023) £10,440 £25,000

Dean Orrico – –

Richard Hughes (Resigned 1 June 2023) £11,275 £27,000

Michael Phair £33,500 £31,000

Kate Anderson £27,000 £25,000

Janine Fraser £27,000 £7,473

Andrew Zychowski (Appointed 30 June 2023) £16,000 N/A

Mr Orrico has waived his entitlement for remuneration for acting as a director, because of his employment by the Investment Manager

The directors receive no other remuneration or beneﬁts from the Company other than the fees stated above. The directors are paid out

of pocket expenses for attendance at Board meetings and for any other expenditure they incur when acting on the Company’s behalf.

The remuneration of each director is determined by the Nomination and Remuneration Committee, with each director abstaining from

discussion of and voting upon their own remuneration. When the directors’ remuneration is being considered, the Nomination and

Remuneration Committee takes into account various factors including, but not limited to, the Company’s and individual directors’

performance, as well as each director’s time commitment to their role. To date, no external remuneration consultant has been appointed.

For the year under review, the directors’ remuneration was set at £36,000 per annum for the chairman of the Board, £32,000 per ann

for the chairman of the audit committee and £29,000 for all other directors bar Mr Orrico, who has waived his entitlement to rem

uneration

for acting as a director.

Shareholders’ Views

The Board welcomes the opportunity to discuss matters of remuneration with shareholders at the Company’s and Fund’s AGMs or at

any investor forum that may be held during the year.

Letters of Appointment

All directors are non-executive. Every director has a letter of appointment and the letters of appointment are available for inspection

on the Company’s website.

Directors’ Remuneration

Report continued

Directors’ Interests in Shares

The interests as at 31 March, 2024, 31 December 2023 and 2022 of the directors who served on the Board and their connected persons

during the year were as follows:

31 March 2024 31 December 2023 31 December 2022

Fund Shares Fund Shares Fund Shares

Philip Bisson (resigned 1 June 2023) – – –

Philean Trust Company Limited (a company connected with

Philip Bisson) – – 451,200

Probitas Trust Company Limited (a company connected with

Philip Bisson) – – 150,000

Beg Kaleh Services Limited (a company connected with

Philip Bisson) – – 141,000

Beg Kaleh Pension Limited (a company connected with

Philip Bisson) – – 1,053,000

Dean Orrico 220,000 220,000 170,000

Middleﬁeld Limited (a company connected with Dean Orrico) 170,000 – –

Richard Hughes (resigned 1 June 2023) – – 101,413

Cheng Sim Hughes (a person connected to Richard Hughes) – – 25,000

Michael Phair (current Chairman) 70,000 70,000 50,000

Andrew Zychowski (appointed 30 June 2023) 50,000 50,000 –

Danuta Zychowska (a person connected to Andrew Zychowski) 83,000 83,000 –

Kate Anderson – – –

Janine Fraser – – –

Directors’ dividends

The following dividends were paid to Directors during the year as well as persons connected to the Directors.

31 December 2023 31 December 2022

Dividend Dividend

GBP GBP

Philip Bisson (resigned 1 June 2023) – –

Philean Trust Company Limited (a company connected with Philip Bisson) 11,731 23,011

Probitas Trust Company Limited (a company connected with Philip Bisson) 3,900 7,650

Beg Kaleh Services Limited (a company connected with Philip Bisson) 3,848 7,191

Beg Kaleh Pension Limited (a company connected with Philip Bisson) 28,418 55,743

Dean Orrico 11,440 5,993

Richard Hughes (resigned 1 June 2023) 2,637 5,172

Cheng Sim Hughes (a person connected to Richard Hughes) 650 1,275

Michael Phair (current Chairman) 3,640 2,550

Andrew Zychowski (appointed 30 June 2023) 2,600 –

Danuta Zychowska (a person connected to Andrew Zychowski) 4,316 –

Kate Anderson – –

Janine Fraser – –

Ongoing Charges

The below table shows the annualised ongoing charges that relate to the management of the Fund as a single percentage of the

average NAV over the same year. In terms of the AIC’s methodology, ongoing charges are those expenses of a type which are likely to

recur in the foreseeable future, whether charged to capital or revenue, and which relate to the operation of the Fund as a collective

investment fund, excluding the costs of acquisition/disposal of investments, ﬁnancing charges and gains/losses arising on investments.

Ongoing

charges (%)

31 December 2023 1.33

31 December 2022 1.30

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

Corporate Governance

Statement

Applicable Corporate Governance Codes

The Board is committed to achieving and demonstrating high standards of corporate governance. The Board is advised on all

governance matters by the Secretary and has access to independent professional advice at the Company’s expense where it is judged

necessary.

As an overseas company with a premium listing, the Company is required to include a statement in its Annual Financial Report as to

whether it has complied throughout the accounting period with all relevant provisions set out in the UK Code or, if not, setting out those

provisions with which it has not complied and the reasons for non-compliance.

The AIC, of which the Company is a member, has published the AIC Code, which has been endorsed by the FRC and supported by

the JFSC. The FRC has conﬁrmed that, by following the AIC Code, investment company boards should fully meet their obligations in

relation to the UK Code and paragraph LR 9.8.6 of the Listing Rules.

The UK Code is available for download from the FRC’s web-site www.frc.org.uk and the AIC Code is available for download from the

AIC’s website www.theaic.co.uk. Both of these documents can also be provided by the Secretary by e-mail upon request.

Statement of Compliance

The Board has considered the principles and recommendations of the AIC Code. The AIC Code addresses all the principles set out in

the UK Code, as well as setting out additional principles and recommendations on issues that are of speciﬁc relevance to the Compan

The Board considers that reporting against the principles and recommendations of the AIC Code provides better information to

shareholders.

The directors believe that the Company has complied with the provisions of the AIC Code, where appropriate, and that it has complied

throughout the year with the provisions where the requirements are of a continuing nature.

Responsibilities of the Board

The Board is responsible for setting the Company’s Investment Objective and Investment Policy, subject to shareholders’ approval of

any proposed material changes, and has a schedule of investment matters reserved for the directors’ resolution. The Board has

contractually delegated to external agencies the management of the investment portfolio, the custodial services and the day-to-da

accounting and secretarial requirements. Each of these contracts is only entered into after proper consideration by the Board of

the

quality of services being offered.

Internal Controls

The directors are responsible for overseeing the effectiveness of the Company’s risk management and internal control systems, which

are designed to ensure that proper accounting records are maintained, that the ﬁnancial information on which business decisions are

made and which is issued for publication is reliable, and that the assets of the Company are safeguarded. However, such a system

can only be designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore can only pro

vide

reasonable and not absolute assurance against material misstatement or loss.

Having reviewed the Company’s risk management and internal control systems and on the advice of the Audit Committee, the Board

believes that they continue to be effective and that no changes thereto are necessary or desirable at this juncture. Because the Compan

delegates its day-to-day operations to third parties and has no employees, having reviewed the effectiveness of the internal control

systems of the Administrator on a quarterly basis and having regard to the role of its external auditor, the Board does not consider tha

there is a need for the Company to establish its own internal audit function. The Administrator does however provide the Company’

compliance ofﬁcer, who monitors the Company’s compliance with applicable laws and regulations and reports directly to the Board of

directors on a quarterly basis.

The Company receives reports from the Secretary and Administrator relating to its activities. Documented contractual arrangements

are in place with the Secretary and Administrator, which deﬁne the areas where the Company has delegated authority to it. The Secretar

ensures that the directors receive accurate, timely and clear information from all service providers.

Directors

Appointment, Retirement and Tenure

As Mr Orrico is not independent of the Investment Manager, he is required by the FCA’s Listing Rules to submit himself for re-election

annually. In addition, in accordance with the provisions of the AIC Code, and PIRC’s published guidance, all directors will contin

ue to

offer themselves for annual re-election for the foreseeable future.

As the Company is a Jersey-regulated entity, the appointment of any new director is subject to the JFSC’s conﬁrmation that they ha

no objection to such director’s appointment. It is also a regulatory requirement that the Company have at least two Jersey resident

directors. Therefore, for so long as there are only two Jersey resident directors in ofﬁce, any Jersey resident director who retires or

Corporate Governance

Statement continued

whose re-election is not approved at a Company and Cell AGM will therefore remain in ofﬁce until such time as a replacement Jersey-

resident director acceptable to the JFSC has been appointed.

The Board is of the view that length of service does not automatically compromise the independence or contribution of directors of

investment company, where continuity and experience can be a beneﬁt to the Board. Furthermore, the Board agrees with the view

expressed in the AIC Code that long-serving directors should not be prevented from forming part of an independent majority or from

acting as Chairman. Consequently, no limit had previously been imposed on the directors’ overall length of service.

However, the Board has noted that the AIC considers that directors who have served on the Board for more than nine years may not

be independent and that certain corporate governance advisory bodies believe that directors should not serve more than nine years

on an investment company’s Board. Therefore, in the spirit of best corporate governance, the Board has decided that any remunera

ted,

independent director appointed in 2018 or thereafter shall only serve for a maximum of nine years before being required to retire from

ofﬁce.

As stated in previous annual ﬁnancial reports, the Board has recognised the merits of refreshing its composition as well as planning

for future succession. The Board intends to continue evolving its composition on a periodic basis and has agreed a succession plan

for the directors with over nine years of service. The Board’s advance planning for the retirement of directors ensures an orderl

transition process that maintains an appropriate balance of skills and relevant experience. The Board has used open advertising in the

past. The directors have decided that in future, in order to reach a broader range of diverse candidates, it will also consider using one

or more UK external search agents to assist with the search for new directors.

As required by the FCA’s Listing Rules, full biographical details of any additional directors appointed will be announced and he or she

will stand for re-election at the next subsequent Company and Cell Meeting convened after their appointment and annually thereafter

Independence

For the period 1 January to 1 June 2023 the Board consisted of six members and from 30 June 2023 to the date of this report, the

Board consisted of ﬁve members, all of whom were non-executive. Mr Orrico is a director of Middleﬁeld Limited, the Investment Manager

and President of the Investment Advisor. All the directors, apart from Mr Orrico, are considered to be independent of the Investment

Manager and free of any business or other relationship that could inﬂuence their ability to exercise independent judgement. The Board

believes that Mr Orrico’s investment management experience as well as his ﬁrst-hand knowledge of the Canadian economic and

investment sector adds considerable value to the Company.

The Board believes that Ms Anderson, Ms Fraser, Mr Phair and Mr Zychowski are independent in character and judgement and that

their experience and knowledge of the specialised sector in which the Company operates adds signiﬁcant strength to the Board.

MrPhair was also considered to be independent upon his appointment as Chairman. The directors believe that the Board has a balance

of skills and experience which enable it to provide effective strategic leadership and proper governance of the Company. Informa

tion

about the directors, including their relevant experience, can be found on pages 26 to 27.

In accordance with the recommendations of the AIC Code, Ms Kate Anderson acted as Senior Independent Director. In-line with the

AIC’s recommendation, Ms Anderson provides a sounding board for the chair and serves as an intermediary for the other directors

and shareholders. She is responsible for coordinating a regular meeting, at least annually and on other occasions as necessary, of

the

non-executive directors (excluding the chair), to appraise the chair’s performance.

Induction and Ongoing Training

Although no formal training in corporate governance is given to directors, the directors are kept appraised of corporate governance

issues through bulletins and training materials provided from time to time by the Secretary and the AIC.

Directors’ Insurance

The Company purchases directors’ and ofﬁcers’ liability insurance cover at a level which is considered appropriate for the Company.

Meeting Attendance

The Board meets at least quarterly to review the overall business of the Company and to consider matters speciﬁcally reserved for its

review. At these meetings, the Board monitors the investment performance of the Fund. The directors also review the Fund’s activities

every quarter to ensure that it adheres to the Fund’s investment objective and policy or, if appropriate, to consider changes to tha

policy. Additional ad hoc reports are received as required and directors have access at all times to the advice and services of the

Secretary, which is responsible for guiding the Board on procedures and applicable rules and regulations.

The Board also receives and considers, together with representatives of the Investment Manager, reports in relation to the opera

tional

controls of the Investment Manager, Administrator, Custodian and Registrar. These reviews identiﬁed no issues of signiﬁcance.

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

The table below summarises the directors’ attendance at each type of meeting held during the year.

Nomination and Management Dividend

Quarterly Ad hoc Audit Remuneration Engagement Committee

Board Board Committee Committee Committee ****

No. of meetings in the Year 4 1 4 2 1 4

Philip Bisson+* 1 1 2 1 1 0

Dean Orrico** 4 1 4 2 1 0

Janine Fraser 4 1 4 2 1 4

Richard Hughes* 1 1 2 1 1 2

Michael Phair 4 1 4 2 1 2

Kate Anderson 4 1 4 2 1 0

Andrew Zychowski*** 3 0 2 1 0 2

+Mr Bisson attended meetings of the Audit Committee as an observer, not as a member or participant.

* Mr Bisson and Mr Hughes resigned on 1 June 2023.

**Mr Orrico attended meetings of the Committees as an observer, not a member or participant.

***Mr Zychowski was appointed on 30 June 2023.

****The quorum for a meeting of the Dividend Committee is one director physically present in the UK.

The Board’s Committees

Performance Evaluation

The directors recognise the importance of the AIC Code in terms of evaluating the performance of the Board as a whole, its respective

Committees and individual directors. After the year end, the performance of the Board, Committees of the Board and individual director

was assessed in terms of:

• attendance at Board and Committee Meetings;

• the independence of individual directors;

• the ability of individual directors to make an effective contribution to the Board and Committees of the Board, together with the

diversity of skills and experience each director brings to meetings;

• the Board’s ability to effectively challenge the Investment Manager’s recommendations, suggest areas of debate and ﬁx timetables

for debates on the future strategy of the Company; and

• the Board’s diversity in terms of gender, social and ethnic backgrounds and cognitive and personal strengths and weaknesses.

The directors concluded that the performance evaluation process had proven successful, with the Board, the Chairman, the Committees

of the Board and the individual directors scoring well in all areas. The Board and the Committees of the Board continued to be ef

fective,

each director’s behaviour continued to be aligned to the Company’s purpose, values and strategy and the individual directors contin

ued

to demonstrate commitment to their respective roles and responsibilities. Although the Board did not procure an externally facilita

ted

Board evaluation during the year under review, the directors will consider doing so at the appropriate time in the future.

The Board also reviews its own policies and procedures on a periodic basis, as well as the terms of reference of its committees, to

ensure that they serve to further the Company’s purpose and that they are aligned with the Company’s values and strategy. The Board

with the support of the Secretary reviewed all of their policies, procedures and the terms of reference, all of which were updated (as

applicable) to meet the recommendations of the AIC Code and concluded that they continued to be in a satisfactory form.

Committees of the Board

Audit Committee

On 26 May 2010 an Audit Committee was established. The current members are Andrew Zychowski (Chairman), Michael Phair,

KateAnderson and Janine Fraser. Notwithstanding that Mr Phair is Chairman of the Board, he was independent on appointment and

the Board considers that his experience and knowledge is of great value to the Audit Committee. A separate report from the Audit

Committee is included at pages 48 to 50.

Nomination and Remuneration Committee

The Board has also established a Nomination and Remuneration Committee, which meets when necessary. At the present time, the

current members are all the directors of the Company bar Mr Orrico, and their summary biographical details are set out on pages 26

to 27.

The Chairman of the Nomination and Remuneration Committee is Andrew Zychowski or, failing him, any member of the Nomination

and Remuneration Committee present within the United Kingdom other than the Chairman of the Company. The Board believes it is

appropriate for all members of the Board (excluding Mr Orrico) to be on the Nomination and Remuneration Committee, because the

directors work together collegiately, and each brings a different perspective to the Nomination and Remuneration Committee’s

discussions.

The key terms of reference of the Nomination and Remuneration Committee are set out below.

• The Committee oversees the process of identifying and nominating prospective directors.

• The Committee considers and monitors the level and structure of remuneration of the directors of the Company and the Fund.

• The Committee considers the need to appoint external remuneration consultants.

• The Committee is authorised, in consultation with the Secretary, where necessary to fulﬁl its duties, to obtain outside legal or other

professional advice, including the advice of independent remuneration consultants, to secure the attendance of external advisors

at its meetings, if it considers this necessary, and to obtain reliable up-to-date information about remuneration in other companies

all at the expense of the Fund.

• The Committee considers the overall levels of insurance cover for the Company, including directors’ and ofﬁcers’ liability insurance

• The Committee conducts a process annually to evaluate the performance of the Board and its individual directors.

• The Committee considers such other topics as directed by the Board.

The Board believes that, subject to any exception explained in this report and the nature of the Company as an investment fund, it has

complied with the applicable provisions of the AIC Code throughout the year. The Board has noted the recommendations of the AIC

relating to Board diversity. Although the Board does not have a formal written policy on diversity and inclusion, the Board, advised b

the Nomination and Remuneration Committee, considers diversity, including the balance of skills, knowledge, diversity (including

gender) and experience amongst other factors when reviewing the composition of the Board and appointing new directors, but does

not consider it appropriate to establish targets or quotas in this regard. Board diversity is carefully considered and will contin

ue to be

considered in the future.

When considering the proposed appointment of new directors, the Nomination and Remuneration Committee receives full biographical

information on all candidates and considers all matters which it considers relevant, including their experience and ability to de

vote

sufﬁcient time to the Company’s business. The process also takes into account numerous other factors including, but not limited to

each candidate’s experience, gender, social and ethnic background and personal strengths and weaknesses. Each director is

interviewed by the Nomination and Remuneration Committee as part of the Board’s evaluation of prospective candidates. After their

appointment, each director seeks the Board’s consent before taking on any other signiﬁcant external appointments.

Management Engagement Committee

The Board established a Management Engagement Committee at its meeting held on 20 November 2013. In addition to regular reporting

and engagement at Board meetings with its service providers, the Board formally reviews all service providers via the Management

Engagement Committee. At the present time, the Management Engagement Committee’s members are all the directors of the Company

bar Mr Orrico, who does not sit on the Management Engagement Committee because of the perceived conﬂict that his role as President

of the Investment Advisor could present.

The Chairman of the Management Engagement Committee is Andrew Zychowski or, failing him, any member of the Management

Engagement Committee present within the United Kingdom other than the Chairman of the Company. For the purposes of transacting

business, a quorum of the Management Engagement Committee is not less than two members of the Management Engagement

Committee and all meetings must take place in the UK.

The Board believes it is appropriate for all independent members of the Board to be on the Management Engagement Committee,

because the directors work together collegiately and each brings a different perspective to the Management Engagement Committee’s

discussions.

Duties

The Management Engagement Committee’s key duty is to review the performance by service providers of their duties and the terms

of all agreements for the provision of services that the Company has entered into or will in future enter into.

The Management Engagement Committee meets at least annually to speciﬁcally consider the ongoing management, administrative,

secretarial and investment management requirements of the Company. The Management Engagement Committee receives

self-evaluation questionnaires provided by all service providers, which include reporting on each service provider’s opinion of the

quality of services provided by the Company’s other service providers, and the Board also receives detailed compliance reporting

from the Company’s compliance ofﬁcer, which the Management Engagement Committee takes into account when reviewing the services

Corporate Governance

Statement continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

provided. The quality and timeliness of reports to the Board are also taken into account and the overall management of the Company’s

affairs by the Investment Manager is considered. Based on its recent review of activities, and taking into account the performance of

the portfolio, the other services provided by the key service providers, and the risk and governance environment in which the Compan

operates, the Board believes that the retention of the current key service providers on the current terms of their appointment remains

in the best interests of the Company and its shareholders.

The Board regularly reviews the performance of the services provided by these companies. A summary of the terms of the agreements

with the Secretary, the Investment Manager and the Investment Advisor are set out in note 1 to the ﬁnancial statements. After due

consideration of the resources and reputations of those parties, the Board believes it is in the interests of shareholders to retain the

services of all three providers for the foreseeable future.

Terms of Reference of Committees

The Terms of Reference of the Audit Committee, the Nomination and Remuneration Committee and the Management Engagement

Committee are all available on the Company’s website and are also available for inspection at the Company’s registered ofﬁce during

normal business hours.

Bribery Act 2010

The Company has no employees. The Board has considered the Bribery Act 2010 and conﬁrmed its zero tolerance of bribery and

corruption in its business activities. It has received assurances from the Company’s main service providers that they will maintain

adequate safeguards to protect against any form of bribery and corruption by their employees and agents.

Criminal Finances Act 2017

The Board has also considered the Criminal Finances Act 2017 and has received assurances from the Company’s main service

providers that they will maintain adequate safeguards to protect against any form of illegal activities under this legislation, inc

luding

the facilitation of tax evasion.

Relations with Shareholders

Shareholder relations are given a high priority by the Board, Investment Manager and Secretary. The primary medium through which

the Company communicates with its shareholders is through the annual and half-yearly ﬁnancial reports, which aim to provide

shareholders with a full understanding of the Company’s activities and results. The information is supplemented by the daily pub

lication

of the NAV of the Fund Shares, monthly factsheets and information on the Company’s website operated by the Investment Manager.

Shareholders have the opportunity to address questions to the Chairman and the Committees of the Board at the AGMs each year.

Shareholders can also write to the Company at its registered ofﬁce or by e-mail to the Secretary at Middleﬁeld.Cosec@JTCGroup.com

There is regular dialogue between the Investment Manager and major shareholders to discuss aspects of investment performance,

governance and strategy and to listen to shareholders’ views, in order to help develop a balanced understanding of their issues and

concerns. General presentations to both shareholders and analysts follow the publication of the annual ﬁnancial results. All meetings

between the Investment Manager and shareholders are reported to the Board.

This report of the Audit Committee has been prepared with reference to the AIC Code. Established in 2010, the Audit Committee reports

formally to the main Board at least twice each year. In accordance with written terms of reference, its delegated duties and

responsibilities are reviewed and reapproved annually. The function of the Audit Committee is to ensure that the Company maintains

high standards of integrity, ﬁnancial reporting and internal controls.

The members do not have any links with the Company’s Auditor. They are also independent of the management teams of the Investment

Manager, the Administrator and all other service providers. The Audit Committee meets formally no less than twice a year in London

and on an ad hoc basis if required.

The Audit Committee considers the ﬁnancial reporting by the Company and the Fund, the internal controls, and relations with the

Company’s and the Fund’s Auditor. In addition, the Audit Committee reviews the independence and objectivity of the Auditor. The

Committee meets at least twice a year to review the internal ﬁnancial and non-ﬁnancial controls, to approve the contents of the interim

and annual reports and ﬁnancial statements and to review accounting policies. Representatives of the Auditor attend the Committee

meeting at which the draft Annual Financial Reports are reviewed and can speak to Committee members without the presence of

representatives of the Investment Manager. The audit program and timetable are drawn up and agreed with the Auditor in advance of

the ﬁnancial year end. Items for audit focus are discussed, agreed and given particular attention during the audit process. The A

uditor

reports to the Committee on these items, among other matters. This report is considered by the Committee and discussed with the

Auditor and the Investment Manager prior to approval and signature of the Annual Financial Report.

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference and to consult with outside leg

or other independent professional advisers when deemed necessary in order to adequately discharge their duties and responsibilities

which include:

• Considering the appointment, resignation or dismissal of the Auditor and their independence and objectivity, particularly in

circumstances where non-audit services have been provided.

• Reviewing the cost effectiveness of the external audit from time to time.

• Reviewing and challenging the half-yearly and Annual Financial Reports, focusing particularly on changes in accounting policies

and practice, areas of accounting judgement and estimation, signiﬁcant adjustments arising from audit or other review and the

going concern assumption.

• Providing advice to the Board on whether the Annual Financial Report, taken as a whole, is fair balanced and understandable and

provides the information necessary for shareholders to assess the company’s position and performance, business model and

strategy.

• Reviewing compliance with accounting standards and law and regulations including the Companies (Jersey) Law 1991 and the

FCA’s Listing and Disclosure Guidance and Transparency Rules.

• Completing regular risk management reviews of internal controls, which include the review of the Fund’s Risk Register.

• Reviewing the effectiveness of the Company’s system of internal controls, including ﬁnancial, operating, compliance, fraud and

risk management controls and making and reporting to the Board any recommendations that may arise.

• Considering the major ﬁndings of internal investigations and making recommendations to the Board on appropriate action.

• Ensuring that arrangements exist whereby service providers and management may raise concerns over irregularities in ﬁnancial

reporting or other matters in conﬁdence and that such concerns are independently investigated and remediated with appropriate

action.

The Audit Committee, having reviewed the effectiveness of the internal control systems of the Administrator on a quarterly basis

, and

having regard to the role of the Auditor, does not consider that there is a need for the Company or Fund to establish its own inter

nal

audit function. The Administrator does however provide the Company’s compliance ofﬁcer, who monitors the Company’s compliance

with applicable laws and regulations and reports directly to the Board of directors on a quarterly basis.

Some of the principal duties of the Audit Committee are to consider the appointment of the Auditor, to discuss and agree with the

Auditor the nature and scope of the audit, to review the scope of and to discuss the results and the effectiveness of the audit and the

independence and objectivity of the Auditor, to review the Auditor’s letter of engagement and management letter and to analyse the

key procedures adopted by the Company’s outsourced service providers including the Administrator and Custodian. The Audit

Committee is responsible for monitoring the ﬁnancial reporting process and the effectiveness of the Company’s and its service pro

vider’s

internal control and risk management systems. The Company’s risk assessment focus and the way in which signiﬁcant risks are

managed is a key area for the Committee. Work here was driven by the Committee’s assessment of the risks arising in the Company’s

operations and identiﬁcation of the controls exercised by the Board and its delegates, the Investment Manager and other service

providers. These are recorded in the Company’s business risk matrix which continues to serve as an effective tool to highlight and

monitor the principal risks.

Report of the Audit Committee

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

The Board also received and considered, together with representatives of the Investment Manager, reports in relation to the operational

controls of the Investment Manager, Secretary and Administrator, Custodian and Registrar. These reviews identiﬁed no issues of

signiﬁcance. The risks relating to the Company (including the Fund) are discussed by the directors and documented in detail in the

minutes of each meeting.

The Audit Committee is also responsible for overseeing the Company’s relationship with the Auditor, including making recommendations

to the Board on the appointment and re-appointment of the Auditor and its remuneration.

Significant Matters

The signiﬁcant matters that were subject to speciﬁc consideration in 2023 by the Committee and consultation with the Auditor where

necessary were as follows:

Valuation and ownership of securities

There is a risk that the securities are incorrectly valued due to factors including low volume traded securities and errors in third party

prices.

Valuation of securities – at each valuation point, a price tolerance check is run.

The following exceptions require further investigation:

• Prices outside the stated tolerance levels: Price movements need to be justiﬁed to underlying support.

• Stale prices: These need to be traced and agreed to support to ensure prices are not stale. Stale prices are escalated as per the

pricing policy after being static for more than 7 days.

• Zero prices: Prices for these securities need to be investigated and added if applicable.

There is also the risk that the securities are not directly owned by the Fund, which may be caused by errors in the recording of

trade

transactions.

Ownership of securities – at each valuation point a stock reconciliation is performed, which entails tracing and agreeing the stoc

holding at valuation point to the Custodian records.

Any differences are investigated.

All new trades are traced and agreed to the contract note.

Allocation to Capital and Revenue

The Directors have made the critical judgement to allocate a proportion of management fees and ﬁnance to capital. This has been

allocated 60% to capital and 40% to revenue.

This has been done in accordance with the Association of Investment Companies’ Statement of Recommended Practice for Investment

Trusts Companies.

The Audit Committee challenged the allocation of charges between capital and revenue by comparing it with the policies of other

companies in the AIC North American sector who allocate charges to both capital and revenue. MCT has a somewhat higher allocation

to revenue than the peer group. Since MCT is the highest yielding fund in the sector, the Audit Committee considered the allocation to

be appropriate following this review and discussion of the separate analysis provided by the Investment Manager.

Compliance with Regulatory Requirements

JTC Fund Solutions (Jersey) Limited as Secretary and Administrator, works with the Board of directors to ensure that the Fund meets

its management, administrative, secretarial and investment management requirements with all applicable laws and regulations including,

but not limited to:

• The Companies (Jersey) Law 1991

• The FCA’s listing rules, prospectus and disclosure guidance and transparency rules

• The AIC Code of Corporate Governance and

• The JFSC’s Codes of Practice for Certiﬁed Funds

• The Jersey Listed Fund Guide

Going Concern

The ﬁnancial statements are prepared using the going concern basis based on the Directors’ assessment that:

• The investment portfolio consists of listed investments that are highly realisable

• The Fund has sufﬁcient liquidity in cash to meet all on-going expenses and repayments of external borrowings

• The Directors have the option to reduce dividend payments if the need arises

The Investment Manager monitors the Fund’s investment portfolio daily and invests in listed securities that can be liquidated in a rela

tively

short period of time. The Board monitors the Fund’s portfolio on a quarterly basis.

Auditor and Audit

The Audit Committee considers the nature, scope and results of the Auditor’s work and monitors the independence of the Auditor.

Formal reports are received at Board meetings from the Auditor on an interim and annual basis relating to the extent of their wor

k. The

work of the Auditor in respect of any signiﬁcant audit issues and consideration of the adequacy of that work is discussed. The A

udit

Committee is pleased to report there have been no concerns regarding their performance or independence.

The Audit Committee assesses the effectiveness of the audit process. The Audit Committee receives a report from the Auditor which

covers the principal matters that have arisen from the audit.

The Audit Committee meets with the Investment Manager and Administrator to discuss the extent of audit work completed to ensure

all matters of risk are covered and assesses the quality of the draft ﬁnancial statements prepared by the Administrator and examines

the interaction between the Investment Manager and the Auditor to resolve any potential audit issues.

The Audit Committee has an active involvement and oversight of the preparation of both half yearly and annual ﬁnancial reports and

recommends for the purposes of the production of these ﬁnancial reports that valuations are prepared by the management team of

the Administrator. These valuations are a critical element in the Company’s ﬁnancial reporting and the Audit Committee questions them

thoroughly.

Ultimate responsibility for reviewing and approving the annual ﬁnancial report remains with the Board.

Andrew Zychowski

Director

Date: 18 April 2024

Report of the Audit

Committee continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

AIFMD Disclosures

In accordance with the AIFMD, the AIFM is required to disclose speciﬁc information in relation to the following aspects of the Company’s

management:

Leverage and borrowing

Leverage is deﬁned as any method by which the Company increases its exposure through borrowing or the use of derivatives. ‘Exposure’

is deﬁned in two ways – ‘gross method’ and ‘commitment method’ – and the Company must not exceed maximum exposures under

both methods. ‘Gross method’ exposure is calculated as the sum of all positions of the Company (both positive and negative), tha

t is,

all eligible assets, liabilities and derivatives, including derivatives held for risk reduction purposes. ‘Commitment method’ exposure is

also calculated as the sum of all positions of the Company (both positive and negative), but after netting off derivative and security

positions as speciﬁed by the Directive.

For the gross method, the following has been excluded:

• the value of any cash and cash equivalents which are highly liquid investments held in the base currency of the AIF that are readil

convertible to a known amount of cash, subject to an insigniﬁcant risk of changes in value;

• cash borrowings that remain in cash or cash equivalent as deﬁned above and where the amounts of that payable are known. The

total amount of leverage calculated as at 31 December 2023 is as follows:

Gross method: 130.13% (31 December 2022: 140.17%)

Commitment method: 130.13% (31 December 2022: 140.17%)

Liquidity

The Investment Manager’s policy is that the Company should normally be close to fully invested (i.e. with liquidity of 5% or less) but this

is subject to the need to retain liquidity for the purpose of the efﬁcient management of the Company in accordance with its objectiv

es.

There may therefore be occasions when there will be higher levels of liquidity, for example following the issue of shares or the realisa

tion

of investments. This policy has been applied consistently throughout the review period and as a result the Investment Manager has not

introduced any new arrangements for managing the Company’s liquidity.

Risk management policy note

Please refer to note 16, Financial instruments, in the Notes to the ﬁnancial statements on pages 71 to 75 for risk management policies,

where the current risk proﬁle of the Company and the risk management systems employed by the Investment Manager to manage

those risks are set out.

AIFM Remuneration

A total of 8 staff employed by the AIFM are engaged in managing the Fund. The compensation paid to these beneﬁciaries during the

year under review was £275,000, split roughly equally between ﬁxed and variable compensation. The Fund has no agreement to pay

any carried interest to the AIFM.

General Shareholder

Information

The Company has produced an EU Key Information Document (the “KID”), as required by the Packaged Retail and Insurance-Based

Investment Products Regulations (the “PRIIPs Regulations”)and a UK KID under the UK’s amended version of the PRIIPs Regulations,

together with a European PRIIPs Template and a European MiFID Template, all of which are available on the Company’s website.

The PRIIPs Regulations require the preparation and publication of the KID. Investors should note that the methodology for calcula

ting

the risks, costs and potential returns cited in the KID are prescribed by the PRIIPs Regulations. However, the methodology is considered

by many market participants, including the AIC, to be ﬂawed and future risks and returns may not transpire to be as cited in the KID

The Board therefore recommends that investors not make any investment or divestment decision based on the information contained

in the KID.

Non-Mainstream Pooled Investment (‘NMPI’) Status

The Company currently conducts its affairs to maintain its status as an “excluded security” for the purposes of the FCA’s rules on “non-

mainstream pooled investments” and intends to continue to do so. The Fund Shares are therefore excluded from the FCA’s restrictions

which apply to non-mainstream pooled investments.

Performance Details/Share Price Information

Details of the Company’s share price and the net asset value per Fund Share can be found on the London Stock Exchange’s website.

The net asset value is calculated and published daily, on the basis of the bid price of securities at closing.

Consumer Duty Value Assessment

Middleﬁeld International Limited (“MIL”) has prepared an assessment of fair value based on the FCA’s guidelines which includes

consideration of the fund’s relative performance, investment process, costs and charges, quality of service, comparable market ra

tes

and economies of scale. Based on this assessment, MIL has concluded that MCT is providing value to its investors. The Assessment

of Value can be found on the website under Other Reports and Filings https://middleﬁeld.com/funds/uk-funds/middleﬁeld-canadian-

income-trust/middleﬁeld-canadian-income-trust-information/middleﬁeld-canadian-income-trust-documents/.

General Data Key Investor

Document and Related Data

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

Opinion

We have audited the ﬁnancial statements of Middleﬁeld Canadian Income – GBP PC (the “Fund”), which comprise the Statement of

Financial Position as at 31 December 2023, and the Statement of Comprehensive Income, Statement of Changes in Redeemable

Participating Preference Shareholder’s Equity and Statement of Cash Flows for the year then ended, and notes 1 to 20 to the ﬁnancial

statements, including a summary of signiﬁcant accounting policies. The ﬁnancial reporting framework that has been applied in their

preparation is applicable law and UK-adopted International Financial Reporting Standards (‘IFRS’).

In our opinion the ﬁnancial statements of Middleﬁeld Canadian Income – GBP PC, a cell of Middleﬁeld Canadian Income PCC:

• give a true and fair view of the state of the Fund’s affairs as at 31 December 2023 and of its loss for the year then ended;

• have been properly prepared in accordance with UK-adopted IFRS; and

• have been prepared in accordance with the Companies (Jersey) Law 1991.

Separate opinion in relation to IFRS as adopted by the European Union

As explained in note 2a, in addition to complying with the Listing Rules obligation to apply UK-adopted IFRS, the Fund has also applied

IFRSs as adopted by the European Union.

In our opinion the ﬁnancial statements give a true and fair view of the ﬁnancial position of the Fund as at 31 December 2023 and of

its

ﬁnancial performance and cash ﬂows for the year then ended in accordance with IFRS as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the ﬁnancial sta

tements

section of our report. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of

the

ﬁnancial statements in Jersey, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulﬁlled our

other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufﬁcient

and appropriate to provide a basis for our opinion.

Our approach to the audit

Our audit was scoped by obtaining an understanding of the Fund and its environment, including internal control, and assessing the

risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit

engagement team.

Our consideration of the control environment

The Fund has appointed JTC Fund Solution (Jersey) Limited to provide the accounting function. The accounting function has been

subcontracted to JTC Fund Solutions (RSA) Pty Ltd (“JTC SA”). We have obtained JTC SA’s ISAE 3402 controls assurance report for the

period 1 April 2022 to 31 March 2023 which summarises the suitability of design and implementation and operating effectiveness of

controls. We have reviewed the report and considered the controls relevant to the accounting functions undertaken by JTC SA for the

Fund in order to rely on controls. As the reporting date of the Fund is 31 December 2023, we have obtained correspondence issued

by JTC SA conﬁrming that there have not been any material changes to the internal control environment nor any material deﬁciencies

in the internal controls to this date.

Independent Auditor’s Report

TO THE MEMBERS OF MIDDLEFIELD CANADIAN INCOME – GBP PC, A CELL OF

MIDDLEFIELD CANADIAN INCOME PCC

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in the audit of the ﬁnancial statements

and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) identiﬁed by us, including those

which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of

the

engagement team. These matters were addressed in the context of our audit of the ﬁnancial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion, the key audit matter was

as follows:

Our application of materiality

We deﬁne materiality as the magnitude of misstatement in the ﬁnancial statements that makes it probable that the economic decisions

of a reasonably knowledgeable person would be changed or inﬂuenced. We use materiality both in planning the scope of our audit

work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the ﬁnancial statements as a whole as follows:

Materiality £2,470,000 (2022: £2,640,000).

Basis for determining materiality – Approximately 1.6% of the Fund’s total assets (2022: 1.6%).

Rationale for the benchmark applied – The reason for using total assets is that the key users of the ﬁnancial statements are primarily

focused on the valuation of the Fund’s assets. This approach remains consistent with the prior year.

Key Audit Matter How our scope addressed this matter

Ownership and valuation of Securities

The Fund’s securities (see note 3 and the schedule of securities)

are included at fair value of £146,643,502 (2022: £162,972,393).

The portfolio is made up of securities actively traded on

recognised markets which are measured at fair value based on

market prices and other prices determined with reference to

observable inputs.

Although all of the securities are listed and have quoted market

pricing data available which is used to value the securities, there

is a risk of material misstatement that the securities may be

incorrectly valued due to stale prices, low trading volumes or

errors reported in third party prices. Where securities are not

regularly traded there is a greater risk of material misstatement

that the quoted price is not reﬂective of fair value and this should

be taken into consideration in management’s assessment.

Valuation has a signiﬁcant impact on the net asset value of the

Fund.

There is a risk that securities, a record of which is maintained

by a third-party custodian, are not directly owned by the Fund.

Securities are held by the custodian. Ensuring that the custodian

records all the securities correctly under the Fund’s name is

critical since the investment portfolio represents the principal

element of the ﬁnancial statements, being the single largest

asset on the Statement of Financial Position.

Our procedures on the valuation of securities included:

• understanding the relevant controls around valuation;

• testing 100% of the valuations of securities by agreeing the

prices directly to independent third-party sources;

• considering the trading history of securities to determine

whether they have been frequently traded, and values at

which they have been traded to consider whether the year-

end prices are stale.

Our procedures on ownership of securities included:

• obtaining an understanding of the relevant controls around

custody of securities;

• agreeing the holdings to independent third-party

conﬁrmations provided by the Fund’s custodian;

• reviewing the ISAE 3402 controls assurance report of the

custodian to consider the controls relevant to the custodial

function.

Key observations

Based on the procedures, we concluded that the ownership and

valuation of securities are appropriate.

Independent Auditor’s Report continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected

misstatements exceed the materiality for the ﬁnancial statements as a whole. Performance materiality was set at 75% of materiality f

the 2023 audit (2022: 75%). In determining performance materiality, we considered our understanding of the entity, including our

assessment of the overall control environment.

Error reporting threshold

We agreed with the Audit Committee that we would report to them all audit differences in excess of £120,000 (2022: £130,000), as well

as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee

on disclosure matters that we identiﬁed when assessing the overall presentation of the ﬁnancial statements.

Conclusions relating to going concern

In auditing the ﬁnancial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the ﬁnancial statements is appropriate. Our evaluation of the directors’ assessment of the Fund’s ability to contin

ue to

adopt the going concern basis of accounting included our review of the directors’ statement in note 2(n) and their identiﬁcation of

any

material uncertainties to the Fund’s ability to continue over a period of at least twelve months from the date of approval of the ﬁnancial

statements.

We considered as part of our risk assessment the nature of the Fund, its business model and related risks including where relevant

the requirements of the applicable ﬁnancial reporting framework and the system of internal control.

We evaluated the directors’ assessment of the Fund’s ability to continue as a going concern, including challenging the underlying da

and key assumptions used to make the assessment, and evaluated the directors’ plans for future actions in relation to their going

concern assessment.

Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that, individuall

or collectively, may cast signiﬁcant doubt on the Fund’s ability to continue as a going concern for a period of at least twelve months

from the date of approval of the ﬁnancial statements.

In relation to the Fund’s reporting on how it has applied Listing Rule 9.8.6R(3), we have nothing material to add or draw attention to in

relation to the director’ statement in the ﬁnancial statements about whether the directors considered it appropriate to adopt the ging

concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of

this

report.

Other information

The other information comprises the information included in the annual report, other than the ﬁnancial statements and our auditor’s

report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the ﬁnancial

statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not e

xpress

any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the

other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit or otherwise appear

s to

be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to deter

mine

whether there is a material misstatement in the ﬁnancial statements or a material misstatement of the other information. If, based on the

work we have performed, we conclude that there is a material misstatement of this other information, we are required to report tha

fact.

We have nothing to report in respect of these matters.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if,

in our opinion:

• adequate accounting records have not been kept; or

• the ﬁnancial statements are not in agreement with the accounting records and returns; or

• proper returns adequate for our audit have not been received from branches not visited by us; or

• we have not received all the information and explanations we require for our audit.

Corporate governance statement

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the

Corporate Governance Statement relating to the Fund’s compliance with the provisions of the Listing Rule 9.8.10R(2) speciﬁed for our

review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance

Statement and Corporate Information is materially consistent with the ﬁnancial statements or our knowledge obtained during the audit:

• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material

uncertainties identiﬁed set out on pages 32 to 33;

• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why they period is

appropriate set out on pages 32 to 33;

• Directors’ statement on fair, balanced and understandable set out on page 40;

• Board’s conﬁrmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 32 to 33;

• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set

out on page 43; and

• The section describing the work of the audit committee set out on pages 48 to 50.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the ﬁnancial

statements and for being satisﬁed that they give a true and fair view, and for such internal control as the directors determine is necessar

to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements, the directors are responsible for assessing the Fund’s ability to continue as a going concer

disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either

intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the ag

gregate,

they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout

the audit. We also:

• Identify and assess the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, design and perf

orm

audit procedures responsive to those risks, and obtain audit evidence that is sufﬁcient and appropriate to provide a basis for our

opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures

made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the Fund’s ability

to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor

s’

report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions

may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the ﬁnancial statements, including the disclosures, and whether the

ﬁnancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and

signiﬁcant audit ﬁndings, including any signiﬁcant deﬁciencies in internal control that we identify during our audit.

Independent Auditor’s Report continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

The extent to which the audit was considered capable of detecting irregularities,

including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to w

hich our

procedures are capable of detecting irregularities, including fraud is explained below.

The objectives of our audit are to obtain sufﬁcient appropriate audit evidence regarding compliance with laws and regulations tha

have a direct effect on the determination of material amounts and disclosures in the ﬁnancial statements, to perform audit procedures

to help identify instances of non-compliance with other laws and regulations that may have a material effect on the ﬁnancial sta

tements,

and to respond appropriately to identiﬁed or suspected non-compliance with laws and regulations identiﬁed during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the ﬁnancial sta

tements

due to fraud, to obtain sufﬁcient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through

designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identiﬁed during the

audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’

operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, we:

• obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the Fund

operates in and how the Fund is complying with the legal and regulatory frameworks;

• inquired of management, and those charged with governance, about their own identiﬁcation and assessment of the risks of

irregularities, including any known actual, suspected, or alleged instances of fraud;

• discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and

where the ﬁnancial statements may be susceptible to fraud having obtained an understanding of the effectiveness of the control

environment; and

• reviewed minutes of the Board and other Committees.

We also obtained an understanding of the legal and regulatory frameworks that the Fund operates in, focusing on provisions of those

laws and regulations that had a direct effect on the determination of material amounts and disclosures in the ﬁnancial statements

. The

key laws and regulations we considered in this context included UK-adopted IFRS, Companies (Jersey) Law 1991, Codes of Practice

for Certiﬁed Funds, Listing and Disclosure Transparency Rules and the AIC Code of Corporate Governance. The audit procedures

performed included:

• a review of the ﬁnancial statement disclosures and testing to supporting documentation;

• completion of disclosure checklists to identify areas of non-compliance; and

• review of the ﬁnancial statement disclosures by a specialist in the Listing and Disclosure Transparency Rules.

The area that we identiﬁed as being susceptible to material misstatement due to fraud was management override of controls. The audit

procedures performed included:

• testing the appropriateness of journal entries and other adjustments;

• undertaking analytical procedures to identify unusual or unexpected relationships;

• assessing whether the judgements made in determining accounting estimates, in particular in respect of the fair value of securities

and the split between capital and revenue, are indicative of a potential bias; and

• evaluation of the business rationale of any signiﬁcant transactions that are unusual or outside the normal course of business.

Owing to the inherent limitations of an audit there is an unavoidable risk that some material misstatement of the ﬁnancial statements

may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK). However, the principal

responsibility for ensuring that the ﬁnancial statements are free from material misstatement, whether caused by fraud or error, rests

with the directors who should not rely on the audit to discharge those functions.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material missta

tement.

We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and

regulations.

Other matters which we are required to address

Following the recommendation of the audit committee, we were appointed by the Board of directors on 1 October 2020 to audit the

ﬁnancial statements for the year ending 31 December 2020 and subsequent ﬁnancial periods. The period of total uninterrupted

engagement is 4 years, covering the years ended 31 December 2020 to 2023.

No non-audit services have been provided to the Fund and we remain independent of the Fund in conducting our audit.

Our audit opinion is consistent with our reporting to the audit committee we are required to provide in accordance with ISAs (UK).

Use of our report

This report is made solely to the Fund’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991.

Our audit work has been undertaken so that we might state to the Fund’s members those matters we are required to state to them in

an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to an

yone

other than the Fund and the Fund’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Philip J Crosby

For & on behalf of

RSM Channel Islands (Audit) Limited

Chartered Accountants and Recognized Auditors

Jersey, C.I.

Date: 18 April 2024

Independent Auditor’s Report continued

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST | CORPORATE GOVERNANCE

372022 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

Financial

Statements

2023 2022

Notes GBP GBP

Current assets

Securities (at fair value through proﬁt or loss) 3 & 20 146,643,502 162,972,393

Accrued dividend income 632,412 603,125

Prepayments 21,787 26,622

Cash and cash equivalents 4 4,433,118 1,523,392

151,730,819 165,125,532

Current liabilities

Other payables and accruals 5 (388,493) (459,482)

Interest payable (71,270) (152,371)

Loan payable 14 (21,831,966) (27,877,663)

(22,291,729) (28,489,516)

Net assets 129,439,090 136,636,016

Equity attributable to equity holders

Stated capital 6 49,704,414 49,704,414

Retained earnings 79,734,676 86,931,602

Total Shareholders’ equity 129,439,090 136,636,016

Net asset value per redeemable participating preference share (pence) 7 121.55 128.31

The ﬁnancial statements and notes on pages 60 to 78 were approved by the directors on 18 April 2024 and signed on behalf of the

Board by:

Michael Phair Andrew Zychowski

Director Director

The accompanying notes on pages 64 to 78 form an integral part of these ﬁnancial statements.

Statement of Financial Position

of the Fund

As at 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

2023 2022

Revenue Capital Total Total

Notes GBP GBP GBP GBP

Revenue

Dividend income 8 9,004,249 – 9,004,249 9,388,801

Interest income 8 91,389 – 91,389 44,049

Net movement in the fair value of securities

(at fair value through proﬁt or loss) 9 – (6,799,595) (6,799,595) (6,931,619)

Net movement on foreign exchange – 698,809 698,809 (1,797,920)

Total revenue/(loss) 9,095,638 (6,100,786) 2,994,852 703,311

Expenditure

Investment management fees 2o 366,708 550,062 916,770 1,063,089

Custodian fees 2l 15,323 – 15,323 19,778

Corporate Broker’s fees 2m 65,483 – 65,483 75,936

Directors’ fees and expenses 154,809 – 154,809 158,987

Legal and professional fees 6,558 – 6,558 46,563

Audit fees 39,000 – 39,000 32,257

Tax fees 7,560 – 7,560 6,624

Registrar’s fees 44,779 – 44,779 43,918

Administration and secretarial fees 2k 130,967 – 130,967 151,871

General expenses 190,771 – 190,771 177,485

Investor relations fee 2u 170,748 – 170,748 198,317

Operating expenses 1,192,706 550,062 1,742,768 1,974,825

Net operating profit/(loss) before

finance costs 7,902,932 (6,650,848) 1,252,084 (1,271,514)

Finance costs 2r (628,007) (942,011) (1,570,018) (964,531)

Profit/(loss) before tax 7,274,927 (7,592,859) (317,934) (2,236,045)

Withholding tax expense 12 (1,341,655) – (1,341,655) (1,385,525)

Net profit/(loss) after taxation 5,933,270 (7,592,859) (1,659,589) (3,621,570)

Profit/(loss) per redeemable participating

preference share – basic and diluted

(pence) 10 5.57 (7.13) (1.56) (3.40)

The total column of this statement represents the Fund’s Statement of Comprehensive Income, prepared in accordance with UK-adopted

IFRS. There are no items of other comprehensive income, therefore net proﬁt/(loss) after taxation is the total comprehensive income

. The

supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the

AIC as disclosed in note 2a. All items in the above statement derive from continuing operations. No operations were acquired or discontin

ued

in the year.

There are £nil (2022: £nil) earnings attributable to the management shares.

The accompanying notes on pages 64 to 78 form an integral part of these ﬁnancial statements.

Statement of Comprehensive

Income of the Fund

For the year ended 31 December 2023

Stated Capital Retained

Account Income Total

Notes GBP GBP GBP

At 1 January 2022 49,704,414 95,984,022 145,688,436

Loss for the year – (3,621,570) (3,621,570)

Dividends 11 – (5,430,850) (5,430,850)

At 31 December 2022 49,704,414 86,931,602 136,636,016

Loss for the year – (1,659,589) (1,659,589)

Dividends 11 – (5,537,337) (5,537,337)

At 31 December 2023 49,704,414 79,734,676 129,439,090

The accompanying notes on pages 64 to 78 form an integral part of these ﬁnancial statements.

Statement of Changes in Redeemable

Participating Preference Shareholders’

Equity of the Fund

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

2023 2022

Notes GBP GBP

Cash flows from operating activities

Net loss after taxation (1,659,589) (3,621,570)

Adjustments for:

Net movement in the fair value of securities (at fair value through proﬁt or loss) 9 6,799,595 6,931,619

Realised (gains)/losses on foreign exchange (1,345,395) 1,945,060

Unrealised losses/(gains) on foreign exchange 2p 646,586 (147,140)

Payment for purchases of securities (46,058,637) (53,195,612)

Proceeds from sale of securities 55,587,931 63,873,458

Operating cash flows before movements in working capital 13,970,491 15,785,815

(Increase)/decrease in receivables (24,452) 136

(Decrease)/increase in payables and accruals (152,089) 157,320

Net generated from operating activities 13,793,950 15,943,271

Cash flows generated used in financing activities

Repayments of borrowings (236,205,147) (251,471,496)

New bank loans raised 230,999,895 239,229,825

Dividends paid 11 (5,537,337) (5,430,850)

Net cash generated used in financing activities (10,742,589) (17,672,521)

Net increase/(decrease) in cash and cash equivalents 3,051,361 (1,729,250)

Cash and cash equivalents at the beginning of the year 1,523,392 2,905,019

Effect of foreign exchange rate changes (141,635) 347,623

Cash and cash equivalents at the end of the year 4,433,118 1,523,392

Cash and cash equivalents made up of:

Cash at bank 4 4,433,118 1,523,392

The accompanying notes on pages 64 to 78 form an integral part of these ﬁnancial statements.

Statement of Cash Flows

of the Fund

For the year ended 31 December 2023

1. General Information

The Company is a closed-ended investment company incorporated in Jersey on 24 May 2006 and is regulated for Financial Services

Business by the JFSC. The Company has one closed-ended cell, Middleﬁeld Canadian Income – GBP PC, also referred to as the

“Fund”. The Fund seeks to provide shareholders with a high level of dividends as well as capital growth over the longer term. The Fund

intends to pay dividends on a quarterly basis each year. The Fund seeks to achieve its investment objective by investing predominantl

in the securities of companies and REITs domiciled in Canada and the U.S. that the Investment Manager believes will provide an

attractive level of distributions, together with the prospect for capital growth. In 2015, shareholders also approved an amendment to

the Investment Policy to increase the percentage of the value of portfolio assets which may be invested in securities listed on recognised

stock exchanges outside Canada to up to 40 per cent.

The address of the Company’s registered ofﬁce is 28 Esplanade, St. Helier, Jersey JE2 3QA, Channel Islands.

The Fund’s shares have been admitted to the Ofﬁcial List of the FCA and to trading on the London Stock Exchange’s Main Market for

listed securities.

The Company and Fund have no employees.

The functional and presentational currency of the Company and the Fund is Pound Sterling (‘GBP’) as the Fund is trading on the London

Stock Exchange’s Main Market.

2. Principal Accounting Policies

a. Basis of preparation

The ﬁnancial statements of the Fund have been prepared on the historical cost basis, except for the measurement at fair value of

investments and derivatives, and in accordance with UK-adopted IFRS and interpretations issued by the IFRSIC. The preparation of

the Financial Statements in conformity with IFRS requires the directors to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the

reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management’s best

knowledge of current events and actions, actual results may ultimately differ from those estimates.

Where presentational guidance set out in the SORP Financial Statements of Investment Trust Companies and Venture Capital Trusts

(July 2022) issued by the AIC is consistent with the requirements of IFRS, the directors have prepared the Financial Statements on a

basis compliant with the recommendations of the SORP. The supplementary information which analyses the Statement of

Comprehensive Income between items of a revenue and a capital nature is presented in accordance with the SORP.

The ﬁnancial statements are prepared in accordance with UK-adopted IFRS as required by the UK Listing and Disclosure Guidance

and Transparency Rules. Jersey company law prescribes which generally accepted accounting principles are allowed to be adopted

by Jersey market traded companies in the preparation of their annual ﬁnancial statements.

Critical accounting estimates and judgements

The preparation of the Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also

requires management to exercise its judgement in the process of applying the accounting policies.

The following are the critical judgements that the directors have made in the process of applying the accounting policies that ha

ve the

most signiﬁcant effect on the amounts recognised in the ﬁnancial statements.

Expenses have been charged to the Statement of Comprehensive Income and shown in the revenue column. Management fees and

ﬁnance costs have been allocated 60% to capital and 40% to revenue. This is in accordance with the Board’s expected long-term split

of returns, in the form of capital gains and income respectively, from the investment portfolio.

There were no judgements made in relation to the fair value of the investments, as all investments are quoted.

Adoption of new standards and amendments

There following amendments to existing standards that are effective for the ﬁrst time for the ﬁnancial period beginning 1 Januar

y 2023

that have had an immaterial impact on the Company:

Disclosure of Accounting Policies – The International Accounting Standards Board issued amendments to IAS 1 and IFRS Practice

Statement 2 making materiality judgements, in which it provides guidance and examples to help entities apply materiality judgements

to accounting policy disclosure (effective periods commencing on or after 1 January 2023.

Deﬁnition of Accounting Estimates – The International Accounting Standards Board issued amendments to IAS 8, in which it introduces

a new deﬁnition of ‘accounting estimates’. The amendments clarify the distinction between changes in accounting estimates and

changes in accounting policies and the correction of errors (effective periods commencing on or after 1 January 2023).

Notes to the Financial Statements

of the Fund

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

2. Principal Accounting Policies continued

a. Basis of preparation continued

There are no other standards, interpretations or amendments to the existing standards that are not yet effective that would be expected

to have a signiﬁcant impact on the Company.

New standards and interpretations not yet effective and have not been adopted early by the Company

• Amendments to IAS 1, ‘Presentation of ﬁnancial statements on classiﬁcation of liabilities’ (effective periods commencing on or

after 1 January 2024 for IFRS).

There are no other standards, interpretations or amendments to existing standards that are not yet effective that would be expected to

have a signiﬁcant impact on the Company.

b. Financial instruments

Financial instruments carried on the Statement of Financial Position include securities, accrued dividend income, cash at bank, loan

payable, other payables and accruals. The particular recognition methods adopted are disclosed in the individual policy statements

associated with each item.

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured

to their fair value based on stock exchange quoted bid prices at the reporting date. The resulting gain or loss is recognised in the

Statement of Comprehensive Income as a capital gain or loss immediately unless the derivative is designated and effective as a hedging

instrument, in which event the timing of the recognition proﬁt or loss depends on the nature of the hedge relationship. The Fund had

no derivatives outstanding as at 31 December 2023 and 2022.

Disclosures about ﬁnancial instruments to which the Fund is a party are provided in Note 16.

c. Securities

Investments in listed securities have been classiﬁed as fair value through proﬁt or loss securities and are those securities intended to

be held for a short period of time but which may be sold in response to needs for liquidity or changes in interest rates. These are held

at fair value through proﬁt or loss, as they are managed and the performance evaluated on a fair value basis.

Fair value through proﬁt or loss securities are initially recognised as at fair value, which is taken to be the cost. The securities are

subsequently re-measured at fair value based on quoted bid prices on the stock exchange at the reporting date. Gains and losses

arising from changes in the fair value of these securities are recognised in proﬁt or loss as they arise.

All purchases and sales of investments and trading securities that require delivery within the time frame established by regulation or

market convention (“regular way” purchases and sales) are recognised at the trade date, which is the date on which the Fund commits

to purchase or sell the asset. In cases which are not within the time frame established by regulation or market convention, such

transactions are recognised on the settlement date. Any change in fair value of the asset to be received is recognised between the

trade date and the settlement date.

d. Receivables

Trade and other receivables are recognised when the Fund becomes a party to the contractual provisions of the receivables. They are

measured, at initial recognition, at fair value plus transaction costs, if any. They are subsequently measured at amortised cost. T

amortised cost is the amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest)

using the effective interest method (except for short term receivables where the recognition of interest would be immaterial) of

any

difference between the initial amount and the maturity amount, adjusted for any loss allowance.

e. Cash and cash equivalents

Cash includes amounts held in interest bearing accounts. Cash and cash equivalents comprise bank balances and cash held by the

Fund. The carrying value of these assets approximates their fair value.

f. Prepayments

Prepayments comprise amounts paid in advance including, but not limited to, payments for insurance, listing fees and AIC membership

fees. Payments are expensed to the Statement of Comprehensive Income over the period for which the Fund is receiving the beneﬁt

of these expenditures.

g. Provisions

A provision is recognised when the Fund has a legal or constructive obligation as a result of a past event and it is probable that an

outﬂow of economic beneﬁts will be required to settle the obligations.

2. Principal Accounting Policies continued

h. Share capital

Redeemable participating preference shares are only redeemable at the sole option of the directors, participate in the net income of

the Fund during its life and are classiﬁed as equity in line with IAS 32 Financial Instruments: Presentation (see Note 6).

i. Net asset value per redeemable participating preference share

The NAV per redeemable participating preference share is calculated by dividing the net assets attributable to redeemable participating

preference shareholders included in the Statement of Financial Position by the number of redeemable participating preference shares

in issue at the year end.

j. Issue costs

The expenditure directly attributable to the launch of the Fund’s shares and all other costs incurred on the launch and subsequent

issues of the Fund’s shares are written-off immediately against proceeds raised.

k. Administration and secretarial fees

Under the provisions of the Administration Agreement dated 18 August 2011 between the Fund and JTC Fund Solutions (Jersey) Limited

as Administrator, the Administrator is entitled to a fee for administrative and secretarial services payable by the Fund quarter

ly in arrears

at a rate of 0.10 per cent. per annum of the average NAV of the Fund calculated over the relevant quarterly period.

l. Custodian fees

The Custodian was appointed as Custodian of the Fund’s assets on 6 October 2011. The Fund pays the Custodian 0.01 per cent. per

annum of the Fund’s NAV, accrued for at each valuation date.

m. Corporate Broker’s fees

The Fund pays the Corporate Broker quarterly in arrears at a rate of 0.05 per cent. per annum of the average NAV of the Fund calculated

over the relevant period.

n. Going concern

In the opinion of the Directors, the Company and the Fund have adequate resources to continue in operational existence for the

foreseeable future being at least the next twelve months from the approval of these ﬁnancial statements. For this reason, the Financial

Statements have been prepared using the going concern basis.

The directors considered, inter alia, the following factors:

• ongoing shareholder interest in the continuation of the Fund;

• the Fund has sufﬁcient liquidity in the form of cash assets to meet all on-going expenses;

• should the need arise, the directors have the option to reduce dividend payments in order to positively affect the Fund’s cash

ﬂows; and

• the Fund’s investments in Canadian and U.S. securities are readily realisable to meet liquidity requirements, if necessary.

The Directors appreciate the severity of the current economic environment and continue to assess, in conjunction with the Investment

Manager and the Investment Advisor, the situation and how it may impact the Company in the short and long term. The Directors

consider the Company to be well placed to withstand any signiﬁcant adverse shocks and assume the going concern basis to be

appropriate.

o. Investment management fees

The Investment Manager is entitled to a management fee payable by the Fund quarterly in arrears at a rate of 0.70 per cent. per annum

of the average NAV of the Fund calculated over the relevant quarterly period.

Investment management fees for the year ended 31 December 2023 total £916,770 (31 December 2022: £1,063,089). The fee is split

between the Investment Manager and the Investment Advisor at a ratio of 0.60 per cent: 0.10 per cent of the 0.70 per cent fee.

Investment management fees have been split 60% to capital and 40% to revenue (see note 2a for further details regarding the alloca

tion

of the management fees).

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

2. Principal Accounting Policies continued

p. Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into Pound Sterling at exchange rates in effect at the

reporting date. Realised and unrealised gains and losses on foreign currency transactions are charged or credited to the Statement

of Comprehensive Income as foreign currency gains and losses. The cost of investments, and income and expenditure are translated

into Pound Sterling based on exchange rates on the date of the transaction. Realised gains on foreign exchange currency transactions

totalled £1,309,333 for the year (2022: losses of £1,910,349). Realised gains on forward exchange contracts totalled £36,062 (2022:

losses of £34,711). Unrealised losses on foreign currency translations totalled £646,586 (2022: gains of £147,140).

q. Revenue recognition

Dividend income arises from equity investments held and is recognised on the date investments are marked ‘ex-dividend’. Where the

Company elects to receive dividends in the form of additional shares rather than cash, the equivalent to the cash dividend is recognised

as income in revenue and any excess in value of the shares received over this is recognised in capital. Dividend income is shown

gross of withholding tax. Interest income arises from cash and cash equivalents and quoted bonds and is recognised in the Statement

of Comprehensive Income using the effective interest method.

Special dividends are reviewed on a case by case basis in determining whether the dividend is to be treated as revenue or capital.

Amounts recognised as revenue will form part of the distributable revenue. Amounts recognised as capital are included in realised

gains. The tax accounting treatment follows the treatment of the principal amount.

r. Loan payable and finance costs

Loan payable is initially measured at fair value and is subsequently measured at amortised cost using the effective interest rate method.

The effective interest rate method is a method of calculating the amortised cost of a ﬁnancial liability and of allocating interest e

xpense

over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the

expected life of the ﬁnancial liability or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

s. Related parties

Related parties are individuals and companies who have the ability, directly or indirectly, to control the other party or exercise signiﬁcant

inﬂuence over the other party in making ﬁnancial and operating decisions (see Note 13).

t. Business and geographical segments

The directors are of the opinion that the Fund is engaged in a single segment of business investing predominantly in securities and

REITs domiciled in Canada and the U.S. to which the Fund is solely exposed and therefore no segmental reporting is provided.

u. Investor relations fee

The Investment Advisor and Investment Manager are paid an additional fee for investor relations services totalling as the lesser of

15basis points of the market value of the Fund or £200,000 per annum, with the fee to be calculated daily based on the closing mark

value of the Fund and payable quarterly in arrears.

Investor relations fee for the year ended 31 December 2023 total £170,748 (31 December 2022: £198,317).

3. Securities (at fair value through profit and loss)

2023 2022

GBP GBP

Quoted/listed Equities 146,643,502 162,972,393

Please refer to Note 20 for the Schedule of Investments.

4. Cash and cash equivalents

2023 2022

GBP GBP

Cash at bank 4,433,118 1,523,392

Cash and cash equivalents comprise cash held by the Fund and bank balances with an original maturity of three months or less. The

carrying value of these assets approximates their fair value.

5. Other payables and accruals

2023 2022

GBP GBP

Investment management fees (Note 13) 220,372 251,614

Corporate Broker’s fees 15,741 17,973

Audit fees 39,000 32,000

Administration fees 31,481 35,946

General expenses 22,334 18,698

Directors’ fees – 34,473

Registrar’s fees 9,466 9,398

Tax service fees 6,840 6,120

Custodian fees 3,148 3,595

Investor relations fee (Note 13) 40,111 49,665

388,493 459,482

6. Stated capital

The authorised share capital of the Fund is split into two management shares of no par value and an unlimited number of redeemable

participating preference shares of no par value, the latter of which are attributable solely to the Fund.

No. of shares GBP

Management shares issued

2 management shares of no par value issued at 100.00 pence each 2 2

At 31 December 2023 and 2022 2 2

Redeemable participating preference shares issued

(excluding shares held in treasury)

At 31 December 2022 106,487,250 49,704,412

Movement for the year – –

At 31 December 2023 106,487,250 49,704,412

Total 49,704,414

The holders of redeemable participating preference shares are entitled to receive in proportion to their holdings, all of the re

venue

proﬁts of the Fund (including accumulated revenue reserves).

Each redeemable participating preference shareholder is entitled to one vote for each share held, provided all amounts payable in

respect of that share have been paid.

Management shares are non-redeemable, have no right in respect of the accrued entitlement, and have no right to participate in the

assets of the Fund on a winding-up. In all other respects, the management shares have the same rights and restrictions as redeemab

participating preference shares. Each management share entitles the holder to one vote for each share held.

Redeemable participating preference shares are redeemed at the absolute discretion of the directors. Since redemption is at the

discretion of the directors, in accordance with the provisions of IAS 32, the redeemable participating preference shares are classiﬁed

as equity. The Fund will not give effect to redemption requests in respect of more than 25 per cent. of the shares then in issue

, or such

lesser percentage as the directors may decide.

At the year end, there were 18,195,000 (31 December 2022: 18,195,000) treasury shares in issue. Treasury shares have no value and

no voting rights.

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

6. Stated capital continued

FCA regulation of ‘non-mainstream pooled investments’

On 1 January 2014, the FCA introduced rules relating to the restrictions on the retail distribution of unregulated collective investment

schemes and close substitutes (non-mainstream pooled investments). UK investment trusts are excluded from these restrictions, as

are other “excluded securities” as deﬁned by the FCA.

As reported in last year’s annual report, the Board believes that the Company’s shares are “excluded securities” under the FCA’s

deﬁnitions of such and, as a result, the FCA’s restrictions on retail distribution do not apply. This status is reviewed annuall

y and the

Board intends to conduct the Company’s affairs to retain such status for the foreseeable future.

Retained Earnings

This reserve records all net gains and losses and transactions with owners not recorded elsewhere. This reserve is available for

distribution to the shareholders. Dividends paid to shareholders are recognised directly in this reserve.

7. Net asset value per redeemable participating preference share

The NAV per share of 121.55p (31 December 2022: 128.31p) is based on the net assets at the year end of £129,439,090 (31December

2022: £136,636,016) and on 106,487,250 redeemable participating preference shares, being the number of redeemable participating

preference shares in issue at the year end (31 December 2022: 106,487,250 shares).

8. Dividend and interest income

2023

Revenue Capital Total 2022

GBP GBP GBP GBP

Interest Income 91,389 – 91,389 44,049

Dividend income 9,004,249 – 9,004,249 9,388,801

9,095,638 – 9,095,638 9,432,850

9. Net movement in the fair value of securities

2023

Revenue Capital Total 2022

GBP GBP GBP GBP

Gains on sale of securities – 608,988 608,988 14,290,636

Losses on the revaluation of securities at year end – (7,408,583) (7,408,583) (21,222,255)

Net movement in the fair value of securities

(at fair value through proﬁt or loss) – (6,799,595) (6,799,595) (6,931,619)

10. Profit/(loss) per redeemable participating preference share – basic and diluted

Basic proﬁt/(loss) per redeemable participating preference share is calculated by dividing the net loss attributable to redeemable

participating preference shares of £1,659,589 (31 December 2022: £3,621,570 loss) by the weighted average number of redeemable

participating preference shares outstanding during the year of 106,487,250 shares (31 December 2022: 106,487,250 shares). The

allocation between revenue and capital can be found on the Statement of Comprehensive Income of the Fund on page61.

11. Dividends

Dividends of 1.30 pence per share were paid on a quarterly basis during the year in the months of January, April, July and October being

5.2 pence per share for the year and totalling £5,537,337 (31 December 2022: £5,430,850). On 31 January 2024 a dividend of £1,410,956

was paid of 1.325 pence per share. In accordance with the requirements of IFRS, as this was approved on 4 January 2024, being after the

reporting date, no accrual was reﬂected in the 2023 Financial Statements for this amount of £1,410,956 (31 December 2022: £1,384,334).

Dividends payable in respect of the ﬁnancial year, which is the basis on which the requirements of Section 1158/1159 of the Corpora

tion

Tax Act 2010 are considered (see note 12) comprise the dividends paid in April, July and October of the ﬁnancial year together with

the dividend paid in January following the ﬁnancial year end. For 2023 these dividends amounted to 5.225 pence per share (for 2022:

5.125 pence per share)

12. Taxation

The Fund is subject to UK corporation tax at a rate of 19% (2022: 19%). The Company adopted UK tax residency on 11 October 2011.

Since that date the Company has been managed in such a way as to be able to meet the conditions for approval as an investment tr

ust

under Section 1158 of the Corporation Tax Act 2010. As an investment trust, all capital gains are exempt from UK corporation tax. On

7 December 2012, the Company received approval from HM Revenue & Customs to be treated as an investment trust in accordance

with Section 1158 of the Corporation Tax Act 2010 and will seek to remain so approved.

The Fund incurred £1,341,655 (2022: £1,385,525) of withholding tax on foreign dividends during the year and this expense has been

included in the Statement of Comprehensive Income.

13. Related party transactions

The directors are regarded as related parties and key management personnel. Total directors’ fees earned during the year amounted

to £125,215 of which £Nil was due at year end (2022: £115,473 of which £34,473 was due at the year end). Each non-executive director

other than Mr. Orrico, earned a fee of £29,000 in respect of the ﬁnancial year (2022: £25,000), the Chairman earned a fee of £36,000

(2022: £31,000) and the Chairman of the Audit Committee £32,000 (2022: £27,000). Mr Orrico waived any right to charge a fee in 2023

and 2022.

The directors held an interest in shares and received dividends during the year. Their interests in shares and the dividends receiv

during the year are disclosed within the Directors’ Remuneration Report.

The Investment Advisor and Investment Manager are also regarded as a related party due to common ownership. Total management

fees paid during the year amounted to £916,770 (2022: £1,063,089), of which £220,372 (2022: £251,614) was outstanding at

31December 2023.

The Investment Advisor and Investment Manager are also paid an additional fee for investor relations services. The fee for the y

ear

ended 31 December 2023 amounted to £170,748 (31 December 2022: £198,317), of which £40,111 (2022: £49,665) was outstanding

at 31 December 2023.

The fees for the above are all arm’s length transactions.

14. Loan payable

The Fund has a Credit Facility Agreement with RBC whereby RBC provides the Credit Facility, with a maximum principal amount of the

lesser of CAD 75,000,000 and 25 per cent. of the total asset value of the Fund.

At 31 December 2023, the amount drawn down under the Credit Facility was CAD 37,000,000 (GBP equivalent at amortised cost of

£21,831,966) (31 December 2022: CAD 46,000,000 (GBP equivalent at amortised cost of £27,877,663)). The loan value of CAD

37,000,000 was made up of three loans as follows:

Issue date Maturity date Loan amount

07 December 2023 08 January 2024 CAD23,000,000

14 December 2023 15 January 2024 CAD7,000,000

22 December 2023 22 January 2024 CAD7,000,000

As at 31 December 2023, pre-paid interest and stamping fees of £43,075 (31 December 2022: £57,320) were paid on the Banker’s

Acceptance of which £43,075 is amortised over a period of 30 days. Interest paid on the Banker’s Acceptance totalled £1,388,175 (31

December 2022: £763,799).

Interest is calculated at an annual percentage equal to, in the case of Prime Loans, the Prime Rate minus 0.35 per cent. In the case of

a Banker’s Acceptance, a stamping fee of 0.60 per cent. per annum is payable.

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

15. Security agreement

In connection with entry into the Credit Facility Agreement, the Fund has entered into a general security agreement with RBC, pursuant

to which the Fund has granted RBC interests in respect of collateral, being all present and future personal property, including the

securities portfolio, as security for the Fund’s obligations under the Credit Facility Agreement.

16. Financial instruments

Fair values

The carrying amounts of the investments, accrued income, other receivables, cash and cash equivalents, loan payable and other

payables approximate their fair values. In 2015, the percentage of the value of portfolio assets which may be invested in securities

listed on a recognised stock exchange outside Canada was increased to up to 40 per cent.

Management of capital

The Investment Manager manages the capital of the Fund in accordance with the Fund’s Investment Objectives and Policy.

The capital structure of the Fund consists of proceeds from the issue of preference shares, loans and reserve accounts. The Investment

Manager manages and adjusts its capital in response to general economic conditions, the risk characteristics of the underlying assets

and working capital requirements. Generally speaking, the Fund will reduce leverage when investments are likely to decrease in v

alue

and will increase leverage when investment appreciation is anticipated. In order to maintain or adjust its capital structure, the Fund

may borrow or repay debt under its Credit Facility or undertake other activities deemed appropriate under the speciﬁc circumstances

The Fund and the Company do not have any externally imposed capital requirements. However, the Fund is subject to bank covenants

in respect of leverage and complied with those covenants for the whole of both 2023 and 2022.

Investment and trading activities

It is intended that the Fund will continue throughout its life to be primarily invested in a Canadian and U.S. equities portfolio.

The Fund’s investing activities expose it to various types of risk that are associated with the ﬁnancial instruments and markets in w

hich

it invests. The most important types of ﬁnancial risk to which the Fund is exposed are market price risk, interest rate risk and cur

rency

risk.

Credit risk

Credit risk is the risk that an issuer or counterparty may be unable or unwilling to meet a commitment that it has entered into with the

Fund.

The Fund’s principal ﬁnancial assets are bank balances and cash, other receivables and investments as set out in the Statement of

Financial Position which represents the Fund’s maximum exposure to credit risk in relation to the ﬁnancial assets. The credit risk on

bank balances is limited because the counterparties are banks with high credit ratings of A, AA- and A+ assigned by Standard and

Poor’s rating agency. All transactions in listed securities are settled upon delivery using approved brokers.

The risk of default is considered minimal as delivery of securities sold is only made once the broker has received payment. Payment

is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its ob

ligations.

Where the Investment Manager makes an investment in debt or corporate securities, the credit rating of the issuer is taken into account

to manage the Company’s exposure to risk of default. Investments in debt or corporate securities are across a variety of sectors and

geographical markets, to avoid concentration of credit risk.

The Fund’s maximum exposure to credit risk is the carrying value of the assets on the Statement of Financial Position.

Market price risk

Market price risk is the risk that the fair value or future cash ﬂows of a ﬁnancial instrument will ﬂuctuate because of changes in market

prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors speciﬁc to the

individual ﬁnancial instrument or its issuer, or factors affecting similar ﬁnancial instruments traded in the market. The Fund’s e

xposure

to market price risk is comprised mainly of movements in the value of the Fund’s investments.

It is the business of the Investment Manager to manage the portfolio and borrowings to achieve the best returns. The directors manage

the risk inherent in the portfolio by monitoring, on a formal basis, the Investment Manager’s compliance with the Company’s stated

Investment Policy and reviewing investment performance.

16. Financial instruments continued

Country risk

On 17 January 2012, the FRC released “Responding to the increased country and currency risk in ﬁnancial reports”. This update from the

FRC included guidance on responding to the increased country and currency risk as a result of funding pressures on certain European

countries, the curtailment of capital spending programs (austerity measures) and regime changes in the Middle East.

The Fund invests primarily in Canadian and U.S. securities. The Investment Manager monitors the Company’s exposure to foreign

currencies on a daily basis. The Board has reviewed the disclosures and believes that no additional disclosures are required because

the Canadian and U.S. economies are stable.

Fair value measurements

IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the

lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under IFRS 13 are as f

ollows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or

liabilities; or

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observabl

for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are

not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is determined on the basis of the lowest level input tha

t is

signiﬁcant to the fair value measurement in its entirety. For this purpose, the signiﬁcance of an input is assessed against the fair v

alue

measurement in its entirety. If a fair value measurement uses observable inputs that require signiﬁcant adjustment based on

unobservable inputs, that measurement is a level 3 measurement. Assessing the signiﬁcance of a particular input to the fair value

measurement in its entirety requires judgment, considering factors speciﬁc to the asset or liability.

The determination of what constitutes ‘observable’ requires signiﬁcant judgment by the Directors. The Directors consider observab

data to be that market data that is readily available, regularly distributed or updated, reliable and veriﬁable, not proprietary

, and provided

by independent sources that are actively involved in the relevant market.

The following tables present the Fund’s ﬁnancial instruments by level within the valuation hierarchy as of 31 December 2023 and 31

December 2022:

Level 1 Level 2 Level 3 Total

31 December 2023 GBP GBP GBP GBP

Financial assets

Securities (at fair value through proﬁt or loss) 146,643,502 – – 146,643,502

Level 1 Level 2 Level 3 Total

31 December 2022 GBP GBP GBP GBP

Financial assets

Securities (at fair value through proﬁt or loss) 162,972,393 – – 162,972,393

The Fund holds securities that are traded in active markets. Such ﬁnancial instruments are classiﬁed as Level 1 of the IFRS 13 fair v

alue

hierarchy. There were no transfers between Level 1, 2 and 3 in the year.

Price sensitivity

At 31 December 2023, if the market prices of the securities had been 30% higher with all other variables held constant, the increase

in net assets attributable to holders of redeemable participating preference shares for the year would have been £43,993,051 (2022:

£48,891,718) higher, arising due to the increase in the fair value of ﬁnancial assets at fair value through proﬁt or loss by £43,993,051

(2022: £48,891,718).

At 31 December 2023, if the market prices of the securities had been 30% lower with all other variables held constant, the decrease

in net assets attributable to holders of redeemable shares for the year would have been equal, but opposite, to the ﬁgures stated abo

ve.

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

16. Financial instruments continued

Interest rate risk

Interest rate risk is the risk that the fair value or future cash ﬂows of a ﬁnancial instrument will ﬂuctuate because of changes in market

interest rates.

The Fund’s interest rate sensitive assets and liabilities mainly comprise cash and cash equivalents, debt securities and loan pa

yable.

The cash and cash equivalents are subject to ﬂoating rates and are considered to be part of the investment strategy of the Fund. No

other hedging is undertaken in respect of this interest rate risk.

There were no ﬁxed rate assets or liabilities at 31 December 2023 and 31 December 2022.

The following table details the Fund’s exposure to interest rate risk at 31 December 2023 and 31 December 2022:

Floating rate assets

Weighted Weighted

average interest 2023 average interest 2022

at year end GBP at year end GBP

Assets

Floating rate assets

Cash and cash equivalents * 4,433,118 * 1,523,392

4,433,118 1,523,392

* Interest on bank balances is not material to the ﬁnancial statements and are based on prevailing bank base rates.

Floating rate liabilities

2023 2022

GBP GBP

Liabilities

Floating rate liabilities

Loan payable (See Note 14) 21,831,966 27,877,663

21,831,966 27,877,663

The above analysis excludes short-term debtors and creditors as all material amounts are non-interest bearing.

Interest rate sensitivity analysis

At 31 December 2023, had interest rates been 50 basis points higher and all other variables were held constant, the Company’s net

assets attributable to redeemable participating preference shares for the year would have decreased by £86,994 (31 December 2022:

£131,171) due to an increase in interest payable on the loan and to a lesser extent an increase in interest earnings on cash and cash

equivalents.

16. Financial instruments continued

Liquidity risk

Liquidity risk is the risk that the Fund cannot meet its liabilities as they fall due. The Fund’s primary source of liquidity consists of cash

and cash equivalents, securities at fair value through proﬁt or loss and the credit facility.

The Fund’s investments are considered to be readily realisable, predominantly issued by Canadian and U.S. companies and REITs

listed on a Canadian Stock Exchange, and actively traded.

As at 31 December 2023, the Fund’s ability to manage liquidity risk was as follows:

Less than 3 months to More than

1 month 1-3 months 1 year 1 year Total

GBP GBP GBP GBP GBP

Assets

Securities (at fair value through proﬁt or loss) 146,643,502 – – – 146,643,502

Accrued dividend income 557,895 74,517 – – 632,412

Cash and cash equivalents 4,433,118 – – – 4,433,118

151,634,515 74,517 – – 151,709,032

Liabilities

Other payables and accruals (388,493) – – – (388,493)

Interest payable (71,270) – – – (71,270)

Loan payable (21,831,966) – – – (21,831,966)

(22,291,729) – – – (22,291,729)

129,342,786 74,517 – – 129,417,303

As at 31 December 2022, the Fund’s ability to manage liquidity risk was as follows:

Less than 3 months to More than

1 month 1-3 months 1 year 1 year Total

GBP GBP GBP GBP GBP

Assets

Securities (at fair value through proﬁt or loss) 162,972,393 – – – 162,972,393

Other receivables 577,953 25,172 – – 603,125

Cash and cash equivalents 1,523,392 – – – 1,523,392

165,073,738 25,172 – – 165,098,910

Liabilities

Other payables and accruals (459,482) – – – (459,482)

Interest payable (152,371) – – – (152,371)

Loan payable (27,877,663) – – – (27,877,663)

(28,489,516) – – – (28,489,516)

136,584,222 25,172 – – 136,609,394

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

16. Financial instruments continued

Currency risk

The Fund is denominated in GBP, whereas the Fund’s principal investments are denominated in CAD and USD. Consequently, the Fund

is exposed to currency risk. The Fund’s policy is therefore to actively monitor exposure to currency risk. The Board reserves the right

to employ currency hedging but, other than in exceptional circumstances, does not intend to hedge. The Board considers that exposure

was signiﬁcant at the year end.

The Fund’s net exposure to CAD currency at the year end was as follows:

2023 2022

GBP GBP

Assets

Securities (at fair value through proﬁt or loss) 146,643,502 158,345,116

Cash and cash equivalents 4,193,885 1,226,114

Accrued income 632,412 603,125

151,469,799 160,174,355

2023 2022

GBP GBP

Liabilities

Loan payable 21,831,966 27,877,663

Interest payable 71,270 152,371

General expenses – –

21,903,236 28,030,034

The Fund’s net exposure to USD currency at the year end was as follows:

2023 2022

GBP GBP

Assets

Securities (at fair value through proﬁt or loss) – 4,627,277

Cash and cash equivalents 82,692 111,088

82,692 4,738,365

Sensitivity analysis

At 31 December 2023, had GBP strengthened against the CAD by 5%, with all other variables held constant, the decrease in net assets

attributable to shareholders would amount to approximately £6,478,328 (31 December 2022: £6,607,216). Had GBP weakened against

the CAD by 5%, this would amount to an increase in net assets attributable to shareholders of approximately £6,478,328 (31 December

2022: £6,607,216).

At 31 December 2023, had GBP strengthened against the USD by 5%, with all other variables held constant, the decrease in net assets

attributable to shareholders would amount to approximately £4,135 (31 December 2022: £236,918). Had GBP weakened against the

USD by 5%, this would amount to an increase in net assets attributable to shareholders of approximately £4,135 (31December 2022:

£236,918).

17. Cash Flow statement reconciliation of financing activities

Non-cash changes

Foreign

1 January exchange Fair value 31 December

2023 Cash flows Acquisition movements changes 2023

GBP GBP GBP GBP GBP GBP

Financial liabilities held at

amortised cost 27,877,663 (5,205,252) – (840,445) – 21,831,966

Total 27,877,663 (5,205,252) – (840,444) – 21,831,966

Non-cash changes

Foreign

1 January exchange Fair value 31 December

2022 Cash flows Acquisition movements changes 2022

GBP GBP GBP GBP GBP GBP

Financial liabilities held at

amortised cost 37,973,792 (12,241,671) – 2,145,542 – 27,877,663

Total 37,973,792 (12,241,671) – 2,145,542 – 27,877,663

18. Post year end events

On 4 January 2024, the Company declared a quarterly dividend of 1.325 pence per share. The ex-dividend date was 11 January 2024

and the record date was 12 January 2024. On 31 January 2024, the dividend of £1,410,956 was paid.

No redeemable preference shares were purchased by the Company subsequent to year end.

The loan of CAD 23,000,000 maturing on 8 January 2024, was renewed with a maturity date of 7 February 2024. On 7 February 2024,

the loan was renewed with an additional CAD 1,000,000 added to the face value for a total of CAD 24,000,000 maturing on 8March

2024. The loan was subsequently renewed with a maturity date of 08 April 2024. On 8 April 2024, the loan was renewed and converted

to a term CORRA (Canadian Overnight Repo Rate Average) loan with an additional CAD 1,000,000 added to the face value with a

maturity date of 8 May 2024.

The loan of CAD 7,000,000 maturing on 15 January 2024, was renewed with a maturity date of 14 February 2024. Thereafter, the loan

was renewed with a maturity date of 15 March 2024, and subsequently renewed with a maturity date of 15 April 2024. On 15April

2024, the loan was renewed and converted to a term CORRA loan with a maturity date of 15May 2024.

The loan of CAD 7,000,000 maturing on 22 January 2024, was renewed with an additional CAD 4,000,000 added to the face value for

a total of CAD 11,000,000 maturing on 21 February 2024. Thereafter, the loan was subsequently renewed with a maturity date of

22March 2024. On 22 March 2024, the loan was renewed with an additional CAD 1,500,000 added to the face value for a total of CAD

12,500,000 maturing on 22 April 2024. On 22 April 2024, a portion of the loan will be paid down and CAD 6,000,000 will be converted

to a term CORRA loan with a maturity date of 22 May 2024.

A new loan of CAD 10,000,000 was issued on 16 February 2024 with a maturity date of 18 March 2024.The loan was subsequently

renewed with a maturity date of 17 April 2024. On 17 April 2024, the loan was converted to a term CORRA loan and renewed with a

maturity date of 17 May 2024.

19. Controlling party

In the directors’ opinion there is no ultimate controlling party.

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

20. Schedule of Investments – Securities (at fair value through profit or loss)

As at 31 December 2023

Bid-Market

Book Cost Value % of % of

Description Shares/Units GBP GBP Net Assets Portfolio

Equities

Canada – Quoted Investments 100.00%

(2022: 94.99%)

Energy:

Canadian Natural Resources Ltd. 130,000 2,958,902 6,689,176 5.17% 4.56%

Peyto Exploration & Development Corp. 300,000 2,162,857 2,138,876 1.65% 1.46%

Suncor Energy Inc. 200,000 4,865,293 5,034,602 3.89% 3.43%

Topaz Energy Corp. 325,000 3,016,708 3,726,276 2.88% 2.54%

Tourmaline Oil Corp. 130,000 5,560,149 4,587,965 3.54% 3.13%

Total Energy Investments 18,563,909 22,176,895 17.13% 15.12%

Financials:

Bank of Montreal 110,000 6,592,091 8,548,503 6.60% 5.83%

Canadian Imperial Bank of Commerce 95,000 2,816,387 3,593,353 2.78% 2.45%

Manulife Financial Corporation 370,000 5,012,155 6,414,907 4.96% 4.37%

National Bank of Canada 80,000 3,757,442 4,781,212 3.69% 3.26%

Power Corporation of Canada 120,000 2,688,690 2,686,940 2.08% 1.83%

Royal Bank of Canada 90,000 6,805,948 7,147,973 5.52% 4.87%

The Bank of Nova Scotia 90,000 3,580,351 3,443,198 2.66% 2.35%

The Toronto-Dominion Bank 130,000 5,570,215 6,594,333 5.09% 4.50%

Total Financials Investments 36,823,279 43,210,419 33.38% 29.46%

Pipelines:

Enbridge Inc. 220,000 5,992,678 6,224,448 4.81% 4.24%

Gibson Energy Inc. 325,000 4,746,860 3,876,638 3.00% 2.64%

Keyera Corp. 190,000 2,509,052 3,606,313 2.79% 2.46%

Pembina Pipeline Corporation 220,000 4,677,505 5,949,111 4.60% 4.06%

TC Energy Corporation 130,000 4,519,334 3,986,518 3.08% 2.72%

Total Pipeline Investments 22,445,429 23,643,028 18.28% 16.12%

Power and Utilities:

Altagas Ltd. 430,000 6,186,817 7,064,933 5.46% 4.82%

Capital Power Corporation 210,000 3,694,549 4,710,865 3.64% 3.21%

Emera Incorporated 115,000 3,714,822 3,422,853 2.64% 2.33%

Total Power and Utilities Investments 13,596,188 15,198,651 11.74% 10.36%

20. Schedule of Investments – Securities (at fair value through profit or loss) continued

As at 31 December 2023

Bid-Market

Book Cost Value % of % of

Description Shares/Units GBP GBP Net Assets Portfolio

Real Estate:

Canadian Apartment Properties Real Estate

Investment Trust 110,000 3,174,159 3,173,555 2.45% 2.16%

Chartwell Retirement Residences 540,000 3,395,061 3,731,466 2.88% 2.55%

Choice Properties Real Estate Investment Trust 600,000 4,627,340 4,950,376 3.82% 3.38%

Crombie Real Estate Investment Trust 225,000 1,972,025 1,828,365 1.41% 1.25%

Dream Industrial Real Estate Investment Trust 600,000 4,270,916 4,946,817 3.82% 3.37%

First Capital Real Estate Investment Trust 420,000 4,340,343 3,811,540 2.94% 2.60%

Granite Real Estate Investment Trust 110,000 4,183,921 4,965,857 3.84% 3.39%

RioCan Real Estate Investment Trust 400,000 3,658,002 4,405,870 3.40% 3.01%

SmartCentres Real Estate Investment Trust 300,000 3,924,099 4,412,988 3.41% 3.01%

Total Real Estate Investments 33,545,866 36,226,834 27.97% 24.72%

Telecommunication Services:

BCE, Inc. 200,000 7,466,268 6,187,675 4.78% 4.22%

Total Equities 132,440,939 146,643,502 113.28% 100.00%

Total investments (2023) 132,440,939 146,643,502 113.28% 100.00%

Total investments (2022) 141,394,055 162,972,393 119.26% 100.00%

As at 31 December 2022, Bermuda quoted investments were 2.17% of the portfolio and U.S. quoted investments were 2.84% of the

portfolio.

Notes to the Financial Statements

of the Fund continued

For the year ended 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

Opinion

We have audited the ﬁnancial statements of Middleﬁeld Canadian Income PCC (the “Company”), which comprise the Statement of

Financial Position as at 31 December 2023, and notes 1 to 4 to the ﬁnancial statements, including a summary of signiﬁcant accounting

policies. The ﬁnancial reporting framework that has been applied in their preparation is applicable law and UK-adopted International

Financial Reporting Standards (‘IFRS’).

In our opinion the ﬁnancial statements:

• give a true and fair view of the state of affairs of the Company as at 31 December 2023 and of its results for the year then ended;

• have been properly prepared in accordance with UK-adopted IFRS; and

• have been prepared in accordance with the Companies (Jersey) Law 1991.

Separate opinion in relation to IFRS as adopted by the European Union

As explained in note 1, in addition to complying with the Listing Rules obligation to apply UK-adopted IFRS, the Fund has also applied

IFRSs as adopted by the European Union.

In our opinion the ﬁnancial statements give a true and fair view of the ﬁnancial position of the Fund as at 31 December 2023 and of

its

ﬁnancial performance and cash ﬂows for the year then ended in accordance with IFRS as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the ﬁnancial sta

tements

section of this report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit

of the ﬁnancial statements in Jersey, including the FRC’s Ethical Standard, and we have fulﬁlled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a

basis for our opinion.

Conclusions relating to going concern

In auditing the ﬁnancial statements, we have concluded that the director’s use of the going concern basis of accounting in the

preparation of the ﬁnancial statements is appropriate.

Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that, individuall

or collectively, may cast signiﬁcant doubt on the company’s ability to continue as a going concern for a period of at least twelv

e months

from when the ﬁnancial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of

this

report.

Other information

The directors are responsible for the other information. Our opinion on the ﬁnancial statements does not cover the other information

and we do not express any form of assurance conclusions thereon.

In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit or otherwise

appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if,

in our opinion;

• adequate accounting records have not been kept; or

• the ﬁnancial statements are not in agreement with the accounting records and returns; or

• proper returns adequate for our audit have not been received from branches not visited by us; or

• we have not received all the information and explanations we require for our audit.

Independent Auditors’ Report

To the Shareholders of Middlefield Canadian Income PCC (The “Company”)

Responsibilities of directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 40, the directors are responsible for the

preparation of the ﬁnancial statements in accordance with UK-adopted IFRS and for being satisﬁed that they give a true and fair view

and for such internal control as the directors determine is necessary to enable the preparation of ﬁnancial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements, the directors are responsible for assessing the Company’s ability to continue as a going concer

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors

either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the ag

gregate,

they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout

the audit. We also:

• Identify and assess the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, design and perf

orm

audit procedures responsive to those risks, and obtain audit evidence that is sufﬁcient and appropriate to provide a basis for our

opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures

made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the Company’s

ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditors’ report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions

may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the ﬁnancial statements, including the disclosures, and whether the

ﬁnancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and

signiﬁcant audit ﬁndings, including any signiﬁcant deﬁciencies in internal control that we identify during our audit.

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to w

hich our

procedures are capable of detecting irregularities, including fraud is explained below.

The objectives of our audit are to obtain sufﬁcient appropriate audit evidence regarding compliance with laws and regulations tha

have a direct effect on the determination of material amounts and disclosures in the ﬁnancial statements, to perform audit procedures

to help identify instances of non-compliance with other laws and regulations that may have a material effect on the ﬁnancial sta

tements,

and to respond appropriately to identiﬁed or suspected non-compliance with laws and regulations identiﬁed during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the ﬁnancial sta

tements

due to fraud, to obtain sufﬁcient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through

designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identiﬁed during the

audit.

However, it is the primary responsibility of the directors to ensure that the entity’s operations are conducted in accordance with the

provisions of laws and regulations and for the prevention and detection of fraud.

Independent Auditors’ Report continued

To the Shareholders of Middlefield Canadian Income PCC (The “Company”)

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

We obtained an understanding of the legal and regulatory frameworks that the entity operates in, focusing on provisions of those laws

and regulations that had a direct effect on the determination of material amounts and disclosures in the ﬁnancial statements. These

included but were not limited to compliance with Companies (Jersey) Law 1991.

Our testing included, but was not limited to:

• enquiries of the directors regarding known or suspect instances of non-compliance with laws and regulations;

• enquiries of the directors regarding known or suspect instances of irregularities, including fraud;

• undertaking analytical procedures to identify unusual or unexpected relationships;

• review of minutes of meetings throughout the year;

• testing the appropriateness of journal entries and other adjustments; and

• agreement of the ﬁnancial statement disclosures to underlying supporting documentation.

Owing to the inherent limitations of an audit there is an unavoidable risk that some material misstatement of the ﬁnancial statements

may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK). However, the principal

responsibility for ensuring that the ﬁnancial statements are free from material misstatement, whether caused by fraud or error, rests

with the directors who should not rely on the audit to discharge those functions.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal controls.

Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud

and cannot be expected to detect non-compliance with all laws and regulations.

Use of our report

This report is made solely to the Company’s shareholders as a body, in accordance with Article 113A of the Companies (Jersey) Law

1991. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters we are required to

state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Company and the Company’s shareholders as a body, for our audit work, for this report, or f

the opinions we have formed.

Philip J Crosby

For & on behalf of

RSM Channel Islands (Audit) Limited

Chartered Accountants and Recognised Auditors

Jersey, C.I.

Date 18 April 2024

2023 2022

Notes GBP GBP

Current assets

Other receivables 2 2

Net assets 2 2

Equity attributable to equity holders

Stated capital 2 2 2

Total Shareholders’ equity 2 2

The ﬁnancial statements and notes on pages 82 to 83 were approved by the directors on 18 April 2024 and signed on behalf of the

Board by:

Michael Phair Andrew Zychowski

Director Director

Statement of Financial Position of the

Company

As at 31 December 2023

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

1. Basis of accounting

The separate ﬁnancial statements of the Company have been prepared showing results of the Company only. They have been prepared

in accordance with UK-adopted IFRS in accordance with the accounting policies set out in Note 2 to the ﬁnancial statements of the

Fund.

The ﬁnancial statements of the Fund have been prepared on the historical cost basis, except for the measurement at fair value of

investments and derivatives, and in accordance with UK-adopted IFRS and interpretations issued by the IFRSIC.

A separate Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement have not been prepared

as there have been no results or cash ﬂows for the Company for this year or the preceding year.

There are no standards and interpretations in issue but not effective that the directors believe would or might have a material impact

on the ﬁnancial statements of the Company.

Judgements and estimates used by the directors

The preparation of ﬁnancial statements in compliance with IFRS requires the directors to make judgements, estimates and assumptions

that affect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates and associa

ted

liabilities are based on historical experience and various other factors that are believed to be reasonable under the circumstances

, the

results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent.

For the purposes of these ﬁnancial statements, there were no speciﬁc areas in which judgement was exercised and no estimation was

required by the directors.

2. The Company’s stated capital

The authorised share capital of the Company is split into two management shares of no par value.

No. of shares GBP

Management shares issued

At 31 December 2023 and 2022 2 2

3. Taxation

The Company adopted UK tax residency on 11 October 2011. Since that date, the Company has been managed in such a way as to

be able to meet the conditions for approval as an investment trust under Section 1158 of the Corporation Tax Act 2010. Accordingl

no UK tax has been provided for. On 7 December 2012, the Company received approval from HM Revenue & Customs to be treated

as an investment trust in accordance with Section 1158 of the Corporation Tax Act 2010 and will seek to remain so approved.

4. Ultimate holding company

The ultimate holding company is Middleﬁeld Limited.

Notes to the Financial Statements of the Company

For the year ended 31 December 2023

AGM Annual general meeting

AIC The Association of Investment Companies

AIC Code The AIC Code of Corporate Governance

AIF Alternative investment fund

AIFM Alternative investment fund manager

AIFMD Alternative Investment Fund Managers Directive

Annual Financial Report Annual report and ﬁnancial statements

Auditor RSM Channel Islands (Audit) Limited

Banker’s Acceptance The amount drawn under the Credit Facility Agreement

Benchmark The S&P TSX Composite High Dividend Index

CAD Canadian Dollar

Cell or Fund Middleﬁeld Canadian Income – GBP PC

Cell AGM An annual general meeting of the holders of Fund Shares

Company or MCT Middleﬁeld Canadian Income PCC

Credit Facility The on-demand credit facility with RBC

ESG Environmental, Social and Governance

EU European Union

FCA Financial Conduct Authority

FRC Financial Reporting Council

Fund Middleﬁeld Canadian Income – GBP PC

Fund Shares The redeemable participating preference shares of no par value in the Fund

GBP Sterling

IFRSIC International Financial Reporting Standards Interpretations Committee

IFRS International Financial Reporting Standards

JFSC Jersey Financial Services Commission

Listing Rules The listing rules made by the FCA under Part VI of the Financial Services and Market

Authority

NAV Net Asset Value of the Company in GBP

Prime Loan Loans to which the Prime Rate can be applied

Prime Rate Annual interest rate set by Canada’s major banks and ﬁnancial institutions

RBC Royal Bank of Canada

REIT Real estate investment trust

SORP Statement of recommended practice

TSX Composite Index S&P/TSX Composite Index

UK Code The UK Corporate Governance Code published by the FRC in July 2018

Definitions

LR.15.2.5: No more than 10% of the Company’s total assets may be invested in other listed closed-ended investment companies unless such investment companies themselves

have published investment policies to invest no more than 15% of their total assets in other closed-ended investment companies, in w

hich case the limit is 15%.

2023 Annual Report & Accounts

MIDDLEFIELD CANADIAN INCOME TRUST |

FINANCIAL STATEMENTS

An APM is a measure of performance or ﬁnancial position that is not deﬁned in applicable accounting standards and cannot be directly

derived from the ﬁnancial statements. The Company’s APMs are set out below and are cross-referenced where relevant to the ﬁnancial

inputs used to derive them as contained in other sections of the Annual Report.

Benchmark

The Company’s benchmark index, used for performance comparative purposes, is the TSX High Dividend Index calculated in sterling

terms with dividends reinvested.

Discount or Premium

Investment trust shares can frequently trade at a discount to NAV. This occurs when the share price (based on the mid-market share

price) is less than the NAV and investors may therefore buy shares at less than the value attributable to them by reference to the

underlying assets. The discount is the difference between the share price and the NAV, expressed as a percentage of the NAV.

Net Asset Value (NAV) per Redeemable Participating Preference Share

This is the value of the Company’s assets attributable to one redeemable participating preference share. It is calculated by dividing

‘equity shareholders’ funds’ by the total number of redeemable participating preference shares in issue (excluding treasury shares).

Gearing/(Net Cash)

Investment companies can borrow to purchase additional investments. This is called ‘gearing’. It allows investment companies to take

advantage of a long-term view on a sector or to take advantage of a favourable situation or a particularly attractive stock without ha

ving

to sell existing investments. Gearing works by magnifying a company’s performance. If a company ‘gears up’ and then markets rise

and returns on the investments outstrip the costs of borrowing, the overall returns to investors will be even greater. But if mar

kets fall

and the performance of the assets in the portfolio is poor, then losses suffered by the investor will also be magniﬁed. The Compan

may achieve gearing through borrowings or the effect of gearing through an appropriate balance of equity capital and borrowings.

Ongoing Charges

Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue,

and which relate to the operation of the investment company as a collective fund. Ongoing charges are based on costs incurred in the

year as being the best estimate of future costs and include the annual management charge.

Yield

The yield is the amount of cash (in percentage terms) that is returned to the owners of the security, in the form of interest or dividends

received from it. Normally, it does not include price variations, distinguishing it from performance (with dividends reinvested).

Alternative Performance Measures

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www.middleﬁeld.co.uk/mcit.htm

LONDON, ENGLAND

Middleﬁeld International Limited

288 Bishopsgate

London, England

EC2M 4QP

Telephone +44 (0) 20 7814 6644

Fax +44 (0) 20 7814 66 11

TORONTO, CANADA

Middleﬁeld Group

Suite 3100

8 Spadina Ave

Toronto, Ontario

Canada M5V 0S8

Telephone 001 (416) 362-0714