Premium Income : Final Short Form Base Shelf Prospectus (English)

This short form base shelf prospectus has been filed under legislation in each of the provinces of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities, except in cases where an exemption from such delivery requirement is available.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be offered for sale and therein only by persons permitted to sell such securities.

Information has been incorporated by reference in this short form base shelf prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the secretary of Mulvihill Capital Management Inc., the manager of the issuer, at 121 King Street West, Suite 2600, P.O. Box 113, Toronto, Ontario, M5H 3T9 or [e-mail] or by calling 416.681.3966, toll-freeat 1.800.725.7172 and are also available electronically at www.sedar.com.

New Issue

SHORT FORM BASE SHELF PROSPECTUS

August 23, 2022

$300,000,000

Preferred Shares and Class A Shares

During the 25-month period that this short form base shelf prospectus, including any amendments hereto, remains effective, Premium Income Corporation (the "Fund") may from time to time offer and issue preferred shares ("Preferred Shares") and class A shares ("Class A Shares") in an aggregate principal amount of up to $300,000,000. Preferred Shares and Class A Shares may be offered in such amount as may be determined in light of market conditions. The specific terms of the Preferred Shares and Class A Shares in respect of which this short form base shelf prospectus is being delivered will be set forth in one or more prospectus supplements (each a "Prospectus Supplement") to be delivered to purchasers together with this short form base shelf prospectus, except in cases where an exemption from such delivery requirement is available, and may include, where applicable, the aggregate offered amount, the number of Preferred Shares and Class A Shares offered, the issue price, the dividend rate, the dividend payment dates and any terms for redemption at the option of the Fund or the holder. Each such Prospectus Supplement will be incorporated by reference into this short form base shelf prospectus for the purposes of securities legislation as of the date of each such Prospectus Supplement and only for the purposes of the distribution of Preferred Shares and Class A Shares to which such Prospectus Supplement pertains.

Preferred Shares and Class A Shares are issued only on the basis that an equal number of Preferred Shares and Class A Shares will be outstanding at all times. The Fund is a mutual fund corporation incorporated under the laws of the Province of Ontario. The Fund invests in a portfolio (the "Portfolio") consisting principally of common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, The Toronto- Dominion Bank (collectively, the "Banks") and National Bank of Canada.

The Fund may sell Preferred Shares and Class A Shares to or through underwriters or dealers or directly to investors or through agents. The Prospectus Supplement relating to the Preferred Shares and Class A Shares offered by the Fund will identify each person who may be deemed to be an underwriter with respect to such Preferred Shares and Class A Shares and will set forth the terms of the offering of such Preferred Shares and Class A Shares, including, to the extent applicable, the offering price, the proceeds to the Fund, the underwriting commissions and any other fees, discounts or concessions to be allowed or reallowed to dealers. The sale of Preferred Shares and Class A Shares may be effected from time to time in one or more transactions at non-fixed prices pursuant to transactions that are deemed to be "at- the-market distributions" as defined in National Instrument 44-102 - Shelf Distributions ("NI 44-102"), including sales made directly on the Toronto Stock Exchange (the "TSX") or other existing trading markets for the Preferred Shares and Class A Shares, and as set forth in a Prospectus Supplement for such purpose. The lead underwriter or lead agent or underwriters or agents with respect to the Preferred Shares and Class A Shares sold to or through underwriters or agents will be named in the related Prospectus Supplement. Subject to applicable laws, in connection with any

offering of Preferred Shares and Class A Shares, other than in an "at-the-market distribution" of Preferred Shares and Class A Shares, the underwriters or agents may over-allot or effect transactions which stabilize or maintain the market price of the Preferred Shares and/or Class A Shares offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. See "Plan of Distribution".

Sales of Preferred Shares and Class A Shares under an "at-the-market distribution", if any, will be made pursuant to an accompanying Prospectus Supplement. Sales of Preferred Shares and Class A Shares under any "at-the-market" program will be made in transactions that are deemed to be "at-the-market distributions" as defined in NI 44-102. The volume and timing of any "at-the-market distributions" will be determined at the Fund's sole discretion.

No underwriter or agent involved in an "at-the-market distribution", no affiliate of such an underwriter or agent and no person or company acting jointly or in concert with such an underwriter or agent may over-allot Preferred Shares or Class A Shares in connection with the distribution or may effect any other transactions that are intended to stabilize or maintain the market price of the Preferred Shares or Class A Shares in connection with an "at-the-market distribution".

The Fund's outstanding Preferred Shares and Class A Shares are listed on the TSX under the symbols PIC.PR.A and PIC.A, respectively. On August 22, 2022, the closing price on the TSX of the Preferred Shares was $14.10 and of the Class A Shares was $7.00. As at August 18, 2022 (the last date prior to the date hereof on which the net asset value of the Fund was calculated), the NAV per Unit (as defined herein) was $21.01.

An investment in the Preferred Shares or the Class A Shares involves a degree of risk. It is important for prospective purchasers to consider the risk factors described in this short form base shelf prospectus. See "Risk Factors".

All shelf information permitted under applicable law to be omitted from this short form base shelf prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this short form base shelf prospectus, except in cases where an exemption from such delivery requirement is available. Each Prospectus Supplement will be incorporated by reference into this short form base shelf prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Preferred Shares and Class A Shares to which the Prospectus Supplement pertains.

TABLE OF CONTENTS
GLOSSARY OF TERMS............................................................................................................................................	1
FORWARD LOOKING STATEMENTS ...................................................................................................................	4
DOCUMENTS INCORPORATED BY REFERENCE ..............................................................................................	4
THE FUND .................................................................................................................................................................	6
DESCRIPTION OF THE SHARES OF THE FUND..................................................................................................	8
DESCRIPTION OF SHARE CAPITAL ...................................................................................................................	12
USE OF PROCEEDS ................................................................................................................................................	13
PLAN OF DISTRIBUTION ......................................................................................................................................	13
ORGANIZATION AND MANAGEMENT OF THE FUND ...................................................................................	14
RISK FACTORS .......................................................................................................................................................	15
EXCHANGE OF TAX INFORMATION .................................................................................................................	18
FEES AND EXPENSES ...........................................................................................................................................	19
LEGAL MATTERS ..................................................................................................................................................	19
PURCHASERS' STATUTORY RIGHTS ................................................................................................................	19
CERTIFICATE OF THE FUND AND THE MANAGER......................................................................................	C-1

GLOSSARY OF TERMS

In this short form base shelf prospectus, the following terms have the meanings set forth below, unless otherwise indicated. Unless otherwise indicated, all references to dollar amounts in this short form base shelf prospectus are to Canadian dollars.

"1933 Act" means the United States Securities Act of 1933, as it may be amended from time to time.

"Banks" means collectively, Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion Bank.

"Bank Shares" means common shares of the Banks.

"Board of Directors" means the board of directors of the Fund.

"Business Day" means any day on which the TSX is open for business.

"cash equivalents" means, and for the purposes of "cash cover" and "cash covered put option", "cash" as used therein means:

1. cash on deposit at the Fund's custodian;
2. an evidence of indebtedness that has a remaining term to maturity of 365 days or less and that is issued, or fully and unconditionally guaranteed as to principal and interest, by:
3. 1. any of the federal or provincial Governments of Canada;
   2. the Government of the United States; or
   3. a Canadian financial institution;

provided that, in the case of (ii) and (iii), such evidence of indebtedness has a rating of at least R-1 (mid) by DBRS Limited or the equivalent rating from another designated rating organization; or

1. other cash cover as defined in NI 81-102.

"CDS" means CDS Clearing and Depository Services Inc.

"CDS Participant" means a participant in CDS.

"Class A Market Price" means the weighted average trading price of the Class A Shares on the principal stock exchange on which the Class A Shares are listed (or, if the Class A Shares are not listed on any stock exchange, on the principal market on which the Class A Shares are quoted for trading) for the 10 trading days immediately preceding the applicable Valuation Date.

"Class A Share" means a transferable, redeemable class A share of the Fund.

"Class B Share" means a transferable, redeemable class B share of the Fund.

"CRA" means the Canada Revenue Agency.

"CRS Rules" has the meaning given to such term under "Exchange of Tax Information".

"Dividend Payment Date" means the last day of January, April, July and October in each year.

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"Fund" means Premium Income Corporation, a mutual fund corporation incorporated under the laws of the Province of Ontario.

"IRC" means the independent review committee of the Fund.

"Investment Management Agreement" means the investment management agreement dated October 17, 1996, as amended on September 29, 2003 and October 8, 2010 between Mulvihill and the Fund.

"Investment Objectives" means the investment objectives of the Fund described under "The Fund - Investment Objectives" in this short form base shelf prospectus.

"Investment Restrictions" means the investment restrictions of the Fund, including without limitation those described under "The Fund - Investment Restrictions" in this short form base shelf prospectus.

"Investment Strategies" means the investment strategies of the Fund described under "The Fund - Investment Strategies" in this short form base shelf prospectus.

"Manager" means Mulvihill Capital Management Inc., in its capacity as manager and investment manager of the Fund.

"Management Agreement" means the management agreement dated October 17, 1996, as amended on September 29, 2003 and October 8, 2010, between Mulvihill (as successor by amalgamation with Mulvihill Fund Services Inc. on September 1, 2010) and the Fund.

"Management Fee" has the meaning given to such term under "Fees and Expenses - Management Fee".

"NAV" means net asset value.

"NAV of the Fund" means (i) the aggregate value of the assets of the Fund, less (ii) the aggregate value of the liabilities of the Fund (the Preferred Shares will not be treated as liabilities for these purposes), including any distributions declared and not paid that are payable to Shareholders on or before such date, less (iii) the stated capital of the Class B Shares ($1,000) as described in the current annual information form of the Fund.

"NAV per Unit" means the NAV of the Fund divided by the number of Units then outstanding.

"NI 81-102" means National Instrument 81-102- Investment Funds.

"October Valuation Date" means the last business day of October.

"Portfolio" means the Fund's investment portfolio.

"Potential Redemption Date" means November 1, 2024 and thereafter a day that is the seventh year anniversary date of the immediately preceding potential date of redemption.

"Preferred Market Price" means the weighted average trading price of the Preferred Shares on the principal stock exchange on which the Preferred Shares are listed (or, if the Preferred Shares are not listed on any stock exchange, on the principal market on which the Preferred Shares are quoted for trading) for the 10 trading days immediately preceding the applicable Valuation Date.

"Preferred Share" means a transferable, redeemable preferred share of the Fund.

"Prospectus Supplement" means a prospectus supplement to be delivered to purchasers together with this short form base shelf prospectus, except in cases where an exemption from such delivery requirement is available and may include, where applicable, the aggregate offered amount, the number of Preferred Shares and Class A Shares offered, the issue price, the dividend rate, the dividend payment dates and any terms for redemption at the option of the Fund or the holder.

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