UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08795
BROOKFIELD HIGH INCOME FUND INC.
(Exact name of registrant as specified in charter)
BROOKFIELD PLACE
250 VESEY STREET, 15th Floor
NEW YORK, NEW YORK 10281-1023
(Address of principal executive offices) (Zip code)
BRIAN F. HURLEY, PRESIDENT
BROOKFIELD HIGH INCOME FUND INC.
BROOKFIELD PLACE
250 VESEY STREET, 15th Floor
NEW YORK, NEW YORK 10281-1023
(Name and address of agent for service)
Registrant’s telephone number, including area code: (855) 777-8001
Date of fiscal year end: September 30, 2015
Date of reporting period: March 31, 2015
Item 1. Reports to Shareholders.
1 | J.P. Morgan, High-Yield Market Monitor, April 1, 2015, page 18. |
2 | J.P. Morgan, High-Yield Market Monitor, April 1, 2015, page 18. |
3 | J.P. Morgan, High-Yield Default Monitor, March 31, 2015, page 5. |
4 | J.P. Morgan, High-Yield Default Monitor, March 31, 2015, page 11. |
5 | J.P. Morgan, High-Yield Default Monitor, March 31, 2015, page 13. |
6 | J.P. Morgan High-Yield Default Monitor, March 31, 2015, page 14. |
7 | J.P. Morgan High-Yield Default Monitor, March 31, 2015, page 14. |
8 | J.P. Morgan High-Yield Default Monitor, March 31, 2015, page 14. |
Portfolio Characteristics (Unaudited)
PORTFOLIO STATISTICS | |
Annualized distribution rate1 | 10.20% |
Weighted average coupon | 7.06% |
Weighted average life | 4.93 years |
Percentage of leveraged assets | 27.52% |
Total number of holdings | 165 |
CREDIT QUALITY2,3 | |
BBB | 2.7% |
BB | 19.6% |
B | 46.5% |
CCC | 19.3% |
Unrated | 9.4% |
Cash | 2.5% |
Total | 100.0% |
ASSET ALLOCATION | |
Residential Mortgage Related Holdings | 3.9% |
Corporate Bonds | 123.5% |
Term Loans | 3.1% |
Common Stocks | 2.7% |
Warrants and Short Term Investments | 2.0% |
Liabilities in Excess of Other Assets | (35.2%) |
Total | 100.0% |
1 | Distributions may include dividends from net investment income, capital gains and/or return of capital. The distribution rate referenced above is calculated as the annualized amount of the most recent monthly distribution declared divided by March 31, 2015 stock price. |
2 | Includes only invested assets and cash. |
3 | The higher of an S&P or Moody’s rating was used. If a Moody’s rating was used, we converted such rating to a comparable S&P rating. |
Schedule of Investments (Unaudited)
Interest Rate | Maturity | Principal Amount (000s) | Value | ||||
RESIDENTIAL MORTGAGE RELATED HOLDINGS – 3.9% | |||||||
Non-Agency Mortgage-Backed Securities – 3.9% | |||||||
Alternative Loan Trust | |||||||
Series 2007-OA3, Class 1A1 1,2 | 0.31% | 04/25/47 | $ 1,709 | $ 1,438,673 | |||
Series 2006-29T1, Class 2A6 | 6.50 | 10/25/36 | 1,521 | 1,355,563 | |||
GSAMP Trust | |||||||
Series 2006-HE8, Class A2C 1,2 | 0.34 | 01/25/37 | 1,497 | 1,256,073 | |||
Home Equity Asset Trust | |||||||
Series 2006-7, Class 2A3 1,2 | 0.32 | 01/25/37 | 2,060 | 1,459,722 | |||
Nomura Resecuritization Trust | |||||||
Series 2014-1R, Class 2A11 1,3,4 | 0.36 | 02/26/37 | 4,490 | 2,320,015 | |||
Securitized Asset Backed Receivables LLC Trust | |||||||
Series 2007-BR4, Class A2B 1,2 | 0.37 | 05/25/37 | 2,692 | 1,774,852 | |||
Total Non-Agency Mortgage-Backed Securities | 9,604,898 | ||||||
Total RESIDENTIAL MORTGAGE RELATED HOLDINGS (Cost $9,525,970) | 9,604,898 | ||||||
CORPORATE BONDS – 123.5% | |||||||
Automotive – 5.6% | |||||||
American Axle & Manufacturing, Inc. 5 | 6.25 | 03/15/21 | 3,190 | 3,357,475 | |||
American Axle & Manufacturing, Inc. 5 | 7.75 | 11/15/19 | 650 | 739,375 | |||
FCA US LLC 5 | 8.25 | 06/15/21 | 3,550 | 3,937,341 | |||
Ford Motor Co. 5 | 6.50 | 08/01/18 | 3,100 | 3,538,799 | |||
Motors Liquidation Co. 6,7 | 8.38 | 07/15/33 | 8,250 | 825 | |||
Servus Luxembourg Holding SCA 3,4,8 | 7.75 | 06/15/18 | 1,809 | 2,040,082 | |||
Total Automotive | 13,613,897 | ||||||
Banking – 0.0% | |||||||
Bilbao Luxembourg SA 8,9 | 10.50 | 12/01/18 | 62 | 70,190 | |||
Basic Industry – 18.6% | |||||||
Alcoa, Inc. 5 | 5.55 | 02/01/17 | 1,000 | 1,064,959 | |||
Alpha Natural Resources, Inc. 5 | 6.25 | 06/01/21 | 4,075 | 1,028,938 | |||
Alpha Natural Resources, Inc. 3,4,5 | 7.50 | 08/01/20 | 1,500 | 625,856 | |||
Arch Coal, Inc. 5 | 7.25 | 06/15/21 | 6,100 | 1,403,000 | |||
Associated Materials LLC 5 | 9.13 | 11/01/17 | 3,475 | 3,023,250 | |||
Building Materials Corporation of America 3,4,5 | 6.75 | 05/01/21 | 950 | 1,009,375 | |||
Cascades, Inc. 3,4,5,8 | 5.50 | 07/15/22 | 3,000 | 3,045,000 | |||
Cascades, Inc. 5,8 | 7.88 | 01/15/20 | 1,025 | 1,062,797 | |||
FMG Resources August 2006 Property Ltd. 3,4,8 | 6.88 | 04/01/22 | 1,950 | 1,440,562 | |||
Hexion, Inc. | 8.88 | 02/01/18 | 1,425 | 1,257,562 | |||
Hexion, Inc. 5 | 9.00 | 11/15/20 | 4,500 | 3,150,000 | |||
Huntsman International LLC 5 | 8.63 | 03/15/21 | 3,050 | 3,263,500 | |||
INEOS Group Holdings SA 3,4,5,8 | 6.13 | 08/15/18 | 3,800 | 3,819,000 | |||
Masonite International Corp. 3,4,5,8 | 8.25 | 04/15/21 | 3,505 | 3,737,206 | |||
Millar Western Forest Products Ltd. 8 | 8.50 | 04/01/21 | 1,575 | 1,598,625 | |||
Polymer Group, Inc. 5 | 7.75 | 02/01/19 | 2,588 | 2,685,050 | |||
PulteGroup, Inc. 5 | 6.38 | 05/15/33 | 2,350 | 2,432,250 | |||
The Dow Chemical Co. | 5.70 | 05/15/18 | 287 | 322,735 | |||
Trinseo Materials Operating SCA 8 | 8.75 | 02/01/19 | 2,564 | 2,705,020 | |||
USG Corp. 5 | 9.75 | 01/15/18 | 3,075 | 3,559,312 |
Schedule of Investments (Unaudited) (continued)
Interest Rate | Maturity | Principal Amount (000s) | Value | ||||
CORPORATE BONDS (continued) | |||||||
Xerium Technologies, Inc. 5 | 8.88% | 06/15/18 | $ 2,850 | $ 2,942,625 | |||
Total Basic Industry | 45,176,622 | ||||||
Capital Goods – 6.3% | |||||||
AAR Corp. 5 | 7.25 | 01/15/22 | 1,600 | 1,816,000 | |||
Ardagh Packaging Finance PLC 3,4,5,8 | 6.75 | 01/31/21 | 3,625 | 3,670,312 | |||
Crown Cork & Seal Company, Inc. 5 | 7.38 | 12/15/26 | 3,950 | 4,522,750 | |||
DP World Sukuk Ltd. 3,4,8 | 6.25 | 07/02/17 | 400 | 431,536 | |||
Tekni-Plex, Inc. 3,4 | 9.75 | 06/01/19 | 1,185 | 1,273,875 | |||
Terex Corp. | 6.00 | 05/15/21 | 1,950 | 1,998,750 | |||
Terex Corp. | 6.50 | 04/01/20 | 1,100 | 1,144,000 | |||
Tyco Electronics Group S.A. 5,8 | 6.55 | 10/01/17 | 500 | 560,564 | |||
Total Capital Goods | 15,417,787 | ||||||
Consumer Goods – 3.0% | |||||||
ACCO Brands Corp. 5 | 6.75 | 04/30/20 | 3,575 | 3,744,813 | |||
Jarden Corp. 5 | 7.50 | 05/01/17 | 500 | 551,250 | |||
Post Holdings, Inc. 5 | 7.38 | 02/15/22 | 2,825 | 2,923,875 | |||
Total Consumer Goods | 7,219,938 | ||||||
Consumer Non-Cyclical – 0.6% | |||||||
Anheuser-Busch InBev Worldwide, Inc. 5 | 7.75 | 01/15/19 | 1,000 | 1,210,186 | |||
DP World Ltd. 3,4,8 | 6.85 | 07/02/37 | 200 | 226,418 | |||
Total Consumer Non-Cyclical | 1,436,604 | ||||||
Electric Utilities & Generation – 0.2% | |||||||
TerraForm Power Operating LLC 3,4 | 5.88 | 02/01/23 | 375 | 389,063 | |||
Energy – 21.2% | |||||||
AmeriGas Finance LLC 5 | 7.00 | 05/20/22 | 1,025 | 1,099,313 | |||
Atlas Pipeline Finance Corp. 5 | 5.88 | 08/01/23 | 4,000 | 3,840,520 | |||
Blue Racer Midstream LLC 3,4 | 6.13 | 11/15/22 | 3,225 | 3,313,687 | |||
BreitBurn Energy Partners LP 5 | 8.63 | 10/15/20 | 3,475 | 2,571,500 | |||
Calfrac Holdings LP 3,4,5 | 7.50 | 12/01/20 | 3,625 | 3,217,188 | |||
Chesapeake Energy Corp. | 4.88 | 04/15/22 | 1,725 | 1,617,188 | |||
Encore Acquisition Co. 6,10 (Acquired 02/19/10, Cost $496, 0.0%) | 6.00 | 07/15/15 | 1 | 500 | |||
EV Energy Partners LP 5 | 8.00 | 04/15/19 | 4,400 | 4,004,000 | |||
Ferrellgas Partners LP 5 | 8.63 | 06/15/20 | 3,375 | 3,484,687 | |||
Global Partners LP 3,4 | 6.25 | 07/15/22 | 3,575 | 3,521,375 | |||
Hilcorp Energy I LP 3,4,5 | 8.00 | 02/15/20 | 3,050 | 3,156,750 | |||
ION Geophysical Corp. | 8.13 | 05/15/18 | 1,975 | 1,540,500 | |||
LBC Tank Terminals Holding Netherlands BV 3,4,8 | 6.88 | 05/15/23 | 3,325 | 3,399,812 | |||
Linn Energy LLC | 7.75 | 02/01/21 | 250 | 198,750 | |||
Linn Energy LLC 5 | 8.63 | 04/15/20 | 3,200 | 2,728,000 | |||
National Oilwell Varco, Inc. 10 (Acquired 03/25/08, Cost $6,954, 0.0%) | 6.13 | 08/15/15 | 7 | 7,003 | |||
Pioneer Natural Resources Co. | 6.65 | 03/15/17 | 1,250 | 1,358,734 | |||
Precision Drilling Corp. 5,8 | 6.63 | 11/15/20 | 1,800 | 1,696,500 | |||
RKI Exploration & Production LLC 3,4,5 | 8.50 | 08/01/21 | 2,450 | 2,327,500 | |||
SESI LLC | 7.13 | 12/15/21 | 500 | 505,000 |
Schedule of Investments (Unaudited) (continued)
Interest Rate | Maturity | Principal Amount (000s) | Value | ||||
CORPORATE BONDS (continued) | |||||||
Tesoro Logistics LP 5 | 6.13% | 10/15/21 | $ 3,400 | $ 3,502,000 | |||
Thunderbird Resource Equity I 7 | 11.00 | 12/01/17 | 1,313 | 1,114,211 | |||
Trinidad Drilling Ltd. 3,4,5,8 | 7.88 | 01/15/19 | 2,865 | 2,664,450 | |||
W&T Offshore, Inc. | 8.50 | 06/15/19 | 1,215 | 735,075 | |||
Total Energy | 51,604,243 | ||||||
Financial Services – 1.0% | |||||||
Puma International Financing SA 3,4,8 | 6.75 | 02/01/21 | 1,325 | 1,341,563 | |||
Puma International Financing SA 3,4,8 | 6.75 | 02/01/21 | 1,150 | 1,164,375 | |||
Total Financial Services | 2,505,938 | ||||||
Healthcare – 9.3% | |||||||
CHS/Community Health Systems, Inc. 5 | 7.13 | 07/15/20 | 3,050 | 3,233,000 | |||
DJO Finance LLC | 9.88 | 04/15/18 | 2,450 | 2,548,000 | |||
HCA, Inc. | 5.88 | 05/01/23 | 1,775 | 1,917,000 | |||
HCA, Inc. 5 | 8.00 | 10/01/18 | 3,475 | 4,026,656 | |||
inVentiv Health, Inc. 3,4,9 | 10.00 | 08/15/18 | 833 | 845,657 | |||
inVentiv Health, Inc. 3,4,5 | 11.00 | 08/15/18 | 569 | 539,128 | |||
Jaguar Holding Company II 3,4,5 | 9.50 | 12/01/19 | 3,125 | 3,359,375 | |||
Kindred Healthcare, Inc. | 6.38 | 04/15/22 | 3,750 | 3,782,813 | |||
Service Corporation International 5 | 6.75 | 04/01/16 | 2,375 | 2,481,875 | |||
Total Healthcare | 22,733,504 | ||||||
Leisure – 11.1% | |||||||
Boyd Gaming Corp. 5 | 9.00 | 07/01/20 | 3,625 | 3,910,469 | |||
Cedar Fair LP | 5.25 | 03/15/21 | 3,275 | 3,381,437 | |||
Chester Downs & Marina LLC 3,4,5 | 9.25 | 02/01/20 | 3,750 | 2,850,000 | |||
GLP Capital LP | 5.38 | 11/01/23 | 4,525 | 4,677,719 | |||
Isle of Capri Casinos, Inc. | 5.88 | 03/15/21 | 1,700 | 1,746,750 | |||
MGM Resorts International 5 | 7.63 | 01/15/17 | 2,875 | 3,079,844 | |||
MTR Gaming Group, Inc. 5 | 11.50 | 08/01/19 | 3,465 | 3,751,280 | |||
Palace Entertainment Holdings LLC 3,4,5 | 8.88 | 04/15/17 | 3,475 | 3,527,125 | |||
Total Leisure | 26,924,624 | ||||||
Media – 11.7% | |||||||
Cablevision Systems Corp. 5 | 8.63 | 09/15/17 | 3,775 | 4,246,875 | |||
CCO Holdings LLC | 7.25 | 10/30/17 | 250 | 260,625 | |||
CCO Holdings LLC 5 | 8.13 | 04/30/20 | 3,785 | 3,955,325 | |||
Cumulus Media Holdings, Inc. 5 | 7.75 | 05/01/19 | 3,425 | 3,356,500 | |||
iHeart Communications, Inc. 5 | 9.00 | 03/01/21 | 3,550 | 3,399,125 | |||
Lamar Media Corp. | 5.38 | 01/15/24 | 3,425 | 3,570,562 | |||
Mediacom Broadband LLC | 6.38 | 04/01/23 | 4,300 | 4,515,000 | |||
National CineMedia LLC | 6.00 | 04/15/22 | 1,050 | 1,078,875 | |||
Numericable-SFR 3,4,8 | 6.00 | 05/15/22 | 3,500 | 3,543,750 | |||
Time Warner Cable, Inc. 5 | 8.25 | 04/01/19 | 500 | 611,570 | |||
Total Media | 28,538,207 | ||||||
Retail – 5.8% | |||||||
L Brands, Inc. 5 | 7.60 | 07/15/37 | 2,500 | 2,843,750 | |||
L Brands, Inc. | 8.50 | 06/15/19 | 800 | 959,760 | |||
Levi Strauss & Co. 5 | 7.63 | 05/15/20 | 3,400 | 3,536,000 |
Schedule of Investments (Unaudited) (continued)
Interest Rate | Maturity | Principal Amount (000s) | Value | ||||
CORPORATE BONDS (continued) | |||||||
New Albertsons, Inc. 5 | 7.75% | 06/15/26 | $ 3,300 | $ 3,118,500 | |||
Roundy's Supermarkets, Inc. 3,4 | 10.25 | 12/15/20 | 3,400 | 2,938,875 | |||
Sally Holdings LLC | 6.88 | 11/15/19 | 725 | 766,687 | |||
Total Retail | 14,163,572 | ||||||
Services – 11.2% | |||||||
Avis Budget Car Rental LLC 5 | 5.50 | 04/01/23 | 1,550 | 1,594,562 | |||
Casella Waste Systems, Inc. 5 | 7.75 | 02/15/19 | 3,400 | 3,400,000 | |||
Dynagas LNG Partners LP 5,8 | 6.25 | 10/30/19 | 2,825 | 2,429,500 | |||
Iron Mountain, Inc. | 6.00 | 08/15/23 | 4,200 | 4,420,500 | |||
Iron Mountain, Inc. 5 | 8.38 | 08/15/21 | 527 | 548,739 | |||
Jurassic Holdings III, Inc. 3,4 | 6.88 | 02/15/21 | 1,725 | 1,500,750 | |||
KraussMaffei Group GmbH 8 | 8.75 | 12/15/20 | 1,050 | 1,238,522 | |||
KraussMaffei Group GmbH 8 | 8.75 | 12/15/20 | 120 | 141,545 | |||
MasTec, Inc. | 4.88 | 03/15/23 | 3,725 | 3,482,875 | |||
Sotheby's 3,4 | 5.25 | 10/01/22 | 1,850 | 1,817,625 | |||
Teekay Offshore Partners LP 8 | 6.00 | 07/30/19 | 3,750 | 3,393,750 | |||
United Rentals North America, Inc. | 7.63 | 04/15/22 | 1,225 | 1,340,150 | |||
United Rentals North America, Inc. 5 | 8.25 | 02/01/21 | 1,700 | 1,836,000 | |||
Total Services | 27,144,518 | ||||||
Technology & Electronics – 1.3% | |||||||
First Data Corp. 5 | 11.25 | 01/15/21 | 2,856 | 3,248,700 | |||
Telecommunications – 14.7% | |||||||
CenturyLink, Inc. 5 | 7.65 | 03/15/42 | 3,050 | 3,118,625 | |||
Cincinnati Bell, Inc. 5 | 8.75 | 03/15/18 | 1,750 | 1,793,313 | |||
CyrusOne LP | 6.38 | 11/15/22 | 825 | 876,563 | |||
Fairpoint Communications, Inc. 3,4,5 | 8.75 | 08/15/19 | 2,250 | 2,373,750 | |||
Frontier Communications Corp. 5 | 7.13 | 03/15/19 | 5,275 | 5,736,562 | |||
Intelsat Luxembourg SA 5,8 | 7.75 | 06/01/21 | 3,600 | 3,321,000 | |||
Level 3 Communications, Inc. 5 | 8.88 | 06/01/19 | 3,575 | 3,762,687 | |||
Level 3 Financing, Inc. | 6.13 | 01/15/21 | 725 | 760,344 | |||
Qwest Capital Funding, Inc. | 6.88 | 07/15/28 | 475 | 482,125 | |||
Qwest Corp. 5 | 6.88 | 09/15/33 | 1,000 | 1,003,533 | |||
T-Mobile USA, Inc. 5 | 6.63 | 04/01/23 | 3,340 | 3,494,475 | |||
Wind Acquisition Finance SA 3,4,8 | 7.38 | 04/23/21 | 1,150 | 1,193,125 | |||
Windstream Corp. 5 | 7.50 | 06/01/22 | 5,150 | 4,969,750 | |||
Zayo Group LLC 3,4 | 6.00 | 04/01/23 | 2,750 | 2,763,750 | |||
Total Telecommunications | 35,649,602 | ||||||
Transportation – 0.4% | |||||||
Watco Companies LLC 3,4 | 6.38 | 04/01/23 | 975 | 975,000 | |||
Utility – 1.5% | |||||||
AES Corp. 5 | 4.88 | 05/15/23 | 3,700 | 3,607,500 | |||
Total CORPORATE BONDS (Cost $308,427,440) | 300,419,509 | ||||||
TERM LOANS – 3.1% | |||||||
Albertsons, Inc. 1,4 | 4.75 | 03/21/19 | 1,262 | 1,270,886 | |||
Caesars Growth Properties 1,4 | 6.25 | 04/10/21 | 1,737 | 1,537,134 |
Schedule of Investments (Unaudited) (continued)
Interest Rate | Maturity | Principal Amount (000s) | Value | ||||
TERM LOANS (continued) | |||||||
Fairpoint Communications, Inc. 1,4 | 7.50% | 02/14/19 | $ 1,960 | $ 1,992,673 | |||
Four Seasons Holdings, Inc. 1,4 | 6.25 | 12/13/20 | 1,000 | 1,005,000 | |||
Roundy's Supermarkets, Inc. 1,4 | 5.75 | 02/21/21 | 943 | 904,284 | |||
Texas Competitive Electric Holdings Company LLC 1,4 | 4.65 | 10/10/17 | 1,566 | 939,298 | |||
Total TERM LOANS (Cost $8,233,914) | 7,649,275 |
Shares | Value | ||||||
COMMON STOCKS – 2.7% | |||||||
Automotive – 0.4% | |||||||
Ford Motor Co. | 61,300 | $ 989,382 | |||||
Basic Industry – 0.3% | |||||||
Cascades, Inc. 8 | 77,325 | 465,824 | |||||
EnLink Midstream Partners LP | 7,800 | 192,972 | |||||
Total Basic Industry | 658,796 | ||||||
Capital Goods – 0.4% | |||||||
General Electric Co. | 37,450 | 929,135 | |||||
Consumer Staples – 0.2% | |||||||
B&G Foods, Inc. | 13,810 | 406,428 | |||||
Energy – 0.1% | |||||||
BreitBurn Energy Partners LP | 13,075 | 71,651 | |||||
EV Energy Partners LP | 7,900 | 105,307 | |||||
Total Energy | 176,958 | ||||||
Services – 0.4% | |||||||
Iron Mountain, Inc. | 26,486 | 966,209 | |||||
Telecommunications – 0.6% | |||||||
CenturyLink, Inc. | 33,160 | 1,145,678 | |||||
Verizon Communications, Inc. | 7,500 | 364,725 | |||||
Total Telecommunications | 1,510,403 | ||||||
Utility – 0.3% | |||||||
AES Corp. | 66,250 | 851,312 | |||||
Dynegy, Inc. 11 | 185 | 5,815 | |||||
NRG Energy, Inc. | 25 | 630 | |||||
Total Utility | 857,757 | ||||||
Total COMMON STOCKS (Cost $6,379,589) | 6,495,068 |
Shares | Value | ||||||
WARRANTS – 0.7% | |||||||
Automotive – 0.7% | |||||||
General Motors Financial Company, Inc. 11 Expiration: July 2016 Exercise Price: $10.00 | 34,193 | $ 948,856 |
Schedule of Investments (Unaudited) (continued)
Shares | Value | ||||||
WARRANTS (continued) | |||||||
General Motors Financial Company, Inc. 11 Expiration: July 2019 Exercise Price: $18.33 | 34,193 | $ 671,892 | |||||
Total Automotive | 1,620,748 | ||||||
Total WARRANTS (Cost $1,969,136) | 1,620,748 |
Interest Rate | |||||||
SHORT TERM INVESTMENT – 1.3% | |||||||
STIT Liquid Assets Portfolio, Institutional Class 1 | 0.08% | 3,199,583 | 3,199,583 | ||||
Total SHORT TERM INVESTMENT (Cost $3,199,583) | 3,199,583 | ||||||
Total Investments – 135.2% (Cost $337,735,632) | 328,989,081 | ||||||
Liabilities in Excess of Other Assets – (35.2)% | (85,695,344) | ||||||
TOTAL NET ASSETS – 100.0% | $ 243,293,737 |
The following notes should be read in conjunction with the accompanying Schedule of Investments. | ||
1 | —Variable rate security – Interest rate shown is the rate in effect as of March 31, 2015. | |
2 | —Security is a “step up” bond where the coupon increases or steps up at a predetermined date. | |
3 | —Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified institutional buyers. As of March 31, 2015, the total value of all such securities was $76,362,910 or 31.4% of net assets. | |
4 | —Private Placement. | |
5 | —All or a portion of the principal amount is pledged as collateral for credit facility. | |
6 | —Security fair valued in good faith pursuant to the fair value procedures adopted by the Board of Directors. As of March 31, 2015, the total value of all such securities was $1,325 or 0.0% of net assets. | |
7 | —Issuer is currently in default on its regularly scheduled interest payment. | |
8 | —Foreign security or a U.S. security of a foreign company. | |
9 | —Payment in kind security. | |
10 | —Restricted Illiquid Securities - Securities that the Adviser has deemed illiquid pursuant to procedures adopted by the Fund's Board of Directors. The values in the parenthesis represent the acquisition date, cost and the percentage of net assets, respectively. As of March 31, 2015, the total value of all such securities was $7,503 or 0.0% of net assets. | |
11 | —Non-income producing security. |
Statement of Assets and Liabilities (Unaudited)
Assets: | |
Investments in securities, at value (Note 2) | $325,789,498 |
Investments in short term securities, at value | 3,199,583 |
Total investments, at value | 328,989,081 |
Cash | 19,435 |
Foreign currency | 1,691,574 |
Interest and dividends receivable | 6,456,109 |
Receivable for investments sold | 2,103,661 |
Receivable for open forward currency contracts (Note 2) | 549,820 |
Prepaid expenses | 30,693 |
Total assets | 339,840,373 |
Liabilities: | |
Payable for credit facility (Note 6) | 93,516,860 |
Payable for credit facility interest (Note 6) | 3,441 |
Payable for investments purchased | 2,572,843 |
Investment advisory fee payable (Note 4) | 186,374 |
Administration fee payable (Note 4) | 43,009 |
Directors' fees payable | 26,862 |
Accrued expenses | 197,247 |
Total liabilities | 96,546,636 |
Commitments and contingencies (Note 9) | |
Net Assets | $243,293,737 |
Composition of Net Assets: | |
Capital stock, at par value ($0.001 par value, 1,000,000,000 shares authorized) (Note 7) | $ 25,532 |
Additional paid-in capital (Note 7) | 279,244,666 |
Distributions in excess of net investment income | (1,408,140) |
Accumulated net realized loss on investments, foreign currency transactions and forward currency contracts | (26,317,059) |
Net unrealized depreciation on investments, foreign currency translations and forward currency contracts | (8,251,262) |
Net assets applicable to capital stock outstanding | $243,293,737 |
Total investments at cost | $337,735,632 |
Foreign currency at cost | $ 1,738,854 |
Shares Outstanding and Net Asset Value Per Share: | |
Shares outstanding | 25,532,427 |
Net asset value per share | $ 9.53 |
Statement of Operations (Unaudited)
Investment Income (Note 2): | |
Interest | $ 12,542,038 |
Dividends (net of foreign withholding tax of $775) | 179,470 |
Total investment income | 12,721,508 |
Expenses: | |
Investment advisory fees (Note 4) | 1,122,376 |
Administration fees (Note 4) | 259,010 |
Legal fees | 142,607 |
Directors' fees | 63,426 |
Reports to stockholders | 52,714 |
Fund accounting servicing fees (Note 4) | 41,868 |
Registration fees | 27,283 |
Audit and tax services | 19,669 |
Transfer agency fees | 13,732 |
Insurance | 13,628 |
Custodian fees | 8,362 |
Miscellaneous | 19 |
Total operating expenses | 1,764,694 |
Interest expense on credit facility (Note 6) | 605,945 |
Total expenses | 2,370,639 |
Net investment income | 10,350,869 |
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency Transactions and Forward Currency Contracts (Note 2): | |
Net realized gain (loss) on: | |
Investments | (780,370) |
Foreign currency transactions | (60,856) |
Forward currency contracts | 366,082 |
Net realized loss | (475,144) |
Net change in unrealized appreciation (depreciation) on: | |
Investments | (13,772,818) |
Foreign currency and foreign currency translations | (34,982) |
Forward currency contracts | 230,123 |
Net change in unrealized depreciation | (13,577,677) |
Net realized and unrealized loss on investments | (14,052,821) |
Net decrease in net assets resulting from operations | $ (3,701,952) |
Statements of Changes in Net Assets
For the Six Months Ended March 31, 2015 (Unaudited) | For the Three Months Ended September 30, 2014* | For the Fiscal Year Ended June 30, 2014 | |||
Increase (Decrease) in Net Assets Resulting from Operations: | |||||
Net investment income | $ 10,350,869 | $ 3,555,809 | $ 6,101,431 | ||
Net realized gain (loss) on investments, foreign currency transactions and forward currency contracts | (475,144) | 797,361 | 1,366,324 | ||
Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and forward currency contracts | (13,577,677) | (9,831,482) | 2,629,586 | ||
Net increase (decrease) in net assets resulting from operations | (3,701,952) | (5,478,312) | 10,097,341 | ||
Distributions to Stockholders (Note 2): | |||||
Net investment income | (12,357,695) | (2,942,067) | (6,258,493) | ||
Return of capital | — | — | (41,267) | ||
Total distributions | (12,357,695) | (2,942,067) | (6,299,760) | ||
Capital Stock Transactions (Note 7): | |||||
Capital received as a result of shares issued due to fund merger | — | 194,513,281 | — | ||
Net increase in net assets from capital share transactions | — | 194,513,281 | — | ||
Total increase (decrease) in net assets | (16,059,647) | 186,092,902 | 3,797,581 | ||
Net Assets: | |||||
Beginning of period | 259,353,384 | 73,260,482 | 69,462,901 | ||
End of period | $243,293,737 | $259,353,384 | $73,260,482 | ||
(including undistributed (distributions in excess of) net investment income of) | $ (1,408,140) | $ 598,686 | $ (21,369) | ||
Share Transactions (Note 7): | |||||
Shares issued due to fund merger | — | 18,684,862 | — | ||
Net increase in shares | — | 18,684,862 | — |
* | The Fund changed its fiscal year end from June 30 to September 30. |
Statement of Cash Flows (Unaudited)
Increase (Decrease) in Cash: | |
Cash flows provided by (used for) operating activities: | |
Net decrease in net assets resulting from operations | $ (3,701,952) |
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities | |
Purchases of long-term portfolio investments and principal payups | (24,868,781) |
Proceeds from disposition of long-term portfolio investments and principal paydowns | 37,938,542 |
Purchases of short-term portfolio investments, net | (2,153,768) |
Return of capital distributions from portfolio investments | 49,993 |
Decrease in interest and dividends receivable | 567,711 |
Increase in receivable for open forward currency contracts | (230,123) |
Decrease in receivable for investments sold | 6,823,429 |
Increase in prepaid expenses | (24,706) |
Decrease in payable for credit facility interest | (3,224) |
Decrease in payable for investments purchased | (5,036,354) |
Decrease in investment advisory fee payable | (9,049) |
Decrease in administration fee payable | (2,089) |
Increase in directors' fee payable | 17,895 |
Decrease in accrued expenses | (292,864) |
Net amortization on investments and paydown gains or losses | (476,817) |
Net change in unrealized depreciation on investments | 13,772,818 |
Net realized loss on investments | 780,370 |
Net cash provided by operating activities | 23,151,031 |
Cash flows used for financing activities: | |
Net cash used for credit facility | (9,283,140) |
Distributions paid to stockholders | (12,357,695) |
Net cash used for financing activities | (21,640,835) |
Net increase in cash | 1,510,196 |
Cash at the beginning of period | 200,813 |
Cash at the end of period | $ 1,711,009 |
Supplemental Disclosure of Cash Flow Information: | |
Interest payments for the six months ended March 31, 2015, totaled $609,169. |
Financial Highlights
For the Six Months Ended March 31, | For the Three Months Ended September 30, | For the Fiscal Years Ended June 30, | |||||||||||
2015 (Unaudited) | 2014 2 | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||
Per Share Operating Performance: | |||||||||||||
Net asset value, beginning of period | $ 10.16 | $ 10.70 | $ 10.14 | $ 9.86 | $ 9.92 | $ 9.25 | $ 8.34 | ||||||
Net investment income1 | 0.41 | 0.21 | 0.88 | 0.92 | 0.91 | 0.93 | 0.67 | ||||||
Net realized and unrealized gain (loss) on investment transactions | (0.56) | (0.52) | 0.60 | 0.27 | (0.03) | 0.69 | 0.80 | ||||||
Net increase (decrease) in net asset value resulting from operations | (0.15) | (0.31) | 1.48 | 1.19 | 0.88 | 1.62 | 1.47 | ||||||
Distributions from net investment income | (0.48) | (0.23) | (0.91) | (0.91) | (0.94) | (0.95) | (0.56) | ||||||
Return of capital distributions | — | — | (0.01) | — | — | — | — | ||||||
Total distributions paid | (0.48) | (0.23) | (0.92) | (0.91) | (0.94) | (0.95) | (0.56) | ||||||
Net asset value, end of period | $ 9.53 | $ 10.16 | $ 10.70 | $ 10.14 | $ 9.86 | $ 9.92 | $ 9.25 | ||||||
Market price, end of period | $ 8.82 | $ 9.37 | $ 10.54 | $ 9.62 | $ 10.00 | $ 9.90 | $ 8.45 | ||||||
Total Investment Return† | -0.72% 4 | -9.05% 4 | 20.13% | 5.12% | 11.37% | 29.77% | 29.31% | ||||||
Ratios to Average Net Assets/ Supplementary Data: | |||||||||||||
Net assets, end of period (000s) | $243,294 | $259,353 | $73,260 | $69,463 | $67,491 | $67,871 | $63,263 | ||||||
Operating expenses | 1.43% 3 | 1.82% 3 | 2.06% | 1.63% | 1.71% | 1.65% | 1.72% | ||||||
Interest expense | 0.49% 3 | 0.45% 3 | 0.48% | 0.53% | 0.62% | 0.42% | 0.11% | ||||||
Total expenses | 1.92% 3 | 2.27% 3 | 2.54% | 2.16% | 2.33% | 2.07% | 1.83% | ||||||
Net expenses, including fee waivers and reimbursement and excluding interest expense | 1.43% 3 | 1.82% 3 | 1.95% | 1.52% | 1.59% | 1.53% | 1.63% | ||||||
Net investment income | 8.36% 3 | 8.04% 3 | 8.47% | 8.87% | 9.45% | 9.36% | 7.33% | ||||||
Net investment income, excluding the effect of fee waivers and reimbursement | 8.36% 3 | 8.04% 3 | 8.36% | 8.76% | 9.33% | 9.25% | 7.24% | ||||||
Portfolio turnover rate | 7% 4 | 11% 4 | 28% | 28% | 24% | 46% | 67% | ||||||
Credit facility, end of period | $ 93,517 | $102,800 | $28,000 | $30,400 | $30,400 | $29,400 | $18,662 | ||||||
Asset coverage per $1,000 unit of senior indebtness5 | $ 3,602 | $ 3,523 | $ 3,616 | $ 3,280 | $ 3,220 | $ 3,310 | $4,390 |
† | Total investment return is computed based upon the New York Stock Exchange market price of the Fund's shares and excludes the effect of broker commissions. Distributions are assumed to be reinvested at the prices obtained under the Fund's dividend reinvestment plan. |
1 | Per share amounts presented are based on average shares outstanding throughout the period indicated. |
2 | Amounts shown are for the three months ended September 30, 2014 and are not necessarily indicative of a full year of operations. The Fund changed its fiscal year end from June 30 to September 30. |
3 | Annualized. |
4 | Not annualized. |
5 | Calculated by subtracting the Fund's total liabilities (not including borrowings) from the Fund's total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
Notes to Financial Statements (Unaudited)
Notes to Financial Statements (Unaudited) (continued)
Notes to Financial Statements (Unaudited) (continued)
Level 1 - | quoted prices in active markets for identical assets or liabilities |
Level 2 - | quoted prices in markets that are not active or other significant observable inputs (including, but not limited to: quoted prices for similar assets or liabilities, quoted prices based on recently executed transactions, interest rates, prepayment speeds, credit risk, etc.) |
Level 3 - | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets or liabilities) |
Valuation Inputs | Level 1 | Level 2 | Level 3 | Total | |||
Residential Mortgage Related Holdings | $ — | $ — | $ 9,604,898 | $ 9,604,898 | |||
Corporate Bonds | — | 300,418,184 | 1,325 | 300,419,509 | |||
Term Loans | — | 7,649,275 | — | 7,649,275 | |||
Common Stocks | 6,495,068 | — | — | 6,495,068 | |||
Warrants | 1,620,748 | — | — | 1,620,748 | |||
Short Term Investment | 3,199,583 | — | — | 3,199,583 | |||
Total | $ 11,315,399 | $ 308,067,459 | $ 9,606,223 | $ 328,989,081 |
Valuation Inputs | Level 1 | Level 2 | Level 3 | Total | |||
Other Financial Instruments* | $ 549,820 | $ — | $ — | $ 549,820 | |||
Total | $ 549,820 | $ — | $ — | $ 549,820 |
Notes to Financial Statements (Unaudited) (continued)
Quantitative Information about Level 3 Fair Value Measurements(1) | ||||
Assets | Value as of March 31, 2015 | Valuation Methodology | Significant Unobservable Input | Price |
Corporate Bonds | ||||
Encore Acquisition Co. | $ 500 | Discounted Cash Flow | Market Comparable Company | $100.00 |
Motors Liquidation Co. | 825 | Discounted Cash Flow | Market Comparable Company | $ 0.01 |
Total | $1,325 |
Investments in Securities | Residential Mortgage Related Holdings | Corporate Bonds | Total | ||
Balance as of September 30, 2014 | $11,862,652 | $1,400 | $11,864,052 | ||
Accrued Discounts | 296,038 | — | 296,038 | ||
Realized Gain | 184,497 | — | 184,497 | ||
Change in Unrealized Depreciation | (437,347) | (75) | (437,422) | ||
Purchases at cost | 8,826 | — | 8,826 | ||
Sales proceeds | (2,309,768) | — | (2,309,768) | ||
Balance as of March 31, 2015 | $ 9,604,898 | $1,325 | $ 9,606,223 | ||
Change in unrealized gains or losses relating to assets still held at reporting date | $ (303,032) | $ — | $ (303,032) |
Notes to Financial Statements (Unaudited) (continued)
Notes to Financial Statements (Unaudited) (continued)
Settlement Date | Currency to be Delivered | U.S. $ Value at March 31, 2015 | Currency to be Received | Unrealized Appreciation | ||
05/11/15 | 464,878 | Canadian Dollars | $366,848 | 409,455 | U.S. Dollars | $42,607 |
05/11/15 | 2,841,317 | Euros | 3,056,836 | 3,564,049 | U.S. Dollars | 507,213 |
Total | $549,820 |
Derivatives Not Accounted for as Hedging Instruments | Statement of Assets and Liabilities | Unrealized Appreciation as of March 31, 2015 |
Forward contracts | Receivable for open forward currency contracts | $549,820 |
Derivatives Not Accounted for as Hedging Instruments | Location of Gains (Losses) on Derivatives Recognized in Income | Net Realized Gains on Forward contracts | Net Change in Unrealized Appreciation on Forward contracts |
Forward contracts | Forward currency contracts | $366,082 | $230,123 |
Gross Amounts not offset in the Statement of Assets and Liabilities | ||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Pledged (Received) | Net Amount | |
Description | ||||||
Forward contracts | $549,820 | $— | $549,820 | $— | $— | $549,820 |
Notes to Financial Statements (Unaudited) (continued)
Notes to Financial Statements (Unaudited) (continued)
Total line of credit amount available | $120,000,000 |
Line of credit outstanding at March 31, 2015 | 93,516,860 |
Line of credit amount unused at March 31, 2015 | 26,483,140 |
Average balance outstanding during the period | 98,074,754 |
Interest expense incurred on line of credit during the period | 605,945 |
Notes to Financial Statements (Unaudited) (continued)
Fund | Capital stock | Distributions in excess of net investment income | Accumulated net realized loss | Net unrealized appreciation | Net Assets | ||||
Helios Advantage Income Fund, Inc. | $ 455,830,525 | $ (541,607) | $ (397,255,387) | $ 3,078,298 | $ 61,111,829 | ||||
Helios High Income Fund, Inc. | 338,166,815 | (387,519) | (296,636,258) | 2,100,449 | 43,243,487 | ||||
Helios Multi-Sector High Income Fund, Inc. | 493,895,301 | (452,857) | (447,428,682) | 2,455,753 | 48,469,515 | ||||
Helios Strategic Income Fund, Inc. | 402,153,537 | (106,175) | (362,982,710) | 2,623,798 | 41,688,450 | ||||
1,690,046,178 | (1,488,158) | (1,504,303,037)* | 10,258,298 | 194,513,281 | |||||
Brookfield High Income Fund, Inc. | 75,800,014 | (494,816) | (7,260,341) | 3,239,964 | 71,284,821 | ||||
Total | $1,765,846,192 | $(1,982,974) | $(1,511,563,378) | $13,498,262 | $265,798,102 |
Fund | Net investment income | Net realized and unrealized gain (loss) on investments | Net increase (decrease) in net assets resulting from operations | ||
Helios Advantage Income Fund, Inc. | $ 340,970 | $ (177,160) | $ 163,810 | ||
Helios High Income Fund, Inc. | 240,772 | (355,243) | (114,471) | ||
Helios Multi-Sector High Income Fund, Inc. | 254,906 | 78,008 | 332,914 | ||
Helios Strategic Income Fund, Inc. | 184,473 | (207,951) | (23,478) | ||
Brookfield High Income Fund, Inc. | 3,555,809 | (9,034,121) | (5,478,312) | ||
Total | $4,576,930* | $(9,696,467)* | $(5,119,537)* |
Notes to Financial Statements (Unaudited) (continued)
Ordinary income | $2,942,067 |
Return of capital | — |
Total distributions | $2,942,067 |
Ordinary income | $6,258,493 |
Return of capital | 41,267 |
Total distributions | $6,299,760 |
Undistributed ordinary income | $ 968,755 |
Capital loss carryforward1 | (25,914,000) |
Tax basis unrealized appreciation | 5,028,431 |
Total tax basis net accumulated losses | $(19,916,814) |
Expiring In: | |
2016 | $ 3,569,974 |
2017 | 22,344,026 |
Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation |
$337,735,632 | $11,942,478 | $(20,689,029) | $(8,746,551) |
Notes to Financial Statements (Unaudited) (continued)
Notes to Financial Statements (Unaudited) (continued)
Dividend Per Share | Record Date | Payable Date |
$0.0750 | April 23, 2015 | April 29, 2015 |
$0.0750 | May 14, 2015 | May 28, 2015 |
Compliance Certification (Unaudited)
Proxy Results (Unaudited)
Shares Voted For | Shares Voted Against | Shares Voted Abstain | ||
1 | To elect to the Fund's Board of Directors Edward A. Kuczmarski | 20,972,077 | 1,613,277 | — |
2 | To elect to the Fund's Board of Directors Stuart A. McFarland | 20,941,596 | 1,643,758 | — |
Dividend Reinvestment Plan (Unaudited)
Joint Notice of Privacy Policy (Unaudited)
• | Information we receive from you in applications or other forms, correspondence or conversations, including but not limited to name, address, phone number, social security number, assets, income and date of birth. |
• | Information about transactions with us, our affiliates, or others, including but not limited to account number, balance and payment history, parties to transactions, cost basis information, and other financial information. |
• | Information we may receive from our due diligence, such as your creditworthiness and your credit history. |
• | Unaffiliated service providers (e.g. transfer agents, securities broker-dealers, administrators, investment advisors or other firms that assist us in maintaining and supporting financial products and services provided to you); |
• | Government agencies, other regulatory bodies and law enforcement officials (e.g. for reporting suspicious transactions); |
• | Other organizations, with your consent or as directed by you; and |
• | Other organizations, as permitted or required by law (e.g. for fraud protection) |
Directors of the Fund | |
Edward A. Kuczmarksi | Chairman |
Louis P. Salvatore | Audit Committee Chairman |
Stuart A. McFarland | Director |
Heather S. Goldman | Director |
Jonathan C. Tyras | Director (Interested) |
Officers of the Fund | |
Brian F. Hurley | President |
Dana E. Erikson | Vice President |
Mark Shipley | Vice President |
Angela W. Ghantous | Treasurer |
Alexis I. Rieger | Secretary |
Seth A. Gelman | Chief Compliance Officer |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Investments.
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment
Companies.
Not applicable for semi-annual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated
Purchasers.
None.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant’s nominating committee charter does not contain any procedure by which shareholders may recommend nominees to the registrant’s board of directors.
Item 11. Controls and Procedures.
(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s Disclosure Controls and Procedures are effective, based on their evaluation of such Disclosure Controls and Procedures as of a date within 90 days of the filing of this report on Form N-CSR.
(b) As of the date of filing this Form N-CSR, the Registrant’s principal executive officer and principal financial officer are aware of no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected or is reasonably likely to materially affect the Registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable .
(2) A separate certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 is attached as an exhibit to this Form N-CSR.
(3) None.
(b) A separate certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 is attached as an exhibit to this Form N-CSR.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BROOKFIELD HIGH INCOME FUND INC. | ||
By: | /s/ Brian F. Hurley | |
Brian F. Hurley | ||
President and Principal Executive Officer | ||
Date: June 4, 2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Brian F. Hurley | |
Brian F. Hurley | ||
President and Principal Executive Officer | ||
Date: June 4, 2015 | ||
By: | /s/ Angela W. Ghantous | |
Angela W. Ghantous | ||
Treasurer and Principal Financial Officer | ||
Date: June 4, 2015 |