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 811-22843
CENTER COAST BROOKFIELD MLP & ENERGY INFRASTRUCTURE FUND
(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 INVESTMENT FUNDS
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
Date of reporting period: September 30, 2018
Item 1. Reports to Shareholders.
Portfolio Characteristics (Unaudited)
PORTFOLIO STATISTICS | |
Annualized distribution rate1 | 13.27% |
Percentage of leveraged assets | 31.02% |
Total number of holdings | 26 |
Asset Allocation by Sector | Percent of Net Assets |
Master Limited Partnerships | |
Diversified Midstream | 33.7% |
Petroleum Transportation & Storage | 30.1% |
Gathering & Processing | 21.2% |
Natural Gas Transportation & Storage | 13.8% |
Total Master Limited Partnerships | 98.8% |
Common Stocks | |
Midstream C-corps | 29.2% |
Petroleum Transportation & Storage | 0.7% |
Total Common Stocks | 29.9% |
Private Equity Fund | 16.0% |
Liabilities in Excess of Other Assets | (44.7)% |
Net Assets | 100.0% |
TOP TEN HOLDINGS | |
KKR Eagle Co-Invest LP | 16.0% |
Enterprise Products Partners LP | 10.9% |
Energy Transfer Partners LP | 10.7% |
Williams Companies, Inc. | 9.9% |
Targa Resources Corp. | 9.4% |
Enlink Midstream Partners LP | 7.6% |
NuStar Energy LP | 7.5% |
MPLX LP | 7.0% |
Plains All American Pipeline LP | 6.9% |
Western Gas Partners LP | 6.3% |
Schedule of Investments
Shares | Value | |||||
MASTER LIMITED PARTNERSHIPS – 98.8% | ||||||
Diversified Midstream – 33.7% | ||||||
Andeavor Logistics LP 1 | 309,197 | $ 15,014,606 | ||||
Energy Transfer Partners LP 1 | 1,374,214 | 30,590,003 | ||||
Enterprise Products Partners LP 1 | 1,088,716 | 31,278,811 | ||||
MPLX LP 1 | 577,026 | 20,011,262 | ||||
Total Diversified Midstream | 96,894,682 | |||||
Gathering & Processing – 21.2% | ||||||
CNX Midstream Partners LP | 165,801 | 3,191,669 | ||||
Crestwood Equity Partners LP 1 | 110,117 | 4,046,800 | ||||
DCP Midstream LP 1 | 247,972 | 9,817,211 | ||||
Enlink Midstream Partners LP 1 | 1,175,751 | 21,915,999 | ||||
Summit Midstream Partners LP 1 | 255,338 | 3,651,333 | ||||
Western Gas Partners LP 1 | 417,272 | 18,226,441 | ||||
Total Gathering & Processing | 60,849,453 | |||||
Natural Gas Transportation & Storage – 13.8% | ||||||
EQT Midstream Partners LP | 170,186 | 8,982,397 | ||||
Spectra Energy Partners LP 1 | 503,602 | 17,983,627 | ||||
TC Pipelines LP 1 | 419,166 | 12,713,305 | ||||
Total Natural Gas Transportation & Storage | 39,679,329 | |||||
Petroleum Transportation & Storage – 30.1% | ||||||
Buckeye Partners LP 1 | 436,467 | 15,586,237 | ||||
Enbridge Energy Partners LP | 908,289 | 9,982,096 | ||||
Magellan Midstream Partners LP 1 | 224,776 | 15,221,831 | ||||
NuStar Energy LP 1 | 776,955 | 21,599,349 | ||||
Phillips 66 Partners LP 1 | 80,934 | 4,138,965 | ||||
Plains All American Pipeline LP 1 | 794,114 | 19,860,791 | ||||
Total Petroleum Transportation & Storage | 86,389,269 | |||||
Total MASTER LIMITED PARTNERSHIPS (Cost $262,386,429) | 283,812,733 | |||||
COMMON STOCKS – 29.9% | ||||||
Midstream C-corps – 29.2% | ||||||
Kinder Morgan Inc. | 519,200 | 9,205,416 | ||||
ONEOK, Inc 1 | 231,495 | 15,693,046 | ||||
SemGroup Corp | 175,284 | 3,865,012 | ||||
Targa Resources Corp. 1 | 476,950 | 26,857,055 | ||||
Williams Companies, Inc. | 1,040,717 | 28,297,095 | ||||
Total Midstream C-corps | 83,917,624 | |||||
Petroleum Transportation & Storage – 0.7% | ||||||
Enbridge Energy Management LLC 2 | 175,983 | 1,921,739 | ||||
Total COMMON STOCKS (Cost $76,650,504) | 85,839,363 |
Schedule of Investments (continued)
Shares | Value | |||||
PRIVATE EQUITY FUND – 16.0% | ||||||
KKR Eagle Co-Invest LP 3 | $ 45,800,000 | |||||
Total PRIVATE EQUITY FUND (Cost $34,472,094) | 45,800,000 | |||||
Total Investments – 144.7% (Cost $373,509,027) | 415,452,096 | |||||
Liabilities in Excess of Other Assets – (44.7)% | (128,302,478) | |||||
TOTAL NET ASSETS – 100.0% | $ 287,149,618 |
Number of Contracts | Notional Amount | Value | ||||
WRITTEN OPTIONS – (0.0)% 2 | ||||||
Natural Gas Transportation & Storage – (0.0)% | ||||||
TC Pipelines LP Call, 11/16/18, Strike $35.00 (Premium $27,997) | 445 | $ 1,557,500 | $ (6,675) | |||
Total WRITTEN OPTIONS | (6,675) |
The following notes should be read in conjunction with the accompanying Schedule of Investments. |
LP— Limited Partnership |
LLC— Limited Liability Company |
1 | — All or a portion of this security is pledged as collateral for credit facility. |
2 | — Non-income producing security. |
3 | — This security is fair valued in good faith pursuant to the fair value procedures adopted by the Board of Trustees (the “Board”). The security has been deemed illiquid by the Adviser pursuant to procedures adopted by the Fund's Board. As of September 30, 2018, the total value of all such securities was $45,800,000 or 16.0% of net assets. The security is in a non-unitized private investment fund that has commitments of $40,000,000, unfunded commitments of $2,300,000, does not permit redemptions, has expected life of 4.6 years, and invests solely in Veresen Midstream Limited Partnership. This security is characterized as a Level 3 security within the disclosure hierarchy. |
Statement of Assets and Liabilities
Assets: | |
Investments in securities, at value (cost $373,509,027) | $415,452,096 |
Cash | 202,084 |
Receivable for investments sold | 415,538 |
Prepaid expenses | 112,255 |
Total assets | 416,181,973 |
Liabilities: | |
Call options written, at fair value (premiums received $27,997) | 6,675 |
Payable for credit facility (Note 9) | 79,100,000 |
Payable for credit facility interest | 37,766 |
Mandatory Redeemable Preferred shares ($0.01 par value, 2,000 shares isssued with liquidation preference of $25,000 per share, net of debt issuance costs of $896,892) (Note 8) | 49,103,108 |
Dividends payable to Mandatory Redeemable Preferred shareholders | 47,012 |
Investment advisory fee payable (Note 5) | 338,134 |
Administration fee payable (Note 5) | 51,980 |
Trustees' fee payable | 9,478 |
Accrued expenses | 338,202 |
Total liabilities | 129,032,355 |
Commitments and contingencies (Note 11) | |
Net Assets | $287,149,618 |
Composition of Net Assets: | |
Paid-in capital | $365,662,698 |
Accumulated distributable earnings | (78,513,080) |
Net Assets | $287,149,618 |
Shares Outstanding and Net Asset Value Per Share: | |
Common shares outstanding | 30,252,372 |
Net asset value per share | $ 9.49 |
Statements of Operations
For the Ten Months Ended September 30, 2018* | For the Fiscal Year Ended November 30, 2017 | ||
Investment Income (Note 2): | |||
Distributions from master limited partnerships | $ 19,944,577 | $ 24,029,080 | |
Dividends | 2,246,722 | 2,763,153 | |
Total dividends and distributions | 22,191,299 | 26,792,233 | |
Less return of capital distributions from master limited partnerships | (19,944,577) | (24,029,080) | |
Less return of capital distributions from corporations | (1,266,604) | (2,430,961) | |
Net dividends and distributions | 980,118 | 332,192 | |
Interest | 2,134 | 2,011 | |
Miscellaneous Income | 24,131 | 134,892 | |
Total income | 1,006,383 | 469,095 | |
Expenses: | |||
Investment advisory fees (Note 5) | 3,246,892 | 3,801,079 | |
Administration fees (Note 5) | 293,206 | 152,831 | |
Professional fees | 422,375 | 422,959 | |
Trustees' fees | 103,609 | 135,000 | |
Reports to shareholders | 95,418 | 46,232 | |
Fund support servicing fees (Note 5) | 88,966 | 249,587 | |
Fund accounting fees | 67,982 | — | |
Miscellaneous | 54,707 | 187,087 | |
Registration fees | 28,523 | — | |
Insurance | 23,526 | 50,259 | |
Transfer agent fees | 22,224 | 17,804 | |
Custodian fees | 16,484 | 24,627 | |
Franchise taxes | 4,816 | 16,913 | |
Total operating expenses | 4,488,728 | 5,104,378 | |
Interest expense on credit facility | 1,769,184 | 1,407,792 | |
Amortization of preferred shares issuance costs | 93,602 | 112,383 | |
Dividends to Mandatory Redeemable Preferred shareholders | 1,786,520 | 2,145,000 | |
Total expenses | 8,138,034 | 8,769,553 | |
Net investment loss | (7,131,651) | (8,300,458) | |
Realized and Unrealized Gain (Loss): | |||
Net realized gain on: | |||
Investments | 3,575,892 | 7,499,788 | |
Option contracts | — | 294,695 | |
Net realized gain | 3,575,892 | 7,794,483 | |
Net change in unrealized appreciation (depreciation) on: | |||
Investments | 32.782,102 | (15,676,839) | |
Option contracts | 21,322 | — | |
Net change in unrealized appreciation (depreciation) | 32,803,424 | (15,676,839) | |
Net realized and unrealized gain (loss) on investments and option contracts | 36,379,316 | (7,882,356) | |
Net increase (decrease) in net assets resulting from operations | $ 29,247,665 | $(16,182,814) |
* | The Fund changed its fiscal year end from November 30 to September 30. |
Statements of Changes in Net Assets
For the Ten Months Ended September 30, 2018* | For the Fiscal Year Ended November 30, 2017 | For the Fiscal Year Ended November 30, 2016 | |||
Increase (Decrease) in Net Assets Resulting from Operations: | |||||
Net investment loss | $ (7,131,651) | $ (8,300,458) | $ (4,813,741) | ||
Net realized gain (loss) on investment transactions | 3,575,892 | 7,794,483 | (77,005,437) | ||
Net change in unrealized appreciation (depreciation) on investments and option contracts | 32,803,424 | (15,676,839) | 112,642,003 | ||
Net increase (decrease) in net assets resulting from operations | 29,247,665 | (16,182,814) | 30,822,825 | ||
Distributions to Common Shareholders: | |||||
Distributable earnings | (9,432,436) | — | — | ||
Return of capital | (17,227,927) | (28,115,028) | (25,037,804) | ||
Total distributions paid | (26,660,363) | (28,115,028) | (25,037,804) | ||
Capital Share Transactions: | |||||
Proceeds from shares sold, net of offering costs (Note 7) | 53,952,269 | 39,801,416 | 10,662,958 | ||
Reinvestment of distributions | 799,452 | 1,188,289 | 708,293 | ||
Net increase in net assets from capital stock transactions | 54,751,721 | 40,989,705 | 11,371,251 | ||
Total increase (decrease) in net assets | 57,339,023 | (3,308,137) | 17,156,272 | ||
Net Assets: | |||||
Beginning of period | 229,810,595 | 233,118,732 | 215,962,460 | ||
End of period | $287,149,618 | $229,810,595 | $233,118,732 | ||
Share Transactions: | |||||
Shares issued (Note 7) | 5,571,911 | 3,711,880 | 937,968 | ||
Shares reinvested | 22,388 | 8,033 | 24,962 | ||
Shares reinvested on the open market | (22,388) | (8,033) | (24,962) | ||
Shares reinvested at net asset value | 87,353 | 112,141 | 68,596 | ||
Net increase in shares outstanding | 5,659,264 | 3,824,021 | 1,006,564 |
* | The Fund changed its fiscal year end from November 30 to September 30. |
Statements of Cash Flows
For the Ten Months Ended September 30, 2018* | For the Fiscal Year Ended November 30, 2017 | ||
Increase (Decrease) in Cash: | |||
Cash flows provided by (used for) operating activities: | |||
Net increase (decrease) in net assets resulting from operations | $ 29,247,665 | $ (16,182,814) | |
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by (used for) operating activities: | |||
Purchases of long-term portfolio investments | (185,107,045) | (156,787,875) | |
Proceeds from disposition of long-term portfolio investments | 127,979,756 | 136,481,505 | |
Net purchases and sales of short-term portfolio investments | 687,379 | 53,110 | |
Return of capital distributions from master limited partnerships | 19,944,577 | 24,029,080 | |
Return of capital distributions from corporations | 1,266,604 | 2,430,961 | |
Return of capital distributions from private equity fund | 913,196 | — | |
(Increase) Decrease in cash on deposit with brokers | — | 155,579 | |
Decrease dividends and interest receivable | 24 | 41,882 | |
Decrease in receivable for investments sold | (415,538) | — | |
Decrease in prepaid expenses | 3,561 | — | |
Decrease in federal and state taxes receivable | — | 4,757,674 | |
Increase in other assets | — | (27,518) | |
Increase in payable for credit facility interest | (376,263) | 1,373 | |
Increase in dividends payable to Mandatory Redeemable Preferred shareholders | 47,012 | — | |
Increase (Decrease) in investment advisory fee payable | 49,950 | (6,859) | |
Increase in administration fee payable | 51,980 | — | |
Decrease in trustees' fee payable | 9,478 | — | |
Increase (Decrease) in accrued expenses | 66,506 | (18,118) | |
Amortization of preferred shares issuance costs | 93,602 | 112,383 | |
Net change in unrealized appreciation on investments and option contracts | (32,803,424) | (7,794,483) | |
Net realized gain (loss) on investments | (3,575,892) | 15,676,839 | |
Net cash provided by (used for) operating activities | (41,916,872) | 2,922,719 | |
Cash flows provided by (used for) financing activities: | |||
Net cash provided by credit facility | 12,600,000 | 39,251,428 | |
Net cash provided by (used for) proceeds from shares sold | 55,332,459 | (26,926,739) | |
Distributions paid to common shareholders, net of reinvestments | (25,860,911) | (15,200,000) | |
Net cash provided by (used for) financing activities | 42,071,548 | (2,875,311) | |
Net increase in cash | 154,676 | 47,408 | |
Cash at beginning of period | 47,408 | — | |
Cash at end of period | $ 202,084 | $ 47,408 | |
Supplemental Disclosure of Cash Flow Information: | |||
Interest payments for the ten months ended September 30, 2018 and fiscal year ended November 30, 2017 totaled $2,145,447 and $3,663,802, respectively. | |||
Non-cash financing activities not included consist of reinvestments of dividends and distributions for the ten months ended September 30, 2018 and fiscal year ended November 30, 2017 of $799,452 and $103,819, respectively. | |||
* The Fund changed its fiscal year end from November 30 to September 30. |
Financial Highlights
For the Ten Month Period Ended September 30, | For the Fiscal Years Ended November 30, | For the Period September 26, 20131 through November 30, | |||||
2018* | 2017 | 2016 | 2015 | 2014 | 2013 | ||
Per Share Operating Performance: | |||||||
Net asset value, beginning of period | $ 9.34 | $ 11.22 | $ 10.93 | $ 20.11 | $ 19.31 | $ 19.062 | |
Net investment loss3 | (0.25) | (0.37) | (0.24) | (0.30) | (0.24) | (0.04) | |
Return of capital3 | 0.75 | 1.19 | 1.10 | 1.17 | 0.81 | 0.24 | |
Net realized and unrealized gain (loss) on investments3,6 | 0.59 | (1.45) | 0.68 | (8.80) | 1.58 | 0.15 | |
Net increase (decrease) in net asset value resulting from operations | 1.09 | (0.63) | 1.54 | (7.93) | 2.15 | 0.35 | |
Distributions to Common Shareholders: | |||||||
Distributions from net investment income/distributable earnings | (0.33) | — | — | — | (1.18) | — | |
Return of capital distributions | (0.61) | (1.25) | (1.25) | (1.25) | (0.17) | (0.10) | |
Total distributions paid | (0.94) | (1.25) | (1.25) | (1.25) | (1.35) | (0.10) | |
Net asset value, end of period | $ 9.49 | $ 9.34 | $ 11.22 | $ 10.93 | $ 20.11 | $ 19.31 | |
Market price, end of period | $ 9.42 | $ 9.20 | $ 11.58 | $ 11.09 | $ 19.49 | $ 18.46 | |
Total Investment Return based on Net asset value# | 12.33% 10 | -6.59% | 15.62% | -40.75% 7 | 11.94% | 1.88% 10 | |
Total Investment Return based on Market price† | 13.20% 10 | -10.85% | 17.61% | -37.97% 7 | 13.49% | -7.18% 10 | |
Ratios to Average Net Assets/ Supplementary Data: | |||||||
Net assets, end of period (000s) | $287,150 | $229,811 | $233,119 | $215,962 | $297,927 | $286,009 | |
Ratio of expenses (benefit) to average net assets4 | 3.68% 11 | 3.51% | 2.90% | (4.96)% | 8.55% | 8.25% 11 | |
Ratio of expenses to average net assets (excluding deferred tax benefit) | 3.68% 11 | 3.51% | 2.83% | 2.53% | 2.26% | 2.08% 11 | |
Ratio of expenses to average net assets (excluding deferred tax benefit and interest expense) | 2.03% 11 | 2.04% | 2.06% | 2.00% | 1.85% | 1.84% 11 | |
Ratio of net investment loss to average net assets4 | (3.22)% 11 | (3.33)% | (2.32)% | (1.82)% | (1.18)% | (1.31)% 11 | |
Ratio of expenses (benefit) to average managed assets5 | 2.51% 11 | 2.31% | 2.06% | (3.46)% | 6.08% | 6.34% 11 | |
Portfolio turnover rate | 33% 10 | 36% | 62% | 91% | 105% | 18% 10 | |
Credit facility, end of period (000's) | $ 79,100 | $ 66,500 | $ 81,700 | $ 79,600 | $129,000 | $100,500 | |
Total amount of preferred shares outstanding (000's) | $ 50,000 | $ 50,000 | $ 50,000 | $ — | $ — | $ — | |
Asset coverage per $1,000 unit of senior indebtedness8 | $ 3,224 | $ 2,973 | $ 2,770 | $ 3,949 | $ 3,310 | $ 3,846 | |
Asset coverage per preferred shares9 | $168,575 | $139,905 | $141,559 | $ — | $ — | $ — | |
Liquidating preference for preferred shares | $ 25,000 | $ 25,000 | $ 25,000 | $ — | $ — | $ — |
# | Total investment return based on net asset value (“NAV”) is the combination of changes in NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV , if any. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total investment return excludes the effects of sales charges or contingent deferred sales charges, if applicable. |
† | Total investment return based on market price is the combination of changes in the New York Stock Exchange market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The actual reinvestment for the last dividend declared in the period may take place over several days as described in the Fund’s dividend reinvestment plan, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total investment return excludes the effect of broker commissions. |
* | Following the close of business on February 2, 2018, Brookfield Investment Management Inc. replaced Center Coast Capital Advisors, LP as the investment adviser to the Fund. Amounts shown are for the ten month period ended September 30, 2018 and are not necessarily indicative of a full year of operations. The Fund changed its fiscal year end from November 30 to September 30. |
1 | Commencement of operations. |
2 | Initial public offering price of $20.00 per share less underwriting discounts of $0.90 per share and offering costs of $0.04 per share. |
3 | Per share amounts presented are based on average shares outstanding throughout the period indicated. |
4 | Includes the deferred tax benefit (expense) allocated to net investment income (loss) and the deferred tax benefit (expense) allocated to realized and unrealized gain (loss). Net Investment Income (Loss) ratios exclude the deferred tax benefit (expense) allocated to realized and realized and unrealized gain (loss). |
5 | Average managed assets represent the total assets of the Fund, including the assets attributable to the proceeds from any forms of financial leverage, minus liabilities, other than liabilities related to any financial leverage. |
6 | Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share in the period. It may not agree to the aggregate gains and losses in the Statement of Operations due to the fluctuation in share transactions this period. |
7 | Includes dilution (net of offering costs) of approximately $1.11 to NAV per share resulting from the Fund's transferrable rights offering, which expired on April 17, 2015. In connection with such offering, the Fund issued 4,938,969 additional common shares at the subscription price per share below the then-current NAV per share of the Fund. |
8 | 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. |
9 | Represents the total value of total assets less liabilities, not including preferred shares divided by the total number of preferred shares. |
10 | Not annualized. |
11 | Annualized. |
Notes to Financial Statements
Notes to Financial Statements (continued)
Level 1 - | quoted prices in active markets for identical assets or liabilities |
Notes to Financial Statements (continued)
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, credit risk, etc.) |
Level 3 - | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets or liabilities) |
Description | Level 1 | Level 2 | Level 3 | Total | |||
Assets: | |||||||
Master Limited Partnerships | $ 283,812,733 | $ — | $ — | $ 283,812,733 | |||
Common Stocks | 85,839,363 | — | — | 85,839,363 | |||
Private Equity Fund | — | — | 45,800,000 | 45,800,000 | |||
Total Assets | $ 369,652,096 | $ — | $ 45,800,000 | $ 415,452,096 | |||
Liabilities: | |||||||
Option contracts | $ (6,675) | $ — | $ — | $ (6,675) | |||
Total Liabilities | $ (6,675) | $ — | $ — | $ (6,675) |
Notes to Financial Statements (continued)
Quantitative Information about Level 3 Fair Value Measurements | ||||||
Type of Security | Value as of September 30, 2018 | Valuation Approach | Valuation Technique | Unobservable Input | Amount | Impact to Valuation from an Increase in Input(1) |
Private Equity Fund | $45,800,000 | Market Approach | Guideline Public Company | EBITDA Multiple Liquidity Discount | 11.5x 12.5% | Increase Decrease |
Income Approach | Discounted Cash Flow | Discount Rate | 10.5% | Decrease | ||
Exit EBITDA Multiple | 12.0x | Increase | ||||
Liquidity Discount | 12.5% | Decrease |
Notes to Financial Statements (continued)
Investments in Securities | Private Equity Fund |
Balance as of November 30, 2017 | $43,904,880 |
Change in unrealized appreciation | 2,808,316 |
Return of capital distributions | (913,196) |
Balance as of September 30, 2018 | $45,800,000 |
Change in unrealized gains or losses relating to assets still held at the reporting period | $ 2,808,316 |
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Derivatives | Location of Gains (Losses) on Derivatives Recognized in Income | Net Realized Gain | Net Change in Unrealized Appreciation |
Equity option contracts | Option contracts | $— | $21,322 |
Deferred tax expense (benefit) | |
Federal | $ 6,439,331 |
State | 694,587 |
Change in valuation allowance | (7,133,918) |
Total deferred tax expense | $ — |
Notes to Financial Statements (continued)
Amount | Rate | ||
Application of statutory income tax rate | $ 6,551,479 | 22.40% | |
State income taxes net of federal benefit | 689,877 | 2.36% | |
Effect of permanent & temporary differences | (107,438) | (0.37)% | |
Change in federal rate due to tax reform | 10,854,745 | 37.11% | |
Change in valution allowance | (17,988,663) | (61.50)% | |
Total income tax expenses | $ — | —% |
Amount | |
Deferred tax assets: | |
Net operating loss carryforward (tax basis) | $ 7,883,736 |
Capital loss carryforward (tax basis) | 17,272,449 |
Other future deductible difference | 462,623 |
Valuation Allowance | (12,338,871) |
Total deferred tax assets | 13,279,937 |
Deferred tax liabilities: | |
Net unrealized gains on investment securities (tax basis) | (13,279,937) |
Total net deferred tax liability | $ — |
Notes to Financial Statements (continued)
Amount | |
Expiration Date: | |
09/30/2035 | $13,600,121 |
09/30/2036 | 7,495,732 |
09/30/2037 | 7,197,063 |
09/30/2038 | 5,396,399 |
Total | $33,689,315 |
Amount | |
Expiration Date: | |
09/30/2021 | $73,809,799 |
Total | $73,809,799 |
Notes to Financial Statements (continued)
Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation |
$358,793,481 | $68,368,302 | $(11,716,362) | $56,651,940 |
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Distribution Per Share | Record Date | Payable Date |
$0.1042 | October 17, 2018 | October 25, 2018 |
$0.1042 | November 14, 2018 | November 21, 2018 |
Notes to Financial Statements (continued)
Report of Independent Registered Public Accounting Firm
Compliance Certification (Unaudited)
Information Concerning Trustees and Officers (Unaudited)
Name, Address and Year of Birth | Position(s) Held with Funds | Principal Occupation(s) During Past 5 Years and Other Directorships Held by Director | Number of Portfolios in Fund Complex | |||
Interested Trustee Class I Trustee to serve until 2021 Annual Meeting of Shareholders: | ||||||
David Levi c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1971 | Trustee Served since 2018 | Director/Trustee of several investment companies advised by the Adviser (2017 - Present); Director of Brookfield Investment Management UK Ltd. (2017-Present); Director of Brookfield Investment Management (Canada) Inc. (2017-Present); President of the Adviser (2016-Present); Managing Director and Head of Distribution of the Adviser (2014-2016); Managing Partner of Brookfield Asset Management Inc. (2015-Present); Managing Director and Head of Global Business Development at Nuveen Investments (2009-2014). | 10 | |||
Independent Trustees Class II Trustee to serve until 2019 Annual Meeting of Shareholders: | ||||||
Edward A. Kuczmarski c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1949 | Trustee and Independent Chairman of the Board, Member of the Audit Committee, Chairman of the Nominating and Compensation Committee Served Since 2018 | Director/Trustee of several investment companies advised by the Adviser (2011-Present); Certified Public Accountant and Retired Partner of Crowe Horwath LLP (1980-2013); Trustee of the Empire Builder Tax Free Bond Fund (1984-2013); Director of ISI Funds (2007-2015); Trustee of the Daily Income Fund (2006-2015), Director of the California Daily Tax Free Income Fund, Inc. (2006-2015); Trustee of the Stralem Funds (2014-2016). | 10 | |||
Stuart A. McFarland c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1947 | Trustee, Member of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2018 | Director/Trustee of several investment companies advised by the Adviser (2006-Present); Director of United Guaranty Corporation (2011-2016); Director of Brandywine Funds (2003-2013); Director of Drive Shack Inc. (formerly, Newcastle Investment Corp.) (2000-Present); Managing Partner of Federal City Capital Advisors (1997-Present); Director of New America High Income Fund (2013-Present); Director of New Senior Investment Group, Inc. (2014-Present). | 10 |
Information Concerning Trustees and Officers (Unaudited) (continued)
Name, Address and Year of Birth | Position(s) Held with Funds | Principal Occupation(s) During Past 5 Years and Other Directorships Held by Director | Number of Portfolios in Fund Complex | |||
Independent Trustees Class III Trustee to serve until 2020 Annual Meeting of Shareholders: | ||||||
Louis P. Salvatore c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1946 | Trustee, Chairman of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2018 | Director/Trustee of several investment companies advised by the Adviser (2005-Present); Director of SP Fiber Technologies, Inc. (2012-2015); Director of Gramercy Property Trust (2012-Present); Director of Turner Corp. (2003-Present); Director of Jackson Hewitt Tax Services, Inc. (2004-2011); Employee of Arthur Andersen LLP (2002-Present). | 10 | |||
Heather S. Goldman c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1967 | Trustee, Member of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2018 | Director/Trustee of several investment companies advised by the Adviser (2013-Present); Global Head of Marketing and Business Development of the Adviser (2011-2013); Managing Partner of Brookfield Financial (2009-2011); Director and Board Chair of University Settlement House (2003-2013); Member of the Honorary Board of University Settlement House (2014-Present); Co-Founder & CEO of Capstak, Inc. (2014-Present); Chairman of Capstak, Inc. (2016-Present). | 10 |
Information Concerning Trustees and Officers (Unaudited) (continued)
Name, Address and Year of Birth | Position(s) Held with Funds | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
Brian F. Hurley* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1977 | President | Served since 2018 | President of several investment companies advised by the Adviser (2014-Present); General Counsel of the Adviser (October 2017 - Present); Managing Director (2014-Present), Assistant General Counsel (2010-Present) and Head of Legal and Funds (April 2017-October 2017) of the Adviser; Director of the Adviser (2010-2014); Corporate Secretary of Brookfield Investment Management Inc. (2017-Present); Corporate Secretary of Brookfield Investment Management UK Ltd. (2017-Present); Corporate Secretary of Brookfield Investment Management (Canada) Inc. (2017-Present); Managing Partner of Brookfield Asset Management Inc. (2016-Present); Secretary of Brookfield Investment Funds (2011-2014); Director of Brookfield Soundvest Capital Management (2015-Present). |
Angela W. Ghantous* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1975 | Treasurer | Served since 2018 | Treasurer of several investment companies advised by the Adviser (2012-Present); Director and Head of Fund Administration and Accounting of the Adviser (2012-Present); Vice President of the Adviser (2009-2012). |
Thomas D. Peeney* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1973 | Secretary | Served since 2018 | Secretary of several investment companies advised by the Adviser (2018-Present); Director of the Adviser (2018-Present); Vice President of the Adviser (2017-2018); Vice President and Assistant General Counsel of SunAmerica Asset Management, LLC (2013-2017); Associate, Corporate Department at Paul Hastings LLP (2006-2013). |
Adam R. Sachs* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1984 | Chief Compliance Officer (“CCO”) | Served since 2018 | Chief Compliance Officer of several investment companies advised by the Advisor (2017-Present); Director of Corporate Legal and Compliance at the Adviser (2017-Present); Chief Compliance Officer of Brookfield Investment Management (Canada) Inc. (2017-Present); Chief Compliance Officer of Brookfield Investment Management UK Ltd. (2017-Present); Senior Compliance Officer of Corporate Legal and Compliance at the Adviser (2011-2017). |
Casey Tushaus* c/o Brookfield Place,250 Vesey Street,New York, New York10281-1023Born: 1982 | Assistant Treasurer | Served since 2018 | Assistant Treasurer of several investment companies advised by the Adviser (2016-Present); Vice President of the Adviser (2014-Present); Assistant Fund Controller at Walton Street Capital (2007-2014). |
Mohamed Rasul* c/o Brookfield Place,250 Vesey Street,New York, New York10281-1023Born: 1981 | Assistant Treasurer | Served since 2018 | Assistant Treasurer of several investment companies advised by the Adviser (2016-Present); Assistant Vice President of the Adviser (2014 -Present); Senior Accountant of the Adviser (2012-2014). |
Information Concerning Trustees and Officers (Unaudited) (continued)
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) |
Item 2. Code of Ethics.
As of the end of the period covered by this report, the Registrant had adopted a Code of Ethics for Principal Executive and Principal Financial Officers (the “Code”). There were no amendments to or waivers from the Code during the period covered by this report. A copy of the Registrant’s Code will be provided upon request to any person without charge by contacting Investor Relations at (855) 777-8001 or by writing to Secretary, Center Coast Brookfield MLP & Energy Infrastructure Fund, Brookfield Place, 250 Vesey Street, 15th Floor, New York, NY 10281-1023.
Item 3. Audit Committee Financial Expert.
The Registrant’s Board of Trustees has determined that Stuart A. McFarland, Edward A. Kuczmarski, and Louis P. Salvatore each qualify as audit committee financial experts, as defined in Item 3(b) of Form N-CSR. Messrs. McFarland, Kuczmarski and Salvatore are considered “independent” for purposes of Item 3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees |
The aggregate fees billed by the Registrant’s independent registered public accounting firm, Deloitte & Touche LLP (“Deloitte”), for professional services rendered for the audit of the Registrant’s annual financial statements and the review of financial statements that are included in the Registrant’s annual and semi-annual reports to shareholders (“Audit Fees”) were $71,500 for the fiscal year ended September 30, 2018.
The aggregate Audit Fees billed by the Registrant’s former independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), were $170,000 for the fiscal year ended November 30, 2017.
(b) | Audit-Related Fees |
There were no fees billed by Deloitte to the Registrant in the fiscal year ended September 30, 2018 for services rendered for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant’s financial statements but are not reported as Audit Fees (“Audit-Related Fees”).
The aggregate Audit-Related Fees billed by PwC to the Registrant in the fiscal year ended November 30, 2017 were $14,250. The Audit-Related Fees listed in this Item 4(b) are related to agreed-upon procedures performed during the initial and secondary offerings of the Registrant and the issuance of consents by PwC with respect to corresponding registration statement filings.
For the Registrant’s two most recent fiscal years, September 30, 2018 and November 30, 2017, respectively, there were no Audit-Related Fees billed either by Deloitte or PwC for engagements related directly to the operations and financial reporting of the Registrant by a “Fund Service Provider.” A Fund Service Provider is any investment adviser to the Registrant, or any entity that provides ongoing services to the Registrant and is controlling, controlled by or under common control with such investment adviser.
(c) | Tax Fees |
For the fiscal year ended September 30, 2018, the aggregate fees billed by Deloitte to the Registrant for tax compliance, tax advice and tax planning (“Tax Fees”) were $68,500. The nature of the services comprising the Tax Fees was the review of the Registrant’s income tax returns and tax distribution requirements.
The aggregate Tax Fees billed by PwC to the Registrant in the fiscal year ended November 30, 2017 were $180,530. The nature of the services comprising the Tax Fees was the review of the Registrant’s income tax returns and tax distribution requirements.
The Tax Fees billed by Deloitte and PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Registrant were $0 for the Registrant’s fiscal years ended September 30, 2018 and November 30, 2017, respectively.
The services for which Tax Fees were charged comprise all services performed by professional staff in Deloitte’s and PWC’s respective tax divisions except those services related to the audits. Typically, this category would include fees for tax compliance, tax advice, and tax planning services, which include, among other things, preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) | All Other Fees |
All other fees billed by Deloitte and PwC for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Registrant were $0 for the Registrant’s fiscal years ended September 30, 2018 and November 30, 2017, respectively.
(e) (1) According to policies adopted by the Audit Committee, services provided by Deloitte to the Registrant must be pre-approved by the Audit Committee. On an annual basis, the Audit Committee reviews and pre-approves various types of services that Deloitte may perform for the Registrant without specific approval of each engagement, subject to specified budget limitations. As contemplated by the Sarbanes-Oxley Act of 2002 and related SEC rules, the Audit Committee also pre-approves non-audit services provided by Deloitte to any Fund Service Provider for any engagement that relates directly to the operations and financial reporting of the Registrant. Any engagement that is not already pre-approved or that will exceed a pre-approved budget must be submitted to the Audit Committee for pre-approval.
(e) (2) None.
(f) Not applicable.
(g) The aggregate fees billed by Deloitte for the fiscal year ended September 30, 2018, for non-audit services rendered to the Registrant and Fund Service Providers were $208,500. For the fiscal year ended September 30, 2018, this amount reflects the amounts disclosed above in Item 4(b),(c),(d), plus $140,000, in fees billed to the Fund Service Providers for non-audit services that did not relate directly to the operations and financial reporting of the Registrant, including fees billed by Deloitte to Brookfield Investment Management Inc. that were associated with Deloitte’s SSAE 16 Review (formerly, SAS No. 70).
There were no fees billed by PwC to the Registrant in the fiscal year ended November 30, 2017 for non-audit services rendered to the Registrant and Fund Service Providers.
(h) The Registrant’s Audit Committee has considered whether the provision of non-audit services by the Registrant’s independent registered public accounting firm to the Registrant’s investment adviser, and any entity controlling, controlled, or under common control with the investment adviser that provided ongoing services to the Registrant that were not pre-approved by the Audit Committee (because such services did not relate directly to the operations and financial reporting of the Registrant) were compatible with maintaining the independence of the independent registered public accounting firm.
Item 5. Audit Committee of Listed Registrants.
The Registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Registrant’s Audit Committee members include Stuart A. McFarland, Edward A. Kuczmarski, Louis P. Salvatore and Heather S. Goldman.
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.
The Portfolio Proxy Voting Policies and Procedures (the “Policies and Procedures”) set forth the proxy voting policies, procedures and guidelines to be followed by Brookfield Investment Management Inc. and its subsidiaries and affiliates (collectively, “BIM”) in voting
portfolio proxies relating to securities that are held in the portfolios of the investment companies or other clients (“Clients”) for which BIM has been delegated such proxy voting authority.
A. Proxy Voting Committee
BIM’s internal proxy voting committee (the “Committee”) is responsible for overseeing the proxy voting process and ensuring that BIM meets its regulatory and corporate governance obligations in voting of portfolio proxies.
The Committee shall oversee the proxy voting agent’s compliance with these Policies and Procedures, including any deviations by the proxy voting agent from the proxy voting guidelines (“Guidelines”).
B. Administration and Voting of Portfolio Proxies
1. Fiduciary Duty and Objective
As an investment adviser that has been granted the authority to vote on portfolio proxies, BIM owes a fiduciary duty to its Clients to monitor corporate events and to vote portfolio proxies consistent with the best interests of its Clients. In this regard, BIM seeks to ensure that all votes are free from unwarranted and inappropriate influences. Accordingly, BIM generally votes portfolio proxies in a uniform manner for its Clients and in accordance with these Policies and Procedures and the Guidelines.
In meeting its fiduciary duty, BIM generally views proxy voting as a way to enhance the value of the company’s stock held by Clients. Similarly, when voting on matters for which the Guidelines dictate a vote to be decided on a case-by-case basis, BIM’s primary consideration is the economic interests of its Clients.
2. Proxy Voting Agent
BIM may retain an independent third party proxy voting agent to assist BIM in its proxy voting responsibilities in accordance with these Policies and Procedures and in particular, with the Guidelines. As discussed above, the Committee is responsible for monitoring the proxy voting agent.
In general, BIM may consider the proxy voting agent’s research and analysis as part of BIM’s own review of a proxy proposal in which the Guidelines recommend that the vote be considered on a case-by-case basis. BIM bears ultimate responsibility for how portfolio proxies are voted. Unless instructed otherwise by BIM, the proxy voting agent, when retained, will vote each portfolio proxy in accordance with the Guidelines. The proxy voting agent also will assist BIM in maintaining records of BIM’s portfolio proxy votes, including the appropriate records necessary for registered investment companies to meet their regulatory obligations regarding the annual filing of proxy voting records on Form N-PX with the Securities and Exchange Commission (“SEC”).
3. Material Conflicts of Interest
BIM votes portfolio proxies without regard to any other business relationship between BIM and the company to which the portfolio proxy relates. To this end, BIM must identify material conflicts of interest that may arise between a Client and BIM, such as the following relationships:
● | BIM provides significant investment advisory or other services to a portfolio company or its affiliates (the “Company”) whose management is soliciting proxies or BIM is seeking to provide such services; |
● | BIM serves as an investment adviser to the pension or other investment account of the Company or BIM is seeking to serve in that capacity; or |
● | BIM and the Company have a lending or other financial-related relationship. |
In each of these situations, voting against the Company management’s recommendation may cause BIM a loss of revenue or other benefit.
BIM generally seeks to avoid such material conflicts of interest by maintaining separate investment decision-making and proxy voting decision-making processes. To further minimize possible conflicts of interest, BIM and the Committee employ the following procedures, as long as BIM determines that the course of action is consistent with the best interests of the Clients:
● | If the proposal that gives rise to a material conflict is specifically addressed in the Guidelines, BIM will vote the portfolio proxy in accordance with the Guidelines, provided that the Guidelines do not provide discretion to BIM on how to vote on the matter (i.e., case-by-case); or |
● | If the previous procedure does not provide an appropriate voting recommendation, BIM may retain an independent fiduciary for advice on how to vote the proposal or the Committee may direct BIM to abstain from voting because voting on the particular proposal is impracticable and/or is outweighed by the cost of voting. |
4. Certain Foreign Securities
Portfolio proxies relating to foreign securities held by Clients are subject to these Policies and Procedures. In certain foreign jurisdictions, however, the voting of portfolio proxies can result in additional restrictions that have an economic impact to the security, such as “share-blocking.” If BIM votes on the portfolio proxy, share-blocking may prevent BIM from selling the shares of the foreign security for a period of time. In determining whether to vote portfolio proxies subject to such restrictions, BIM, in consultation with the Committee, considers whether the vote, either in itself or together with the votes of other shareholders, is expected to affect the value of the security that outweighs the cost of voting. If BIM votes on a portfolio proxy and during the “share-blocking period,” BIM would like to sell the affected foreign security, BIM, in consultation with the Committee, will attempt to recall the shares (as allowable within the market time-frame and practices).
C. Fund Board Reporting and Recordkeeping
BIM will prepare periodic reports for submission to the Boards of Directors/Trustees of its affiliated funds (the “Funds”) describing:
● | any issues arising under these Policies and Procedures since the last report to the Funds’ Boards of Directors/Trustees and the resolution of such issues, including but not limited to, information about conflicts of interest not addressed in the Policies and Procedures; and |
● | any proxy votes taken by BIM on behalf of the Funds since the last report to such Funds’ Boards of Directors/Trustees that deviated from these Policies and Procedures, with reasons for any such deviations. |
In addition, no less frequently than annually, BIM will provide the Boards of Directors/Trustees of the Funds with a written report of any recommended changes based upon BIM’s experience under these Policies and Procedures, evolving industry practices and developments in the applicable laws or regulations.
BIM will maintain all records that are required under, and in accordance with, all applicable regulations, including the Investment Company Act of 1940, as amended, and the Investment Advisers Act of 1940, which include, but not limited to:
● | these Policies and Procedures, as amended from time to time; |
● | records of votes cast with respect to portfolio proxies, reflecting the information required to be included in Form N-PX, as applicable; |
● | records of written client requests for proxy voting information and any written responses of BIM to such requests; and |
● | any written materials prepared by BIM that were material to making a decision in how to vote, or that memorialized the basis for the decision. |
D. Amendments to these Procedures
The Committee shall periodically review and update these Policies and Procedures as necessary. Any amendments to these Procedures and Policies (including the Guidelines) shall be provided to the Board of Trustees of BIM and to the Boards of Directors/Trustees of the Funds for review and approval.
E. Proxy Voting Guidelines
Guidelines are available upon request.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Dan C. Tutcher – Managing Director and Portfolio Manager
Managing Director and Portfolio Manager. Mr. Tutcher is a Portfolio Manager on the energy infrastructure securities team. Prior to joining the Adviser, he was a founder and Principal at Center Coast since its inception in 2007 and also served on its investment committee. He has over 40 years of industry experience owning, operating and acquiring MLPs. Prior to founding Center Coast, Mr. Tutcher was President of Enbridge Energy Company, Inc. (“Enbridge”) and President and Director of Enbridge Energy Partners, L.P. Prior to that, he founded and served as Chairman of the Board, President and Chief Executive Officer of MidCoast Energy Resources (“MidCoast”), from its formation in 1992 until 2001, when Enbridge acquired MidCoast. In addition, Mr. Tutcher has been involved in the design, construction and operation of petroleum pipelines and all types of petroleum equipment
and storage, as well as oil and gas exploration and production. Mr. Tutcher holds a B.B.A from Washburn University.
Robert T. Chisholm – Managing Director and Portfolio Manager
Managing Director and Portfolio Manager. Mr. Chisholm has 17 years of experience and is a Portfolio Manager on the energy infrastructure securities team. His responsibilities include research & analysis of individual MLPs, quantitative & qualitative analysis of MLP holdings, and trading. Prior to joining the Adviser, he served as Senior Portfolio Manager of Center Coast since its inception
in 2007. Prior to that, Mr. Chisholm was in Morgan Keegan’s Energy Investment Banking Division (from 2006 to 2007) and a Senior Project Advisor at Enbridge Energy Partners, LP (from 2002 to 2006), where he advised on over $8 billion of MLP mergers and acquisitions. Mr. Chisholm began his career in the energy industry at Koch Industries, Inc. where he served in various roles in their Capital Market, Hydrocarbon and Midstream groups. Mr. Chisholm holds an M.B.A from the McCombs School of Business at the University of Texas and a B.B.A in Finance from Texas Christian University.
Jeff Jorgensen – Managing Director and Portfolio Manager
Jeff Jorgensen Managing Director and Portfolio Manager. Mr. Jorgensen is a Portfolio Manager on the energy infrastructure securities team. Prior to joining the Adviser, he served as Center Coast’s Director of Research since March 2014. As Director of Research, Mr. Jorgensen was responsible for leading Center Coast’s research efforts across all of its investment products and provided macro and micro investable analytics on energy infrastructure investments. Prior to that, Mr. Jorgensen served as an Executive Director in UBS’ Global Natural Resources Group focusing on MLPs and other oil and gas sub-sectors. During his tenure at UBS, he worked on over $20 billion of MLP and energy equity offerings, $10 billion of mergers and acquisitions transactions, and in excess of $20 billion of debt deals. Mr. Jorgensen’s previous experience includes working as an attorney for Bracewell & Giuliani and as an associate with Morgan Stanley’s Global Energy Group. He received a J.D. from the University of Texas School of Law and a B.A. in Economics from Rice University.
Management of Other Accounts
Mr. Tutcher manages other investment companies and/or investment vehicles and accounts in addition to the Registrant. The tables below show the number of other accounts managed by Mr. Tutcher as of September 30, 2018 and the total assets in each of the following categories: (a) registered investment companies; (b) other pooled investment vehicles; and (c) other accounts. For each category, the table also shows the number of accounts and the total assets in the accounts with respect to which the advisory fee is based on account performance.
Name of Portfolio Manager | Type of Accounts | Total Number of Accounts Managed as of September 30, 2018 | Total Assets in USD Millions as of September 30, 2018 (assets in | Number of Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (assets | |||||
Dan C. Tutcher | Registered Investment Company | 1 | $ 2,594.2 | — | $ — | |||||
Other Pooled Investment Vehicles | — | $ — | 1 | $ 44.0 | ||||||
Other Accounts | 939 | $ 878.7 | — | $ — |
Mr. Chisholm manages other investment companies and/or investment vehicles and accounts in addition to the Registrant. The tables below show the number of other accounts managed by Mr. Chisholm as of September 30, 2018 and the total assets in each of the following categories: (a) registered investment companies; (b) other pooled investment vehicles; and (c) other accounts. For each category, the table also shows the number of accounts and the total assets in the accounts with respect to which the advisory fee is based on account performance
Name of Portfolio Manager | Type of Accounts | Total Number of Accounts Managed as of September 30, 2018 | Total Assets in USD Millions as of September 30, 2018 (assets in | Number of Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (assets | |||||
Robert T. Chisholm | Registered Investment Company | 1 | $ 2,594.2 | — | $ — | |||||
Other Pooled Investment Vehicles | — | $ — | 1 | $ 44.0 | ||||||
Other Accounts | 1,085 | $ 944.5 | — | $ — |
Mr. Jorgensen manages other investment companies and/or investment vehicles and accounts in addition to the Registrant. The tables below show the number of other accounts managed by Mr. Jorgensen as of September 30, 2018 and the total assets in each of the following categories: (a) registered investment companies; (b) other pooled investment vehicles; and (c) other accounts. For each category, the table also shows the number of accounts and the total assets in the accounts with respect to which the advisory fee is based on account performance
Name of Portfolio Manager | Type of Accounts | Total Number of Accounts Managed as of September 30, 2018 | Total Assets in USD Millions as of September 30, 2018 (assets in | Number of Managed with Advisory Fee Based on Performance | Total Assets with Advisory Fee Based on Performance (assets | |||||
Jeff Jorgensen | Registered Investment Company | 1 | $ 2,594.2 | — | $ — | |||||
Other Pooled Investment Vehicles | — | $ — | 1 | $ 44.0 | ||||||
Other Accounts | 1,085 | $ 944.5 | — | $ — |
Share Ownership
The following table indicates the dollar range of securities of the Registrant owned by the Registrant’s portfolio managers as of September 30, 2018.
Dollar Range of Securities Owned | ||
Dan C. Tutcher | Over $1,000,000 | |
Robert T. Chisholm | $10,001 - $50,000 | |
Jeff Jorgensen | $50,001 - $100,000 |
Potential Conflicts of Interest
Actual or apparent conflicts of interest may arise when the Portfolio Managers also have day-to-day management responsibilities with respect to one or more other accounts. The Registrant’s investment adviser, Brookfield Investment Management Inc. (the “Adviser”), has adopted policies and procedures that are reasonably designed to identify and minimize the effects of these potential conflicts, however, there can be no guarantee that these policies and procedures will be effective in detecting potential conflicts, or in eliminating the effects of any such conflicts. These potential conflicts include:
Allocation of Limited Time and Attention. As indicated in the tables above, the Portfolio Managers manage multiple accounts. As a result, the Portfolio Managers will not be able to devote all of their time to management of the Registrant. The Portfolio Managers, therefore, may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as might be the case if he were to devote all of his attention to the management of only the Registrant.
Allocation of Limited Investment Opportunities. As indicated above, the Portfolio Managers manage accounts with investment strategies and/or policies that are similar to the Registrant. If the Portfolio Managers identify an investment opportunity that may be suitable for multiple accounts, the Registrant may not be able to take full advantage of that opportunity because the opportunity may be allocated among these accounts or other accounts managed primarily by other Portfolio Managers of the Adviser and its affiliates. In addition, in the event a Portfolio Manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions.
Pursuit of Differing Strategies. At times, a Portfolio Manager may determine that an investment opportunity may be appropriate for only some of the accounts for which the Portfolio Manager exercises investment responsibility, or may decide that certain of these funds or accounts should take differing positions with respect to a particular security. In these cases, the Portfolio Manager may execute differing or opposite transactions for one or more accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment of one or more other accounts. For example, the sale of a long position or establishment of a short position by an account may impair the price of the same security sold short by (and therefore benefit) the Adviser, its affiliates, or other accounts, and the purchase of a security or covering of a short position in a security by an account may increase the price of the same security held by (and therefore benefit) the Adviser, its affiliates, or other accounts.
Selection of Broker/Dealers. A Portfolio Manager may be able to select or influence the selection of the brokers and dealers that are used to execute securities transactions for the Registrant or accounts that he supervises. In addition to providing execution of trades, some brokers and dealers provide Portfolio Managers with brokerage and research services which may result in the payment of higher brokerage fees than might otherwise be available. These services may be more beneficial to certain funds or accounts of the Adviser and its affiliates than to others. Although the payment of brokerage commissions is subject to the requirement that the Adviser determines in good faith that the commissions are reasonable in relation to the value of the brokerage and research services provided to the Registrant, a Portfolio Manager’s decision as to the selection of brokers and dealers could yield disproportionate costs and benefits among the funds or other accounts that the Adviser and its affiliates manage. In addition, with respect to certain types of accounts (such as pooled investment vehicles and other accounts managed for organizations and individuals) the Adviser may be limited by the client concerning the selection of brokers or may be instructed to direct trades to particular brokers. In these cases, the Adviser or its affiliates may place separate, non-simultaneous transactions in the same security for the Registrant and another account that may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Registrant or the other accounts.
Variation in Compensation. A conflict of interest may arise where the financial or other benefits available to a Portfolio Manager differ among the accounts that he manages. If the structure of the Adviser’s management fee or the Portfolio Manager’s compensation differs among accounts (such as where certain accounts pay higher management fees or performance-based management fees), the Portfolio Managers may be motivated to favor certain accounts over others. The Portfolio Managers also may be motivated to favor accounts in which they have investment interests, or in which the Adviser or its affiliates have investment interests. Similarly, the desire to maintain assets under management or to enhance a Portfolio Manager’s performance record or to derive other rewards, financial or otherwise, could influence the Portfolio Manager in affording preferential treatment to those accounts that could most significantly benefit the Portfolio Manager. For example, as reflected above, if a Portfolio Manager manages accounts which have performance fee arrangements, certain portions of his/her compensation will depend on the achievement of performance milestones on those accounts. The Portfolio Manager could be incented to afford preferential treatment to those accounts and thereby be subject to a potential conflict of interest.
The Adviser and the Registrant have adopted compliance policies and procedures that are reasonably designed to address the various conflicts of interest that may arise for the Adviser and its staff members. However, there is no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may arise.
Portfolio Manager Compensation
The Portfolio Managers are compensated based on the scale and complexity of their portfolio responsibilities, the total return performance of funds and accounts managed by the Portfolio Manager on an absolute basis and when compared to appropriate peer groups of similar size and strategy, as well as the management skills displayed in managing their portfolio teams and the teamwork displayed in working with other members of the firm. Since the Portfolio Managers are responsible for multiple funds and accounts, investment performance is evaluated on an aggregate basis almost equally weighted among performance, management and teamwork. Base compensation for the Portfolio Managers varies in line with a Portfolio Manager’s seniority and position. The compensation of Portfolio Managers with other job responsibilities (such as acting as an executive officer of their firm or supervising various departments) includes consideration of the scope of such responsibilities and the Portfolio Manager’s performance in meeting them. The Adviser seeks to compensate Portfolio Managers commensurate with their responsibilities and performance, and in a manner that is competitive with other firms within the investment management industry. Salaries, bonuses and stock-based compensation in the industry also are influenced by the operating performance of their respective firms and their parent companies. While the salaries of the Portfolio Managers are comparatively fixed, cash bonuses and stock-based compensation may fluctuate significantly from year to year. Bonuses are determined on a discretionary basis by the senior executives of the firm and measured by individual and team-oriented performance guidelines. Awards under the Long Term Incentive Plan (LTIP) are approved annually and there is a rolling vesting schedule to aid in retention of key people. A key component of this program is achievement of client objectives in order to properly align interests with our clients. Further, the incentive compensation of all investment personnel who work on each strategy is directly tied to the relative performance of the strategy and its clients.
The compensation structure of the Portfolio Managers and other investment professionals has four primary components:
● | A base salary; |
● | An annual cash bonus; |
● | If applicable, long-term compensation consisting of restricted stock or stock options of the Adviser’s ultimate parent company, Brookfield Asset Management Inc.; and |
● | If applicable, long-term compensation consisting generally of restricted share units tied to the performance of funds managed by the Adviser. |
The Portfolio Managers also receive certain retirement, insurance and other benefits that are broadly available to all employees. Compensation of the Portfolio Managers is reviewed on an annual basis by senior management.
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.
There were no material changes to the procedures by which stockholders may recommend nominees to the Registrant’s Board of Trustees that were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a- 101), or this Item 10.
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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. Exhibits.
(a)(1) | None. |
(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) | Not applicable. |
(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. |
(4) | Not applicable. |
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.
CENTER COAST BROOKFIELD MLP & ENERGY INFRASTRUCTURE FUND
By: | /s/ Brian F. Hurley | |
Brian F. Hurley | ||
President and Principal Executive Officer | ||
Date: | December 6, 2018 |
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: | December 6, 2018 | |
By: | /s/ Angela W. Ghantous | |
Angela W. Ghantous | ||
Treasurer and Principal Financial Officer | ||
Date: | December 6, 2018 |