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, 2020
Item 1. Reports to Shareholders.
• | Higher crude oil prices following an historic OPEC+3 production cut (prices increased 92% on the quarter4); |
• | The general resumption of economic activity and a corresponding increase in demand for hydrocarbons as initial lockdowns started to phase out; and |
• | The abatement of technical selling, as closed end funds stopped de-leveraging en masse |
Portfolio Characteristics (Unaudited)
PORTFOLIO STATISTICS | |
Percentage of leveraged assets | 26.56% |
Total number of holdings | 27 |
Asset Allocation by Sector1 | Percent of Total Investments |
Master Limited Partnerships | |
Pipeline Transportation | Petroleum | 12.0% |
Pipeline Transportation | Natural Gas | 10.1% |
Gathering + Processing | 2.9% |
Liquefaction | 2.4% |
Total Master Limited Partnerships | 27.4% |
Common Stocks | |
Gathering + Processing | 12.2% |
Pipeline Transportation | Natural Gas | 6.4% |
Pipeline Transportation | Petroleum | 4.8% |
Liquefaction | 0.8% |
Total Common Stocks | 24.2% |
Private Investment | |
Gathering + Processing | 47.6% |
Money Market Funds | 0.8% |
Total | 100.0% |
TOP TEN HOLDINGS1 | Percent of Total Investments |
KKR Eagle Co-Invest LP | 47.6% |
Enterprise Products Partners LP | 4.6% |
The Williams Companies, Inc. | 3.7% |
Plains All American Pipeline LP | 3.5% |
Energy Transfer LP | 3.5% |
Magellan Midstream Partners LP | 3.5% |
Enbridge, Inc. | 3.1% |
MPLX LP | 3.0% |
TC Energy Corp. | 2.7% |
Kinder Morgan, Inc. | 2.5% |
Schedule of Investments
Shares | Value | |||||
MASTER LIMITED PARTNERSHIPS – 37.8% | ||||||
Gathering + Processing – 4.0% | ||||||
Noble Midstream Partners LP | 81,352 | $ 595,496 | ||||
Western Midstream Partners LP | 177,500 | 1,420,000 | ||||
Total Gathering + Processing | 2,015,496 | |||||
Liquefaction – 3.3% | ||||||
Cheniere Energy Partners LP | 50,092 | 1,666,060 | ||||
Pipeline Transportation | Natural Gas – 14.0% | ||||||
Energy Transfer LP | 450,398 | 2,441,157 | ||||
Enterprise Products Partners LP | 201,695 | 3,184,764 | ||||
TC Pipelines LP | 57,368 | 1,467,474 | ||||
Total Pipeline Transportation | Natural Gas | 7,093,395 | |||||
Pipeline Transportation | Petroleum – 16.5% | ||||||
Magellan Midstream Partners LP | 71,252 | 2,436,819 | ||||
MPLX LP | 132,738 | 2,089,296 | ||||
NuStar Energy LP | 50,984 | 541,450 | ||||
Phillips 66 Partners LP | 36,529 | 841,628 | ||||
Plains All American Pipeline LP | 413,352 | 2,471,845 | ||||
Total Pipeline Transportation | Petroleum | 8,381,038 | |||||
Total MASTER LIMITED PARTNERSHIPS (Cost $21,437,480) | 19,155,989 | |||||
COMMON STOCKS – 33.4% | ||||||
Gathering + Processing – 16.8% | ||||||
Antero Midstream Corp. | 163,461 | 877,786 | ||||
EnLink Midstream LLC | 300,854 | 707,007 | ||||
Equitrans Midstream Corp. | 149,105 | 1,261,428 | ||||
HESS Midstream LP | 38,002 | 573,830 | ||||
Rattler Midstream LP | 129,088 | 768,074 | ||||
Targa Resources Corp. | 121,345 | 1,702,470 | ||||
The Williams Companies, Inc. | 132,236 | 2,598,437 | ||||
Total Gathering + Processing | 8,489,032 | |||||
Liquefaction – 1.1% | ||||||
Cheniere Energy, Inc. (n) | 11,694 | 541,081 | ||||
Pipeline Transportation | Natural Gas – 8.9% | ||||||
Kinder Morgan, Inc. | 141,471 | 1,744,337 | ||||
ONEOK, Inc. | 34,025 | 883,970 | ||||
TC Energy Corp. (u) | 44,449 | 1,867,747 | ||||
Total Pipeline Transportation | Natural Gas | 4,496,054 | |||||
Pipeline Transportation | Petroleum – 6.6% | ||||||
Enbridge, Inc. (u) | 73,547 | 2,147,572 | ||||
Pembina Pipeline Corp. (u) | 56,863 | 1,207,202 | ||||
Total Pipeline Transportation | Petroleum | 3,354,774 | |||||
Total COMMON STOCKS (Cost $17,159,770) | 16,880,941 |
Schedule of Investments (continued)
Shares | Value | |||||
PRIVATE INVESTMENT – 65.6% | ||||||
Gathering + Processing – 65.6% | ||||||
KKR Eagle Co-Invest LP (f) | $ 33,200,000 | |||||
Total PRIVATE INVESTMENT (Cost $34,472,094) | 33,200,000 | |||||
SHORT-TERM INVESTMENTS – 1.1% | ||||||
Money Market Fund – 1.1% | ||||||
First American Treasury Obligations Fund, Class X, 0.06% (y) | 527,009 | 527,009 | ||||
GS Financial Square Treasury Solutions Fund, Capital Class, 0.00% (y) | 24,801 | 24,801 | ||||
Total SHORT-TERM INVESTMENTS (Cost $551,810) | 551,810 | |||||
Total Investments – 137.9% (Cost $73,621,154) | 69,788,740 | |||||
Liabilities in Excess of Other Assets – (37.9)% | (19,184,747) | |||||
TOTAL NET ASSETS – 100.0% | $ 50,603,993 |
LP— Limited Partnership |
LLC— Limited Liability Company |
(f) | — 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, 2020, the total value of all such securities was $33,200,000 or 64.5% 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 2.25 years, and invests solely in Veresen Midstream Limited Partnership. This security is characterized as a Level 3 security within the disclosure hierarchy. |
(n) | — Non-income producing security. |
(u) | — Foreign security or a U.S. security of a foreign company. |
(y) | — The rate quoted is the annualized seven-day yield as of September 30, 2020. |
Statement of Assets and Liabilities
Assets: | |
Investments in securities, at value (cost $73,621,154) | $ 69,788,740 |
Deferred offering costs (Note 8) | 207,643 |
Dividends and interest receivable | 69,275 |
Prepaid expenses | 151,162 |
Total assets | 70,216,820 |
Liabilities: | |
Payable for current income taxes (Note 4) | 860,277 |
Mandatory Redeemable Preferred Shares ($0.01 par value, 746 shares issued with liquidation preference of $25,000 per share, net of debt issuance cost $250,587) (Note 9) | 18,399,413 |
Dividends payable to Mandatory Redeemable Preferred shareholders | 35,257 |
Investment advisory fees payable (Note 5) | 60,230 |
Administration fees payable (Note 5) | 9,034 |
Trustees' fees payable | 13,970 |
Accrued expenses | 234,646 |
Total liabilities | 19,612,827 |
Commitments and contingencies (Note 11) | |
Net Assets | $ 50,603,993 |
Composition of Net Assets: | |
Paid-in capital | 428,012,284 |
Accumulated losses | (377,408,291) |
Net Assets | $ 50,603,993 |
Shares Outstanding and Net Asset Value Per Share: | |
Common shares outstanding | 4,929,945 |
Net asset value per share | $ 10.26 |
Statement of Operations
Investment Income (Note 2): | |
Dividends and distributions (net of foreign witholding tax of $86,420) | $ 21,241,320 |
Interest | 55,384 |
Less return of capital distributions | (15,735,217) |
Total income | 5,561,487 |
Expenses: | |
Investment advisory fees (Note 5) | 2,288,801 |
Administration fees (Note 5) | 343,319 |
Legal fees | 346,373 |
Audit and tax services | 138,505 |
Trustees' fees | 136,104 |
Reports to shareholders | 80,698 |
Miscellaneous | 79,609 |
Registration fees | 54,163 |
Transfer agent fees | 45,231 |
Rating agency fees | 31,000 |
Franchise taxes | 25,508 |
Custodian fees | 17,839 |
Fund accounting fees | 17,067 |
Insurance | 14,804 |
Total operating expenses | 3,619,021 |
Interest expense on credit facility | 951,458 |
Amortization of Mandatory Redeemable Preferred Shares issuance costs | 533,921 |
Dividends to Mandatory Redeemable Preferred shareholders | 2,025,869 |
Total expenses | 7,130,269 |
Net investment loss before taxes | (1,568,782) |
Current income tax expense (Note 4) | (3,904,680) |
Net investment loss | (5,473,462) |
Net realized gain (loss) on: | |
Investments | (230,216,975) |
Written option contracts | 90,091 |
Foreign currency transactions | (1,220) |
Net realized loss | (230,128,104) |
Net change in unrealized appreciation (depreciation) on: | |
Investments | (29,476,800) |
Written option contracts | 2,090 |
Foreign currency translations | (64) |
Net change in unrealized depreciation | (29,474,774) |
Net realized and unrealized loss | (259,602,878) |
Net decrease in net assets resulting from operations | $(265,076,340) |
Statements of Changes in Net Assets
For the Fiscal Year Ended September 30, 2020 | For the Fiscal Year Ended September 30, 2019 | ||
Decrease in Net Assets Resulting from Operations: | |||
Net investment loss | $ (5,473,462) | $ (4,633,970) | |
Net realized loss | (230,128,104) | (12,863,128) | |
Net change in unrealized depreciation | (29,474,774) | (16,321,773) | |
Net decrease in net assets resulting from operations | (265,076,340) | (33,818,871) | |
Distributions to Common Shareholders: | |||
Return of capital | (32,742,603) | (44,001,829) | |
Total distributions paid | (32,742,603) | (44,001,829) | |
Capital Share Transactions: | |||
Proceeds from shares sold, net of offering costs (Note 8) | 39,672,677 | 97,625,658 | |
Reinvestment of distributions | 636,630 | 1,159,053 | |
Net increase in net assets from capital share transactions | 40,309,307 | 98,784,711 | |
Total increase (decrease) in net assets | (257,509,636) | 20,964,011 | |
Net Assets: | |||
Beginning of year | 308,113,629 | 287,149,618 | |
End of year | $ 50,603,993 | $308,113,629 | |
Share Transactions: | |||
Shares sold (Note 8) | 6,317,604 | 12,348,410 | |
Shares reinvested (Note 8) | 233,437 | 147,630 | |
Shares reduced due to reverse share split (Note 7) | (44,369,508) * | — | |
Net increase (decrease) in shares outstanding | (37,818,467) | 12,496,040 |
* | The Fund effected a 1:10 reverse share split after market close on July 2, 2020. |
Statement of Cash Flows
Increase (Decrease) in Cash: | |
Cash flows provided by (used for) operating activities: | |
Net decrease in net assets resulting from operations | $(265,076,340) |
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities: | |
Purchases of long-term portfolio investments | (170,486,425) |
Proceeds from disposition of long-term portfolio investments | 263,727,879 |
Net purchases of short-term portfolio investments | 2,051,797 |
Return of capital distributions | 15,735,217 |
Decrease in dividends and interest receivable | (9,747) |
Decrease in deferred offering costs | (82,740) |
Increase in prepaid expenses | (82,762) |
Increase in payable for credit facility interest | (205,743) |
Increase in dividends payable to Mandatory Redeemable Preferred Shareholders | (11,754) |
Increase in payable for current income taxes | 860,277 |
Decrease in investment advisory fee payable | (299,807) |
Decrease in administration fee payable | (44,972) |
Increase in trustees' fee payable | 4,084 |
Decrease in accrued expenses | 32,817 |
Amortization of preferred shares issuance costs | 533,921 |
Net change in unrealized depreciation on investments and option contracts | 29,474,710 |
Net realized loss on investments | 230,126,884 |
Net cash provided by operating activities | 106,247,296 |
Cash flows used for financing activities: | |
Cash used for credit facility | (82,500,000) |
Cash provided by proceeds from shares sold | 39,672,677 |
Cash used for Mandatory Redeemable Preferred Shareholders redemptions | (31,350,000) |
Distributions paid to common shareholders, net of reinvestments | (32,105,973) |
Net cash used for financing activities | (106,283,296) |
Net decrease in cash | (36,000) |
Cash at beginning of fiscal year | 36,000 |
Cash at end of fiscal year | $ — |
Supplemental Disclosure of Cash Flow Information: | |
Interest payments for the fiscal year ended September 30, 2020 totaled $3,183,070. | |
Non-cash financing activities not included consist of reinvestments of dividends and distributions for the fiscal year ended September 30, 2020 of $636,630. |
Financial Highlights
2020 11 | 2019 11 | 2018 *,12 | 2017 13 | 2016 13 | 2015 13 | ||||||
Per Share Operating Performance:10 | |||||||||||
Net asset value, beginning of period | $ 72.10 | $ 94.90 | $ 93.40 | $ 112.20 | $ 109.30 | $ 201.10 | |||||
Net investment income1 | (1.14) | (1.30) | (2.50) | (3.70) | (2.40) | (3.00) | |||||
Return of capital1 | 3.28 | 7.30 | 7.50 | 11.90 | 11.00 | 11.70 | |||||
Net realized and unrealized gain (loss)1,4 | (56.98) | (16.30) | 5.90 | (14.50) | 6.80 | (88.00) | |||||
Net increase (decrease) in net asset value resulting from operations | (54.84) | (10.30) | 10.90 | (6.30) | 15.40 | (79.30) | |||||
Distributions to Common Shareholders: | |||||||||||
Dividends from distributable earnings | — | — | (3.30) | — | — | — | |||||
Return of capital distributions | (7.00) | (12.50) | (6.10) | (12.50) | (12.50) | (12.50) | |||||
Total dividends and distributions paid^ | (7.00) | (12.50) | (9.40) | (12.50) | (12.50) | (12.50) | |||||
Net asset value, end of period | $ 10.26 | $ 72.10 | $ 94.90 | $ 93.40 | $ 112.20 | $ 109.30 | |||||
Market price, end of period | $ 7.45 | $ 71.20 | $ 94.20 | $ 92.00 | $ 115.80 | $ 110.90 | |||||
Total Investment Return based on Net asset value# | -81.70% | -10.92% | 12.33% 8 | -6.59% | 15.62% | -40.75% 5 | |||||
Total Investment Return based on Market price† | -86.71% | -11.32% | 13.20% 8 | -10.85% | 17.61% | -37.97% 5 | |||||
Ratios to Average Net Assets/ Supplementary Data: | |||||||||||
Net assets, end of period (000s) | $50,604 | $308,114 | $287,150 | $229,811 | $233,119 | $215,962 | |||||
Ratio of expenses (benefit) to average net assets2 | 6.95% | 3.62% | 3.68% 9 | 3.51% | 2.90% | (4.96)% | |||||
Ratio of expenses to average net assets (excluding current and deferred tax benefit) | 4.49% | 3.62% | 3.68% 9 | 3.51% | 2.83% | 2.53% | |||||
Ratio of expenses to average net assets (excluding current and deferred tax benefit and interest expense) | 2.28% | 1.89% | 2.03% 9 | 2.04% | 2.06% | 2.00% | |||||
Ratio of net investment loss to average net assets2 | (3.44)% | (1.66)% | (3.22)% 9 | (3.33)% | (2.32)% | (1.82)% | |||||
Ratio of expenses (benefit) to average managed assets3 | 4.83% | 2.49% | 2.51% 9 | 2.31% | 2.06% | (3.46)% | |||||
Portfolio turnover rate | 75% | 56% | 33% 8 | 36% | 62% | 91% | |||||
Credit facility, end of period (000's) | N/A | $ 82,500 | $ 79,100 | $ 66,500 | $ 81,700 | $ 79,600 | |||||
Total amount of preferred shares outstanding (000's) | $18,650 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ — | |||||
Asset coverage per $1,000 unit of senior indebtedness6 | $ 3,713 | $ 3,325 | $ 3,224 | $ 2,973 | $ 2,770 | $ 3,949 | |||||
Asset coverage per preferred shares7 | $92,834 | $179,057 | $168,575 | $139,905 | $141,559 | $ — | |||||
Liquidating preference for preferred shares | $25,000 | $ 25,000 | $ 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. |
^ | Distributions for annual periods determined in accordance with federal income tax regulations. |
* | Following the close of business on February 2, 2018, Brookfield Public Securities Group LLC, 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 | Per share amounts presented are based on average shares outstanding throughout the period indicated. |
2 | 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). |
3 | 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. |
4 | 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. |
5 | 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. |
6 | 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. |
7 | Represents the total value of total assets less liabilities, not including preferred shares divided by the total number of preferred shares. |
8 | Not annualized. |
9 | Annualized. |
10 | The Fund had a 1:10 reverse share split effective after market close on July 2, 2020. Prior year net asset values and per share amounts have been restated to reflect the impact of the reverse share split. |
11 | For the Fiscal Years Ended September 30, |
12 | For the Ten Month Period Ended September 30, 2018. |
13 | For the Fiscal Years Ended November 30, |
Notes to Financial Statements
Notes to Financial Statements (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, 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 | |||
Master Limited Partnerships | $ 19,155,989 | $ — | $ — | $ 19,155,989 | |||
Common Stocks | 16,880,941 | — | — | 16,880,941 | |||
Private Investment | — | — | 33,200,000 | 33,200,000 | |||
Money Market Funds | 551,810 | — | — | 551,810 | |||
Total Investments | $ 36,588,740 | $ — | $ 33,200,000 | $ 69,788,740 |
Notes to Financial Statements (continued)
Quantitative Information about Level 3 Fair Value Measurements | ||||||
Type of Security | Value as of September 30, 2020 | Valuation Approach | Valuation Technique | Unobservable Input | Amount | Impact to Valuation from an Increase in Input(1) |
Private Investment | $33,200,000 | Income Approach | Discounted Cash Flow | Discount Rate Exit EBITDA Multiple Liquidity Discount | 10.0% 11.0x 20.0% | Decrease Increase Decrease |
Market Approach | Guideline Public Company | EBITDA Multiple Liquidity Discount | 10.1x 20.0% | Increase Decrease |
Private Investment | |
Balance as of September 30, 2019 | $ 45,400,000 |
Change in unrealized depreciation | (12,200,000) |
Balance as of September 30, 2020 | $ 33,200,000 |
Change in unrealized gains or losses relating to assets still held at the reporting date | (12,200,000) |
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Derivatives | Location of Gains (Losses) on Derivatives | Net Realized Gain on Derivatives | Net Change in Unrealized Appreciation of Derivatives |
Written equity call options | Option contracts | $90,091 | $2,090 |
Current tax expense | |
Federal | $ 3,599,978 |
State | 304,702 |
Total current tax expense | $ 3,904,680 |
Deferred tax expense (benefit) | |
Federal | $(58,216,196) |
State | (5,266,763) |
Change in valuation allowance | 63,482,959 |
Total deferred tax expense | $ — |
Amount | |
Application of statutory income tax rate | $(54,846,050) |
State income taxes net of federal benefit | (4,642,289) |
Effect of permanent & temporary differences | (89,940) |
Change in valution allowance | 63,482,959 |
Total current income tax expense | $ 3,904,680 |
Notes to Financial Statements (continued)
Amount | |
Deferred tax assets: | |
Net operating loss carryforward (tax basis) | $ — |
Capital loss carryforward (tax basis) | 82,775,008 |
Net unrealized losses on investment securities (tax basis) | 814,343 |
Valuation Allowance | (83,589,351) |
Total deferred tax assets | $ — |
Notes to Financial Statements (continued)
Expiration Date: | Amount |
9/30/2021 | $ 71,568,964 |
9/30/2024 | 23,430,056 |
9/30/2025 | 268,408,109 |
Total | $363,407,129 |
Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation |
$74,422,123 | $1,547,984 | $(6,181,367) | $(4,633,383) |
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Notes to Financial Statements (continued)
Report of Independent Registered Public Accounting Firm
Compliance Certification (Unaudited)
Proxy Results (Unaudited)
Shares Voted For | Shares Voted Against | Shares Voted Abstain | ||
Proposal 1a. | 37,549,320 | 1,894,716 | 1,227,991 | |
Proposal 1b. | 448 | — | — |
Board Considerations Relating to the Investment Advisory Agreement (Unaudited)
Board Considerations Relating to the Investment Advisory Agreement (Unaudited) (continued)
Board Considerations Relating to the Investment Advisory Agreement (Unaudited) (continued)
Board Considerations Relating to the Investment Advisory Agreement (Unaudited) (continued)
Additional Information Regarding the Fund (Unaudited)
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Additional Information Regarding the Fund (Unaudited) (continued)
• | dependence on the Adviser’s ability to predict correctly movements in the direction of interest rates and securities prices; |
• | imperfect correlation between the price of the derivative instrument and movements in the prices of the reference instrument; |
• | the fact that skills needed to use these strategies are different from those needed to select portfolio securities; |
• | the possible absence of a liquid secondary market for any particular instrument at any time; |
• | the possible need to defer closing out certain positions to avoid adverse tax consequences; |
• | the possible inability of the Fund to purchase or sell a security at a time that otherwise would be favorable for it to do so, or the possible need for the Fund to sell a security at a disadvantageous time due to a need for the Fund to maintain “cover” or to segregate securities in connection with the hedging techniques; |
• | the creditworthiness of counterparties; |
Additional Information Regarding the Fund (Unaudited) (continued)
• | if used for hedging purposes, the duration of the derivative instrument may be significantly different than the duration of the related liability or asset; and |
• | volatility of interest rates and price of the reference instrument. |
Additional Information Regarding the Fund (Unaudited) (continued)
Additional Information Regarding the Fund (Unaudited) (continued)
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Additional Information Regarding the Fund (Unaudited) (continued)
Additional Information Regarding the Fund (Unaudited) (continued)
Additional Information Regarding the Fund (Unaudited) (continued)
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 Director to serve until 2021 Annual Meeting of Shareholders: | ||||||
David W. Levi* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1971 | Director Served since 2018 | Director/Trustee of several investment companies advised by the Adviser (2017-Present). Chief Executive Officer of the Adviser (2019-Present); President of the Adviser (2016-2019); Managing Director and Head of Distribution of the Adviser (2014-2016); Managing Partner of Brookfield Asset Management Inc. (2015-Present). | 7 | |||
Independent Trustee Class I Director to serve until 2021 Annual Meeting of Shareholders: | ||||||
William H. Wright II c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1960 | Director, Member of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2020 | Director/Trustee of several investment companies advised by the Adviser (2020-Present); Retired. Prior to that, Managing Director, Morgan Stanley (1982-2010); Director of Alcentra Capital Corporation (1940 Act BDC) (2018-2019); Director of The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc. (2013-2016); Advisory Director of Virtus Global Dividend & Income Fund (2016-2019); Advisory Director of Virtus Global Multi-Sector Income Fund (2016-2019); Advisory Director of Virtus Total Return Fund (2016-2019); Advisory Director of Duff & Phelps Select Energy MLP Fund (2016-2019). | 7 | |||
Independent Directors Class II Trustees to serve until 2022 Annual Meeting of Shareholders: | ||||||
Edward A. Kuczmarski c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1949 | Director and Independent Chairman of the Board, Member of the Audit Committee, Chairman of the Nominating and Compensation Committee Served Since 2011 | Director/Trustee of several investment companies advised by Brookfield Public Securities Group LLC (the “Adviser”) (2011- Present); 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). | 7 | |||
Stuart A. McFarland** c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1947 | Director, Member of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2013 | Director/Trustee of several investment companies advised by the Adviser (2006-Present); Director of United Guaranty Corporation (2011-2016); Director of Drive Shack Inc. (formerly, New Castle 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); Director of Steward Partners (2017- Present). | 7 |
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 Trustees to serve until 2023 Annual Meeting of Shareholders: | ||||||
Heather S. Goldman** c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1967 | Director, Member of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2013 | Director/Trustee of several investment companies advised by the Adviser (2013-Present); Board Director of Gesher USA (2015-Present); Trustee of Nevada Museum of Art (2016-2018); Member of the Honorary Board of University Settlement House (2014-Present); Co-founder and CEO of Capstak, Inc. (2014-2018); Chairman of Capstak, Inc. (2016-2018). | 7 | |||
Louis P. Salvatore c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1946 | Director, Chairman of the Audit Committee, Member of the Nominating and Compensation Committee Served Since 2011 | 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 (formerly, Chambers Street Properties) (2012-2018); Director of Turner Corp. (2003- Present); Employee of Arthur Andersen LLP (2002-Present); Principal of Trimblestone Investment Co. (2019- Present).. | 7 |
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 (2010-2017) 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 Accounting and Administration 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 P. Tushaus* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 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). |
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 |
Mohamed S. Rasul* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 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). |
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 the most recent fiscal year 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 $68,000 and $52,000 for the fiscal years ended September 30, 2020 and September 30, 2019, respectively.
(b) Audit-Related Fees
The aggregate Audit-Related Fees billed by Deloitte to the Registrant in the fiscal years ended September 30, 2020 and September 30, 2019 were $8,500 and $10,500, respectively, 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 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 Deloitte with respect to corresponding registration statement filings.
For the Registrant’s two most recent fiscal years, there were no Audit-Related Fees billed by Deloitte 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 years ended September 30, 2020 and September 30, 2019, the aggregate fees billed by Deloitte to the Registrant for tax compliance, tax advice and tax planning (“Tax Fees”) were $133,124 and $74,938, respectively. 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 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, 2020 and September 30, 2019.
The services for which Tax Fees were charged comprise all services performed by professional staff in Deloitte’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 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, 2020 and September 30, 2019.
(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 years ended September 30, 2020 and September 30, 2019, for non-audit services rendered to the Registrant and Fund Service Providers were $290,624 and $230,438, respectively. For the fiscal years ended September 30, 2020 and September 30, 2019, these amounts reflect the amounts disclosed above in Item 4(b),(c),(d), plus $149,000 and $145,000, respectively, 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 Public Securities Group LLC that were associated with Deloitte’s SSAE 16 Review (formerly, SAS No. 70).
(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 Public Securities Group LLC and its subsidiaries and affiliates (collectively, “PSG”) in voting portfolio proxies relating to securities that are held in the portfolios of the investment companies or other clients (“Clients”) for which PSG has been delegated such proxy voting authority.
A. Proxy Voting Committee
PSG’s internal proxy voting committee (the “Committee”) is responsible for overseeing the proxy voting process and ensuring that PSG 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, PSG 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, PSG seeks to ensure that all votes are free from unwarranted and inappropriate influences. Accordingly, PSG 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, PSG generally view proxy voting as a way to enhance the value of the company’s stock held by the Clients. Similarly, when voting on matters for which the Guidelines dictate a vote be decided on a case-by-case basis, PSG’s primary consideration is the economic interests of its Clients.
2. Proxy Voting Agent
PSG may retain an independent third party proxy voting agent to assist PSG 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, PSG may consider the proxy voting agent’s research and analysis as part of PSG’s own review of a proxy proposal in which the Guidelines recommend that the vote be considered on a case-by-case basis. PSG bears ultimate responsibility for how portfolio proxies are voted. Unless instructed otherwise by PSG, the proxy voting agent, when retained, will vote each portfolio proxy in accordance with the Guidelines. The proxy voting agent also will assist PSG in maintaining records of PSG’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
PSG votes portfolio proxies without regard to any other business relationship between PSG and the company to which the portfolio proxy relates. To this end, PSG must identify material conflicts of interest that may arise between a Client and PSG, such as the following relationships:
● | PSG provides significant investment advisory or other services to a portfolio company or its affiliates (the “Company”) whose management is soliciting proxies or PSG is seeking to provide such services; |
● | PSG serves as an investment adviser to the pension or other investment account of the Company or PSG is seeking to serve in that capacity; or |
● | PSG 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 PSG a loss of revenue or other benefit.
PSG 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, PSG and the Committee employ the following procedures, as long as PSG 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, PSG will vote the portfolio proxy in accordance with the Guidelines, provided that the Guidelines do not provide discretion to PSG on how to vote on the matter (i.e., case-by-case); or |
● | If the previous procedure does not provide an appropriate voting recommendation, PSG may retain an independent fiduciary for advice on how to vote the proposal or the Committee may direct PSG 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, in accordance with local law or business practices, many foreign companies prevent the sales of shares that have been voted for a certain period beginning prior to the shareholder meeting and ending on the day following the meeting. The costs of voting proxies with respect to shares of foreign companies include the potentially serious portfolio management consequences of reduced flexibility to sell the shares at the most advantageous time for the Fund. As a result, such proxies generally will not be voted in the absence of an unusual, significant vote of compelling economic importance. In determining whether to vote proxies under these circumstances, PSG, in consultation with the Committee, considers whether the costs of voting proxies with respect to such shares of foreign companies generally outweigh any benefits that may be achieved by voting such proxies.
C. Fund Board Reporting and Recordkeeping
PSG 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 PSG 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, PSG will provide the Boards of Directors/Trustees of the Funds with a written report of any recommended changes based upon PSG’s experience under these Policies and Procedures, evolving industry practices and developments in the applicable laws or regulations. |
PSG 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 PSG to such requests; and |
● | any written materials prepared by PSG 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 Directors of PSG 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.
Robert T. Chisholm. Rob Chisholm is a Managing Director and Portfolio Manager on the Energy Infrastructure Equities team for Brookfield’s Public Securities Group. In this role, he oversees and contributes to the portfolio construction process, including execution of buy/sell decisions. Prior to joining Brookfield in 2007, Mr. Chisholm worked in the Energy Investment Banking Division of Morgan Keegan and was Senior Project Analyst at Enbridge Energy Partners, LP where he analyzed midstream MLP mergers and asset acquisitions. He also worked at Koch Industries in the Capital Markets, Hydrocarbon and Midstream Groups. Mr. Chisholm earned a Master of Business Administration from The University of Texas at Austin and a Bachelor of Business Administration from Texas Christian University.
Jeff Jorgensen. Jeff Jorgensen is a Portfolio Manager and the Director of Research on the Energy Infrastructure Equities team for Brookfield’s Public Securities Group. In this role, he leads the research efforts across the firm’s energy infrastructure investment products and contributes to the portfolio construction process, including execution of buy/sell decisions. Prior to joining Brookfield in 2014, Mr. Jorgensen was an Executive Director at UBS Investment Bank in the Global Natural Resources group after working in Energy Investment Banking at Morgan Stanley and as a finance attorney at Bracewell & Giuliani LLP. As a banker and an attorney, he worked with more than 50 management teams on over $40 billion of MLP and energy equity and debt offerings and $10 billion of M&A transactions. Mr. Jorgensen earned a Juris Doctor degree with Honors from The University of Texas School of Law, and a Bachelor of Arts in Economics, Managerial Studies and Sports Management from Rice University.
Management of Other Accounts
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, 2020 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.
Registered Investment Companies | Other Pooled Investment Companies | Other Accounts | ||||||||||
Number of Accounts Managed | 3 | 5 | 501 | |||||||||
Number of Accounts Managed with Performance-Based Fees | – | 1 | – | |||||||||
Assets Managed (assets in millions) | $ | 806.0 | $ | 22.0 | $ | 258.7 | ||||||
Assets Managed with Performance-Based Fees (assets in millions) | $ | – | $ | 6.1 | $ | – |
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, 2020 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
Registered Investment Companies | Other Pooled Investment Companies | Other Accounts | ||||||||||
Number of Accounts Managed | 3 | 5 | 501 | |||||||||
Number of Accounts Managed with Performance-Based Fees | – | 1 | – | |||||||||
Assets Managed (assets in millions) | $ | 806.0 | $ | 22.0 | $ | 258.7 | ||||||
Assets Managed with Performance-Based Fees (assets in millions) | $ | – | $ | 6.1 | $ | – |
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, 2020.
Dollar Range of Securities Owned | ||
Robert T. Chisholm | $1 - $10,000 | |
Jeff Jorgensen | $1 - $10,000 |
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 Public Securities Group LLC (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 above, each portfolio manager manages multiple accounts. As a result, a portfolio manager will not be able to devote all of his time to management of the Fund. A portfolio manager, therefore, may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for the Fund as might be the case if he were to devote all of his attention to the management of only the Fund.
Allocation of Limited Investment Opportunities. As indicated above, each portfolio manager manages accounts with investment strategies and/or policies that are similar to the Fund. If a portfolio manager identifies an investment opportunity that may be suitable for multiple accounts, the Fund 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 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, a 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 and 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 and 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 funds 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 fund, 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 Fund 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 Fund 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 a portfolio manager’s compensation differs among accounts (such as where certain accounts pay higher management fees or performance based management fees), the portfolio manager may be motivated to favor certain accounts over others. A portfolio manager also may be motivated to favor accounts in which he has 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 a 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 compensation will depend on the achievement of performance milestones on those accounts. A portfolio manager could be incented to afford preferential treatment to those accounts and thereby be subject to a potential conflict of interest.
Certain Business Relationships. Dan C. Tutcher, is a Managing Director of the Adviser on the Energy Infrastructure Securities team. Mr. Tutcher also serves on the Board of Enbridge, Inc. (NYSE: ENB). Enbridge Inc. is the parent company of Spectra Energy Corp (NYSE:SE) and DCP Midstream Partners (NYSE: DCP) (collectively, the “Enbridge Companies”). As a board member, Mr. Tutcher attends quarterly board meetings for Enbridge, Inc. The Fund may from time to time invest in Enbridge Companies. In connection with any such investments, the Adviser has adopted policies and procedures that are designed to address potential conflicts of interest that may arise in connection with Mr. Tutcher’s service as a director of Enbridge Inc. Specifically, these policies and procedures, among other things; (i) establish information barriers designed to restrict Mr. Tutcher from sharing information regarding Enbridge Companies with other investment professionals of the Adviser, (ii) require Mr. Tutcher to recuse himself from any discussions by the Adviser’s Investment Committee involving Enbridge Companies and (iii) require that all trading decisions involving Enbridge Companies be made by the Fund’s Portfolio Managers, without any input from Mr. Tutcher. While these policies and procedures are designed to allow the Fund to invest in Enbridge Companies, the policies and procedures may require the Adviser to restrict trading in Enbridge Companies from time to time, which may prevent the Fund from acquiring or disposing of securities of Enbridge Companies at a favorable time. In addition, as a result of these policies and procedures, the Fund will not benefit from Mr. Tutcher’s experience and expertise with respect to investments in Enbridge Companies.
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 Brookfield. |
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.
Each portfolio manager was compensated for the sale of his equity interests in Center Coast to Brookfield, and may receive additional contingent payments to be paid within the first five years following the closing of the transaction calculated based, in part, on the assets under management of the business and subject to certain conditions.
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) |
(3) | Not applicable. |
(b) |
(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 7, 2020 |
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 7, 2020 | |||
By: | /s/ Angela W. Ghantous | |||
Angela W. Ghantous | ||||
Treasurer and Principal Financial Officer | ||||
Date: | December 7, 2020 |