Brookfield Investment Management Brookfield High Yield Strategic Income Fund BHY.UN

Transcription

1 Brookfield Investment Management 2015 Brookfield High Yield Strategic Income Fund BHY.UN Interim Management Report of Fund Performance For the period from January 1, 2015 to June 30, 2015

2 IN PROFILE Brookfield High Yield Strategic Income Fund (the Fund ) is managed by Brookfield Investment Management (Canada) Inc. ( BIM Canada ). BIM Canada is a subsidiary of Brookfield Asset Management Inc., a global alternative asset manager with over US$200 billion of assets under management as at June 30, 2015 and over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity. Brookfield Investment Management Inc. is the investment manager of the Fund. BHY.UN (TSX LISTED) UNIT INFORMATION Units Outstanding (June 30, 2015): Targeted Quarterly Distributions: Record Date: Payment Date: 12,919,000 Units The quarterly distributions are targeted to be $ per Unit ($0.65 per annum representing an annual cash distribution of 6.5% based on the $10.00 per Unit issue price). The Fund does not have a fixed distribution. The last business day of each of March, June, September and December. No later than the 15th business day of the month following the distribution Record Date Interim Management Report of Fund Performance 1

3 LETTER TO UNITHOLDERS Dear Unitholders, We are pleased to provide this interim management report of fund performance for Brookfield High Yield Strategic Income Fund (the Fund ) for the period ended June 30, 2015 (the Period ). The Fund was created with the objectives to (i) provide holders of Units ( Unitholders ) with taxadvantaged quarterly cash distributions; (ii) maximize total return for Unitholders through distributions and capital appreciation; and (iii) preserve capital. The quarterly distributions are currently targeted at $ per Unit or $0.65 per annum, representing a targeted annual cash distribution of 6.5% based on the $10.00 per Unit issue price. To achieve this return, the Fund obtains economic exposure to a portfolio (the Portfolio ) held by High Yield Strategic Trust through the utilization of a forward agreement. The Portfolio is comprised primarily of North American high yield debt. The Portfolio may also invest in other fixed income, equity and derivative securities. PERFORMANCE As at June 30, 2015, the net asset value per Unit was $9.45 after payments of two quarterly distributions to Unitholders of $ per Unit. This compares to the net asset value per Unit of $9.61 on December 31, For the six months ended June 30, 2015, the Fund had a total return of 1.78% including payment of quarterly distributions to Unitholders of $ per Unit. For the Period, the Portfolio was predominately invested in high yield bonds and asset-backed and mortgage-backed securities of companies domiciled in the United States and to a lesser extent, Canada, Europe and the United Kingdom. Global events rattle markets Geopolitical uncertainty provided an unsettled backdrop for financial markets in the second quarter of Firmer growth in the U.S. helped drive the yield on U.S. Treasury rates higher, while growing concerns over Greece included a potential sovereign debt default, capital controls and bank closings. As a result, the Chicago Board Options Exchange Volatility Index (VIX) spiked at the end of June, reflecting general investor nervousness. Toward the end of the quarter, equity markets in China declined sharply, following bubble-like behavior earlier in the year. High yield markets moved modestly higher Bucking the negative trend of most fixed income markets for the second quarter, the high-yield bond market produced very modest positive results for the quarter. The low correlation of high-yield to interest rates served to produce this positive result. Within the high-yield market, higher-quality BB bonds declined (refl ecting their greater interest rate sensitivity) and CCC bonds declined, reflecting growing credit concerns in certain industry sectors, namely metals, mining and energy. The leveraged loan market, which has very low interest rate correlation due to its floating rate structure, modestly outperformed the high-yield market in the quarter and pulled ahead of high-yield in the year-to-date performance rankings. Despite rising interest rates and positive total returns for high-yield, the highyield market spread increased from 474 basis points to 490 basis points. 1 Mutual fund flows turned sharply negative in the quarter, totaling $5 billion in outflows, a marked contrast to the $9.1 billion inflow in the first quarter. 2 Year-to-date fund flows remain positive at $4.1 billion. New issue activity this quarter was $95.6 billion, matching the pace of the first quarter, bringing year-to-date issuance to $191 billion, representing a strong new issue market. New issues tended to come at the narrow end of price talk and traded well in aftermarket trading, reflecting 1 Source: Merrill Lynch, Bloomberg. Data as of June 30, Source: J.P. Morgan, High Yield Market Monitor, July 1, All subsequent data is from this publication Interim Management Report of Fund Performance 2

4 generally strong investor demand. Smaller-sized bonds outperformed larger, more-liquid securities during the quarter. This behavior often can reflect some supply/demand pressure in the secondary market. Credit conditions remain positive despite natural resource pressure Continued pressure in the energy and coal sectors increased default activity this quarter. The 12-month default rate rose to 1.9%, which remains well below the long-term average. Approximately 65% of defaults this year have come in the energy and coal sectors. On the other hand, the upgrade-todowngrade ratio improved from 0.97 in March 2015 to 1.09 in June 2015, signaling continued improvement in overall credit quality. Investors saw positive trends in the new issue market this quarter. While we were concerned in the first quarter about the decline in refinancing as a use of proceeds, which had dropped to 44%, this metric totaled 51% year to date through June, roughly paralleling the rate seen in Refinancing has a beneficial effect on corporate credit by reducing interest payments and extending maturities. The market continued to see relatively modest issuance of lower-rated credit, which totaled 12.8% of new issue volume year to date through June 2015, a decline from 18.5% over the same period in This suggests that bond investors are maintaining a healthy approach to credit. New issue financing for mergers, acquisitions and leveraged buyouts (LBOs), however, remains somewhat eleva ted at 31% of total issuance year to date through June, only modestly declining from the 33% seen in the first quarter of These figures remain elevated compared to the 26% posted in This form of financing tends to increase corporate credit risk, since most acquisitions tend to increase corporate leverage. OUTLOOK Brookfield believes that the outlook for high-yield credit remains relatively benign. Market spreads are substantial in view of the only modest embedded credit risk among high-yield companies. A number of concerning trends in the new issue market observed in the first quarter of 2015 have reversed, suggesting that investors are maintaining reasonable credit standards and corporate treasurers are limiting overall risk. On the other hand, a number of late cycle events are occurring. Distress continues to build in the energy, metals and natural resource sectors, driven by lower product pricing. It seems likely that defaults in these sectors may increase, driving the overall default rate higher. Furthermore, global macro concerns remained troubling, including well-publicized credit difficulties in Greece and Puerto Rico, and the equity market decline in mainland China. While we note these events carefully, we believe that on average overall market defaults should remain at or below long-term averages, and believe that current spreads adequately compensate investors for these risks. We continue to believe that in view of healthy overall credit in the high-yield market, the greatest potential risk for high-yield investors continues to revolve around global political and economic events. Should investors take a risk-off posture, this may pressure markets despite reasonable overall fundamentals. We believe that the U.S. Federal Reserve (Fed) is likely to engineer higher short-term interest rates at some point in the next 12 months. However, we do not believe that the longer end of the U.S. Treasury curve is likely to move significantly higher on Fed tightening, and we think that current market spreads are sufficiently wide that higher interest rates should not negatively impact the overall high-yield market Interim Management Report of Fund Performance 3

5 We welcome your questions and comments, and encourage you to contact our Investor Relations team at (855) or visit us at for more information. Thank you for your support. Dana Erikson, Managing Director On behalf of the Investment Manager, Brookfield Investment Management Inc Interim Management Report of Fund Performance 4

6 MANAGEMENT REPORT OF FUND PERFORMANCE This interim management report of fund performance contains financial highlights but does not contain the complete interim financial statements of the Brookfield High Yield Strategic Income Fund (the Fund ). The interim financial statements may contain information not included in the management report of fund performance. You can get a copy of the interim financial statements at your request, and at no cost, by contacting us (see contact information at end of this report) or by visiting our website at or by viewing our filings on SEDAR at Unitholders may also contact us to request a free copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. This report may contain forward-looking statements. The use of any of the words anticipate, may, will, expect, estimate, should, believe and similar expressions are intended to identify forward-looking statements. Such statements reflect the opinion of Brookfield Investment Management Inc. ( Investment Manager or BIM ) regarding factors that might be reasonably expected to affect the performance and the distribution on units of the Fund and are based on information available at the time of writing. The Investment Manager believes that the expectations reflected in these forwardlooking statements and in the report are reasonable but no assurance can be given that these expectations or the report will prove to be correct and accordingly, they should not be unduly relied on. These statements speak only as at the date of the report. Actual events and outcomes may differ materially from those described in these forward-looking statements or report. Unless otherwise indicated, all information is presented as at June 30, 2015 and expressed in Canadian dollars. None of the websites referred to in this interim management report of fund performance, or any of the information on such websites, are incorporated by reference in this interim management report of fund performance. INVESTMENT OBJECTIVES AND STRATEGIES The Fund endeavours to provide holders of units ( Unitholders ) with tax-advantaged quarterly cash distributions currently targeted at $ per unit ($0.65 per annum representing an annual cash distribution of 6.5% based on the $10.00 per unit issue price) while maximizing total return for Unitholders through distributions and capital appreciation and preserving the net asset value ( NAV ) of the Fund. The Fund was created with the objective of producing a high income return by obtaining economic exposure to a portfolio (the Portfolio ) held by High Yield Strategic Trust (the Trust ), through the utilization of a forward agreement. The investments in the Portfolio are comprised primarily of North American high yield debt. Brookfield Investment Management (Canada) Inc. ( BIM Canada ) is the manager (the Manager ) of the Fund and the Trust (together, the Funds ) and BIM is the investment manager of the Funds. RISK At June 30, 2015, the Portfolio was primarily invested in high yield bonds of companies domiciled in the United States and to a lesser extent, Canada, Europe and the United Kingdom. The Portfolio was also invested in asset-backed and mortgage-backed securities and equities, albeit at relatively lower weightings. To fund the cash distribution currently targeted at $0.65 per annum, while preserving the net asset value, the Fund, through its exposure to the Portfolio, is exposed to various risks including risks related to the credit quality of the issuer of the securities, the trading liquidity of the securities and the currency in which the securities are denominated. The Fund seeks to minimize potentially adverse effects of these risks on the Trust s performance by employing experienced portfolio 2015 Interim Management Report of Fund Performance 5

7 managers, by continuously monitoring the Trust s securities positions and markets, and by hedging the majority of currency risk. Since the Fund s inception on June 19, 2012, there has been no material change in the overall level of risk created by the credit quality, trading liquidity or currency denomination of the investments employed by the Trust. The Trust uses leverage to finance the purchase of certain investments. Leverage in the Trust is restricted to 33% of the total assets of the Trust. As at June 30, 2015, the Trust had employed leverage equal to 30.7% (December 31, %) of the total assets of the Trust. The Trust uses derivative instruments for hedging purposes to protect investment returns on the Portfolio from currency fluctuations. Not less than 70% of the Portfolio s investments denominated in currencies other than the Canadian dollar are hedged back to the Canadian dollar. RESULTS OF OPERATIONS The following Manager s commentary relates to the Fund s exposure to the performance of the Portfolio held by the Trust: The Fund effectively began operations on June 19, 2012 when it completed an initial public offering of 12,500,000 units (the Units ) and subsequently issued 425,000 Units pursuant to an over-allotment option on June 29, 2012 at $10.00 per Unit, for gross proceeds of $129.3 million and net proceeds of $121.7 million after deducting issuance costs of approximately $7.6 million. The Fund s net asset value was $122.1 million as at June 30, 2015, a decrease of $2.1 million from $124.2 million as at December 31, The decrease in net asset value was largely comprised of a reduction in the Fund s net asset value of $4.2 million during the Period through distributions to Unitholders and the redemption of 6,000 units for $0.1 million, while being offset by operating profit generated by the Fund of $2.2 million. As at June 30, 2015, the net asset value per Unit was $9.45, after recording distributions to Unitholders of $0.33 per Unit, compared to $9.61 per unit on December 31, The total return for the Fund was 1.78% for the six months ended June 30, In the first half of 2015, the Trust continued to be positioned for economic expansion by overweighting middle- and lower-quality credit, underweighting BB bonds and overweighting cyclical industries such as leisure, services and energy. The biggest underweights continued to be banking, financial services and technology. Credit positioning added value this year, since higher-quality BB bonds tended to underperform the overall market in an environment of rising overall interest rates. BB bonds tend to be more interest rate sensitive than the rest of the market. Similarly, the Trust s industry positioning also added value. Rebounding energy prices helped move energy bonds higher this year, gaming names in the leisure sector rebounded from depressed levels last year and our financial service underweight was neutral in terms of performance. Investors showed some skittishness toward the high-yield market this year. There were substantial inflows into high-yield mutual funds in the first quarter, but investors withdrew considerable funds in the second quarter. These unstable fund flows caused larger, more liquid bonds to underperform this year. The Trust is underweight larger bonds, and overweight mid-to smaller-sized issues. This helped insulate returns from erratic fund flows and positively contributed to relative performance. Performance detractors this year came mainly from security selection in metals and mining, where price declines in iron ore, steel and coal drove bond prices lower in those sectors. There was also some negative security selection in the telecom sector, where certain companies exhibited indigestion from recent acquisitions, or investors worried about changes in business strategy Interim Management Report of Fund Performance 6

8 Leverage is restricted to 33% of the total assets of the Trust. Accordingly, at the time of borrowing, the maximum amount of leverage that the Trust could employ is 1.50:1 (total long positions, including leveraged positions, divided by net assets of the Trust). As at June 30, 2015, the Trust had employed leverage equal to 30.7% (December 31, %) of the total assets of the Trust, equating to $58.1 million (December 31, $45.5 million). The minimum and maximum amount of borrowings outstanding during the year ended June 30, 2015 was $43.8 million and $58.1 million, respectively. The minimum and maximum amount of borrowings outstanding during the period ended December 31, 2014 was $41.1 million and $58.7 million, respectively. The borrowings were used to grow the Trust s investments and for working capital needs. Adding a controlled amount of leverage to the Trust is consistent with the Trust s objectives. RECENT DEVELOPMENTS There have been no recent developments in the market, outlook, or operations of the Trust that represent a material change for investors. Transition to IFRS In accordance with IAS 34, Interim Financial Reporting, the financial statements for the fiscal year beginning January 1, 2014 have been prepared in accordance with International Financial Reporting Standards. The Fund adopted this basis of accounting as required by Canadian securities legislation and the Canadian Accounting Standards. Previously, the Fund prepared its financial statements in accordance with Canadian generally accepted accounting principles as defined in Part V of the Chartered Professional Accountants of Canada Handbook. Under Canadian GAAP, the Fund measured the fair value of its investments in accordance with Section 3855, Financial Instruments Recognition and Measurement, which required the use of bid prices for long positions and ask prices for short positions; to the extent such prices were available. Under IFRS, the Fund measures the fair values of its investments using the guidance in IFRS 13, Fair Value Measurement ( IFRS 13 ), which requires that if an asset or a liability has a bid price and an ask price, then its fair value is to be based on a price within the bid-ask spread that is most representative of fair value. It also allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid-ask spread. As a result, upon adoption of IFRS an adjustment was recognized. RELATED PARTY TRANSACTIONS The Manager and the Investment Manager are wholly owned subsidiaries of Brookfield Asset Management Inc. ( Brookfield ) and the Investment Manager manages the investment and trading activities of the Funds pursuant to a management agreement. Due to Brookfield s ability to control the Funds, Brookfield, and its affiliates over which it has the ability to exercise control or significant influence, are related parties of the Funds by virtue of common control or common significant influence. Transactions with related parties, including investment transactions, are conducted in the normal course of operations and are recorded at exchange amounts, which are equivalent to normal market terms. Please refer to the section titled Management Fees, which outlines the fees paid to the Manager by the Funds. As at June 30, 2015, Brookfield and its affiliates owned a 7.7% (December 31, %) interest in the Fund. During the twelve months ended December 31, 2014, Brookfield sold 0.7% of its ownership interest to an affiliated party. There were no other transactions conducted with related parties during six month period ended June 30, 2015 and twelve month period ended December 31, Interim Management Report of Fund Performance 7

9 FINANCIAL HIGHLIGHTS The following tables provide selected key financial information about the Fund and are intended to help you understand the Fund s financial performance since inception: For the six For the twelve For the twelve Period from months ended months ended months ended June 19, 2012 through The Fund s Net Assets per Unit (1) June 30, 2015 December 31, 2014 December 31, 2013 December 31, 2012 (2) Net assets, beginning of period (3) $9.61 $10.12 $ (3) Increase (decrease) from operations Total revenue Total expenses (0.07) (0.17) (0.17) (0.09) Realized gains (losses) for the period 0.08 (0.03) Unrealized gains (losses) for the period Total increase (decrease) from operations (4) $0.95 $0.73 Distributions Due to return of capital gains - - (0.21) - Due to return of capital (0.33) (0.65) (0.44) (0.32) Total distributions (5) (0.33) (0.65) (0.65) (0.32) Net assets, end of period (6) $9.45 $9.61 $10.12 $9.85 Notes: (1) This information is derived from the Fund s unaudited interim financial statements and the audited financial statements as at December 31 of the year. The 2014 information was prepared in accordance with IFRS and the 2013 information was restated in accordance with IFRS. The 2012 information was prepared in accordance with Canadian GAAP. (2) The Fund commenced operations on June 19, (3) For the 2012 period, reflects the issue price of $10.00 less issue expenses of $0.59 per Unit. (4) Net assets and distributions are based on the actual number of Units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of Units outstanding over the financial period. Accordingly, totals may not sum in the above table due to the different basis for computing the per unit amounts. (5) Quarterly distributions were recorded as equal payments of $0.1625/unit. Cash payment of distributions occurs within 15 business days of the record date. (6) This is not a reconciliation of the beginning and ending net assets per Unit. For the six For the twelve For the twelve Period from months ended months ended months ended June 19, 2012 through Ratios and Supplemental Data June 30, 2015 December 31, 2014 December 31, 2013 December 31, 2012 (1) Total net asset value $122,139,281 $124,166,917 $130,810,223 $127,249,310 Number of Units outstanding 12,919,000 12,925,000 12,925,000 12,925,000 Management expense ratio (2) 3.25% 3.55% 4.38% 9.38% Management expense ratio before waivers and absorptions 3.25% 3.55% 4.38% 9.38% Trading expense ratio (3) N/A N/A N/A N/A Portfolio turnover rate (3) N/A N/A N/A N/A Net asset value per Unit $9.45 $9.61 $10.12 $9.85 Closing market price $9.28 $9.28 $9.41 $9.70 Notes: (1) Commencement of investment operations. (2) Management expense ratio ( MER ) is based on total expenses of the Funds (excluding commissions and other portfolio transaction costs but including interest expense and management fees of the Trust) for the stated period, except as stated in the following sentence, and is expressed as an annualized percentage of daily average net asset value during the period. The MER for the Period includes agents fees and other offering expenses, which are one-time expenses and therefore are not annualized. The MER for the period ended December 31, 2012, excluding agents fees and offering expenses, was 3.29%. (3) The Fund s return is linked, by virtue of a forward agreement, to the performance of the Portfolio and consequently, the portfolio turnover rate and trading expense ratio do not apply to the Fund Interim Management Report of Fund Performance 8

10 MANAGEMENT FEES The Manager and Investment Manager are responsible for providing or arranging for all investment advisory and portfolio management services required by the Funds including, without limitation, managing the Portfolio in a manner consistent with the investment objectives, guidelines and restrictions of the Trust and for arranging for the execution of all portfolio transactions. The Manager is also responsible for the operational and administrative functions of the Funds. An annual management fee equal to % per annum of the net asset value of the Fund, calculated daily and payable monthly in arrears, plus an amount calculated quarterly and paid as soon as practicable after the end of each calendar quarter, equal to the service fee (the Service Fee ), plus applicable taxes, is paid to the Manager. As well, an annual management fee of % based on the net asset value of the Trust, calculated daily and payable monthly in arrears, is paid to the Manager (total overall annual management fee for the Funds of 1.25% excluding the Service Fee). The management fee excluding the Service Fee, totalled $220,771 and $236,518 for the Fund and $666,876 and $713,555 for the Trust for the six months ended June 30, 2015 and 2014, respectively. The Manager pays to registered dealers the Service Fee equal to 0.50% annually of the net asset value per Unit for each Unit held by clients of the registered dealers, calculated and paid at the end of each calendar quarter, plus applicable taxes. The Service Fees totaled $278,432 and $94,175 for the six months ended June 30, 2015 and 2014, respectively. The Manager is also eligible in each fiscal year to receive from the Trust a performance fee (the "Performance Fee") that shall be calculated and accrued monthly and be paid annually, if applicable. The Performance Fee for a given year will, subject to some exceptions regarding redemptions and issuances of units of the Trust, be equal to 15% of the amount by which the net asset value per unit of the Trust (calculated without taking into account any Performance Fee) exceeds 106.5% of the Threshold Amount. The Threshold Amount is the greater of: (i) $10.00; and (ii) the net asset value per unit of the Trust at the end of the last fiscal year in which a Performance Fee was paid (after payment of such Performance Fee). Please refer to the Fund s Prospectus for additional information on the Performance Fee. The Performance Fee accrued totalled $0 and $642,931 for the Trust for the six months ended June 30, 2015 and 2014, respectively. PAST PERFORMANCE Note that the performance information shown in this section assumes that all distributions made by the Fund in the period shown were reinvested in additional Units. Also note that the performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns on performance. The performance of the Fund in the past does not necessarily indicate how it will perform in the future Interim Management Report of Fund Performance 9

11 Year-to-Date Returns The following bar chart shows the Fund s performance for the periods stated. The bar chart shows, in percentage terms, how much an investment made on the first day of the relevant period would have grown or decreased by the last day of the period % 15.00% 10.00% 8.18% 9.67% 5.00% 0.00% 1.52% 1.78% -5.00% (1) (2) (3) 2014 (2) 2015 (1) Represents the period from June 19, 2012 (the inception date) to December 31, (2) Represents the twelve month period ended December 31 of the stated year. (3) Represents the six month period ended June 30 of the stated year Interim Management Report of Fund Performance 10

12 SUMMARY OF INVESTMENT PORTFOLIO The Fund has entered into a forward agreement whereby the Fund obtains economic exposure to the performance of the Portfolio. Accordingly, this management report of fund performance should be read in conjunction with the management report of fund performance and financial statements of the Trust. The management report of fund performance and financial statements for the Trust are available to Unitholders and may be obtained by visiting our website at or by writing to the Investor Relations group of Brookfield Investment Management (Canada) Inc., Brookfield Place, 181 Bay Street, Suite 300, Toronto, Ontario, Canada, M5J 2T3. The following is a summary of the Trust portfolio as at June 30, This is a summary only and will change due to ongoing portfolio transactions of the Trust. Quarterly updates will be posted to As at June 30, 2015 Top 25 Positions Cash and Cash Equivalents % of Net Asset Value of the Trust 3.54 FCA US LLC Bonds 2.34 HCA Inc. Bonds 2.23 Iron Mountain Inc. Bonds 2.19 Community Health Systems Inc. Bonds 2.19 American Axle & Manufacturing Inc. Bonds 2.18 Level 3 Financing Inc. Bonds 2.17 SBA Communications Corp. Bonds 2.16 Mediacom Broadband LLC Bonds 2.15 Windstream Corp. Bonds 2.15 United Rentals North America Inc. Bonds 2.12 GLP Capital LP Bonds 2.10 Frontier Communications Corp. Bonds 2.09 USG Corp. Bonds 2.05 Hexion US Finance Corp. Bonds 2.01 EV Energy Partners L.P. Bonds 1.95 Atlas Pipeline Partners L.P. Bonds 1.94 MasTec Inc. Bonds 1.91 Terex Corp. Bonds 1.88 Blue Racer Midstream LLC Bonds 1.88 Tesoro Logistics L.P. Bonds 1.87 NRG Yield Operating LLC Bonds 1.86 NRG Energy Inc. Bonds 1.85 TerraForm Power Operating LLC Bonds 1.85 Global Partners L.P. Bonds 1.85 Total Interim Management Report of Fund Performance 11

13 As at June 30, 2015 Sector Allocation Automotive % of Net Asset Value of the Trust 4.97 Basic Industry Capital Goods 5.76 Consumer Cyclical 8.02 Consumer Non-Cyclical 3.03 Energy Healthcare 8.17 Leisure 3.52 Media Securitized 5.02 Services Technology & Electronics 1.98 Telecommunications Transportation 1.37 Utility 7.80 Cash and Cash Equivalents 3.54 Other Liabilities and Accrued Investment Income (48.98) Total Interim Management Report of Fund Performance 12

14 FUND INFORMATION MANAGER AND TRUSTEE Brookfield Investment Management (Canada) Inc. Gail Cecil Director, President & Chief Executive Officer Jonathan Tyras Director, Chief Financial Officer, Treasurer, and Secretary Craig Noble Director INDEPENDENT REVIEW COMMITTEE John P. Barratt (Chair) Corporate Director James L. R. Kelly President Earth Power Inc. Frank Lochan Corporate Director CONTACT INFORMATION Brookfield High Yield Strategic Income Fund welcomes inquiries from Unitholders, analysts, media representatives or other interested parties. Investment Manager Brookfield Investment Management Inc. Brookfield Place 250 Vesey Street New York, New York t w. Transfer Agent and Registrar Unitholder inquiries relating to distributions, address changes and Unitholder account information should be directed to the Fund s Transfer Agent: Valiant Trust Company 710, 130 King Street West Toronto, Ontario M5X 1A9 t (toll-free North America) f (toll-free North America) International e. inquiries@valianttrust.com w Interim Management Report of Fund Performance 13

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