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 811-05820
BROOKFIELD TOTAL RETURN FUND INC.
(Exact name of registrant as specified in charter)
BROOKFIELD PLACE
250 VESEY STREET
NEW YORK, NEW YORK 10281-1023
(Address of principal executive offices) (Zip code)
BRIAN F. HURLEY, PRESIDENT
BROOKFIELD TOTAL RETURN FUND INC.
BROOKFIELD PLACE
250 VESEY STREET
NEW YORK, NEW YORK 10281-1023
(Name and address of agent for service)
Registrants telephone number, including area code: (855) 777-8001
Date of fiscal year end: September 30, 2015
Date of reporting period: September 30, 2015
Item 1. Reports to Shareholders.
PORTFOLIO STATISTICS | |
Annualized distribution rate1 | 10.69% |
Weighted average coupon | 4.00% |
Weighted average life | 3.74 years |
Average Portfolio Dollar Price (Excluding Interest-Only Securities) | $ 87.78 |
Percentage of Fixed Rate Securites (excluding cash, equities and interest-only securities) | 64.24% |
Percentage of Floating Rate Securities (excluding cash, equities and interest-only securities) | 35.76% |
Percentage of leveraged assets | 26.40% |
Total number of holdings | 236 |
CREDIT QUALITY2,3 | |
AAA | 13.0% |
AA | 2.2% |
A | 5.4% |
BBB | 6.3% |
BB | 11.6% |
B | 20.5% |
Below B | 41.0% |
Total | 100.0% |
ASSET ALLOCATION3 | |
U.S. Government & Agency Obligations | 5.2% |
Asset-Backed Securities | 6.9% |
Residential Mortgage Related Holdings | 60.5% |
Commercial Mortgage Related Holdings | 47.6% |
Interest-Only Securities | 0.8% |
Corporate Bonds | 7.8% |
Preferred Stocks | 1.9% |
Liabilities in Excess of Assets | (30.7)% |
Total | 100.0% |
1 | The distribution rate referenced above is calculated as the annualized amount of the most recent monthly distribution declared divided by September 30, 2015 stock price. This calculation does not include any non-income items such as loan proceeds or borrowings. The Fund estimates that it has distributed more than its net investment income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. Year-to-date through September 30, 2015, 10.04% of the Fund’s distributions is a return of capital. |
2 | Credit ratings allocations are expressed as a percentage of total investments (by market value), not total assets and will vary over time. Cash is excluded. Credit ratings are expressed as a percentage of total investments (by market value) and will vary over time. Credit allocation excludes equities. The higher of an S&P or Moody’s rating was used. If a Moody’s rating was used, we converted such rating to a comparable S&P ratings. |
3 | Percentages are based on net assets. |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
U.S. GOVERNMENT & AGENCY OBLIGATIONS – 5.2% | ||||||
U.S. Government Agency Collateralized Mortgage Obligations – 0.0% | ||||||
Federal National Mortgage Association | ||||||
Series 1997-79, Class PL
|
6.85% | 12/18/27 | $ 182 | $ 210,516 | ||
Total U.S. Government Agency Collateralized Mortgage Obligations | 210,516 | |||||
U.S. Government Agency Pass-Through Certificates – 5.2% | ||||||
Federal Home Loan Mortgage Corporation | ||||||
Federal Home Loan Mortgage Corporation
|
3.50 | TBA | 2,000 | 2,080,938 | ||
Pool Q03049
1 |
4.50 | 08/01/41 | 2,113 | 2,311,783 | ||
Pool C69047
1 |
7.00 | 06/01/32 | 341 | 392,623 | ||
Pool C56878
|
8.00 | 08/01/31 | 48 | 49,065 | ||
Pool C58516
|
8.00 | 09/01/31 | 39 | 39,559 | ||
Pool C59641
1 |
8.00 | 10/01/31 | 207 | 242,825 | ||
Pool C55166
|
8.50 | 07/01/31 | 100 | 108,073 | ||
Pool C55167
|
8.50 | 07/01/31 | 63 | 65,478 | ||
Pool C55169
|
8.50 | 07/01/31 | 60 | 62,424 | ||
Pool G01466
1 |
9.50 | 12/01/22 | 226 | 245,569 | ||
Pool 555559
1 |
10.00 | 03/01/21 | 48 | 51,323 | ||
Pool 555538
1 |
10.00 | 03/01/21 | 68 | 71,409 | ||
Federal National Mortgage Association | ||||||
Federal National Mortgage Association
|
3.50 | TBA | 3,500 | 3,651,046 | ||
Pool 753914
1 |
5.50 | 12/01/33 | 932 | 1,049,666 | ||
Pool 761836
1 |
6.00 | 06/01/33 | 544 | 618,211 | ||
Pool 948362
1 |
6.50 | 08/01/37 | 97 | 109,947 | ||
Pool 555933
1 |
7.00 | 06/01/32 | 1,421 | 1,698,890 | ||
Pool 645912
1 |
7.00 | 06/01/32 | 321 | 367,688 | ||
Pool 645913
1 |
7.00 | 06/01/32 | 475 | 552,859 | ||
Pool 650131
1 |
7.00 | 07/01/32 | 286 | 311,008 | ||
Pool 789284
|
7.50 | 05/01/17 | 13 | 12,754 | ||
Pool 827853
|
7.50 | 10/01/29 | 32 | 32,659 | ||
Pool 545990
1 |
7.50 | 04/01/31 | 526 | 622,873 | ||
Pool 255053
1 |
7.50 | 12/01/33 | 119 | 139,850 | ||
Pool 735576
1 |
7.50 | 11/01/34 | 663 | 826,952 | ||
Pool 896391
1 |
7.50 | 06/01/36 | 328 | 369,786 | ||
Pool 735800
1 |
8.00 | 01/01/35 | 393 | 498,981 | ||
Pool 636449
1 |
8.50 | 04/01/32 | 354 | 427,105 | ||
Pool 458132
1 |
8.91 | 03/15/31 | 509 | 594,369 | ||
Pool 852865
1 |
9.00 | 07/01/20 | 303 | 330,312 | ||
Pool 545436
1 |
9.00 | 10/01/31 | 299 | 373,857 | ||
Total U.S. Government Agency Pass-Through Certificates | 18,309,882 | |||||
Total U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost
$17,263,670) |
18,520,398 | |||||
ASSET-BACKED SECURITIES – 6.9% | ||||||
Housing Related Asset-Backed Securities – 6.9% | ||||||
ACE Securities Corporation Manufactured Housing Trust | ||||||
Series 2003-MH1, Class A4
2,3 |
6.50 | 08/15/30 | 1,469 | 1,615,977 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
ASSET-BACKED SECURITIES (continued) | ||||||
Conseco Finance Securitizations Corp. | ||||||
Series 2001-4, Class A4
|
7.36% | 08/01/32 | $ 211 | $ 228,639 | ||
Conseco Financial Corp. | ||||||
Series 1998-3, Class A6
|
6.76 | 03/01/30 | 894 | 952,378 | ||
Series 1997-7, Class A7
|
6.96 | 07/15/28 | 574 | 588,827 | ||
Series 1997-2, Class A6
|
7.24 | 06/15/28 | 64 | 65,118 | ||
Series 1997-6, Class A9
|
7.55 | 01/15/29 | 514 | 531,232 | ||
Greenpoint Manufactured Housing | ||||||
Series 1999-1, Class A5
|
6.77 | 08/15/29 | 5,870 | 5,721,436 | ||
Series 1999-3, Class IA7
|
7.27 | 06/15/29 | 4,055 | 3,995,271 | ||
Lehman ABS Manufactured Housing Contract Trust | ||||||
Series 2001-B, Class A5
|
5.87 | 04/15/40 | 151 | 159,352 | ||
Series 2001-B, Class A6
|
6.47 | 04/15/40 | 775 | 823,510 | ||
Mid-State Capital Corp. | ||||||
Series 2004-1, Class M1
|
6.50 | 08/15/37 | 4,053 | 4,335,063 | ||
Series 2004-1, Class M2 4 (Acquired 07/01/04, Cost $3,521,241,
1.1%) |
8.11 | 08/15/37 | 3,340 | 3,831,169 | ||
Origen Manufactured Housing Contract Trust | ||||||
Series 2005-B, Class A4
|
5.91 | 01/15/37 | 1,551 | 1,619,490 | ||
Total Housing Related Asset-Backed Securities | 24,467,462 | |||||
Total ASSET-BACKED SECURITIES (Cost
$24,209,505) |
24,467,462 | |||||
RESIDENTIAL MORTGAGE RELATED HOLDINGS – 60.5% | ||||||
Non-Agency Mortgage-Backed Securities – 60.5% | ||||||
Alternative Loan Trust | ||||||
Series 2007-OA3, Class 1A1
5,6 |
0.33 | 04/25/47 | 6,449 | 5,402,001 | ||
Series 2005-51, Class 4A1
5,6 |
0.52 | 11/20/35 | 4,991 | 4,019,912 | ||
Series 2007-2CB, Class 1A15
|
5.75 | 03/25/37 | 890 | 801,304 | ||
Series 2007-12T1, Class A22
|
5.75 | 06/25/37 | 3,788 | 3,118,281 | ||
Series 2006-29T1, Class 2A5
|
6.00 | 10/25/36 | 3,357 | 2,958,009 | ||
Series 2006-29T1, Class 3A3
6,7 |
76.44 | 10/25/36 | 967 | 3,555,372 | ||
Asset-Backed Securities Corporation Home Equity Loan Trust | ||||||
Series 2007-HE1, Class A4
5,6 |
0.33 | 12/25/36 | 2,123 | 1,713,664 | ||
Banc of America Funding Trust | ||||||
Series 2003-3, Class B4 4 (Acquired 01/28/04, Cost $166,947,
0.0%) |
5.49 | 10/25/33 | 183 | 64,607 | ||
Series 2003-3, Class B5 4 (Acquired 01/28/04, Cost $82,040,
0.0%) |
5.49 | 10/25/33 | 109 | 21,480 | ||
Series 2006-G, Class 3A2
6 |
5.75 | 07/20/36 | 6,073 | 5,985,519 | ||
BCAP LLC Trust | ||||||
Series 2012-RR4, Class 5A6
2,3,6 |
2.39 | 05/26/36 | 4,382 | 3,062,074 | ||
BNC Mortgage Loan Trust | ||||||
Series 2007-2, Class A5
5,6 |
0.50 | 05/25/37 | 5,888 | 4,204,394 | ||
Carefree Portfolio Trust | ||||||
Series 2014-CARE, Class F
2,3,5,6 |
2.78 | 11/15/19 | 4,980 | 4,830,919 | ||
CD Commercial Mortgage Trust | ||||||
Series 2007-CD4, Class AMFX
1 |
5.37 | 12/11/49 | 5,000 | 5,168,395 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
RESIDENTIAL MORTGAGE RELATED HOLDINGS (continued) | ||||||
Citigroup Mortgage Loan Trust | ||||||
Series 2009-11, Class 8A2
2,3,6 |
2.16% | 04/25/45 | $ 3,244 | $ 2,884,393 | ||
Series 2012-6, Class 2A2
|
2.42 | 08/25/36 | 7,650 | 6,364,968 | ||
Countrywide Home Loan Mortgage Pass-Through Trust | ||||||
Series 2007-5, Class A29
|
5.50 | 05/25/37 | 631 | 587,909 | ||
Series 2006-21, Class A11
|
5.75 | 02/25/37 | 2,171 | 2,053,668 | ||
Series 2004-21, Class A10
|
6.00 | 11/25/34 | 283 | 295,246 | ||
Series 2007-18, Class 1A1
|
6.00 | 11/25/37 | 672 | 614,431 | ||
Series 2006-14, Class A4
|
6.25 | 09/25/36 | 4,259 | 4,058,945 | ||
Credit Suisse Mortgage Trust | ||||||
Series 2010-19R, Class 5A4
2,3 |
3.25 | 08/27/36 | 7,280 | 7,101,589 | ||
First Republic Mortgage Bank Mortgage Pass-Through Certificates | ||||||
Series 2000-FRB1, Class B3 4,6 (Acquired 08/30/01, Cost $74,005,
0.0%) |
0.69 | 06/25/30 | 77 | 50,055 | ||
GMAC Mortgage Home Equity Loan Trust | ||||||
Series 2007-HE2, Class A2
|
6.05 | 12/25/37 | 3,227 | 3,194,081 | ||
GMACM Home Equity Loan Trust | ||||||
Series 2007-HE2, Class A3
|
6.19 | 12/25/37 | 1,203 | 1,196,298 | ||
GSAMP Trust | ||||||
Series 2006-HE5, Class A2C
5,6 |
0.34 | 08/25/36 | 4,224 | 3,652,778 | ||
Series 2006-HE8, Class A2C
5,6 |
0.36 | 01/25/37 | 6,277 | 5,236,305 | ||
GSR Mortgage Loan Trust | ||||||
Series 2005-6F, Class 1A6
|
5.25 | 07/25/35 | 726 | 748,604 | ||
Irwin Home Equity Loan Trust | ||||||
Series 2006-1, Class 2A3
2,3,5,6 |
5.77 | 09/25/35 | 5,054 | 5,175,262 | ||
IXIS Real Estate Capital Trust | ||||||
Series 2006-HE3, Class A2
5,6 |
0.29 | 01/25/37 | 978 | 459,486 | ||
Series 2006-HE2, Class A3
5,6 |
0.35 | 08/25/36 | 9,464 | 3,939,567 | ||
Series 2006-HE3, Class A4
5,6 |
0.42 | 01/25/37 | 754 | 373,446 | ||
JP Morgan Mortgage Trust | ||||||
Series 2003-A1, Class B4 4,6 (Acquired 10/29/04, Cost $164,351,
0.0%) |
2.19 | 10/25/33 | 192 | 143,295 | ||
Series 2003-A2, Class B4 4,6 (Acquired 10/29/04, Cost $20,953,
0.0%) |
2.35 | 11/25/33 | 91 | 11,596 | ||
Lehman ABS Manufactured Housing Contract Trust | ||||||
Series 2001-B, Class M1
|
6.63 | 04/15/40 | 4,717 | 5,092,388 | ||
Master Asset Backed Securities Trust | ||||||
Series 2006-NC3, Class A3
5,6 |
0.29 | 10/25/36 | 2,512 | 1,500,968 | ||
Series 2006-NC2, Class A4
5,6 |
0.34 | 08/25/36 | 1,652 | 824,825 | ||
Series 2006-NC3, Class A4
5,6 |
0.35 | 10/25/36 | 2,683 | 1,617,266 | ||
Series 2006-HE5, Class A3
5,6 |
0.35 | 11/25/36 | 5,248 | 3,260,444 | ||
Series 2006-NC3, Class A5
5,6 |
0.40 | 10/25/36 | 4,135 | 2,511,550 | ||
Series 2006-HE5, Class A4
5,6 |
0.41 | 11/25/36 | 1,771 | 1,109,938 | ||
Series 2006-NC2, Class A5
5,6 |
0.43 | 08/25/36 | 614 | 311,679 | ||
Series 2005-NC2, Class A4
5,6 |
0.54 | 11/25/35 | 6,689 | 4,527,822 | ||
Mid-State Capital Corp. | ||||||
Series 2004-1, Class B
|
8.90 | 08/15/37 | 337 | 374,144 | ||
Mid-State Trust IV |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
RESIDENTIAL MORTGAGE RELATED HOLDINGS (continued) | ||||||
Series 4, Class A
|
8.33% | 04/01/30 | $ 4,334 | $ 4,486,261 | ||
Mid-State Trust X | ||||||
Series 10, Class B 4 (Acquired 01/05/04, Cost $1,568,210,
0.5%) |
7.54 | 02/15/36 | 1,632 | 1,771,134 | ||
Nationstar Home Equity Loan Trust | ||||||
Series 2006-B, Class AV4
5,6 |
0.47 | 09/25/36 | 11,268 | 10,447,656 | ||
Nomura Resecuritization Trust | ||||||
Series 2013-1R, Class 3A12
2,3,5,6 |
0.36 | 10/26/36 | 14,656 | 11,745,318 | ||
Series 2014-1R, Class 2A11
2,3,6 |
0.40 | 02/26/37 | 14,854 | 7,688,120 | ||
Series 2015-4R, Class 3A8
2,3 |
2.37 | 01/26/36 | 8,577 | 5,990,471 | ||
Series 2014-6R, Class 5A7
2,3 |
2.46 | 04/26/37 | 4,496 | 2,933,694 | ||
Series 2015-6R, Class 2A4
2,3 |
7.96 | 01/26/37 | 7,125 | 5,695,465 | ||
Oakwood Mortgage Investors, Inc. | ||||||
Series 2001-E, Class A4
|
6.81 | 12/15/31 | 8,255 | 8,203,165 | ||
Series 2001-D, Class A4
|
6.93 | 09/15/31 | 1,094 | 943,018 | ||
RALI Trust | ||||||
Series 2006-QO1, Class 2A1
5,6 |
0.46 | 02/25/46 | 3,994 | 2,322,670 | ||
Series 2006-QO7, Class 2A1
6 |
1.05 | 09/25/46 | 10,427 | 7,508,399 | ||
Series 2007-QS6, Class A2
6,7 |
53.97 | 04/25/37 | 286 | 673,452 | ||
Series 2006-QS14, Class A30
6,7 |
78.73 | 11/25/36 | 180 | 540,883 | ||
Resix Finance Limited Credit-Linked Notes | ||||||
Series 2004-S1, Class B1 4 (Acquired 02/26/04, Cost $0,
0.0%) |
5.25 | 02/25/34 | 76 | 3,842 | ||
Series 2003-S7, Class B2 4 (Acquired 05/19/03, Cost $0,
0.0%) |
5.50 | 05/25/33 | 14 | — | ||
Series 2003-CB1, Class B8 2,3,4,6 (Acquired 12/22/04, Cost $870,114,
0.1%) |
6.95 | 06/10/35 | 980 | 348,664 | ||
Series 2004-B, Class B9 2,3,4,6 (Acquired 05/21/04, Cost $246,373,
0.0%) |
8.45 | 02/10/36 | 246 | 144,130 | ||
Series 2004-A, Class B10 2,3,4,6 (Acquired 03/09/04, Cost $36,901,
0.0%) |
11.70 | 02/10/36 | 37 | 254 | ||
Securitized Asset Backed Receivables LLC Trust | ||||||
Series 2007-NC1, Class A2B
5,6 |
0.34 | 12/25/36 | 5,900 | 3,275,230 | ||
Series 2007-BR2, Class A2
5,6 |
0.42 | 02/25/37 | 3,900 | 2,126,379 | ||
Towd Point Mortgage Trust | ||||||
Series 2015-2, Class 2A1
1,2,3 |
3.75 | 11/25/57 | 8,878 | 9,218,654 | ||
Washington Mutual Mortgage Pass-Through Certificates Trust | ||||||
Series 2007-HY6, Class 2A1
6 |
2.23 | 06/25/37 | 5,352 | 4,667,410 | ||
Series 2007-HY5, Class 3A1
6 |
4.43 | 05/25/37 | 1,385 | 1,292,924 | ||
Series 2003-S1, Class B4 2,3,4 (Acquired 10/25/07, Cost $16,475,
0.0%) |
5.50 | 04/25/33 | 111 | 1 | ||
Series 2007-5, Class A11
6,7 |
38.32 | 06/25/37 | 102 | 235,329 | ||
Series 2005-6, Class 2A3
6,7 |
49.02 | 08/25/35 | 138 | 231,454 | ||
Wells Fargo Mortgage Backed Securities Trust | ||||||
Series 2004-6, Class B4 4 (Acquired 04/13/05, Cost $41,400,
0.0%) |
5.50 | 06/25/34 | 48 | 4,185 | ||
Series 2006-9, Class 1A19
|
6.00 | 08/25/36 | 5,673 | 5,680,616 | ||
Series 2007-8, Class 2A2
|
6.00 | 07/25/37 | 878 | 863,511 | ||
Series 2007-13, Class A7
|
6.00 | 09/25/37 | 308 | 309,519 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
RESIDENTIAL MORTGAGE RELATED HOLDINGS (continued) | ||||||
Series 2005-18, Class 2A10
6,7 |
22.02% | 01/25/36 | $ 122 | $ 147,720 | ||
Total Non-Agency Mortgage-Backed Securities | 213,678,405 | |||||
Total RESIDENTIAL MORTGAGE RELATED HOLDINGS (Cost
$208,583,258) |
213,678,405 | |||||
COMMERCIAL MORTGAGE RELATED HOLDINGS – 47.6% | ||||||
Class B Notes – 1.3% | ||||||
901 Ponce de Leon Blvd 2,4,8 (Acquired 03/30/15, Cost $1,875,000,
0.5%) |
11.00 | 09/01/19 | 1,875 | 1,875,000 | ||
Barrington Centre Office 2,4,8 (Acquired 03/30/15, Cost $545,000,
0.2%) |
12.00 | 07/01/17 | 545 | 545,000 | ||
Creekwood Village Apartments 2,4,8 (Acquired 03/30/15, Cost $670,000,
0.2%) |
11.00 | 04/01/20 | 670 | 670,000 | ||
Kicullen Quads 2,4,8 (Acquired 03/30/15, Cost $500,000,
0.1%) |
11.00 | 01/01/18 | 500 | 500,000 | ||
La Paloma Corporate Center 2,4,8 (Acquired 03/30/15, Cost $500,000,
0.1%) |
11.00 | 09/01/17 | 500 | 500,000 | ||
Shoppes at Forest Greene 2,4,8 (Acquired 03/30/15, Cost $525,000,
0.1%) |
10.00 | 01/01/18 | 525 | 525,000 | ||
Total Class B Notes | 4,615,000 | |||||
Commercial Mortgage-Backed Securities – 44.3% | ||||||
A10 Bridge Asset Financing LLC | ||||||
Series 2015-A, Class B 2,3,4,6,8 (Acquired 04/29/15, Cost $10,000,000,
2.8%) |
4.20 | 05/15/30 | 10,000 | 9,963,000 | ||
A10 Securitization LLC | ||||||
Series 2015-1, Class C
2,3 |
4.45 | 04/15/34 | 2,865 | 2,835,886 | ||
Series 2015-1, Class D
2,3 |
4.99 | 04/15/34 | 1,000 | 990,660 | ||
A10 Term Asset Financing LLC | ||||||
Series 2014-1, Class B
2,3 |
3.87 | 04/15/33 | 2,112 | 2,113,062 | ||
Series 2013-2, Class B
2,3 |
4.38 | 11/15/27 | 2,927 | 2,963,046 | ||
Series 2014-1, Class C
2,3 |
4.57 | 04/15/33 | 1,171 | 1,172,679 | ||
Series 2014-1, Class D
2,3 |
5.08 | 04/15/33 | 328 | 327,610 | ||
Series 2013-2, Class C
2,3 |
5.12 | 11/15/27 | 2,000 | 2,035,684 | ||
Series 2013-2, Class D
2,3 |
6.23 | 11/15/27 | 501 | 518,837 | ||
ACRE Commercial Mortgage Trust | ||||||
Series 2013-FL1, Class D
1,2,3,6 |
4.61 | 06/15/30 | 5,000 | 5,013,895 | ||
Banc of America Commercial Mortgage Trust | ||||||
Series 2006-6, Class AJ
1 |
5.42 | 10/10/45 | 13,150 | 13,392,183 | ||
Series 2007-3, Class AJ
1 |
5.56 | 06/10/49 | 14,670 | 15,112,565 | ||
Bear Stearns Commercial Mortgage Securities Trust | ||||||
Series 2006-PW11, Class H 2,3,4 (Acquired 03/08/06, Cost $1,698,878,
0.0%) |
5.52 | 03/11/39 | 1,752 | 30,360 | ||
Commercial Mortgage Trust | ||||||
Series 2007-C9, Class AJFL
1,2,3,6 |
0.89 | 12/10/49 | 9,277 | 8,980,702 | ||
Series 2007-GG7, Class AJ
1 |
5.82 | 07/10/38 | 3,830 | 3,796,905 | ||
Series 2007-GG11, Class AJ
1 |
6.05 | 12/10/49 | 10,330 | 10,595,202 | ||
Credit Suisse Commercial Mortgage Trust | ||||||
Series 2007-C2, Class AMFL
1,6 |
0.43 | 01/15/49 | 7,000 | 6,760,425 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
COMMERCIAL MORTGAGE RELATED HOLDINGS (continued) | ||||||
Series 2006-C1, Class K 2,3,4 (Acquired 03/07/06, Cost $4,419,263,
0.2%) |
5.65% | 02/15/39 | $ 5,465 | $ 553,312 | ||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||
Series 2009-IWST, Class D 1,2,3,4 (Acquired 06/28/07, Cost $7,598,341,
2.3%) |
7.45 | 12/05/27 | 7,000 | 8,266,293 | ||
LB-UBS Commercial Mortgage Trust | ||||||
Series 2007-C1, Class AJ
1 |
5.48 | 02/15/40 | 7,460 | 7,670,499 | ||
Series 2007-C7, Class AJ
|
6.45 | 09/15/45 | 10,000 | 10,412,820 | ||
LNR CDO V Ltd. | ||||||
Series 2007-1A, Class F 2,3,4,6 (Acquired 02/27/07, Cost $3,750,000,
0.0%) |
1.64 | 12/26/49 | 3,750 | — | ||
Morgan Stanley Capital I Trust | ||||||
Series 2006-IQ11, Class J 2,3,4 (Acquired 05/24/06, Cost $0,
0.0%) |
5.53 | 10/15/42 | 139 | 2,228 | ||
Series 2007-HQ13, Class A3
1 |
5.57 | 12/15/44 | 5,646 | 5,954,567 | ||
Series 2007-T25, Class AJ
1 |
5.57 | 11/12/49 | 12,500 | 12,727,763 | ||
Series 2007-T27, Class AJ
1 |
5.65 | 06/11/42 | 3,757 | 3,980,001 | ||
Wachovia Bank Commercial Mortgage Trust | ||||||
Series 2007-C31, Class L 2,3,4 (Acquired 05/11/07, Cost $0,
0.0%) |
5.13 | 04/15/47 | 1,788 | 357 | ||
Series 2005-C20, Class F 2,3,4 (Acquired 10/15/10, Cost $3,928,884,
0.9%) |
5.31 | 07/15/42 | 4,000 | 3,246,768 | ||
Series 2007-C30, Class AJ
|
5.41 | 12/15/43 | 6,500 | 6,557,902 | ||
Series 2007-C33, Class AJ
1 |
6.15 | 02/15/51 | 10,000 | 10,291,260 | ||
Total Commercial Mortgage-Backed Securities | 156,266,471 | |||||
Mezzanine Loan – 2.0% | ||||||
BOCA Mezzanine
2 |
8.20 | 08/09/16 | 7,107 | 7,106,803 | ||
Total Mezzanine Loan | 7,106,803 | |||||
Total COMMERCIAL MORTGAGE RELATED HOLDINGS (Cost
$168,627,759) |
167,988,274 | |||||
INTEREST-ONLY SECURITIES – 0.8% | ||||||
Commercial Mortgage Trust | ||||||
Series 2001-J2A, Class EIO
2,3,6,9 |
4.09 | 07/16/34 | 10,000 | 281,280 | ||
Federal National Mortgage Association | ||||||
Series 2012-125, Class MI
9 |
3.50 | 11/25/42 | 4,043 | 718,925 | ||
Series 2013-32, Class IG
9 |
3.50 | 04/25/33 | 6,738 | 958,336 | ||
Series 2011-46, Class BI
9 |
4.50 | 04/25/37 | 3,382 | 219,144 | ||
GMAC Commercial Mortgage Securities, Inc. | ||||||
Series 2003-C1, Class X1
2,3,6,9 |
1.31 | 05/10/36 | 1,093 | 25,013 | ||
Government National Mortgage Association | ||||||
Series 2005-76, Class IO
1,6,9 |
0.61 | 09/16/45 | 15,311 | 167,196 | ||
Series 2010-132, Class IO
1,6,9 |
0.68 | 11/16/52 | 6,229 | 269,237 | ||
Vendee Mortgage Trust | ||||||
Series 1997-2, Class IO
6,9 |
0.00 | 06/15/27 | 10,432 | 1 | ||
Wachovia Commercial Mortgage Pass-Through Certificates |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
INTEREST-ONLY SECURITIES (continued) | ||||||
Series 2002-C2, Class IO1
2,3,6,9 |
1.94% | 11/15/34 | $ 865 | $ 46 | ||
Total INTEREST-ONLY SECURITIES (Cost $4,077,004)
|
2,639,178 | |||||
CORPORATE BONDS – 7.8% | ||||||
Automotive – 0.2% | ||||||
American Axle & Manufacturing, Inc.
1 |
6.63 | 10/15/22 | 300 | 301,500 | ||
American Axle & Manufacturing, Inc.
1 |
7.75 | 11/15/19 | 350 | 385,000 | ||
Total Automotive | 686,500 | |||||
Basic Industry – 0.5% | ||||||
Arch Coal, Inc.
1 |
7.25 | 06/15/21 | 925 | 55,500 | ||
AVINTIV Specialty Materials, Inc.
1 |
7.75 | 02/01/19 | 244 | 253,455 | ||
FMG Resources August 2006 Property Ltd.
2,3,10 |
6.88 | 04/01/22 | 525 | 338,625 | ||
Hexion, Inc.
1 |
9.00 | 11/15/20 | 600 | 360,000 | ||
PulteGroup, Inc.
1 |
6.38 | 05/15/33 | 550 | 565,125 | ||
United States Steel Corp.
|
7.00 | 02/01/18 | 325 | 291,688 | ||
Total Basic Industry | 1,864,393 | |||||
Capital Goods – 0.3% | ||||||
Crown Cork & Seal Company, Inc.
|
7.38 | 12/15/26 | 350 | 381,500 | ||
Terex Corp.
|
6.50 | 04/01/20 | 600 | 609,000 | ||
Total Capital Goods | 990,500 | |||||
Consumer Goods – 0.3% | ||||||
ACCO Brands Corp.
1 |
6.75 | 04/30/20 | 600 | 624,000 | ||
Post Holdings, Inc.
1 |
7.38 | 02/15/22 | 500 | 507,500 | ||
Total Consumer Goods | 1,131,500 | |||||
Consumer Non-Cyclical – 0.1% | ||||||
Bumble Bee Holdings, Inc.
1,2,3 |
9.00 | 12/15/17 | 516 | 526,320 | ||
Energy – 1.3% | ||||||
BreitBurn Energy Partners LP
|
7.88 | 04/15/22 | 675 | 241,312 | ||
Calfrac Holdings LP
1,2,3 |
7.50 | 12/01/20 | 600 | 375,000 | ||
Crestwood Midstream Partners LP
|
6.00 | 12/15/20 | 600 | 538,500 | ||
EV Energy Partners LP
1 |
8.00 | 04/15/19 | 800 | 544,000 | ||
Ferrellgas Partners LP
1 |
8.63 | 06/15/20 | 500 | 500,000 | ||
Global Partners LP
1 |
6.25 | 07/15/22 | 400 | 352,000 | ||
ION Geophysical Corp.
|
8.13 | 05/15/18 | 300 | 168,000 | ||
Linn Energy LLC
|
7.75 | 02/01/21 | 300 | 69,000 | ||
Linn Energy LLC
|
8.63 | 04/15/20 | 300 | 81,000 | ||
Precision Drilling Corp.
10 |
6.63 | 11/15/20 | 300 | 261,750 | ||
Targa Pipeline Partners LP
1,8 |
5.88 | 08/01/23 | 600 | 618,000 | ||
Trinidad Drilling Ltd.
2,3,10 |
7.88 | 01/15/19 | 600 | 561,000 | ||
W&T Offshore, Inc.
|
8.50 | 06/15/19 | 600 | 267,000 | ||
Total Energy | 4,576,562 | |||||
Healthcare – 0.8% | ||||||
CHS/Community Health Systems, Inc.
1 |
7.13 | 07/15/20 | 700 | 728,000 | ||
HCA, Inc.
1 |
5.88 | 05/01/23 | 150 | 155,625 | ||
HCA, Inc.
1 |
8.00 | 10/01/18 | 600 | 677,940 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
CORPORATE BONDS (continued) | ||||||
Kindred Healthcare, Inc.
1 |
6.38% | 04/15/22 | $ 700 | $ 694,750 | ||
Service Corporation International
1 |
8.00 | 11/15/21 | 450 | 523,125 | ||
Total Healthcare | 2,779,440 | |||||
Leisure – 0.8% | ||||||
Boyd Gaming Corp.
|
9.00 | 07/01/20 | 600 | 637,620 | ||
Cedar Fair LP
|
5.25 | 03/15/21 | 200 | 202,500 | ||
Chester Downs & Marina LLC
1,2,3 |
9.25 | 02/01/20 | 825 | 620,812 | ||
MGM Resorts International
|
7.63 | 01/15/17 | 350 | 366,625 | ||
MGM Resorts International
|
7.75 | 03/15/22 | 125 | 133,125 | ||
MGM Resorts International
|
8.63 | 02/01/19 | 275 | 301,813 | ||
Palace Entertainment Holdings LLC
2,3 |
8.88 | 04/15/17 | 525 | 517,125 | ||
Total Leisure | 2,779,620 | |||||
Media – 1.1% | ||||||
Cablevision Systems Corp.
|
8.63 | 09/15/17 | 500 | 521,250 | ||
CCO Holdings LLC
|
5.75 | 01/15/24 | 250 | 238,750 | ||
CCO Holdings LLC
|
6.63 | 01/31/22 | 300 | 302,250 | ||
Clear Channel Worldwide Holdings, Inc.
|
7.63 | 03/15/20 | 750 | 751,875 | ||
Lamar Media Corp.
|
5.38 | 01/15/24 | 550 | 555,500 | ||
Mediacom Broadband LLC
|
6.38 | 04/01/23 | 550 | 519,750 | ||
National CineMedia LLC
|
6.00 | 04/15/22 | 525 | 530,250 | ||
Numericable-SFR SAS
2,3,10 |
6.00 | 05/15/22 | 500 | 481,875 | ||
Total Media | 3,901,500 | |||||
Retail – 0.3% | ||||||
L Brands, Inc.
1 |
7.60 | 07/15/37 | 500 | 551,250 | ||
Roundy's Supermarkets, Inc.
2,3 |
10.25 | 12/15/20 | 500 | 338,750 | ||
Total Retail | 890,000 | |||||
Services – 0.9% | ||||||
Avis Budget Car Rental LLC
|
5.50 | 04/01/23 | 550 | 532,417 | ||
CalAtlantic Group, Inc .
1 |
8.38 | 05/15/18 | 300 | 337,500 | ||
CalAtlantic Group, Inc .
1 |
8.38 | 01/15/21 | 450 | 528,750 | ||
Casella Waste Systems, Inc.
|
7.75 | 02/15/19 | 500 | 490,000 | ||
H&E Equipment Services, Inc.
|
7.00 | 09/01/22 | 600 | 582,000 | ||
Iron Mountain, Inc.
|
6.00 | 08/15/23 | 250 | 250,000 | ||
Iron Mountain, Inc.
|
8.38 | 08/15/21 | 18 | 18,513 | ||
Jurassic Holdings III, Inc.
2,3 |
6.88 | 02/15/21 | 100 | 70,250 | ||
United Rentals North America, Inc.
1 |
7.63 | 04/15/22 | 450 | 477,000 | ||
Total Services | 3,286,430 | |||||
Telecommunications – 1.2% | ||||||
CenturyLink, Inc.
|
7.65 | 03/15/42 | 300 | 229,500 | ||
Cincinnati Bell, Inc.
|
8.38 | 10/15/20 | 414 | 416,846 | ||
FairPoint Communications, Inc.
2,3 |
8.75 | 08/15/19 | 600 | 624,000 | ||
Frontier Communications Corp.
|
7.63 | 04/15/24 | 550 | 459,250 | ||
Intelsat Jackson Holdings SA
10 |
5.50 | 08/01/23 | 600 | 495,000 | ||
Level 3 Financing, Inc.
|
8.63 | 07/15/20 | 525 | 548,625 | ||
Qwest Capital Funding, Inc.
1 |
6.88 | 07/15/28 | 350 | 295,750 | ||
T-Mobile USA, Inc.
|
6.63 | 04/01/23 | 550 | 544,500 |
Interest
Rate |
Maturity | Principal
Amount (000s) |
Value | |||
CORPORATE BONDS (continued) | ||||||
Wind Acquisition Finance SA
2,3,10 |
7.38% | 04/23/21 | $ 250 | $ 246,875 | ||
Windstream Services LLC
|
7.50 | 06/01/22 | 525 | 396,375 | ||
Total Telecommunications | 4,256,721 | |||||
Total CORPORATE BONDS (Cost
$31,699,623) |
27,669,486 |
Shares | Value | |||||
PREFERRED STOCKS – 1.9% | ||||||
Finance & Investment – 1.9% | ||||||
Ally Financial, Inc., 7.00%
2,3 |
2,500 | $ 2,520,391 | ||||
Public Storage, 6.00%
|
160,000 | 4,099,200 | ||||
Total Finance & Investment | 6,619,591 | |||||
Total PREFERRED STOCKS (Cost
$6,515,625) |
6,619,591 | |||||
Total Investments – 130.7% (Cost $460,976,444)
|
461,582,794 | |||||
Liabilities in Excess of Other Assets – (30.7)%
|
(108,506,580) | |||||
TOTAL NET ASSETS – 100.0%
|
$ 353,076,214 |
The following notes should be read in conjunction with the accompanying Schedule of Investments. | |
1 | — Portion or entire principal amount delivered as collateral for reverse repurchase agreements. |
2 | — Private Placement. |
3 | — Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified institutional buyers. As of September 30, 2015, the total value of all such securities was $124,976,727 or 35.4% of net assets. |
4 | — Restricted Illiquid Securities - Securities that the Adviser has deemed illiquid pursuant to procedures adopted by the Fund's Board of Directors. The values in the parenthesis represent the acquisition date, cost and the percentage of net assets, respectively. As of September 30, 2015, the total value of all such securities was $33,071,730 or 9.2% of net assets. |
5 | — Security is a “step up” bond where the coupon increases or steps up at a predetermined date. |
6 | — Variable rate security – Interest rate shown is the rate in effect as of September 30, 2015. |
7 | — Security is an inverse floating rate bond. |
8 | — Security fair valued in good faith pursuant to the fair value procedures adopted by the Board of Directors. As of September 30, 2015, the total value of all such securities was $15,196,000 or 4.3% of net assets. |
9 | — Interest rate is based on the notional amount of the underlying mortgage pools. |
10 | — Foreign security or a U.S. security of a foreign company. |
Assets: | |
Investments in securities, at
value |
$461,582,794 |
Cash |
22,059,422 |
Cash collateral for reverse repurchase
agreements |
2,669,124 |
Interest
receivable |
2,244,342 |
Principal paydown
receivable |
7,399 |
Prepaid
expenses |
3,947 |
Total
assets |
488,567,028 |
Liabilities: | |
Reverse repurchase agreements (Note
6) |
128,990,000 |
Interest payable for reverse repurchase agreements (Note
6) |
324,695 |
Payable for TBA
transactions |
5,692,733 |
Investment advisory fee payable (Note
4) |
189,779 |
Administration fee payable (Note
4) |
58,394 |
Directors' fee
payable |
9,384 |
Other current
liabilities |
225,829 |
Total
liabilities |
135,490,814 |
Commitments and contingencies (Note
10) |
|
Net
Assets |
$353,076,214 |
Composition of Net Assets: | |
Capital stock, at par value ($0.01 par value, 50,000,000 shares authorized) (Note
7) |
$ 139,607 |
Additional paid-in capital (Note
7) |
431,505,975 |
Accumulated net realized loss on investment transactions and futures
transactions |
(79,175,718) |
Net unrealized appreciation on
investments |
606,350 |
Net assets applicable to capital stock
outstanding |
$353,076,214 |
Total investments at
cost |
$460,976,444 |
Shares Outstanding and Net Asset Value Per Share: | |
Common shares
outstanding |
13,960,683 |
Net asset value per
share |
$ 25.29 |
Investment Income (Note 2): | |
Interest |
$ 33,007,053 |
Dividends |
495,271 |
Total
income |
33,502,324 |
Expenses: | |
Investment advisory fees (Note
4) |
2,380,714 |
Administration fees (Note
4) |
732,527 |
Fund accounting servicing
fees |
136,208 |
Directors'
fees |
107,778 |
Reports to
stockholders |
92,525 |
Legal
fees |
88,259 |
Audit and tax
services |
65,373 |
Transfer agent
fees |
55,433 |
Insurance |
39,048 |
Custodian
fees |
32,158 |
Registration
fees |
24,684 |
Miscellaneous |
14,928 |
Total operating
expenses |
3,769,635 |
Interest expense on reverse repurchase agreements (Note
6) |
1,907,904 |
Total
expenses |
5,677,539 |
Net investment
income |
27,824,785 |
Realized and Unrealized Gain (Loss) on Investments (Note 2): | |
Net realized gain on investment
transactions |
4,137,791 |
Net change in unrealized depreciation on
investments |
(22,968,740) |
Net realized and unrealized loss on
investments |
(18,830,949) |
Net increase in net assets resulting from
operations |
$ 8,993,836 |
For
the Fiscal Year Ended September 30, 2015 |
For
the Ten Months Ended September 30, 2014^ |
For
the Fiscal Year Ended November 30, 2013 | |||
Increase (Decrease) in Net Assets Resulting from Operations: | |||||
Net investment
income |
$ 27,824,785 | $ 25,753,661 | $ 29,044,043 | ||
Net realized gain (loss) on investment transactions and futures
transactions |
4,137,791 | 1,313,481 | (4,647,333) | ||
Net change in unrealized appreciation (depreciation) on investments and
futures |
(22,968,740) | 11,969,858 | 27,427,335 | ||
Net increase in net assets resulting from
operations |
8,993,836 | 39,037,000 | 51,824,045 | ||
Distributions to Stockholders (Note 2): | |||||
Net investment
income |
(28,633,458) | (25,868,594) | (29,305,886) | ||
Return of
capital |
(3,196,899) | (656,704) | (2,523,318) | ||
Total distributions
paid |
(31,830,357) | (26,525,298) | (31,829,204) | ||
Capital Stock Transactions (Note 7): | |||||
Proceeds from rights offering, net of offering
costs |
— | — | 73,021 * | ||
Reinvestment of
distributions |
— | — | 29,572 | ||
Net increase in net assets from capital stock
transactions |
— | — | 102,593 | ||
Total increase (decrease) in net
assets |
(22,836,521) | 12,511,702 | 20,097,434 | ||
Net Assets: | |||||
Beginning of
period |
375,912,735 | 363,401,033 | 343,303,599 | ||
End of
period |
$353,076,214 | $375,912,735 | $363,401,033 | ||
(including distributions in excess of net investment income
of) |
$ — | $ — | $ — | ||
Share Transactions: | |||||
Reinvested
shares |
— | — | 1,122 |
^ | The Fund changed its fiscal year end from November 30 to September 30. |
* | This amount represents an adjustment to paid-in capital in connection with the rights offering. |
Increase (Decrease) in Cash: | |
Cash flows provided by (used for) operating activities: | |
Net increase in net assets resulting from
operations |
$ 8,993,836 |
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating
activities: | |
Purchases of long-term portfolio investments and principal
payups |
(134,250,992) |
Proceeds from disposition of long-term portfolio investments and principal
paydowns |
180,501,829 |
Return of capital distributions from portfolio
investments |
9,179 |
Sales of TBA transactions,
net |
3,896,954 |
Decrease in interest
receivable |
517,632 |
Decrease in receivable for investments
sold |
1,282,818 |
Decrease in principal paydown
receivable |
1,983 |
Decrease in prepaid
expenses |
2,370 |
Decrease in interest payable for reverse repurchase
agreements |
(206,087) |
Increase in payable for TBA
transactions |
1,475,080 |
Decrease in investment advisory fee
payable |
(11,560) |
Decrease in administration fee
payable |
(3,557) |
Decrease in directors' fee
payable |
(674) |
Increase in other current
liabilities |
95,038 |
Net accretion or amortization on investments and paydown gains or losses on
investments |
(7,109,938) |
Unrealized depreciation on
investments |
22,968,740 |
Net realized gain on investment
transactions |
(4,137,791) |
Net cash provided by operating
activities |
74,024,860 |
Cash flows used for financing activities: | |
Net cash used for reverse repurchase
agreements |
(32,532,000) |
Distributions paid to stockholders, net of
reinvestments |
(31,830,357) |
Net cash used for financing
activities |
(64,362,357) |
Net increase in
cash |
9,662,503 |
Cash at beginning of
year |
15,066,043 |
Cash at end of
year |
$ 24,728,546 |
Supplemental Disclosure of Cash Flow Information: | |
Interest payments on the reverse repurchase agreements for the year ended September 30, 2015, totaled $2,113,991. | |
Cash at the end of the year includes $2,669,124 for cash collateral for reverse repurchase agreements. |
For
the Fiscal Year Ended September 30, |
For the Ten Months Ended September 30, | For the Fiscal Years Ended November 30 | |||||||||
2015 | 2014 5 | 2013 | 2012 | 2011 7 | 2010 7 | ||||||
Per Share Operating Performance: | |||||||||||
Net asset value, beginning of
period |
$ 26.93 | $ 26.03 | $ 24.59 | $ 22.80 | $ 24.80 | $ 21.84 | |||||
Net investment
income |
1.99 1 | 1.85 | 2.08 | 2.24 | 1.68 | 2.12 | |||||
Net realized and unrealized gain (loss) on investments
transactions |
(1.35) | 0.95 | 1.64 | 3.01 | (1.20) | 2.92 | |||||
Net increase in net asset value resulting from
operations |
0.64 | 2.80 | 3.72 | 5.25 | 0.48 | 5.04 | |||||
Distributions from net investment
income |
(2.05) | (1.85) | (2.10) | (2.24) | (1.84) | (2.08) | |||||
Return of capital
distributions |
(0.23) | (0.05) | (0.18) | (0.04) | (0.64) | — | |||||
Total distributions
paid |
(2.28) | (1.90) | (2.28) | (2.28) | (2.48) | (2.08) | |||||
Change due to rights
offering2 |
— | — | — | (1.18) | — | — | |||||
Net asset value, end of
period |
$ 25.29 | $ 26.93 | $ 26.03 | $ 24.59 | $ 22.80 | $ 24.80 | |||||
Market price, end of
period |
$ 21.32 | $ 24.97 | $ 23.31 | $ 24.05 | $ 22.56 | $ 24.04 | |||||
Total Investment
Return† |
-6.00% | 15.72% 3 | 6.41% | 17.29% | 4.11% | 26.63% | |||||
Ratios to Average Net Assets/Supplementary Data: | |||||||||||
Net assets, end of period
(000s) |
$353,076 | $375,913 | $363,401 | $343,304 | $176,463 | $191,738 | |||||
Operating
expenses |
1.03% | 1.03% 4 | 1.04% | 1.30% | 1.18% | 1.23% | |||||
Interest
expense |
0.52% | 0.55% 4 | 0.39% | 0.41% | 0.53% | 0.31% | |||||
Total
expenses |
1.55% | 1.58% 4 | 1.43% | 1.71% | 1.71% | 1.54% | |||||
Net investment
income |
7.60% | 8.31% 4 | 8.13% | 9.19% | 6.83% | 9.34% | |||||
Portfolio turnover
rate |
28% | 26% 3 | 38% | 75% | 43% | 204% | |||||
Reverse repurchase agreements, end of period
(000s) |
$128,990 | $161,522 | $163,540 | $103,490 | $ 80,751 | $ 81,513 | |||||
Asset coverage per $1,000 unit of senior
indebtedness6 |
$ 3,737 | $ 3,327 | $ 3,222 | $ 4,317 | $ 3,185 | $ 3,352 |
† | Total investment return is computed based upon the New York Stock Exchange market price of the Fund's shares and excludes the effect of broker commissions. Distributions are assumed to be reinvested at the prices obtained under the Fund's dividend reinvestment plan. |
1 | Per share amounts presented are based on average shares outstanding throughout the period indicated. |
2 | Effective as of the close of business on September 20, 2012, the Fund issued transferrable rights to its stockholders to subscribe for up to 3,500,000 shares of common stock at a rate of one share for every 3 rights held. The subscription price was set at 90% of the average closing price for the last 5 trading days of the offering period. The shares were subscribed at a price of $21.50 which was less than the NAV of $25.35 thus creating a dilutive effect on the NAV. |
3 | Not annualized. |
4 | Annualized. |
5 | Amounts shown are for the ten months ended September 30, 2014 and are not necessarily indicative of a full year of operations. The Fund changed its fiscal year end from November 30 to September 30. |
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 | The Fund had a 1:4 reverse stock split with ex-dividend and payable dates of August 21, 2012 and August 22, 2012, respectively. Prior year net asset values and per share amounts have been restated to reflect the impact of the reverse stock split. The net asset value and market price reported at the original dates prior to the reverse stock split were as follows: |
For the Fiscal Years Ended November 30, | 2011 | 2010 |
Net Asset Value (prior to reverse stock
split) |
$5.70 | $6.20 |
Market Price (prior to reverse stock
split) |
$5.64 | $6.01 |
Level 1 - | quoted prices in active markets for identical assets or liabilities |
Level 2 - | quoted prices in markets
that are not active or other significant observable inputs (including, but not limited to: quoted prices for similar assets or liabilities, quoted prices based on recently executed transactions, interest rates, prepayment speeds, credit risk,
etc.) |
Level 3 - | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets or liabilities) |
Valuation Inputs | Level 1 | Level 2 | Level 3 | Total | |||
U.S. Government & Agency
Obligations |
$ — | $ 18,520,398 | $ — | $ 18,520,398 | |||
Asset-Backed
Securities |
— | 24,467,462 | — | 24,467,462 | |||
Residential Mortgage Related
Holdings |
— | — | 213,678,405 | 213,678,405 | |||
Commercial Mortgage Related
Holdings |
— | — | 167,988,274 | 167,988,274 | |||
Interest-Only
Securities |
— | — | 2,639,178 | 2,639,178 | |||
Corporate
Bonds |
— | 27,051,486 | 618,000 | 27,669,486 | |||
Preferred
Stocks |
4,099,200 | 2,520,391 | — | 6,619,591 | |||
Total |
$ 4,099,200 | $ 72,559,737 | $ 384,923,857 | $ 461,582,794 |
Quantitative Information about Level 3 Fair Value Measurements (1) | ||||
Assets | Value as of September 30, 2015 | Valuation Methodology | Significant Unobservable Input | Range
(Weighted Average) |
Commercial Mortgage Related Holdings | ||||
Class B
Notes |
$ 4,615,000 | Discounted Cash Flow | Yield
(Discount Rate of Cash Flows) |
10%
- 12% (11%) |
A10 Securitization LLC, Series 2015-A, Class B
|
9,963,000 | Discounted Cash Flow | Yield
(Discount Rate of Cash Flows) |
4.55%
- 4.75% (4.65%) |
Corporate Bonds | ||||
Targa Pipeline Partners LP
|
618,000 | Discounted Cash Flow | Implied Spread to Index | 2.05%
- 8.40% (5.22%) |
Total |
$15,196,000 |
Investments in Securities | Asset-
Backed Securities |
Residential Mortgage Related Holdings | Commercial Mortgage Related Holdings | Interest-Only Securities | Corporate Bonds | Total | |||||
Balance as of September 30,
2014 |
$ 1,773,069 | $171,344,876 | $222,025,425 | $ 18,358,034 | $ — | $ 413,501,404 | |||||
Accrued Discounts
(Premiums) |
— | 2,260,020 | 4,345,837 | (1,966,304) | — | 4,639,553 | |||||
Realized Gain
(Loss) |
— | 8,764,603 | (270,665) | 34,547,132 | — | 43,041,070 | |||||
Change in Unrealized Appreciation
(Depreciation) |
(8,776) | (6,667,065) | (10,997,543) | (1,034,424) | — | (18,707,808) | |||||
Purchases at
cost |
— | 91,254,622 | 24,384,527 | — | — | 115,639,149 | |||||
Sales
proceeds |
(1,764,293) | (67,632,186) | (71,499,307) | (47,265,260) | — | (188,161,046) | |||||
Transfers into Level
3 |
— | 14,353,535 | — | — | 618,000 | 14,971,535 (a) | |||||
Balance as of September 30, 2015 | $ — | $213,678,405 | $167,988,274 | $ 2,639,178 | $618,000 | $ 384,923,857 | |||||
Change in unrealized gains or losses relating to assets still held at reporting
date: |
$ — | $ (2,210,519) | $ (4,377,439) | $ (1,023,018) | $ — | $ (7,610,976) |
Security Name | Interest Rate | Principal Amount | Current Payable | |
Federal Home Loan Mortgage
Corporation |
3.50% | $2,000,000 | $2,066,903 | |
Federal National Mortgage
Association |
3.50% | 3,500,000 | 3,625,830 | |
Total |
$5,500,000 | $5,692,733 |
Long-Term Securities (excluding U.S. Government Securities) | U.S. Government Securities | ||
Purchases | Sales | Purchases | Sales |
$134,250,992 | $165,342,613 | $— | $15,159,216 |
Counterparty | Borrowing Rate | Borrowing Date | Maturity Date | Amount Borrowed(1) | Payable
for Reverse Repurchase Agreements | |
Goldman
Sachs |
0.40% | 08/04/15 | 11/04/15 | $ 7,179,000 | $ 7,183,626 | |
JP Morgan
Chase |
0.43% | 07/06/15 | 10/05/15 | 4,963,000 | 4,968,157 | |
JP Morgan
Chase |
1.06% | 09/10/15 | 10/09/15 | 5,824,000 | 5,827,589 | |
JP Morgan
Chase |
1.28% | 07/06/15 | 10/05/15 | 268,000 | 268,832 | |
JP Morgan
Chase |
1.65% | 07/20/15 | 10/20/15 | 6,590,000 | 6,611,982 | |
RBC Capital
Markets |
0.91% | 07/02/15 | 10/02/15 | 8,925,000 | 8,945,489 | |
RBC Capital
Markets |
1.04% | 09/14/15 | 12/14/15 | 1,614,000 | 1,614,790 | |
RBC Capital
Markets |
1.39% | 07/28/15 | 10/28/15 | 4,692,000 | 4,703,806 | |
RBC Capital
Markets |
1.53% | 07/02/15 | 10/02/15 | 11,408,000 | 11,452,213 | |
RBC Capital
Markets |
1.54% | 07/13/15 | 10/13/15 | 8,560,000 | 8,589,218 | |
RBC Capital
Markets |
1.54% | 07/16/15 | 10/16/15 | 7,719,000 | 7,744,401 | |
RBC Capital
Markets |
1.58% | 09/03/15 | 12/03/15 | 4,008,000 | 4,012,938 | |
RBC Capital
Markets |
1.59% | 09/14/15 | 12/14/15 | 43,023,000 | 43,055,215 | |
RBC Capital
Markets |
1.88% | 10/02/14 | 10/02/15 | 3,061,000 | 3,119,143 | |
RBC Capital
Markets |
1.93% | 10/02/14 | 10/02/15 | 2,768,000 | 2,821,977 | |
Wells
Fargo |
1.05% | 09/01/15 | 10/01/15 | 8,388,000 | 8,395,319 | |
Total |
$128,990,000 | $129,314,695 |
Gross
Amounts not offset in the Statement of Assets and Liabilities |
||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts Presented in the Statement of Assets and Liabilities | Financial Instruments | Collateral Pledged (Received)* | Net Amount | |
Description | ||||||
Reverse Repurchase
Agreements |
$128,990,000 | — | $128,990,000 | $128,990,000 | — | — |
Fiscal
Year Ended September 30, 2015 |
Ten
Months Ended September 30, 2014 |
Fiscal
Year Ended November 30, 2013 | |||
Ordinary
income |
$28,633,458 | $25,868,594 | $29,305,886 | ||
Return of
capital |
3,196,899 | 656,704 | 2,523,318 | ||
Total |
$31,830,357 | $26,525,298 | $31,829,204 |
Capital loss
carryforward(1) |
$(79,175,718) |
Tax basis unrealized appreciation on
investments |
606,350 |
Total tax basis net accumulated
losses |
$(78,569,368) |
Expiring In: | |
2016 |
$ 7,710,904 |
2017 |
38,404,880 |
2018 |
18,161,948 |
2019 |
12,712,591 |
Infinite
(Short-Term) |
1,791,207 |
Infinite
(Long-Term) |
394,189 |
Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation |
$460,976,444 | $20,882,874 | $(20,276,524) | $606,350 |
Additional paid-in capital | Distributions in excess of net investment income | Accumulated net realized loss |
$(3,792,573) | $808,673 | $2,983,900 |
Dividend Per Share | Record Date | Payable Date |
$0.1900 | October 15, 2015 | October 29, 2015 |
$0.1900 | November 17, 2015 | November 24, 2015 |
Name, Address and Year of Birth | Position(s) Held with Fund and Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years and Other Directorships Held by Director | Number of Portfolios in Fund Complex Overseen by Director | |||
Independent
Director Class I Director to serve until 2015 Annual Meeting of Stockholders: |
||||||
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 Elected since 2006 |
Director/Trustee of several investment companies advised by the Adviser (2006-Present); Director of United Guaranty Corporation (2011-Present); Director of Brandywine Funds (2003-2013); Director of 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). | 9 | |||
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 Elected since 2013 |
Director/Trustee of several investment companies advised by the Adviser (2013-Present); Global Head of Marketing and Business Development of the Adviser (2011-2013); Managing Partner of Brookfield Financial (2009-2011); Director and immediate past Board Chair of University Settlement House (2003-2013); Member of the Honorary Board of University Settlement House (2014-Present); Co-Founder & President of Capstak, Inc. (2014-Present). | 9 | |||
Independent
Director Class II Director to serve until 2016 Annual Meeting of Stockholders: |
||||||
Edward
A. Kuczmarski c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1949 |
Director,
Chairman of the Board, Member of the Audit Committee, Chairman of the Nominating and Compensation Committee Elected since 2014 |
Director/Trustee of several investment companies advised by the Adviser (2011-Present); Certified Public Accountant and Retired Partner of Crowe Horwath LLP (1980-2013); Trustee of the Empire Builder Tax Free Bond Fund (1984-2013); Director of ISI Funds (2007-2015); Trustee of the Stralem Funds (2014-Present). | 9 | |||
Independent
Director Class III Director to serve until 2017 Annual Meeting of Stockholders: |
||||||
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 Elected since 2005 |
Director/Trustee of several investment companies advised by the Adviser (2005-Present); Director of SP Fiber Technologies, Inc. (2012-2015); Director of Chambers Street Properties (2012-Present); Director of Crystal River Capital, Inc. (2005-2010); Director of Turner Corp. (2003-Present); Director of Jackson Hewitt Tax Services, Inc. (2004-2011); Employee of Arthur Andersen LLP (2002-Present). | 9 |
Name, Address and Year of Birth | Position(s) Held with Fund and Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years and Other Directorships Held by Director | Number of Portfolios in Fund Complex Overseen by Director | |||
Interested
Director Class III Director to serve until 2017 Annual Meeting of Stockholders: |
||||||
Jonathan
C. Tyras c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1968 |
Director
Elected since 2014 |
Managing Director and Chief Financial Officer of the Adviser (2010-Present); General Counsel and Secretary of the Adviser (2006-Present); Director/Trustee of several investment companies advised by the Adviser (2014-Present); Secretary of several investment companies advised by the Adviser (2006-2014); Vice President of Brookfield Investment Funds (2011-2014); Vice President and General Counsel (2006-2010) and Secretary (2007-2010) of Crystal River Capital, Inc.; Chief Financial Officer of Brookfield Investment Management (UK) Limited (2011-Present); Director of Brookfield Investment Management (UK) Limited (2013-Present); Chief Financial Officer of Brookfield Investment Management (Canada) Inc. (2011-Present); Director of Brookfield Investment Management (Canada) Inc. (2015-Present); Chief Executive Officer of Brookfield Investment Management (US) LLC (2011-Present); Managing Director of AMP Capital Brookfield Pty Limited (2011-2012); Chairman of Brookfield Soundvest Capital Management (2015-Present). | 9 |
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 | Since 2014 | Managing Director (2014-Present) and Assistant General Counsel (2010-Present) of the Adviser; Director of the Adviser (2010-2014); Secretary of Brookfield Investment Funds (2011-2014); Associate at Paul Hastings LLP (2002-2010); 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 | Since 2013 | Treasurer of several investment companies advised by the Adviser (2012-Present); Director of the Adviser (2012-Present); Vice President of the Adviser (2009-2012); Controller of Brookfield Redding LLC (2006-2009). |
Alexis
I. Rieger* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1980 |
Secretary | Since 2014 | Vice President and Associate General Counsel of the Adviser (2011-Present); Associate at Kleinberg, Kaplan, Wolff & Cohen P.C. (2009-2011); Associate at Alston & Bird LLP (2007-2009). |
Seth
Gelman* c/o Brookfield Place, 250 Vesey Street, New York, New York 10281-1023 Born: 1975 |
Chief Compliance Officer (“CCO”) | Since 2009 | CCO of several investment companies advised by the Adviser (2009-Present); CCO of the Adviser (2009-Present); Vice President of Oppenheimer Funds, Inc. (2004-2009). |
• | 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 Registrants Code will be provided upon request to any person without charge by contacting Investor Relations at (855) 777-8001 or by writing to Secretary, Brookfield Total Return Fund Inc., Brookfield Place, 250 Vesey Street, 15th Floor, New York, NY 10281-1023.
Item 3. Audit Committee Financial Expert.
The Registrants Board of Directors has determined that four members serving on the Registrants audit committee are audit committee financial experts. Their names are Stuart A. McFarland, Edward A. Kuczmarski, Louis P. Salvatore and Heather S. Goldman. Messrs. McFarland, Kuczmarski, Salvatore and Mme. Goldman are each independent.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees |
The aggregate fees billed by the Funds independent registered public accounting firm, BBD, LLP (BBD), to the Funds for the Funds two most recent fiscal years for professional services rendered for the audit of the Registrants annual financial statements and the review of financial statements that are included in the Registrants annual and semi-annual reports to shareholders (Audit Fees) were $61,000 and $61,000 for the fiscal years ended September 30, 2015 and September 30, 2014, respectively.
(b) | Audit-Related Fees |
There were no fees billed by BBD to the Fund in its two recent fiscal years for services rendered for assurance and related services that are reasonably related to the performance of the audit or review of the Funds financial statements, but are not reported as Audit Fees (Audit-Related Fees).
For the Funds two most recent fiscal years, there were no Audit-Related Fees billed by BBD for engagements related directly to the operations and financial reporting of one or more Funds by a Fund Service Provider. A Fund Service Provider is (a) any investment adviser to the Fund (not including any Subadvisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) or (b) any entity that provides ongoing services to the Fund and is controlling, controlled by or under common control with a Fund investment adviser described in (a).
(c) | Tax Fees |
For the fiscal years ended September 30, 2015 and September 30, 2014, BBD billed the Registrant aggregate fees of $3,500 and $4,000, respectively. The nature of the services for which Tax Fees were charged comprise all services performed by professional staff in BBDs tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include 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.
For the Funds two most recent fiscal years, Tax Fees billed by BBD for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Funds were $0 for fiscal 2015 and $0 for fiscal 2014, respectively.
(d) | All Other Fees |
There were no other fees billed by BBD to the Fund for all other non-audit services (Other Fees) for the fiscal years ended September 30, 2015 and September 30, 2014. During the same period, there were no Other Fees billed by BBD for engagements by Fund Service Providers that related directly to the operations and financial reporting of the Fund.
(e) (1) According to policies adopted by the Audit Committee, services provided by BBD to the Funds must be pre-approved by the Audit Committee. On an annual basis, the Audit Committee reviews and pre-approves various types of services that BBD may perform for the Funds 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 BBD to any Fund Service Provider for any engagement that relates directly to the operations and financial reporting of the Funds. 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 BBD in 2015 and 2014 for non-audit services rendered to the Fund and Fund Service Providers were $64,500 and $65,000, respectively. For the fiscal year ended September 30, 2015, this amount reflects the amounts disclosed above in Item 4(b),(c),(d), plus $0 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 Fund. For the fiscal year ended September 30, 2014, this amount reflects the amounts disclosed above in Item 4(b),(c),(d), plus $0 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 Fund.
(h) The Funds Audit Committee has considered whether the provision of non-audit services by registrants independent registered public accounting firm to the registrants investment advisor, and any entity controlling, controlled, or under common control with the investment advisor that provided ongoing services to the registrant that were not pre-approved by the Committee (because such services did not relate directly to the operations and financial reporting of the registrant) was 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 Registrants Audit Committee members include Stuart A. McFarland, Edward A. Kuczmarski, Louis P. Salvatore and Heather S. Goldman.
Item 6. Schedule of 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. |
BROOKFIELD INVESTMENT MANAGEMENT INC.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES
May 2012
The Portfolio Proxy Voting Policies and Procedures (the Policies and Procedures) set forth the proxy voting policies, procedures and guidelines to be followed by Brookfield Investment Management Inc. and its subsidiaries and affiliates (collectively, BIM) in voting portfolio proxies relating to securities that are held in the portfolios of the investment companies or other clients (Clients) for which BIM has been delegated such proxy voting authority.
A. Proxy Voting Committee
BIMs internal proxy voting committee (the Committee) is responsible for overseeing the proxy voting process and ensuring that BIM meets its regulatory and corporate governance obligations in voting of portfolio proxies.
The Committee shall oversee the proxy voting agents compliance with these Policies and Procedures, including any deviations by the proxy voting agent from the proxy voting guidelines (Guidelines).
B. Administration and Voting of Portfolio Proxies
1. Fiduciary Duty and Objective
As an investment adviser that has been granted the authority to vote on portfolio proxies, BIM owes a fiduciary duty to its Clients to monitor corporate events and to vote portfolio proxies consistent with the best interests of its Clients. In this regard, BIM seeks to ensure that all votes are free from unwarranted and inappropriate influences. Accordingly, BIM generally votes portfolio proxies in a uniform manner for its Clients and in accordance with these Policies and Procedures and the Guidelines.
In meeting its fiduciary duty, BIM generally view proxy voting as a way to enhance the value of the companys 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, BIMs primary consideration is the economic interests its Clients.
2. Proxy Voting Agent
BIM may retain an independent third party proxy voting agent to assist BIM in its proxy voting responsibilities in accordance with these Policies and Procedures and in particular, with the Guidelines. As discussed above, the Committee is responsible for monitoring the proxy voting agent.
In general, BIM may consider the proxy voting agents research and analysis as part of BIMs own review of a proxy proposal in which the Guidelines recommend that the vote be considered on a case-by-case basis. BIM bears ultimate responsibility for how portfolio proxies are voted. Unless instructed otherwise by BIM, the proxy voting agent, when retained, will vote each portfolio proxy in accordance with the Guidelines. The proxy voting agent also will assist BIM in maintaining records of BIMs portfolio proxy votes, including the appropriate records necessary for registered investment companies to meet their regulatory obligations regarding the annual filing of proxy voting records on Form N-PX with the Securities and Exchange Commission (SEC).
3. Material Conflicts of Interest
BIM votes portfolio proxies without regard to any other business relationship between BIM and the company to which the portfolio proxy relates. To this end, BIM must identify material conflicts of interest that may arise between a Client and BIM, such as the following relationships:
● | BIM provides significant investment advisory or other services to a portfolio company or its affiliates (the Company) whose management is soliciting proxies or BIM is seeking to provide such services; |
● | BIM serves as an investment adviser to the pension or other investment account of the Company or BIM is seeking to serve in that capacity; or |
● | BIM and the Company have a lending or other financial-related relationship. |
In each of these situations, voting against the Company managements recommendation may cause BIM a loss of revenue or other benefit.
BIM generally seeks to avoid such material conflicts of interest by maintaining separate investment decision-making and proxy voting decision-making processes. To further minimize possible conflicts of interest, BIM and the Committee employ the following procedures, as long as BIM determines that the course of action is consistent with the best interests of the Clients:
● | If the proposal that gives rise to a material conflict is specifically addressed in the Guidelines, BIM will vote the portfolio proxy in accordance with the Guidelines, provided that the Guidelines do not provide discretion to BIM on how to vote on the matter (i.e., case-by-case); or |
● | If the previous procedure does not provide an appropriate voting recommendation, BIM may retain an independent fiduciary for advice on how to vote the proposal or the Committee may direct BIM to abstain from voting because voting on the particular proposal is impracticable and/or is outweighed by the cost of voting. |
4. Certain Foreign Securities
Portfolio proxies relating to foreign securities held by Clients are subject to these Policies and Procedures. In certain foreign jurisdictions, however, the voting of portfolio proxies can result in additional restrictions that have an economic impact to the security, such as share-blocking. If BIM votes on the portfolio proxy, share-blocking may prevent BIM from selling the shares of the foreign security for a period of time. In determining whether to vote portfolio proxies subject to such restrictions, BIM, in consultation with the Committee, considers whether the vote, either in itself or together with the votes of other shareholders, is expected to affect the value of the security that outweighs the cost of voting. If BIM votes on a portfolio proxy and during the share-blocking period, BIM would like to sell the affected foreign security, BIM, in consultation with the Committee, will attempt to recall the shares (as allowable within the market time-frame and practices).
C. Fund Board Reporting and Recordkeeping
BIM will prepare periodic reports for submission to the Boards of Directors of its affiliated funds (the Funds) describing:
● | any issues arising under these Policies and Procedures since the last report to the Funds Boards of Directors/Trustees and the resolution of such issues, including but not limited to, information about conflicts of interest not addressed in the Policies and Procedures; and |
● | any proxy votes taken by BIM on behalf of the Funds since the last report to such Funds Boards of Directors/Trustees that deviated from these Policies and Procedures, with reasons for any such deviations. |
In addition, no less frequently than annually, BIM will provide the Boards of Directors/Trustees of the Funds with a written report of any recommended changes based upon BIMs experience under these Policies and Procedures, evolving industry practices and developments in the applicable laws or regulations.
BIM will maintain all records that are required under, and in accordance with, all applicable regulations, including the Investment Company Act of 1940, as amended, and the Investment Advisers Act of 1940, which include, but not limited to:
● | these Policies and Procedures, as amended from time to time; |
● | records of votes cast with respect to portfolio proxies, reflecting the information required to be included in Form N-PX, as applicable; |
● | records of written client requests for proxy voting information and any written responses of BIM to such requests; and |
● | any written materials prepared by BIM that were material to making a decision in how to vote, or that memorialized the basis for the decision. |
D. Amendments to these Procedures
The Committee shall periodically review and update these Policies and Procedures as necessary. Any amendments to these Procedures and Policies (including the Guidelines) shall be provided to the Board of Directors of BIM and to the Boards of Directors 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.
Investment Team Portfolio Managers
Ms. Michelle Russell-Dowe Managing Director, Head of Securitized Products Investment Team
Ms. Russell-Dowe is the lead Portfolio Manager and Head of the Securitized Products Investment Team. She is responsible for the firms securitized credit strategies and exposures. Ms. Russell-Dowe has personally built her investment team, which averages 13 years of industry experience. Ms. Russell-Dowe has 20 years of investment experience in securitized products, including 16 years with the firm, which she joined in 1999 from Duff & Phelps. She earned a Bachelor of Arts degree in Economics from Princeton University and holds an MBA from the Graduate School of Business at Columbia University, where she graduated as valedictorian.
Management of Other Accounts
Ms. Russell-Dowe 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 Ms. Russell-Dowe as of October 31, 2015 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 Investment Vehicles
|
Other Accounts | ||||||||||
Number of Accounts Managed |
4 | 8 | 11 | |||||||||
Number of Accounts Managed with Performance- Based Advisory Fees
|
0 | 1 | 1 | |||||||||
Assets Managed |
$1,210 million | $963 million | $2,506 million | |||||||||
Assets Managed with Performance-Based Advisory Fees |
$0 | $30 million | $762 million | |||||||||
Share Ownership
The following table indicates the dollar range of securities of the Registrant owned by the Registrants portfolio managers as October 31, 2015.
Dollar Range of Securities Owned | ||
Michelle Russell-Dowe |
Over $100,000 |
Portfolio Manager Material Conflict of Interest
Potential conflicts of interest may arise when a funds portfolio manager has day-to-day management responsibilities with respect to one or more other funds or other accounts, as is the case for the portfolio managers of the Registrant.
These potential conflicts include:
Allocation of Limited Time and Attention. A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. As a result, the portfolio manager may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as the case may be if he or she were to devote substantially more attention to the management of a single fund. The effects of this potential conflict may be more pronounced where funds and/or accounts overseen by a particular portfolio manager have different investment strategies.
Allocation of Limited Investment Opportunities. If a portfolio manager identifies a limited investment opportunity that may be suitable for multiple funds and/or accounts, the opportunity may be allocated among these several funds or accounts, which may limit a funds ability to take full advantage of the investment opportunity.
Pursuit of Differing Strategies. At times, a portfolio manager may determine that an investment opportunity may be appropriate for only some of the funds and/or accounts for which he or she exercises investment responsibility, or may decide that certain of the funds and/or accounts should take differing positions with respect to a particular security. In these cases, the portfolio manager may place separate transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit of one or more other funds and/or accounts.
Variation in Compensation. A conflict of interest may arise where the financial or other benefits available to the portfolio manager differ among the funds and/or accounts that he or she manages. If the structure of the investment advisers management fee and/or the portfolio managers compensation differs among funds and/or accounts (such as where certain funds or accounts pay higher management fees or performance-based management fees), the portfolio manager might be motivated to help certain funds and/or accounts over others. The portfolio manager might be motivated to favor funds and/or accounts in which he or she has an interest or in which the investment adviser and/or its affiliates have interests. Similarly, the desire to maintain or raise assets under management or to enhance the portfolio managers performance record or to derive other rewards, financial or otherwise, could influence the portfolio manager to lend preferential treatment to those funds and/or accounts that could most significantly benefit the portfolio manager.
Related Business Opportunities. The investment adviser or its affiliates may provide more services (such as distribution or recordkeeping) for some types of funds or accounts than for others. In such cases, a portfolio manager may benefit, either directly or indirectly, by devoting disproportionate attention to the management of fund and/or accounts that provide greater overall returns to the investment manager and its affiliates.
The Adviser and the Registrants have adopted compliance policies and procedures that are designed to address the various conflicts of interest that may arise for the Adviser and the individuals that it employs. For example, the Adviser seeks to minimize the effects of competing interests for the time and attention of portfolio managers by assigning portfolio managers to manage funds and accounts that share a similar investment style. The Adviser has also adopted trade allocation procedures that are designed to facilitate the fair allocation of limited investment opportunities among multiple funds and accounts. There is, however, no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may appear.
Portfolio Manager Compensation
The Registrants portfolio manager is compensated by the Adviser. The compensation structure of the Advisers portfolio managers and other investment professionals has three primary components: (1) a base salary, (2) an annual cash bonus, and (3) if applicable, long-term stock-based compensation consisting generally of restricted stock units of the Advisers indirect parent company, Brookfield Asset Management, Inc. The portfolio managers also receive certain retirement, insurance and other benefits that are broadly available to all of the Advisers employees. Compensation of the portfolio managers is reviewed on an annual basis by senior management.
The Adviser compensates its portfolio managers based primarily 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 versus appropriate peer groups of similar size and strategy, as well as the management skills displayed in managing their subordinates 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 Advisers portfolio managers varies in line with the portfolio managers seniority and position. The compensation of portfolio managers with other job responsibilities (such as acting as an
executive officer of the Adviser and supervising various departments) will include consideration of the scope of such responsibilities and the portfolio managers performance in meeting them. The Adviser seeks to compensate portfolio managers commensurate with their responsibilities and performance, and competitive with other firms within the investment management industry. Salaries, bonuses and stock-based compensation are also influenced by the operating performance of the Adviser and its indirect parent. While the salaries of the Advisers portfolio managers are comparatively fixed, cash bonuses and stock-based compensation may fluctuate significantly from year to year, based on changes in the portfolio managers performance and other factors as described herein.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
None.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrants nominating committee charter does not contain any procedure by which shareholders may recommend nominees to the registrants board of directors.
Item 11. Controls and Procedures.
(a) The Registrants principal executive officer and principal financial officer have concluded that the Registrants 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 Registrants principal executive officer and principal financial officer are aware of no changes in the Registrants internal control over financial reporting that occurred during the Registrants second fiscal quarter of the period covered by this report that has materially affected or is reasonably likely to materially affect the Registrants internal control over financial reporting.
Item 12. Exhibits.
(a)(1) None.
(2) A separate certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 is attached as an exhibit to this Form N-CSR.
(3) None.
(b) A separate certification for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(b) under the Investment Company Act of 1940 is attached as an exhibit to this Form N-CSR.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BROOKFIELD TOTAL RETURN FUND INC. | ||||||
By: | /s/ Brian F. Hurley |
|||||
Brian F. Hurley | ||||||
President and Principal Executive Officer | ||||||
Date: November 27, 2015 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Brian F. Hurley |
|||||
Brian F. Hurley | ||||||
President and Principal Executive Officer | ||||||
Date: November 27, 2015 |
By: | /s/ Angela W. Ghantous |
|||||
Angela W. Ghantous | ||||||
Treasurer and Principal Financial Officer | ||||||
Date: November 27, 2015 |
EX-99.CERT
CERTIFICATION
I, Brian F. Hurley, certify that:
1. I have reviewed this report on Form N-CSR of BROOKFIELD TOTAL RETURN FUND INC.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
d) disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer(s) and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Dated: November 27, 2015 | /s/ Brian F. Hurley |
|||||
Brian F. Hurley | ||||||
President and Principal Executive Officer |
CERTIFICATION
I, Angela W. Ghantous, certify that:
1. I have reviewed this report on Form N-CSR of BROOKFIELD TOTAL RETURN FUND INC.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
d) disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer(s) and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Dated: November 27, 2015 | /s/ Angela W. Ghantous |
|||||
Angela W. Ghantous | ||||||
Treasurer and Principal Financial Officer |
EX-99.906CERT
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES OXLEY ACT
Brian F. Hurley, President and Principal Executive Officer, and Angela W. Ghantous, Treasurer and Principal Financial Officer, of BROOKFIELD TOTAL RETURN FUND INC. (the Registrant), each certify as evidenced below that:
1. | The N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Dated: November 27, 2015 | /s/ Brian F. Hurley |
|||||||
Brian F. Hurley | ||||||||
President and Principal Executive Officer | ||||||||
BROOKFIELD TOTAL RETURN FUND INC. |
Dated: November 27, 2015 | /s/ Angela W. Ghantous |
|||||||
Angela W. Ghantous | ||||||||
Treasurer and Principal Financial Officer | ||||||||
BROOKFIELD TOTAL RETURN FUND INC. |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided BROOKFIELD TOTAL RETURN FUND INC. and will be retained by BROOKFIELD TOTAL RETURN FUND INC. and furnished to the Securities and Exchange Commission or its staff upon request.
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