This report is for stockholder
information. This is not a prospectus intended for use in the purchase or sale of Fund Shares.
|
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NOT FDIC INSURED
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MAY LOSE VALUE
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NOT BANK GUARANTEED
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©
Copyright
2012. Brookfield Investment Management, Inc.
LETTER TO STOCKHOLDERS
Dear Stockholders,
I am pleased to provide the Annual Report for Brookfield Global Listed
Infrastructure Income Fund Inc. (the Fund) for the year ended December 31, 2012.
Despite ongoing macroeconomic
volatility and political uncertainty, global capital markets generally experienced positive results during 2012. Investor confidence improved as the year progressed, due in large part to meaningful central bank activity around the world. Further
momentum was provided by signs of global economic stabilization, as the U.S. housing market continued to heal, sovereign debt concerns in Europe began to subside, and evidence of stability emerged in China. With liquidity continuing to flood the
market and interest rates remaining near historic lows, risk tolerance levels began to rise.
Within this environment, demand for
income-producing asset classes with upside growth potential accelerated. In particular, global infrastructure equities produced attractive returns, as investors sought the unique combination of yield, stability and growth offered by these
securities. Additionally, the infrastructure asset class itself continued to expand, as the need for capital spending on development and refurbishment projects intensified across the globe. The public infrastructure securities market continues to
play a vital role in meeting this need while providing an attractive means of accessing this global investment opportunity.
Moving
forward, we expect demand for higher-yielding investments to remain strong, particularly as interest rates and inflation remain muted. We maintain our positive outlook for infrastructure equities, which offer bond-like current income, relatively
stable cash flows and equity return potential. Additionally, we anticipate demand for Real Assets to accelerate in the near team, as investors recognize the portfolio benefits of increased allocations to the asset class. The public markets offer a
highly liquid and transparent means of achieving these allocations, which should directly benefit public infrastructure securities.
In
addition to performance information, this report provides the Funds audited financial statements including the schedule of investments as of December 31, 2012.
We welcome your questions and comments, and encourage you to contact our Investor Relations team at (800) 497-3746 or visit us at www.brookfieldim.com for more information. Thank you for your support.
Sincerely,
Kim G. Redding
President
2012 Annual Report
1
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
OBJECTIVE AND STRATEGY
The Funds investment objective is to provide a
high level of total return, with an emphasis on income. The Fund seeks to achieve its investment objective by investing primarily in securities of publicly traded infrastructure companies.
Investment Risks:
All investment strategies and the investments made pursuant to such strategies involve the risk of loss, including the
potential loss of the entire investment. The investment performance and the success of any investment strategy or particular investment can never be predicted or guaranteed, and the value of an investment will fluctuate due to market conditions and
other factors. The Fund is a non-diversified, closed-end management investment company. Shares of closed-end management investment companies frequently trade at a discount to their net asset value, and the Funds common shares may likewise
trade at a discount to their net asset value.
Investing in the Fund will be subject to risks incidental to the ownership and operation
of infrastructure assets. Such risks include risks associated with general economic climates; fluctuations in interest rates and currency; availability and attractiveness of secured and unsecured financing; compliance with relevant government
regulations; environmental liabilities; various uninsured or uninsurable unforeseen events; infrastructure development and construction and the ability of the relevant operating company to manage the relevant infrastructure business. These risks,
either individually or in combination, may cause, among other things, a reduction in income, an increase in operating costs and an increase in costs associated with investments in infrastructure assets, which may materially affect the financial
position and returns of specific investments generally. For additional information about the risks associated with investing in the Fund, investors should review the Funds Prospectus and Statement of Additional Information.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the year ended December 31, 2012, Brookfield Global Listed Infrastructure Income Fund Inc. (NYSE: INF) had a total return based on net
asset value of 13.71% and a total return based on market price of 23.06%, which assumes the reinvestment of dividends and is exclusive of brokerage commissions. Based on NYSE closing price of $20.15 on December 31, 2012, the Funds shares
have a dividend yield of 6.95%. The dividend yield is calculated as the annualized amount of the reporting periods most recent dividend declared divided by the stated stock price.
Individual contributors of performance included Companhia Energetica de Minas Gerais, Spark Infrastructure Group and Hutchinson Port Holdings
Trust. Companhia Energetica de Minas Gerais, a Brazilian firm within the Transmission & Distribution sector contributed to the Funds overall performance following the firms announcement regarding intentions to pay a special
dividend equaling R$3.3 billion, which lifted the stock price into year end.
Spark Infrastructure Group, an Australian firm in the
Transmission & Distribution sector, also contributed to the Funds performance. The company has low regulatory risks relative to other Australian utilities companies coupled with a strong balance sheet and high quality dividend.
Hutchison Port Holdings Trust, a Hong Kong-based firm was strong in 2012 as it offers a high recurring yield, mature assets, and steady
cash flow generation. Additionally, the companys port assets in Hong Kong and East Shenzhen are among the most defensive ports during downturns while the company also is well positioned to benefit from trade recovery. We believe this provides
for stability in down markets and opportunity in up markets.
Detractors of performance included Hi-Crush Partners L.P., Eletropaulo
Metropolitana Eletricidade de Sao Paulo SA and Companhia de Transmissao de Energia Eletrica Paulista. Hi-Crush Partners L.P., based in the U.S., is a Master Limited Partnership engaged in producing sand used in oil and natural gas wells. The
companys initial public offering was in August 2012 and the stock initially performed very well.
However, on its first earnings
call, in November 2012, the company announced that a key contract had been cancelled and the stock price fell. We believe Hi-Crush Partners L.P. will find replacement purchasers of its sand to maintain its distribution.
Brookfield
Investment Management Inc.
2
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA is a Brazilian
firm within the Transmission & Distribution sector. The company detracted from the Funds performance due to regulatory announcements expected to negatively impact its EBITDA. The National Agency for Electricity, which governs
Brazilian utilities, announced reduced allowable tariffs to consumers electricity bills in April and again in July in its final statement.
Companhia de Transmissao de Energia Eletrica Paulista (CTEEP), another Brazilian firm within the Transmission & Distribution sector also detracted from the Funds performance. During the
third quarter, Brazilian President Dilma Rousseff announced that rolling 20 year concession agreements with power companies would be renewed at prices up to 28% lower in an effort to lower energy prices. As a result of this announcement, CTEEP is
expected to see a significant decline in revenues. However, the government assigned residual value to transmission assets built prior to 2000, allowing CTEEP to earn government compensation and likely produce positive cash flows after reducing debt.
INFRASTRUCTURE MARKET OVERVIEW AND OUTLOOK
Global equity markets ended 2012 with another quarter of positive performance. The MSCI World Index (Broad Equity Markets) closed the quarter up 2.6%, finishing the 12 month period up 16.5%. Like recent
years preceding 2012, we saw a number of dramatic (albeit less severe) ups and downs in global equity markets caused by shifting investor confidence in the global macroeconomic recovery. We saw the strongest first quarter in over a decade
(+11.7%) and wide-reaching investor confidence give way to a strongly negative second quarter (-4.9%) on worsening fears of the European crisis and contagion.
However, some stability emerged in the second half of the year as continued macroeconomic weakness drove corresponding actions by governments and central banks worldwide. In particular, central bank announcements
in September created positive momentum in equity markets. Ben Bernanke and the U.S. Federal Reserve announced third round Quantitative Easing (QE3), pledging up to US$40 billion per month to buy mortgage backed securities until the U.S. labor market
improves. Across the pond, the European Central Bank (ECB) pledged a new and potentially unlimited short dated government bond-buying program coined Outright Monetary Transactions or OMT to reduce yields on European sovereign debt to
strengthen sovereign balance sheets.
As the year came to a close positive drivers of investor sentiment included continual improvement
in the U.S. housing market, evidence of economic stability in China, enthusiasm over the outcome of the Japanese election, and a Europe region that appears to be gradually stabilizing. These developments countered the two week selloff following the
U.S. presidential election as well as fears of the U.S. fiscal cliff. A deal to address taxes was reached on January 1 as part of the fiscal cliff negotiations, leading markets sharply higher in the New Year.
Global infrastructure securities were up 1.8% in the fourth quarter, bringing the asset class to a 2012 return of 13.8% as
measured by the Dow Jones Brookfield Global Infrastructure Composite Index. Global infrastructure securities underperformed Broad Equity Markets during the strong rally in the first quarter (+4.3%) and outperformed in the second quarter selloff
(+0.7%). Conversely, amid downward market movements in the fourth quarter, higher yielding securities within the asset class underperformed. Master Limited Partnerships (MLPs) were down 3.4% as measured by the Alerian MLP Index.
1
We believe underperformance of these higher yielding securities indicates investors
concern, prior to the January 1 tax legislation passage, over the likely tax increases on dividends. Further, many high yielding securities have been very strong for several months and underperformance could be the result of a modest
correction.
Importantly, we believe the infrastructure securities asset class is poised to perform well in an environment of the slowly
recovering global economy forecasted for 2013. We are excited to pursue these opportunities targeting strong nominal and absolute returns on behalf of our investors in the coming year.
A growing infrastructure securities asset class
We believe one of the
distinct attributes about infrastructure securities is the asset class has been growing rapidly while historically it continued to offer stable cash flows. There is simply not enough good infrastructure around the
1
|
The Alerian MLP Total Return Index is a composite of the 50 most prominent energy Master Limited Partnerships (MLPs) and is calculated using a float-adjusted,
capitalization-weighted methodology.
|
2012 Annual Report
3
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
world. This is true in developed markets, where much of the infrastructure is reaching the end of its useful life and needs to be replaced or repaired. In emerging markets, there is a substantial
need for new infrastructure as these economies grow.
In addition, governments are cash strapped and privatizing infrastructure assets
to raise capital, particularly in the Europe region. These types of asset sales can represent potentially attractive entry points for investors. One of the best examples of this in 2012 was an announcement from the Portuguese government regarding
its decision to sell the Portuguese airport concession company ANA-Aeroportos de Portugal SA (ANA) as part of the countrys agreed austerity measures precedent to the bailout it received from the European Union and International
Monetary Fund last year. ANA holds the concession to operate the countrys 10 airports. Many of the bidders (and the winner) are in the global infrastructure securities investment universe, including Fraport AG (owner of the Frankfurt airport
concession), Flughafen Zuerich AG (owner of the Zurich airport concession) and CCR SA (a Brazilian toll road company). The winning bid was Vinci SAs
3 billion bid. Vinci SA is a French diversified infrastructure company.
The airport infrastructure sector was strong in 2012, up 34.5%.
2
Strength has been driven partly by corporate transaction announcements. Currently 10 companies with a market cap of approximately
US$35 billion currently comprise the sector.
A changing North American energy infrastructure landscape
Seventeen MLPs completed successful IPOs valued at approximately US$5.6 billion in total in 2012. This included listings by EQT Midstream Partners
(EQM), Summit Midstream Partners (SMLP) and Western Gas Equity Partners LP (WGP US), among others. We believe the surge of MLP IPOs reflects companies desire to tap investor demand for current income amid the low interest rate environment. We
too find MLPs compelling. These companies generally own high quality, pure-play infrastructure assets with stable, predictable and growing cash flows. We believe opportunities in the space will continue to arise, especially following the
sectors underperformance in late 2012.
The MLP IPO rush is indicative of a broader transformation in the
North American energy infrastructure market. The continued growth of shale gas exploration and the expansion of the oil sands in Western Canada are impacting North American energy infrastructure companies in ways that would have been unimaginable a
decade ago. In December, an important development occurred when the U.S. Department of Energy (DOE) issued a report supportive of natural gas drilling, and therefore positive for the energy infrastructure sector. The study was intended to protect
public interest, including agriculture, by examining impacts on domestic natural gas pricing as additional natural gas export facilities become operational. Current laws require natural gas companies to obtain a license when exporting natural gas to
non-Free Trade Agreement (FTA) countries. The report concluded that additional export facilities in the U.S. would likely have a minimal impact on natural gas pricing and benefits would likely outweigh any costs, therefore paving the way
for DOE approval for more terminals.
3
Attractive opportunities among Asian natural gas companies
Continued changes in North American energy infrastructure will impact markets worldwide, including China which is likely to become an importer of natural gas. Chinese natural gas distribution companies look
particularly attractive given energy has been identified as a top priority for Chinese national security. Furthermore, China has come under pressure for its significant use of coal mining and now aims to reduce its coal use. As such, the Chinese
government has issued directives to increase the use of natural gas for power generation, vehicle fuel as well as heating and cooking fuel given the current low consumer market penetration. Indeed, gas demand in 2011 equaled roughly 130 billion
cubic meters (bcm), which amounts to 4% of the countrys total energy consumption. By 2015 the government is targeting consumption to rise to 8% of total energy consumption, potentially exceeding 260 bcm.
2
|
As measured by the Dow Jones Brookfield Airports Infrastructure Index, a global index of companies that derive at least 70% of cash flows from infrastructure
lines of business and at least 50% of cash flows from the development, ownership, lease, concession or management of airports and related facilities.
|
3
|
Federal Register Notice of Availability of the LNG Export Study;
www.fossil.energy.gov/programs/gasregulation/LNGStudy.html
.
|
Brookfield
Investment Management Inc.
4
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Increased consumption cannot be supported by domestic natural gas supply, or consequently the existing natural gas infrastructure. Domestic natural gas supply accounted for approximately 80% of 2010 consumption.
And we estimate domestic supply will cover just 60% of consumption by 2015. As a result, China will need to import liquefied natural gas (or LNG), requiring new Central Asian pipelines with an estimated growth requirement of over 40 bcm
by 2015. We believe this will create a significant growth opportunity in Chinese natural gas infrastructure, particularly for city gas distributors, operators of midstream gas distribution pipelines, and LNG focused gas infrastructure.
Increasing demand and transaction activity among tower companies
Communications infrastructure (
i.e.
cell towers) was the strongest performing infrastructure sector this year, up
35.7%.
4
Growing demand for wireless data service globally is expected to
benefit cell tower owners in the global infrastructure securities asset class as wireless providers will require additional tower locations to expand their 4G footprint. Transaction activity among tower owners supported public market valuations of
companies in the communications infrastructure sector. In February, SBA Communications Corp. (SBAC), a communications infrastructure company in our universe, announced a US$1.09 billion acquisition of 2,300 tower sites throughout the U.S. and
Central America from cell tower firm Mobilitie LLC. SBAC issued $285 million in common equity in March to repay debt associated with the transaction.
OUTLOOK
Throughout 2012, we remained focused on our medium term outlook as we
constructed portfolio positions. Key sector exposures include oil and gas pipelines, U.S. communications, and transportation infrastructure. Amid uncertainty and market weakness surrounding the fiscal cliff negotiations in December we began to
transition the portfolio to increase exposure to pro-growth stocks and reduce exposure to some of the most defensive securities. As part of this trade, we added U.S. railroads and Chinese transportation companies while selling U.S./UK water and U.S.
electricity transmission and distribution companies.
As we look ahead to 2013, we believe hurdles to global macroeconomic stability
will persist. Macro indicators have improved in the Asia Pacific region. The election of Mr. Shinzo Abe as Japans new prime minister and the change in government in China are both believed to be market friendly transitions.
Mr. Abe is espousing aggressive easing policies and set a 2% inflation target to break Japans characteristic low growth, deflationary market environment. The new Chinese leadership generally appears to support reforms leading to more
liberalization in the marketplace. On the other hand, while the U.S. Congress tackled one part of the fiscal cliff problem, many investors believe the most difficult negotiations to cut spending and reduce the U.S. deficit are yet to come. In
addition, Southern Europe remains challenged.
Against this macro background, we believe infrastructure securities will benefit from a
number of key trends in 2013, remaining an important and attractive global asset class. Investor demand for bonds is expected to shift to equities over the medium term, which should benefit real asset securities such as infrastructure securities as
they generally exhibit an attractive mix of bond-like yields with equity returns. Infrastructure securities continue to offer stable fundamentals coupled with growth, capital appreciation, diversification, attractive risk adjusted returns, as well
as an important hedge against inflation. We believe global investors will continue to recognize this in the New Year.
Forward-Looking Information
This management discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements that are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or
by the use of forward-looking terminology, such as may, will, believe, expect, anticipate, continue, should, intend, or similar terms or variations on
those terms or the negative of those terms. Although we believe that the expectations contained in any forward-looking
4
|
The Dow Jones Brookfield Communications Infrastructure Index is a global index of companies that derive at least 70% of cash flows from infrastructure lines
of business and at least 50% of cash flows from the development, lease, concession, or management of broadcast/mobile towers, satellites and fibre optic/copper (excludes telecom services) cable.
|
2012 Annual Report
5
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
statement are based on reasonable assumptions, we can give no assurance that our expectations will be attained. We do not undertake, and specifically disclaim any obligation, to publicly release
any update or supplement to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Disclosure
All returns shown in USD.
The Funds portfolio holdings are subject to change without notice. The mention of specific securities is not a recommendation or solicitation
for any person to buy, sell or hold any particular security. There is no assurance that the Brookfield Global Listed Infrastructure Income Fund Inc. currently holds these securities.
The Dow Jones Brookfield Global Infrastructure Composite Index was created on July 1, 2008 and is comprised of infrastructure companies with
at least 70% of its annual cash flows derived from owning and operating infrastructure assets. The Index is maintained by Dow Jones Indexes. The Index is unmanaged and, unlike the Fund, is not affected by cash flows or trading and other expenses. It
is not possible to invest directly in an index. Index performance is shown for illustrative purposes only and does not predict or depict the performance of the Fund.
MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 24
developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United
Kingdom, and the United States.
Performance data quoted represents past performance results and does not guarantee future results.
Current performance may be lower or higher than the performance data quoted. These views represent the opinions of Brookfield Investment Management Inc. and are not intended to predict or depict the performance of any investment. These views are as
of the close of business on December 31, 2012 and subject to change based on subsequent developments.
Brookfield
Investment Management Inc.
6
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Portfolio Characteristics (Unaudited)
December 31, 2012
PORTFOLIO STATISTICS
|
|
|
Annualized dividend yield
1
|
|
6.95%
|
|
|
Percentage of levered assets
|
|
24.18%
|
|
|
|
ASSET ALLOCATION BY GEOGRAPHY
|
|
Percent of
Net Assets
|
United States
|
|
45.7%
|
Australia
|
|
18.3%
|
Canada
|
|
16.6%
|
Hong Kong
|
|
8.3%
|
Brazil
|
|
8.3%
|
Spain
|
|
8.1%
|
United Kingdom
|
|
6.8%
|
Italy
|
|
6.5%
|
France
|
|
4.9%
|
Portugal
|
|
2.8%
|
Liabilities in Excess of Other Assets
|
|
(26.3)%
|
Total
|
|
100.0%
|
ASSET ALLOCATION BY SECTOR
|
|
|
Oil & Gas Storage & Transportation
|
|
65.4%
|
Transmission & Distribution
|
|
27.4%
|
Infrastructure Diversified
|
|
10.7%
|
Ports
|
|
8.3%
|
Airports
|
|
5.5%
|
Infrastructure Communications
|
|
3.2%
|
Toll Roads
|
|
2.8%
|
Real Estate Operator/Developer
|
|
1.6%
|
Water
|
|
1.4%
|
Liabilities in Excess of Other Assets
|
|
(26.3)%
|
Total
|
|
100.0%
|
TOP TEN HOLDINGS
|
|
|
Hutchison Port Holdings Trust
|
|
8.3%
|
Spark Infrastructure Group
|
|
7.0%
|
Kinder Morgan Management LLC
|
|
5.9%
|
Transmissora Alianca de Energia Eletrica SA
|
|
5.8%
|
Sydney Airport
|
|
5.5%
|
National Grid PLC
|
|
5.4%
|
GDF Suez
|
|
4.9%
|
Gibson Energy, Inc
|
|
4.4%
|
Exterran Partners L.P.
|
|
3.9%
|
APA Group
|
|
3.9%
|
1
|
Dividends may include net investment income, capital gains and/or return of capital. The dividend yield referenced above is calculated as the annualized
amount of the most recent monthly dividend declared divided by December 31, 2012 stock price.
|
2012 Annual Report
7
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Statement of Assets and Liabilities
December 31, 2012
|
|
|
|
|
Assets:
|
|
|
|
|
Investments in securities, at value (Note 2)
|
|
$
|
209,543,813
|
|
Cash
|
|
|
8,664,828
|
|
Dividends and interest receivable
|
|
|
996,215
|
|
Prepaid expenses
|
|
|
26,683
|
|
|
|
|
|
|
Total assets
|
|
|
219,231,539
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Payable for credit facility (Note 6)
|
|
|
53,000,000
|
|
Payable for credit facility interest
|
|
|
6,859
|
|
Investment advisory fee payable
|
|
|
184,273
|
|
Administration fee payable
|
|
|
27,641
|
|
Directors fee payable
|
|
|
2,917
|
|
Accrued expenses and other liabilities
|
|
|
128,461
|
|
|
|
|
|
|
Total liabilities
|
|
|
53,350,151
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
165,881,388
|
|
|
|
|
|
|
|
|
Composition of Net Assets:
|
|
|
|
|
Capital stock, at par value ($0.001 par value, 1,000,000,000 shares authorized)
|
|
$
|
7,755
|
|
Additional paid-in capital
|
|
|
145,912,560
|
|
Distributions in excess of net investment income
|
|
|
(874,031
|
)
|
Accumulated net realized gain on investments, written option contracts, and foreign currency and foreign currency
transactions
|
|
|
273,822
|
|
Net unrealized appreciation on investments and foreign currency translation
|
|
|
20,561,282
|
|
|
|
|
|
|
Net assets applicable to capital stock outstanding
|
|
$
|
165,881,388
|
|
|
|
|
|
|
Total investments at cost
|
|
$
|
188,978,917
|
|
|
|
|
|
|
|
|
Shares Outstanding and Net Asset Value Per Share:
|
|
|
|
|
Shares outstanding
|
|
|
7,755,240
|
|
Net asset value per share
|
|
$
|
21.39
|
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
12
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Statement of Operations
For the Year Ended
December 31, 2012
|
|
|
|
|
Investment Income:
|
|
|
|
|
Interest
|
|
$
|
68,101
|
|
Dividends
|
|
|
9,297,659
|
|
Foreign withholding tax
|
|
|
(711,063
|
)
|
|
|
|
|
|
Total investment income
|
|
|
8,654,697
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Investment advisory fees (Note 3)
|
|
|
2,142,502
|
|
Administration fees (Note 3)
|
|
|
321,375
|
|
Legal fees
|
|
|
109,683
|
|
Audit and tax services
|
|
|
75,273
|
|
Custodian fees
|
|
|
69,272
|
|
Insurance
|
|
|
56,326
|
|
Fund accounting servicing fees
|
|
|
52,931
|
|
Reports to stockholders
|
|
|
36,072
|
|
Directors fees
|
|
|
34,393
|
|
Registration fees
|
|
|
25,000
|
|
Miscellaneous
|
|
|
14,991
|
|
Transfer agent fees
|
|
|
11,458
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,949,276
|
|
Interest expense on credit facility (Note 6)
|
|
|
678,741
|
|
|
|
|
|
|
Total expenses
|
|
|
3,628,017
|
|
|
|
|
|
|
Net investment income
|
|
|
5,026,680
|
|
|
|
|
|
|
|
|
Realized and Unrealized Gain (Loss):
|
|
|
|
|
Net realized gain (loss) from:
|
|
|
|
|
Investments
|
|
|
8,963,974
|
|
Written option contracts
|
|
|
234,409
|
|
Foreign currency and foreign currency transactions
|
|
|
(203,466
|
)
|
|
|
|
|
|
Net realized gain on investments, written option contracts, foreign currency and foreign currency transactions
|
|
|
8,994,917
|
|
|
|
|
|
|
Net change in unrealized appreciation (depreciation) on:
|
|
|
|
|
Investments
|
|
|
6,522,837
|
|
Written option contracts
|
|
|
143,604
|
|
Foreign currency translation
|
|
|
(11,235
|
)
|
|
|
|
|
|
Net change in unrealized appreciation on investments, written option contracts and foreign currency translations
|
|
|
6,655,206
|
|
|
|
|
|
|
Total realized and unrealized gain (loss)
|
|
|
15,650,123
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
20,676,803
|
|
|
|
|
|
|
See Notes to Financial Statements.
2012 Annual Report
13
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Statements of Changes in Net Assets
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended
December 31, 2012
|
|
|
For the Period
August 26,
2011
1
through
December 31, 2011
|
|
Increase (Decrease) in Net Assets Resulting from Operations:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
5,026,680
|
|
|
$
|
1,421,018
|
|
Net realized gain (loss) on investments, written option contracts, foreign currency and foreign currency translations
|
|
|
8,994,917
|
|
|
|
(4,443,049
|
)
|
Net change in unrealized appreciation on investments, written option contracts, foreign currency and foreign currency
translation
|
|
|
6,655,206
|
|
|
|
13,906,076
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
20,676,803
|
|
|
|
10,884,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Stockholders:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(3,750,331
|
)
|
|
|
(707,976
|
)
|
Net realized gains
|
|
|
(6,915,708
|
)
|
|
|
|
|
Return of capital
|
|
|
(194,399
|
)
|
|
|
(2,007,130
|
)
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
|
(10,860,438
|
)
|
|
|
(2,715,106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock Transactions (Note 7):
|
|
|
|
|
|
|
|
|
Proceeds from shares sold
|
|
|
|
|
|
|
147,896,084
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets from capital share transactions
|
|
|
|
|
|
|
147,896,084
|
|
|
|
|
|
|
|
|
|
|
Total increase in net assets
|
|
|
9,816,365
|
|
|
|
156,065,023
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
156,065,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
165,881,388
|
|
|
$
|
156,065,023
|
|
|
|
|
|
|
|
|
|
|
Distributions in excess of net investment income
|
|
$
|
(874,031
|
)
|
|
$
|
(224,709
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Transactions (Note 7):
|
|
|
|
|
|
|
|
|
Shares sold
|
|
|
|
|
|
|
7,755,240
|
|
|
|
|
|
|
|
|
|
|
1
|
Commencement of operations
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
14
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Statement of Cash Flows
For the Year Ended
December 31, 2012
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
20,676,803
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
|
|
|
|
|
Purchases of investments
|
|
|
(155,195,601
|
)
|
Proceeds from disposition of portfolio investments
|
|
|
159,559,263
|
|
Premiums received on options written
|
|
|
1,108,129
|
|
Written options contracts closed or exercised
|
|
|
(1,258,066
|
)
|
Decrease in receivable for investments sold
|
|
|
2,249,229
|
|
Decrease in prepaid expenses
|
|
|
25,198
|
|
Decrease in interest and dividends receivable
|
|
|
693,875
|
|
Decrease in payable for investments purchased
|
|
|
(3,466,380
|
)
|
Increase in payable for credit facility interest
|
|
|
626
|
|
Increase in investment advisory fee payable
|
|
|
11,391
|
|
Increase in administration fee payable
|
|
|
1,709
|
|
Decrease in accrued expenses and other liabilities
|
|
|
(3,322
|
)
|
Net accretion on investments
|
|
|
1,136
|
|
Net change in unrealized appreciation on investments and written option contracts
|
|
|
(6,666,441
|
)
|
Net realized gain on investments and written option contracts
|
|
|
(9,198,383
|
)
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
8,539,166
|
|
|
|
|
|
|
|
|
Cash flows used for financing activities:
|
|
|
|
|
Distributions paid to stockholders
|
|
|
(10,860,438
|
)
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(10,860,438
|
)
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(2,321,272
|
)
|
Cash at the beginning of year
|
|
|
10,986,100
|
|
|
|
|
|
|
Cash at the end of year
|
|
$
|
8,664,828
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
Interest payments for the year ended December 31, 2012 totaled $678,115.
See Notes to Financial Statements.
2012 Annual Report
15
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
For the
Year Ended
December 31, 2012
|
|
|
Period From
August 26, 2011
1
through
December 31, 2011
|
|
Per Share Operating Performance:
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
$
|
20.12
|
|
|
$
|
19.10
|
3
|
|
|
|
|
|
|
|
|
|
Net investment income
2
|
|
|
0.65
|
|
|
|
0.18
|
|
Net realized and unrealized gain on investment transactions
|
|
|
2.02
|
|
|
|
1.19
|
|
|
|
|
|
|
|
|
|
|
Net increase in net asset value resulting from operations
|
|
|
2.67
|
|
|
|
1.37
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income
|
|
|
(0.48
|
)
|
|
|
(0.09
|
)
|
Distributions from net realized gains
|
|
|
(0.89
|
)
|
|
|
|
|
Return of capital distributions
|
|
|
(0.03
|
)
|
|
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
Total distributions paid
|
|
|
(1.40
|
)
|
|
|
(0.35
|
)
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
21.39
|
|
|
$
|
20.12
|
|
|
|
|
|
|
|
|
|
|
Market price, end of period
|
|
$
|
20.15
|
|
|
$
|
17.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Return
|
|
|
23.06
|
%
|
|
|
-10.16
|
%
5
|
|
|
|
Ratio of Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
|
|
Net assets, end of period (000s)
|
|
$
|
165,881
|
|
|
$
|
156,065
|
|
Operating expenses
|
|
|
1.83
|
%
|
|
|
2.14
|
%
4
|
Interest expense
|
|
|
0.42
|
%
|
|
|
0.47
|
%
4
|
Total expenses
|
|
|
2.25
|
%
|
|
|
2.61
|
%
4
|
Net investment income
|
|
|
3.12
|
%
|
|
|
2.81
|
%
4
|
Portfolio turnover rate
|
|
|
76
|
%
|
|
|
30
|
%
5
|
|
Total investment return is computed based upon the New York Stock Exchange market price of the Funds shares and excludes the effect of broker
commissions. Distributions are assumed to be reinvested at the prices obtained under the Funds dividend reinvestment plan.
|
1
|
Commencement of operations.
|
2
|
Per share amounts presented are based on average shares outstanding throughout the period indicated.
|
3
|
Net asset value, beginning of period, reflects a deduction of $0.90 per share sales charge from the initial public offering price of $20.00 per share.
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
16
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
1. Organization
Brookfield Global Listed Infrastructure Income Fund Inc. (the
Fund) was organized under the laws of the State of Maryland as a Maryland corporation on June 8, 2011. The Fund is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a non-diversified,
closed-end management investment company, which will invest primarily in publicly traded infrastructure companies.
Brookfield
Investment Management Inc. (BIM or Adviser), a wholly-owned subsidiary of Brookfield Asset Management Inc., is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers
Act), and serves as investment adviser to the Fund. AMP Capital Brookfield (US) LLC (the Sub-Adviser), a Delaware limited liability company and a registered investment adviser under the Advisers Act, served as investment
sub-adviser to the Fund until March 31, 2012.
The Funds investment objective is to provide a high level of total return,
with an emphasis on income. The investment objective of the Fund is not fundamental and may be changed without stockholder approval, upon not less than 60 days prior written notice to stockholders. No assurance can be given that the Funds
investment objective will be achieved.
2. Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
(GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Valuation of
Investments
: Debt securities, including U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities, are generally valued at the bid prices
furnished by an independent pricing service or, if not valued by an independent pricing service, using bid prices obtained from at least two active and reliable market makers in any such security. If quotes cannot be obtained from two active and
reliable market makers then the securities may be priced using a quote obtained from a single active market maker. Short-term debt securities with remaining maturities of sixty days or less are valued at cost with adjusted by the amortization of
discount or premium to the date of maturity, unless such valuation, in the judgment of the Advisers Valuation Committee, does not represent market value, in which case these securities will be fair valued as determined by the Advisers
Valuation Committee.
Investments in equity securities listed or traded on any securities exchange or traded in the over-the-counter
market are valued at the trade price as of the close of business on the valuation date. Equity securities for which no sales were reported for that date are valued at fair value as determined in good faith by the Advisers Valuation
Committee. Investments in open-end registered investment companies, if any, are valued at the net asset value (NAV) as reported by those investment companies.
When price quotations for certain securities are not readily available, or if the available quotations are not believed to be reflective of market value by the Adviser, those securities will be valued at fair
value as determined in good faith by the Advisers Valuation Committee using procedures adopted by and under the supervision of each Funds Board of Directors. There can be no assurance that a Fund could purchase or sell a portfolio
security at the price used to calculate a Funds NAV.
Fair valuation procedures may be used to value a substantial portion of the
assets of each Fund. A Fund may use the fair value of a security to calculate its NAV when, for example, (1) a portfolio security is not traded in a public market or the principal market in which the security trades is closed, (2) trading
in a portfolio security is suspended and not resumed prior to the normal market close, (3) a portfolio security is not traded in significant volume for a substantial period, or (4) the Adviser determines that the quotation or price for a
portfolio security provided by a broker-dealer or an independent pricing service is inaccurate.
2012 Annual Report
17
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
The fair value of securities may be difficult to determine and thus judgment plays a greater role in the valuation process. The fair
valuation methodology may include or consider the following guidelines, as appropriate: (1) evaluation of all relevant factors, including but not limited to, pricing history, current market level, supply and demand of the respective security;
(2) comparison to the values and current pricing of securities that have comparable characteristics; (3) knowledge of historical market information with respect to the security; (4) other factors relevant to the security which would
include, but not be limited to, duration, yield, fundamental analytical data, the Treasury yield curve, and credit quality.
The values
assigned to fair valued investments are based on available information and do not necessarily represent amounts that might ultimately be realized, since such amounts depend on future developments inherent in long-term investments. Changes in the
fair valuation of portfolio securities may be less frequent and of greater magnitude than changes in the price of portfolio securities valued at their last sale price, by an independent pricing service, or based on market quotations. Imprecision in
estimating fair value can also impact the amount of unrealized appreciation or depreciation recorded for a particular portfolio security and differences in the assumptions used could result in a different determination of fair value, and those
differences could be material.
The Board has adopted procedures for the valuation of the Funds securities and has delegated the
day to day responsibilities for valuation determinations under these procedures to the Adviser. Securities are valued using unadjusted quoted market prices, when available, as supplied primarily by third party pricing services or dealers. If a
market value or price cannot be determined for a security or a significant event has occurred that would materially affect the value of the security, the security is fair valued by the Advisers Valuation Committee. The Valuation Committee is
comprised of senior members of the Advisers management team.
The Fund has established methods of fair value measurements in
accordance with GAAP. Fair value denotes the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy has been
established to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market
participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the
inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from
sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best
information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
|
|
|
|
|
|
|
Level 1 -
|
|
quoted prices in active markets for identical investments
|
|
|
Level 2 -
|
|
quoted prices in markets that are not active or other significant observable inputs (including, but not limited to: quoted prices for similar investments, quoted prices
based on recently executed transactions, interest rates, prepayment speeds, credit risk, etc.)
|
|
|
Level 3 -
|
|
significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments)
|
The Advisers valuation policy, as previously stated, establishes parameters for the sources and types of
valuation analysis, as well as, the methodologies and inputs the Adviser uses in determining fair value, including the use of the Advisers Valuation Committee. If the Valuation Committee determines that additional techniques, sources or inputs
are appropriate or necessary in a given situation, such additional work will be undertaken.
Significant increases or decreases in any
of the unobservable inputs in isolation may result in a lower or higher fair value measurement.
Brookfield
Investment Management Inc.
18
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
To assess the continuing appropriateness of security valuations, the Adviser (or its third party service provider who is subject to oversight by
the Adviser), regularly compares one of its prior day prices, prices on comparable securities and sale prices to the current day prices and challenges those prices that exceed certain tolerance levels with the third party pricing service or broker
source. For those securities valued by fair valuations, the Valuation Committee reviews and affirms the reasonableness of the valuations based on such methodologies and fair valuation determinations on a regular basis after considering all relevant
information that is reasonably available.
The inputs or methodology used for valuing investments are not necessarily an indication of
the risk associated with investing in those securities.
The following table summarizes the Funds investments categorized in the
disclosure hierarchy as of December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Common Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
|
|
$
|
|
|
|
$
|
27,269,669
|
|
|
$
|
|
|
|
$
|
27,269,669
|
|
Brazil
|
|
|
13,738,579
|
|
|
|
|
|
|
|
|
|
|
|
13,738,579
|
|
Canada
|
|
|
27,538,599
|
|
|
|
|
|
|
|
|
|
|
|
27,538,599
|
|
France
|
|
|
|
|
|
|
8,176,685
|
|
|
|
|
|
|
|
8,176,685
|
|
Hong Kong
|
|
|
|
|
|
|
13,831,257
|
|
|
|
|
|
|
|
13,831,257
|
|
Italy
|
|
|
|
|
|
|
10,695,992
|
|
|
|
|
|
|
|
10,695,992
|
|
Portugal
|
|
|
4,598,472
|
|
|
|
|
|
|
|
|
|
|
|
4,598,472
|
|
Spain
|
|
|
|
|
|
|
13,512,422
|
|
|
|
|
|
|
|
13,512,422
|
|
United Kingdom
|
|
|
8,903,200
|
|
|
|
2,244,135
|
|
|
|
|
|
|
|
11,147,335
|
|
United States
|
|
|
75,871,675
|
|
|
|
|
|
|
|
|
|
|
|
75,871,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks
|
|
|
130,650,525
|
|
|
|
75,730,160
|
|
|
|
|
|
|
|
206,380,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Bond:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
|
|
|
|
|
|
|
3,163,128
|
|
|
|
|
|
|
|
3,163,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
130,650,525
|
|
|
$
|
78,893,288
|
|
|
$
|
|
|
|
$
|
209,543,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For further information regarding security characteristics, see the Schedule of Investments.
The fair value of the Funds credit facility, which qualifies as a financial instrument under FASB Accounting Standards Codification
(ASC) 820 Disclosures about Fair Values of Financial Instruments, approximates the carrying amounts presented in the Schedule of Investments and Statement of Assets and Liabilities. As of December 31, 2012 this financial
instrument is categorized as a Level 2 within the disclosure hierarchy.
During the year ended December 31, 2012, the Fund did not
invest in any Level 3 securities. There were transfers from Level 1 to Level 2 of $13,831,257. The transfers were due to the securities being fair valued as a result of market movements following the close of local trading. The basis for recognizing
and valuing transfers is as of the end of the period in which transfers occur.
Investment Transactions and Investment Income
:
Securities transactions are recorded on the trade date. Realized gains and losses from securities transactions are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date.
Foreign Currency Transactions
: Securities and other assets and liabilities denominated in foreign currencies
are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions.
The Fund isolates the portion of realized gains or losses resulting from changes in foreign exchange rates on securities from the fluctuations arising from changes in market prices of securities held.
2012 Annual Report
19
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
Reported net realized foreign exchange gains or losses arise from sales of securities, currency gains or losses realized between the trade and settlement dates on securities transactions and the
difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid.
Taxes:
The Fund intends to continue to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its taxable income to its stockholders. Therefore, no federal income or excise tax provision is required. The Fund may incur an excise tax to the extent it has not distributed all of its
taxable income on a calendar year basis.
GAAP provides guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. An evaluation of tax positions taken in the course of preparing the Funds tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the
taxing authority is required. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be booked as a tax expense in the current year and recognized as: a liability for unrecognized tax benefits; a reduction of an income
tax refund receivable; a reduction of a deferred tax asset; an increase in deferred tax liability; or a combination thereof. As of December 31, 2012, the Fund has determined that there are no uncertain tax positions or tax liabilities required
to be accrued.
The Fund has reviewed all taxable years that are open for examination (
i.e.
, not barred by the applicable statute
of limitations) by taxing authorities of all major jurisdictions, including the Internal Revenue Service. As of December 31, 2012, open taxable years consisted of the taxable period August 26, 2011 (commencement of operations) to
December 31, 2011 and the taxable year ended December 31, 2012. No examination of the Funds tax returns is currently in progress.
Expenses:
Expenses directly attributable to the Fund are charged directly to the Fund, while expenses which are attributable to the Fund and other investment companies advised by the Adviser are allocated
among the respective investment companies, including the Fund, based upon relative net assets.
Dividends and Distributions:
The
Fund declares and pays dividends monthly from net investment income. Distributions of realized capital gains in excess of capital loss carryforwards are distributed at least annually. Dividends and distributions are recorded on the ex-dividend date.
All common shares have equal dividend and other distribution rights.
A notice disclosing the source(s) of a distribution will be
provided if payment is made from any source other than net investment income. Any such notice would be provided only for informational purposes in order to comply with the requirements of Section 19(a) of the 1940 Act and not for tax reporting
purposes. The tax composition of the Funds distributions for each calendar year is reported on IRS Form 1099-DIV.
Dividends from
net investment income and distributions from realized gains from investment transactions have been determined in accordance with Federal income tax regulations and may differ from net investment income and realized gains recorded by the Fund for
financial reporting purposes. These differences which could be temporary or permanent in nature may result in reclassification of distributions; however, net investment income, net realized gains and losses and net assets are not affected.
Cash Flow Information:
The Fund invests in securities and distributes dividends and distributions which are paid in cash or are
reinvested at the discretion of stockholders. These activities are reported in the Statements of Changes in Net Assets. Additional information on cash receipts and cash payments is presented in the Statement of Cash Flows. Cash, as used in the
Statement of Cash Flows, is the amount reported as Cash in the Statement of Assets and Liabilities, and does not include short-term investments.
3. Investment Advisory Agreements and Affiliated Transactions
The Fund has
entered into an investment advisory agreement (the Advisory Agreement) with the Advisor under which the Advisor is responsible for the management of the Funds portfolio and provides the necessary
Brookfield
Investment Management Inc.
20
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
personnel, facilities, equipment and certain other services necessary to the operation of the Fund. The Advisory Agreement provides that the Fund shall pay the Adviser a fee, computed daily and
payable monthly, at an annual rate of 1.00% of the Funds average daily net assets (plus the amount of borrowing for investment purposes) (Managed Assets). Pursuant to the Advisory Agreement, the Adviser may delegate any or all of
its responsibilities to one or more investment sub-advisers, which may be affiliates of the Adviser, subject to the approval of the Board of Directors and stockholders of the Fund. For the year ended December 31, 2012, the Adviser earned
$2,142,502 in investment advisory fees under the Advisory Agreement.
The Fund has entered into an Administration Agreement with the
Adviser. The Adviser entered into a sub-administration agreement with U.S. Bancorp Fund Services, LLC (the Sub-Administrator). The Adviser and Sub-Administrator perform administrative services necessary for the operation of the Fund,
including maintaining certain books and records of the Fund and preparing reports and other documents required by federal, state, and other applicable laws and regulations, and providing the Fund with administrative office facilities. For these
services, the Fund pays to the Adviser a monthly fee at an annual rate of 0.15% of the Funds average daily total assets minus liabilities (other than the aggregate indebtedness entered into for purposes of leverage). The Adviser is responsible
for any fees due to the Sub-Administrator.
For the year ended December 31, 2012, the Adviser earned $321,375 in administration
fees.
Certain officers and/or directors of the Fund are officers and/or directors of the Adviser.
4. Purchases and Sales of Investments
For the year ended December 31, 2012, purchases and sales of investments, excluding short-term securities, credit facility and U.S. Government securities were $155,195,601 and $159,559,263, respectively.
5. Option Contracts
The Fund may purchase or sell (
i.e
., write) options on securities, securities indices and foreign currencies which are listed on a national securities exchange or traded in the over-the-counter market to
hedge the value of the Funds portfolio or, as a means of achieving additional return.
A call option is a contract that gives the
holder of the option the right to buy from the writer of the option, in return for a premium, the security or currency underlying the option at a specified exercise price at any time during the term of the option. The writer of the call option has
the obligation, upon exercise of the option, to deliver the underlying security or currency upon payment of the exercise price during the option period.
A put option is a contract that gives the holder of the option the right, in return for a premium, to sell to the seller the underlying security at a specified price. The seller of the put option has the obligation
to buy the underlying security upon exercise at the exercise price.
A call option is covered if the Fund owns the
underlying instrument covered by the call or has an absolute and immediate right to acquire that instrument without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian) upon conversion or
exchange of other instruments held in its portfolio. A call option is also covered if the Fund holds a call option on the same instrument as the call option written where the exercise price of the call option held is (i) equal to or less than
the exercise price of the call option written or (ii) greater than the exercise price of the call option written if the difference is maintained by the Fund in cash, U.S. government securities or other high-grade short-term obligations in a
segregated account with its custodian. A call option is uncovered if the underlying security covered by the call is not held by the Fund. A put option is covered if the Fund maintains cash or other liquid securities with a
value equal to the exercise price in a segregated account with its custodian, or else holds a put option on the same instrument as the put option written where the exercise price of the put option held is equal to or greater than the exercise price
of the put option written.
2012 Annual Report
21
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
If the Fund has written an option, it may terminate its obligation by effecting a closing purchase transaction. This is accomplished by purchasing
an option of the same series as the option previously written. However, once the Fund has been assigned an exercise notice, the Fund will be unable to effect a closing purchase transaction. Similarly, if the Fund is the holder of an option it may
liquidate its position by effecting a closing sale transaction. This is accomplished by selling an option of the same series as the option previously purchased. There can be no assurance that either a closing purchase or sale transaction can be
effected when the Fund so desires.
The Fund will realize a profit from a closing transaction if the price of the transaction is less
than the premium received from writing the option, or is more than the premium paid to purchase the option; the Fund will realize a loss from a closing transaction if the price of the transaction is more than the premium received from writing the
option, or is less than the premium paid to purchase the option. Since call option prices generally reflect increases in the price of the underlying security, any loss resulting from the repurchase of a call option may also be wholly or partially
offset by unrealized appreciation of the underlying security. Other principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price and price volatility of the underlying
security and the time remaining until the expiration date of the option. Gains and losses on investments in options depend, in part, on the ability of the Adviser to correctly predict the effect of these factors. The use of options cannot serve as a
complete hedge since the price movement of securities underlying the options will not necessarily follow the price movements of the portfolio securities subject to the hedge.
The premium amount and the number of written option contracts during the year ended December 31, 2012 were as follows:
|
|
|
|
|
|
|
|
|
Options
|
|
Number of
Contracts
|
|
|
Premium
Amount
|
|
Outstanding at December 31, 2011
|
|
$
|
4,050
|
|
|
$
|
384,346
|
|
Options written
|
|
|
7,650
|
|
|
|
1,108,129
|
|
Options expired
|
|
|
(2,676
|
)
|
|
|
(234,409
|
)
|
Options closed
|
|
|
(9,024
|
)
|
|
|
(1,258,066
|
)
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2012, there were no options outstanding.
The average notional value of written options during the year ended December 31, 2012 was $6,528,400.
6. Borrowings
Credit facility:
The Fund, with the approval of its Board of Directors, including its independent Directors, has entered into a financing package that includes a Commitment Facility Agreement (the
Agreement) with BNP Paribas Prime Brokerage, Inc. that allows the Fund to borrow up to an initial limit of up to
33
1
/
3
% of its Managed Assets. Borrowings under the Agreement are secured by assets of the Fund that are held with the Funds custodian in a separate account. Interest is charged at the 3 month LIBOR (London
Inter-bank Offered Rate) plus 0.70% on the amount borrowed and 0.70% on the undrawn amount.
For the year ended December 31,
2012, the average interest rate paid under the line of credit was 1.08% of the total line of credit amount available for the Fund.
|
|
|
|
|
Total line of credit amount available
|
|
$
|
63,000,000
|
|
Line of credit outstanding at December 31, 2012
|
|
|
53,000,000
|
|
Line of credit amount unused at December 31, 2012
|
|
|
10,000,000
|
|
Average balance outstanding during the year
|
|
|
53,000,000
|
|
Interest expense incurred on line of credit during the year
|
|
|
678,741
|
|
Brookfield
Investment Management Inc.
22
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
7. Capital Stock
The Funds authorized stock consists of 1,000,000,000
shares of stock, par value $0.001 per share. The Funds Board of Directors is authorized to classify and reclassify any unissued shares of capital stock into other classes or series of stock and authorize the issuance of shares of stock without
obtaining stockholder approval. The Board of Directors, without any action by the stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or
series that the Fund has authority to issue.
The common shares have no preemptive, conversion, exchange or redemption rights. All
common shares of the Funds common stock have equal voting, dividend, distribution and liquidation rights. The common shares, when issued, will be fully paid and non-assessable. Common stockholders are entitled to one vote per share and all
voting rights for the election of directors are non-cumulative. The Fund has no present intentions of offering additional shares, except as described in the Dividend Reinvestment Plan on page 32.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
The tax character of distributions paid for the year ended December 31, 2012 was as follows:
|
|
|
|
|
Ordinary income (including short-term capital gains)
|
|
$
|
10,440,212
|
|
Long-term capital gains
|
|
|
225,827
|
|
Return of capital
|
|
|
194,399
|
|
|
|
|
|
|
Total distributions
|
|
$
|
10,860,438
|
|
|
|
|
|
|
The tax character of the distributions paid for the period August 26, 2011 (commencement of operations)
through December 31, 2011 was as follows:
|
|
|
|
|
Ordinary income
|
|
$
|
707,976
|
|
Return of capital
|
|
|
2,007,130
|
|
|
|
|
|
|
Total distributions
|
|
$
|
2,715,106
|
|
|
|
|
|
|
At December 31, 2012, the Funds most recently completed tax year-end, the components of distributable
earnings on a tax basis were as follows:
|
|
|
|
|
Other accumulated losses
|
|
$
|
(874,031
|
)
|
Tax basis unrealized appreciation
|
|
|
20,835,104
|
|
|
|
|
|
|
Total tax basis accumulated gains
|
|
$
|
19,961,073
|
|
|
|
|
|
|
As of December 31, 2012, the Fund had no capital loss carryforwards.
Federal Income Tax Basis:
The federal income tax basis of the Funds investments, not including foreign currency and foreign currency
transactions at December 31, 2012 was as follows:
|
|
|
|
|
|
|
Cost of
Investments
|
|
Gross Unrealized
Appreciation
|
|
Gross Unrealized
Depreciation
|
|
Net Unrealized
Appreciation
|
$188,705,095
|
|
$26,232,016
|
|
$(5,393,298)
|
|
$20,838,718
|
Capital Account Reclassifications:
Because federal income tax regulations differ in certain respects from
GAAP, income and capital gain distributions, if any, determined in accordance with tax regulations may differ from net
2012 Annual Report
23
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
investment income and realized gains recognized for financial reporting purposes. These differences are primarily due to differing treatments for wash sales and return of capital. Permanent book
and tax differences, if any, relating to stockholder distributions will result in reclassifications to paid-in-capital or to undistributed capital gains. These reclassifications have no effect on net assets or net asset value per share.
At December 31, 2012, the Funds most recently completed tax year-end, the Funds components of net assets were increased or
(decreased) by the amounts shown in the table below.
|
|
|
|
|
Additional
Paid-In Capital
|
|
Distributions in
excess of Net
Investment Income
|
|
Accumulated Net
Realized Gain
|
$225,760
|
|
$(1,925,671)
|
|
$1,699,911
|
9. Indemnification
Under the Funds organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course
of business, the Fund enters into contracts with its vendors and others that provide for indemnification. The Funds maximum exposure under these arrangements is unknown, since this would involve the resolution of certain claims, as well as
future claims that may be made, against the Fund. Thus an estimate of the financial impact, if any, of these arrangements cannot be made at this time. However, based on experience, the Fund expects the risk of loss due these warranties and
indemnities to be unlikely.
10. New Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11
Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires disclosures to make financial statements that are prepared under U.S. GAAP more comparable to those prepared under IFRS. The new disclosure requirements mandate
that entities disclose both gross and net information about instruments and transactions eligible for offset in the Statement of Assets and Liabilities as well as instruments and transactions subject to an agreement similar to a master netting
arrangement. In addition, ASU 2011-11 requires disclosure of collateral received and posted in connection with master netting agreements or similar arrangements. New disclosures are required for annual reporting periods beginning on or after
January 1, 2013, and interim periods within those annual periods.
Management is currently evaluating the impact ASU
No. 2011-11 will have on the Funds financial statements and disclosures.
11. Exclusion for Definition of Commodity Pool
Operator
Pursuant to amendments by the Commodity Futures Trading Commission to Rule 4.5 under the Commodity Exchange Act
(CEA), the Adviser has filed a notice of exemption from registering as a commodity pool operator with respect to the Fund. The Fund and the Adviser are therefore not subject to registration or regulation as a pool operator
under the CEA. Effective December 31, 2012, in order to claim the Rule 4.5 exemption, the Fund is limited in its ability to invest in commodity futures, options, swaps (including securities futures, broad-based stock index futures and financial
futures contracts). The Fund will limit its transactions in such instruments (excluding transactions entered into for bona fide hedging purposes, as defined under the Commodity Futures Trading Commission regulations) such that either:
(i) the aggregate initial margin and premiums required to establish its futures, options on futures and swaps do not exceed 5% of the liquidation value of the Funds portfolio, after taking into account unrealized profits and losses on
such positions; or (ii) the aggregate net notional value of its futures, options on futures and swaps does not exceed 100% of the liquidation value of the Funds portfolio, after taking into account unrealized profits and losses on such
positions. The Fund and the Adviser do not believe that complying with the amended rule will limit the Funds ability to use commodity, futures, options and swaps to the extent that it has used them in the past. These limitations, however, may
have an impact on the ability of the Adviser to manage the Fund in the future and on the Funds performance.
Brookfield
Investment Management Inc.
24
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Notes to Financial Statements
December 31,
2012
12. Subsequent Events
GAAP requires recognition in the financial statements
of the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statement of Assets and Liabilities. For non-recognized, subsequent events that must be disclosed to keep the financial
statements from being misleading, the Fund is required to disclose the nature of the events as well as an estimate of their financial effect, or a statement that such an estimate cannot be made.
Dividends:
The Funds Boards of Directors declared the following monthly dividends:
|
|
|
|
|
Dividend Per Share
|
|
Record Date
|
|
Payable Date
|
$0.1167
|
|
01/17/13
|
|
01/31/13
|
$0.1167
|
|
02/14/13
|
|
02/28/13
|
Management has evaluated subsequent events in the preparation of the Funds financial statements and has
determined that other than the items listed herein, there are no events that require recognition or disclosure in the financial statements.
2012 Annual Report
25
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Report of Independent Registered Public Accounting Firm
December 31, 2012
To the Stockholders and Board of Directors of
Brookfield Global Listed Infrastructure Income Fund Inc.
We have audited the
accompanying statement of assets and liabilities of Brookfield Global Listed Infrastructure Income Fund Inc. (the Fund), including the schedule of investments, as of December 31, 2012, and the related statements of operations and cash
flows for the year then ended, the statements of changes in net assets and the financial highlights for the year then ended and for the period August 26, 2011 (commencement of operations) through December 31, 2011. These financial statements and
financial highlights are the responsibility of the Funds management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2012,
by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our
opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Brookfield Global Listed Infrastructure Income Fund Inc. as of December 31, 2012, the results of its
operations and its cash flows for the year then ended, and the changes in its net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 28, 2013
Brookfield
Investment Management Inc.
26
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.
Tax Information (Unaudited)
December 31,
2012
The Fund is required by subchapter M of the Internal Revenue Code of 1986, as amended, to advise you within 60 days of the Funds year end
(December 31, 2012) as to the federal tax status of distributions received by stockholders during such year. Accordingly, we are advising you that 1.79% of the distributions paid from net investment income for the Fund was reclassified as return of
capital and are reflected as such in the Funds Statements of Changes in Net Assets and Financial Highlights.
For the year ended
December 31, 2012, certain dividends paid by the Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from ordinary income
designated as qualified dividend income was 65.52%.
For corporate stockholders, the percent of ordinary income distributions qualifying
for the corporate dividends received deduction for the year ended December 31, 2012 was 2.70%.
The percentage of taxable ordinary
income distributions that are designated as short-term capital gain distributions under Internal Revenue Section 871 (k)(2)(C) was 64.08%.
2012 Annual Report
27
BROOKFIELD GLOBAL LISTED INFRASTRUCTURE INCOME FUND INC.