UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07359
HYPERION BROOKFIELD INCOME FUND, INC.
(Exact name of registrant as specified in charter)
THREE WORLD FINANCIAL CENTER, 200 VESEY STREET, 10TH FLOOR
NEW YORK, NEW YORK 10281-1010
(Address of principal executive offices) (Zip code)
NEW YORK, NEW YORK 10281-1010
(Address of principal executive offices) (Zip code)
CLIFFORD E. LAI, PRESIDENT
HYPERION BROOKFIELD INCOME FUND, INC.
THREE WORLD FINANCIAL CENTER, 200 VESEY STREET, 10TH FLOOR
NEW YORK, NEW YORK 10281-1010
(Name and address of agent for service)
HYPERION BROOKFIELD INCOME FUND, INC.
THREE WORLD FINANCIAL CENTER, 200 VESEY STREET, 10TH FLOOR
NEW YORK, NEW YORK 10281-1010
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1 (800) Hyperion
Date of fiscal year end: July 31
Date of reporting period: January 31, 2008
Item 1. Reports to Shareholders.
Hyperion
Brookfield
Income
Fund, Inc.
Brookfield
Income
Fund, Inc.
Semi-Annual Report
January 31, 2008
Item 1. Reports to Shareholders.
HYPERION BROOKFIELD INCOME FUND, INC.
Portfolio Composition – (Unaudited)
Portfolio Composition – (Unaudited)
The chart that follows shows the allocation of the Fund’s holdings by asset category as of January 31, 2008.
HYPERION BROOKFIELD INCOME FUND, INC.
Portfolio of Investments as of January 31, 2008*
* As a percentage of total investments.
1
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
ASSET-BACKED SECURITIES – 1.9% | ||||||||||||||
Long Beach Mortgage Loan Trust | ||||||||||||||
Series 2002-5, Class M4B | 6.00 | % | 11/25/32 | $ | 742 | $ | 24,904 | |||||||
Mid-State Trust | ||||||||||||||
Series 2004-1, Class B | 8.90 | 08/15/37 | 2,347 | 2,308,491 | ||||||||||
Sail Net Interest Margin Notes | ||||||||||||||
Series 2004-BNC2, Class B* (e) | 7.00 | 12/27/34 | 619 | 5,238 | ||||||||||
Series 2003-5, Class A* (e) | 7.35 | 06/27/33 | 31 | 420 | ||||||||||
Series 2003-3, Class A* (e) | 7.75 | 04/27/33 | 78 | 1,210 | ||||||||||
6,868 | ||||||||||||||
Structured Asset Investment Loan Trust | ||||||||||||||
Series 2004-4, Class B* (c) (e) | 5.00/5.50 | 04/25/34 | 780 | 21,777 | ||||||||||
Series 2004-11, Class B* (c) (e) | 5.00/5.50 | 01/25/35 | 2,371 | 154,050 | ||||||||||
Series 2003-BC13, Class B* (a) (c) | 6.00/5.50 | 11/25/33 | 325 | 56,031 | ||||||||||
Series 2004-3, Class B* (c) | 6.00/6.50 | 04/25/34 | 992 | 69,874 | ||||||||||
301,732 | ||||||||||||||
Wells Fargo Alternative Loan Trust | ||||||||||||||
Series 2005-1, Class B5 | 5.50 | 02/25/35 | 310 | 46,488 | ||||||||||
Series 2005-1, Class B6 | 5.50 | 02/25/35 | 397 | 19,851 | ||||||||||
66,339 | ||||||||||||||
Total Asset-Backed Securities | ||||||||||||||
(Cost – $8,556,878) | 2,708,334 | |||||||||||||
COMMERCIAL MORTGAGE BACKED SECURITIES – 118.0% | ||||||||||||||
Other Commercial Mortgage Backed Securities – 118.0% | ||||||||||||||
Banc America Commercial Mortgage, Inc. | ||||||||||||||
Series 2004-6, Class F* | 5.36 | 12/10/42 | 2,500 | @ | 2,026,113 | |||||||||
Series 2007-2, Class L* | 5.37 | 04/10/49 | 1,514 | 673,308 | ||||||||||
Series 2007-2, Class M* | 5.37 | 04/10/49 | 695 | 292,139 | ||||||||||
Series 2007-2, Class N* | 5.37 | 04/10/49 | 2,340 | 919,115 | ||||||||||
Series 2007-2, Class O | 5.37 | 04/10/49 | 889 | 322,726 | ||||||||||
Series 2007-2, Class P* | 5.37 | 04/10/49 | 844 | 302,475 | ||||||||||
Series 2007-2, Class Q* | 5.37 | 04/10/49 | 3,131 | 1,066,657 | ||||||||||
Series 2007-2, Class S* | 5.37 | 04/10/49 | 11,887 | 2,324,488 | ||||||||||
Series 2006-2, Class J* | 5.48 | 05/10/45 | 882 | 413,366 | ||||||||||
Series 2006-2, Class K* | 5.48 | 05/10/45 | 1,386 | 614,279 | ||||||||||
Series 2006-2, Class L* | 5.48 | 05/10/45 | 1,591 | 668,040 | ||||||||||
Series 2006-2, Class M* | 5.48 | 05/10/45 | 1,040 | 414,112 | ||||||||||
Series 2006-2, Class N* | 5.48 | 05/10/45 | 2,080 | 786,414 | ||||||||||
Series 2006-2, Class O* | 5.48 | 05/10/45 | 2,035 | 691,788 | ||||||||||
Series 2006-2, Class P* | 5.48 | 05/10/45 | 11,190 | 2,186,854 | ||||||||||
Series 2007-2, Class K* | 5.70 | 04/10/49 | 3,610 | @ | 1,729,923 | |||||||||
Series 2002-PB2, Class K* | 6.29 | 06/11/35 | 2,000 | 1,847,734 | ||||||||||
17,279,531 | ||||||||||||||
See notes to financial statements.
2
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
COMMERCIAL MORTGAGE BACKED SECURITIES (continued) | ||||||||||||||
Bear Stearns Commercial Mortgage Securities | ||||||||||||||
Series 2005-PWR9, Class L* | 4.66 | % | 09/11/42 | $ | 5,000 | $ | 2,172,960 | |||||||
Series 2004-ESA, Class A3* | 4.74 | 05/14/16 | 3,500 | @ | 3,588,319 | |||||||||
Series 2004-T16, Class A6* | 4.75 | 02/13/46 | 5,300 | @ | 5,148,531 | |||||||||
Series 2005-T18, Class A4* | 4.93 | 02/13/42 | 11,000 | @ | 10,736,451 | |||||||||
Series 2006-PWR13, Class J* | 5.26 | 09/11/41 | 3,185 | 1,708,682 | ||||||||||
Series 2006-PWR13, Class N* | 5.26 | 09/11/41 | 1,297 | 360,507 | ||||||||||
Series 2006-PWR13, Class K* | 5.26 | 09/11/41 | 399 | 192,652 | ||||||||||
Series 2006-PWR13, Class L* | 5.26 | 09/11/41 | 2,663 | 871,733 | ||||||||||
Series 2006-PWR13, Class M* | 5.26 | 09/11/41 | 2,175 | 638,610 | ||||||||||
Series 2006-PWR13, Class O* | 5.26 | 09/11/41 | 2,172 | 574,441 | ||||||||||
Series 2006-PWR13, Class P* | 5.26 | 09/11/41 | 10,858 | 2,055,911 | ||||||||||
Series 2004-PWR5, Class F* | 5.48 | † | 07/11/42 | 3,500 | @ | 2,804,771 | ||||||||
Series 2004-PWR6, Class F* | 5.62 | † | 11/11/41 | 2,250 | @ | 1,604,682 | ||||||||
Series 2005-PWR10, Class K* | 5.63 | 12/11/40 | 6,113 | @ | 3,428,372 | |||||||||
Series 1999-C1, Class J*(e) | 5.64 | 02/14/31 | 1,553 | 73,902 | ||||||||||
Series 2007-T28, Class G* | 6.18 | 09/11/42 | 1,881 | 990,111 | ||||||||||
Series 2007-T28, Class F* | 6.18 | 09/11/42 | 1,080 | 602,978 | ||||||||||
Series 2006-PWR13, Class H* | 6.03 | 09/11/41 | 1,715 | 1,019,917 | ||||||||||
38,573,530 | ||||||||||||||
CD 2006 CD2 | ||||||||||||||
Series 2006-CD2, Class K* | 5.09 | 01/15/46 | 1,632 | 893,231 | ||||||||||
Series 2006-CD2, Class L* | 5.09 | 01/15/46 | 1,166 | 571,430 | ||||||||||
Series 2006-CD6, Class M* | 5.09 | 01/15/46 | 1,980 | 834,346 | ||||||||||
2,299,007 | ||||||||||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | ||||||||||||||
Series 2005-CD1, Class G* | 5.40 | † | 07/15/44 | 5,000 | @ | 3,806,180 | ||||||||
Credit Suisse First Boston Mortgage Securities Corp. | ||||||||||||||
Series 2003-C3, Class J* | 4.23 | 05/15/38 | 1,200 | 914,119 | ||||||||||
Series 2004-C3, Class J* | 4.78 | 07/15/36 | 275 | 191,770 | ||||||||||
Series 2006-C1, Class L* | 5.24 | 02/15/39 | 1,717 | 960,239 | ||||||||||
Series 2006-C1, Class M* | 5.24 | 02/15/39 | 1,200 | 627,673 | ||||||||||
Series 2006-C1, Class N* | 5.24 | 02/15/39 | 1,288 | 638,044 | ||||||||||
Series 2006-C1, Class O* | 5.24 | 02/15/39 | 429 | 201,459 | ||||||||||
Series 2006-C1, Class P* | 5.24 | 02/15/39 | 430 | 190,610 | ||||||||||
Series 2006-C1, Class Q* | 5.24 | 02/15/39 | 858 | 356,701 | ||||||||||
Series 2006-C1, Class S* | 5.24 | 02/15/39 | 3,861 | 933,432 | ||||||||||
Series 2007-C2, Class K* | 5.55 | 01/15/49 | 7,965 | 3,752,511 | ||||||||||
8,766,558 | ||||||||||||||
Credit Suisse Mortgage Capital Certificates | ||||||||||||||
Series 2006-C4, Class L* | 5.15 | 09/15/39 | 623 | 327,884 | ||||||||||
Series 2006-C4, Class M* | 5.15 | 09/15/39 | 1,004 | 496,012 | ||||||||||
Series 2006-C4, Class N* | 5.15 | 09/15/39 | 1,619 | 750,933 | ||||||||||
Series 2006-C4, Class O* | 5.15 | 09/15/39 | 1,597 | 636,262 | ||||||||||
Series 2006-C4, Class P* | 5.15 | 09/15/39 | 2,405 | 887,505 | ||||||||||
Series 2006-C4, Class Q* | 5.15 | 09/15/39 | 3,193 | 1,123,751 | ||||||||||
Series 2006-C4, Class S* | 5.15 | 09/15/39 | 15,963 | 3,465,966 | ||||||||||
7,688,313 | ||||||||||||||
See notes to financial statements.
3
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
COMMERCIAL MORTGAGE BACKED SECURITIES (continued) | ||||||||||||||
Greenwich Capital Commercial Funding Corp. | ||||||||||||||
Series 2005-GG5, Class A5 | 5.22 | % | 04/10/37 | $ | 11,500 | @ | $ | 11,585,917 | ||||||
JP Morgan Commercial Mortgage Finance Corp. | ||||||||||||||
Series 2003-C1, Class X1* | 0.65 | 01/12/37 | 53,380 | 1,879,779 | ||||||||||
Series 2003-C1, Class K* | 5.08 | 01/12/37 | 1,625 | 1,181,242 | ||||||||||
Series 2003-C1, Class L* | 5.08 | 01/12/37 | 1,200 | 734,376 | ||||||||||
Series 2004-C2, Class A3 | 5.38 | 05/15/41 | 5,000 | @ | 5,022,320 | |||||||||
Series 2005-LDP5, Class J* | 5.50 | 12/15/44 | 4,500 | @ | 3,221,748 | |||||||||
Series 2004-PNC1, Class A4 | 5.54 | 06/12/41 | 5,000 | @ | 5,062,975 | |||||||||
Series 1999-C7, Class F* | 6.00 | 10/15/35 | 6,000 | @ | 6,023,370 | |||||||||
Series 2007-LDP11, Class K* | 6.01 | 06/15/49 | 5,499 | @ | 2,640,933 | |||||||||
25,766,743 | ||||||||||||||
LB-UBS Commercial Mortgage Trust | ||||||||||||||
Series 2005-C1, Class G* | 5.16 | 02/15/40 | 4,286 | @ | 3,392,129 | |||||||||
Series 2002-C2, Class V** | 5.68 | 07/15/35 | 0 | 0 | ||||||||||
Series 2002-C2, Class M* | 5.68 | 07/15/35 | 900 | 834,683 | ||||||||||
Series 2002-C2, Class N* | 5.68 | 07/15/35 | 1,450 | 1,165,788 | ||||||||||
Series 2001-C7, Class L* | 5.87 | 11/15/33 | 3,299 | 2,959,926 | ||||||||||
8,352,526 | ||||||||||||||
LNR CDO Ltd. | ||||||||||||||
Series 2007-1A, Class F* | 4.74 | † | 12/26/49 | 3,750 | 739,320 | |||||||||
Merrill Lynch Mortgage Trust | ||||||||||||||
Series 2002-MW1, Class J* | 5.70 | 07/12/34 | 2,295 | 2,102,203 | ||||||||||
Morgan Stanley Cap I, Inc. | ||||||||||||||
Series 2005-HQ6, Class A4A | 4.99 | 08/13/42 | 12,000 | @ | 11,819,268 | |||||||||
Series 2006-IQ11, Class J* | 5.53 | 10/15/42 | 811 | 278,411 | ||||||||||
Series 2006-IQ11, Class K* | 5.53 | 10/15/42 | 586 | 200,417 | ||||||||||
Series 2006-IQ11, Class L* | 5.53 | 10/15/42 | 660 | 218,796 | ||||||||||
Series 2005-HQ6, Class J* | 5.60 | † | 08/13/42 | 5,000 | @ | 3,713,915 | ||||||||
16,230,807 | ||||||||||||||
PNC Corp. Center B Note (d) (e) | 8.85 | 03/11/17 | 2,350 | 2,242,090 | ||||||||||
Sheffield Bldg. Mezzanine Loan (d) (e) | 14.32 | 07/09/08 | 5,430 | 5,423,202 | ||||||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||||||||
Series 2005-C18, Class J* | 4.70 | 04/15/42 | 1,248 | 737,475 | ||||||||||
Series 2005-C18, Class K* | 4.70 | 04/15/42 | 1,665 | 932,006 | ||||||||||
Series 2005-C18, Class L* | 4.70 | 04/15/42 | 797 | 423,428 | ||||||||||
Series 2005-C18, Class M* | 4.70 | 04/15/42 | 532 | 270,085 | ||||||||||
Series 2005-C18, Class N* | 4.70 | 04/15/42 | 648 | 262,208 | ||||||||||
Series 2002-C2, Class L* | 4.94 | 11/15/34 | 1,833 | 1,495,107 | ||||||||||
Series 2002-C2, Class M* | 4.94 | 11/15/34 | 1,072 | 763,717 | ||||||||||
Series 2002-C2, Class N* | 4.94 | 11/15/34 | 938 | 638,800 | ||||||||||
Series 2002-C2, Class O* | 4.94 | 11/15/34 | 755 | 441,848 | ||||||||||
Series 2002-C2, Class P* (e) | 4.94 | 11/15/34 | 10,044 | 3,373,778 | ||||||||||
Series 2006-C29, Class K* | 5.07 | 11/15/48 | 1,399 | 637,608 | ||||||||||
Series 2006-C29, Class L* | 5.07 | 11/15/48 | 932 | 376,228 | ||||||||||
Series 2006-C29, Class M* | 5.07 | 11/15/48 | 887 | 341,259 | ||||||||||
Series 2006-C29, Class N* | 5.07 | 11/15/48 | 1,145 | 431,336 | ||||||||||
Series 2006-C29, Class O* | 5.07 | 11/15/48 | 2,464 | 777,882 | ||||||||||
Series 2006-C29, Class P* | 5.07 | 11/15/48 | 2,507 | 736,802 | ||||||||||
Series 2006-C29, Class Q* | 5.07 | 11/15/48 | 11,284 | 2,953,587 |
See notes to financial statements.
4
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
COMMERCIAL MORTGAGE BACKED SECURITIES (continued) | ||||||||||||||
Series 2007-C31, Class L* | 5.13 | % | 04/15/47 | $ | 3,380 | $ | 1,429,017 | |||||||
Series 2007-C31, Class M* | 5.13 | 04/15/47 | 729 | 291,549 | ||||||||||
Series 2007-C31, Class N* | 5.13 | 04/15/47 | 2,840 | 1,061,419 | ||||||||||
Series 2007-C31, Class O* | 5.13 | 04/15/47 | 1,645 | 559,933 | ||||||||||
Series 2007-C31, Class P* | 5.13 | 04/15/47 | 1,654 | 474,079 | ||||||||||
Series 2007-C31, Class Q* | 5.13 | 04/15/47 | 1,654 | 442,376 | ||||||||||
Series 2007-C31, Class S* | 5.13 | 04/15/47 | 940 | 225,122 | ||||||||||
Series 2007-C31, Class T* | 5.13 | 04/15/47 | 1,890 | 452,640 | ||||||||||
Series 2007-C31, Class U* | 5.13 | 04/15/47 | 7,569 | 1,812,034 | ||||||||||
22,341,323 | ||||||||||||||
Total Other Commercial Mortgage Backed Securities | ||||||||||||||
(Cost – $232,299,009) | 173,197,250 | |||||||||||||
Total Commercial Mortgage Backed Securities | ||||||||||||||
(Cost – $232,299,009) | 173,197,250 | |||||||||||||
NON-AGENCY RESIDENTIAL MORTGAGE BACKED SECURITIES – 20.4% | ||||||||||||||
Subordinated Collateralized Mortgage Obligations – 20.4% | ||||||||||||||
Citicorp Mortgage Securities, Inc. | ||||||||||||||
Series 2003-4, Class B4 | 5.00 | 03/25/18 | 254 | 242,008 | ||||||||||
Series 2003-4, Class B5 | 5.00 | 03/25/18 | 127 | 110,714 | ||||||||||
Series 2003-4, Class B6 | 5.00 | 03/25/18 | 254 | 114,437 | ||||||||||
Series 2003-5, Class B4 | 5.35 | 04/25/33 | 480 | 407,471 | ||||||||||
Series 2003-5, Class B5 | 5.35 | 04/25/33 | 320 | 248,551 | ||||||||||
Series 2003-5, Class B6 | 5.35 | 04/25/33 | 481 | 199,551 | ||||||||||
1,322,732 | ||||||||||||||
Commercial Mortgage Pass-Through Certificates | ||||||||||||||
Series 2006-C8, Class L* | 5.06 | 12/10/46 | 2,207 | 1,154,504 | ||||||||||
Series 2006-C8, Class M* | 5.06 | 12/10/46 | 2,207 | 1,082,297 | ||||||||||
Series 2006-C8, Class N* | 5.06 | 12/10/46 | 551 | 249,386 | ||||||||||
Series 2007-C9, Class P* | 5.24 | 12/10/49 | 2,549 | 866,974 | ||||||||||
Series 2007-C9, Class Q* | 5.24 | 12/10/49 | 1,527 | 506,326 | ||||||||||
Series 2007-C9, Class S* | 5.24 | 12/10/49 | 10,824 | 2,604,525 | ||||||||||
Series 2007-C9, Class L* | 5.24 | 12/10/49 | 4,197 | 1,820,835 | ||||||||||
Series 2007-C9, Class M* | 5.24 | 12/10/49 | 1,647 | 675,385 | ||||||||||
Series 2007-C9, Class N* | 5.24 | 12/10/49 | 1,778 | 690,052 | ||||||||||
Series 2007-C9, Class O* | 5.24 | 12/10/49 | 1,512 | 548,792 | ||||||||||
10,199,076 | ||||||||||||||
First Horizon Mortgage Trust | ||||||||||||||
Series 2005-FA9, Class B4 | 5.50 | 12/25/35 | 1,053 | 131,672 | ||||||||||
Series 2005-FA9, Class B5 | 5.50 | 12/25/35 | 1,585 | 118,874 | ||||||||||
Series 2005-FA9, Class B6 | 5.50 | 12/25/35 | 1,125 | 33,740 | ||||||||||
284,286 | ||||||||||||||
G3 Mortgage Reinsurance Ltd. | ||||||||||||||
Series 1, Class EH* (e) | 23.38 | † | 05/25/08 | 2,289 | 2,308,423 | |||||||||
Harborview Mortgage Loan Trust | ||||||||||||||
Series 2005-1, Class B4* (b) | 5.68 | † | 03/19/35 | 969 | 561,902 | |||||||||
Series 2005-1, Class B5* (b) | 5.68 | † | 03/19/35 | 1,414 | 777,461 | |||||||||
Series 2005-1, Class B6* (b) | 5.68 | † | 03/19/35 | 1,525 | 228,678 |
See notes to financial statements.
5
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
NON-AGENCY RESIDENTIAL MORTGAGE BACKED SECURITIES (continued) | ||||||||||||||
Series 2005-14, Class B4* | 5.69 | % | 12/19/35 | $ | 3,352 | $ | 1,340,715 | |||||||
2,908,756 | ||||||||||||||
Residential Funding Mortgage Sec I | ||||||||||||||
Series 2003-S6, Class B1 | 5.00 | 04/25/18 | 154 | 144,676 | ||||||||||
Series 2003-S6, Class B2 | 5.00 | 04/25/18 | 77 | 61,278 | ||||||||||
Series 2003-S6, Class B3 | 5.00 | 04/25/18 | 154 | 41,485 | ||||||||||
Series 2005-S9, Class B1* | 5.75 | 12/25/35 | 896 | 411,498 | ||||||||||
Series 2005-S9, Class B2* | 5.75 | 12/25/35 | 538 | 206,046 | ||||||||||
Series 2005-S9, Class B3* | 5.75 | 12/25/35 | 754 | 195,964 | ||||||||||
1,060,947 | ||||||||||||||
Resix Financial Ltd. | ||||||||||||||
Series 2004-A, Class B8* | 9.41 | † | 02/10/36 | 822 | 645,950 | |||||||||
Series 2005-A, Class B9* | 10.16 | † | 03/10/37 | 1,316 | 814,916 | |||||||||
Series 2005-D, Class B9* | 12.24 | † | 12/15/37 | 2,874 | 1,966,361 | |||||||||
Series 2005-A, Class B10* | 12.91 | † | 03/10/37 | 1,026 | 639,195 | |||||||||
Series 2005-D, Class B10* | 13.74 | † | 12/15/37 | 1,437 | 915,843 | |||||||||
Series 2005-D, Class B11* | 15.74 | † | 12/15/37 | 1,916 | 1,091,449 | |||||||||
Series 2004-A, Class B11* | 18.91 | † | 02/10/36 | 939 | 835,642 | |||||||||
6,909,356 | ||||||||||||||
Washington Mutual | ||||||||||||||
Series 2005-AR2, Class B11 (b) | 4.58 | † | 01/25/45 | 3,832 | 2,107,392 | |||||||||
Series 2005-AR2, Class B12 (b) | 4.58 | † | 01/25/45 | 2,658 | 398,769 | |||||||||
Series 2003-S3, Class CB5 | 5.41 | 06/25/33 | 1,074 | 658,437 | ||||||||||
Series 2003-S3, Class CB6 | 5.41 | 06/25/33 | 1,074 | 349,156 | ||||||||||
3,513,754 | ||||||||||||||
Wells Fargo Mortgage Backed Securities Trust | ||||||||||||||
Series 2005-AR4, Class B6 | 4.56 | † | 04/25/35 | 1,107 | 188,230 | |||||||||
Series 2006-14, Class B4* | 6.00 | 11/25/36 | 1,238 | 553,105 | ||||||||||
Series 2006-15, Class B5* | 6.00 | 11/25/36 | 1,856 | 408,389 | ||||||||||
Series 2006-15, Class B6* | 6.00 | 11/25/36 | 1,976 | 335,927 | ||||||||||
1,485,651 | ||||||||||||||
Total Subordinated Collateralized Mortgage Obligations | ||||||||||||||
(Cost – $48,150,794) | 29,992,981 | |||||||||||||
Total Non-Agency Residential Mortgage Backed Securities | ||||||||||||||
(Cost – $48,150,794) | 29,992,981 | |||||||||||||
Value | ||||||||||||||
Shares | (Note 2) | |||||||||||||
Preferred Stock – 0.6% | ||||||||||||||
Strategic Hotel Capital, Inc. Series A, 8.50% (REIT)* (cost $949,519) | 37,154 | 931,172 | ||||||||||||
See notes to financial statements.
6
HYPERION BROOKFIELD INCOME FUND, INC. | ||||||||||||||
Portfolio of Investments – (Unaudited) | ||||||||||||||
January 31, 2008 | ||||||||||||||
Principal | ||||||||||||||
Interest | Amount | Value | ||||||||||||
Rate | Maturity | (000s) | (Note 2) | |||||||||||
SHORT TERM INVESTMENTS – 5.4% | ||||||||||||||
Federal Home Loan Mortgage Discount Note (f) | 0.00 | % | 02/04/08 | $ | 2,000 | $ | 1,999,584 | |||||||
Federal National Mortgage Association Discount Note (f) | 0.00 | 02/04/08 | 5,300 | 5,298,719 | ||||||||||
United States Treasury Bill# | 3.28 | 06/19/08 | 625 | 620,259 | ||||||||||
Total Short Term Investments | ||||||||||||||
(Cost – $7,915,581) | 7,918,562 | |||||||||||||
Total Investments – 146.3% | ||||||||||||||
(Cost – $297,871,781) | 214,748,299 | |||||||||||||
Liabilities in Excess of Other Assets – (46.3)% | (67,963,570 | ) | ||||||||||||
NET ASSETS – 100.0% | $ | 146,784,729 | ||||||||||||
@ | — | Portion or entire principal amount delivered as collateral for reverse repurchase agreements (Note 6). | ||
* | — | 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. | ||
** | — | Acquired in connection with purchase of LB-UBS Commercial Mortgage Trust Series 2002-C2 Classes Q, S, T, and U. | ||
† | — | Variable Rate Security — Interest Rate is in effect as of January 31, 2008. | ||
(a) | — | Interest rate and principal amounts are based on the notional amount of the underlying mortgage pools. | ||
(b) | — | Security is a “step up” bond where coupon increases or steps up at a predetermined date. At that date the coupon increases to LIBOR plus a predetermined margin. | ||
(c) | — | Security is a “step up” bond where coupon increases or steps up at a predetermined date. Rates shown are current coupon and next coupon rate when security steps up. | ||
(d) | — | Investments in loans receivable. | ||
(e) | — | Security valued in good faith pursuant to fair value procedures adopted by the Board of Directors. As of January 31, 2008, the total value of all such securities was $13,530,188 or 9.2% of net assets. | ||
(f) | — | Zero Coupon Note-Interest rate represents current yield to maturity. | ||
# | — | Portion or entire principal amount held as collateral for open future contracts (Note 8). | ||
CDO | — | Collateralized Debt Obligation | ||
REIT | — | Real Estate Investment Trust |
See notes to financial statements.
7
HYPERION BROOKFIELD INCOME FUND, INC.
Statement of Assets and Liabilities – (Unaudited)
January 31, 2008
Statement of Assets and Liabilities – (Unaudited)
January 31, 2008
Assets: | ||||
Investments in securities, at market (cost $290,040,477) (Note 2) | $ | 207,083,007 | ||
Investments in loans receivable (cost $7,831,304) | 7,665,292 | |||
Total investments (cost $297,871,781) | 214,748,299 | |||
Cash | 840,742 | |||
Cash collateral held for margin requirement on swap contracts and futures | 2,346,941 | |||
Interest and dividends receivable | 1,678,090 | |||
Prepaid expenses | 112,802 | |||
Total assets | 219,726,874 | |||
Liabilities: | ||||
Reverse repurchase agreements (Note 6) | 68,407,125 | |||
Interest payable for reverse repurchase agreements (Note 6) | 124,514 | |||
Unrealized depreciation on swap contracts (Note 8) | 3,972,729 | |||
Variation margin payable | 301,875 | |||
Investment advisory fee payable (Note 4) | 49,918 | |||
Administration fee payable (Note 4) | 20,641 | |||
Accrued expenses | 65,343 | |||
Total liabilities | 72,942,145 | |||
Net Assets (equivalent to $3.89 per share based on 37,764,948 shares issued and outstanding) | $ | 146,784,729 | ||
Composition of Net Assets: | ||||
Capital stock, at par value ($0.001, 200,000,000 shares authorized) (Note 7) | $ | 37,765 | ||
Additional paid-in capital (Note 7) | 253,073,398 | |||
Undistributed net investment income | 3,500,450 | |||
Accumulated net realized loss on investments, swap contracts and futures | (20,927,910 | ) | ||
Net unrealized depreciation on investments, swap contracts and futures | (88,898,974 | ) | ||
Net assets applicable to capital stock outstanding | $ | 146,784,729 | ||
See notes to financial statements.
8
HYPERION BROOKFIELD INCOME FUND, INC.
Statement of Operations – (Unaudited)
For the Six Months Ended January 31, 2008
Statement of Operations – (Unaudited)
For the Six Months Ended January 31, 2008
Investment Income (Note 2): | ||||
Interest | $ | 15,549,917 | ||
Dividends | 216,404 | |||
15,766,321 | ||||
Expenses: | ||||
Investment advisory fee (Note 4) | 468,001 | |||
Administration fee (Note 4) | 144,423 | |||
Insurance | 44,942 | |||
Custodian | 40,560 | |||
Legal fees | 31,684 | |||
Directors’ fees | 30,163 | |||
Audit and tax service fees | 23,817 | |||
Reports to stockholders | 10,117 | |||
Miscellaneous | 5,044 | |||
Total operating expenses | 798,751 | |||
Interest expense on reverse repurchase agreements (Note 6) | 2,385,472 | |||
Total expenses | 3,184,223 | |||
Less expenses waived by the investment adviser (Note 4) | (96,750 | ) | ||
Net expenses | 3,087,473 | |||
Net investment income | 12,678,848 | |||
Realized and Unrealized Gain (Loss) on Investments (Notes 2 and 8): | ||||
Net realized loss on: | ||||
Investment transactions | (7,786,894 | ) | ||
Swap contracts | (8,020,079 | ) | ||
Futures | (5,424,988 | ) | ||
Net realized loss on investment transactions, swap contracts and futures transactions | (21,231,961 | ) | ||
Net change in unrealized appreciation/depreciation on: | ||||
Investments | (53,473,981 | ) | ||
Swap contracts | 1,322,521 | |||
Futures | (640,900 | ) | ||
Net change in unrealized appreciation/depreciation on investments, swap contracts and futures | (52,792,360 | ) | ||
Net realized and unrealized loss on investments, swap contracts and futures | (74,024,321 | ) | ||
Net decrease in net assets resulting from operations | $ | (61,345,473 | ) | |
See notes to financial statements.
9
HYPERION BROOKFIELD INCOME FUND, INC.
Statements of Changes in Net Assets
Statements of Changes in Net Assets
For the Six Months | ||||||||
Ended | For The Year | |||||||
January 31, 2008 | Ended | |||||||
(Unaudited) | July 31, 2007 | |||||||
Increase (Decrease) in Net Assets Resulting from Operations: | ||||||||
Net investment income | $ | 12,678,848 | $ | 25,968,391 | ||||
Net realized gain (loss) on investment transactions, swap contracts and futures | (21,231,961 | ) | 257,316 | |||||
Net change in unrealized depreciation on investments, swap contracts and futures | (52,792,360 | ) | (32,726,373 | ) | ||||
Net decrease in net assets resulting from operations | (61,345,473 | ) | (6,500,666 | ) | ||||
Dividends to Stockholders (Note 2): | ||||||||
Net investment income | (9,388,284 | ) | (25,733,022 | ) | ||||
Net realized gains | — | (5,806,658 | ) | |||||
Total dividends | (9,388,284 | ) | (31,539,680 | ) | ||||
Capital Stock Transactions (Note 7): | ||||||||
Net asset value of shares issued through dividend reinvestment (1,656,164 and 4,236,314 shares, respectively) | 7,204,311 | 27,633,727 | ||||||
Cost of shares redeemed (– and 7,268,150 shares, respectively) | — | (49,423,420 | ) | |||||
Net increase/(decrease) from capital stock transactions | 7,204,311 | (21,789,693 | ) | |||||
Total decrease in net assets | (63,529,446 | ) | (59,830,039 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 210,314,175 | 270,144,214 | ||||||
End of period (including undistributed net investment income of $3,500,450 and $209,886, respectively) | $ | 146,784,729 | $ | 210,314,175 | ||||
See notes to financial statements.
10
HYPERION BROOKFIELD INCOME FUND, INC.
Statement of Cash Flows
For the Six Months Ended January 31, 2008 (Unaudited)
Statement of Cash Flows
For the Six Months Ended January 31, 2008 (Unaudited)
Increase (Decrease) in Cash: | ||||
Cash flows provided by (used for) operating activities: | ||||
Net decrease in net assets resulting from operations | $ | (61,345,473 | ) | |
Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities: | ||||
Purchases of long-term portfolio investments | (14,335,527 | ) | ||
Proceeds from disposition of long-term portfolio investments and principal paydowns | 63,256,201 | |||
Purchases of short-term portfolio investments, net | (4,237,174 | ) | ||
Decrease in interest and dividend receivable | 186,687 | |||
Increase in prepaid expenses and other assets | (75,554 | ) | ||
Increase in variation margin payable | 135,109 | |||
Decrease in swap premiums received | (1,429,905 | ) | ||
Decrease in interest payable for reverse repurchase agreements | (48,111 | ) | ||
Decrease in investment advisory fee payable | (14,896 | ) | ||
Decrease in administration fee payable | (9,190 | ) | ||
Decrease in accrued expenses and other liabilities | (10,303 | ) | ||
Net amortization and paydown on investments | (4,673,831 | ) | ||
Unrealized depreciation on investments | 53,473,981 | |||
Unrealized appreciation/depreciation on swap contracts | (1,322,521 | ) | ||
Net realized losses on investment transactions | 7,786,894 | |||
Net cash provided by operating activities | 37,336,387 | |||
Cash flows used in financing activities: | ||||
Net cash used for reverse repurchase agreements | (32,475,875 | ) | ||
Dividends paid to stockholders, net of reinvestments | (6,089,926 | ) | ||
Net cash used for financing activities | (38,565,801 | ) | ||
Net decrease in cash | (1,229,414 | ) | ||
Cash at beginning of period | 4,417,097 | |||
Cash at end of period | $ | 3,187,683 | ||
Noncash financing activities not included herein consist of reinvestment od dividends of $7,204,311.
Interest payments for the six months ended January 31, 2008 totaled $2,433,583.
Cash at the end of the period includes $2,346,941 held by third parties for margin requirements on swap contracts and futures.
See notes to financial statements.
11
HYPERION BROOKFIELD INCOME FUND, INC.
Financial Highlights
Financial Highlights
For the | ||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
January 31, 2008 | For The Year Ended July 31, | |||||||||||||||||||||||
(Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||
Net asset value, beginning of period | $ | 5.82 | $ | 6.90 | $ | 6.96 | $ | 6.83 | $ | 6.84 | $ | 11.14 | ||||||||||||
Net investment income | 0.35 | 0.73 | 0.60 | 0.65 | * | 0.76 | * | 0.76 | ||||||||||||||||
Net realized and unrealized gains (losses) on investments, short sales, futures and swap contracts | (2.02 | ) | (0.94 | ) | (0.02 | ) | 0.15 | (0.08 | ) | 0.28 | ||||||||||||||
Net increase (decrease) in net asset value resulting from operations | (1.67 | ) | (0.21 | ) | 0.58 | 0.80 | 0.68 | 1.04 | ||||||||||||||||
Dividends from net investment income | (0.26 | ) | (0.72 | ) | (0.59 | ) | (0.65 | ) | (0.65 | ) | (1.39 | ) | ||||||||||||
Dividends from net realized gains | — | (0.15 | ) | (0.05 | ) | (0.02 | ) | (0.04 | ) | (0.92 | ) | |||||||||||||
Dividends from returns of capital | — | — | — | — | — | (3.03 | ) | |||||||||||||||||
Total dividends | (0.26 | ) | (0.87 | ) | (0.64 | ) | (0.67 | ) | (0.69 | ) | (5.34 | ) | ||||||||||||
Net asset value, end of period | $ | 3.89 | $ | 5.82 | $ | 6.90 | $ | 6.96 | $ | 6.83 | $ | 6.84 | ||||||||||||
Total Investment Return | (29.17 | )%(1) | (3.97 | )% | 8.47% | 11.74% | 10.02% | 8.98% | ||||||||||||||||
Ratios to Average Net Assets/Supplementary Data: | ||||||||||||||||||||||||
Net assets, end of period (000’s) | $ | 146,785 | $ | 210,314 | $ | 270,144 | $ | 178,578 | $ | 138,689 | $ | 98,539 | ||||||||||||
Operating expenses | 0.85% | (2) | 0.79% | 0.79% | 0.87% | 0.89% | 0.77% | |||||||||||||||||
Interest expense | 2.55% | (2) | 0.50% | 0.82% | 0.72% | 0.33% | 0.05% | |||||||||||||||||
Total expenses | 3.40% | (2) | 1.29% | 1.61% | 1.59% | 1.22% | 0.82% | |||||||||||||||||
Total expenses including fee waiver and excluding interest expense | 0.75% | (2) | 0.75% | 0.75% | 0.75% | 0.75% | 0.75% | |||||||||||||||||
Net investment income | 13.55% | (2) | 9.39% | 9.34% | 9.67% | 11.02% | 7.75% | |||||||||||||||||
Portfolio turnover rate | 6% | (1) | 18% | 46% | 31% | 51% | 83% |
(1) | Not annualized |
(2) | Annualized |
* | Calculated based on the average shares outstanding during the period. |
See notes to financial statements.
12
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
1. | The Fund |
The Hyperion Brookfield Income Fund, Inc. (the “Fund”) was incorporated under the laws of the State of Maryland on September 12, 1995 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified closed-end management investment company. Pursuant to the Fund’s charter, the Fund’s existence will terminate on December 31, 2008, unless stockholders holding more than 75% of the Fund’s common stock agree to extend the duration of the Fund’s existence for another year.
The Fund’s investment objective is to provide a high total return by investing in securities backed by interests in real estate. No assurance can be given that the Fund’s investment objective will be achieved.
2. | Significant Accounting Policies |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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: Securities held by the Fund are valued based upon the current bid price where market quotations are readily available. Securities for which quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures approved by the Fund’s Board of Directors. As a general rule, the current fair value of a security would appear to be the amount which the Fund could expect to receive upon its current sale. Some of the general factors that are considered in determining fair value include the fundamental analytic data relating to the investment and an evaluation of the forces which influence the market in which these securities are purchased and sold. Determination of fair value involves subjective judgment, as the actual market value of a particular security can be established only by negotiations between the parties in a sales transaction. Debt securities having a remaining maturity of sixty days or less when purchased and debt securities originally purchased with maturities in excess of sixty days but which currently have maturities of sixty days or less are valued at amortized cost.
Valuation of and Basis of Accounting for Loans Receivable: Loans receivable are carried at fair value, which is considered equal to the present value of the expected future cash flows discounted at the loan’s effective interest rate, or collateral value, if the loan is collateral dependent. Interest income on the loans receivable is accrued based upon the principal amount outstanding.
The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or region. The value of mortgage-backed securities can be significantly affected by changes in interest rates or in the financial conditions of an issuer or market.
Securities 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. Discounts and premiums on securities are accreted and amortized, respectively, using the effective yield to maturity method.
Taxes: The Fund intends to qualify and meet the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute substantially all of its taxable income to its stockholders. Therefore, no federal income or excise tax provision is required.
The Financial Accounting Standards Board (“FASB”) has issued FASB Interpretation 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes. FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the taxing authority. 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 deferred tax asset; an increase in deferred tax liability; or a combination thereof. As of January 31, 2008 the Fund has implemented FIN 48 and has determined that there is no impact on its financial statements.
13
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
Distributions to Stockholders: Distributions from net investment income and net realized capital gains (including net short term capital gains), if any, are declared and paid at least annually. Distributions to shareholders are recorded on the ex-dividend date.
Income dividends and capital gain distributions are determined in accordance with income tax regulations that may differ from accounting principals generally accepted in the United States of America. These differences are primarily due to differing treatment of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the fund as a whole.
Repurchase Agreements: The Fund regularly invests in repurchase agreements. A repurchase agreement is an agreement by which the Fund purchases securities from a third party with the commitment that they will be repurchased by the seller at a fixed price on an agreed future date. The Fund, through its custodian, receives delivery of the underlying collateral, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Hyperion Brookfield Asset Management, Inc. (the “Adviser”) is responsible for determining that the value of these underlying securities is sufficient at all times. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings commence with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.
Swap agreements: The Fund may enter into swap agreements to manage its exposure to various risks. An interest rate swap agreement involves the exchange by the Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. A total rate of return swap agreement is a derivative contract in which one party (the receiver) receives the total return of a specific index on a notional amount of principal from a second party (the seller) in return for paying a funding cost, which is usually quoted in relation to the London Inter-Bank Offer Rate (“LIBOR”). During the life of the agreement, there are periodic exchanges of cash flows in which the index receiver pays the LIBOR based interest on the notional principal amount and receives (or pays if the total return is negative or spreads widen) the index total return on the notional principal amount. A credit default swap is an agreement between a protection buyer and a protection seller whereby the buyer agrees to periodically pay the seller a premium, generally expressed in terms of interest on a notional principal amount, over a specified period in exchange for receiving compensation from the seller when an underlying reference debt obligation is subject to one or more specified adverse credit events (such as bankruptcy, failure to pay, acceleration of indebtedness, restructuring, or repudiation/moratorium). The Fund will usually enter into swaps on a net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Swaps are marked to market based upon quotations from market makers and the change, if any, along with an accrual for periodic payments due or owed is recorded as unrealized gain or loss in the Statement of Operations. Net payments on swap agreements are included as part of realized gain/loss in the Statement of Operations. Payments paid or received upon the opening of a swap agreement are included in Swap premiums paid or received in the Statement of Assets and Liabilities. These upfront payments are recorded as realized gain or loss in the Statement of Operations upon the termination or maturity of the swap. Entering into these agreements involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks include the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform, that there may be unfavorable changes in the fluctuation of interest rates or the occurrence of adverse credit events on reference debt obligations. See Note 8 for a summary of all open swap agreements as of January 31, 2008.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract.
The Fund invests in financial futures contracts to hedge against fluctuations in the value of portfolio securities caused by changes in prevailing market interest rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. The Fund is at risk that it may not be able to close out a transaction because of an illiquid market.
14
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
3. | Risks of Investing in Asset-Backed Securities |
The value of asset-backed securities may be affected by, among other factors, changes in: interest rates, the market’s assessment of the quality of underlying assets, the creditworthiness of the servicer for the underlying assets, information concerning the originator of the underlying assets, or the creditworthiness or rating of the entities that provide any supporting letters of credit, surety bonds, derivative instruments, or other credit enhancement. The value of asset-backed securities also will be affected by the exhaustion, termination or expiration of any credit enhancement.
4. | Investment Advisory Agreements and Affiliated Transactions |
The Fund entered into an Investment Advisory Agreement with the Adviser under which the Adviser is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. The Advisory Agreement provides, among other things, that the Adviser will bear all expenses of its employees and overhead incurred in connection with its duties under the Investment Advisory Agreement, and will pay all salaries of the Fund’s directors and officers who are affiliated persons (as such term is defined in the 1940 Act) of the Adviser. The Investment Advisory Agreement provides that the Fund shall pay the Adviser a monthly fee for its services which are equal to 0.50% of the average weekly asset value of the Fund.
During the six months ended January 31, 2008, the Adviser earned $468,001 in management fees, of which the Adviser has waived $96,750 of its fee.
The Adviser has contractually agreed to either waive or reimburse the ongoing expenses of the Fund to the extent that such expenses, excluding interest expense, exceed 0.75% of average daily net assets per annum.
The Fund has entered into an Administration Agreement with the Adviser. The Adviser entered into a sub-administration agreement with State Street Bank and Trust Company (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 Fund’s average weekly net assets. During the six months ended January 31, 2008, the Adviser earned $144,423 in Administration fees. The Adviser is responsible for any fees due the Sub-Administrator, except for NQ filing fees.
Certain officers and/or directors of the Fund are officers and/or directors of the Adviser.
5. | Purchases and Sales of Investments |
Purchases and sales of investments, excluding short-term securities and U.S. Government securities, for the six months ended January 31, 2008, were $14,335,527 and $63,256,201, respectively.
6. | Borrowings |
Under reverse repurchase agreements, the Fund sells securities and agrees to repurchase them at a mutually agreed upon date and price. Under the 1940 Act, reverse repurchase agreements will be regarded as a form of borrowing by the Fund unless, at the time it enters into a reverse repurchase agreement, it establishes and maintains a segregated account with its custodian containing securities from its portfolio having a value not less than the repurchase price (including accrued interest). The Fund has established and maintained such an account for each of its reverse repurchase agreements.
Reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale by the Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its Trustee or receiver may receive an extension of time to determine whether to enforce the Fund’s obligation to repurchase the securities, and the Fund’s use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision.
15
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
As of January 31, 2008, the Fund had the following reverse repurchase agreements outstanding:
Face Value | Description | Maturity Amount | ||||||
$ | 1,689,000 | Bear Stearns, 4.44%, dated 01/24/08, maturity date 02/25/08 | $ | 1,695,662 | ||||
1,604,000 | Bear Stearns, 4.28%, dated 01/24/08, maturity date 02/25/08 | 1,610,097 | ||||||
2,159,000 | Bear Stearns, 4.28%, dated 01/24/08, maturity date 02/25/08 | 2,167,207 | ||||||
4,471,000 | Bear Stearns, 4.87%, dated 01/09/08, maturity date 02/07/08 | 4,488,540 | ||||||
2,975,000 | Bear Stearns, 4.87%, dated 01/09/08, maturity date 02/07/08 | 2,986,671 | ||||||
1,322,000 | Bear Stearns, 5.22%, dated 01/09/08, maturity date 02/07/08 | 1,327,559 | ||||||
916,000 | Bear Stearns, 4.28%, dated 01/24/08, maturity date 02/25/08 | 919,482 | ||||||
1,912,000 | Bear Stearns, 4.28%, dated 01/24/08, maturity date 02/25/08 | 1,919,268 | ||||||
1,165,000 | Bear Stearns, 5.47%, dated 01/09/08, maturity date 02/07/08 | 1,170,133 | ||||||
9,332,000 | Bear Stearns, 4.87%, dated 01/09/08, maturity date 02/07/08 | 9,368,610 | ||||||
10,234,000 | Greenwich Capital, 4.07%, dated 01/22/08, maturity date 02/22/08 | 10,269,903 | ||||||
4,632,000 | J.P. Morgan Chase, 4.30%, dated 01/18/08, maturity date 02/20/08 | 4,650,258 | ||||||
2,174,000 | J.P. Morgan Chase, 4.75%, dated 01/18/08, maturity date 02/20/08 | 2,183,466 | ||||||
4,672,000 | J.P. Morgan Chase, 4.30%, dated 01/18/08, maturity date 02/20/08 | 4,690,415 | ||||||
2,722,000 | J.P. Morgan Chase, 4.60%, dated 01/18/08, maturity date 02/20/08 | 2,733,478 | ||||||
5,175,000 | J.P. Morgan Chase, 4.50%, dated 01/18/08, maturity date 02/20/08 | 5,196,347 | ||||||
2,405,000 | Morgan Stanley, 4.52%, dated 01/24/08, maturity date 02/25/08 | 2,414,671 | ||||||
8,848,125 | Morgan Stanley, 4.27%, dated 01/24/08, maturity date 02/25/08 | 8,881,738 | ||||||
$ | 68,407,125 | |||||||
Maturity Amount, Including Interest Payable | $ | 68,673,505 | ||||||
Market Value of Assets Sold Under Agreements | $ | 87,355,916 | ||||||
Weighted Average Interest Rate | 4.49 | % | ||||||
The average daily balance of reverse repurchase agreements outstanding during the six months ended January 31, 2008, was approximately $86,485,764 at a weighted average interest rate of 5.52%. The maximum amount of reverse repurchase agreements outstanding at any time during the period was $104,472,182 as of August 10, 2007, which was 33.29% of total assets.
7. | Capital Stock |
There are 200 million shares of $0.001 par value common stock authorized. Of the 37,764,948 shares outstanding at January 31, 2008, the Adviser owned 69,442 shares. On October 1, 2004 the Fund purchased 174,263 shares of its common stock to provide liquidity to the Fund’s stockholders since the Fund’s shares are not sold on a secondary market. The value of the purchase shares amounted to $1,245,982. Also, on June 14, 2007, the Fund purchased 7,268,150 shares of its common stock to provide liquidity to the Fund’s stockholders. The value of the purchased shares amounted to $49,423,420.
8. | Financial Instruments |
The Fund regularly trades in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments include written options, futures contracts and swap agreements and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. During the period, the Fund had segregated sufficient cash and/or securities to cover any commitments under these contracts.
16
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
As of January 31, 2008, the following swap agreements were outstanding:
Notional | Expiration | Net Unrealized | ||||||||||
Amount | Date | Description | Depreciation | |||||||||
$ | 5,000,000 | 09/11/42 | Agreement with Bear Stearns, dated 11/02/05 to receive monthly the notional amount multiplied by 2.10% and to pay only in the event of a write down, or failure to pay a principal payment or an interest shortfall on BSCMS 2005-PWR9K. | $ | (2,135,537 | ) | ||||||
6,000,000 | 04/15/42 | Agreement with Morgan Stanley, dated 11/02/05 to receive monthly the notional amount multiplied by 2.15% and to pay only in the event of a write down, or failure to pay a principal payment or an interest shortfall on WBCMT 2005-C18J. | (1,837,192 | ) | ||||||||
$ | (3,972,729 | ) | ||||||||||
As of January 31, 2008, the Fund had the following short futures contracts outstanding:
Notional | Expiration | Cost at | Value at | Unrealized | ||||||||||||||||
Amount | Type | Date | Trade Date | January 31, 2008 | Depreciation | |||||||||||||||
$ | 42,000,000 | 10 Yr. U.S. Treasury Note | March 2008 | $ | 47,219,112 | $ | 49,021,875 | $ | (1,802,763 | ) |
9. | Federal Income Tax Information |
Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America.
The tax character of distributions paid during the six months ended January 31, 2008 and the year ended July 31, 2007 was as follows:
Distributions paid from: | 2008 | 2007 | ||||||
Ordinary income | $ | 9,388,284 | $ | 25,733,022 | ||||
Long-term capital gain | — | 5,806,658 | ||||||
$ | 9,388,284 | $ | 31,539,680 | |||||
The components of distributable earnings on a tax basis are reported as of the Fund’s most recent year-end.
At July 31, 2007, the components of net assets (excluding paid-in capital) on a tax basis were as follows:
Undistributed ordinary income | $ | 246,517 | ||
Capital loss carryforward | $ | (2,201 | ) | |
Post October loss | $ | (855,611 | ) | |
Unrealized depreciation | $ | (34,981,382 | ) |
The capital loss carryforward expires July 31, 2015. The differences between undistributed ordinary income, the capital loss carryforward and unrealized depreciation on a tax basis and undistributed net investment income, accumulated net realized gain and unrealized depreciation as reported in the Statement of Assets and Liabilities is due to temporary book/tax differences related to swap income/expense and the mark to market of unrealized losses on futures and the deferral of post-October losses for tax purposes.
Federal Income Tax Basis: The federal income tax basis of the Fund’s investments at January 31, 2008 was $297,871,781. Net unrealized depreciation, excluding swaps and futures was $(83,123,482) (gross appreciation — $1,683,883; gross unrealized depreciation — $(84,807,365)).
17
HYPERION BROOKFIELD INCOME FUND, INC.
Notes to Financial Statements – (Unaudited)
January 31, 2008
Notes to Financial Statements – (Unaudited)
January 31, 2008
10. | Contractual Obligations |
The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
11. | New Accounting Pronouncements |
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current accounting principles generally accepted in the United States of America from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of January 31, 2008, the Fund has not completed it evaluation of the impact of the adoption of SFAS No. 157 and the impact on the amounts reported in the financial statements.
18
HYPERION BROOKFIELD INCOME FUND, INC.
Information Concerning Directors and Officer (Unaudited)
Information Concerning Directors and Officer (Unaudited)
The following tables provide the information concerning the directors and officers of the Hyperion Brookfield Income Fund, (the “Fund”).
Position(s) Held with | Principal Occupation(s) | Number of | ||||||
Fund and Term of | During Past 5 Years and | Portfolios in Fund | ||||||
Name, Address | Office and Length of | Other Directorships Held | Complex Overseen | |||||
and Age | Time Served | by Director | by Director | |||||
Robert F. Birch c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 72 | Director, Member of the Audit Committee, Member of Nominating and Compensation Committee Elected since April 2002 | Director of several investment companies advised by the Advisor or by its affiliates (1998-Present); President and Director of New America High Income Fund (1992-Present); Director of Brandywine Funds (3) (2001-Present). | 4 | |||||
Rodman L. Drake c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 65 | Director, Member of the Audit Committee, Member of Nominating and Compensation Committee Elected since May 2005 | Chairman (since 2003) and Director of several investment companies advised by the Advisor or by its affiliates (1989-Present); Director and/or Lead Director of Crystal River Capital, Inc. (“CRZ”) (2005-Present); Director of Celgene Corporation (“CELG”) (April 2006-Present); Director of Student Loan Corporation (“STU”) (2005-Present); Director of Apex Silver Corp. (“SIL”) (2007-Present); General Partner of Resource Capital Fund II & III CIP L.P. (1998-2006); Co-founder of Baringo Capital LLC (2002-Present); Director of Jackson Hewitt Tax Services Inc. (“JTX”) (2004-Present); Director of Animal Medical Center (2002-Present); Director and/or Lead Director of Parsons Brinckerhoff, Inc. (1995-2008); Trustee of Excelsior Funds (1994-2008); Trustee of Columbia Atlantic Funds (2007-Present). | 4 | |||||
Harald R. Hansen c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 76 | Director, Member of the Audit Committee, Member of Nominating and Compensation Committee Elected since December 1999 | Director of other investment company advised by the Advisor or by its affiliates (2003-Present); Director of Crystal River Capital, Inc. (2005-Present); Director and Chairman of Executive Committee of Georgia Commerce Bank (2002-Present); Director of Midtown Alliance (1988-Present); Chairman of the Board of U.S. Disabled Athletes Fund (1991-2005); Trustee and Vice Chairman of the Board of Oglethorpe University (1993-Present); Trustee of Asheville School (1996-Present); Trustee of the Tull Foundation (1996-Present); Member of Advisory Board of Directors of Wachovia Bank, NA. (1996-Present). | 2 | |||||
Clifford E. Lai* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 54 | Director and Chairman of the Board Elected since September 2000 | Managing Partner of Brookfield Asset Management Inc. (2006-Present); Chairman (2005-Present), Chief Executive Officer (1998-2007), President (1998-2006) and Chief Investment Officer (1993-2002) of the Advisor; President, Chief Executive Officer and Director of Crystal River Capital, Inc. (“CRZ”) (2005-Present); President and Director of several investment companies advised by the Advisor or by its affiliates (1995-Present); and Co-Chairman (2003-2006) and Board of Managers (1995-2006) of Hyperion GMAC Capital Advisors, LLC (formerly Lend Lease Hyperion Capital, LLC). | 4 |
* | Interested person as defined by the Investment Company Act of 1940 as amended (the “1940 Act”), because of affiliations with Hyperion Brookfield Asset Management, Inc., the Fund’s Advisor. |
19
HYPERION BROOKFIELD INCOME FUND, INC.
Information Concerning Directors and Officer (Unaudited)
Information Concerning Directors and Officer (Unaudited)
Position(s) Held with | Principal Occupation(s) | Number of | ||||||
Fund and Term of | During Past 5 Years and | Portfolios in Fund | ||||||
Name, Address | Office and Length of | Other Directorships Held | Complex Overseen | |||||
and Age | Time Served | by Director | by Director | |||||
Stuart A. McFarland c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 60 | Director, Member of the Audit Committee, Member of Nominating and Compensation Committee Elected Since December 2006 | Director of several investment companies advised by the Advisor or by its affiliates (2006-Present); Director of Brandywine Funds (2003-Present); Director of New Castle Investment Corp. (2000-Present); Chairman and Chief Executive Officer of Federal City Bancorp, Inc. (2005-2007); Managing Partner of Federal City Capital Advisors (1997-Present). | 4 | |||||
Louis P. Salvatore c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 61 | Director, Chairman of the Audit Committee, Member of Nominating and Compensation Committee Elected Since December 2006 | Director of several investment companies advised by the Advisor or by its affiliates (2005-Present); Director of Crystal River Capital, Inc. (“CRZ”) (2005-Present); Director of Turner Corp. (2003-Present); Director of Jackson Hewitt Tax Services, Inc. (“JTX”) (2004-Present); Employee of Arthur Andersen LLP (2002-Present); Partner of Arthur Andersen LLP (1977-2002). | 4 |
20
HYPERION BROOKFIELD INCOME FUND, INC.
Information Concerning Directors and Officer (Unaudited)
Information Concerning Directors and Officer (Unaudited)
Officers of the Fund
Position(s) | Term of Office and | Principal Occupation(s) | ||||
Name, Address and Age | Held with Fund | Length of Time Served | During Past 5 Years | |||
Clifford E. Lai* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 54 | President | Elected Annually Since July 2007** | Please see “Information Concerning Directors and Officers” | |||
John J. Feeney, Jr.* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 48 | Vice-President | Elected Annually Since July 2007** | Director (2002-Present), Chief Executive Officer (2007-Present), President (2006-Present) and Director of Marketing (1997-2006) of the Advisor; Vice President of several investment companies advised by the Advisor (2007-Present); Executive Vice President and Secretary ofCrystal River Capital, Inc. (“CRZ”) (2005-2007). | |||
Thomas F. Doodian* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 48 | Treasurer | Elected Annually Since December 1999 | Managing Director of Brookfield Operations and Management Services, LLC (2007-Present); Managing Director, Chief Operating Officer (1998-2006) and Chief Financial Officer (2002-2006) of the Advisor; Treasurer of several investment companies advised by the Advisor (1996-Present); Treasurer of Hyperion GMAC Capital Advisors, LLC (formerly, Lend Lease Hyperion Capital Advisors, LLC) (1996-2006). | |||
Jonathan C. Tyras* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 39 | Secretary | Elected Annually Since November 2006 | Director, General Counsel and Secretary (2006-Present) of the Advisor; Vice President, General Counsel and Secretary of Crystal River Capital, Inc. (2006-Present); Secretary of several investment companies advised by the Advisor (2006-Present); Attorney at Paul, Hastings, Janofsky & Walker LLP (1998-2006). | |||
Josielyne K. Pacifico* c/o Three World Financial Center, 200 Vesey Street, 10th floor, New York, New York 10281-1010 Age 35 | Chief Compliance Officer (“CCO”) | Elected Annually Since August 2006 | Director and CCO (2006-Present), Assistant General Counsel (2006-Present), Compliance Officer (2005-2006) of the Advisor; CCO of several investment companies advised by the Advisor (2006-Present); Assistant Secretary of Crystal River Capital, Inc. (2007- Present); Compliance Manager of Marsh & McLennan Companies (2004-2005); Staff Attorney at the United States Securities and Exchange Commission (2001-2004). |
* | Interested person as defined by the Invesment Company Act of 1940, as amended (the “1940 Act”), because of affiliations with Hyperion Brookfield Asset Management, Inc., the Fund’s Advisor. |
** | John H. Dolan served as the President of the Fund until July 2007. |
The Fund’s Statement of Additional Information includes additional information about the directors and is available, without charge, upon request by calling 1-800-497-3746.
21
HYPERION BROOKFIELD INCOME FUND, INC.
Additional Information
Quarterly Portfolio Schedule: The Fund will file Form N-Q with the Securities and Exchange Commission for the first and third quarters of each fiscal year. The Fund’s Form N-Q will be available on the Securities and Exchange Commission’s website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Once filed, the most recent Form N-Q will be available without charge, upon request, by calling 1-800-HYPERION or on the Fund’s website at http://www.hyperionbrookfield.com.
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-497-3746 and on the Securities and Exchange Commission’s website at http://www.sec.gov.
Proxy Voting Record
The Fund has filed with the Securities and Exchange Commission its proxy voting record for the 12-month period ending June 30 on Form N-PX. Once filed, the most recent Form N-PX will be available without charge, upon request, by calling 1-800-497-3746 or on the Securities and Exchange Commission’s website at http://www.sec.gov.
Officers & Directors
Clifford E. Lai
President, Director and Chairman of the Board
President, Director and Chairman of the Board
Robert F. Birch*
Director
Director
Harald R. Hansen*
Director
Director
Rodman L. Drake*
Director
Director
Stuart A. McFarland*
Director
Director
Louis P. Salvatore*
Director
Director
John J. Feeney, Jr.
Vice President
Vice President
Thomas F. Doodian
Treasurer
Treasurer
Jonathan C. Tyras
Secretary
Secretary
Josielyne K. Pacifico
Chief Compliance Officer
Chief Compliance Officer
* Audit Committee Members
The financial information included herein is taken from records of the Fund without Audit by the Fund’s independent auditors, who do not express an opinion thereon.
This Report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of Fund Shares.
Hyperion Brookfield Asset Management Inc.
Three World Financial Center
200 Vesey Street, 10th Floor
New York, NY 10281-1010
Three World Financial Center
200 Vesey Street, 10th Floor
New York, NY 10281-1010
Item 2. Code of Ethics.
Not Applicable.
Item 3. Audit Committee Financial Expert.
Not Applicable.
Item 4. Principal Accountant Fees and Services.
Not Applicable.
Item 5. Audit Committee of Listed Registrants.
Not Applicable.
Item 6. Schedule of Investments.
See Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not Applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures.
(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s Disclosure Controls and Procedures are effective, based on their evaluation of such Disclosure Controls and Procedures as of a date within 90 days of the filing of this report on Form N-CSR.
(b) As of the date of filing this Form N-CSR, the Registrant’s principal executive officer and principal financial officer are aware of no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s second fiscal quarter that has materially affected or is reasonably likely to materially affect the Registrant’s 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.
HYPERION BROOKFIELD INCOME FUND, INC.
By: | /s/ Clifford E. Lai | |||
Clifford E. Lai | ||||
Principal Executive Officer | ||||
Date: April 4, 2008
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/ Clifford E. Lai | |||
Clifford E. Lai | ||||
Principal Executive Officer | ||||
Date: April 4, 2008
By: | /s/ Thomas F. Doodian | |||
Thomas F. Doodian | ||||
Treasurer and Principal Financial Officer | ||||
Date: April 4, 2008