UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
811-21833
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
(Exact name of registrant as specified in charter)
THREE WORLD FINANCIAL CENTER,
200 VESEY STREET, 24
TH
FLOOR
NEW YORK, NEW YORK 10281-1010
(Address of principal executive offices) (Zip code)
KIM G. REDDING, PRESIDENT
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
THREE WORLD FINANCIAL CENTER, 200 VESEY STREET, 24
TH
FLOOR
NEW YORK, NEW YORK 10281-1010
(Name and address of agent for service)
Registrant’s telephone number, including area code: 1-800-497-3746
Date of fiscal year end: March 31, 2012
Date of reporting period: March 31, 2012
Item 1. Reports to Shareholders.
Brookfield Investment Management Inc. Helios Advantage Income Fund,
Inc. Helios High Income Fund, Inc. Helios Multi-Sector High Income Fund, Inc. Helios Strategic Income Fund, Inc. Annual Report March 31, 2012 Brookfield
IN PROFILE
Brookfield
is a global alternative asset manager with approximately $150 billion in assets under management as of
March 31, 2012. We have over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity. We offer a range of public and private investment products and services, which leverage
our expertise and experience and provide us with a distinct competitive advantage in the markets where we operate. On behalf of our clients, Brookfield is also an active investor in the public securities markets, where our experience extends nearly
40 years. Over this time, we have successfully developed several investment operations and built expertise in the management of institutional portfolios, retail mutual funds, and structured product investments.
Through our
SEC-registered investment advisor, Brookfield Investment Management Inc., our public market activities complement our core competencies as a direct investor. These activities encompass global listed real estate and infrastructure equities, corporate
high yield investments, opportunistic credit strategies and a dedicated insurance asset management division. Headquartered in New York, NY, Brookfield Investment Management Inc. maintains offices and investment teams in Toronto, Chicago, Boston and
London.
This report is for stockholder
information. This is not a prospectus intended for the use in the purchase or sale of Fund Shares.
|
|
|
|
|
|
|
|
|
NOT FDIC INSURED
|
|
MAY LOSE VALUE
|
|
|
NOT BANK GUARANTEED
|
|
©
Copyright
2012. Brookfield Investment Management Inc.
LETTER TO STOCKHOLDERS
Dear Stockholders,
I am pleased to provide the Annual Report for Helios Advantage Income Fund, Inc.,
Helios High Income Fund, Inc., Helios Multi-Sector High Income Fund, Inc. and Helios Strategic Income Fund, Inc. (each a “Fund” and, collectively, the “Funds”) for the fiscal year ended March 31, 2012.
Market performance over the prior twelve months was volatile, as the capital markets faced lingering concerns over the health of the global economy
and sovereign debt issues in Europe. Investor confidence shifted regularly in response to economic data releases and financial headlines, resulting in a fluctuating and highly correlated market. However, as 2011 drew to a close, optimism began to
regain some footing due to early signs of economic stabilization and recovery in the U.S. Within the high yield market, this rally in performance offset weakness experienced earlier in the year and led to improved confidence heading into 2012.
We continue to maintain our positive view of corporate credit quality and liquidity. Furthermore, we continue to believe that yield
spreads in the high yield market remain attractive. However, we note that the market is now trading above par and nominal yields are trending below historical averages. Accordingly, while we believe the current market represents value for investors,
the potential for future price appreciation may be limited.
Importantly, our experience suggests that a diversified portfolio of income
producing corporate bonds with a conservative risk profile should support an attractive dividend stream for investors. We continue to believe the Funds are well-positioned to generate sustainable yields over the course of an entire market cycle.
In addition to performance information, this report provides an overview of market conditions and a discussion of factors affecting the
Funds’ investment performance, together with the Funds’ audited financial statements and portfolio of investments as of March 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
HELIOS ADVANTAGE INCOME FUND, INC.
OBJECTIVE & STRATEGY
Helios Advantage Income Fund, Inc. seeks a high
level of current income. The Fund seeks capital growth as a secondary investment objective when consistent with its primary investment objective. The Fund invests a majority of its total assets in below-investment grade debt securities that offer
attractive yield and capital appreciation potential. The Fund also may invest in investment grade debt securities, up to 15% of its total assets in foreign debt and foreign equity securities and up to 25% of its total assets in domestic equity
securities, including common and preferred stocks. The Fund invests in a wide range of below-investment grade debt securities, including corporate bonds, mortgage-backed and asset-backed securities and municipal and foreign government obligations,
as well as securities of companies in bankruptcy reorganization proceedings or otherwise in the process of debt restructuring. (Below-investment grade debt securities are rated Ba1 or lower by Moody’s Investors Service, Inc., BB+ or lower by
Standard & Poor’s Ratings Group, comparably rated by another nationally recognized statistical rating organization or, if unrated, determined by the Fund’s investment advisor to be of comparable quality.) The Fund may use leverage
through bank borrowings, reverse repurchase agreements or other transactions involving indebtedness or through the issuance of preferred shares. The Fund may leverage one third of its total assets (in each case including the amount borrowed.) The
Fund may vary its use of leverage in response to changing market conditions.
Investment Risks:
Investors in any bond fund should
anticipate fluctuations in price. Bond prices and the value of bond funds decline as interest rates rise. Bonds with longer-term maturities generally are more vulnerable to interest rate risk than bonds with shorter-term maturities. Below-investment
grade bonds involve greater credit risk, which is the risk that the issuer will not make interest or principal payments when due. An economic downturn or period of rising interest rates could adversely affect the ability of issuers, especially
issuers of below-investment grade debt, to service primary obligations and an unanticipated default could cause the Fund to experience a reduction in value of its shares. The Fund’s investments in mortgage-backed or asset-backed securities that
are “subordinated” to other interests in the same pool may increase credit risk to the extent that the Fund, as a holder of those securities, may only receive payments after the pool’s obligations to other investors have been
satisfied. Below-investment grade bonds also are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change, than higher-rated debt securities. The value of U.S. and foreign equity securities
in which the Fund invests will change based on changes in a company’s financial condition and in overall market and economic conditions. Leverage creates an opportunity for an increased return to common stockholders, but unless the income and
capital appreciation, if any, on securities acquired with leverage proceeds exceed the costs of the leverage, the use of leverage will diminish the investment performance of the Fund’s shares. Use of leverage also may increase the likelihood
that the net asset value of the Fund and market value of its common shares will be more volatile, and the yield and total return to common stockholders will tend to fluctuate more in response to changes in interest rates and creditworthiness.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the fiscal year ended March 31, 2012, Helios Advantage Income Fund, Inc. (NYSE: HAV) had a total return based on net asset value of 14.54%
and a total return based on market price of 32.08%, which assumes the reinvestment of dividends and is exclusive of brokerage commissions. Based on the NYSE closing price of $9.30 on March 31, 2012, the Fund’s shares had a dividend yield
of 8.06%. The dividend yield is calculated as the annualized amount of the reporting period’s most recent monthly dividend declared divided by the stated stock price.
Individual contributors of performance included Huntsman Corp., Crown, Cork & Seal Co., Inc. and Berry Plastics Corp. Huntsman Corp. is a
chemical company that experienced better than expected earnings as underlying business trends improved. Crown, Cork & Seal Co., Inc. is a packaging company whose earnings improved on strong emerging market growth. Berry Plastics Corp. is
another packaging company whose bonds rose on expectations of a possible Initial Public Offering and debt reduction.
Detractors of
performance included Verso Paper Holdings, Sprint Capital and GMX Resources. Verso Paper Holdings is a paper company whose bonds fell on concern of a secular decline in coated paper usage. Sprint Capital is a wireless telecommunications service
provider that announced a major network expansion financed with debt. GMX Resources is an oil and gas producer that completed a distressed bond exchange.
Brookfield
Investment Management Inc.
2
HELIOS ADVANTAGE INCOME FUND, INC.
HIGH YIELD MARKET ENVIRONMENT
The high yield market
delivered modest, yet positive returns for the 12-month period ended March 31, 2012. Early in the period, markets corrected lower as, for the second year in a row, investors took a negative view beginning in May 2011 regarding the health of
European peripheral countries, namely Greece. Following a challenging summer, markets turned decidedly positive producing strong returns in the second half of the period. High yield bonds returned 5.6% as the spread widened from 535 basis points to
594 basis points.
1
Part of this spread widening was offset by lower Treasury
bond interest rates, which fell from 3.5% to 2.2%. Equity returns, as measured by the Russell 2000, were slightly negative at 0.2%.
The spread between high yield and the 10-year Treasury, which rose sharply with the summer sell-off, rose from 535 basis points to briefly reach the high 800s on fears that European problems might cause a flight to
safety and possibly another recession in the United States.
1
Spreads narrowed
as investors regained confidence in the economy as the year progressed. Current spreads of 594 basis points remain much wider than the 400-500 basis points we would normally expect to see at this point in the credit cycle. Therefore, while the high
yield market continues to represent value to investors, further price appreciation is likely to be limited as the sector as a whole is trading above par. The difficulty in the market can be seen by the more volatile CCC-rated securities
underperforming, returning only 2.2% in the period
2
, compared with 6.8% from
the more conservative BB-rated names.
3
Corporate credit has been sound for the past couple of years, and we saw stable credit this period with the default rate steady
at 1.9%.
4
Note that this year’s default rate of 1.9% remains well below
the market’s 25-year average default rate of 4.2%.
5
Credit ratings agencies confirm the improving trend in corporate credit by upgrading 1.1 times as many high yield companies as
they downgraded in the past 12 months.
6
This means that credit is still
improving, albeit at a slower rate than before. We noted that companies reported generally good earnings through the fourth quarter of 2011, (the latest reporting period) however we saw some decline in the rate of improvement with more companies
reporting pressure on their costs.
Supply and demand was generally positive during the period and in the final six
months, high yield mutual funds continued to experience strong inflows. New issue volume was strong after a late summer pause, accelerating to an all time quarterly record of $96.8 billion, in the first quarter of 2012, above the previous record of
$81.8 billion posted in the second quarter of last year.
7
Overall with money
flooding into mutual funds, deals were oversubscribed and traded higher in the aftermarket. Traders report that there seems to be ample cash available for reasonably creditworthy names and report some challenges buying good quality paper in the
secondary market. The bulk of new issues are used to refinance debt which has the effect of improving credit quality by eliminating near term maturities.
OUTLOOK
Brookfield has been positive on the high yield market, noting the
robust credit quality, good corporate liquidity and excellent progress on the part of corporate treasurers in managing their debt structures. The high yield market agreed and returns were excellent. As these fundamentals remain in place, our outlook
for this asset class over the next 12 months or so remains positive.
However, we also believe that significant further potential upside
appreciation is limited due to the decline in spreads from 737 to 594 basis points, and with the return of the market above par. While normally we would expect the spread to be 100 to 150 basis points narrower than current levels, we note the
unusually depressed level of the benchmark treasury yields, which may be artificially depressed due to actions by the Federal Reserve. With the market trading at yield levels within 50 basis points of all time lows, our enthusiasm is somewhat
tempered at this point.
Given our expectation of modest economic growth, modestly increasing defaults and no general recession, we
believe that high yield investors are adequately, but not generously compensated at current yield spread levels. While we would normally be targeting yield spreads of 400 to 500 basis points at this point in the credit cycle, we
2012 Annual Report
3
HELIOS ADVANTAGE INCOME FUND, INC.
remain skeptical that the problems in Europe are permanently addressed, and wonder if investors might not question the health of the United States’ balance sheet after the November election.
With these risks outstanding we expect high yield investors will continue to demand a premium to historical spreads, at least for the next few quarters. For investors seeking to clip the current coupon offered in the high yield market, the
investment landscape remains attractive.
|
1
|
BofA Merrill Lynch U.S. High Yield Master II Index
|
|
2
|
BofA Merrill Lynch CCC & Lower U.S. High Yield Index
|
|
3
|
BofA Merrill Lynch BB U.S. High Yield Index
|
|
4
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 1
|
|
5
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 2
|
|
6
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 10
|
|
7
|
Credit Suisse “Leveraged Finance Strategy Update” April 2, 2012, p. 2.
|
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 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
The
Fund’s 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
Helios Advantage Income Fund, Inc. currently holds these securities.
The Barclays Capital U.S. Corporate High Yield Index covers the
U.S. dollar denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging markets
debt. The Barclays Capital U.S. Corporate High Yield Index is part of the Barclays Capital U.S. Universal and Global High Yield Indices. 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.
The Fund may utilize leverage to seek to enhance the yield and net asset value of its common stock, through bank borrowings, issuance of short-term debt securities or shares of preferred stock, or a combination
thereof. However, these objectives cannot be achieved in all interest rate environments. While leverage may result in a higher yield for the Fund, the use of leverage involves risk, including the potential for higher volatility of the NAV,
fluctuations of dividends and other distributions paid by the Fund and the market price of the Fund’s common stock, among others. Certain funds may invest assets in securities of issuers domiciled outside the United States, including issuers
from emerging markets. Foreign investing involves special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments.
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 March 31, 2012 and subject to change based on subsequent developments.
Brookfield
Investment Management Inc.
4
HELIOS ADVANTAGE INCOME FUND, INC.
Portfolio Characteristics (Unaudited)
March 31, 2012
PORTFOLIO STATISTICS
|
|
|
|
|
Annualized dividend yield
1
|
|
8.06%
|
|
|
|
|
Weighted average coupon
|
|
8.01%
|
|
|
|
|
Weighted average life
|
|
5.32 years
|
|
|
|
|
Percentage of leveraged assets
|
|
28.86%
|
|
|
|
|
Total number of holdings
|
|
132
|
CREDIT QUALITY
|
|
|
|
|
|
|
BBB
|
|
|
3
|
%
|
|
|
|
|
BB
|
|
|
13
|
%
|
|
|
|
|
B
|
|
|
61
|
%
|
|
|
|
|
CCC
|
|
|
17
|
%
|
|
|
|
|
Unrated
|
|
|
2
|
%
|
|
|
|
|
Cash
|
|
|
4
|
%
|
|
Total
|
|
|
100
|
%
|
ASSET ALLOCATION
2
|
|
|
|
|
|
|
Investment Grade Corporate Bonds
|
|
|
4
|
%
|
|
|
|
|
High Yield Corporate Bonds
|
|
|
94
|
%
|
|
|
|
|
Common Stocks and Warrants
|
|
|
2
|
%
|
|
Total
|
|
|
100
|
%
|
|
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 March 31, 2012 stock price.
|
|
2
|
Includes only invested assets; excludes cash.
|
2012 Annual Report
5
HELIOS ADVANTAGE INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
INVESTMENT GRADE CORPORATE BONDS – 5.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 2.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific LLC
|
|
|
7.25
|
%
|
|
|
06/01/28
|
|
|
$
|
230
|
|
|
$
|
270,712
|
|
|
Georgia-Pacific LLC
|
|
|
7.38
|
|
|
|
12/01/25
|
|
|
|
270
|
|
|
|
329,333
|
|
|
Westlake Chemical Corp.
2
|
|
|
6.63
|
|
|
|
01/15/16
|
|
|
|
750
|
|
|
|
763,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $1,155,412)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,363,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer Natural Resources Co.
(Cost – $438,318)
|
|
|
6.65
|
|
|
|
03/15/17
|
|
|
|
500
|
|
|
|
571,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qwest Corp.
2
(Cost – $885,403)
|
|
|
6.88
|
|
|
|
09/15/33
|
|
|
|
1,225
|
|
|
|
1,212,750
|
|
|
Total INVESTMENT GRADE CORPORATE BONDS
(Cost – $2,479,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,147,568
|
|
|
HIGH YIELD CORPORATE BONDS – 124.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 18.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AK Steel Corp.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
670
|
|
|
|
646,550
|
|
|
Associated Materials LLC
|
|
|
9.13
|
|
|
|
11/01/17
|
|
|
|
700
|
|
|
|
680,750
|
|
|
Cascades, Inc.
6
|
|
|
7.75
|
|
|
|
12/15/17
|
|
|
|
275
|
|
|
|
275,000
|
|
|
Cascades, Inc.
6
|
|
|
7.88
|
|
|
|
01/15/20
|
|
|
|
500
|
|
|
|
493,750
|
|
|
FMG Resources August 2006 Pty Limited
3,4,6
|
|
|
6.88
|
|
|
|
04/01/22
|
|
|
|
375
|
|
|
|
365,625
|
|
|
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
2
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
700
|
|
|
|
724,500
|
|
|
Huntsman International LLC
2
|
|
|
8.63
|
|
|
|
03/15/21
|
|
|
|
1,000
|
|
|
|
1,122,500
|
|
|
Ineos Group Holdings Limited
3,4,6
|
|
|
8.50
|
|
|
|
02/15/16
|
|
|
|
375
|
|
|
|
354,375
|
|
|
Ply Gem Industries, Inc.
2
|
|
|
8.25
|
|
|
|
02/15/18
|
|
|
|
750
|
|
|
|
754,687
|
|
|
Polymer Group, Inc.
|
|
|
7.75
|
|
|
|
02/01/19
|
|
|
|
750
|
|
|
|
789,375
|
|
|
Solutia, Inc.
|
|
|
8.75
|
|
|
|
11/01/17
|
|
|
|
250
|
|
|
|
283,437
|
|
|
Steel Dynamics, Inc.
|
|
|
7.63
|
|
|
|
03/15/20
|
|
|
|
550
|
|
|
|
595,375
|
|
|
Tembec Industries, Inc.
2,6
|
|
|
11.25
|
|
|
|
12/15/18
|
|
|
|
775
|
|
|
|
821,500
|
|
|
Trimas Corp.
|
|
|
9.75
|
|
|
|
12/15/17
|
|
|
|
345
|
|
|
|
381,225
|
|
|
United States Steel Corp.
2
|
|
|
7.00
|
|
|
|
02/01/18
|
|
|
|
1,400
|
|
|
|
1,438,500
|
|
|
Verso Paper Holdings LLC/Verso Paper, Inc.
3,4
|
|
|
11.75
|
|
|
|
01/15/19
|
|
|
|
325
|
|
|
|
334,750
|
|
|
Xerium Technologies, Inc.
|
|
|
8.88
|
|
|
|
06/15/18
|
|
|
|
550
|
|
|
|
477,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $10,226,092)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,539,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Goods – 7.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR Corp.
3,4
|
|
|
7.25
|
|
|
|
01/15/22
|
|
|
|
300
|
|
|
|
306,000
|
|
|
Berry Plastics Corp.
2
|
|
|
9.50
|
|
|
|
05/15/18
|
|
|
|
700
|
|
|
|
742,000
|
|
|
Building Materials Corp. of America
3,4
|
|
|
6.75
|
|
|
|
05/01/21
|
|
|
|
375
|
|
|
|
397,969
|
|
|
Crown Cork & Seal Co., Inc.
2
|
|
|
7.38
|
|
|
|
12/15/26
|
|
|
|
975
|
|
|
|
1,033,500
|
|
|
Owens-Illinois, Inc.
|
|
|
7.80
|
|
|
|
05/15/18
|
|
|
|
575
|
|
|
|
645,437
|
|
|
Terex Corp.
|
|
|
6.50
|
|
|
|
04/01/20
|
|
|
|
300
|
|
|
|
302,250
|
|
|
Terex Corp.
2
|
|
|
8.00
|
|
|
|
11/15/17
|
|
|
|
475
|
|
|
|
491,625
|
|
|
USG Corp.
2
|
|
|
9.75
|
|
|
|
01/15/18
|
|
|
|
475
|
|
|
|
471,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Goods
(Cost – $4,121,574)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,390,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
6
HELIOS ADVANTAGE INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Cyclical – 18.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ace Hardware Corp.
2,3,4
|
|
|
9.13
|
%
|
|
|
06/01/16
|
|
|
$
|
500
|
|
|
$
|
526,250
|
|
|
American Axle & Manufacturing, Inc.
2
|
|
|
7.88
|
|
|
|
03/01/17
|
|
|
|
1,000
|
|
|
|
1,032,500
|
|
|
Caesars Operating Escrow LLC/Caesars Escrow Corp.
3,4
|
|
|
8.50
|
|
|
|
02/15/20
|
|
|
|
300
|
|
|
|
305,250
|
|
|
CityCenter Holdings LLC/CityCenter Finance Corp.
2
|
|
|
7.63
|
|
|
|
01/15/16
|
|
|
|
750
|
|
|
|
791,250
|
|
|
Dine Equity, Inc.
2
|
|
|
9.50
|
|
|
|
10/30/18
|
|
|
|
750
|
|
|
|
821,250
|
|
|
Ford Motor Co.
2
|
|
|
6.50
|
|
|
|
08/01/18
|
|
|
|
650
|
|
|
|
705,250
|
|
|
Jaguar Land Rover PLC
3,4,6
|
|
|
8.13
|
|
|
|
05/15/21
|
|
|
|
400
|
|
|
|
410,000
|
|
|
Levi Strauss & Co.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
750
|
|
|
|
793,125
|
|
|
Limited Brands, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
300
|
|
|
|
354,750
|
|
|
McJunkin Red Man Corp.
2
|
|
|
9.50
|
|
|
|
12/15/16
|
|
|
|
650
|
|
|
|
708,500
|
|
|
MGM Resorts International
2
|
|
|
7.63
|
|
|
|
01/15/17
|
|
|
|
775
|
|
|
|
800,188
|
|
|
MGM Resorts International
3,4
|
|
|
8.63
|
|
|
|
02/01/19
|
|
|
|
225
|
|
|
|
241,313
|
|
|
MTR Gaming Group, Inc.
|
|
|
11.50
|
|
|
|
08/01/19
|
|
|
|
221
|
|
|
|
218,889
|
|
|
Niska Gas Storage US LLC/Niska Gas Storage Canada ULC
2
|
|
|
8.88
|
|
|
|
03/15/18
|
|
|
|
750
|
|
|
|
705,000
|
|
|
Pharmaceutical Product Development, Inc.
3,4
|
|
|
9.50
|
|
|
|
12/01/19
|
|
|
|
450
|
|
|
|
488,250
|
|
|
Pittsburgh Glass Works LLC
3,4
|
|
|
8.50
|
|
|
|
04/15/16
|
|
|
|
165
|
|
|
|
164,175
|
|
|
Sally Holdings LLC/Sally Capital, Inc.
3,4
|
|
|
6.88
|
|
|
|
11/15/19
|
|
|
|
475
|
|
|
|
505,875
|
|
|
Tenneco, Inc.
2
|
|
|
6.88
|
|
|
|
12/15/20
|
|
|
|
775
|
|
|
|
833,125
|
|
|
The Neiman Marcus Group, Inc.
2
|
|
|
10.38
|
|
|
|
10/15/15
|
|
|
|
375
|
|
|
|
390,472
|
|
|
Visteon Corp.
|
|
|
6.75
|
|
|
|
04/15/19
|
|
|
|
110
|
|
|
|
111,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Cyclical
(Cost – $10,158,064)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,907,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Cyclical – 16.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCO Brands Corp.
2
|
|
|
10.63
|
|
|
|
03/15/15
|
|
|
|
650
|
|
|
|
709,319
|
|
|
American Reprographics Co.
2
|
|
|
10.50
|
|
|
|
12/15/16
|
|
|
|
750
|
|
|
|
742,500
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
2
|
|
|
8.25
|
|
|
|
01/15/19
|
|
|
|
775
|
|
|
|
807,937
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
|
|
|
9.75
|
|
|
|
03/15/20
|
|
|
|
200
|
|
|
|
218,500
|
|
|
B&G Foods, Inc.
2
|
|
|
7.63
|
|
|
|
01/15/18
|
|
|
|
1,000
|
|
|
|
1,073,750
|
|
|
C&S Group Enterprises LLC
3,4
|
|
|
8.38
|
|
|
|
05/01/17
|
|
|
|
630
|
|
|
|
663,075
|
|
|
Cenveo Corp.
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
350
|
|
|
|
332,500
|
|
|
Deluxe Corp.
2
|
|
|
7.38
|
|
|
|
06/01/15
|
|
|
|
600
|
|
|
|
616,500
|
|
|
FTI Consulting, Inc.
|
|
|
7.75
|
|
|
|
10/01/16
|
|
|
|
500
|
|
|
|
514,375
|
|
|
Iron Mountain, Inc.
|
|
|
8.38
|
|
|
|
08/15/21
|
|
|
|
325
|
|
|
|
353,437
|
|
|
Iron Mountain, Inc.
2
|
|
|
8.75
|
|
|
|
07/15/18
|
|
|
|
700
|
|
|
|
726,250
|
|
|
Jarden Corp.
2
|
|
|
7.50
|
|
|
|
05/01/17
|
|
|
|
500
|
|
|
|
550,000
|
|
|
Reynolds Group Issuer LLC
2,3,4
|
|
|
9.00
|
|
|
|
04/15/19
|
|
|
|
600
|
|
|
|
591,000
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
|
|
|
8.25
|
|
|
|
02/01/21
|
|
|
|
450
|
|
|
|
479,250
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
2
|
|
|
10.25
|
|
|
|
11/15/19
|
|
|
|
325
|
|
|
|
364,000
|
|
|
Service Corp. International
2
|
|
|
6.75
|
|
|
|
04/01/16
|
|
|
|
1,000
|
|
|
|
1,082,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Non-Cyclical
(Cost – $9,277,882)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,824,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 23.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch Coal, Inc.
|
|
|
8.75
|
|
|
|
08/01/16
|
|
|
|
550
|
|
|
|
577,500
|
|
|
BreitBurn Energy Partners LP/BreitBurn Finance Corp.
2
|
|
|
8.63
|
|
|
|
10/15/20
|
|
|
|
750
|
|
|
|
796,875
|
|
|
Calfrac Holdings LP
2,3,4
|
|
|
7.50
|
|
|
|
12/01/20
|
|
|
|
700
|
|
|
|
703,500
|
|
|
Chaparral Energy, Inc.
2
|
|
|
8.88
|
|
|
|
02/01/17
|
|
|
|
1,000
|
|
|
|
1,045,000
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
7
HELIOS ADVANTAGE INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consol Energy, Inc.
2
|
|
|
8.25
|
%
|
|
|
04/01/20
|
|
|
$
|
900
|
|
|
$
|
940,500
|
|
|
Crosstex Energy LP/Crosstex Energy Finance Corp.
2
|
|
|
8.88
|
|
|
|
02/15/18
|
|
|
|
675
|
|
|
|
717,187
|
|
|
EV Energy Partners LP/EV Energy Finance Corp.
2
|
|
|
8.00
|
|
|
|
04/15/19
|
|
|
|
775
|
|
|
|
794,375
|
|
|
FTS International Services LLC/FTS International Bonds, Inc.
3,4
|
|
|
7.88
|
|
|
|
11/15/18
|
|
|
|
455
|
|
|
|
475,475
|
|
|
Frontier Oil Corp.
|
|
|
8.50
|
|
|
|
09/15/16
|
|
|
|
550
|
|
|
|
584,375
|
|
|
GMX Resources, Inc.
3,4,7
|
|
|
11.00
|
|
|
|
12/01/17
|
|
|
|
281
|
|
|
|
234,635
|
|
|
Hercules Offshore, Inc.
2,3,4
|
|
|
10.50
|
|
|
|
10/15/17
|
|
|
|
750
|
|
|
|
785,625
|
|
|
Hilcorp Energy I LP/Hilcorp Finance Co.
3,4
|
|
|
8.00
|
|
|
|
02/15/20
|
|
|
|
550
|
|
|
|
594,000
|
|
|
Key Energy Services, Inc.
|
|
|
6.75
|
|
|
|
03/01/21
|
|
|
|
500
|
|
|
|
513,750
|
|
|
Linn Energy LLC/Linn Energy Finance Corp.
|
|
|
8.63
|
|
|
|
04/15/20
|
|
|
|
570
|
|
|
|
614,175
|
|
|
Petroleum Geo-Services ASA
3,4,6
|
|
|
7.38
|
|
|
|
12/15/18
|
|
|
|
325
|
|
|
|
338,000
|
|
|
Plains Exploration & Production Co.
|
|
|
7.63
|
|
|
|
06/01/18
|
|
|
|
550
|
|
|
|
584,375
|
|
|
Precision Drilling Corp.
2,6
|
|
|
6.63
|
|
|
|
11/15/20
|
|
|
|
750
|
|
|
|
785,625
|
|
|
Quicksilver Resources, Inc.
2
|
|
|
11.75
|
|
|
|
01/01/16
|
|
|
|
450
|
|
|
|
475,875
|
|
|
SESI LLC
2
|
|
|
6.88
|
|
|
|
06/01/14
|
|
|
|
600
|
|
|
|
601,500
|
|
|
Trinidad Drilling LTD
3,4,6
|
|
|
7.88
|
|
|
|
01/15/19
|
|
|
|
760
|
|
|
|
808,450
|
|
|
Venoco, Inc.
2
|
|
|
8.88
|
|
|
|
02/15/19
|
|
|
|
750
|
|
|
|
686,250
|
|
|
W&T Offshore, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
255
|
|
|
|
269,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
(Cost – $13,558,671)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,926,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance & Investment – 4.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FireKeepers Development Authority
2,3,4
|
|
|
13.88
|
|
|
|
05/01/15
|
|
|
|
500
|
|
|
|
556,250
|
|
|
Ineos Finance PLC
3,4,6
|
|
|
9.00
|
|
|
|
05/15/15
|
|
|
|
400
|
|
|
|
424,500
|
|
|
Marina District Finance Co., Inc.
2
|
|
|
9.88
|
|
|
|
08/15/18
|
|
|
|
1,000
|
|
|
|
897,500
|
|
|
Masonite International Corp.
3,4,6
|
|
|
8.25
|
|
|
|
04/15/21
|
|
|
|
775
|
|
|
|
806,000
|
|
|
Motors Liquidation Co.
8
|
|
|
7.13
|
|
|
|
07/15/13
|
|
|
|
250
|
|
|
|
3,750
|
|
|
Motors Liquidation Co.
2,8
|
|
|
8.38
|
|
|
|
07/15/33
|
|
|
|
1,750
|
|
|
|
26,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Finance & Investment
(Cost – $2,653,883)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,714,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media – 5.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corp.
2
|
|
|
8.63
|
|
|
|
09/15/17
|
|
|
|
800
|
|
|
|
871,000
|
|
|
CCO Holdings LLC/CCO Cap Corp.
2
|
|
|
8.13
|
|
|
|
04/30/20
|
|
|
|
975
|
|
|
|
1,082,250
|
|
|
Insight Communications, Inc.
3,4
|
|
|
9.38
|
|
|
|
07/15/18
|
|
|
|
454
|
|
|
|
518,695
|
|
|
Mediacom LLC/Mediacom Capital Corp.
2
|
|
|
9.13
|
|
|
|
08/15/19
|
|
|
|
750
|
|
|
|
814,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Media
(Cost – $3,099,454)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,286,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate – 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realogy Corp.
3,4
(Cost – $696,890)
|
|
|
7.88
|
|
|
|
02/15/19
|
|
|
|
775
|
|
|
|
775,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Cyclical – 8.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMC Entertainment, Inc.
2
|
|
|
8.75
|
|
|
|
06/01/19
|
|
|
|
875
|
|
|
|
916,563
|
|
|
Beazer Homes USA, Inc.
|
|
|
9.13
|
|
|
|
06/15/18
|
|
|
|
300
|
|
|
|
262,125
|
|
|
Caesars Entertainment Operating Co., Inc.
2
|
|
|
11.25
|
|
|
|
06/01/17
|
|
|
|
600
|
|
|
|
654,000
|
|
|
Easton-Bell Sports, Inc.
2
|
|
|
9.75
|
|
|
|
12/01/16
|
|
|
|
650
|
|
|
|
719,063
|
|
|
K Hovnanian Enterprises, Inc.
2
|
|
|
10.63
|
|
|
|
10/15/16
|
|
|
|
750
|
|
|
|
677,813
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
8
HELIOS ADVANTAGE INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palace Entertainment Holdings LLC/Palace Entertainment Holdings Corp.
3,4
|
|
|
8.88
|
%
|
|
|
04/15/17
|
|
|
$
|
750
|
|
|
$
|
779,063
|
|
|
Pulte Group, Inc.
|
|
|
6.38
|
|
|
|
05/15/33
|
|
|
|
750
|
|
|
|
603,750
|
|
|
Standard Pacific Corp.
2
|
|
|
8.38
|
|
|
|
05/15/18
|
|
|
|
550
|
|
|
|
585,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Cyclical
(Cost – $5,071,181)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,197,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Non-Cyclical – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCA, Inc.
2
|
|
|
8.00
|
|
|
|
10/01/18
|
|
|
|
775
|
|
|
|
844,750
|
|
|
Health Management Associates, Inc.
3,4
|
|
|
7.38
|
|
|
|
01/15/20
|
|
|
|
375
|
|
|
|
382,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Non-Cyclical
(Cost – $1,160,592)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,227,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Electronics – 3.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coleman Cable, Inc.
2
|
|
|
9.00
|
|
|
|
02/15/18
|
|
|
|
550
|
|
|
|
578,875
|
|
|
First Data Corp.
2,3,4
|
|
|
8.25
|
|
|
|
01/15/21
|
|
|
|
750
|
|
|
|
733,125
|
|
|
First Data Corp.
|
|
|
9.88
|
|
|
|
09/24/15
|
|
|
|
71
|
|
|
|
71,355
|
|
|
Freescale Semiconductor, Inc.
2,3,4
|
|
|
9.25
|
|
|
|
04/15/18
|
|
|
|
750
|
|
|
|
821,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Technology & Electronics
(Cost – $2,117,790)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,204,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 9.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati Bell, Inc.
|
|
|
8.25
|
|
|
|
10/15/17
|
|
|
|
345
|
|
|
|
352,331
|
|
|
Cincinnati Bell, Inc.
2
|
|
|
8.38
|
|
|
|
10/15/20
|
|
|
|
580
|
|
|
|
582,900
|
|
|
Clear Channel Communications, Inc.
2
|
|
|
9.00
|
|
|
|
03/01/21
|
|
|
|
750
|
|
|
|
675,000
|
|
|
Frontier Communications Corp.
2
|
|
|
7.13
|
|
|
|
03/15/19
|
|
|
|
1,300
|
|
|
|
1,303,250
|
|
|
inVentiv Health, Inc.
3,4
|
|
|
10.00
|
|
|
|
08/15/18
|
|
|
|
300
|
|
|
|
271,500
|
|
|
Level 3 Financing, Inc.
3,4
|
|
|
8.63
|
|
|
|
07/15/20
|
|
|
|
650
|
|
|
|
682,500
|
|
|
PAETEC Holding Corp.
|
|
|
9.88
|
|
|
|
12/01/18
|
|
|
|
500
|
|
|
|
565,000
|
|
|
Windstream Corp.
2
|
|
|
7.00
|
|
|
|
03/15/19
|
|
|
|
1,250
|
|
|
|
1,275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $5,556,567)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,707,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility – 3.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calpine Corp.
2,3,4
|
|
|
7.25
|
|
|
|
10/15/17
|
|
|
|
650
|
|
|
|
689,000
|
|
|
Edison Mission Energy
|
|
|
7.00
|
|
|
|
05/15/17
|
|
|
|
325
|
|
|
|
204,750
|
|
|
Mueller Water Products, Inc.
|
|
|
7.38
|
|
|
|
06/01/17
|
|
|
|
500
|
|
|
|
492,500
|
|
|
NRG Energy, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
550
|
|
|
|
554,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Utility
(Cost – $1,942,058)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,940,375
|
|
|
Total HIGH YIELD CORPORATE BONDS
(Cost – $69,640,698)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,640,940
|
|
|
TERM LOAN – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas Competitive Electric Holdings Co. LLC
1,4
(Cost – $273,843)
|
|
|
4.74
|
|
|
|
04/10/12
|
|
|
|
334
|
|
|
|
185,210
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
9
HELIOS ADVANTAGE INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
COMMON STOCKS – 1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
(Cost – $380,638)
|
|
|
|
|
|
|
8,132
|
|
|
$
|
208,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials – 0.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corp.
(Cost – $379,531)
|
|
|
|
|
|
|
37,905
|
|
|
|
531,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frontier Communications Corp.
|
|
|
|
|
|
|
21,644
|
|
|
|
90,255
|
|
|
Windstream Corp.
|
|
|
|
|
|
|
11,050
|
|
|
|
129,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $325,638)
|
|
|
|
|
|
|
|
|
|
|
219,651
|
|
|
Total COMMON STOCKS
(Cost – $1,085,807)
|
|
|
|
|
|
|
|
|
|
|
959,286
|
|
|
WARRANTS – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration: July 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Price: $10.00
|
|
|
|
|
|
|
7,393
|
|
|
|
122,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration: July 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Price: $18.33
|
|
|
|
|
|
|
7,393
|
|
|
|
82,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
(Cost – $432,026)
|
|
|
|
|
|
|
|
|
|
|
205,748
|
|
|
Total WARRANTS
(Cost – $432,026)
|
|
|
|
|
|
|
|
|
|
|
205,748
|
|
|
Total Investments – 132.4%
(Cost – $73,911,507)
|
|
|
|
|
|
|
|
|
|
|
77,138,752
|
|
|
Liabilities in Excess of Other Assets – (32.4)%
|
|
|
|
|
|
|
|
|
|
|
(18,859,293
|
)
|
|
|
|
|
|
|
|
Total NET ASSETS – 100.0%
|
|
|
|
|
|
|
|
|
|
$
|
58,279,459
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
10
HELIOS HIGH INCOME FUND, INC.
OBJECTIVE & STRATEGY
Helios High Income Fund, Inc. seeks a high
level of current income. The Fund seeks capital growth as a secondary investment objective when consistent with its primary investment objective. The Fund invests a majority of its total assets in below-investment grade debt securities that offer
attractive yield and capital appreciation potential. The Fund also may invest in investment grade debt securities, up to 15% of its total assets in foreign debt and foreign equity securities and up to 25% of its total assets in domestic equity
securities, including common and preferred stocks. The Fund invests in a wide range of below-investment grade debt securities, including corporate bonds, mortgage-backed and asset-backed securities and municipal and foreign government obligations,
as well as securities of companies in bankruptcy reorganization proceedings or otherwise in the process of debt restructuring. (Below-investment grade debt securities are rated Ba1 or lower by Moody’s Investors Service, Inc., BB+ or lower by
Standard & Poor’s Ratings Group, comparably rated by another nationally recognized statistical rating organization or, if unrated, determined by the Fund’s investment advisor to be of comparable quality.) The Fund may use leverage
through bank borrowings, reverse repurchase agreements or other transactions involving indebtedness or through the issuance of preferred shares. The Fund may leverage one third of its total assets (in each case including the amount borrowed.) The
Fund may vary its use of leverage in response to changing market conditions.
Investment Risks:
Investors in any bond fund should
anticipate fluctuations in price. Bond prices and the value of bond funds decline as interest rates rise. Bonds with longer-term maturities generally are more vulnerable to interest rate risk than bonds with shorter-term maturities. Below-investment
grade bonds involve greater credit risk, which is the risk that the issuer will not make interest or principal payments when due. An economic downturn or period of rising interest rates could adversely affect the ability of issuers, especially
issuers of below-investment grade debt, to service primary obligations and an unanticipated default could cause the Fund to experience a reduction in value of its shares. The Fund’s investments in mortgage-backed or asset-backed securities that
are “subordinated” to other interests in the same pool may increase credit risk to the extent that the Fund as a holder of those securities may only receive payments after the pool’s obligations to other investors have been satisfied.
Below-investment grade bonds also are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change, than higher-rated debt securities. The value of U.S. and foreign equity securities in which
the Fund invests will change based on changes in a company’s financial condition and in overall market and economic conditions. Leverage creates an opportunity for an increased return to common stockholders, but unless the income and capital
appreciation, if any, on securities acquired with leverage proceeds exceed the costs of the leverage, the use of leverage will diminish the investment performance of the Fund’s shares. Use of leverage also may increase the likelihood that the
net asset value of the Fund and market value of its common shares will be more volatile, and the yield and total return to common stockholders will tend to fluctuate more in response to changes in interest rates and creditworthiness.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the fiscal year ended March 31, 2012, Helios High Income Fund, Inc. (NYSE: HIH) had a total return based on net asset value of 15.31% and
a total return based on market price of 27.89%, which assumes the reinvestment of dividends and is exclusive of brokerage commissions. Based on the NYSE closing price of $8.90 on March 31, 2012, the Fund’s shares had a dividend yield of
8.09%. The dividend yield is calculated as the annualized amount of the reporting period’s most recent monthly dividend declared divided by the stated stock price.
Individual contributors of performance included Huntsman Corp., Berry Plastics Corp. and Crown, Cork & Seal Co. Huntsman Corp. is a chemical company that experienced better than expected earnings as
underlying business trends improved. Berry Plastics Corp. is a packaging company whose bonds rose on expectations of a possible Initial Public Offering and debt reduction and Crown, Cork & Seal Co., Inc. is another a packaging company whose
earnings improved on strong emerging market growth.
Detractors of performance included Sprint Capital, GMX Resources and Mercer
International. Sprint Capital is a wireless telecommunications service provider that announced a major network expansion financed with debt. GMX Resources is an oil and gas producer that completed a distressed bond exchange. Mercer International is
a pulp producer that has experienced lower volumes and prices.
2012 Annual Report
11
HELIOS HIGH INCOME FUND, INC.
HIGH YIELD MARKET ENVIRONMENT
The high yield market
delivered modest, yet positive returns for the 12-month period ended March 31, 2012. Early in the period, markets corrected lower as, for the second year in a row, investors took a negative view beginning in May 2011 regarding the health of
European peripheral countries, namely Greece. Following a challenging summer, markets turned decidedly positive producing strong returns in the second half of the period. High yield bonds returned 5.6% as the spread widened from 535 basis points to
594 basis points.
1
Part of this spread widening was offset by lower Treasury
bond interest rates, which fell from 3.5% to 2.2%. Equity returns, as measured by the Russell 2000, were slightly negative at 0.2%.
The spread between high yield and the 10-year Treasury, which rose sharply with the summer sell-off, rose from 535 basis points to briefly reach the high 800s on fears that European problems might cause a flight to
safety and possibly another recession in the United States.
1
Spreads narrowed
as investors regained confidence in the economy as the year progressed. Current spreads of 594 basis points remain much wider than the 400-500 basis points we would normally expect to see at this point in the credit cycle. Therefore, while the high
yield market continues to represent value to investors, further price appreciation is likely to be limited as the sector as a whole is trading above par. The difficulty in the market can be seen by the more volatile CCC-rated securities
underperforming, returning only 2.2% in the period
2
, compared with 6.8% from
the more conservative BB-rated names.
3
Corporate credit has been sound for the past couple of years, and we saw stable credit this period with the default rate steady
at 1.9%.
4
Note that this year’s default rate of 1.9% remains well below
the market’s 25-year average default rate of 4.2%.
5
Credit ratings agencies confirm the improving trend in corporate credit by upgrading 1.1 times as many high yield companies as
they downgraded in the past 12 months.
6
This means that credit is still
improving, albeit at a slower rate than before. We noted that companies reported generally good earnings through the fourth quarter of 2011, (the latest reporting period) however we saw some decline in the rate of improvement with more companies
reporting pressure on their costs.
Supply and demand was generally positive during the period and in the final six
months, high yield mutual funds continued to experience strong inflows. New issue volume was strong after a late summer pause, accelerating to an all time quarterly record of $96.8 billion, in the first quarter of 2012, above the previous record of
$81.8 billion posted in the second quarter of last year.
7
Overall with money
flooding into mutual funds, deals were oversubscribed and traded higher in the aftermarket. Traders report that there seems to be ample cash available for reasonably creditworthy names and report some challenges buying good quality paper in the
secondary market. The bulk of new issues are used to refinance debt which has the effect of improving credit quality by eliminating near term maturities.
OUTLOOK
Brookfield has been positive on the high yield market, noting the
robust credit quality, good corporate liquidity and excellent progress on the part of corporate treasurers in managing their debt structures. The high yield market agreed and returns were excellent. As these fundamentals remain in place, our outlook
for this asset class over the next 12 months or so remains positive.
However, we also believe that significant further potential upside
appreciation is limited due to the decline in spreads from 737 to 594 basis points, and with the return of the market above par. While normally we would expect the spread to be 100 to 150 basis points narrower than current levels, we note the
unusually depressed level of the benchmark treasury yields, which may be artificially depressed due to actions by the Federal Reserve. With the market trading at yield levels within 50 basis points of all time lows, our enthusiasm is somewhat
tempered at this point.
Given our expectation of modest economic growth, modestly increasing defaults and no general recession, we
believe that high yield investors are adequately, but not generously compensated at current yield spread levels. While we would normally be targeting yield spreads of 400 to 500 basis points at this point in the credit cycle, we
Brookfield
Investment Management Inc.
12
HELIOS HIGH INCOME FUND, INC.
remain skeptical that the problems in Europe are permanently addressed, and wonder if investors might not question the health of the United States’ balance sheet after the November election.
With these risks outstanding we expect high yield investors will continue to demand a premium to historical spreads, at least for the next few quarters. For investors seeking to clip the current coupon offered in the high yield market, the
investment landscape remains attractive.
|
1
|
BofA Merrill Lynch U.S. High Yield Master II Index
|
|
2
|
BofA Merrill Lynch CCC & Lower U.S. High Yield Index
|
|
3
|
BofA Merrill Lynch BB U.S. High Yield Index
|
|
4
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 1
|
|
5
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 2
|
|
6
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 10
|
|
7
|
Credit Suisse “Leveraged Finance Strategy Update” April 2, 2012, p. 2.
|
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 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
The
Fund’s 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
Helios High Income Fund, Inc. currently holds these securities.
The Barclays Capital U.S. Corporate High Yield Index covers the U.S.
dollar denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging markets debt.
The Barclays Capital U.S. Corporate High Yield Index is part of the Barclays Capital U.S. Universal and Global High Yield Indices. 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.
The Fund may utilize leverage to seek to enhance the yield and net asset value of its common stock, through bank borrowings, issuance of short-term debt securities or shares of preferred stock, or a combination
thereof. However, these objectives cannot be achieved in all interest rate environments. While leverage may result in a higher yield for the Fund, the use of leverage involves risk, including the potential for higher volatility of the NAV,
fluctuations of dividends and other distributions paid by the Fund and the market price of the Fund’s common stock, among others. Certain funds may invest assets in securities of issuers domiciled outside the United States, including issuers
from emerging markets. Foreign investing involves special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments.
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 March 31, 2012 and subject to change based on subsequent developments.
2012 Annual Report
13
HELIOS HIGH INCOME FUND, INC.
Portfolio Characteristics (Unaudited)
March 31, 2012
PORTFOLIO STATISTICS
|
|
|
|
|
Annualized dividend yield
1
|
|
8.09%
|
|
|
|
|
Weighted average coupon
|
|
8.02%
|
|
|
|
|
Weighted average life
|
|
5.31 years
|
|
|
|
|
Percentage of leveraged assets
|
|
29.73%
|
|
|
|
|
Total number of holdings
|
|
127
|
CREDIT QUALITY
|
|
|
|
|
|
|
BBB
|
|
|
4
|
%
|
|
|
|
|
BB
|
|
|
13
|
%
|
|
|
|
|
B
|
|
|
60
|
%
|
|
|
|
|
CCC
|
|
|
17
|
%
|
|
|
|
|
Unrated
|
|
|
2
|
%
|
|
|
|
|
Cash
|
|
|
4
|
%
|
|
Total
|
|
|
100
|
%
|
ASSET ALLOCATION
2
|
|
|
|
|
|
|
Investment Grade Corporate Bonds
|
|
|
5
|
%
|
|
|
|
|
High Yield Corporate Bonds
|
|
|
93
|
%
|
|
|
|
|
Common Stocks and Warrants
|
|
|
2
|
%
|
|
Total
|
|
|
100
|
%
|
|
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 the March 31, 2012 stock price.
|
|
2
|
Includes only invested assets; excludes cash.
|
Brookfield
Investment Management Inc.
14
HELIOS HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
INVESTMENT GRADE CORPORATE BONDS – 6.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 2.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific LLC
|
|
|
7.25
|
%
|
|
|
06/01/28
|
|
|
$
|
220
|
|
|
$
|
258,942
|
|
|
Georgia-Pacific LLC
|
|
|
7.38
|
|
|
|
12/01/25
|
|
|
|
255
|
|
|
|
311,037
|
|
|
Westlake Chemical Corp.
2
|
|
|
6.63
|
|
|
|
01/15/16
|
|
|
|
625
|
|
|
|
635,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $1,017,352)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,205,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer Natural Resources Co.
(Cost – $301,691)
|
|
|
6.65
|
|
|
|
03/15/17
|
|
|
|
350
|
|
|
|
400,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 3.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qwest Corp.
2
(Cost – $931,697)
|
|
|
6.88
|
|
|
|
09/15/33
|
|
|
|
1,225
|
|
|
|
1,212,750
|
|
|
Total INVESTMENT GRADE CORPORATE BONDS
(Cost – $2,250,740)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,818,821
|
|
|
HIGH YIELD CORPORATE BONDS – 124.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 18.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AK Steel Corp.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
580
|
|
|
|
559,700
|
|
|
Associated Materials LLC
|
|
|
9.13
|
|
|
|
11/01/17
|
|
|
|
525
|
|
|
|
510,563
|
|
|
Cascades, Inc.
2,6
|
|
|
7.75
|
|
|
|
12/15/17
|
|
|
|
550
|
|
|
|
550,000
|
|
|
FMG Resources August 2006 Pty Limited
3,4,6
|
|
|
6.88
|
|
|
|
04/01/22
|
|
|
|
275
|
|
|
|
268,125
|
|
|
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
2
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
550
|
|
|
|
569,250
|
|
|
Huntsman International LLC
|
|
|
8.63
|
|
|
|
03/15/21
|
|
|
|
500
|
|
|
|
561,250
|
|
|
Ineos Group Holdings Limited
3,4,6
|
|
|
8.50
|
|
|
|
02/15/16
|
|
|
|
265
|
|
|
|
250,425
|
|
|
Ply Gem Industries, Inc.
|
|
|
8.25
|
|
|
|
02/15/18
|
|
|
|
525
|
|
|
|
528,281
|
|
|
Polymer Group, Inc.
2
|
|
|
7.75
|
|
|
|
02/01/19
|
|
|
|
525
|
|
|
|
552,562
|
|
|
Solutia, Inc.
|
|
|
8.75
|
|
|
|
11/01/17
|
|
|
|
175
|
|
|
|
198,406
|
|
|
Steel Dynamics, Inc.
2
|
|
|
7.63
|
|
|
|
03/15/20
|
|
|
|
500
|
|
|
|
541,250
|
|
|
Tembec Industries, Inc.
2,6
|
|
|
11.25
|
|
|
|
12/15/18
|
|
|
|
550
|
|
|
|
583,000
|
|
|
Trimas Corp.
2
|
|
|
9.75
|
|
|
|
12/15/17
|
|
|
|
260
|
|
|
|
287,300
|
|
|
United States Steel Corp.
2
|
|
|
7.00
|
|
|
|
02/01/18
|
|
|
|
1,000
|
|
|
|
1,027,500
|
|
|
Verso Paper Holdings LLC/Verso Paper, Inc.
3,4
|
|
|
11.75
|
|
|
|
01/15/19
|
|
|
|
225
|
|
|
|
231,750
|
|
|
Xerium Technologies, Inc.
|
|
|
8.88
|
|
|
|
06/15/18
|
|
|
|
415
|
|
|
|
360,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $7,346,088)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,579,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Goods – 8.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR Corp.
3,4
|
|
|
7.25
|
|
|
|
01/15/22
|
|
|
|
200
|
|
|
|
204,000
|
|
|
Berry Plastics Corp.
2
|
|
|
9.50
|
|
|
|
05/15/18
|
|
|
|
525
|
|
|
|
556,500
|
|
|
Building Materials Corp. of America
3,4
|
|
|
6.75
|
|
|
|
05/01/21
|
|
|
|
275
|
|
|
|
291,844
|
|
|
Crown Cork & Seal Co., Inc.
2
|
|
|
7.38
|
|
|
|
12/15/26
|
|
|
|
700
|
|
|
|
742,000
|
|
|
Owens-Illinois, Inc.
|
|
|
7.80
|
|
|
|
05/15/18
|
|
|
|
425
|
|
|
|
477,062
|
|
|
Terex Corp.
|
|
|
6.50
|
|
|
|
04/01/20
|
|
|
|
200
|
|
|
|
201,500
|
|
|
Terex Corp.
2
|
|
|
8.00
|
|
|
|
11/15/17
|
|
|
|
350
|
|
|
|
362,250
|
|
|
USG Corp.
2
|
|
|
9.75
|
|
|
|
01/15/18
|
|
|
|
500
|
|
|
|
496,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Goods
(Cost – $3,114,979)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,331,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
15
HELIOS HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Cyclical – 17.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACE Hardware Corp.
2,3,4
|
|
|
9.13
|
%
|
|
|
06/01/16
|
|
|
$
|
500
|
|
|
$
|
526,250
|
|
|
American Axle & Manufacturing, Inc.
|
|
|
7.75
|
|
|
|
11/15/19
|
|
|
|
200
|
|
|
|
213,500
|
|
|
American Axle & Manufacturing, Inc.
2
|
|
|
7.88
|
|
|
|
03/01/17
|
|
|
|
550
|
|
|
|
567,875
|
|
|
Caesars Operating Escrow LLC/Caesars Escrow Corp.
3,4
|
|
|
8.50
|
|
|
|
02/15/20
|
|
|
|
200
|
|
|
|
203,500
|
|
|
CityCenter Holdings LLC/CityCenter Finance Corp.
|
|
|
7.63
|
|
|
|
01/15/16
|
|
|
|
100
|
|
|
|
105,500
|
|
|
DineEquity, Inc.
2
|
|
|
9.50
|
|
|
|
10/30/18
|
|
|
|
525
|
|
|
|
574,875
|
|
|
Ford Motor Co.
|
|
|
6.50
|
|
|
|
08/01/18
|
|
|
|
475
|
|
|
|
515,375
|
|
|
Jaguar Land Rover PLC
3,4,6
|
|
|
8.13
|
|
|
|
05/15/21
|
|
|
|
275
|
|
|
|
281,875
|
|
|
Levi Strauss & Co.
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
500
|
|
|
|
528,750
|
|
|
Limited Brands, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
250
|
|
|
|
295,625
|
|
|
McJunkin Red Man Corp.
|
|
|
9.50
|
|
|
|
12/15/16
|
|
|
|
475
|
|
|
|
517,750
|
|
|
MGM Resorts International
2
|
|
|
7.63
|
|
|
|
01/15/17
|
|
|
|
550
|
|
|
|
567,875
|
|
|
MGM Resorts International
3,4
|
|
|
8.63
|
|
|
|
02/01/19
|
|
|
|
150
|
|
|
|
160,875
|
|
|
MTR Gaming Group, Inc.
|
|
|
11.50
|
|
|
|
08/01/19
|
|
|
|
166
|
|
|
|
164,167
|
|
|
Niska Gas Storage US LLC/Niska Gas Storage Canada ULC
2
|
|
|
8.88
|
|
|
|
03/15/18
|
|
|
|
525
|
|
|
|
493,500
|
|
|
Pharmaceutical Product Development, Inc.
3,4
|
|
|
9.50
|
|
|
|
12/01/19
|
|
|
|
500
|
|
|
|
542,500
|
|
|
Pittsburgh Glass Works LLC
3,4
|
|
|
8.50
|
|
|
|
04/15/16
|
|
|
|
125
|
|
|
|
124,375
|
|
|
Tenneco, Inc.
2
|
|
|
6.88
|
|
|
|
12/15/20
|
|
|
|
550
|
|
|
|
591,250
|
|
|
The Neiman Marcus Group, Inc.
2
|
|
|
10.38
|
|
|
|
10/15/15
|
|
|
|
260
|
|
|
|
270,728
|
|
|
Visteon Corp.
|
|
|
6.75
|
|
|
|
04/15/19
|
|
|
|
80
|
|
|
|
81,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Cyclical
(Cost – $6,749,480)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,327,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Cyclical – 15.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCO Brands Corp.
2
|
|
|
10.63
|
|
|
|
03/15/15
|
|
|
|
500
|
|
|
|
545,630
|
|
|
American Reprographics Co.
2
|
|
|
10.50
|
|
|
|
12/15/16
|
|
|
|
525
|
|
|
|
519,750
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
2
|
|
|
8.25
|
|
|
|
01/15/19
|
|
|
|
550
|
|
|
|
573,375
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
|
|
|
9.75
|
|
|
|
03/15/20
|
|
|
|
150
|
|
|
|
163,875
|
|
|
B&G Foods, Inc.
2
|
|
|
7.63
|
|
|
|
01/15/18
|
|
|
|
500
|
|
|
|
536,875
|
|
|
C&S Group Enterprises LLC
3,4
|
|
|
8.38
|
|
|
|
05/01/17
|
|
|
|
472
|
|
|
|
496,780
|
|
|
Cenveo Corp.
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
250
|
|
|
|
237,500
|
|
|
Deluxe Corp.
2
|
|
|
7.38
|
|
|
|
06/01/15
|
|
|
|
500
|
|
|
|
513,750
|
|
|
Iron Mountain, Inc.
2
|
|
|
8.38
|
|
|
|
08/15/21
|
|
|
|
250
|
|
|
|
271,875
|
|
|
Iron Mountain, Inc.
2
|
|
|
8.75
|
|
|
|
07/15/18
|
|
|
|
525
|
|
|
|
544,687
|
|
|
Reynolds Group Issuer LLC
2,3,4
|
|
|
9.00
|
|
|
|
04/15/19
|
|
|
|
525
|
|
|
|
517,125
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
|
|
|
8.25
|
|
|
|
02/01/21
|
|
|
|
300
|
|
|
|
319,500
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
2
|
|
|
10.25
|
|
|
|
11/15/19
|
|
|
|
250
|
|
|
|
280,000
|
|
|
Service Corp. International
2
|
|
|
6.75
|
|
|
|
04/01/16
|
|
|
|
750
|
|
|
|
811,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Non-Cyclical
(Cost – $6,052,504)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,332,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 24.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch Coal, Inc.
2
|
|
|
8.75
|
|
|
|
08/01/16
|
|
|
|
500
|
|
|
|
525,000
|
|
|
BreitBurn Energy Partners LP/BreitBurn Finance Corp.
2
|
|
|
8.63
|
|
|
|
10/15/20
|
|
|
|
525
|
|
|
|
557,812
|
|
|
Calfrac Holdings LP
2,3,4
|
|
|
7.50
|
|
|
|
12/01/20
|
|
|
|
525
|
|
|
|
527,625
|
|
|
Chaparral Energy, Inc.
2
|
|
|
8.88
|
|
|
|
02/01/17
|
|
|
|
525
|
|
|
|
548,625
|
|
|
Consol Energy, Inc.
2
|
|
|
8.25
|
|
|
|
04/01/20
|
|
|
|
700
|
|
|
|
731,500
|
|
|
Crosstex Energy LP/Crosstex Energy Finance Corp.
2
|
|
|
8.88
|
|
|
|
02/15/18
|
|
|
|
500
|
|
|
|
531,250
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
16
HELIOS HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EV Energy Partners LP/EV Energy Finance Corp.
2
|
|
|
8.00
|
%
|
|
|
04/15/19
|
|
|
$
|
550
|
|
|
$
|
563,750
|
|
|
FTS International Services LLC/FTS International Bonds, Inc.
2,3,4
|
|
|
7.88
|
|
|
|
11/15/18
|
|
|
|
340
|
|
|
|
355,300
|
|
|
Frontier Oil Corp.
|
|
|
8.50
|
|
|
|
09/15/16
|
|
|
|
500
|
|
|
|
531,250
|
|
|
GMX Resources, Inc.
2,3,4,7
|
|
|
11.00
|
|
|
|
12/01/17
|
|
|
|
198
|
|
|
|
165,330
|
|
|
Hercules Offshore, Inc.
2,3,4
|
|
|
10.50
|
|
|
|
10/15/17
|
|
|
|
325
|
|
|
|
340,438
|
|
|
Hilcorp Energy I LP/Hilcorp Finance Co.
2,3,4
|
|
|
8.00
|
|
|
|
02/15/20
|
|
|
|
500
|
|
|
|
540,000
|
|
|
Key Energy Services, Inc.
|
|
|
6.75
|
|
|
|
03/01/21
|
|
|
|
400
|
|
|
|
411,000
|
|
|
Linn Energy LLC/Linn Energy Finance Corp.
2
|
|
|
8.63
|
|
|
|
04/15/20
|
|
|
|
500
|
|
|
|
538,750
|
|
|
Petroleum Geo-Services ASA
3,4,6
|
|
|
7.38
|
|
|
|
12/15/18
|
|
|
|
225
|
|
|
|
234,000
|
|
|
Plains Exploration & Production Co.
|
|
|
7.63
|
|
|
|
06/01/18
|
|
|
|
500
|
|
|
|
531,250
|
|
|
Precision Drilling Corp.
6
|
|
|
6.63
|
|
|
|
11/15/20
|
|
|
|
450
|
|
|
|
471,375
|
|
|
Quicksilver Resources, Inc.
2
|
|
|
11.75
|
|
|
|
01/01/16
|
|
|
|
350
|
|
|
|
370,125
|
|
|
SESI LLC
2
|
|
|
6.88
|
|
|
|
06/01/14
|
|
|
|
450
|
|
|
|
451,125
|
|
|
Trinidad Drilling Limited
2,3,4,6
|
|
|
7.88
|
|
|
|
01/15/19
|
|
|
|
550
|
|
|
|
585,063
|
|
|
Venoco, Inc.
|
|
|
8.88
|
|
|
|
02/15/19
|
|
|
|
525
|
|
|
|
480,375
|
|
|
W&T Offshore, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
190
|
|
|
|
200,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
(Cost – $9,957,044)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,191,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance & Investment – 4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FireKeepers Development Authority
2,3,4
|
|
|
13.88
|
|
|
|
05/01/15
|
|
|
|
500
|
|
|
|
556,250
|
|
|
Ineos Finance PLC
3,4,6
|
|
|
9.00
|
|
|
|
05/15/15
|
|
|
|
285
|
|
|
|
302,456
|
|
|
Marina District Finance Co., Inc.
|
|
|
9.88
|
|
|
|
08/15/18
|
|
|
|
525
|
|
|
|
471,187
|
|
|
Masonite International Corp.
3,4,6
|
|
|
8.25
|
|
|
|
04/15/21
|
|
|
|
575
|
|
|
|
598,000
|
|
|
Motors Liquidation Co.
8
|
|
|
7.13
|
|
|
|
07/15/13
|
|
|
|
250
|
|
|
|
3,750
|
|
|
Motors Liquidation Co.
2,8
|
|
|
8.38
|
|
|
|
07/15/33
|
|
|
|
1,250
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Finance & Investment
(Cost – $1,872,752)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media – 6.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corp.
2
|
|
|
8.63
|
|
|
|
09/15/17
|
|
|
|
750
|
|
|
|
816,563
|
|
|
CCO Holdings LLC/CCO Cap Corp.
2
|
|
|
8.13
|
|
|
|
04/30/20
|
|
|
|
750
|
|
|
|
832,500
|
|
|
Insight Communications, Inc.
3,4
|
|
|
9.38
|
|
|
|
07/15/18
|
|
|
|
325
|
|
|
|
371,313
|
|
|
Mediacom LLC/Mediacom Capital Corp.
2
|
|
|
9.13
|
|
|
|
08/15/19
|
|
|
|
525
|
|
|
|
570,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Media
(Cost – $2,438,782)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,590,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate – 1.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realogy Corp.
3,4
(Cost – $494,567)
|
|
|
7.88
|
|
|
|
02/15/19
|
|
|
|
550
|
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Cyclical – 8.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMC Entertainment, Inc.
2
|
|
|
8.75
|
|
|
|
06/01/19
|
|
|
|
800
|
|
|
|
838,000
|
|
|
Beazer Homes USA, Inc.
2
|
|
|
9.13
|
|
|
|
06/15/18
|
|
|
|
250
|
|
|
|
218,437
|
|
|
Easton-Bell Sports, Inc.
2
|
|
|
9.75
|
|
|
|
12/01/16
|
|
|
|
475
|
|
|
|
525,469
|
|
|
Caesars Entertainment Operating Co., Inc.
2
|
|
|
11.25
|
|
|
|
06/01/17
|
|
|
|
450
|
|
|
|
490,500
|
|
|
K Hovnanian Enterprises, Inc.
2
|
|
|
10.63
|
|
|
|
10/15/16
|
|
|
|
525
|
|
|
|
474,469
|
|
|
Palace Entertainment Holdings LLC/Palace Entertainment Holdings Corp.
3,4
|
|
|
8.88
|
|
|
|
04/15/17
|
|
|
|
525
|
|
|
|
545,344
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
17
HELIOS HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standard Pacific Corp.
2
|
|
|
8.38
|
%
|
|
|
05/15/18
|
|
|
$
|
500
|
|
|
$
|
531,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Cyclical
(Cost – $3,496,279)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,624,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Non-Cyclical – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCA, Inc.
2
|
|
|
8.00
|
|
|
|
10/01/18
|
|
|
|
550
|
|
|
|
599,500
|
|
|
Health Management Associates, Inc.
3,4
|
|
|
7.38
|
|
|
|
01/15/20
|
|
|
|
275
|
|
|
|
280,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Non-Cyclical
(Cost – $833,155)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
880,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Electronics – 2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Data Corp.
2,3,4
|
|
|
8.25
|
|
|
|
01/15/21
|
|
|
|
525
|
|
|
|
513,187
|
|
|
First Data Corp.
|
|
|
9.88
|
|
|
|
09/24/15
|
|
|
|
53
|
|
|
|
53,265
|
|
|
Freescale Semiconductor, Inc.
2,3,4
|
|
|
9.25
|
|
|
|
04/15/18
|
|
|
|
500
|
|
|
|
547,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Technology & Electronics
(Cost – $1,053,856)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,113,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati Bell, Inc.
2
|
|
|
8.25
|
|
|
|
10/15/17
|
|
|
|
250
|
|
|
|
255,313
|
|
|
Cincinnati Bell, Inc.
2
|
|
|
8.38
|
|
|
|
10/15/20
|
|
|
|
500
|
|
|
|
502,500
|
|
|
Clear Channel Communications, Inc.
2
|
|
|
9.00
|
|
|
|
03/01/21
|
|
|
|
525
|
|
|
|
472,500
|
|
|
Frontier Communications Corp.
2
|
|
|
7.13
|
|
|
|
03/15/19
|
|
|
|
950
|
|
|
|
952,375
|
|
|
inVentiv Health, Inc.
3,4
|
|
|
10.00
|
|
|
|
08/15/18
|
|
|
|
215
|
|
|
|
194,575
|
|
|
Level 3 Financing, Inc.
3,4
|
|
|
8.63
|
|
|
|
07/15/20
|
|
|
|
450
|
|
|
|
472,500
|
|
|
PAETEC Holding Corp.
|
|
|
9.88
|
|
|
|
12/01/18
|
|
|
|
300
|
|
|
|
339,000
|
|
|
Windstream Corp.
2
|
|
|
7.00
|
|
|
|
03/15/19
|
|
|
|
900
|
|
|
|
918,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $4,003,238)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,106,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility – 3.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calpine Corp.
2,3,4
|
|
|
7.25
|
|
|
|
10/15/17
|
|
|
|
500
|
|
|
|
530,000
|
|
|
Edison Mission Energy
|
|
|
7.00
|
|
|
|
05/15/17
|
|
|
|
250
|
|
|
|
157,500
|
|
|
Mueller Water Products, Inc.
|
|
|
7.38
|
|
|
|
06/01/17
|
|
|
|
350
|
|
|
|
344,750
|
|
|
NRG Energy, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
500
|
|
|
|
503,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Utility
(Cost – $1,535,605)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,536,000
|
|
|
Total HIGH YIELD CORPORATE BONDS
(Cost – $48,948,329)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,114,450
|
|
|
TERM LOAN – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas Competitive Electric Holdings Co. LLC
1,4
(Cost – $215,161)
|
|
|
4.74
|
|
|
|
04/10/12
|
|
|
|
262
|
|
|
|
145,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
COMMON STOCKS – 1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
(Cost – $296,245)
|
|
|
|
|
|
|
|
|
|
|
6,099
|
|
|
$
|
156,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
18
HELIOS HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
COMMON STOCKS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials – 0.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corp.
(Cost – $275,862)
|
|
|
|
|
|
|
27,370
|
|
|
$
|
383,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frontier Communications Corp.
|
|
|
|
|
|
|
15,508
|
|
|
|
64,668
|
|
|
Windstream Corp.
|
|
|
|
|
|
|
8,300
|
|
|
|
97,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $273,230)
|
|
|
|
|
|
|
|
|
|
|
161,861
|
|
|
Total COMMON STOCKS
(Cost – $845,337)
|
|
|
|
|
|
|
|
|
|
|
701,754
|
|
|
WARRANTS – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
Expiration: July 2016
Exercise Price: $10.00
|
|
|
|
|
|
|
5,546
|
|
|
|
92,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
Expiration: July 2019
Exercise Price: $18.33
|
|
|
|
|
|
|
5,546
|
|
|
|
62,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
(Cost – $336,206)
|
|
|
|
|
|
|
|
|
|
|
154,345
|
|
|
Total WARRANTS
(Cost – $336,206)
|
|
|
|
|
|
|
|
|
|
|
154,345
|
|
|
Total Investments – 133.8%
(Cost – $52,595,773)
|
|
|
|
|
|
|
|
|
|
|
54,934,892
|
|
|
Liabilities in Excess of Other Assets – (33.8)%
|
|
|
|
|
|
|
|
|
|
|
(13,865,694
|
)
|
|
|
|
|
|
|
|
Total NET ASSETS – 100.0%
|
|
|
|
|
|
|
|
|
|
$
|
41,069,198
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
19
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
OBJECTIVE & STRATEGY
Helios Multi-Sector High Income Fund, Inc.
seeks a high level of current income. The Fund seeks capital growth as a secondary investment objective when consistent with its primary investment objective. The Fund invests in a diversified portfolio consisting primarily of debt securities that
offer attractive yield and capital appreciation potential. Under normal market conditions, the Fund invests a majority of its total assets in below-investment grade debt securities, including up to 20% of the Fund’s total assets in distressed
securities. The Fund maintains the flexibility to invest up to 50% of its total assets in investment grade debt securities. The Fund invests up to 30% of its total assets in equity securities of both domestic and foreign issuers and up to 15% of its
total assets in a combination of foreign debt and foreign equity securities. The Fund invests in a wide range of debt securities including, corporate bonds, mortgage-backed and asset-backed securities, convertible debt securities, distressed
securities, including securities of companies in bankruptcy reorganization proceedings or otherwise in the process of debt restructuring, U.S. government and municipal obligations and foreign government obligations. (Below-investment grade debt
securities are rated Ba1 or lower by Moody’s Investors Service, Inc., BB+ or lower by Standard & Poor’s Ratings Group, comparably rated by another nationally recognized statistical rating organization or, if unrated, determined by
the Fund’s investment advisor to be of comparable quality.) The Fund may use leverage through bank borrowings, reverse repurchase agreements or other transactions involving indebtedness or through the issuance of preferred shares. The Fund may
leverage one third of its total assets (in each case including the amount borrowed.) The Fund may vary its use of leverage in response to changing market conditions.
Investment Risks:
Investors in any bond fund should anticipate fluctuations in price. Bond prices and the value of bond funds decline as interest rates rise. Bonds with longer-term maturities generally are
more vulnerable to interest rate risk than bonds with shorter-term maturities. Below-investment grade bonds involve greater credit risk, which is the risk that the issuer will not make interest or principal payments when due. An economic downturn or
period of rising interest rates could adversely affect the ability of issuers, especially issuers of below investment-grade debt, to service primary obligations and an unanticipated default could cause the Fund to experience a reduction in value of
its shares. The Fund’s investments in mortgage-backed or asset-backed securities that are “subordinated” to other interests in the same pool may increase credit risk to the extent that the Fund as a holder of those securities may only
receive payments after the pool’s obligations to other investors have been satisfied. Below-investment grade bonds also are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change,
than higher-rated debt securities. The value of U.S. and foreign equity securities in which the Fund invests will change based on changes in a company’s financial condition and in overall market and economic conditions. Leverage creates an
opportunity for an increased return to common stockholders, but unless the income and capital appreciation, if any, on securities acquired with leverage proceeds exceed the costs of the leverage, the use of leverage will diminish the investment
performance of the Fund’s shares. Use of leverage also may increase the likelihood that the net asset value of the Fund and market value of its common shares will be more volatile, and the yield and total return to common stockholders will tend
to fluctuate more in response to changes in interest rates and creditworthiness.
MANAGEMENT DISCUSSION OF
FUND PERFORMANCE
For the fiscal year ended March 31, 2012, Helios Multi-Sector High Income Fund, Inc. (NYSE: HMH) had a total
return based on net asset value of 16.94% and a total return based on market price of 28.69%, which assumes the reinvestment of dividends and is exclusive of brokerage commissions. Based on the NYSE closing price of $6.07 on March 31, 2012, the
Fund’s shares had a dividend yield of 8.40%. The dividend yield is calculated as the annualized amount of the reporting period’s most recent monthly dividend declared divided by the stated stock price.
Individual contributors of performance included Huntsman Corp., Nalco Co. and Crown, Cork & Seal Co. Huntsman Corp. is a chemical company
that experienced better than expected earnings as underlying business trends improved. Nalco Co. is a chemical company that was acquired by Ecolab and whose bonds were tendered. Crown, Cork & Seal Co., Inc. is a packaging company whose
earnings improved on strong emerging market growth.
Brookfield
Investment Management Inc.
20
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Detractors of performance included Sprint Capital, GMX Resources and Mercer International. Sprint Capital is a wireless telecommunications service provider that announced a major network expansion financed with
debt. GMX Resources is an oil and gas producer that completed a distressed bond exchange. Mercer International is a pulp producer that has experienced lower volumes and prices.
HIGH YIELD MARKET ENVIRONMENT
The high yield market
delivered modest, yet positive returns for the 12-month period ended March 31, 2012. Early in the period, markets corrected lower as, for the second year in a row, investors took a negative view beginning in May 2011 regarding the health of
European peripheral countries, namely Greece. Following a challenging summer, markets turned decidedly positive producing strong returns in the second half of the period. High yield bonds returned 5.6% as the spread widened from 535 basis points to
594 basis points.
1
Part of this spread widening was offset by lower Treasury
bond interest rates, which fell from 3.5% to 2.2%. Equity returns, as measured by the Russell 2000, were slightly negative at 0.2%.
The spread between high yield and the 10-year Treasury, which rose sharply with the summer sell-off, rose from 535 basis points to briefly reach the high 800s on fears that European problems might cause a flight to
safety and possibly another recession in the United States.
1
Spreads narrowed
as investors regained confidence in the economy as the year progressed. Current spreads of 594 basis points remain much wider than the 400-500 basis points we would normally expect to see at this point in the credit cycle. Therefore, while the high
yield market continues to represent value to investors, further price appreciation is likely to be limited as the sector as a whole is trading above par. The difficulty in the market can be seen by the more volatile CCC-rated securities
underperforming, returning only 2.2% in the period
2
, compared with 6.8% from
the more conservative BB-rated names.
3
Corporate credit has been sound for the past couple of years, and we saw stable credit this period with the default rate steady
at 1.9%.
4
Note that this year’s default rate of 1.9% remains well below
the market’s 25-year average default rate of 4.2%.
5
Credit ratings agencies confirm the improving trend in corporate credit by upgrading 1.1 times as many high yield companies as
they downgraded in the past 12 months.
6
This means that credit is still
improving, albeit at a slower rate than before. We noted that companies reported generally good earnings through the fourth quarter of 2011, (the latest reporting period) however we saw some decline in the rate of improvement with more companies
reporting pressure on their costs.
Supply and demand was generally positive during the period and in the final six
months, high yield mutual funds continued to experience strong inflows. New issue volume was strong after a late summer pause, accelerating to an all time quarterly record of $96.8 billion, in the first quarter of 2012, above the previous record of
$81.8 billion posted in the second quarter of last year.
7
Overall with money
flooding into mutual funds, deals were oversubscribed and traded higher in the aftermarket. Traders report that there seems to be ample cash available for reasonably creditworthy names and report some challenges buying good quality paper in the
secondary market. The bulk of new issues are used to refinance debt which has the effect of improving credit quality by eliminating near term maturities.
OUTLOOK
Brookfield has been positive on the high yield market, noting the
robust credit quality, good corporate liquidity and excellent progress on the part of corporate treasurers in managing their debt structures. The high yield market agreed and returns were excellent. As these fundamentals remain in place, our outlook
for this asset class over the next 12 months or so remains positive.
However, we also believe that significant further potential upside
appreciation is limited due to the decline in spreads from 737 to 594 basis points, and with the return of the market above par. While normally we would expect the spread to be 100 to 150 basis points narrower than current levels, we note the
unusually depressed level of the benchmark treasury yields, which may be artificially depressed due to actions by the Federal Reserve.
2012 Annual Report
21
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
With the market trading at yield levels within 50 basis points of all time lows, our enthusiasm is somewhat tempered at this point.
Given our expectation of modest economic growth, modestly increasing defaults and no general recession, we believe that high yield investors are
adequately, but not generously compensated at current yield spread levels. While we would normally be targeting yield spreads of 400 to 500 basis points at this point in the credit cycle, we remain skeptical that the problems in Europe are
permanently addressed, and wonder if investors might not question the health of the United States’ balance sheet after the November election. With these risks outstanding we expect high yield investors will continue to demand a premium to
historical spreads, at least for the next few quarters. For investors seeking to clip the current coupon offered in the high yield market, the investment landscape remains attractive.
|
1
|
BofA Merrill Lynch U.S. High Yield Master II Index
|
|
2
|
BofA Merrill Lynch CCC & Lower U.S. High Yield Index
|
|
3
|
BofA Merrill Lynch BB U.S. High Yield Index
|
|
4
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 1
|
|
5
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 2
|
|
6
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 10
|
|
7
|
Credit Suisse “Leveraged Finance Strategy Update” April 2, 2012, p. 2.
|
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 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
The
Fund’s 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
Helios Multi-Sector High Income Fund, Inc. currently holds these securities.
The Barclays Capital U.S. Corporate High Yield Index
covers the U.S. dollar denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes
emerging markets debt. The Barclays Capital U.S. Corporate High Yield Index is part of the Barclays Capital U.S. Universal and Global High Yield Indices. 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.
The Fund may utilize leverage to seek to enhance the yield and net asset value of its common stock, through bank borrowings, issuance of short-term
debt securities or shares of preferred stock, or a combination thereof. However, these objectives cannot be achieved in all interest rate environments. While leverage may result in a higher yield for the Fund, the use of leverage involves risk,
including the potential for higher volatility of the NAV, fluctuations of dividends and other distributions paid by the Fund and the market price of the Fund’s common stock, among others. Certain funds may invest assets in securities of issuers
domiciled outside the United States, including issuers from emerging markets. Foreign investing involves special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other
developments.
Brookfield
Investment Management Inc.
22
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
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 March 31, 2012 and subject to change based on subsequent developments.
2012 Annual Report
23
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Portfolio Characteristics (Unaudited)
March 31, 2012
PORTFOLIO STATISTICS
|
|
|
|
|
Annualized dividend yield
1
|
|
8.40%
|
|
|
|
|
Weighted average coupon
|
|
7.96%
|
|
|
|
|
Weighted average life
|
|
5.28 years
|
|
|
|
|
Percentage of leveraged assets
|
|
29.82%
|
|
|
|
|
Total number of holdings
|
|
130
|
CREDIT QUALITY
|
|
|
|
|
|
|
BBB
|
|
|
3
|
%
|
|
|
|
|
BB
|
|
|
13
|
%
|
|
|
|
|
B
|
|
|
59
|
%
|
|
|
|
|
CCC
|
|
|
18
|
%
|
|
|
|
|
Unrated
|
|
|
2
|
%
|
|
|
|
|
Cash
|
|
|
5
|
%
|
|
Total
|
|
|
100
|
%
|
ASSET ALLOCATION
2
|
|
|
|
|
|
|
Investment Grade Corporate Bonds
|
|
|
4
|
%
|
|
|
|
|
High Yield Corporate Bonds
|
|
|
94
|
%
|
|
|
|
|
Common Stocks and Warrants
|
|
|
2
|
%
|
|
Total
|
|
|
100
|
%
|
|
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 the March 31, 2012 stock price.
|
|
2
|
Includes only invested assets; excludes cash.
|
Brookfield
Investment Management Inc.
24
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
INVESTMENT GRADE CORPORATE BONDS – 5.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific LLC
|
|
|
7.25
|
%
|
|
|
06/01/28
|
|
|
$
|
240
|
|
|
$
|
282,482
|
|
|
Georgia-Pacific LLC
|
|
|
7.38
|
|
|
|
12/01/25
|
|
|
|
285
|
|
|
|
347,630
|
|
|
Westlake Chemical Corp.
2
|
|
|
6.63
|
|
|
|
01/15/16
|
|
|
|
500
|
|
|
|
508,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $949,727)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,138,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer Natural Resources Co.
(Cost – $347,233)
|
|
|
6.65
|
|
|
|
03/15/17
|
|
|
|
400
|
|
|
|
457,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qwest Corp.
2
(Cost – $723,476)
|
|
|
6.88
|
|
|
|
09/15/33
|
|
|
|
1,000
|
|
|
|
990,000
|
|
|
Total INVESTMENT GRADE CORPORATE BONDS
(Cost – $2,020,436)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,586,181
|
|
|
HIGH YIELD CORPORATE BONDS – 124.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 17.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AK Steel Corp.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
790
|
|
|
|
762,350
|
|
|
Associated Materials LLC
2
|
|
|
9.13
|
|
|
|
11/01/17
|
|
|
|
600
|
|
|
|
583,500
|
|
|
Cascades, Inc.
2,6
|
|
|
7.75
|
|
|
|
12/15/17
|
|
|
|
625
|
|
|
|
625,000
|
|
|
FMG Resources August 2006 Pty Limited
3,4,6
|
|
|
6.88
|
|
|
|
04/01/22
|
|
|
|
300
|
|
|
|
292,500
|
|
|
Hexion US Finance Corp./Hexion Nova Scotia Finance
ULC
2
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
600
|
|
|
|
621,000
|
|
|
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
|
|
|
9.00
|
|
|
|
11/15/20
|
|
|
|
250
|
|
|
|
232,500
|
|
|
Huntsman International LLC
2
|
|
|
8.63
|
|
|
|
03/15/21
|
|
|
|
550
|
|
|
|
617,375
|
|
|
Ineos Group Holdings Limited
3,4,6
|
|
|
8.50
|
|
|
|
02/15/16
|
|
|
|
300
|
|
|
|
283,500
|
|
|
Ply Gem Industries, Inc.
2
|
|
|
8.25
|
|
|
|
02/15/18
|
|
|
|
600
|
|
|
|
603,750
|
|
|
Polymer Group Inc.
2
|
|
|
7.75
|
|
|
|
02/01/19
|
|
|
|
600
|
|
|
|
631,500
|
|
|
Solutia, Inc.
|
|
|
8.75
|
|
|
|
11/01/17
|
|
|
|
200
|
|
|
|
226,750
|
|
|
Steel Dynamics Inc.
2
|
|
|
7.63
|
|
|
|
03/15/20
|
|
|
|
675
|
|
|
|
730,687
|
|
|
Tembec Industries Inc.
2,6
|
|
|
11.25
|
|
|
|
12/15/18
|
|
|
|
625
|
|
|
|
662,500
|
|
|
Trimas Corp.
2
|
|
|
9.75
|
|
|
|
12/15/17
|
|
|
|
285
|
|
|
|
314,925
|
|
|
Verso Paper Holdings LLC/Verso Paper, Inc.
3,4
|
|
|
11.75
|
|
|
|
01/15/19
|
|
|
|
275
|
|
|
|
283,250
|
|
|
Xerium Technologies, Inc.
|
|
|
8.88
|
|
|
|
06/15/18
|
|
|
|
470
|
|
|
|
407,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $7,844,748)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,878,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Goods – 8.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAR Corp.
3,4
|
|
|
7.25
|
|
|
|
01/15/22
|
|
|
|
225
|
|
|
|
229,500
|
|
|
Berry Plastics Corp.
2
|
|
|
9.50
|
|
|
|
05/15/18
|
|
|
|
600
|
|
|
|
636,000
|
|
|
Building Materials Corp. of America
3,4
|
|
|
6.75
|
|
|
|
05/01/21
|
|
|
|
300
|
|
|
|
318,375
|
|
|
Crown Cork & Seal Co., Inc.
2
|
|
|
7.38
|
|
|
|
12/15/26
|
|
|
|
775
|
|
|
|
821,500
|
|
|
Owens-Illinois, Inc.
|
|
|
7.80
|
|
|
|
05/15/18
|
|
|
|
475
|
|
|
|
533,188
|
|
|
Terex Corp.
|
|
|
6.50
|
|
|
|
04/01/20
|
|
|
|
200
|
|
|
|
201,500
|
|
|
Terex Corp.
2
|
|
|
8.00
|
|
|
|
11/15/17
|
|
|
|
400
|
|
|
|
414,000
|
|
|
USG Corp.
2
|
|
|
9.75
|
|
|
|
01/15/18
|
|
|
|
675
|
|
|
|
669,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Goods
(Cost – $3,572,624)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,824,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
25
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Cyclical – 19.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ace Hardware Corp.
3,4
|
|
|
9.13
|
%
|
|
|
06/01/16
|
|
|
$
|
500
|
|
|
$
|
526,250
|
|
|
American Axle & Manufacturing, Inc.
|
|
|
7.75
|
|
|
|
11/15/19
|
|
|
|
275
|
|
|
|
293,563
|
|
|
American Axle & Manufacturing, Inc.
2
|
|
|
7.88
|
|
|
|
03/01/17
|
|
|
|
550
|
|
|
|
567,875
|
|
|
Caesars Operating Escrow LLC/Caesars Escrow Corp.
3,4
|
|
|
8.50
|
|
|
|
02/15/20
|
|
|
|
225
|
|
|
|
228,938
|
|
|
CityCenter Holdings LLC/City Center Finance Corp.
2
|
|
|
7.63
|
|
|
|
01/15/16
|
|
|
|
600
|
|
|
|
633,000
|
|
|
Dine Equity Inc.
2
|
|
|
9.50
|
|
|
|
10/30/18
|
|
|
|
600
|
|
|
|
657,000
|
|
|
Ford Motor Co.
|
|
|
6.50
|
|
|
|
08/01/18
|
|
|
|
525
|
|
|
|
569,625
|
|
|
Jaguar Land Rover PLC
3,4,6
|
|
|
8.13
|
|
|
|
05/15/21
|
|
|
|
325
|
|
|
|
333,125
|
|
|
Levi Strauss & Co.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
675
|
|
|
|
713,812
|
|
|
Limited Brands Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
250
|
|
|
|
295,625
|
|
|
McJunkin Red Man Corp.
|
|
|
9.50
|
|
|
|
12/15/16
|
|
|
|
525
|
|
|
|
572,250
|
|
|
MGM Resorts International
2
|
|
|
7.63
|
|
|
|
01/15/17
|
|
|
|
625
|
|
|
|
645,313
|
|
|
MGM Resorts International
3,4
|
|
|
8.63
|
|
|
|
02/01/09
|
|
|
|
200
|
|
|
|
214,500
|
|
|
MTR Gaming Group, Inc.
|
|
|
11.50
|
|
|
|
08/01/19
|
|
|
|
191
|
|
|
|
189,040
|
|
|
Niska Gas Storage US LLC/Niska Gas Storage Canada ULC
|
|
|
8.88
|
|
|
|
03/15/18
|
|
|
|
600
|
|
|
|
564,000
|
|
|
Pharmaceutical Product Development, Inc.
3,4
|
|
|
9.50
|
|
|
|
12/01/19
|
|
|
|
375
|
|
|
|
406,875
|
|
|
Pittsburgh Glass Works LLC
3,4
|
|
|
8.50
|
|
|
|
04/15/16
|
|
|
|
140
|
|
|
|
139,300
|
|
|
Sally Holdings LLC/Sally Capital, Inc.
3,4
|
|
|
6.88
|
|
|
|
11/15/19
|
|
|
|
250
|
|
|
|
266,250
|
|
|
Tenneco Inc.
2
|
|
|
6.88
|
|
|
|
12/15/20
|
|
|
|
625
|
|
|
|
671,875
|
|
|
The Neiman Marcus Group Inc.
2
|
|
|
10.38
|
|
|
|
10/15/15
|
|
|
|
300
|
|
|
|
312,378
|
|
|
Visteon Corp.
|
|
|
6.75
|
|
|
|
04/15/19
|
|
|
|
95
|
|
|
|
96,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Cyclical
(Cost – $8,264,782)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,897,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Cyclical – 15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCO Brands Corp.
2
|
|
|
10.63
|
|
|
|
03/15/15
|
|
|
|
550
|
|
|
|
600,193
|
|
|
American Reprographics Co.
2
|
|
|
10.50
|
|
|
|
12/15/16
|
|
|
|
600
|
|
|
|
594,000
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
2
|
|
|
8.25
|
|
|
|
01/15/19
|
|
|
|
625
|
|
|
|
651,562
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
|
|
|
9.75
|
|
|
|
03/15/20
|
|
|
|
175
|
|
|
|
191,188
|
|
|
B&G Foods, Inc.
2
|
|
|
7.63
|
|
|
|
01/15/18
|
|
|
|
675
|
|
|
|
724,781
|
|
|
C&S Group Enterprises LLC
3,4
|
|
|
8.38
|
|
|
|
05/01/17
|
|
|
|
540
|
|
|
|
568,350
|
|
|
Cenveo Corp.
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
275
|
|
|
|
261,250
|
|
|
Deluxe Corp.
2
|
|
|
7.38
|
|
|
|
06/01/15
|
|
|
|
500
|
|
|
|
513,750
|
|
|
Iron Mountain Inc.
2
|
|
|
8.38
|
|
|
|
08/15/21
|
|
|
|
275
|
|
|
|
299,063
|
|
|
Iron Mountain Inc.
2
|
|
|
8.75
|
|
|
|
07/15/18
|
|
|
|
575
|
|
|
|
596,563
|
|
|
Reynolds Group Issuer LLC
2,3,4
|
|
|
9.00
|
|
|
|
04/15/19
|
|
|
|
515
|
|
|
|
507,275
|
|
|
Rite Aid Corp.
2
|
|
|
9.75
|
|
|
|
06/12/16
|
|
|
|
275
|
|
|
|
304,563
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
|
|
|
8.25
|
|
|
|
02/01/21
|
|
|
|
350
|
|
|
|
372,750
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
2
|
|
|
10.25
|
|
|
|
11/15/19
|
|
|
|
275
|
|
|
|
308,000
|
|
|
Service Corp. International
2
|
|
|
6.75
|
|
|
|
04/01/16
|
|
|
|
750
|
|
|
|
811,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Non-Cyclical
(Cost – $6,974,351)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,305,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 25.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch Coal Inc.
2
|
|
|
8.75
|
|
|
|
08/01/16
|
|
|
|
675
|
|
|
|
708,750
|
|
|
BreitBurn Energy Partners LP/BreitBurn Finance Corp.
2
|
|
|
8.63
|
|
|
|
10/15/20
|
|
|
|
600
|
|
|
|
637,500
|
|
|
Calfrac Holdings LP
2,3,4
|
|
|
7.50
|
|
|
|
12/01/20
|
|
|
|
600
|
|
|
|
603,000
|
|
|
Chaparral Energy, Inc.
2
|
|
|
8.88
|
|
|
|
02/01/17
|
|
|
|
600
|
|
|
|
627,000
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
26
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consol Energy Inc.
2
|
|
|
8.25
|
%
|
|
|
04/01/20
|
|
|
$
|
750
|
|
|
$
|
783,750
|
|
|
Crosstex Energy LP/Crosstex Energy Finance Corp.
2
|
|
|
8.88
|
|
|
|
02/15/18
|
|
|
|
550
|
|
|
|
584,375
|
|
|
EV Energy Partners LP/EV Energy Finance Corp.
|
|
|
8.00
|
|
|
|
04/15/19
|
|
|
|
625
|
|
|
|
640,625
|
|
|
FTS International Services LLC/FTS International Bonds, Inc.
2,3,4
|
|
|
7.88
|
|
|
|
11/15/18
|
|
|
|
390
|
|
|
|
407,550
|
|
|
Frontier Oil Corp.
2
|
|
|
8.50
|
|
|
|
09/15/16
|
|
|
|
675
|
|
|
|
717,187
|
|
|
GMX Resources Inc.
2,3,4,7
|
|
|
11.00
|
|
|
|
12/01/17
|
|
|
|
225
|
|
|
|
187,875
|
|
|
Hercules Offshore, Inc.
2,3,4
|
|
|
10.50
|
|
|
|
10/15/17
|
|
|
|
375
|
|
|
|
392,813
|
|
|
Hilcorp Energy I LP/Hilcorp Finance Co.
2,3,4
|
|
|
8.00
|
|
|
|
02/15/20
|
|
|
|
675
|
|
|
|
729,000
|
|
|
Key Energy Services Inc.
|
|
|
6.75
|
|
|
|
03/01/21
|
|
|
|
375
|
|
|
|
385,312
|
|
|
Linn Energy LLC/Linn Energy Finance Corp.
2
|
|
|
8.63
|
|
|
|
04/15/20
|
|
|
|
660
|
|
|
|
711,150
|
|
|
Petroleum Geo-Services ASA
3,4,6
|
|
|
7.38
|
|
|
|
12/15/18
|
|
|
|
275
|
|
|
|
286,000
|
|
|
Plains Exploration & Production Co.
2
|
|
|
7.63
|
|
|
|
06/01/18
|
|
|
|
675
|
|
|
|
717,188
|
|
|
Precision Drilling Corp.
6
|
|
|
6.63
|
|
|
|
11/15/20
|
|
|
|
225
|
|
|
|
235,688
|
|
|
Quick silver Resources, Inc.
2
|
|
|
11.75
|
|
|
|
01/01/16
|
|
|
|
375
|
|
|
|
396,562
|
|
|
SESI LLC
2
|
|
|
6.88
|
|
|
|
06/01/14
|
|
|
|
500
|
|
|
|
501,250
|
|
|
Trinidad Drilling LTD
2,3,4,6
|
|
|
7.88
|
|
|
|
01/15/19
|
|
|
|
625
|
|
|
|
664,844
|
|
|
Venoco, Inc.
|
|
|
8.88
|
|
|
|
02/15/19
|
|
|
|
600
|
|
|
|
549,000
|
|
|
W&T Offshore, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
220
|
|
|
|
232,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
(Cost – $11,386,184)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,699,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance & Investment – 4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FireKeepers Development Authority
2,3,4
|
|
|
13.88
|
|
|
|
05/01/15
|
|
|
|
500
|
|
|
|
556,250
|
|
|
Ineos Finance PLC
3,4,6
|
|
|
9.00
|
|
|
|
05/15/15
|
|
|
|
325
|
|
|
|
344,906
|
|
|
Marina District Finance Co., Inc.
|
|
|
9.88
|
|
|
|
08/15/18
|
|
|
|
600
|
|
|
|
538,500
|
|
|
Masonite International Corp.
3,4,6
|
|
|
8.25
|
|
|
|
04/15/21
|
|
|
|
625
|
|
|
|
650,000
|
|
|
Motors Liquidation Co.
8
|
|
|
7.13
|
|
|
|
07/15/13
|
|
|
|
250
|
|
|
|
3,750
|
|
|
Motors Liquidation Co.
2,8
|
|
|
8.38
|
|
|
|
07/15/33
|
|
|
|
1,500
|
|
|
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Finance & Investment
(Cost – $2,033,421)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,115,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media – 5.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corp.
2
|
|
|
8.63
|
|
|
|
09/15/17
|
|
|
|
750
|
|
|
|
816,562
|
|
|
CCO Holdings LLC/Cap Corp.
2
|
|
|
8.13
|
|
|
|
04/30/20
|
|
|
|
675
|
|
|
|
749,250
|
|
|
Insight Communications, Inc.
3,4
|
|
|
9.38
|
|
|
|
07/15/18
|
|
|
|
443
|
|
|
|
506,128
|
|
|
Mediacom LLC/Mediacom Capital Corp.
2
|
|
|
9.13
|
|
|
|
08/15/19
|
|
|
|
600
|
|
|
|
651,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Media
(Cost – $2,551,361)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,723,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate – 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realogy Corp.
3,4
(Cost – $562,008)
|
|
|
7.88
|
|
|
|
02/15/19
|
|
|
|
625
|
|
|
|
625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Cyclical – 9.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMC Entertainment Inc.
2
|
|
|
8.75
|
|
|
|
06/01/19
|
|
|
|
600
|
|
|
|
628,500
|
|
|
Beazer Homes USA, Inc.
2
|
|
|
9.13
|
|
|
|
06/15/18
|
|
|
|
275
|
|
|
|
240,281
|
|
|
Easton-Bell Sports Inc.
2
|
|
|
9.75
|
|
|
|
12/01/16
|
|
|
|
525
|
|
|
|
580,781
|
|
|
Caesars Entertainment Operating Co., Inc.
2
|
|
|
11.25
|
|
|
|
06/01/17
|
|
|
|
500
|
|
|
|
545,000
|
|
|
K Hovnanian Enterprises Inc.
2
|
|
|
10.63
|
|
|
|
10/15/16
|
|
|
|
600
|
|
|
|
542,250
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
27
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palace Entertainment Holdings LLC/Palace Entertainment Holdings Corp.
3,4
|
|
|
8.88
|
%
|
|
|
04/15/17
|
|
|
$
|
600
|
|
|
$
|
623,250
|
|
|
Pulte Group, Inc.
|
|
|
6.38
|
|
|
|
05/15/33
|
|
|
|
600
|
|
|
|
483,000
|
|
|
Standard Pacific Corp.
2
|
|
|
8.38
|
|
|
|
05/15/18
|
|
|
|
675
|
|
|
|
718,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Cyclical
(Cost – $4,240,936)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,361,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Non-Cyclical – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCA, Inc.
2
|
|
|
8.00
|
|
|
|
10/01/18
|
|
|
|
625
|
|
|
|
681,250
|
|
|
Health Management Associates Inc.
3,4
|
|
|
7.38
|
|
|
|
01/15/20
|
|
|
|
300
|
|
|
|
306,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Non-Cyclical
(Cost – $934,250)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
987,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Electronics – 2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Data Corp.
2,3,4
|
|
|
8.25
|
|
|
|
01/15/21
|
|
|
|
600
|
|
|
|
586,500
|
|
|
First Data Corp.
|
|
|
9.88
|
|
|
|
09/24/15
|
|
|
|
61
|
|
|
|
61,305
|
|
|
Freescale Semiconductor, Inc.
2,3,4
|
|
|
9.25
|
|
|
|
04/15/18
|
|
|
|
550
|
|
|
|
602,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Technology & Electronics
(Cost – $1,184,674)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 9.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati Bell Inc.
2
|
|
|
8.25
|
|
|
|
10/15/17
|
|
|
|
265
|
|
|
|
270,631
|
|
|
Cincinnati Bell Inc.
2
|
|
|
8.38
|
|
|
|
10/15/20
|
|
|
|
285
|
|
|
|
286,425
|
|
|
Clear Channel Communications, Inc.
|
|
|
9.00
|
|
|
|
03/01/21
|
|
|
|
600
|
|
|
|
540,000
|
|
|
Frontier Communications Corp.
2
|
|
|
7.13
|
|
|
|
03/15/19
|
|
|
|
1,050
|
|
|
|
1,052,625
|
|
|
inVentiv Health, Inc.
3,4
|
|
|
10.00
|
|
|
|
08/15/18
|
|
|
|
245
|
|
|
|
221,725
|
|
|
Level 3 Financing, Inc.
3,4
|
|
|
8.63
|
|
|
|
07/15/20
|
|
|
|
600
|
|
|
|
630,000
|
|
|
PAETEC Holding Corp.
|
|
|
9.88
|
|
|
|
12/01/18
|
|
|
|
375
|
|
|
|
423,750
|
|
|
Windstream Corp.
2
|
|
|
7.00
|
|
|
|
03/15/19
|
|
|
|
1,000
|
|
|
|
1,020,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $4,342,456)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,445,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility – 3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calpine Corp.
2,3,4
|
|
|
7.25
|
|
|
|
10/15/17
|
|
|
|
550
|
|
|
|
583,000
|
|
|
Edison Mission Energy
|
|
|
7.00
|
|
|
|
05/15/17
|
|
|
|
275
|
|
|
|
173,250
|
|
|
Mueller Water Products, Inc.
|
|
|
7.38
|
|
|
|
06/01/17
|
|
|
|
400
|
|
|
|
394,000
|
|
|
NRG Energy, Inc.
2
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
675
|
|
|
|
680,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Utility
(Cost – $1,827,619)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,830,312
|
|
|
Total HIGH YIELD CORPORATE BONDS
(Cost – $55,719,414)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,942,526
|
|
|
TERM LOAN – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas Competitive Electric Holdings LLC
1,4
(Cost – $234,698)
|
|
|
4.74
|
|
|
|
04/10/12
|
|
|
|
286
|
|
|
|
158,751
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
28
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
COMMON STOCKS – 1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
(Cost – $338,441)
|
|
|
|
|
|
|
7,115
|
|
|
$
|
182,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials – 1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corp.
(Cost – $309,392)
|
|
|
|
|
|
|
30,900
|
|
|
|
432,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frontier Communications Corp.
|
|
|
|
|
|
|
17,743
|
|
|
|
73,988
|
|
|
Windstream Corp.
|
|
|
|
|
|
|
9,200
|
|
|
|
107,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $285,725)
|
|
|
|
|
|
|
|
|
|
|
181,720
|
|
|
Total COMMON STOCKS
(Cost – $933,558)
|
|
|
|
|
|
|
|
|
|
|
797,129
|
|
|
WARRANTS – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration: July 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Price: $10.00
|
|
|
|
|
|
|
6,469
|
|
|
|
107,579
|
|
|
General Motors Company
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration: July 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Price: $18.33
|
|
|
|
|
|
|
6,469
|
|
|
|
72,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
(Cost – $384,117)
|
|
|
|
|
|
|
|
|
|
|
180,032
|
|
|
Total WARRANTS
(Cost – $384,117)
|
|
|
|
|
|
|
|
|
|
|
180,032
|
|
|
Total Investments – 132.7%
(Cost – $59,292,223)
|
|
|
|
|
|
|
|
|
|
|
61,664,619
|
|
|
Liabilities in Excess of Other Assets – (32.7)%
|
|
|
|
|
|
|
|
|
|
|
(15,181,433
|
)
|
|
|
|
|
|
|
|
Total NET ASSETS – 100.0%
|
|
|
|
|
|
|
|
|
|
$
|
46,483,186
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
29
HELIOS STRATEGIC INCOME FUND, INC.
OBJECTIVE & STRATEGY
Helios Strategic Income Fund, Inc. seeks a high
level of current income. The Fund seeks capital growth as a secondary investment objective when consistent with its primary investment objective. The Fund invests in a diversified portfolio of securities that offers attractive yield and capital
appreciation potential and consists primarily of debt securities and secondarily of equity securities. The Advisor will continually analyze the markets for income-producing securities and will periodically reallocate the Fund’s investments
among various fixed-income and equity asset classes and between investment grade and below-investment grade debt securities to pursue its investment objectives. As a result, a majority of the Fund’s total assets may be invested in investment
grade securities at some times and in below-investment grade debt securities at other times. The Fund invests in a wide range of debt securities, including corporate bonds, mortgage-backed and asset-backed securities, and municipal and foreign
government obligations, as well as securities of companies in bankruptcy reorganization proceedings or otherwise in the process of debt restructuring. The Fund also invests in other securities providing the potential for high income or a combination
of high income and capital growth. (Below-investment grade debt securities are rated Ba1 or lower by Moody’s Investors Service, Inc., BB+ or lower by Standard & Poor’s Ratings Group, comparably rated by another nationally
recognized statistical rating organization or, if unrated, determined by the Fund’s investment advisor to be of comparable quality.) The Fund may use leverage through bank borrowings, reverse repurchase agreements or other transactions
involving indebtedness or through the issuance of preferred shares. The Fund may leverage up to one third of its total assets (in each case including the amount borrowed.) The Fund may vary its use of leverage in response to changing market
conditions.
Investment Risks:
Investors in any bond fund should anticipate fluctuations in price. Bond prices and the value of
bond funds decline as interest rates rise. Bonds with longer-term maturities generally are more vulnerable to interest rate risk than bonds with shorter-term maturities. Below-investment grade bonds involve greater credit downturn or period of
rising interest rates could adversely affect the ability of issuers, especially issuers of below-investment grade debt, to service primary obligations and an unanticipated default could cause the Fund to experience a reduction in value of its
shares. The Fund’s investments in mortgage-backed or asset-backed securities that are “subordinated” to other interests in the same pool may increase credit risk to the extent that the Fund, as a holder of those securities, may only
receive payments after the pools’ obligations to other investors have been satisfied. Below-investment grade bonds are subject to greater price volatility and are less liquid, especially during periods of economic uncertainty or change, than
higher-rated debt securities. The value of U.S. and foreign equity securities in which the Fund invests will change based on changes in a company’s financial condition and in overall market and economic conditions. Leverage creates an
opportunity for an increased return to common stockholders, but unless the income and capital appreciation, if any, on securities acquired with leverage proceeds exceed the costs of the leverage, the use of leverage will diminish the net investment
performance of the Fund’s shares. Use of leverage also may increase the likelihood that the net asset value of the Fund and market value of its common shares will be more volatile, and the yield and total return to common stockholders will tend
to fluctuate more in response to changes in interest rates and creditworthiness.
MANAGEMENT DISCUSSION OF
FUND PERFORMANCE
For the fiscal year ended March 31, 2012, Helios Strategic Income Fund, Inc. (NYSE: HSA) had a total return
based on net asset value of 16.52% and a total return based on market price of 20.55%, which assumes the reinvestment of dividends and is exclusive of brokerage commissions. Based on the NYSE closing price of $5.94 on March 31, 2012, the
Fund’s shares had a dividend yield of 7.07%. The dividend yield is calculated as the annualized amount of the reporting period’s most recent monthly dividend declared divided by the stated stock price.
Individual contributors of performance included Anheuser-Busch, Dow Chemical and a CMBS security. Anheuser-Busch is an international beer company
that experienced strong business trends. Dow Chemical is a chemical company that has successfully integrated its acquisition of Rohm & Haas and reduced debt. A CMBS security, Bear Stearns Commercial Mortgage Series 2007 also contributed to
the Fund’s performance as the security and the Fund’s overall CMBS allocation benefitted from a decline in benchmark interest rates and tightening yield spreads over the period.
Brookfield
Investment Management Inc.
30
HELIOS STRATEGIC INCOME FUND, INC.
Detractors of performance included Sprint Capital, GMX Resources and Clear Channel Communications. Sprint Capital is a wireless telecommunications service provider that announced a major network expansion financed
with debt. GMX Resources is an oil and gas producer that completed a distressed bond exchange. Clear Channel Communications is an outdoor advertising company that has yet to experience a recovery in its end markets.
HIGH YIELD MARKET ENVIRONMENT
The high yield market delivered modest, yet positive returns for the 12-month period ended March 31, 2012. Early in the period, markets corrected lower as, for the second year in a row, investors took a
negative view beginning in May 2011 regarding the health of European peripheral countries, namely Greece. Following a challenging summer, markets turned decidedly positive producing strong returns in the second half of the period. High yield bonds
returned 5.6% as the spread widened from 535 basis points to 594 basis
points.
1
Part of this spread widening was offset by lower Treasury bond
interest rates, which fell from 3.5% to 2.2%. Equity returns, as measured by the Russell 2000, were slightly negative at 0.2%.
The spread between high yield and the 10-year Treasury, which rose sharply with the summer sell-off, rose from 535 basis points to briefly reach the high 800s on fears that European problems might cause a flight to
safety and possibly another recession in the United States.
1
Spreads narrowed
as investors regained confidence in the economy as the year progressed. Current spreads of 594 basis points remain much wider than the 400-500 basis points we would normally expect to see at this point in the credit cycle. Therefore, while the high
yield market continues to represent value to investors, further price appreciation is likely to be limited as the sector as a whole is trading above par. The difficulty in the market can be seen by the more volatile CCC-rated securities
underperforming, returning only 2.2% in the period
2
, compared with 6.8% from
the more conservative BB-rated names.
3
Corporate credit has been sound for the past couple of years, and we saw stable credit this period with the default rate steady
at 1.9%.
4
Note that this year’s default rate of 1.9% remains well below
the market’s 25-year average default rate of 4.2%.
5
Credit ratings agencies confirm the improving trend in corporate credit by upgrading 1.1 times as many high yield companies as
they downgraded in the past 12 months.
6
This means that credit is still
improving, albeit at a slower rate than before. We noted that companies reported generally good earnings through the fourth quarter of 2011, (the latest reporting period) however we saw some decline in the rate of improvement with more companies
reporting pressure on their costs.
Supply and demand was generally positive during the period and in the final six
months, high yield mutual funds continued to experience strong inflows. New issue volume was strong after a late summer pause, accelerating to an all time quarterly record of $96.8 billion, in the first quarter of 2012, above the previous record of
$81.8 billion posted in the second quarter of last year.
7
Overall with money
flooding into mutual funds, deals were oversubscribed and traded higher in the aftermarket. Traders report that there seems to be ample cash available for reasonably creditworthy names and report some challenges buying good quality paper in the
secondary market. The bulk of new issues are used to refinance debt which has the effect of improving credit quality by eliminating near term maturities.
OUTLOOK
Brookfield has been positive on the high yield market, noting the
robust credit quality, good corporate liquidity and excellent progress on the part of corporate treasurers in managing their debt structures. The high yield market agreed and returns were excellent. As these fundamentals remain in place, our outlook
for this asset class over the next 12 months or so remains positive.
However, we also believe that significant further potential upside
appreciation is limited due to the decline in spreads from 737 to 594 basis points, and with the return of the market above par. While normally we would expect the spread to be 100 to 150 basis points narrower than current levels, we note the
unusually depressed level of the benchmark treasury yields, which may be artificially depressed due to actions by the Federal Reserve.
2012 Annual Report
31
HELIOS STRATEGIC INCOME FUND, INC.
With the market trading at yield levels within 50 basis points of all time lows, our enthusiasm is somewhat tempered at this point.
Given our expectation of modest economic growth, modestly increasing defaults and no general recession, we believe that high yield investors are
adequately, but not generously compensated at current yield spread levels. While we would normally be targeting yield spreads of 400 to 500 basis points at this point in the credit cycle, we remain skeptical that the problems in Europe are
permanently addressed, and wonder if investors might not question the health of the United States’ balance sheet after the November election. With these risks outstanding we expect high yield investors will continue to demand a premium to
historical spreads, at least for the next few quarters. For investors seeking to clip the current coupon offered in the high yield market, the investment landscape remains attractive.
|
1
|
BofA Merrill Lynch U.S. High Yield Master II Index
|
|
2
|
BofA Merrill Lynch CCC & Lower U.S. High Yield Index
|
|
3
|
BofA Merrill Lynch BB U.S. High Yield Index
|
|
4
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 1
|
|
5
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 2
|
|
6
|
JP Morgan, High Yield Default Monitor, April 2, 2012 p. 10
|
|
7
|
Credit Suisse “Leveraged Finance Strategy Update” April 2, 2012, p. 2.
|
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 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
The
Fund’s 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
Helios Strategic Income Fund, Inc. currently holds these securities.
The Barclays Capital U.S. Corporate High Yield Index covers the
U.S. dollar denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging markets
debt. The Barclays Capital U.S. Corporate High Yield Index is part of the Barclays Capital U.S. Universal and Global High Yield Indices. 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.
The Fund may utilize leverage to seek to enhance the yield and net asset value of its common stock, through bank borrowings, issuance of short-term debt securities or shares of preferred stock, or a combination
thereof. However, these objectives cannot be achieved in all interest rate environments. While leverage may result in a higher yield for the Fund, the use of leverage involves risk, including the potential for higher volatility of the NAV,
fluctuations of dividends and other distributions paid by the Fund and the market price of the Fund’s common stock, among others. Certain funds may invest assets in securities of issuers domiciled outside the United States, including issuers
from emerging markets. Foreign investing involves special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments.
Brookfield
Investment Management Inc.
32
HELIOS STRATEGIC INCOME FUND, INC.
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 March 31, 2012 and subject to change based on subsequent developments.
2012 Annual Report
33
HELIOS STRATEGIC INCOME FUND, INC.
Portfolio Characteristics (Unaudited)
March 31, 2012
PORTFOLIO STATISTICS
|
|
|
|
|
Annualized dividend yield
1
|
|
7.07%
|
|
|
|
|
Weighted average coupon
|
|
7.61%
|
|
|
|
|
Weighted average life
|
|
5.63 years
|
|
|
|
|
Percentage of leveraged assets
|
|
28.84%
|
|
|
|
|
Total number of holdings
|
|
127
|
CREDIT QUALITY
|
|
|
|
|
|
|
BBB
|
|
|
29
|
%
|
|
|
|
|
BB
|
|
|
6
|
%
|
|
|
|
|
B
|
|
|
42
|
%
|
|
|
|
|
CCC
|
|
|
14
|
%
|
|
|
|
|
Unrated
|
|
|
6
|
%
|
|
|
|
|
Cash
|
|
|
3
|
%
|
|
Total
|
|
|
100
|
%
|
ASSET ALLOCATION
2
|
|
|
|
|
|
|
Commercial Mortgage-Backed Securities
|
|
|
16
|
%
|
|
|
|
|
Investment Grade Corporate Bonds
|
|
|
15
|
%
|
|
|
|
|
High Yield Corporate Bonds
|
|
|
63
|
%
|
|
|
|
|
Common Stocks and Warrants
|
|
|
6
|
%
|
|
Total
|
|
|
100
|
%
|
|
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 the March 31, 2012 stock price.
|
|
2
|
Includes only invested assets; excludes cash.
|
Brookfield
Investment Management Inc.
34
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
COMMERCIAL MORTGAGE-BACKED SECURITIES – 20.9%
|
|
|
Bear Stearns Commercial Mortgage Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series 2006-PW14, Class A4
|
|
|
5.20
|
%
|
|
|
12/11/38
|
|
|
$
|
625
|
|
|
$
|
702,642
|
|
|
Series 2007-T28, Class A4
|
|
|
5.74
|
|
|
|
09/11/42
|
|
|
|
670
|
|
|
|
774,090
|
|
|
Citigroup/Deutsche Bank Commercial Mortgage Trust
Series 2007-CD4, Class A4
|
|
|
5.32
|
|
|
|
12/11/49
|
|
|
|
1,000
|
|
|
|
1,093,838
|
|
|
Commercial Mortgage Pass Through Certificates
Series 2007-C9, Class A4
1
|
|
|
6.01
|
|
|
|
12/10/49
|
|
|
|
500
|
|
|
|
573,773
|
|
|
Greenwich Capital Commercial Funding Corp.
Series 2007-GG9, Class A4
|
|
|
5.44
|
|
|
|
03/10/39
|
|
|
|
1,000
|
|
|
|
1,100,420
|
|
|
JP Morgan Chase Commercial Mortgage Securities Corp.
Series 2006-LDP7, Class A4
1
|
|
|
5.87
|
|
|
|
04/15/45
|
|
|
|
650
|
|
|
|
739,198
|
|
|
LB-UBS Commercial Mortgage Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series 2006-C1, Class A4
|
|
|
5.16
|
|
|
|
02/15/31
|
|
|
|
670
|
|
|
|
745,426
|
|
|
Series 2006-C6, Class A4
|
|
|
5.37
|
|
|
|
09/15/39
|
|
|
|
670
|
|
|
|
756,613
|
|
|
Morgan Stanley Capital I
Series 2007-T27, Class A4
1
|
|
|
5.64
|
|
|
|
06/11/42
|
|
|
|
660
|
|
|
|
758,746
|
|
|
Wachovia Bank Commercial Mortgage Trust
Series 2007-C30, Class A5
|
|
|
5.34
|
|
|
|
12/15/43
|
|
|
|
890
|
|
|
|
960,959
|
|
|
Total COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost – $7,897,756)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,205,705
|
|
|
INVESTMENT GRADE CORPORATE BONDS – 19.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alcoa, Inc.
2
|
|
|
5.55
|
|
|
|
02/01/17
|
|
|
|
1,000
|
|
|
|
1,098,523
|
|
|
ArcelorMittal
2,6
|
|
|
6.13
|
|
|
|
06/01/18
|
|
|
|
500
|
|
|
|
525,353
|
|
|
The Dow Chemical Co.
2
|
|
|
5.70
|
|
|
|
05/15/18
|
|
|
|
1,000
|
|
|
|
1,157,504
|
|
|
Westlake Chemical Corp.
2
|
|
|
6.63
|
|
|
|
01/15/16
|
|
|
|
500
|
|
|
|
508,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $2,705,717)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,290,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Goods – 1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tyco Electronics Group S.A.
2,6
(Cost – $470,052)
|
|
|
6.55
|
|
|
|
10/01/17
|
|
|
|
500
|
|
|
|
591,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Cyclical – 0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Game Technology
(Cost – $287,477)
|
|
|
7.50
|
|
|
|
06/15/19
|
|
|
|
250
|
|
|
|
292,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Cyclical – 5.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Altria Group, Inc.
2
|
|
|
9.70
|
|
|
|
11/10/18
|
|
|
|
500
|
|
|
|
679,413
|
|
|
Anheuser-Busch InBev Worldwide, Inc.
2
|
|
|
7.75
|
|
|
|
01/15/19
|
|
|
|
1,000
|
|
|
|
1,304,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Non-Cyclical
(Cost – $1,578,205)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,983,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media – 1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Warner Cable, Inc.
2
(Cost – $497,326)
|
|
|
8.25
|
|
|
|
04/01/19
|
|
|
|
500
|
|
|
|
639,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
35
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
Telecommunications – 2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qwest Corp.
2
(Cost – $965,731)
|
|
|
6.88
|
%
|
|
|
09/15/33
|
|
|
$
|
1,000
|
|
|
$
|
990,000
|
|
|
Total INVESTMENT GRADE CORPORATE BONDS
(Cost – $6,504,508)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,788,378
|
|
|
HIGH YIELD CORPORATE BONDS – 85.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Industry – 9.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AK Steel Corp.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
200
|
|
|
|
193,000
|
|
|
Associated Materials LLC
2
|
|
|
9.13
|
|
|
|
11/01/17
|
|
|
|
500
|
|
|
|
486,250
|
|
|
Cascades, Inc.
2,6
|
|
|
7.88
|
|
|
|
01/15/20
|
|
|
|
525
|
|
|
|
518,437
|
|
|
FMG Resources August 2006 Pty Limited
3,4,6
|
|
|
6.88
|
|
|
|
04/01/22
|
|
|
|
400
|
|
|
|
390,000
|
|
|
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
2
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
600
|
|
|
|
621,000
|
|
|
Ineos Group Holdings Limited
3,4,6
|
|
|
8.50
|
|
|
|
02/15/16
|
|
|
|
250
|
|
|
|
236,250
|
|
|
Ply Gem Industries, Inc.
|
|
|
8.25
|
|
|
|
02/15/18
|
|
|
|
245
|
|
|
|
246,531
|
|
|
Solutia, Inc.
|
|
|
8.75
|
|
|
|
11/01/17
|
|
|
|
175
|
|
|
|
198,406
|
|
|
Trimas Corp.
2
|
|
|
9.75
|
|
|
|
12/15/17
|
|
|
|
245
|
|
|
|
270,725
|
|
|
Verso Paper Holdings LLC/Verso Paper, Inc.
3,4
|
|
|
11.75
|
|
|
|
01/15/19
|
|
|
|
225
|
|
|
|
231,750
|
|
|
Xerium Technologies, Inc.
|
|
|
8.88
|
|
|
|
06/15/18
|
|
|
|
395
|
|
|
|
342,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic Industry
(Cost – $3,779,575)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,735,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Goods – 5.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Berry Plastics Corp.
2
|
|
|
9.50
|
|
|
|
05/15/18
|
|
|
|
500
|
|
|
|
530,000
|
|
|
Building Materials Corp. of America
3,4
|
|
|
6.75
|
|
|
|
05/01/21
|
|
|
|
150
|
|
|
|
159,187
|
|
|
Crown Cork & Seal Co., Inc.
2
|
|
|
7.38
|
|
|
|
12/15/26
|
|
|
|
500
|
|
|
|
530,000
|
|
|
Owens-Illinois, Inc.
2
|
|
|
7.80
|
|
|
|
05/15/18
|
|
|
|
400
|
|
|
|
449,000
|
|
|
Terex Corp.
|
|
|
6.50
|
|
|
|
04/01/20
|
|
|
|
200
|
|
|
|
201,500
|
|
|
Terex Corp.
2
|
|
|
8.00
|
|
|
|
11/15/17
|
|
|
|
325
|
|
|
|
336,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Goods
(Cost – $2,023,820)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,206,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Cyclical – 12.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACE Hardware Corp.
2,3,4
|
|
|
9.13
|
|
|
|
06/01/16
|
|
|
|
500
|
|
|
|
526,250
|
|
|
American Axle & Manufacturing, Inc.
|
|
|
7.75
|
|
|
|
11/15/19
|
|
|
|
175
|
|
|
|
186,812
|
|
|
American Axle & Manufacturing, Inc.
2
|
|
|
7.88
|
|
|
|
03/01/17
|
|
|
|
500
|
|
|
|
516,250
|
|
|
Caesars Operating Escrow LLC/Caesars Escrow Corp.
3,4
|
|
|
8.50
|
|
|
|
02/15/20
|
|
|
|
125
|
|
|
|
127,188
|
|
|
DineEquity, Inc.
|
|
|
9.50
|
|
|
|
10/30/18
|
|
|
|
85
|
|
|
|
93,075
|
|
|
Ford Motor Co.
2
|
|
|
6.50
|
|
|
|
08/01/18
|
|
|
|
450
|
|
|
|
488,250
|
|
|
Jaguar Land Rover PLC
3,4,6
|
|
|
8.13
|
|
|
|
05/15/21
|
|
|
|
275
|
|
|
|
281,875
|
|
|
Levi Strauss & Co.
2
|
|
|
7.63
|
|
|
|
05/15/20
|
|
|
|
475
|
|
|
|
502,313
|
|
|
McJunkin Red Man Corp.
2
|
|
|
9.50
|
|
|
|
12/15/16
|
|
|
|
450
|
|
|
|
490,500
|
|
|
MGM Resorts International
2
|
|
|
7.63
|
|
|
|
01/15/17
|
|
|
|
525
|
|
|
|
542,062
|
|
|
MGM Resorts International
3,4
|
|
|
8.63
|
|
|
|
02/01/19
|
|
|
|
125
|
|
|
|
134,062
|
|
|
MTR Gaming Group, Inc.
|
|
|
11.50
|
|
|
|
08/01/19
|
|
|
|
161
|
|
|
|
159,192
|
|
|
Niska Gas Storage US LLC/Niska Gas Storage Canada ULC
2
|
|
|
8.88
|
|
|
|
03/15/18
|
|
|
|
250
|
|
|
|
235,000
|
|
|
Pharmaceutical Product Development, Inc.
3,4
|
|
|
9.50
|
|
|
|
12/01/19
|
|
|
|
300
|
|
|
|
325,500
|
|
|
Pittsburgh Glass Works LLC
3,4
|
|
|
8.50
|
|
|
|
04/15/16
|
|
|
|
120
|
|
|
|
119,400
|
|
|
Visteon Corp.
|
|
|
6.75
|
|
|
|
04/15/19
|
|
|
|
80
|
|
|
|
81,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Cyclical
(Cost – $4,378,466)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,808,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
36
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Non-Cyclical – 8.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Reprographics Co.
2
|
|
|
10.50
|
%
|
|
|
12/15/16
|
|
|
$
|
500
|
|
|
$
|
495,000
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
2
|
|
|
8.25
|
|
|
|
01/15/19
|
|
|
|
525
|
|
|
|
547,312
|
|
|
C&S Group Enterprises LLC
3,4
|
|
|
8.38
|
|
|
|
05/01/17
|
|
|
|
450
|
|
|
|
473,625
|
|
|
Cenveo Corp.
|
|
|
8.88
|
|
|
|
02/01/18
|
|
|
|
225
|
|
|
|
213,750
|
|
|
Iron Mountain Inc.
|
|
|
8.38
|
|
|
|
08/15/21
|
|
|
|
225
|
|
|
|
244,688
|
|
|
Iron Mountain Inc.
2
|
|
|
8.75
|
|
|
|
07/15/18
|
|
|
|
500
|
|
|
|
518,750
|
|
|
Reynolds Group Issuer LLC
2,3,4
|
|
|
9.00
|
|
|
|
04/15/19
|
|
|
|
430
|
|
|
|
423,550
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
|
|
|
8.25
|
|
|
|
02/01/21
|
|
|
|
275
|
|
|
|
292,875
|
|
|
RSC Equipment Rental, Inc./RSC Holdings III LLC
2
|
|
|
10.25
|
|
|
|
11/15/19
|
|
|
|
250
|
|
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Non-Cyclical
(Cost – $3,403,895)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,489,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch Coal Inc.
2
|
|
|
8.75
|
|
|
|
08/01/16
|
|
|
|
475
|
|
|
|
498,750
|
|
|
BreitBurn Energy Partners LP/BreitBurn Finance Corp.
2
|
|
|
8.63
|
|
|
|
10/15/20
|
|
|
|
500
|
|
|
|
531,250
|
|
|
Calfrac Holdings LP
3,4
|
|
|
7.50
|
|
|
|
12/01/20
|
|
|
|
525
|
|
|
|
527,625
|
|
|
Chaparral Energy, Inc.
|
|
|
8.88
|
|
|
|
02/01/17
|
|
|
|
125
|
|
|
|
130,625
|
|
|
Consol Energy Inc.
2
|
|
|
8.25
|
|
|
|
04/01/20
|
|
|
|
500
|
|
|
|
522,500
|
|
|
Crosstex Energy LP/Crosstex Energy Finance Corp.
2
|
|
|
8.88
|
|
|
|
02/15/18
|
|
|
|
475
|
|
|
|
504,687
|
|
|
EV Energy Partners LP/EV Energy Finance Corp.
2
|
|
|
8.00
|
|
|
|
04/15/19
|
|
|
|
525
|
|
|
|
538,125
|
|
|
FTS International Services LLC/FTS International Bonds, Inc.
3,4
|
|
|
7.88
|
|
|
|
11/15/18
|
|
|
|
225
|
|
|
|
235,125
|
|
|
GMX Resources Inc.
2,3,4,7
|
|
|
11.00
|
|
|
|
12/01/17
|
|
|
|
187
|
|
|
|
156,145
|
|
|
Hercules Offshore, Inc.
2,3,4
|
|
|
10.50
|
|
|
|
10/15/17
|
|
|
|
300
|
|
|
|
314,250
|
|
|
Hilcorp Energy I LP/Hilcorp Finance Co.
2,3,4
|
|
|
8.00
|
|
|
|
02/15/20
|
|
|
|
475
|
|
|
|
513,000
|
|
|
Linn Energy LLC/Linn Energy Finance Corp.
|
|
|
8.63
|
|
|
|
04/15/20
|
|
|
|
140
|
|
|
|
150,850
|
|
|
Petroleum Geo-Services ASA
3,4,6
|
|
|
7.38
|
|
|
|
12/15/18
|
|
|
|
225
|
|
|
|
234,000
|
|
|
SESI LLC
2
|
|
|
6.88
|
|
|
|
06/01/14
|
|
|
|
425
|
|
|
|
426,063
|
|
|
Trinidad Drilling Limited
2,3,4,6
|
|
|
7.88
|
|
|
|
01/15/19
|
|
|
|
310
|
|
|
|
329,763
|
|
|
Venoco, Inc.
2
|
|
|
8.88
|
|
|
|
02/15/19
|
|
|
|
500
|
|
|
|
457,500
|
|
|
W&T Offshore, Inc.
|
|
|
8.50
|
|
|
|
06/15/19
|
|
|
|
185
|
|
|
|
195,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
(Cost – $6,206,768)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,265,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance & Investment – 4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FireKeepers Development Authority
2,3,4
|
|
|
13.88
|
|
|
|
05/01/15
|
|
|
|
500
|
|
|
|
556,250
|
|
|
Ineos Finance PLC
3,4,6
|
|
|
9.00
|
|
|
|
05/15/15
|
|
|
|
275
|
|
|
|
291,844
|
|
|
Marina District Finance Co., Inc.
2
|
|
|
9.88
|
|
|
|
08/15/18
|
|
|
|
500
|
|
|
|
448,750
|
|
|
Masonite International Corp.
3,4,6
|
|
|
8.25
|
|
|
|
04/15/21
|
|
|
|
530
|
|
|
|
551,200
|
|
|
Motors Liquidation Co.
8
|
|
|
7.13
|
|
|
|
07/15/13
|
|
|
|
250
|
|
|
|
3,750
|
|
|
Motors Liquidation Co.
2,8
|
|
|
8.38
|
|
|
|
07/15/33
|
|
|
|
1,250
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Finance & Investment
(Cost – $1,837,487)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,870,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media – 5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cablevision Systems Corp.
2
|
|
|
8.63
|
|
|
|
09/15/17
|
|
|
|
475
|
|
|
|
517,156
|
|
|
CCO Holdings LLC/Cap Corp.
2
|
|
|
8.13
|
|
|
|
04/30/20
|
|
|
|
550
|
|
|
|
610,500
|
|
|
Insight Communications, Inc.
3,4
|
|
|
9.38
|
|
|
|
07/15/18
|
|
|
|
308
|
|
|
|
351,890
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
37
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mediacom LLC/Mediacom Cap Corp.
2
|
|
|
9.13
|
%
|
|
|
08/15/19
|
|
|
$
|
500
|
|
|
$
|
543,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Media
(Cost – $1,881,549)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,022,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate – 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realogy Corp.
2,3,4
(Cost – $472,087)
|
|
|
7.88
|
|
|
|
02/15/19
|
|
|
|
525
|
|
|
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Cyclical – 6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMC Entertainment Inc.
2
|
|
|
8.75
|
|
|
|
06/01/19
|
|
|
|
600
|
|
|
|
628,500
|
|
|
Beazer Homes USA, Inc.
2
|
|
|
9.13
|
|
|
|
06/15/18
|
|
|
|
250
|
|
|
|
218,438
|
|
|
Cedar Fair LP/Canada’s Wonderland Co./Magnum Management Corp.
|
|
|
9.13
|
|
|
|
08/01/18
|
|
|
|
100
|
|
|
|
112,250
|
|
|
Caesars Entertainment Operating Co., Inc.
2
|
|
|
11.25
|
|
|
|
06/01/17
|
|
|
|
525
|
|
|
|
572,250
|
|
|
K Hovnanian Enterprises Inc.
|
|
|
10.63
|
|
|
|
10/15/16
|
|
|
|
500
|
|
|
|
451,875
|
|
|
Palace Entertainment Holdings LLC/Palace Entertainment Holdings Corp.
2,3,4
|
|
|
8.88
|
|
|
|
04/15/17
|
|
|
|
500
|
|
|
|
519,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Cyclical
(Cost – $2,520,534)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,502,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Non-Cyclical – 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCA, Inc.
2
|
|
|
8.00
|
|
|
|
10/01/18
|
|
|
|
525
|
|
|
|
572,250
|
|
|
Health Management Associates Inc.
3,4
|
|
|
7.38
|
|
|
|
01/15/20
|
|
|
|
250
|
|
|
|
255,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Services Non-Cyclical
(Cost – $783,031)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
827,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Electronics – 2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Data Corp.
2,3,4
|
|
|
8.25
|
|
|
|
01/15/21
|
|
|
|
500
|
|
|
|
488,750
|
|
|
First Data Corp.
|
|
|
9.88
|
|
|
|
09/24/15
|
|
|
|
51
|
|
|
|
51,255
|
|
|
Freescale Semiconductor, Inc.
2,3,4
|
|
|
9.25
|
|
|
|
04/15/18
|
|
|
|
475
|
|
|
|
520,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Technology & Electronics
(Cost – $1,002,918)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,060,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati Bell, Inc.
|
|
|
8.25
|
|
|
|
10/15/17
|
|
|
|
240
|
|
|
|
245,100
|
|
|
Cincinnati Bell, Inc.
|
|
|
8.38
|
|
|
|
10/15/20
|
|
|
|
235
|
|
|
|
236,175
|
|
|
Clear Channel Communications, Inc.
2
|
|
|
9.00
|
|
|
|
03/01/21
|
|
|
|
500
|
|
|
|
450,000
|
|
|
Frontier Communications Corp.
2
|
|
|
7.13
|
|
|
|
03/15/19
|
|
|
|
900
|
|
|
|
902,250
|
|
|
inVentiv Health, Inc.
3,4
|
|
|
10.00
|
|
|
|
08/15/18
|
|
|
|
205
|
|
|
|
185,525
|
|
|
Level 3 Financing, Inc.
3,4
|
|
|
8.63
|
|
|
|
07/15/20
|
|
|
|
450
|
|
|
|
472,500
|
|
|
PAETEC Holding Corp.
|
|
|
9.88
|
|
|
|
12/01/18
|
|
|
|
250
|
|
|
|
282,500
|
|
|
Windstream Corp.
2
|
|
|
7.00
|
|
|
|
03/15/19
|
|
|
|
500
|
|
|
|
510,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $3,225,843)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,284,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility – 2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edison Mission Energy
|
|
|
7.00
|
|
|
|
05/15/17
|
|
|
|
250
|
|
|
|
157,500
|
|
|
Mueller Water Products, Inc.
|
|
|
7.38
|
|
|
|
06/01/17
|
|
|
|
350
|
|
|
|
344,750
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
38
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate
|
|
|
Maturity
|
|
|
Principal
Amount
(000s)
|
|
|
Value
(Note 2)
|
|
|
HIGH YIELD CORPORATE BONDS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NRG Energy, Inc.
2
|
|
|
8.50
|
%
|
|
|
06/15/19
|
|
|
$
|
475
|
|
|
$
|
478,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Utility
(Cost – $1,008,688)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
980,813
|
|
|
Total HIGH YIELD CORPORATE BONDS
(Cost – $32,524,661)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,578,594
|
|
|
TERM LOAN – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas Competitive Electric Holdings Co. LLC
1,4
(Cost – $195,582)
|
|
|
4.74
|
|
|
|
04/10/12
|
|
|
|
238
|
|
|
|
132,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
COMMON STOCKS – 7.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
(Cost – $296,245)
|
|
|
|
|
|
|
|
|
|
|
6,099
|
|
|
$
|
156,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples – 1.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B&G Foods, Inc.
(Cost – $247,294)
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
450,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy – 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BreitBurn Energy Partners LP
|
|
|
|
|
|
|
|
|
|
|
13,075
|
|
|
|
249,994
|
|
|
Crosstex Energy LP
|
|
|
|
|
|
|
|
|
|
|
7,800
|
|
|
|
133,302
|
|
|
Niska Gas Storage Partners LLC
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
119,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Energy
(Cost – $620,010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
502,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials – 0.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corp.
(Cost – $257,286)
|
|
|
|
|
|
|
|
|
|
|
25,696
|
|
|
|
360,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications – 3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AT&T, Inc.
|
|
|
|
|
|
|
|
|
|
|
8,500
|
|
|
|
265,455
|
|
|
Century Link, Inc.
|
|
|
|
|
|
|
|
|
|
|
9,500
|
|
|
|
367,175
|
|
|
Frontier Communications Corp.
|
|
|
|
|
|
|
|
|
|
|
41,180
|
|
|
|
171,721
|
|
|
Verizon Communications, Inc.
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
286,725
|
|
|
Windstream Corp.
|
|
|
|
|
|
|
|
|
|
|
26,350
|
|
|
|
308,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Telecommunications
(Cost – $1,529,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,399,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility – 0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrellgas Partners LP
(Cost – $129,769)
|
|
|
|
|
|
|
|
|
|
|
6,750
|
|
|
|
101,790
|
|
|
Total COMMON STOCKS
(Cost – $3,079,737)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,970,611
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
2012 Annual Report
39
HELIOS STRATEGIC INCOME FUND, INC.
Schedule of Investments
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
(Note 2)
|
|
|
WARRANTS – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary – 0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Motors Company
5
Expiration: July 2016
Exercise Price: $10.00
|
|
|
|
|
|
|
5,546
|
|
|
$
|
92,230
|
|
|
General Motors Company
5
Expiration: July 2019
Exercise Price: $18.33
|
|
|
|
|
|
|
5,546
|
|
|
|
62,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer Discretionary
(Cost – $336,206)
|
|
|
|
|
|
|
|
|
|
|
154,345
|
|
|
Total WARRANTS
(Cost – $336,206)
|
|
|
|
|
|
|
|
|
|
|
154,345
|
|
|
Total Investments – 134.7%
(Cost – $50,538,450)
|
|
|
|
|
|
|
|
|
|
|
52,829,926
|
|
|
Liabilities in Excess of Other Assets – (34.7)%
|
|
|
|
|
|
|
|
|
|
|
(13,596,128
|
)
|
|
|
|
|
|
|
|
Total NET ASSETS – 100.0%
|
|
|
|
|
|
|
|
|
|
$
|
39,233,798
|
|
|
|
|
See Notes to Schedules of Investments and Notes to Financial Statements.
Brookfield
Investment Management Inc.
40
HELIOS FUNDS
Notes to Schedules of Investments
March 31, 2012
The following notes should be read in conjunction with the accompanying Schedules of Investments.
|
|
|
|
|
|
|
|
|
1
|
|
|
—
|
|
|
Variable rate security – Interest rate shown is the rate in effect as of March 31, 2012.
|
|
2
|
|
|
—
|
|
|
Portion or entire principal amount pledged as collateral for margin loans.
|
|
3
|
|
|
—
|
|
|
Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold in transactions exempt from registration, normally to qualified
institutional buyers. As of March 31, 2012, the total values of all such investments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Value
|
|
|
% of Net Assets
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
17,032,975
|
|
|
|
29.23
|
%
|
|
Helios High Income Fund, Inc.
|
|
|
12,308,805
|
|
|
|
29.97
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
14,104,079
|
|
|
|
30.34
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
10,456,004
|
|
|
|
26.65
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
—
|
|
|
Private Placement.
|
|
5
|
|
|
—
|
|
|
Non-Income producing security.
|
|
6
|
|
|
—
|
|
|
Foreign security or a U.S. security of a foreign company.
|
|
7
|
|
|
—
|
|
|
Payment in kind security.
|
|
8
|
|
|
—
|
|
|
Security fair valued in good faith pursuant to the fair value procedures adopted by the Board of Directors. As of March 31, 2012, the total values of all such securities were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Value
|
|
|
% of Net Assets
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
30,000
|
|
|
|
0.05
|
%
|
|
Helios High Income Fund, Inc.
|
|
|
22,500
|
|
|
|
0.05
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
26,250
|
|
|
|
0.06
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
22,500
|
|
|
|
0.06
|
|
See Notes to Financial Statements.
2012 Annual Report
41
HELIOS FUNDS
Statements of Assets and Liabilities
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios
Advantage
Income Fund,
Inc.
|
|
|
Helios High
Income Fund,
Inc.
|
|
|
Helios Multi-
Sector High
Income Fund,
Inc.
|
|
|
Helios
Strategic
Income Fund,
Inc.
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in securities, at value (Note 2)
|
|
$
|
77,138,752
|
|
|
$
|
54,934,892
|
|
|
$
|
61,664,619
|
|
|
$
|
52,829,926
|
|
|
Cash
|
|
|
3,330,780
|
|
|
|
2,514,463
|
|
|
|
3,424,633
|
|
|
|
1,518,372
|
|
|
Interest and dividends receivable
|
|
|
1,640,953
|
|
|
|
1,166,430
|
|
|
|
1,318,181
|
|
|
|
951,423
|
|
|
Prepaid expenses
|
|
|
10,106
|
|
|
|
7,130
|
|
|
|
8,032
|
|
|
|
6,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
82,120,591
|
|
|
|
58,622,915
|
|
|
|
66,415,465
|
|
|
|
55,306,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable for credit facility (Note 6)
|
|
|
23,700,000
|
|
|
|
17,425,000
|
|
|
|
19,800,000
|
|
|
|
15,950,000
|
|
|
Payable for credit facility interest (Note 6)
|
|
|
2,783
|
|
|
|
1,989
|
|
|
|
2,288
|
|
|
|
1,862
|
|
|
Investment advisory fee payable (Note 4)
|
|
|
45,226
|
|
|
|
32,274
|
|
|
|
36,585
|
|
|
|
30,449
|
|
|
Administration fee payable (Note 4)
|
|
|
10,437
|
|
|
|
7,448
|
|
|
|
8,443
|
|
|
|
7,026
|
|
|
Accrued expenses
|
|
|
82,686
|
|
|
|
87,006
|
|
|
|
84,963
|
|
|
|
83,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
23,841,132
|
|
|
|
17,553,717
|
|
|
|
19,932,279
|
|
|
|
16,072,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
58,279,459
|
|
|
$
|
41,069,198
|
|
|
$
|
46,483,186
|
|
|
$
|
39,233,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock, at par value ($0.0001 par value, 1,000,000,000 shares authorized) (Note 8)
|
|
$
|
654
|
|
|
$
|
484
|
|
|
$
|
759
|
|
|
$
|
593
|
|
|
Additional paid-in capital (Note 8)
|
|
|
455,690,987
|
|
|
|
338,071,655
|
|
|
|
493,833,641
|
|
|
|
402,153,392
|
|
|
Undistributed net investment income
|
|
|
373,065
|
|
|
|
34,148
|
|
|
|
376,505
|
|
|
|
274,287
|
|
|
Accumulated net realized loss on investment transactions
|
|
|
(401,012,492
|
)
|
|
|
(299,376,208
|
)
|
|
|
(450,100,115
|
)
|
|
|
(365,485,950
|
)
|
|
Net unrealized appreciation on investments
|
|
|
3,227,245
|
|
|
|
2,339,119
|
|
|
|
2,372,396
|
|
|
|
2,291,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets applicable to capital stock outstanding
|
|
$
|
58,279,459
|
|
|
$
|
41,069,198
|
|
|
$
|
46,483,186
|
|
|
$
|
39,233,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments at cost
|
|
$
|
73,911,507
|
|
|
$
|
52,595,773
|
|
|
$
|
59,292,223
|
|
|
$
|
50,538,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Outstanding and Net Asset Value Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding
|
|
|
6,540,131
|
|
|
|
4,843,347
|
|
|
|
7,588,538
|
|
|
|
5,930,400
|
|
|
Net asset value per share
|
|
$
|
8.91
|
|
|
$
|
8.48
|
|
|
$
|
6.13
|
|
|
$
|
6.62
|
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
42
HELIOS FUNDS
Statements of Operations
For the Fiscal Year Ended March 31,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios
Advantage
Income Fund,
Inc.
|
|
|
Helios High
Income Fund,
Inc.
|
|
|
Helios Multi-
Sector High
Income Fund,
Inc.
|
|
|
Helios
Strategic
Income Fund,
Inc.
|
|
|
Investment Income (Note 2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
6,329,402
|
|
|
$
|
4,555,157
|
|
|
$
|
5,087,650
|
|
|
$
|
3,632,619
|
|
|
Dividends
|
|
|
32,386
|
|
|
|
26,446
|
|
|
|
26,687
|
|
|
|
141,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment income
|
|
|
6,361,788
|
|
|
|
4,581,603
|
|
|
|
5,114,337
|
|
|
|
3,773,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory fees (Note 4)
|
|
|
510,243
|
|
|
|
366,899
|
|
|
|
413,540
|
|
|
|
342,011
|
|
|
Administration fees (Note 4)
|
|
|
117,748
|
|
|
|
84,669
|
|
|
|
95,432
|
|
|
|
78,926
|
|
|
Legal fees
|
|
|
146,014
|
|
|
|
104,361
|
|
|
|
111,382
|
|
|
|
96,627
|
|
|
Custodian
|
|
|
52,463
|
|
|
|
51,938
|
|
|
|
51,543
|
|
|
|
51,892
|
|
|
Audit and tax services
|
|
|
44,000
|
|
|
|
44,000
|
|
|
|
44,000
|
|
|
|
44,000
|
|
|
Directors’ fees
|
|
|
43,000
|
|
|
|
43,000
|
|
|
|
43,000
|
|
|
|
43,000
|
|
|
Reports to stockholders
|
|
|
42,883
|
|
|
|
33,253
|
|
|
|
38,217
|
|
|
|
38,556
|
|
|
Fund accounting fees
|
|
|
32,540
|
|
|
|
31,980
|
|
|
|
31,386
|
|
|
|
31,007
|
|
|
Insurance
|
|
|
29,242
|
|
|
|
23,037
|
|
|
|
23,284
|
|
|
|
17,650
|
|
|
Transfer agent fees
|
|
|
29,179
|
|
|
|
29,774
|
|
|
|
28,868
|
|
|
|
28,689
|
|
|
Registration fees
|
|
|
23,816
|
|
|
|
23,816
|
|
|
|
25,067
|
|
|
|
23,816
|
|
|
Miscellaneous
|
|
|
7,192
|
|
|
|
4,582
|
|
|
|
6,641
|
|
|
|
6,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,078,320
|
|
|
|
841,309
|
|
|
|
912,360
|
|
|
|
802,379
|
|
|
Interest expense on credit facility (Note 6)
|
|
|
309,094
|
|
|
|
221,957
|
|
|
|
255,232
|
|
|
|
206,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1,387,414
|
|
|
|
1,063,266
|
|
|
|
1,167,592
|
|
|
|
1,008,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
4,974,374
|
|
|
|
3,518,337
|
|
|
|
3,946,745
|
|
|
|
2,765,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain (Loss) on Investments (Note 2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investment transactions
|
|
|
3,200,883
|
|
|
|
3,496,946
|
|
|
|
3,981,749
|
|
|
|
2,511,064
|
|
|
Net change in unrealized appreciation on investments
|
|
|
(448,526
|
)
|
|
|
(1,350,148
|
)
|
|
|
(903,870
|
)
|
|
|
465,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized gain on investments
|
|
|
2,752,357
|
|
|
|
2,146,798
|
|
|
|
3,077,879
|
|
|
|
2,976,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
7,726,731
|
|
|
$
|
5,665,135
|
|
|
$
|
7,024,624
|
|
|
$
|
5,741,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
2012 Annual Report
43
HELIOS FUNDS
Statements of Changes in Net Assets
For the Fiscal Years Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage Income
Fund, Inc.
|
|
|
Helios High Income
Fund, Inc.
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Increase (Decrease) in Net Assets Resulting from Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
4,974,374
|
|
|
$
|
4,827,660
|
|
|
$
|
3,518,337
|
|
|
$
|
3,337,932
|
|
|
Net realized gain on investment transactions
|
|
|
3,200,883
|
|
|
|
5,908,075
|
|
|
|
3,496,946
|
|
|
|
1,858,367
|
|
|
Net change in unrealized appreciation on investments
|
|
|
(448,526
|
)
|
|
|
197,292
|
|
|
|
(1,350,148
|
)
|
|
|
74,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
7,726,731
|
|
|
|
10,933,027
|
|
|
|
5,665,135
|
|
|
|
5,271,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Stockholders (Note 2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(4,722,655
|
)
|
|
|
(4,706,314
|
)
|
|
|
(3,484,189
|
)
|
|
|
(3,337,932
|
)
|
|
Return of capital
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(144,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(4,722,655
|
)
|
|
|
(4,706,314
|
)
|
|
|
(3,484,189
|
)
|
|
|
(3,482,124
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock Transactions (Note 8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvestment of dividends and distributions
|
|
|
31,898
|
|
|
|
—
|
|
|
|
59,021
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase in net assets
|
|
|
3,035,974
|
|
|
|
6,226,713
|
|
|
|
2,239,967
|
|
|
|
1,789,001
|
|
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
55,243,485
|
|
|
|
49,016,772
|
|
|
|
38,829,231
|
|
|
|
37,040,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
58,279,459
|
|
|
$
|
55,243,485
|
|
|
$
|
41,069,198
|
|
|
$
|
38,829,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(including undistributed net investment income of)
|
|
$
|
373,065
|
|
|
$
|
121,346
|
|
|
$
|
34,148
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Transactions (Note 8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinvested shares
|
|
|
3,584
|
|
|
|
—
|
|
|
|
7,063
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
44
HELIOS FUNDS
Statements of Changes in Net Assets (continued)
For the Fiscal Years Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Multi-Sector High Income
Fund, Inc.
|
|
|
Helios Strategic Income
Fund, Inc.
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Increase (Decrease) in Net Assets Resulting from Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
3,946,745
|
|
|
$
|
3,733,728
|
|
|
$
|
2,765,054
|
|
|
$
|
2,677,178
|
|
|
Net realized gain on investment transactions
|
|
|
3,981,749
|
|
|
|
2,364,612
|
|
|
|
2,511,064
|
|
|
|
1,463,553
|
|
|
Net change in unrealized appreciation on investments
|
|
|
(903,870
|
)
|
|
|
(188,088
|
)
|
|
|
465,630
|
|
|
|
(310,764
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
7,024,624
|
|
|
|
5,910,252
|
|
|
|
5,741,748
|
|
|
|
3,829,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and Distributions to Stockholders (Note 2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(3,661,470
|
)
|
|
|
(3,642,498
|
)
|
|
|
(2,490,768
|
)
|
|
|
(2,668,637
|
)
|
|
Return of capital
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(148,303
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(3,661,470
|
)
|
|
|
(3,642,498
|
)
|
|
|
(2,490,768
|
)
|
|
|
(2,816,940
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase in net assets
|
|
|
3,363,154
|
|
|
|
2,267,754
|
|
|
|
3,250,980
|
|
|
|
1,013,027
|
|
|
|
|
|
|
|
|
Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
43,120,032
|
|
|
|
40,852,278
|
|
|
|
35,982,818
|
|
|
|
34,969,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of year
|
|
$
|
46,483,186
|
|
|
$
|
43,120,032
|
|
|
$
|
39,233,798
|
|
|
$
|
35,982,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(including undistributed net investment income of)
|
|
$
|
376,505
|
|
|
$
|
91,230
|
|
|
$
|
274,287
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
2012 Annual Report
45
HELIOS ADVANTAGE INCOME FUND, INC.
Statement of Cash Flows
For the Fiscal Year Ended March 31,
2012
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
7,726,731
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities
|
|
|
|
|
|
Purchases of long-term investments
|
|
|
(24,565,534
|
)
|
|
Proceeds from disposition of long-term portfolio investments
|
|
|
26,841,784
|
|
|
Increase in interest and dividends receivable
|
|
|
(100,035
|
)
|
|
Decrease in prepaid expenses
|
|
|
3,602
|
|
|
Decrease in payable for investments purchased
|
|
|
(1,150,381
|
)
|
|
Increase in payable for credit facility interest
|
|
|
1,202
|
|
|
Increase in investment advisory fee payable
|
|
|
2,518
|
|
|
Increase in administration fee payable
|
|
|
581
|
|
|
Decrease in accrued expenses
|
|
|
(29,489
|
)
|
|
Net amortization on investments
|
|
|
(134,328
|
)
|
|
Unrealized depreciation on investments
|
|
|
448,526
|
|
|
Net realized gain on investment transactions
|
|
|
(3,200,883
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
5,844,294
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for financing activities:
|
|
|
|
|
|
Net cash provided by credit facility
|
|
|
1,500,000
|
|
|
Dividends and distributions paid to stockholders
|
|
|
(4,736,946
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(3,236,946
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
2,607,348
|
|
|
Cash at the beginning of year
|
|
|
723,432
|
|
|
|
|
|
|
|
|
Cash at the end of year
|
|
$
|
3,330,780
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
Interest payments for the year ended March 31, 2012, totaled $307,892.
Noncash financing activities included reinvestment of dividends of $31,898.
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
46
HELIOS HIGH INCOME FUND, INC.
Statement of Cash Flows
For the Fiscal Year Ended March 31, 2012
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
5,665,135
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities
|
|
|
|
|
|
Purchases of long-term investments
|
|
|
(16,577,204
|
)
|
|
Proceeds from disposition of long-term portfolio investments
|
|
|
18,705,223
|
|
|
Increase in interest and dividends receivable
|
|
|
(55,592
|
)
|
|
Decrease in prepaid expenses
|
|
|
4,964
|
|
|
Decrease in payable for investments purchased
|
|
|
(495,000
|
)
|
|
Increase in payable for credit facility interest
|
|
|
855
|
|
|
Increase in investment advisory fee payable
|
|
|
1,551
|
|
|
Increase in administration fee payable
|
|
|
358
|
|
|
Decrease in accrued expenses
|
|
|
(14,448
|
)
|
|
Net amortization on investments
|
|
|
(104,618
|
)
|
|
Unrealized depreciation on investments
|
|
|
1,350,148
|
|
|
Net realized gain on investment transactions
|
|
|
(3,496,946
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
4,984,426
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for financing activities:
|
|
|
|
|
|
Net cash provided by credit facility
|
|
|
525,000
|
|
|
Dividends and distributions paid to stockholders
|
|
|
(3,457,981
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(2,932,981
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
2,051,445
|
|
|
Cash at the beginning of year
|
|
|
463,018
|
|
|
|
|
|
|
|
|
Cash at the end of year
|
|
$
|
2,514,463
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
Interest payments for the year ended March 31, 2012, totaled $221,102.
Noncash financing
activities included reinvestment of dividends of $59,021.
See Notes to Financial Statements.
2012 Annual Report
47
HELIOS MULTI-SECTOR INCOME FUND, INC.
Statement of Cash Flows
For the Fiscal Year Ended March 31, 2012
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
7,024,624
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities
|
|
|
|
|
|
Purchases of long-term investments
|
|
|
(19,445,697
|
)
|
|
Proceeds from disposition of long-term portfolio investments
|
|
|
22,071,959
|
|
|
Increase in interest and dividends receivable
|
|
|
(60,828
|
)
|
|
Decrease in prepaid expenses
|
|
|
2,917
|
|
|
Decrease in payable for investments purchased
|
|
|
(565,000
|
)
|
|
Increase in payable for credit facility interest
|
|
|
982
|
|
|
Increase in investment advisory fee payable
|
|
|
2,244
|
|
|
Increase in administration fee payable
|
|
|
518
|
|
|
Decrease in accrued expenses
|
|
|
(17,398
|
)
|
|
Net amortization on investments
|
|
|
(82,359
|
)
|
|
Unrealized depreciation on investments
|
|
|
903,870
|
|
|
Net realized gain on investment transactions
|
|
|
(3,981,749
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
5,854,083
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for financing activities:
|
|
|
|
|
|
Net cash provided by credit facility
|
|
|
650,000
|
|
|
Dividends and distributions paid to stockholders
|
|
|
(3,696,545
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(3,046,545
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
2,807,538
|
|
|
Cash at the beginning of year
|
|
|
617,095
|
|
|
|
|
|
|
|
|
Cash at the end of year
|
|
$
|
3,424,633
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
Interest payments for the year ended March 31, 2012, totaled $254,250.
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
48
HELIOS STRATEGIC INCOME FUND, INC.
Statement of Cash Flows
For the Fiscal Year Ended March 31, 2012
|
|
|
|
|
|
|
Increase (Decrease) in Cash:
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
5,741,748
|
|
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities
|
|
|
|
|
|
Purchases of long-term investments
|
|
|
(21,186,410
|
)
|
|
Proceeds from disposition of long-term portfolio investments
|
|
|
21,429,542
|
|
|
Increase in interest and dividends receivable
|
|
|
(76,391
|
)
|
|
Decrease in prepaid expenses
|
|
|
305
|
|
|
Decrease in payable for investments purchased
|
|
|
(475,000
|
)
|
|
Increase in payable for credit facility interest
|
|
|
805
|
|
|
Increase in investment advisory fee payable
|
|
|
2,358
|
|
|
Increase in administration fee payable
|
|
|
543
|
|
|
Decrease in accrued expenses
|
|
|
(12,845
|
)
|
|
Net amortization on investments
|
|
|
4,570
|
|
|
Unrealized appreciation on investments
|
|
|
(465,630
|
)
|
|
Net realized gain on investment transactions
|
|
|
(2,511,064
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
2,452,531
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for financing activities:
|
|
|
|
|
|
Net cash provided by credit facility
|
|
|
1,000,000
|
|
|
Dividends and distributions paid to stockholders
|
|
|
(2,514,845
|
)
|
|
|
|
|
|
|
|
Net cash used for financing activities
|
|
|
(1,514,845
|
)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
937,686
|
|
|
Cash at the beginning of year
|
|
|
580,686
|
|
|
|
|
|
|
|
|
Cash at the end of year
|
|
$
|
1,518,372
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
Interest payments for the year ended March 31, 2012, totaled $205,632.
See Notes to Financial Statements.
2012 Annual Report
49
HELIOS ADVANTAGE INCOME FUND, INC.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
2,3
|
|
|
2008*
,2,3
(unaudited)
|
|
|
Per Share Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
8.45
|
|
|
$
|
7.50
|
|
|
$
|
6.20
|
|
|
$
|
15.55
|
|
|
$
|
66.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.76
|
|
|
|
0.74
|
|
|
|
0.70
|
|
|
|
1.75
|
|
|
|
6.15
|
|
|
Net realized and unrealized gain (loss) on investment transactions
|
|
|
0.42
|
|
|
|
0.93
|
|
|
|
1.40
|
|
|
|
(8.85
|
)
|
|
|
(49.85
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net asset value resulting from operations
|
|
|
1.18
|
|
|
|
1.67
|
|
|
|
2.10
|
|
|
|
(7.10
|
)
|
|
|
(43.70
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.72
|
)
|
|
|
(0.72
|
)
|
|
|
(0.70
|
)
|
|
|
(1.20
|
)
|
|
|
(6.55
|
)
|
|
Return of capital distributions
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.10
|
)
|
|
|
(1.05
|
)
|
|
|
(0.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(0.72
|
)
|
|
|
(0.72
|
)
|
|
|
(0.80
|
)
|
|
|
(2.25
|
)
|
|
|
(7.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
8.91
|
|
|
$
|
8.45
|
|
|
$
|
7.50
|
|
|
$
|
6.20
|
|
|
$
|
15.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
9.30
|
|
|
$
|
7.70
|
|
|
$
|
7.00
|
|
|
$
|
5.00
|
|
|
$
|
16.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Return
†
|
|
|
32.08
|
%
|
|
|
21.39
|
%
|
|
|
58.73
|
%
|
|
|
(61.80
|
)%
|
|
|
(73.61
|
)%
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s)
|
|
$
|
58,279
|
|
|
$
|
55,243
|
|
|
$
|
49,017
|
|
|
$
|
40,676
|
|
|
$
|
100,299
|
|
|
Gross operating expenses
|
|
|
1.93
|
%
|
|
|
2.30
|
%
|
|
|
2.22
|
%
|
|
|
2.44
|
%
|
|
|
3.66
|
%
|
|
Interest expense
|
|
|
0.55
|
%
|
|
|
0.37
|
%
|
|
|
0.52
|
%
|
|
|
0.03
|
%
|
|
|
N/A
|
1
|
|
Total expenses
|
|
|
2.48
|
%
|
|
|
2.67
|
%
|
|
|
2.74
|
%
|
|
|
2.47
|
%
|
|
|
3.66
|
%
|
|
Net expenses, including fee waivers and reimbursement and excluding interest expense, debt issuance costs and extraordinary
expenses
|
|
|
1.93
|
%
|
|
|
2.24
|
%
|
|
|
1.40
|
%
|
|
|
1.23
|
%
|
|
|
3.49
|
%
|
|
Net investment income
|
|
|
8.89
|
%
|
|
|
9.44
|
%
|
|
|
9.97
|
%
|
|
|
19.66
|
%
|
|
|
15.69
|
%
|
|
Net investment income, excluding the effect of fee waivers and reimbursement
|
|
|
8.89
|
%
|
|
|
9.38
|
%
|
|
|
9.15
|
%
|
|
|
18.91
|
%
|
|
|
15.52
|
%
|
|
Portfolio turnover rate
|
|
|
29
|
%
|
|
|
62
|
%
|
|
|
45
|
%
|
|
|
89
|
%
|
|
|
76
|
%
|
|
*
|
By correspondence dated May 27, 2010, the Fund’s independent registered public accounting firm for the fiscal year ended March 31, 2008,
informed the Fund that it’s audit report dated May 29, 2008 on the Fund’s financial statements should no longer be relied upon. Based upon the actions of the Fund’s former independent registered public accounting firm, the
financial highlights for the fiscal year ended March 31, 2008 should not be relied upon.
|
|
†
|
Total investment return is computed based upon the New York Stock Exchange market price of the Fund’s shares and excludes the effect of brokerage
commissions. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund’s dividend reinvestment plan.
|
|
1
|
Not available. During this period, interest expense was not reported separately from operating expenses.
|
|
2
|
The Fund had a 1:5 reverse stock split with ex-dividend and payable dates of August 31, 2009 and September 1, 2009, respectively. Prior year net
asset values and per share amounts have been restated to reflect the impact of the reverse stock split. (See Notes to Financial Statements). The net asset value and market price reported at the original dates prior to the reverse stock split were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended March 31,
|
|
2009
|
|
|
2008
(Unaudited)
|
|
|
Net Asset Value (prior to reverse stock split)
|
|
$
|
1.24
|
|
|
$
|
3.11
|
|
|
Market Price (prior to reverse stock split)
|
|
$
|
1.00
|
|
|
$
|
3.34
|
|
|
3
|
Brookfield Investment Management, Inc. became the Advisor of the Fund on July 29, 2008.
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
50
HELIOS HIGH INCOME FUND, INC.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
2,3
|
|
|
2008*
,2,3
(unaudited)
|
|
|
Per Share Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
8.03
|
|
|
$
|
7.66
|
|
|
$
|
6.25
|
|
|
$
|
15.60
|
|
|
$
|
65.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.73
|
|
|
|
0.69
|
|
|
|
0.72
|
|
|
|
1.95
|
|
|
|
5.80
|
|
|
Net realized and unrealized gain (loss) on investment transactions
|
|
|
0.44
|
|
|
|
0.40
|
|
|
|
1.49
|
|
|
|
(9.05
|
)
|
|
|
(48.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net asset value resulting from operations
|
|
|
1.17
|
|
|
|
1.09
|
|
|
|
2.21
|
|
|
|
(7.10
|
)
|
|
|
(43.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.72
|
)
|
|
|
(0.69
|
)
|
|
|
(0.72
|
)
|
|
|
(1.40
|
)
|
|
|
(6.30
|
)
|
|
Return of capital distributions
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
(0.08
|
)
|
|
|
(0.85
|
)
|
|
|
(0.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(0.72
|
)
|
|
|
(0.72
|
)
|
|
|
(0.80
|
)
|
|
|
(2.25
|
)
|
|
|
(7.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
8.48
|
|
|
$
|
8.03
|
|
|
$
|
7.66
|
|
|
$
|
6.25
|
|
|
$
|
15.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
8.90
|
|
|
$
|
7.62
|
|
|
$
|
7.19
|
|
|
$
|
4.95
|
|
|
$
|
17.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Return
†
|
|
|
27.89
|
%
|
|
|
17.00
|
%
|
|
|
64.29
|
%
|
|
|
(64.25
|
)%
|
|
|
(72.40
|
)%
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s)
|
|
$
|
41,069
|
|
|
$
|
38,829
|
|
|
$
|
37,040
|
|
|
$
|
30,190
|
|
|
$
|
74,539
|
|
|
Gross operating expenses
|
|
|
2.13
|
%
|
|
|
2.51
|
%
|
|
|
2.28
|
%
|
|
|
2.30
|
%
|
|
|
3.73
|
%
|
|
Interest expense
|
|
|
0.57
|
%
|
|
|
0.38
|
%
|
|
|
0.49
|
%
|
|
|
0.04
|
%
|
|
|
N/A
|
1
|
|
Total expenses
|
|
|
2.70
|
%
|
|
|
2.89
|
%
|
|
|
2.77
|
%
|
|
|
2.34
|
%
|
|
|
3.73
|
%
|
|
Net expenses, including fee waivers and reimbursement and excluding interest expense, debt issuance costs and extraordinary
expenses
|
|
|
2.13
|
%
|
|
|
2.36
|
%
|
|
|
1.30
|
%
|
|
|
1.24
|
%
|
|
|
3.56
|
%
|
|
Net investment income
|
|
|
8.92
|
%
|
|
|
8.91
|
%
|
|
|
10.10
|
%
|
|
|
22.35
|
%
|
|
|
14.81
|
%
|
|
Net investment income, excluding the effect of fee waivers and reimbursement
|
|
|
8.92
|
%
|
|
|
8.75
|
%
|
|
|
9.12
|
%
|
|
|
21.37
|
%
|
|
|
14.64
|
%
|
|
Portfolio turnover rate
|
|
|
29
|
%
|
|
|
60
|
%
|
|
|
48
|
%
|
|
|
88
|
%
|
|
|
74
|
%
|
|
*
|
By correspondence dated May 27, 2010, the Fund’s independent registered public accounting firm for the fiscal year ended March 31, 2008,
informed the Fund that it’s audit report dated May 29, 2008 on the Fund’s financial statements should no longer be relied upon. Based upon the actions of the Fund’s former independent registered public accounting firm, the
financial highlights for the fiscal year ended March 31, 2008 should not be relied upon.
|
|
†
|
Total investment return is computed based upon the New York Stock Exchange market price of the Fund’s shares and excludes the effect of brokerage
commissions. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund’s dividend reinvestment plan.
|
|
1
|
Not available. During this period, interest expense was not reported separately from operating expenses.
|
|
2
|
The Fund had a 1:5 reverse stock split with ex-dividend and payable dates of August 31, 2009 and September 1, 2009, respectively. Prior year net
asset values and per share amounts have been restated to reflect the impact of the reverse stock split. (See Notes to Financial Statements). The net asset value and market price reported at the original dates prior to the reverse stock split were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended March 31,
|
|
2009
|
|
|
2008
(Unaudited)
|
|
|
Net Asset Value (prior to reverse stock split)
|
|
$
|
1.25
|
|
|
$
|
3.12
|
|
|
Market Price (prior to reverse stock split)
|
|
$
|
0.99
|
|
|
$
|
3.51
|
|
|
3
|
Brookfield Investment Management, Inc. became the Advisor of the Fund on July 29, 2008.
|
See Notes to Financial Statements.
2012 Annual Report
51
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
2,3
|
|
|
2008*
,2,3
(unaudited)
|
|
|
Per Share Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
5.68
|
|
|
$
|
5.38
|
|
|
$
|
4.40
|
|
|
$
|
13.55
|
|
|
$
|
70.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.52
|
|
|
|
0.49
|
|
|
|
0.50
|
|
|
|
1.50
|
|
|
|
6.40
|
|
|
Net realized and unrealized gain (loss) on investment transactions
|
|
|
0.41
|
|
|
|
0.29
|
|
|
|
1.01
|
|
|
|
(8.35
|
)
|
|
|
(54.35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net asset value resulting from operations
|
|
|
0.93
|
|
|
|
0.78
|
|
|
|
1.51
|
|
|
|
(6.85
|
)
|
|
|
(47.95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.48
|
)
|
|
|
(0.48
|
)
|
|
|
(0.50
|
)
|
|
|
(1.20
|
)
|
|
|
(7.75
|
)
|
|
Distributions from net realized gains
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.35
|
)
|
|
Return of capital distributions
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
(1.10
|
)
|
|
|
(0.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(0.48
|
)
|
|
|
(0.48
|
)
|
|
|
(0.53
|
)
|
|
|
(2.30
|
)
|
|
|
(9.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
6.13
|
|
|
$
|
5.68
|
|
|
$
|
5.38
|
|
|
$
|
4.40
|
|
|
$
|
13.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
6.07
|
|
|
$
|
5.15
|
|
|
$
|
5.00
|
|
|
$
|
3.55
|
|
|
$
|
16.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Return
†
|
|
|
28.69
|
%
|
|
|
13.33
|
%
|
|
|
58.59
|
%
|
|
|
(72.05
|
)%
|
|
|
(72.67
|
)%
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s)
|
|
$
|
46,483
|
|
|
$
|
43,120
|
|
|
$
|
40,852
|
|
|
$
|
33,460
|
|
|
$
|
98,627
|
|
|
Gross operating expenses
|
|
|
2.06
|
%
|
|
|
2.43
|
%
|
|
|
2.23
|
%
|
|
|
2.59
|
%
|
|
|
3.71
|
%
|
|
Interest expense
|
|
|
0.57
|
%
|
|
|
0.39
|
%
|
|
|
0.51
|
%
|
|
|
0.06
|
%
|
|
|
N/A
|
1
|
|
Total expenses
|
|
|
2.63
|
%
|
|
|
2.82
|
%
|
|
|
2.74
|
%
|
|
|
2.65
|
%
|
|
|
3.71
|
%
|
|
Net expenses, including fee waivers and reimbursement and excluding interest expense, debt issuance costs and extraordinary
expenses
|
|
|
2.06
|
%
|
|
|
2.32
|
%
|
|
|
1.30
|
%
|
|
|
1.20
|
%
|
|
|
3.55
|
%
|
|
Net investment income
|
|
|
8.90
|
%
|
|
|
9.00
|
%
|
|
|
10.03
|
%
|
|
|
20.53
|
%
|
|
|
15.28
|
%
|
|
Net investment income, excluding the effect of fee waivers and reimbursement
|
|
|
8.90
|
%
|
|
|
8.89
|
%
|
|
|
9.10
|
%
|
|
|
19.65
|
%
|
|
|
15.11
|
%
|
|
Portfolio turnover rate
|
|
|
30
|
%
|
|
|
64
|
%
|
|
|
49
|
%
|
|
|
75
|
%
|
|
|
68
|
%
|
|
*
|
By correspondence dated May 27, 2010, the Fund’s independent registered public accounting firm for the fiscal year ended March 31, 2008,
informed the Fund that it’s audit report dated May 29, 2008 on the Fund’s financial statements should no longer be relied upon. Based upon the actions of the Fund’s former independent registered public accounting firm, the
financial highlights for the fiscal year ended March 31, 2008 should not be relied upon.
|
|
†
|
Total investment return is computed based upon the New York Stock Exchange market price of the Fund’s shares and excludes the effect of brokerage
commissions. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund’s dividend reinvestment plan.
|
|
1
|
Not available. During this period, interest expense was not reported separately from operating expenses.
|
|
2
|
The Fund had a 1:5 reverse stock split with ex-dividend and payable dates of August 31, 2009 and September 1, 2009, respectively. Prior year net
asset values and per share amounts have been restated to reflect the impact of the reverse stock split. (See Notes to Financial Statements). The net asset value and market price reported at the original dates prior to the reverse stock split were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended March 31,
|
|
2009
|
|
|
2008
(Unaudited)
|
|
|
Net Asset Value (prior to reverse stock split)
|
|
$
|
0.88
|
|
|
$
|
2.71
|
|
|
Market Price (prior to reverse stock split)
|
|
$
|
0.71
|
|
|
$
|
3.33
|
|
|
3
|
Brookfield Investment Management, Inc. became the Advisor of the Fund on July 29, 2008.
|
See Notes to Financial Statements.
Brookfield
Investment Management Inc.
52
HELIOS STRATEGIC INCOME FUND, INC.
Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
2,3
|
|
|
2008*
,2,3
(unaudited)
|
|
|
Per Share Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
6.07
|
|
|
$
|
5.90
|
|
|
$
|
5.05
|
|
|
$
|
14.35
|
|
|
$
|
64.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.47
|
|
|
|
0.48
|
|
|
|
0.51
|
|
|
|
2.20
|
|
|
|
6.00
|
|
|
Net realized and unrealized gain (loss) on investment transactions
|
|
|
0.50
|
|
|
|
0.17
|
|
|
|
1.00
|
|
|
|
(9.10
|
)
|
|
|
(48.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net asset value resulting from operations
|
|
|
0.97
|
|
|
|
0.65
|
|
|
|
1.51
|
|
|
|
(6.90
|
)
|
|
|
(42.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.42
|
)
|
|
|
(0.45
|
)
|
|
|
(0.51
|
)
|
|
|
(1.70
|
)
|
|
|
(6.40
|
)
|
|
Return of capital distributions
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
(0.15
|
)
|
|
|
(0.70
|
)
|
|
|
(0.80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions paid
|
|
|
(0.42
|
)
|
|
|
(0.48
|
)
|
|
|
(0.66
|
)
|
|
|
(2.40
|
)
|
|
|
(7.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
6.62
|
|
|
$
|
6.07
|
|
|
$
|
5.90
|
|
|
$
|
5.05
|
|
|
$
|
14.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market price, end of year
|
|
$
|
5.94
|
|
|
$
|
5.31
|
|
|
$
|
5.46
|
|
|
$
|
4.10
|
|
|
$
|
15.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Return
†
|
|
|
20.55
|
%
|
|
|
6.24
|
%
|
|
|
51.23
|
%
|
|
|
(65.85
|
)%
|
|
|
(74.01
|
)%
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets/Supplementary Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s)
|
|
$
|
39,234
|
|
|
$
|
35,983
|
|
|
$
|
34,970
|
|
|
$
|
29,816
|
|
|
$
|
82,734
|
|
|
Gross operating expenses
|
|
|
2.14
|
%
|
|
|
2.54
|
%
|
|
|
2.34
|
%
|
|
|
2.24
|
%
|
|
|
3.86
|
%
|
|
Interest expense
|
|
|
0.55
|
%
|
|
|
0.37
|
%
|
|
|
0.47
|
%
|
|
|
0.21
|
%
|
|
|
N/A
|
1
|
|
Total expenses
|
|
|
2.69
|
%
|
|
|
2.91
|
%
|
|
|
2.81
|
%
|
|
|
2.45
|
%
|
|
|
3.86
|
%
|
|
Net expenses, including fee waivers and reimbursement and excluding interest expense, debt issuance costs and extraordinary
expenses
|
|
|
2.14
|
%
|
|
|
2.38
|
%
|
|
|
1.30
|
%
|
|
|
1.27
|
%
|
|
|
3.69
|
%
|
|
Net investment income
|
|
|
7.38
|
%
|
|
|
7.60
|
%
|
|
|
9.05
|
%
|
|
|
26.85
|
%
|
|
|
15.79
|
%
|
|
Net investment income, excluding the effect of fee waivers and reimbursement
|
|
|
7.38
|
%
|
|
|
7.44
|
%
|
|
|
8.02
|
%
|
|
|
25.93
|
%
|
|
|
15.62
|
%
|
|
Portfolio turnover rate
|
|
|
36
|
%
|
|
|
55
|
%
|
|
|
43
|
%
|
|
|
71
|
%
|
|
|
73
|
%
|
|
*
|
By correspondence dated May 27, 2010, the Fund’s independent registered public accounting firm for the fiscal year ended March 31, 2008,
informed the Fund that it’s audit report dated May 29, 2008 on the Fund’s financial statements should no longer be relied upon. Based upon the actions of the Fund’s former independent registered public accounting firm, the
financial highlights for the fiscal year ended March 31, 2008 should not be relied upon.
|
|
†
|
Total investment return is computed based upon the New York Stock Exchange market price of the Fund’s shares and excludes the effect of brokerage
commissions. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund’s dividend reinvestment plan.
|
|
1
|
Not available. During this period, interest expense was not reported separately from operating expenses.
|
|
2
|
The Fund had a 1:5 reverse stock split with ex-dividend and payable dates of August 31, 2009 and September 1, 2009, respectively. Prior year net
asset values and per share amounts have been restated to reflect the impact of the reverse stock split. (See Notes to Financial Statements). The net asset value and market price reported at the original dates prior to the reverse stock split were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended March 31,
|
|
2009
|
|
|
2008
(Unaudited)
|
|
|
Net Asset Value (prior to reverse stock split)
|
|
$
|
1.01
|
|
|
$
|
2.87
|
|
|
Market Price (prior to reverse stock split)
|
|
$
|
0.82
|
|
|
$
|
3.18
|
|
|
3
|
Brookfield Investment Management, Inc. became the Advisor of the Fund on July 29, 2008.
|
See Notes to Financial Statements.
2012 Annual Report
53
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
1. Organization
Helios Advantage Income Fund, Inc., Helios High Income Fund,
Inc., Helios Multi-Sector High Income Fund, Inc. and Helios Strategic Income Fund, Inc. (each a “Fund” and, collectively, the “Funds” or the “Helios Funds”) were organized as separate Maryland corporations on
September 7, 2004, April 16, 2003, November 14, 2005 and January 16, 2004, respectively. Each Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified,
closed-end management investment company with its own investment objective.
Brookfield Investment Management Inc. (“BIM” or
“Advisor”), a wholly-owned subsidiary of Brookfield Asset Management Inc., is registered as an investment advisor under the Investment Advisers Act of 1940, as amended, and serves as investment advisor to the Funds.
Each Fund’s primary investment objective is to seek a high level of current income with capital growth as a secondary investment objective. No
assurances can be given that each Fund’s 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 latest price
furnished by an independent pricing service or, if not valued by an independent pricing service, using prices obtained from at least two active and reliable market makers in any such security or a broker-dealer. Short-term debt securities with
remaining maturities of sixty days or less are valued at cost with interest accrued or discount accreted to the date of maturity, unless such valuation, in the judgment of the Advisor’s Valuation Committee, does not represent market value.
Investments in equity securities listed or traded on any securities exchange or traded in the over-the-counter market are valued at the
last quoted 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 Advisor’s 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 Advisor, those securities will be valued at “fair
value” as determined in good faith by the Advisor’s Valuation Committee using procedures adopted by and under the supervision of each Fund’s 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 Fund’s 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 Advisor determines that the quotation or price for a
portfolio security provided by a broker-dealer or an independent pricing service is inaccurate.
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
Brookfield
Investment Management Inc.
54
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
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 Funds have established methods of fair value measurements in accordance with GAAP. Fair value denotes the price that a 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 entity’s 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 quoted prices for similar investments, interest rates, prepayment speeds,
credit risk, etc.)
|
|
•
|
|
Level 3 -
|
|
significant unobservable inputs (including each Fund’s own assumptions in determining the fair value of investments)
|
The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated
with investing in those securities.
The following is a summary of the inputs used as of March 31, 2012 in valuing the Funds’
investments carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage Income Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
Investment
Grade
Corporate
Bonds
|
|
|
High Yield
Corporate
Bonds
|
|
|
Term
Loan
|
|
|
Common
Stocks
|
|
|
Warrants
|
|
|
Total
|
|
|
Level 1 — Quoted Prices
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
959,286
|
|
|
$
|
205,748
|
|
|
$
|
1,165,034
|
|
|
Level 2 — Quoted Prices in Inactive Markets or Other Significant Observable Inputs
|
|
|
3,147,568
|
|
|
|
53,720,285
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
56,867,853
|
|
|
Level 3 — Significant Unobservable Inputs
|
|
|
—
|
|
|
|
18,920,655
|
|
|
|
185,210
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,105,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,147,568
|
|
|
$
|
72,640,940
|
|
|
$
|
185,210
|
|
|
$
|
959,286
|
|
|
$
|
205,748
|
|
|
$
|
77,138,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Annual Report
55
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios High Income Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
Investment
Grade
Corporate
Bonds
|
|
|
High Yield
Corporate
Bonds
|
|
|
Term
Loan
|
|
|
Common
Stocks
|
|
|
Warrants
|
|
|
Total
|
|
|
Level 1 — Quoted Prices
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
701,754
|
|
|
$
|
154,345
|
|
|
$
|
856,099
|
|
|
Level 2 — Quoted Prices in Inactive Markets or Other Significant Observable Inputs
|
|
|
2,818,821
|
|
|
|
37,404,771
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,223,592
|
|
|
Level 3 — Significant Unobservable Inputs
|
|
|
—
|
|
|
|
13,709,679
|
|
|
|
145,522
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,855,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,818,821
|
|
|
$
|
51,114,450
|
|
|
$
|
145,522
|
|
|
$
|
701,754
|
|
|
$
|
154,345
|
|
|
$
|
54,934,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
Investment
Grade
Corporate
Bonds
|
|
|
High Yield
Corporate
Bonds
|
|
|
Term
Loan
|
|
|
Common
Stocks
|
|
|
Warrants
|
|
|
Total
|
|
|
Level 1 — Quoted Prices
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
797,129
|
|
|
$
|
180,032
|
|
|
$
|
977,161
|
|
|
Level 2 — Quoted Prices in Inactive Markets or Other Significant Observable Inputs
|
|
|
2,586,181
|
|
|
|
42,102,294
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,688,475
|
|
|
Level 3 — Significant Unobservable Inputs
|
|
|
—
|
|
|
|
15,840,232
|
|
|
|
158,751
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,998,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,586,181
|
|
|
$
|
57,942,526
|
|
|
$
|
158,751
|
|
|
$
|
797,129
|
|
|
$
|
180,032
|
|
|
$
|
61,664,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
Commercial
Mortgage-
Backed
Securities
|
|
|
Investment
Grade
Corporate
Bonds
|
|
|
High Yield
Corporate
Bonds
|
|
|
Term
Loan
|
|
|
Common
Stocks
|
|
|
Warrants
|
|
|
Total
|
|
|
Level 1 — Quoted Prices
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,970,611
|
|
|
$
|
154,345
|
|
|
$
|
3,124,956
|
|
|
Level 2 — Quoted Prices in Inactive Markets or Other Significant Observable Inputs
|
|
|
—
|
|
|
|
7,788,378
|
|
|
|
21,751,292
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,539,670
|
|
|
Level 3 — Significant Unobservable Inputs
|
|
|
8,205,705
|
|
|
|
—
|
|
|
|
11,827,302
|
|
|
|
132,293
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,165,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,205,705
|
|
|
$
|
7,788,378
|
|
|
$
|
33,578,594
|
|
|
$
|
132,293
|
|
|
$
|
2,970,611
|
|
|
$
|
154,345
|
|
|
$
|
52,829,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookfield
Investment Management Inc.
56
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage Income Fund, Inc.
|
|
|
|
|
|
|
|
Investments in Securities
|
|
High Yield
Corporate
Bonds
|
|
|
Term Loan
|
|
|
Total
|
|
|
Balance as of March 31, 2011
|
|
$
|
31,193,500
|
|
|
$
|
291,584
|
|
|
$
|
31,485,084
|
|
|
Accrued Discounts (Premiums)
|
|
|
172,291
|
|
|
|
8,093
|
|
|
|
180,384
|
|
|
Realized Gain/(Loss)
|
|
|
(1,299,755
|
)
|
|
|
2,784
|
|
|
|
(1,296,971
|
)
|
|
Change in Unrealized Appreciation (Depreciation)
|
|
|
927,838
|
|
|
|
(87,540
|
)
|
|
|
840,298
|
|
|
Purchases at cost
|
|
|
12,497,634
|
|
|
|
265,729
|
|
|
|
12,763,363
|
|
|
Sales proceeds
|
|
|
(17,551,421
|
)
|
|
|
(295,440
|
)
|
|
|
(17,846,861
|
)
|
|
Transfers out of Level 3
|
|
|
(7,019,432
|
)
|
|
|
—
|
|
|
|
(7,019,432
|
)
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
$
|
18,920,655
|
|
|
$
|
185,210
|
|
|
$
|
19,105,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses relating to assets still held at reporting date
|
|
$
|
(40,042
|
)
|
|
$
|
(88,633
|
)
|
|
$
|
(128,675
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios High Income Fund, Inc.
|
|
|
|
|
|
|
|
Investments in Securities
|
|
High Yield
Corporate
Bonds
|
|
|
Term Loan
|
|
|
Total
|
|
|
Balance as of March 31, 2011
|
|
$
|
20,909,956
|
|
|
$
|
229,102
|
|
|
$
|
21,139,058
|
|
|
Accrued Discounts (Premiums)
|
|
|
79,503
|
|
|
|
6,694
|
|
|
|
86,197
|
|
|
Realized Gain/(Loss)
|
|
|
140,038
|
|
|
|
1,852
|
|
|
|
141,890
|
|
|
Change in Unrealized Appreciation (Depreciation)
|
|
|
(368,554
|
)
|
|
|
(68,781
|
)
|
|
|
(437,335
|
)
|
|
Purchases at cost
|
|
|
8,661,940
|
|
|
|
208,787
|
|
|
|
8,870,727
|
|
|
Sales proceeds
|
|
|
(10,420,125
|
)
|
|
|
(232,132
|
)
|
|
|
(10,652,257
|
)
|
|
Transfers out of Level 3
|
|
|
(5,293,079
|
)
|
|
|
—
|
|
|
|
(5,293,079
|
)
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
$
|
13,709,679
|
|
|
$
|
145,522
|
|
|
$
|
13,855,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses relating to assets still held at reporting date
|
|
$
|
(56,939
|
)
|
|
$
|
(69,639
|
)
|
|
$
|
(126,578
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
|
|
|
|
|
Investments in Securities
|
|
High Yield
Corporate
Bonds
|
|
|
Term Loan
|
|
|
Total
|
|
|
Balance as of March 31, 2011
|
|
$
|
23,513,374
|
|
|
$
|
249,929
|
|
|
$
|
23,763,303
|
|
|
Accrued Discounts (Premiums)
|
|
|
107,199
|
|
|
|
7,278
|
|
|
|
114,477
|
|
|
Realized Gain/(Loss)
|
|
|
(471,896
|
)
|
|
|
2,021
|
|
|
|
(469,875
|
)
|
|
Change in Unrealized Appreciation (Depreciation)
|
|
|
298,105
|
|
|
|
(75,010
|
)
|
|
|
223,095
|
|
|
Purchases at cost
|
|
|
9,906,607
|
|
|
|
227,768
|
|
|
|
10,134,375
|
|
|
Sales proceeds
|
|
|
(12,180,371
|
)
|
|
|
(253,235
|
)
|
|
|
(12,433,606
|
)
|
|
Transfers out of Level 3
|
|
|
(5,332,786
|
)
|
|
|
—
|
|
|
|
(5,332,786
|
)
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
$
|
15,840,232
|
|
|
$
|
158,751
|
|
|
$
|
15,998,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses relating to assets still held at reporting date
|
|
$
|
(69,865
|
)
|
|
$
|
(75,947
|
)
|
|
$
|
(145,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Annual Report
57
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
|
|
|
|
|
|
Investments in Securities
|
|
Commercial
Mortgage-
Backed
Securities
|
|
|
High Yield
Corporate
Bonds
|
|
|
Term Loan
|
|
|
Total
|
|
|
Balance as of March 31, 2011
|
|
$
|
4,799,663
|
|
|
$
|
14,795,090
|
|
|
$
|
208,275
|
|
|
$
|
19,803,028
|
|
|
Accrued Discounts (Premiums)
|
|
|
(66,982
|
)
|
|
|
112,893
|
|
|
|
6,064
|
|
|
|
51,975
|
|
|
Realized Gain/(Loss)
|
|
|
—
|
|
|
|
(1,127,746
|
)
|
|
|
1,684
|
|
|
|
(1,126,062
|
)
|
|
Change in Unrealized Appreciation (Depreciation)
|
|
|
404,583
|
|
|
|
1,084,922
|
|
|
|
(62,508
|
)
|
|
|
1,426,997
|
|
|
Purchases at cost
|
|
|
3,068,441
|
|
|
|
7,991,078
|
|
|
|
189,807
|
|
|
|
11,249,326
|
|
|
Sales proceeds
|
|
|
—
|
|
|
|
(7,644,740
|
)
|
|
|
(211,029
|
)
|
|
|
(7,855,769
|
)
|
|
Transfers out of Level 3
|
|
|
—
|
|
|
|
(3,384,195
|
)
|
|
|
—
|
|
|
|
(3,384,195
|
)
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2012
|
|
$
|
8,205,705
|
|
|
$
|
11,827,302
|
|
|
$
|
132,293
|
|
|
$
|
20,165,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains or losses relating to assets still held at reporting date
|
|
$
|
404,583
|
|
|
$
|
(225,947
|
)
|
|
$
|
(63,289
|
)
|
|
$
|
115,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Transferred due to an increase/decrease of observable market data for these securities primarily an increase in trade basis information versus dealer quotes.
|
For the fiscal year ended March 31, 2012, there was no significant security transfer activity between Level 1
and Level 2.
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. Discounts and premiums on securities are accreted and amortized, respectively on a daily basis, using the
effective yield to maturity method adjusted based on management’s assessment of the collectability of such interest. Dividend income is recorded on the ex-dividend date.
Taxes:
Each 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. Each 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 March 31, 2012, the Funds have determined that there are no uncertain tax positions or tax liabilities required to be accrued.
The Funds have 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 March 31, 2012, open taxable years consisted of the taxable years ended March 31, 2009 through March 31, 2012. No examination of any of the
Fund’s tax returns is currently in progress.
Expenses:
Expenses directly attributable to a Fund are charged directly to
that Fund, while expenses which are attributable to more than one Fund are allocated among the respective Funds based upon relative net assets.
Dividends and Distributions:
Each Fund declares and pays dividends monthly from net investment income. To the extent that these distributions exceed net investment income, they may be classified as return of
capital. Each Fund also pays distributions at least annually from its net realized capital gains, if any. Dividends and distributions
Brookfield
Investment Management Inc.
58
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
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 each Fund’s 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 each 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.
When-Issued and Delayed Delivery Transactions:
The Funds may engage in when-issued or delayed delivery transactions. The Funds record
when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Cash Flow Information:
Each 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 Statements of Assets and Liabilities, and does not include short-term investments.
Accounting practices that do not affect reporting activities on a cash basis include carrying investments at value and accreting discounts and amortizing premiums on debt obligations.
3. Risks of Investing in Asset-Backed Securities and Below-Investment Grade 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 the 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.
The Funds have investments in below-investment grade debt securities. Below-investment grade securities involve a higher degree of credit risk than
investment grade debt securities. In the event of an unanticipated default, the Funds would experience a reduction in their income, a decline in the market value of the securities so affected and a decline in the NAV of their shares. During an
economic downturn or period of rising interest rates, highly leveraged and other below-investment grade issuers frequently experience financial stress that could adversely affect their ability to service principal and interest payment obligations,
to meet projected business goals and to obtain additional financing. The market prices of below-investment grade debt securities are generally less sensitive to interest rate changes than higher-rated investments but are more sensitive to adverse
economic or political changes or individual developments specific to the issuer than higher-rated investments. Periods of economic or political uncertainty and change can be expected to result in significant volatility of prices for these
securities. Rating services consider these securities to be speculative in nature.
Below-investment grade securities may be subject to
market conditions, events of default or other circumstances which cause them to be considered “distressed securities.” Distressed securities frequently do not produce income while they are outstanding. The Funds may be required to bear
certain extraordinary expenses in order to protect and recover their investments in certain distressed securities. Therefore, to the extent the Funds seek capital growth through investment in such securities, the Funds’ ability to achieve
current income for its
2012 Annual Report
59
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
stockholders may be diminished. The Funds also are subject to significant uncertainty as to when and in what manner and for what value the obligations evidenced by distressed securities will
eventually be satisfied (
e.g.
, through a liquidation of the obligor’s assets, an exchange offer or plan of reorganization involving the securities or a payment of some amount in satisfaction of the obligation). In addition, even if an
exchange offer is made or a plan of reorganization is adopted with respect to distressed securities held by the Funds, there can be no assurance that the securities or other assets received by the Funds in connection with such exchange offer or plan
of reorganization will not have a lower value or income potential than may have been anticipated when the investment was made. Moreover, any securities received by the Funds upon completion of an exchange offer or plan of reorganization may be
restricted as to resale. As a result of the Funds’ participation in negotiations with respect to any exchange offer or plan of reorganization with respect to an issuer of such securities, the Funds may be restricted from disposing of distressed
securities.
4. Investment Advisory Agreements and Affiliated Transactions
Each Fund has entered into a separate Investment Advisory Agreement (the “Advisory Agreements”) with the Advisor under which the Advisor
is responsible for the management of each Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of each Fund. The Advisory Agreements provide, among other things,
that the Advisor will bear all expenses of its employees and overhead incurred in connection with the performance of its duties under the Advisory Agreements, and will pay all salaries of the Funds’ directors and officers who are affiliated
persons (as such term is defined in the 1940 Act) of the Advisor. The Advisory Agreements provide that each Fund shall pay the Advisor a monthly fee for its services at an annual rate of 0.65% of each Fund’s average daily total assets minus
liabilities (other than aggregate indebtedness entered into for purposes of leverage).
Each Fund previously entered into a separate
expense limitation agreement (the “Expense Limitation Agreements”) under which the Advisor contractually agreed to waive its fees and/or reimburse each Fund for its expenses to the extent necessary to ensure each Fund’s annual
operating expenses (excluding brokerage, interest expenses and taxes, and acquired fund fees and expenses) did not exceed 1.30% of average annual net assets of each Fund. The Expense Limitation Agreements terminated effective July 29, 2010.
Pursuant to the Expense Limitation Agreements, the Advisor retains its right to receive reimbursement of any payments made by it, or to recoup any fees waived by it during the prior three fiscal years, provided that after giving effect to such
repayment or recoupment, such adjusted total annual operating expenses (expressed as a percentage of average net assets) for each Fund would not exceed the percentage limitations listed above.
The amount of investment advisory fees waived and expenses reimbursed available to be recouped and the year of expiration for each Fund are listed
in the table below:
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
March 31, 2013
|
|
|
Up to July 29, 2013
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
374,959
|
|
|
$
|
32,427
|
|
|
Helios High Income Fund, Inc.
|
|
|
337,154
|
|
|
|
58,511
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
353,979
|
|
|
|
44,492
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
341,483
|
|
|
|
57,099
|
|
During the fiscal year ended March 31, 2012, the Advisor earned the following in investment advisory fees
under the Advisory Agreements.
|
|
|
|
|
|
|
Fund
|
|
Investment
Advisory Fees
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
510,243
|
|
|
Helios High Income Fund, Inc.
|
|
|
366,899
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
413,540
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
342,011
|
|
|
|
|
|
|
|
|
|
|
$
|
1,632,693
|
|
|
|
|
|
|
|
Brookfield
Investment Management Inc.
60
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
The Funds have entered into an Administration Agreement with the Advisor. The Advisor entered into a sub-administration agreement with U.S. Bancorp Fund Services, LLC (the “Sub-Administrator”), located at
615 East Michigan Street, Milwaukee, Wisconsin 53202, which replaced State Street Bank and Trust Company as the sub-administrator of the Funds effective October 1, 2011. The Advisor and Sub-Administrator perform administrative services
necessary for the operation of the Funds, including maintaining certain books and records of the Funds and preparing reports and other documents required by federal, state, and other applicable laws and regulations, and providing the Funds with
administrative office facilities. For these services, each Fund pays to the Advisor a monthly fee at an annual rate of 0.15% of each Fund’s average daily total assets minus liabilities (other than the aggregate indebtedness entered into for
purposes of leverage). The Advisor is responsible for any fees due the Sub-Administrator.
During the fiscal year ended March 31,
2012, the Advisor earned the following in Administration fees:
|
|
|
|
|
|
|
Fund
|
|
Administration Fee
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
117,748
|
|
|
Helios High Income Fund, Inc.
|
|
|
84,669
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
95,432
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
78,926
|
|
|
|
|
|
|
|
|
|
|
$
|
376,775
|
|
|
|
|
|
|
|
Certain officers and/or directors of the Funds are officers and/or directors of the Advisor.
5. Purchases and Sales of Investments
Purchases and sales of investments, excluding short-term securities, credit facility and U.S. Government securities, for the fiscal year ended March 31, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Purchases
|
|
|
Sales
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
24,565,534
|
|
|
$
|
22,254,517
|
|
|
Helios High Income Fund, Inc.
|
|
|
16,577,204
|
|
|
|
15,749,130
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
19,445,697
|
|
|
|
18,094,420
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
21,186,410
|
|
|
|
18,383,532
|
|
For the fiscal year ended March 31, 2012, there were no transactions in U.S. Government securities.
6. Borrowings
Credit facility:
The Funds established a line of credit with BNP Paribas for investment purposes subject to the limitations of the 1940 Act
for borrowings by registered investment companies. Each Fund pays interest in the amount of 0.80% plus the 3-month London Interbank Offered Rate on the amount outstanding and 0.80% on the line of credit that is unused. For the fiscal year ended
March 31, 2012, the average interest rate paid on the amounts outstanding under the line of credit was 1.18% for each of the Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage
Income Fund, Inc.
|
|
|
Helios High
Income Fund, Inc.
|
|
|
Helios Multi-Sector
High Income Fund, Inc.
|
|
|
Helios Strategic
Income Fund, Inc.
|
|
|
Total line of credit amount available
|
|
$
|
27,000,000
|
|
|
$
|
19,000,000
|
|
|
$
|
22,000,000
|
|
|
$
|
18,000,000
|
|
|
Line of credit outstanding at March 31, 2012
|
|
|
23,700,000
|
|
|
|
17,425,000
|
|
|
|
19,800,000
|
|
|
|
15,950,000
|
|
|
Line of credit amount unused at March 31, 2012
|
|
|
3,300,000
|
|
|
|
1,575,000
|
|
|
|
2,200,000
|
|
|
|
2,050,000
|
|
|
Average balance outstanding during the period
|
|
|
22,532,109
|
|
|
|
17,016,287
|
|
|
|
19,265,552
|
|
|
|
15,133,153
|
|
|
Interest expense incurred on line of credit during the year
|
|
|
309,094
|
|
|
|
221,957
|
|
|
|
255,232
|
|
|
|
206,437
|
|
2012 Annual Report
61
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
7. Reverse Stock Split
Effective September 1, 2009, each Fund affected a
1 for 5 reverse stock split for its respective shares. All share transactions in capital stock and per share data prior to September 1, 2009, have been restated to give effect of the reverse stock split. The reverse stock split had no impact on
the overall value of a stockholder’s investment in each Fund.
8. Capital Stock
Each Fund is authorized to issue 1,000,000,000 shares of capital stock with a par value of $0.0001 per share. The Funds’ Boards of Directors
are authorized to classify and reclassify any unissued shares of capital stock from time to time by setting or changing any preferences, conversion or other rights, voting powers, or, restrictions, limitations as to dividends, qualifications, or
terms or conditions for the redemption of such shares by the Funds. The common shares have no preemptive, conversion, exchange or redemption rights. All common shares 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 Funds have no present intentions of offering additional
shares, except as described in the Dividend Reinvestment Plan on page 76.
9. 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 fiscal year ended March 31, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage
Income Fund, Inc.
|
|
|
Helios High
Income Fund, Inc.
|
|
|
Helios Multi- Sector
High Income Fund, Inc.
|
|
|
Helios Strategic
Income Fund, Inc.
|
|
|
Ordinary
income
(1)
|
|
$
|
4,722,655
|
|
|
$
|
3,484,189
|
|
|
$
|
3,661,470
|
|
|
$
|
2,490,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
$
|
4,722,655
|
|
|
$
|
3,484,189
|
|
|
$
|
3,661,470
|
|
|
$
|
2,490,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
|
The tax character of distributions paid for the fiscal year ended March 31, 2011 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage
Income Fund, Inc.
|
|
|
Helios High
Income Fund, Inc.
|
|
|
Helios Multi-Sector
High Income Fund, Inc.
|
|
|
Helios Strategic
Income Fund, Inc.
|
|
|
Ordinary
income
(1)
|
|
$
|
4,706,314
|
|
|
$
|
3,337,932
|
|
|
$
|
3,642,498
|
|
|
$
|
2,668,637
|
|
|
Return of capital
|
|
|
—
|
|
|
|
144,192
|
|
|
|
—
|
|
|
|
148,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
$
|
4,706,314
|
|
|
$
|
3,482,124
|
|
|
$
|
3,642,498
|
|
|
$
|
2,816,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For tax purposes, short-term capital gain distributions are considered ordinary income distributions.
|
At March 31, 2012, each Fund’s most recently completed tax year-end, the components of net assets (excluding paid-in capital) on a tax
basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage
Income Fund, Inc.
|
|
|
Helios High
Income Fund, Inc.
|
|
|
Helios Multi-Sector
High Income Fund, Inc.
|
|
|
Helios Strategic
Income Fund, Inc.
|
|
|
Undistributed ordinary income
|
|
$
|
373,065
|
|
|
$
|
34,148
|
|
|
$
|
376,505
|
|
|
$
|
276,511
|
|
|
Capital loss carryforward
(1)
|
|
|
(401,012,492
|
)
|
|
|
(299,376,208
|
)
|
|
|
(450,100,115
|
)
|
|
|
(365,491,429
|
)
|
|
Unrealized appreciation
|
|
|
3,227,245
|
|
|
|
2,339,119
|
|
|
|
2,372,396
|
|
|
|
2,294,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(397,412,182
|
)
|
|
$
|
(297,002,941
|
)
|
|
$
|
(447,351,214
|
)
|
|
$
|
(362,920,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
To the extent future capital gains are offset by capital loss carryforwards, such
gains will not be distributed.
|
Brookfield
Investment Management Inc.
62
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
As of March 31, 2012, the Funds’ capital loss carryforwards were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Expiring in
2014
|
|
|
Expiring in
2015
|
|
|
Expiring in
2016
|
|
|
Expiring in
2017
|
|
|
Expiring in
2018
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54,307,610
|
|
|
$
|
175,931,140
|
|
|
$
|
170,773,742
|
|
|
Helios High Income Fund, Inc.
|
|
|
—
|
|
|
|
—
|
|
|
|
42,347,138
|
|
|
|
130,227,458
|
|
|
|
126,801,612
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
—
|
|
|
|
—
|
|
|
|
61,500,585
|
|
|
|
205,725,325
|
|
|
|
182,874,205
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
1,362,197
|
|
|
|
193,592
|
|
|
|
59,889,208
|
|
|
|
152,878,553
|
|
|
|
151,167,879
|
|
Federal Income Tax Basis:
The federal income tax basis of the Funds’ investments at March 31, 2012
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Cost of
Investments
|
|
|
Gross Unrealized
Appreciation
|
|
|
Gross Unrealized
Depreciation
|
|
|
Net Unrealized
Appreciation
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
73,911,507
|
|
|
$
|
4,743,148
|
|
|
$
|
(1,515,903
|
)
|
|
$
|
3,227,245
|
|
|
Helios High Income Fund, Inc.
|
|
|
52,595,773
|
|
|
|
3,513,499
|
|
|
|
(1,174,380
|
)
|
|
|
2,339,119
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
59,292,223
|
|
|
|
3,707,839
|
|
|
|
(1,335,443
|
)
|
|
|
2,372,396
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
50,535,195
|
|
|
|
3,711,662
|
|
|
|
(1,416,931
|
)
|
|
|
2,294,731
|
|
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 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 NAV per share.
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Undistributed
Net Investment Income
|
|
|
Paid in Capital
|
|
|
Helios Strategic Income Fund, Inc.
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
10. Indemnification
Under each Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to each Fund. In addition, in the normal course
of business, the Funds enter into contracts with their 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 Funds. Thus, an estimate of the financial impact, if any, of these arrangements cannot be made at this time.
11. New Accounting Pronouncements
In May, 2011, the Financial Accounting
Standards Board issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements” in U.S. GAAP and International Financial Reporting Standards. ASU
No. 2011-04 requires additional disclosures regarding fair value measurements. Effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years, entities will need to disclose the following:
|
|
1)
|
the amounts of any transfers between Level 1 and Level 2 and the reasons for those transfers, and
|
|
|
2)
|
for Level 3 fair value measurements, quantitative information about the significant unobservable inputs used, a description of the entity’s valuation
processes, and a narrative description of the sensitivity of the fair value measurement to changes in the unobservable inputs and the interrelationship between inputs.
|
Management is currently evaluating the impact this pronouncement will have on the Funds’ financial statement disclosures.
2012 Annual Report
63
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
12. Pending Litigation
Beginning in late 2007, lawsuits were filed in state
and federal courts in Tennessee, Alabama, Arkansas, Indiana, Mississippi, Louisiana, New York and Texas relating to certain fixed income funds managed by the Advisor, including the Funds. Certain of the cases were filed as putative class actions on
behalf of investors who purchased shares of the Funds from December 2004 through February 2008 and other cases were filed as actions on behalf of one or more individuals or trusts. The complaints name various entities and individuals as defendants
including, among others, the Funds, the former advisor, Morgan Asset Management, Inc. (“MAM”), Morgan Keegan & Company, Inc. (“Morgan Keegan”), Regions Financial Corporation and several affiliates (“Regions”),
certain former directors and former officers of the Funds and the Funds’ former portfolio managers. The complaints generally allege that the defendants misrepresented or failed to disclose material facts relating to portfolio composition, fair
valuation, liquidity and risk in Fund registration statements and other documents. The plaintiffs seek damages in amounts to be determined at trial and reasonable costs and, in some cases, attorneys’ fees. Each of the cases is at a preliminary
stage. An answer was filed in a state court case,
Burke v. Citigroup Global Markets, Inc.
pending in the circuit court of Jefferson County, Alabama, on behalf of Helios Multi-Sector High Income Fund, Inc. and Helios Strategic Income Fund,
Inc. Other than the Burke case and the motions to dismiss filed in the actions discussed below, no responses to the complaints have been filed in the actions pending against the Funds, and no classes have been certified in any of the putative class
actions filed against the Funds. As discussed further below, the Funds moved to dismiss the consolidated class action related to the closed-end funds, but the Court denied the motion as it relates to the Funds. The parties in this action have agreed
to an extension until June 2012 for the filing of an answer to the complaint.
On March 13, 2008, a derivative action was filed in
the United States District Court for the Western District of Tennessee seeking damages on behalf of Helios Multi-Sector High Income Fund, Inc. against MAM and certain former directors of the Fund. The complaint in this action alleged, among other
things, that defendants MAM and certain former directors of the Fund breached their fiduciary duties and mismanaged the Fund in connection with portfolio composition, fair valuation, liquidity, risk management and disclosure. The complaint sought
damages in an amount to be determined at trial and reasonable costs and attorneys’ fees. Motions to dismiss the complaint were filed by the respective defendants. The Board of the Fund underwent an investigation of the underlying allegations in
the complaint to determine whether pursuit of such claims is in the best interest of the Fund. The Fund moved to dismiss the action without prejudice, or alternatively, to stay the action pending the completion of the Board’s investigation of
the underlying allegations and its determination as to proceeding on behalf of the Fund. On March 10, 2010, the court granted the defendants’ motions to dismiss and dismissed the action without prejudice to the Fund’s right to seek
remuneration for any perceived wrongs on the completion of its Board’s investigation.
Subsequently, on March 18, 2010, four
derivative actions were filed on behalf of each of the Funds. The complaints in these actions allege, among other things, that defendants MAM, and certain former officers and directors of the Funds breached their fiduciary duties and mismanaged the
Funds in connection with portfolio composition, fair valuation, liquidity, risk management and disclosure. The complaints seek equitable relief, damages in an amount to be determined at trial and reasonable costs and attorneys’ fees. The
proceedings are at a preliminary stage. On November 5, 2010, the Court granted plaintiff’s unopposed motion for consolidation of these actions, and on December 6, 2010, plaintiffs filed a consolidated amended complaint. The Boards of
the Funds have undertaken an investigation of the underlying allegations in the consolidated amended complaint to determine whether pursuit of such claims is in the best interest of the Funds. On January 24, 2011, the Funds filed a motion for a
stay of the action pending the completion of the Boards’ investigation or, in the alternative, until April 6, 2011. Also on January 24, 2011, the non-Fund defendants filed motions to dismiss the consolidated amended complaint. On
February 9, 2011, the Court granted the Funds’ motion and stayed the case until April 6, 2011. On April 6, 2011, the Funds and derivative plaintiffs filed a joint, unopposed motion for a sixty-day extension of the stay of the
case to facilitate their discussion of a possible resolution of the issues in this action. The Court granted this motion on April 8, 2011, staying the case until June 6, 2011. Per the Court’s June 28, 2011 Scheduling Order,
derivative plaintiffs filed their motion in opposition to the non-Fund defendants’ motion to
Brookfield
Investment Management Inc.
64
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
dismiss on July 19, 2011. Non-Fund defendants filed their reply on August 18, 2011. On September 9, 2011, the Court entered an order granting non-Fund defendants’ motion to
dismiss without prejudice. Following the Board’s investigation, the Board has authorized derivative plaintiffs’ counsel to pursue the derivative claims on behalf of the closed-end funds. On October 21, 2011, derivative plaintiffs
filed a verified shareholder derivative complaint, with plans to file an amended complaint soon thereafter. Subsequently, on November 15, 2011, derivative plaintiffs filed a verified amended shareholder derivative complaint. On January 13,
2012, non-Fund defendants filed a motion to dismiss the amended derivative complaint. Derivative plaintiffs filed their opposition brief on February 27, 2012, and defendants’ replies were filed on March 28, 2012. A decision on the
motion to dismiss is still pending.
Claims substantially similar to those described above have been made in lawsuits filed in the
United States Federal and state courts concerning certain open-end funds formerly managed by the Advisor. Motions to dismiss the open-end derivative and open-end class actions were filed by the respective defendants. The open-end fund defendants
moved to dismiss the open-end derivative action without prejudice, or alternatively, to stay such action pending the completion of the Board investigation described above. On September 24, 2010, the Court denied defendants’ motions to
dismiss but granted a stay of the action pending receipt by October 25, 2010 of a report by the Board regarding the status of its investigation; on October 22, 2010, the Board filed a status report, and requested that the stay be extended
until November 30, 2010. The open-end fund defendants separately moved to dismiss the open-end class actions for failure to state a claim. On September 30, 2010, the Court issued an order granting in part and denying in part
defendants’ motions to dismiss. Defendants’ time to answer the surviving claims was extended until November 30, 2010. On November 30, 2010, the open-end funds filed an additional status report in the open-end derivative action,
including a proposed memorandum of understanding between the open-end funds and derivative plaintiffs regarding the resolution of some of the issues in the open-end derivative and class actions and the realignment of the open-end funds as plaintiffs
in the open-end derivative action (the “MOU”). The open-end funds and derivative plaintiffs also filed a motion for an extension of the stay to facilitate the steps necessary to seek approval of the MOU and the proposed settlement. On
December 10, 2010, the Court granted the joint motion and stayed the action until April 6, 2011. On December 16, 2010, the Court entered a scheduling order in the open-end class action that gave plaintiffs until April 6, 2011 to file the
necessary motions seeking approval of the proposed partial settlement. On March 14, 2011, the open-end funds and derivative plaintiffs filed a joint motion for approval of the proposed notice to the open-end funds’ shareholders and final
approval of the MOU in the open-end derivative action. On that same date, the open-end funds and lead plaintiffs filed a joint motion for preliminary approval of the proposed partial settlement and approval of notice to the settlement class members
in the open-end class action. Non-Fund defendants filed opposition papers on April 18, 2011. On June 21, 2011 the Funds and plaintiffs executed an amended MOU (the “Amended MOU”), which was submitted to the Court together with
the reply papers of the Funds and plaintiffs on June 24, 2011. The non-Fund defendants filed their sur-reply papers on August 1, 2011. On August 12, 2011, plaintiffs and the Funds filed a motion with the Court requesting leave to file
sur-sur-reply briefs in response to the non-Fund defendants’ sur-reply briefs. On September 6, 2011, plaintiffs and the Funds filed a joint motion to strike the Declaration of Nancy J. Moore (the “Moore Declaration”), submitted
in support of the non-Fund defendants’ opposition to final approval of the Amended MOU and partial settlement. Non-Fund defendants filed their opposition brief September 20, 2011, and plaintiffs and the Funds filed their reply brief on
October 27, 2011. The Court held a hearing on the motion to strike the Moore Declaration on December 7, 2011, and on January 4, 2012, the Court entered an order denying the motion to strike. On March 26, 2012, the Court granted
plaintiffs’ and the Funds’ joint motion for leave to file a sur-sur-reply on the Amended MOU briefing. On April 18, 2012, plaintiffs and the Funds each filed their respective sur-sur-reply briefs. A decision on the motion to approve
the Amended MOU and partial settlement is still pending.
On September 23, 2008, most of the cases pending in federal court in the
Western District of Tennessee in which the Funds are defendants, and other cases pending in that court involving the same or similar claims against other defendants, were consolidated into a single proceeding encaptioned
In re Regions Morgan
Keegan Closed End Fund Litigation
. On December 15, 2010, the Court entered an order appointing lead plaintiffs and lead counsel and consolidating the various actions in this proceeding. On February 22, 2011, plaintiffs filed a
2012 Annual Report
65
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
consolidated amended class action complaint, alleging Section 11 and Section 12 securities violations against Helios Multi-Sector High Income Fund, and Section 10b securities
violations against all four Closed-End Funds. On April 13, 2011, the Funds filed a motion to dismiss the consolidated amended complaint with prejudice. The non-Fund defendants filed separate motions to dismiss the consolidated amended complaint
on April 13, 2011. Per the Court’s May 20, 2011 Scheduling Order, plaintiffs filed their brief in opposition to the Funds’ and non-Fund defendants’ separate motions to dismiss on June 17, 2011. The Funds and non-Fund
defendants filed their replies in support of their separate motions to dismiss on August 12, 2011. On March 30, 2012, the Court entered an order granting in part and denying in part the motion to dismiss. The Court dismissed certain claims
against the Officer Co-Defendants, but denied dismissal of all other claims. On April 13, 2012, plaintiffs filed a consolidated amended class action complaint. Also on April 13, 2012, co-defendants and the Funds filed a joint, unopposed
motion for an extension on the filing of an answer to the amended class action complaint until June 11, 2012.
On February 12,
2009, the Judicial Panel on Multidistrict Litigation (“Judicial Panel”) issued an order transferring related actions pending in other federal courts to the United States District Court for the Western District of Tennessee and directing
that the transferred cases be coordinated or consolidated with the above-described actions relating to the Funds (the “MDL proceeding”).
On June 18 and June 23, 2010, respectively, two actions were filed in the Northern District of Alabama against Morgan Keegan, MK Holding, Inc., the Funds, and certain other defendants. These complaints
generally allege that the defendants misrepresented or failed to disclose material facts relating to portfolio composition, fair valuation, liquidity and risk in Fund prospectuses and registration statements. The plaintiffs seek damages in amounts
to be determined at trial and attorneys’ fees. On July 28, 2010, joint motions were filed by plaintiffs, Morgan Keegan and MK Holding, Inc. in these proceedings for temporary stays pending transfer to the Western District of Tennessee for
consolidated or coordinated pretrial proceedings as part of the MDL proceeding. The Court entered the MDL transfer order consolidating the actions on August 31, 2010.
On July 12, 2010, a putative class action was filed in the Western District of Tennessee against MAM, Morgan Keegan, Regions, MK Holding, Inc., the Funds, and certain other defendants. The action purports to
assert claims under the Employee Retirement Income Security Act of 1974 (“ERISA”), on behalf of all ERISA plans for which Regions Bank serves or served as trustee, custodian or agent that owned or held shares of certain investment funds,
which are subject of the multidistrict litigation discussed above. The Funds, together with certain open-end funds formerly managed by the Advisor, are sued as Nonfiduciary Parties in Interest, and are alleged to be liable, and subject to equitable
remedies, for allegedly knowingly participating in breaches of ERISA fiduciary duties by other defendants, or wrongfully obtaining or receiving assets from the Regions ERISA Trusts. Plaintiffs also allege that the Funds are liable for the conduct of
certain other defendants who allegedly acted as agents of the Funds. The action seeks equitable remedies, including a constructive trust and/or restitution of assets allegedly wrongfully obtained or received, as well as fees, profits, bonuses,
dividends or other remuneration, together with damages in an amount to be determined at trial and reasonable costs and attorneys’ fees. On September 9, 2010, the non-Fund defendants filed a motion to consolidate this action with other
ERISA cases in which the Funds are not named as defendants. On April 25, 2011, the Court granted defendants’ motion to consolidate the ERISA actions. On May 20, 2011, the ERISA plaintiffs filed a Third Amended Consolidated Class Action
Complaint that no longer names the Funds as defendants in the action.
No estimate of the effect, if any, of these lawsuits on the Funds
can be made at this time.
Brookfield
Investment Management Inc.
66
HELIOS FUNDS
Notes to Financial Statements
March 31, 2012
13. Settlement Proceeds
During the fiscal year ended March 31, 2012, the
Funds received settlements of various claims from certain securities previously held in their portfolios in the following amounts:
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Amount Received
|
|
|
Per Share
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
3,976,032
|
|
|
$
|
0.61
|
|
|
Helios High Income Fund, Inc.
|
|
|
2,956,097
|
|
|
|
0.61
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
3,946,645
|
|
|
|
0.52
|
|
|
Helios Strategic Income Fund, Inc.
|
|
|
2,956,097
|
|
|
|
0.50
|
|
These amounts are included in net realized gains on investment transactions on the Statements of Operations.
14. 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 Statements of Assets and Liabilities.
For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Dividend Per Share
|
|
|
Record Date
|
|
|
Payable Date
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
0.0625
|
|
|
|
April 18, 2012
|
|
|
|
April 26, 2012
|
|
|
Helios High Income Fund, Inc.
|
|
$
|
0.0600
|
|
|
|
April 18, 2012
|
|
|
|
April 26, 2012
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
$
|
0.0425
|
|
|
|
April 18, 2012
|
|
|
|
April 26, 2012
|
|
|
Helios Strategic Income Fund, Inc.
|
|
$
|
0.0350
|
|
|
|
April 18, 2012
|
|
|
|
April 26, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Dividend Per Share
|
|
|
Record Date
|
|
|
Payable Date
|
|
|
Helios Advantage Income Fund, Inc.
|
|
$
|
0.0625
|
|
|
|
May 16, 2012
|
|
|
|
May 31, 2012
|
|
|
Helios High Income Fund, Inc.
|
|
$
|
0.0600
|
|
|
|
May 16, 2012
|
|
|
|
May 31, 2012
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
$
|
0.0425
|
|
|
|
May 16, 2012
|
|
|
|
May 31, 2012
|
|
|
Helios Strategic Income Fund, Inc.
|
|
$
|
0.0350
|
|
|
|
May 16, 2012
|
|
|
|
May 31, 2012
|
|
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
67
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
Helios Advantage Income Fund,
Inc.,
Helios High Income Fund, Inc.,
Helios Multi-Sector High Income Fund, Inc. and
Helios Strategic Income
Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the
Helios Advantage Income Fund, Inc., Helios High Income Fund, Inc., Helios Multi-Sector High Income Fund, Inc. and Helios Strategic Income Fund, Inc. as of March 31, 2012, and the related statements of operations and cash flows for the year then
ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended. 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 were not engaged to audit nor have we audited the financial highlights for the
year ended March 31, 2008. Accordingly, we express no opinion or any other form of assurance on the financial highlights for the year ended March 31, 2008.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 2012, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material respects, the financial position of the Helios Advantage Income Fund, Inc., Helios High Income Fund, Inc., Helios Multi-Sector High Income Fund, Inc. and Helios Strategic
Income Fund, Inc. as of March 31, 2012, the results of their operations and cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the
four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
BBD,
LLP
Philadelphia, Pennsylvania
May 25, 2012
Brookfield
Investment Management Inc.
68
HELIOS FUNDS
Tax Information (Unaudited)
March 31, 2012
QUALIFIED DIVIDEND INCOME/DIVIDENDS RECEIVED DEDUCTION
For the fiscal year
ended March 31, 2012, certain dividends paid by the Funds 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 as follows:
|
|
|
|
|
|
|
Fund
|
|
Percentage
|
|
|
Helios Advantage Income Fund, Inc.
|
|
|
0.63
|
%
|
|
Helios High Income Fund, Inc.
|
|
|
0.75
|
%
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
0.66
|
%
|
|
Helios Strategic Income Fund, Inc.
|
|
|
4.96
|
%
|
For corporate stockholders, the percent of ordinary income distributions qualifying for the corporate dividends
received deduction for the fiscal year ended March 31, 2012 was as follows:
|
|
|
|
|
|
|
Fund
|
|
Percentage
|
|
|
Helios Advantage Income Fund, Inc.
|
|
|
0.63
|
%
|
|
Helios High Income Fund, Inc.
|
|
|
0.75
|
%
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
|
0.66
|
%
|
|
Helios Strategic Income Fund, Inc.
|
|
|
5.19
|
%
|
2012 Annual Report
69
HELIOS FUNDS
Compliance Certifications (Unaudited)
March 31, 2012
On November 21, 2011, the Funds submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the Funds’
principal executive officer certified that he was not aware, as of that date, of any violation by the Funds of the NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and
related SEC rules, the Funds’ principal executive and principal financial officers have made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Funds’ disclosure controls
and procedures and internal control over financial reporting, as applicable.
Brookfield
Investment Management Inc.
70
HELIOS FUNDS
Proxy Results (Unaudited)
March 31, 2012
During the fiscal year ended March 31, 2012, the stockholders of the Helios Advantage Income Fund, Inc., Helios High Income Fund, Inc., Helios Multi-Sector High Income Fund Inc. and Helios Strategic Income
Fund, Inc. voted on the following proposals at a stockholder meeting on November 17, 2011. The description of the proposal and number of shares voted are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios Advantage Income Fund, Inc.
|
|
Shares Voted
For
|
|
|
Shares Voted
Against
|
|
|
Shares Voted
Abstain
|
|
|
1 To elect to the Funds’ Board of Directors Louis P.
Salvatore
|
|
|
6,027,142
|
|
|
|
159,407
|
|
|
|
—
|
|
|
|
|
|
|
|
Helios High Income Fund, Inc.
|
|
Shares Voted
For
|
|
|
Shares Voted
Against
|
|
|
Shares Voted
Abstain
|
|
|
1 To elect to the Funds’ Board of Directors Louis P.
Salvatore
|
|
|
4,383,093
|
|
|
|
124,575
|
|
|
|
—
|
|
|
|
|
|
|
|
Helios Multi-Sector High Income Fund, Inc.
|
|
Shares Voted
For
|
|
|
Shares Voted
Against
|
|
|
Shares Voted
Abstain
|
|
|
1 To elect to the Funds’ Board of Directors Louis P.
Salvatore
|
|
|
6,750,123
|
|
|
|
236,610
|
|
|
|
—
|
|
|
|
|
|
|
|
Helios Strategic Income Fund, Inc.
|
|
Shares Voted
For
|
|
|
Shares Voted
Against
|
|
|
Shares Voted
Abstain
|
|
|
1 To elect to the Funds’ Board of Directors Louis P.
Salvatore
|
|
|
5,140,096
|
|
|
|
176,723
|
|
|
|
—
|
|
2012 Annual Report
71
HELIOS FUNDS
Information Concerning Directors and Officers (Unaudited)
The following tables provide information concerning the directors and officers of Helios Advantage Income Fund, Inc., Helios High Income Fund, Inc., Helios Multi-Sector High Income Fund, Inc. and Helios Strategic
Income Fund, Inc. (the “Funds”).
Directors of the Funds
|
|
|
|
|
|
|
|
|
Name, Address and Age
|
|
Position(s) Held with
Funds and Term of Office
and Length of Time Served
|
|
Principal Occupation(s) During Past 5 Years and
Other Directorships Held by Director
|
|
Number of Portfolios
in Fund Complex
Overseen by Director
|
|
|
|
|
|
Disinterested Directors
|
|
|
|
|
|
Class I Director to serve until 2012 Annual Meeting of Stockholders:
|
|
|
|
|
|
|
|
|
Stuart A. McFarland c/o Three World Financial Center, 200 Vesey Street, 24
th
Floor,
New York, New York, 10281-1010
Age 65
|
|
Director, Member of the Audit Committee, Member of the Nominating and Compensation Committee
Elected since 2008
|
|
Director/Trustee of several investment companies advised by the Advisor (2006-Present); Director of United Guaranty Corporation (2011-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).
|
|
6
|
|
|
|
|
|
Disinterested Director
|
|
|
|
|
|
Class II Director to serve until 2013 Annual Meeting of Stockholders:
|
|
|
|
|
|
|
|
|
Rodman L. Drake
c/o Three World Financial Center,
200 Vesey Street, 24
th
Floor,
New York, New York,
10281-1010
Age 69
|
|
Director and Chairman of the Board, Member of the Audit Committee, Chairman of Nominating and Compensation Committee
Elected since 2008
|
|
Chairman (since 2003) and Director/Trustee of several investment companies advised by the Advisor (1989-Present); Director and/or Lead Director of Crystal River Capital, Inc. (2005-2010);
Chairman of the Board (2005-2010); Interim President and Chief Executive Officer of Crystal River Capital, Inc. (2009-2010); Director of Celgene Corporation (2006-Present); Director of Student Loan Corporation (2005-Present); Director of Apex Silver
Mines Limited (2007-2009); Co-founder, Baringo Capital LLC (2002-Present); Director of Jackson Hewitt Tax Services Inc. (2004-2011); Director of Animal Medical Center (2002-Present); Director and/or Lead Director of Parsons Brinckerhoff, Inc.
(1995-2008); Trustee and Chairman of Excelsior Funds (1994-2007); Trustee of Columbia Atlantic Funds (2007-2009); Chairman of Columbia Atlantic Funds (2009-Present).
|
|
11
|
|
|
|
|
|
|
Diana H. Hamilton
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York,
10281-1010
Age 55
|
|
Director, Member of the Audit Committee, Member of the Nominating and Compensation Committee
Elected since 2009
|
|
Director/Trustee of several investment companies advised by the Advisor (2004-Present); President, Sycamore Advisors, LLC, a municipal finance advisory firm (2004-Present).
|
|
6
|
Brookfield
Investment Management Inc.
72
HELIOS FUNDS
Information Concerning Directors and Officers (Unaudited)
Directors of the Funds (continued)
|
|
|
|
|
|
|
|
|
Name, Address and Age
|
|
Position(s) Held with
Funds and Term of Office
and Length of Time Served
|
|
Principal Occupation(s) During Past 5 Years and
Other Directorships Held by Director
|
|
Number of Portfolios
in Fund Complex
Overseen by Director
|
|
|
|
|
|
Disinterested Director
|
|
|
|
|
|
Class III Director to serve until 2014 Annual Meeting of Stockholders:
|
|
|
|
|
|
|
|
|
Louis P. Salvatore
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York,
10281-1010
Age 65
|
|
Director, Chairman of the Audit Committee, Member of the Nominating and Compensation Committee
Elected since 2008
|
|
Director/Trustee of several investment companies advised by the Advisor (2005-Present); Director of Crystal River Capital, Inc. (2005-2010); Director of Turner Corp. (2003-Present); Director
of Jackson Hewitt Tax Services, Inc. (2004-2011); Employee of Arthur Andersen LLP (2002-Present).
|
|
11
|
2012 Annual Report
73
HELIOS FUNDS
Information Concerning Directors and Officers (Unaudited)
Officers of the Funds
|
|
|
|
|
|
|
|
|
Name, Address and Age
|
|
Position(s)
Held with Funds
|
|
Term of Office and
Length of Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
Kim G. Redding*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York,
10281-1010
Age 56
|
|
President
|
|
Elected Annually Since February 2010
|
|
President of several investment companies advised by the Advisor (2010-Present); Chief Executive Officer and Chief Investment Officer of the Advisor (2010-Present); Director, Brookfield
Investment Management (UK) Limited (2011-Present); Director and Chairman of the Board of Directors, Brookfield Investment Management (Canada) Inc. (2011-Present); Co-Chief Executive Officer and Chief Investment Officer of the Advisor (2009-2010);
Director, Brookfield Investments Funds (UCITS) PLC (2011-Present); Director, Brookfield Investment Funds (QIF) PLC (2011-Present); Founder and Chief Executive Officer of Brookfield Redding LLC (2001-2009); Founder and Chief Executive Officer of
Brookfield Redding LLC (2001-2009).
|
|
|
|
|
|
|
Dana E. Erikson*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York,
10281-1010
Age 46
|
|
Vice President
|
|
Elected Annually Since July 2008
|
|
Senior Portfolio Manager/Managing Director of the Advisor (2006-Present); Vice President of one other investment company advised by the Advisor (2009-Present).
|
|
|
|
|
|
|
Richard M. Cryan*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York
10281-1010
Age 56
|
|
Vice President
|
|
Elected Annually Since May 2011
|
|
Vice President of several investment companies advised by the Advisor (2011-present); Senior Portfolio Manager of the Advisor (2006-Present); Managing Director of the Advisor
(2006-Present).
|
|
|
|
|
|
|
Mark Shipley*
c/o Three World
Financial Center,
200 Vesey Street,
24
h
Floor,
New York, New York
10281-1010
Age 40
|
|
Vice President
|
|
Elected Annually Since May 2011
|
|
Vice President of several investment companies advised by the Advisor (2011-present); Portfolio Manager of the Advisor (2011-Present); Managing Director of the Advisor (2011-Present);
Director of the Advisor (2006-2010); Analyst of the Advisor (2006-2010).
|
Brookfield
Investment Management Inc.
74
HELIOS FUNDS
Information Concerning Directors and Officers (Unaudited)
Officers of the Funds (continued)
|
|
|
|
|
|
|
|
|
Name, Address and Age
|
|
Position(s)
Held with Funds
|
|
Term of Office and
Length of Time Served
|
|
Principal Occupation(s) During Past 5 Years
|
|
|
|
|
|
|
Steven M. Pires*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York,
10281-1010
Age 55
|
|
Treasurer
|
|
Elected Annually Since April 2009
|
|
Treasurer of several investment companies advised by the Advisor (2009-Present); Vice President of the Advisor (2011-Present); Vice President of Brookfield Operations and Management Services
LLC (2008-2011); Assistant Vice President of Managers Investment Group LLC (2004-2008).
|
|
|
|
|
|
|
Jonathan C. Tyras*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York
10281-1010
Age 43
|
|
Secretary
|
|
Elected Annually Since March 2009
|
|
Managing Director and Chief Financial Officer of the Advisor (2010-Present), Director of the Advisor (2006-2010); General Counsel and Secretary of the Advisor (2006-Present); Vice President
and General Counsel (2006-Present) and Secretary (2007-Present) of Crystal River Capital, Inc.; Secretary of several investment companies advised by the Advisor (2006-Present); Chief Financial Officer of Brookfield Investment Management (UK) Limited
(2011-Present): Chief Financial Officer of Brookfield Investment Management (Canada) Inc. (2011-Present).
|
|
|
|
|
|
|
Seth Gelman*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York
10281-1010
Age 36
|
|
Chief Compliance Officer (“CCO”)
|
|
Elected Annually Since May 2009
|
|
CCO of several investment companies advised by the Advisor (2009-Present); Director and CCO of the Advisor (2009-Present); Vice President, Oppenheimer Funds, Inc.
(2004-2009).
|
|
|
|
|
|
|
Lily Wicker*
c/o Three World
Financial Center,
200 Vesey Street,
24
th
Floor,
New York, New York
10281-1010
Age 33
|
|
Assistant Secretary
|
|
Elected Annually Since September 2009
|
|
Assistant Secretary (2009-Present) and Interim CCO (March-May 2009) of several investment companies advised by the Advisor; Chief Compliance Officer, Brookfield Investment Management (UK)
Limited (2011-Present); Vice President (2010-Present) and Compliance Officer (2011-Present); Assistant Vice President (2009-2010) and Associate (2007-2009) of the Advisor; Juris Doctor, Boston University School of Law (2004-2007).
|
|
*
|
Interested person as defined by the Investment Company Act of 1940, as amended (the “1940 Act”) because of affiliations with Brookfield Investment
Management Inc., Advisor of the Helios Funds.
|
The Funds’ Statement of Additional Information includes additional
information about the directors and is available, without charge, upon request by calling 1-800-497-3746.
2012 Annual Report
75
HELIOS FUNDS
Dividend Reinvestment Plan (Unaudited)
The Funds offer a dividend reinvestment plan (the “Plan”)
pursuant to which stockholders, unless they elect otherwise, automatically have dividends and other distributions reinvested in common shares of the Fund by Computershare Trust Company, N.A. and Computershare Shareholder Services, Inc. (together,
the “Plan Agent”). Stockholders who elect not to participate in the Plan receive all distributions in cash paid by wire or check mailed directly to the recordholder by the Plan Agent.
How the Plan Works
After a
Fund declares a dividend or determines to make other distributions, the Plan Agent will acquire shares for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of newly-issued shares of
the Fund or (ii) by open-market purchases as follows:
|
•
|
|
If, on the payment date, the NAV is equal to or less than the market price per share plus estimated brokerage commissions, the Plan Agent will invest the
distribution amount in newly-issued shares on behalf of the participants. The number of newly-issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the distribution by the NAV on the date
the shares are issued. However, if the NAV is less than 95% of the market price on the payment date, the dollar amount of the distribution will be divided by 95% of the market price on the payment date. Because common shares may be issued at less
than their market price, Plan participants may get a benefit that non-participants do not.
|
|
•
|
|
If, on the payment date, the NAV is greater than the market value per share plus estimated brokerage commissions, the Plan Agent will invest the distribution
amount in shares acquired on behalf of the participants in open-market purchases, which may be made on the New York Stock Exchange (“NYSE”), in the over-the-counter market or in negotiated transactions and may be on such terms as to price,
delivery and otherwise as the Plan Agent shall determine. It is possible that the market price for the shares may increase before the Plan Agent has completed its purchases. Therefore, the average purchase price per share the Plan Agent pays may
exceed the market price thereof on the payment date. If the market price per share increases so that it equals or exceeds the NAV per share (minus estimated brokerage commissions), the Plan Agent will cease its purchases. Otherwise, the Plan Agent
will use all distributions received in cash to purchase shares in the open market on or shortly after the payment date, but in no event more than thirty (30) days after the payment date, except where temporary curtailment or suspension of
purchases is necessary to comply with applicable provisions of the federal securities laws. If the Plan Agent is unable to invest the full amount through open-market purchases during the purchase period, the Plan Agent will request that, with
respect to the uninvested portion of such amount, the Fund issue new shares at the close of business on the earlier of the last day of the purchase period or the first day during the purchase period on which the NAV per share (minus estimated
brokerage commissions) equals or is less than the market price per share.
|
Costs of the Plan
The Plan Agent’s fees for the handling of the reinvestment of dividends and other distributions will be paid by the Funds. However, each
participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of dividends and other distributions. If a participant elects to have the Plan
Agent sell part or all of his or her shares and remit the proceeds, the participant will be subject to a $15.00 service fee and a $0.12 per share sold processing fee (which includes applicable brokerage commissions the Plan Agent is required to
pay). The participant will not be charged any other fees for this service. However, each Fund reserves the right to amend the Plan to include a service fee payable by the participant.
Tax-Implications
The
automatic reinvestment of dividends or other distributions does not relieve participants of any taxes that may be payable on such distributions. Participants will receive tax information annually for their personal records and to help them prepare
their federal income tax returns. For further information as to the tax consequences of participation in the Plan, participants should consult with their own tax advisors.
Brookfield
Investment Management Inc.
76
HELIOS FUNDS
Dividend Reinvestment Plan (Unaudited)
Right to Withdraw
Participants may withdraw from the Plan by calling the Plan Agent at 800-426-5523, writing to the Plan Agent at 250 Royall Street, Canton,
Massachusetts 02021 or completing and returning the transaction form attached to each Plan statement. The withdrawal will be effective immediately if the participant’s notice is received by the Plan Agent not less than ten days prior to any
dividend or other distribution record date. Otherwise, the withdrawal will be effective the first trading day after the payment date for the dividend or other distribution with respect to any subsequent dividend or other distribution.
2012 Annual Report
77
CORPORATE INFORMATION
Investment Advisor and Administrator
Brookfield Investment Management Inc.
Three World Financial Center
200 Vesey Street
New York, New York 10281
www.brookfieldim.com
Please direct
your inquiries to:
Investor Relations
Phone: 1-800-497-3746
E-mail: funds@brookfield.com
Transfer Agent
Stockholder
inquiries relating to distributions, address changes and stockholder account information should be directed to the Funds’ transfer agent:
Computershare Shareholder Services, Inc.
250 Royall Street
Canton, Massachusetts 02021
1-800-426-5523
Sub-Administrator and Fund Accounting Agent
U.S. Bank Fund Services
615 East Michigan Street
Milwaukee, Wisconsin 53202
Independent Registered Public Accounting Firm
BBD, LLP
1835 Market Street, 26th Floor
Philadelphia, Pennsylvania 19103
Legal Counsel
Paul Hastings
LLP
75 East 55th Street
New York, New York 10022
Custodian
U.S. Bank
National Association
1555 North River Center Drive, Suite 302
Milwaukee, Wisconsin 53212
The Funds will file their complete schedules of portfolio holdings with
the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q will be available on the SEC’s website at www.sec.gov. In addition, the Funds’ Form N-Q may be reviewed and copied at the SEC’s Public
Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
You may obtain a description of the Funds’ proxy voting policies and procedures, and information regarding how the Funds voted proxies
relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request by calling 1-800-497-3746, or go to the SEC’s website at www.sec.gov.
Brookfield Investment Management Inc. Three World Financial Center 200 Vesey Street New
York, New York 10281-1010 1-800-497-3746 www.brookfieldim.com
Item 2. Code of Ethics.
As of the end of the period covered by this period, the Registrant had adopted a Code of Ethics for Principal Executive
and Principal Financial Officers (the “Code”). There were no amendments to or waivers from the Code during the period covered by this report. A copy of the Registrant’s Code will be provided upon request to any person without charge
by contacting Registrant Secretary at 1-800-497-3746 or by writing to Registrant Secretary at Three World Financial Center, 200 Vesey Street, 24
th
Floor, New York, NY 10281-1010.
Item 3. Audit Committee Financial Expert.
The
Registrant’s Board of Directors has determined that four members serving on the Registrant’s audit committee are audit committee financial experts. Their names are Rodman L. Drake, Diana H. Hamilton, Stuart A. McFarland and Louis P.
Salvatore. Messrs. Drake, McFarland and Salvatore and Ms. Hamilton are each independent.
Item 4. Principal Accountant Fees and
Services.
Audit Fees
For each fiscal year ended March 31, 2012 and March 31, 2011, BBD, LLP (“BBD”) billed the Registrant aggregate fees of $39,800 and $39,800 respectively, each bill is for professional
services rendered for the audit of the Registrant’s annual financial statements and the review of financial statements that are included in the Registrant’s annual and semi-annual reports to stockholders.
Tax Fees
For each fiscal year ended March 31, 2012 and March 31, 2011, BBD billed the Registrant aggregate fees of $4,200, each bill is for professional services rendered for tax compliance, tax advice
and tax planning. The nature of the services comprising the Tax Fees was the review of the Registrant’s income tax returns and tax distribution requirements.
Audit-Related Fees
For the fiscal year ended
March 31, 2012 and March 31, 2011, there were no Audit-related fees.
All Other Fees
For the fiscal years ended March 31, 2012 and March 31, 2011, there were no Other Fees.
Item 5. Audit Committee of Listed Registrant.
The Registrant has a separately-designated standing Audit Committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Registrant’s Audit Committee members include Rodman L. Drake, Diana H. Hamilton, Stuart A. McFarland and Louis P. Salvatore.
Item 6. Schedule of Investments.
Please see Item 1.
|
Item 7.
|
Disclosure of Proxy Voting Policies and Procedures for Closed-End
|
|
|
Management Investment Companies.
|
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES
The Portfolio Proxy Voting
Policies and Procedures (the “Policies and Procedures”) set forth the proxy voting policies, procedures and guidelines to be followed by Brookfield Investment Management Inc. and its subsidiaries and affiliates (collectively, the
“Adviser”) in voting portfolio proxies relating to securities that are held in the portfolios of the investment companies or other clients (“Clients”) for which the Adviser has been delegated such proxy voting authority.
A. Proxy Voting Committee
The Adviser’s internal proxy voting committee (the “Committee”) is responsible for overseeing the proxy voting process and ensuring that the Adviser meets its regulatory and corporate
governance obligations in voting of portfolio proxies.
The Committee shall oversee the proxy voting agent’s compliance
with these Policies and Procedures, including any deviations by the proxy voting agent from the proxy voting guidelines (“Guidelines”).
B. Administration and Voting of Portfolio Proxies
1. Fiduciary
Duty and Objective
As an investment adviser that has been granted the authority to vote on portfolio proxies, the Adviser
owes a fiduciary duty to its Clients to monitor corporate events and to vote portfolio proxies consistent with the best interests of its Clients. In this regard, the Adviser seeks to ensure that all votes are free from unwarranted and inappropriate
influences. Accordingly, the Adviser generally votes portfolio proxies in a uniform manner for its Clients and in accordance with these Policies and Procedures and the Guidelines.
In meeting its fiduciary duty, the Adviser generally view proxy voting as a way to enhance the value of the company’s stock held by
the Clients. Similarly, when voting on matters for which the Guidelines dictate a vote be decided on a case-by-case basis, the Adviser’s primary consideration is the economic interests its Clients.
2. Proxy Voting Agent
The Adviser may retain an independent third party proxy voting agent to assist it in its proxy voting responsibilities in accordance with these Policies and Procedures and in particular, with the
Guidelines. As discussed above, the Committee is responsible for monitoring the proxy voting agent.
In general, the Adviser
may consider the proxy voting agent’s research and analysis as part of its own review of a proxy proposal in which the Guidelines recommend that the vote be considered on a case-by-case basis. The Adviser bears ultimate responsibility for how
portfolio proxies are voted. Unless instructed otherwise by the Adviser, the proxy voting agent, when retained, will vote each portfolio proxy in accordance with the Guidelines. The proxy voting agent also will assist the Adviser in maintaining
records of its portfolio proxy votes, including the appropriate records necessary for registered investment companies to meet their regulatory obligations regarding the annual filing of proxy voting records on Form N-PX with the Securities and
Exchange Commission (“SEC”).
3. Material Conflicts of Interest
BIM votes portfolio proxies without regard to any other business relationship between BIM and the company to which the portfolio proxy
relates. To this end, BIM must identify material conflicts of interest that may arise between a Client and BIM, such as the following relationships:
|
|
•
|
|
BIM provides significant investment advisory or other services to a portfolio company or its affiliates (the “Company”) whose management
is soliciting proxies or BIM is seeking to provide such services;
|
|
|
•
|
|
BIM serves as an investment adviser to the pension or other investment account of the Company or BIM is seeking to serve in that capacity; or
|
|
|
•
|
|
BIM and the Company have a lending or other financial-related relationship.
|
In each of these situations, voting against the Company management’s recommendation may cause BIM a loss of revenue or other
benefit.
BIM generally seeks to avoid such material conflicts of interest by maintaining separate investment decision-making
and proxy voting decision-making processes. To further minimize possible conflicts of interest, BIM and the Committee employ the following procedures, as long as BIM determines that the course of action is consistent with the best interests of the
Clients:
|
|
•
|
|
If the proposal that gives rise to a material conflict is specifically addressed in the Guidelines, BIM will vote the portfolio proxy in accordance
with the Guidelines, provided that the Guidelines do not provide discretion to BIM on how to vote on the matter (
i.e
., case-by-case); or
|
|
|
•
|
|
If the previous procedure does not provide an appropriate voting recommendation, BIM may retain an independent fiduciary for advice on how to vote
the proposal or the Committee may direct BIM to abstain from voting because voting on the particular proposal is impracticable and/or is outweighed by the cost of voting.
|
4. Certain Foreign Securities
Portfolio proxies relating to foreign securities held by Clients are subject to these Policies and Procedures. In certain foreign
jurisdictions, however, the voting of portfolio proxies can result in additional restrictions that have an economic impact to the security, such as “share-blocking.” If BIM votes on the portfolio proxy, share-blocking may prevent BIM from
selling the shares of the foreign security for a period of time. In determining whether to vote portfolio proxies subject to such restrictions, BIM, in consultation with the Committee, considers whether the vote, either in itself or together with
the votes of other shareholders, is expected to affect the value of the security that outweighs the cost of voting. If BIM votes on a portfolio proxy and during the “share-blocking period,” BIM would like to sell the affected foreign
security, BIM, in consultation with the Committee, will attempt to recall the shares (as allowable within the market time-frame and practices).
C. Fund Board Reporting and Recordkeeping
BIM will prepare periodic reports for submission to the Boards of Directors of its affiliated funds (the “Helios Funds”) describing:
|
|
•
|
|
any issues arising under these Policies and Procedures since the last report to the Helios Funds’ Boards of Directors and the resolution of
such issues, including but not limited to, information about conflicts of interest not addressed in the Policies and Procedures; and
|
|
|
•
|
|
any proxy votes taken by BIM on behalf of the Helios Funds since the last report to the Helios Funds’ Boards of Directors that deviated from
these Policies and Procedures, with reasons for any such deviations.
|
In addition, no less frequently than
annually, BIM will provide the Boards of Directors of the Helios Funds with a written report of any recommended changes based upon BIM’s experience under these Policies and Procedures, evolving industry practices and developments in the
applicable laws or regulations.
BIM will maintain all records that are required under, and in accordance with, the Investment
Company Act of 1940, as amended, and the Investment Advisers Act of 1940, which include, but not limited to:
|
|
•
|
|
these Policies and Procedures, as amended from time to time;
|
|
|
•
|
|
records of votes cast with respect to portfolio proxies, reflecting the information required to be included in Form N-PX;
|
|
|
•
|
|
records of written client requests for proxy voting information and any written responses of BIM to such requests; and
|
|
|
•
|
|
any written materials prepared by BIM that were material to making a decision in how to vote, or that memorialized the basis for the decision.
|
D. Amendments to these Procedures
The Committee shall periodically review and update these Policies and Procedures as necessary. Any amendments to these Procedures and Policies (including the Guidelines) shall be provided to the Board of
Directors of BIM and to the Boards of Directors of the Helios Funds for review and approval.
E. Proxy Voting Guidelines
Guidelines are available upon request.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Portfolio Managers
Dana E. Erikson, CFA
– Mr. Erikson is the lead portfolio manager for the Registrant and is supported by a team of investment professionals. Mr. Erikson has over 28 years of
investment experience in the high yield business, including management of multiple closed- and open-end high yield and multi-sector funds. Mr. Erikson, who joined Brookfield Investment Management Inc. (the “Adviser”) in 2006, leads a
team of five investment professionals focusing on high yield assets, including bank debt, corporate high yield, equities, private placements and distressed debt. Prior to joining the Adviser, Mr. Erikson was with Evergreen Investments or one of
its predecessor firms since 1996 where he was a senior portfolio manager and the Head of the High Yield team. Prior to serving as Head of the High Yield team, Mr. Erikson was Head of High Yield Research. Prior to Evergreen Investments,
Mr. Erikson was an Associate Portfolio Manager for Prospect Street Investment Management Company. Additionally, he was an Analyst with the Kellett Group and a Research Assistant with Robert R. Nathan Associates.
Richard M. Cryan
– Mr. Cryan serves as co-portfolio manager for the Registrant since May 2011.
Mr. Cryan is based in Boston and is responsible for the Adviser’s corporate high yield exposures, the establishment of portfolio objectives and strategies. Mr. Cryan has over 32 years of investment experience. Mr. Cryan received
a Bachelor of Science degree in Business from the University of Colorado and an MBA from Columbia University.
Mark Shipley, CFA
– Mr. Shipley serves as co-portfolio manager for the Registrant since May 2011.
Mr. Shipley has over 22 years of investment experience. He is responsible for the implementation of the Adviser’s corporate high yield portfolio objectives and strategies, managing the credit research process and company research.
Mr. Shipley received a Bachelor of Arts degree in Finance from Northeastern University and holds the Chartered Financial Analyst designation. Mr. Shipley is a member of the Boston Security Analysts Society.
Mr. Erikson leads the management of the Fund and Messrs. Cryan and Shipley share equally the day-to-day portfolio
management responsibilities.
Management of Other Accounts
The portfolio managers listed below manage other investment companies and/or investment vehicles and accounts in addition to the Registrant. The tables below show the number of other accounts managed by
Messrs. Erikson, Cryan and Shipley and the total assets in each of the following categories: (a) registered investment companies; (b) other pooled investment vehicles; and (c) other accounts. For each category, the table also shows
the number of accounts and the total assets in the accounts with respect to which the advisory fee is based on account performance.
The following table provides information about the accounts managed by
Dana E.
Erikson, CFA
, Lead Portfolio Manager for the Registrant, as of April 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered
Investment
Companies
|
|
|
Other
Pooled
Investment
Vehicles
|
|
|
Other Accounts
|
|
|
|
|
Number of Accounts Managed
|
|
|
7
|
|
|
|
2
|
|
|
|
1
|
|
|
|
|
Number of Accounts Managed with Performance-Based
Advisory Fees
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
|
|
|
Assets Managed
|
|
|
$616 million
|
|
|
|
$49 million
|
|
|
|
$60 million
|
|
|
|
|
Assets Managed
with
Performance-Based Advisory
Fees
|
|
|
$0
|
|
|
|
$3 million
|
|
|
|
$0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides
information about the accounts managed by
Richard Cryan
, Co-Portfolio Manager for the Registrant, as of April 30, 2012:
|
|
|
|
Registered
Investment
Companies
|
|
|
Other
Pooled
Investment
Vehicles
|
|
|
Other Accounts
|
|
|
|
|
Number of Accounts Managed
|
|
|
4
|
|
|
|
2
|
|
|
|
0
|
|
|
|
|
Number of Accounts Managed with Performance-Based
Advisory Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
Assets Managed
|
|
|
$208 million
|
|
|
|
$67 million
|
|
|
|
$0
|
|
|
|
|
Assets Managed
with
Performance-Based Advisory
Fees
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides information about the accounts managed by
Mark
Shipley
, Co-Portfolio Manager for the Registrant, as of April 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registered
Investment
Companies
|
|
|
Other
Pooled
Investment
Vehicles
|
|
|
Other Accounts
|
|
|
|
|
Number of Accounts Managed
|
|
|
4
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
Number of Accounts Managed with Performance-Based
Advisory Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
Assets Managed
|
|
|
$208 million
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
|
Assets Managed
with
Performance-Based Advisory
Fees
|
|
|
$0
|
|
|
|
$0
|
|
|
|
$0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Ownership
The following table indicates the dollar range of securities of the Registrant owned by the Registrant’s portfolio managers as April 30, 2012.
|
|
|
|
|
|
|
Dollar Range of Securities Owned
|
|
Dana E. Erikson
|
|
Over $100,000
|
|
Richard Cryan
|
|
$0 - $10,000
|
|
Mark Shipley
|
|
$0 - $10,000
|
Portfolio Manager Material Conflict of Interest
Potential conflicts of interest may arise when a fund’s portfolio manager has day-to-day management responsibilities with respect to
one or more other funds or other accounts, as is the case for the portfolio managers of the Registrant.
These potential
conflicts include:
Allocation of Limited Time and Attention
. A portfolio manager who is responsible for managing
multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. As a result, the portfolio manager may not be able to formulate as complete a strategy or identify equally attractive investment
opportunities for each of those accounts as the case may be if he or she were to devote substantially more attention to the management of a single fund. The effects of this potential conflict may be more pronounced where funds and/or accounts
overseen by a particular portfolio manager have different investment strategies.
Allocation of Limited Investment
Opportunities
. If a portfolio manager identifies a limited investment opportunity that may be suitable for multiple funds and/or accounts, the opportunity may be allocated among these several funds or accounts, which may limit a client’s
ability to take full advantage of the investment opportunity.
Pursuit of Differing Strategies
. At times, a portfolio manager may determine that an
investment opportunity may be appropriate for only some of the funds and/or accounts for which he or she exercises investment responsibility, or may decide that certain of the funds and/or accounts should take differing positions with respect to a
particular security. In these cases, the portfolio manager may place separate transactions for one or more funds or accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment or benefit
of one or more other funds and/or accounts.
Variation in Compensation
. A conflict of interest may arise where the
financial or other benefits available to the portfolio manager differ among the funds and/or accounts that he or she manages. If the structure of the investment adviser’s management fee and/or the portfolio manager’s compensation differs
among funds and/or accounts (such as where certain funds or accounts pay higher management fees or performance-based management fees), the portfolio manager might be motivated to help certain funds and/or accounts over others. The portfolio manager
might be motivated to favor funds and/or accounts in which he or she has an interest or in which the investment advisor and/or its affiliates have interests. Similarly, the desire to maintain or raise assets under management or to enhance the
portfolio manager’s performance record or to derive other rewards, financial or otherwise, could influence the portfolio manager to lend preferential treatment to those funds and/or accounts that could most significantly benefit the portfolio
manager.
Related Business Opportunities
. The investment adviser or its affiliates may provide more services (such as
distribution or recordkeeping) for some types of funds or accounts than for others. In such cases, a portfolio manager may benefit, either directly or indirectly, by devoting disproportionate attention to the management of fund and/or accounts that
provide greater overall returns to the investment manager and its affiliates.
The Adviser and the Registrant have adopted
compliance policies and procedures that are designed to address the various conflicts of interest that may arise for the Adviser and the individuals that it employs. For example, the Adviser seeks to minimize the effects of competing interests for
the time and attention of portfolio managers by assigning portfolio managers to manage funds and accounts that share a similar investment style. The Adviser has also adopted trade allocation procedures that are designed to facilitate the fair
allocation of limited investment opportunities among multiple funds and accounts. There is, however, no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may
appear.
Portfolio Manager Compensation
The Adviser compensates its portfolio managers based on the scale and complexity of their portfolio responsibilities, the total return performance of funds and accounts managed by the portfolio manager on
an absolute basis and versus appropriate peer groups of similar size and strategy, as well as the management skills displayed in managing their subordinates and the teamwork displayed in working with other members of the Adviser. Since the portfolio
managers are responsible for multiple funds and accounts, investment performance is evaluated on an aggregate basis almost equally weighted among performance, management and teamwork. Base compensation for the Adviser’s portfolio managers
varies in line with a portfolio manager’s seniority and position. The compensation of portfolio managers with other job responsibilities (such as acting as an executive officer of the Adviser or supervising various departments) includes
consideration of the scope of such responsibilities and the portfolio manager’s performance in meeting them. The Adviser seeks to compensate
portfolio managers commensurate with their responsibilities and performance, and competitive with other firms within the investment management industry. Salaries, bonuses and stock-based
compensation also are influenced by the operating performance of the Adviser and its parent company. While the salaries of the Adviser’s portfolio managers are comparatively fixed, cash bonuses and stock-based compensation may fluctuate
significantly from year to year. Bonuses are determined on a discretionary basis by the senior executives of the Adviser and measured by individual and team-oriented performance guidelines. The amount of the Long Term Incentive Plan (LTIP) is
approved by the board of directors annually and there is a rolling vesting schedule to aid in retention of key people. A key component of this program is achievement of client objectives in order to properly align interests with our clients.
Further, the incentive compensation of all investment personnel who work on each strategy is directly tied to the relative performance of the strategy and its clients.
The compensation structure of the Adviser’s portfolio managers and other investment professionals has three primary components:
|
|
•
|
|
An annual cash bonus; and
|
|
|
•
|
|
If applicable, long-term compensation consisting of restricted stock units or stock options of the Adviser’s ultimate parent company.
|
|
|
•
|
|
If applicable, long-term compensation consisting of interests in hedge funds managed by the investment professional.
|
The portfolio managers also receive certain retirement, insurance and other benefits that are broadly available to all of the
Adviser’s employees. Compensation of the portfolio managers is reviewed on an annual basis by senior management.
|
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 of the period covered by this report that has materially affected or is reasonably likely to materially affect the
Registrant’s internal control over financial reporting.
Item 12. 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.
HELIOS MULTI-SECTOR HIGH INCOME FUND, INC.
|
|
|
|
|
|
|
By:
|
|
/s/ Kim G. Redding
|
|
|
|
|
|
Kim G. Redding
|
|
|
|
|
|
President
|
|
|
Date: June 5, 2012
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/ Kim G. Redding
|
|
|
|
|
|
Kim G. Redding
|
|
|
|
|
|
President
|
|
|
|
|
|
|
Date: June 5, 2012
|
|
|
|
|
|
|
|
By:
|
|
/s/ Steven M. Pires
|
|
|
|
|
|
Steven M. Pires
|
|
|
|
|
|
Treasurer
|
|
|
Date: June 5, 2012
Helios Multi-Secto (NYSE:HMH)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Helios Multi-Secto (NYSE:HMH)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
