Brookfield Investment Management

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1 Brookfield Investment Management 2015 Brookfield Select Opportunities Income Fund BSO.UN Interim Management Report of Fund Performance For the period from January 1, 2015 to June 30, 2015

2 IN PROFILE Brookfield Select Opportunities Income Fund (the Fund ) is managed by Brookfield Investment Management (Canada) Inc. ( BIM Canada ). BIM Canada is a subsidiary of Brookfield Asset Management Inc., a global alternative asset manager with over US$200 billion of assets under management as at June 30, 2015 and over a 100-year history of owning and operating assets with a focus on property, renewable energy, infrastructure and private equity. BIM Canada is also the investment manager of the Fund. BSO.UN (TSX LISTED) UNIT INFORMATION Units Outstanding (June 30, 2015) 19,200,000 Units Targeted Quarterly Distributions: The quarterly distributions are targeted to be $0.15 per Unit ($0.60 per annum representing an annual cash distribution of 6.0% based on the $10.00 per Unit issue price). The Fund does not have a fixed distribution. Record Date: Payment Date: The last business day of each of March, June, September and December. No later than the 15th business day of the month following the distribution Record Date Interim Management Report of Fund Performance 1

3 LETTER TO UNITHOLDERS Dear Unitholders, We are pleased to provide this Interim Management Report of Fund Performance for Brookfield Select Opportunities Income Fund (the Fund ) for the six months ended June 30, 2015 (the Period ). The Fund was created with the objectives to (i) provide holders of units ( Unitholders ) with quarterly cash distributions; (ii) maximize total return for Unitholders through distributions and capital appreciation; and (iii) preserve capital. The quarterly distributions are currently targeted at $0.15 per Unit or $0.60 per annum. To achieve this level of income, the Fund invests primarily in fixed income and equity securities on a global basis (the Portfolio ). The Fund focuses on, but is not limited to, investments in high yield corporate debt and publicly-listed equity securities of infrastructure and real estate companies. As at June 30, 2015, the net asset value ( NAV ) per Unit was $7.40 compared to a net asset value per Unit of $7.64 at December 31, For the six months ended June 30, 2015 (the Period ), the Fund had a total return of 0.64% including assumed reinvestment of the Fund s distributions to Unitholders during the Period of $0.30 per Unit. Despite periods of volatility, global equities ended the first half of 2015 in positive territory. The MSCI World Index returned 3.0% from January 1, 2015 to June 30, 2015, led by Asia Pacific (+9.0%), and Europe (+4.3%), with weaker returns from North America (+1.2%). 1 Market performance weakened into the end of the period, as several key developments rattled investor confidence. Of primary concern was the potential for Greece to default on its sovereign debt obligations and possibly exit the Eurozone, while the governor of Puerto Rico announced late in June that the island would not be able to pay its approximately $72 billion in debt. 2 In addition, China s equity markets suffered significant intra-day volatility during June, retreating from strong year-to-date performance. 3 Lastly, the threat of incremental oil supply from the potential removal of economic sanctions against Iran, in the face of already flush global supply caused investors to worry about further declines in global energy prices. As a result of this geopolitical uncertainty, the Chicago Board Options Exchange Volatility Index (VIX) spiked at the end of June to its highest level since February Across global equity markets, healthcare (+10.3%) was the strongest sector, followed by consumer discretionary (+7.3%) and telecommunications (+5.7%). 5 In contrast, the utilities (-7.5%) and energy (-4.7%) sectors significantly underperformed for the period, as investor concern over rising interest rates and lower energy prices negatively impacted these sectors. Other more defensive sectors, including industrials (+1.3%) and materials (+1.4%), also underperformed. In the U.S., economic data remained mixed, as GDP growth turned negative in the first quarter of 2015 to an annualized rate of -0.7%. 6 However, the U.S. unemployment rate declined in the period from 5.6% to 5.3%, and the U.S. economy added 223,000 jobs in June. 7 As expected, the U.S. Federal Reserve (Fed) did not raise interest rates at its June meeting, but Fed Chair Janet Yellen indicated that a rate hike was likely to 1 As measured by the MSCI World Index, a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. 2 Sources: 3 Source: Bloomberg 4 Source: Bloomberg 5 Sector returns are measured by the MSCI World Health Care Index (gross), the MSCI World Consumer Discretionary Index (gross), the MSCI World Telecommunication Services Index (gross), the MSCI World Utilities Index (gross), the MSCI World Energy Index (gross), the MSCI World Industrials Index (gross) and the MSCI World Materials Index (gross). Source: Bloomberg. 6 Source: Bureau of Economic Analysis, U.S. Department of Commerce 7 Source: Bureau of Labor Statistics, U.S. Department of Labor 2015 Interim Management Report of Fund Performance 2

4 occur later in Of note, the Fed suggested that interest rate increases would be implemented more gradually than previously anticipated. 8 For the period, the yield on the U.S. 10-year Treasury note increased to 2.35% on June 30, 2015, compared with 2.17% as of December 31, In contrast to the negative trend of most fixed income markets for the second quarter, the high-yield bond market produced very modest positive results for the quarter. The low correlation of high-yield to interest rates served to produce this positive result. Within the high-yield market, higher-quality BB bonds declined (reflecting their greater interest rate sensitivity) and CCC bonds declined, reflecting growing credit concerns in certain industry sectors, namely metals, mining and energy. Despite rising interest rates and positive total returns for high-yield, the high-yield market spread increased from 474 basis points to 490 basis points 10. This spread widening was in part due to a reversal in high yield mutual fund flows. These flows turned sharply negative in the second quarter, totaling $5 billion in outflows, a marked contrast to the $9.1 billion inflow in the first quarter 11. Investors saw positive trends in the new issue market this quarter with $95.6 billion of new bonds issued, matching the pace of the first quarter. While we were concerned in the first quarter about the decline in refinancing as a use of proceeds, which had dropped to 44%, this metric totaled 51% year to date through June, roughly paralleling the rate seen in Refinancing has a beneficial effect on corporate credit by reducing interest payments and extending maturities. Outlook The following is our outlook for each of our three focus investment areas: High yield corporate debt: We believe that the HY market is in the midst of a mid-cycle correction and that the outlook for high-yield credit remains relatively benign. Market spreads are substantial in view of the only modest embedded credit risk among high-yield companies. A number of concerning trends in the new issue market observed in the first quarter of 2015 have reversed, suggesting that investors are maintaining reasonable credit standards and corporate treasurers are limiting overall risk. On the other hand, a number of late cycle events are occurring. Distress continues to build in the energy, metals and natural resource sectors, driven by lower product pricing. It seems likely that defaults in these sectors may increase, driving the overall default rate higher. While we note these events carefully, we believe that on average overall market defaults should remain at or below long-term averages, and believe that current spreads adequately compensate investors for these risks. We also believe that current market spreads are sufficiently wide that higher interest rates should not negatively impact the overall high-yield market. Publicly-listed infrastructure securities: Despite near-term volatility due to macro concerns and the specter of rising interest rates, we believe the fundamental outlook for most infrastructure sectors remains positive. We are monitoring the impact of commodity price fluctuations and decreasing capital flows on the performance of MLPs, but we continue to believe in the long-term fundamentals for the MLP sector. We expect any increase in U.S. interest rates will be a slow and deliberate process, resulting in low nominal rates for the foreseeable future. These low rates should be supportive of infrastructure valuations. From a regional perspective, we believe that the U.S. has significant growth potential, although recent data remains mixed. We maintain our view that quantitative easing activity in Europe will provide support for the region. From a sector perspective, we continue to monitor the potential impact of sustained lower oil prices on our energy infrastructure holdings as lower oil prices will likely reduce the growth outlooks and capital expenditures of E&P companies, which in turn will reduce the growth rate of energy infrastructure companies. 8 Source: 9 Source: U.S. Department of Treasury 10 Source: Merrill Lynch, Bloomberg. Data as of June 30, Source: J.P. Morgan, High Yield Market Monitor, July 1, All subsequent data is from this publication Interim Management Report of Fund Performance 3

5 Publicly-listed real estate securities: Although we had no exposure to this sector at the end of the Period, we maintain our positive outlook for global real estate securities, although we believe the U.S. is in a stronger growth position than the rest of the world. In the past several months, U.S. REITs have been negatively affected by the specter of rising U.S. interest rates. Notwithstanding this short term volatility, we would note that over longer time periods, U.S. REIT valuations tend to be dictated primarily by property market fundamentals, which still appear strong in the U.S. We expect any increase in U.S. interest rates will be a slow and deliberate process, resulting in low nominal rates for the foreseeable future. As a result, we believe we are currently in the middle of the property cycle in the U.S., with meaningful growth remaining, supported by strong fundamentals. In addition, we anticipate that asset values will continue to move higher in developed markets, as we see accelerating competition for direct asset investment. We also believe near-term weakness could lead to merger and acquisition (M&A) activity, which should further support asset values. We believe the Fund is currently well-positioned to generate its target distributions and we will seek to continue to take profits as appropriate and redeploy capital into other high yielding securities that have attractive risk-reward characteristics. We welcome your questions and comments, and encourage you to contact our Investor Relations team at (855) or visit us at for more information. Thank you for your support. Gail Cecil, Managing Director On behalf of the Manager and Investment Manager, Brookfield Investment Management (Canada) Inc Interim Management Report of Fund Performance 4

6 MANAGEMENT REPORT OF FUND PERFORMANCE This interim management report of fund performance contains financial highlights but does not contain the complete interim financial statements of Brookfield Select Opportunities Income Fund (the Fund ). The interim financial statements may contain information not included in the management report of fund performance. You can get a copy of the interim financial statements at your request, and at no cost, by contacting us (see contact information at end of this report) or by visiting our website at or by viewing our filings on SEDAR at Unitholders may also contact us to request a free copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. This report may contain forward-looking statements. The use of any of the words anticipate, may, will, expect, estimate, should, believe and similar expressions are intended to identify forward-looking statements. Such statements reflect the opinion of Brookfield Investment Management (Canada) Inc. ( Investment Manager or BIM Canada ) regarding factors that might be reasonably expected to affect the performance and the distribution on units of the Fund and are based on information available at the time of writing. The Investment Manager believes that the expectations reflected in these forward-looking statements and in the report are reasonable but no assurance can be given that these expectations or the report will prove to be correct and accordingly, they should not be unduly relied upon. These statements speak only as at the date of the report. Actual events and outcomes may differ materially from those described in these forward-looking statements or report. Unless otherwise indicated, all information is presented as at June 30, 2015, and expressed in Canadian dollars. None of the websites referred to in this annual management report of fund performance, or any of the information on such websites, are incorporated by reference in this annual management report of fund performance. INVESTMENT OBJECTIVES AND STRATEGIES The Fund endeavours to (i) provide holders of units ( Unitholders ) with quarterly cash distributions currently targeted at $0.15 per unit ($0.60 per annum representing an annual cash distribution of 6.0% based on the $10.00 per unit issue price); (ii) maximize total return for Unitholders through distributions and capital appreciation; and (iii) preserve capital. The Fund invests in a portfolio (the Portfolio ) comprised primarily of fixed income and equity securities on a global basis. The Fund focuses on, but is not limited to, investments in high yield corporate debt and publicly-listed equity securities of infrastructure and real estate companies. BIM Canada is the manager (the Manager ) and the investment manager of the Fund. RISK At June 30, 2015, approximately two-thirds of the Portfolio was invested in high yield fixed income securities of companies domiciled in the United States and to a lesser extent, Canada, Mexico and Brazil. The remainder of the Portfolio was invested in high yielding equities which represented approximately one-third of the Portfolio holdings as at June 30, 2015, a decrease from approximately half of the Portfolio when the Fund became fully invested and flat from December 31, The Portfolio holdings are exposed to various risks including risks related to the credit quality of the issuer of the securities, the trading liquidity of the securities and the currency in which the securities are denominated. The Fund seeks to minimize potentially adverse effects of these risks on the Portfolio s 2015 Interim Management Report of Fund Performance 5

7 performance by employing experienced portfolio managers and by continuously monitoring the Portfolio s securities positions and markets. Over the period from the commencement of the Fund s operations on May 23, 2014 to June 30, 2015 (the Period ) there was no material change in the overall level of risk created by the credit quality, trading liquidity or currency denomination of the investments employed by the Fund. As at June 30, 2015, the Fund had exposure to forward currency contracts and equity total return swaps. The Investment Manager seeks to mitigate the counterparty risk arising from such arrangements through the careful selection of its derivative contract counterparties. As at June 30, 2015, the Fund held five positions through equity total return swaps representing $22.2 million of gross exposure compared to December 31, 2014 the Fund held four positions through equity total return swaps representing $17.8 million of gross exposure. The Fund also had US$70.0 million and 5.9 million (December 31, US$70.0 million and 5.9 million) of net forward currency contracts in place to protect against a strengthening in the Canadian dollar against the U.S. dollar and the British Pound, respectively. For discussion of the Fund s use of leverage, please see Results of Operations. RESULTS OF OPERATIONS The Fund began operations on May 23, 2014 when it completed an initial public offering of 19,200,000 units (the Units ) at $10.00 per Unit, for gross proceeds of $192.0 million and net proceeds of $181.1 million after deducting issuance costs of approximately $10.9 million. The Fund s net asset value was $142.1 million as at June 30, 2015, a decrease of $4.5 million from $146.6 million as at December 31, The decrease in net asset value was largely comprised of $5.7 million of distributions to Unitholders offset by an operating profit of $1.2 million. As at June 30, 2015, the net asset value ( NAV ) per Unit was $7.40 compared to $7.64 at December 31, The Fund s total return was 0.64% for the Period, essentially flat. There was a risk off posture in certain equity and debt markets that began in May as a result of several factors. Uncertainty surrounding the potential default of Greece on its sovereign obligations and the destabilizing threat of the country exiting the Euro caused investors to worry about possible contagion into other sectors of global markets. The incredible 50% rise of mainland Chinese stocks from January to June as measured by the CSI 300 Index and the bursting of that bubble erasing nearly all year-to-date gains, caused investors to fear a severe slowdown of growth in China. The threat of incremental oil supply from the potential removal of economic sanctions against Iran, in the face of already flush global oil supply caused investors to worry about further declines in global energy prices. These macro-economic factors impacted the portfolio in a variety of ways: As global investors fled risky assets the U.S. dollar strengthened causing price declines in most basic materials. In addition, a weak growth outlook for China exacerbated these price drops. Declining commodity prices impacted the Fund s 15.54% weight in the basic materials sector as a percentage of NAV as at June 30, Within the Fund s basic materials holdings, positive performance of Imperial Metals Corporation convertible bonds, which improved on the back of favorable regulatory approvals, helped to offset negative performance in Arch Coal Inc. bonds over the Period Interim Management Report of Fund Performance 6

8 During the first half of 2015 many Latin American currencies weakened against the U.S. Dollar. The Fund had an 13.67% exposure as a percentage of NAV to Latin America as at June 30, 2015, and was impacted by a weaker Brazilian Real and Mexican Peso. Bribery allegations arising in Brazil and Mexico also impacted Latin American markets. The Fund holds fixed income securities of Banco do Brasil and Empressas ICA (a construction and infrastructure provider in Mexico) that experienced mark-to-market declines as the U.S. dollar denominated debt grew in size relative to local currency operating profit. In addition, the Fund has direct exposure to the Brazilian Real through three holdings that represent approximately 2.61% of NAV. The Brazilian Real declined 12.1% over the Period. The Fund s holdings in Energy and energy-sensitive equities, which represented 15.74% of NAV as at June 30, 2015 experienced mark-to-market declines as oil prices declined. The declines in equity valuations of the Fund s holdings in Royal Dutch Shell Plc, MarkWest Enegy Partners and EV Energy Partners LP were partially offset by positive performance from energy-sensitive fixed income investments in MEG Energy, Forbes Energy Services and EV Energy Partners. Also offsetting the negative trends in the Fund s energy sensitive investments was the performance of fixed income holdings with minimal or no commodity exposure, including New Albertsons Inc. bonds which outperformed on the back of supermarket M&A rumours, and Just Energy convertible bonds on continued operational improvements. Separately, the Fund s holdings in SuperMedia Inc. Term loans suffered a setback after the Company s disappointing first quarter results. Changes in foreign currency added approximately 0.5% to the Fund s total return during the Period, net of hedges. As at June 30, 2015 approximately 12.66% of the Net Asset Value of the Fund had exposure to the U.S. dollar, net of currency hedges. Leverage is restricted to 25% of the total assets of the Fund. Accordingly, at the time of borrowing, the maximum amount of leverage that the Fund could employ is 1.33:1 (total long positions, including leveraged positions, divided by net assets of the Fund). As at June 30, 2015, the Fund had employed leverage equal to 17.9% of the total net assets of the Fund (December 31, %), which equates to $25.4 million (December 31, $23.4 million). The minimum and maximum amount of borrowings outstanding during the six months ended June 30, 2015 was $15.8 and $33.1 million, respectively. The minimum and maximum amount of borrowings outstanding during the period May 23, 2014 to December 31, 2014 was $0 and $41.3 million, respectively. The borrowings were used to grow the Fund s investments and for working capital needs. Adding a controlled amount of leverage to the Fund is consistent with the Fund s objectives. RECENT DEVELOPMENTS Consistent with the Investment Manager s strategy, the Portfolio is focused on, but not limited to, investments in high yield corporate debt and publicly-listed securities in infrastructure and real estate companies across a global universe. Allocations across these asset classes are based on trends and risk and return expectations, and the Investment Manager s assessment of the macro-economic environment and investment landscape. At the current time, of the three focus asset classes, the Investment Manager believes that high yield corporate debt is exhibiting value and we will focus on high conviction ideas in lower grade credit stories with improving fundamentals, value in high yield energy sector, as well as special situations in debt and equities that we believe to be undervalued by the broader market Interim Management Report of Fund Performance 7

9 RELATED PARTY TRANSACTIONS The Manager and the Investment Manager is a wholly owned subsidiary of Brookfield Asset Management Inc. ( Brookfield ) and manages the investment and trading activities of the Fund pursuant to a portfolio management agreement. Due to Brookfield s ability to control the Fund, Brookfield, and its affiliates over which it has the ability to exercise control or significant influence, are related parties of the Fund by virtue of common control or common significant influence. Transactions with related parties, including investment transactions, are conducted in the normal course of operations and are recorded at exchange amounts, which are equivalent to normal market terms. Please refer to the section titled Management Fees, which outlines the fees paid to the Manager by the Fund. During the period May 23, 2014 to June 30, 2014, the Fund entered into inter-fund trades with New Horizons Master Fund ( NHMF ) which is a related party of the Fund due to common control. The Investment Manager determined that these inter-fund trades complied with the Fund s and NHMF s investment restrictions and that owning the securities was consistent with the Fund s and NHMF s investment objectives. The Manager sought the approval of the Fund s and NHMF s Independent Review Committee (the IRC ) of the proposed inter-fund trades. The IRC provided its approval on the proposed inter fund trades on the Manager s recommendation. During the six months ended June 30, 2015, Brookfield purchased 13,550 units of the Fund in the open market. As at June 30, 2015, Brookfield and its affiliates owned a 4.1% (December 31, %) interest in the Fund Interim Management Report of Fund Performance 8

10 FINANCIAL HIGHLIGHTS The following tables provide selected key financial information about the Fund and are intended to help you understand the Fund s financial performance since inception: The Fund s Net Assets per Unit (1) For the six months ended June 30, 2015 Period from May 23, 2014 to December 31, 2014 (2) Net assets, beginning of period $7.64 $9.43 (3) Increase (decrease) from operations Total revenue Total expenses (0.07) (0.11) Realized losses for the period (0.50) (0.33) Unrealized gains (losses) for the period 0.23 (1.49) Total increase (decrease) from operations (4) 0.06 (1.49) Distributions Due to net investment income (0.30) - Due to capital gains - (0.24) Due to return of capital - (0.06) Total distributions (5) (0.30) (0.30) Net assets, end of period (6) $7.40 $7.64 Notes: (1) This information is derived from the Fund's financial statements as at June 30, 2015 and December 31, (2) Results are for the period from May 23, 2014 (the inception date of the Fund) to June 30, (3) The beginning of period net assets per Unit reflects the issue price of $10.00 net of offering expenses. (4) Net assets and distributions are based on the actual number of Units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of Units outstanding over the financial period. Accordingly, totals may not sum in the above table due to the different basis for computing the per unit amounts. (5) Distributions were recorded as equal payments of $0.15 per Unit. Cash payment of distributions occurs within 15 business days of the record date. (6) This is not a reconciliation of the beginning and ending net assets per Unit Interim Management Report of Fund Performance 9

11 Ratios and Supplemental Data For the six months ended June 30, 2015 Period from May 23, 2014 to December 31, 2014 (1) Net assets attributable to holders of redeemable Units $142,053,328 $146,619,401 Number of redeemable units outstanding 19,200,000 19,200,000 Management expense ratio (2) 1.67% 1.66% Management expense ratio before waivers and absorptions 1.67% 1.66% Trading expense ratio (3) 0.06% 0.26% Portfolio turnover rate (4) 19.90% 22.32% Net asset value per Unit $7.40 $7.64 Closing market price $6.95 $7.04 Notes: (1) Results are for the period from May 23, 2014 (the inception date of the Fund) to December 31, (2) Management expense ratio ( MER ) is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period, and is expressed as an annualized percentage of daily average net asset value during the period. (3) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. (4) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a fund s portfolio turnover rate in a year, the greater the trading costs payable by the fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a fund. MANAGEMENT FEES The Manager and Investment Manager are responsible for providing or arranging for all investment advisory and management services required by the Fund including, without limitation, managing in a manner consistent with the investment objectives, guidelines and restrictions of the Fund and for arranging for the execution of all transactions. The Manager is also responsible for the operational and administrative functions of the Fund. An annual management fee equal to 1.25% per annum of the net asset value of the Fund, calculated daily and payable monthly in arrears plus applicable taxes, is paid to the Manager. The management fee totaled $1,049,348 and $265,596 for the Fund for the six months ended June 30, 2015 and the period May 23, 2014 to June 30, 2014, respectively. The Manager is also eligible in each fiscal year to receive from the Fund a performance fee (the "Performance Fee") that shall be calculated and accrued monthly and be paid annually, if applicable. The Performance Fee for a given year will, subject to some exceptions regarding redemptions and issuances of Units, be equal to 20% of the amount by which the net asset value per Unit (calculated without taking into account any Performance Fee) exceeds 106.0% of the Threshold Amount. The Threshold Amount is the greater of: (i) $10.00; and (ii) the net asset value per Unit at the end of the last fiscal year in which a Performance Fee was paid (after payment of such Performance Fee). Please refer to the Fund s declaration of trust for additional information on the Performance Fee. The Performance Fee accrual totaled $0 and $0 for the six months ended June 30, 2015 and the period May 23, 2014 to June 30, 2014, respectively Interim Management Report of Fund Performance 10

12 PAST PERFORMANCE Note that the performance information shown in this section assumes that all distributions made by the Fund in the period shown were reinvested in additional Units. Also note that the performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns on performance. The performance of the Fund in the past does not necessarily indicate how it will perform in the future. Year-to-Date Returns The following bar chart shows the Fund s performance for the period from May 23, 2014 to June 30, The bar chart shows, in percentage terms, how much an investment made on the first day of the Period would have increased or decreased by the last day of the Period Interim Management Report of Fund Performance 11

13 SUMMARY OF INVESTMENT PORTFOLIO The following is a summary of the Fund as at June 30, This is a summary only and will change due to ongoing portfolio transactions of the Fund. Quarterly updates will be posted to As at June 30, 2015 % of Net Asset Value Top 25 Positions of the Fund Hexion US Finance Corp. Bonds 8.58 Lightstream Resources Ltd. Bonds 7.18 New Albertson's Inc. Bonds 6.67 Just Energy Group Inc. Bonds 6.66 Banco do Brasil SA Bonds 6.13 MEG Energy Corp. Bonds 5.95 Imperial Metals Corp. Bonds 5.72 SuperMedia Inc. Term Loans 5.50 Forbes Energy Services Ltd. Bonds 5.43 EV Energy Partners L.P. Bonds 5.34 Empresas ICA S.A.B. de C.V. Bonds 4.93 British American Tobacco PLC Equity 4.77 JPMorgan Chase & Co. Equity 4.26 Perpetual Energy Inc. Bonds 4.12 Markwest Energy Partners LP Equity Total Return Swap 4.08 General Motors Co. Equity 3.85 HSBC Holdings PLC Equity 3.46 Royal Dutch Shell PLC Equity 3.28 Aberdeen Asset Management PLC Equity 3.23 Bill Barrett Corp. Bonds 3.12 Basic Energy Services Inc. Bonds 2.72 Energy Transfer Partners L.P. Equity Total Return Swap 2.00 EV Energy Partners L.P. Equity Total Return Swap 1.87 GDF Suez Equity 1.86 Vermilion Energy Inc. Equity 1.85 Total Interim Management Report of Fund Performance 12

14 As at June 30, 2015 % of Net Asset Value Sector Allocation of the Fund Basic Materials Cash and Cash Equivalents 0.91 Consumer Cyclical 3.85 Consumer Non-Cyclical Energy Financials Infrastructure Media 5.50 Other Liabilities and Accrued Investment Income (7.85) Total (1) (1) The Fund has notional exposure resulting from derivatives (excluding derivatives used for purposes of hedging) representing 15.63% of Net Asset Value. Table includes this notional value of derivatives and therefore do not sum to 100% of the Net Asset Value Interim Management Report of Fund Performance 13

15 FUND INFORMATION MANAGER AND INVESTMENT MANAGER Brookfield Investment Management (Canada) Inc. Gail Cecil Director, President & Chief Executive Officer Jonathan Tyras Director, Chief Financial Officer, Treasurer, and Secretary Craig Noble Director INDEPENDENT REVIEW COMMITTEE John P. Barratt (Chair) Corporate Director James L. R. Kelly President Earth Power Inc. Frank Lochan Corporate Director CONTACT INFORMATION Brookfield Select Opportunities Income Fund welcomes inquiries from Unitholders, analysts, media representatives or other interested parties. Manager, Investment Manager, and Trustee Brookfield Investment Management (Canada) Inc. Brookfield Place 181 Bay Street, Suite 300 Toronto, Ontario M5J 2T3 t w. Transfer Agent and Registrar Unitholder inquiries relating to distributions, address changes and Unitholder account information should be directed to the Fund s Transfer Agent: Valiant Trust Company 710, 130 King Street West Toronto, Ontario M5X 1A9 t (toll-free North America) f (toll-free North America) International e. inquiries@valianttrust.com w Interim Management Report of Fund Performance 14

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