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2013Interim Financial Statements

For the period from January 1, 2013 to June 30, 2013

Brookf ie ld High Yield Strategic Income FundBHY.UN

Brookfield Investment Management

Brookfield High Yield Strategic Income Fund

2013 Interim Financial Statements | 1

NOTICE TO READER

These interim financial statements and related notes of Brookfield High Yield Strategic Income Fund(the “Fund”) for the six month period ended June 30, 2013 have been prepared by management of theFund. The external auditors of the Fund have not audited or reviewed these interim financialstatements.

CONTENTS

Financial Statements 2Notes to Financial Statements 12Fund Information 26



STATEMENT OF NET ASSETSAs at June 30, 2013 and December 31, 2012(Unaudited, Expressed in Canadian Dollars)

2013 2012$ $

AssetsInvestment portfolio at fair value, (Cost: $117,069,593; 2012 -$120,036,932) 127,334,378 130,084,069

Cash and cash equivalents 238,482 6,081

Other receivables 39,870 -

127,612,730 130,090,150

LiabilitiesDistributions payable (Note 13) 2,100,313 2,100,313

Accounts payable and accrued liabilities 907,438 1,130,614

3,007,751 3,230,927

Net assets, representing Unitholders' equity 124,604,979 126,859,223

Number of Units outstanding (Note 12) 12,925,000 12,925,000

Net assets per Unit $ 9.64 $ 9.82

See accompanying notes to financial statements.

Approved on behalf of the Manager, Brookfield Investment Management (Canada) Inc.

George E. MyhalDirector

Gail CecilDirector



STATEMENT OF OPERATIONSFor the six months ended June 30, 2013(Unaudited, Expressed in Canadian Dollars)

2013

$

Investment income

Fee income 39,870

39,870

Expenses (Note 9)

Forward fees 350,377

Hedging fees 111,515

Service fees 324,718

Management fees 229,331

Operating costs 122,875

1,138,816

Net investment loss (1,098,946)

Net realized and unrealized gain on investments

Realized gain on sale of investments 2,802,689

Change in unrealized appreciation of investments 242,649

3,045,338

Increase in net assets from operations for the period 1,946,392

Increase in net assets from operations per Unit $ 0.15

The Fund began operations on June 19, 2012; therefore there is no comparable period.

See accompanying notes to financial statements.



STATEMENT OF CHANGES IN NET ASSETSFor the six months ended June 30, 2013(Unaudited, Expressed in Canadian Dollars)

2013

$

Net assets, beginning of period 126,859,223

Increase in net assets from operations 1,946,392

Capital transactions

Amounts paid for redemption of Units -

Distribution to Unitholders

Return of capital payable (2,100,313)

Return of capital paid (2,100,323)

(4,200,636)

Net assets, end of period 124,604,979


See accompanying notes to financial statements



STATEMENT OF INVESTMENTSAs at June 30, 2013(Unaudited, Expressed in Canadian Dollars)

Average Cost Fair value

$ $

Investment portfolio 117,069,593 127,334,378

Cash and cash equivalents 238,482

Other assets and liabilities (2,967,881)

Net assets, end of period 124,604,979



As a result of the Forward Agreement described in Note 4, the net asset value of the Fund’s investmentportfolio (which includes the Forward Agreement) is equal to the net asset value of the High YieldStrategic Trust (as described in Note 1). The investment portfolio of $127,334,378 presented above inthis Statement of Investments differs from the net asset value of High Yield Strategic Trust. Anexplanation of this difference can be found in Note 4 of these financial statements. The investmentportfolio consists of total investments of the Common Share Portfolio of $125,414,531 (Note 4) and thegain on the forward agreement at the fair value of $1,919,847 (Note 4), the sum of which is$127,334,378.

The net assets of the High Yield Strategic Trust as at June 30, 2013 are listed below:



STATEMENT OF INVESTMENTSHigh Yield Strategic TrustAs at June 30, 2013(Unaudited, Expressed in Canadian Dollars)

Quantity Security

AverageCost

$Fair Value

$

NetAssets

%BONDSUnited States Dollar Denominated

1,050,000 AAR Corp. 7.25% 1/15/2022 1,064,043 1,188,006 0.93

1,200,000 AK Steel Corp. 7.63% 5/15/2020 1,045,718 1,076,049 0.84

1,850,000 Alpha Natural Resources Inc. 6.25% 6/01/2021 1,619,427 1,561,326 1.22

300,000 American Axle & Manufacturing Inc. 7.75% 11/15/2019 326,651 351,871 0.28

1,550,000 American Axle & Manufacturing Inc. 6.25% 3/15/2021 1,632,549 1,655,612 1.30

1,450,000 ArcelorMittal 6.13% 6/01/2018 1,504,372 1,580,478 1.24

2,850,000 Arch Coal Inc. 7.25% 6/15/2021 2,615,149 2,441,275 1.91

1,225,000 Associated Materials LLC 9.13% 11/01/2017 1,249,216 1,347,237 1.06

1,750,000 Avis Budget Car Rental LLC 8.25% 1/15/2019 1,915,921 1,980,010 1.55

1,100,000 Berry Plastics Corp. 9.75% 1/15/2021 1,227,216 1,309,853 1.03

1,600,000 Boyd Gaming Corp. 9.00% 7/01/2020 1,587,948 1,687,920 1.32

1,200,000 BreitBurn Energy Partners L.P. 8.63% 10/15/2020 1,319,750 1,345,061 1.05

500,000 BreitBurn Energy Partners L.P. 7.88% 4/15/2022 506,865 539,343 0.42

1,450,000 Cablevision Systems Corp. 8.63% 9/15/2017 1,649,149 1,729,300 1.35

1,900,000 Casella Waste Systems Inc. 7.75% 2/15/2019 1,841,837 1,896,668 1.49

1,750,000 CCO Holdings LLC 6.63% 1/31/2022 1,905,960 1,929,240 1.51

1,950,000 CenturyLink Inc. 7.65% 3/15/2042 1,983,993 1,955,591 1.53

1,725,000 Cenveo Corp. 8.88% 2/01/2018 1,716,991 1,774,294 1.39

2,250,000 Chrysler Group LLC 8.25% 6/15/2021 2,354,645 2,606,562 2.04

1,550,000 Community Health Systems Inc. 7.13% 7/15/2020 1,636,920 1,680,140 1.32

2,275,000 Cincinnati Bell Inc. 8.75% 3/15/2018 2,248,751 2,395,211 1.88

1,450,000 CityCenter Holdings LLC 7.63% 1/15/2016 1,563,985 1,614,575 1.26

750,000 Clear Channel Communications Inc. 9.00% 3/01/2021 670,931 741,762 0.58

755,000 Coleman Cable Inc. 9.00% 2/15/2018 811,003 846,267 0.66

1,600,000 Crosstex Energy L.P. 8.88% 2/15/2018 1,731,899 1,787,085 1.40



1,500,000 Crown Cork & Seal Co. Inc. 7.38% 12/15/2026 1,615,466 1,730,778 1.36

1,350,000 Cumulus Media Holdings Inc. 7.75% 5/01/2019 1,292,270 1,381,458 1.08

1,400,000 DineEquity Inc. 9.50% 10/30/2018 1,573,829 1,660,394 1.30

1,200,000 DJO Finance LLC 9.88% 4/15/2018 1,208,824 1,314,995 1.03

1,500,000 EV Energy Partners L.P. 8.00% 4/15/2019 1,525,392 1,594,293 1.25

425,000 FairPoint Communications Inc. 8.75% 8/15/2019 441,140 442,189 0.35

2,100,000 First Data Corp. 11.25% 1/15/2021 2,132,768 2,215,395 1.74

825,000 FMG Resources (August 2006) Pty Ltd. 6.88% 4/01/2022 847,751 823,762 0.65

1,925,000 Freescale Semiconductor Inc. 8.05% 2/01/2020 1,933,544 2,058,703 1.61

2,150,000 Frontier Communications Corp. 7.13% 3/15/2019 2,243,472 2,370,209 1.86

1,675,000 HCA Inc. 8.00% 10/01/2018 1,919,030 2,034,306 1.59

775,000 Health Management Associates Inc. 7.38% 1/15/2020 847,583 899,345 0.70

1,875,000 Hexion US Finance Corp. 9.00% 11/15/2020 1,657,992 1,876,658 1.47

1,675,000 Intelsat Luxembourg SA 7.75% 6/01/2021 1,784,753 1,779,940 1.39

900,000 ION Geophysical Corp. 8.13% 5/15/2018 922,503 954,203 0.75

1,100,000 Iron Mountain Inc. 8.38% 8/15/2021 1,239,466 1,231,523 0.96

750,000 Iron Mountain Inc. 5.75% 8/15/2024 747,563 733,850 0.57

725,000 Isle of Capri Casinos Inc. 7.75% 3/15/2019 765,307 800,212 0.63

1,875,000 Jaguar Land Rover PLC 8.13% 5/15/2021 2,004,936 2,136,313 1.67

735,000 Key Energy Services Inc. 6.75% 3/01/2021 747,742 744,373 0.58

1,625,000 Kindred Healthcare Inc. 8.25% 6/01/2019 1,646,731 1,735,723 1.36

625,000 L Brands Inc. 7.60% 7/15/2037 641,033 673,355 0.53

1,200,000 Lamar Media Corp. 5.88% 2/01/2022 1,267,709 1,303,374 1.02

1,250,000 Legrand France SA 8.50% 2/15/2025 1,675,740 1,657,709 1.30

1,850,000 Level 3 Communications Inc. 8.88% 6/01/2019 1,913,763 2,029,724 1.59

1,450,000 Levi Strauss & Co. 6.88% 5/01/2022 1,522,618 1,655,111 1.30

1,400,000 LINN Energy LLC 7.75% 2/01/2021 1,487,932 1,473,238 1.15

1,600,000 Masonite International Corp. 8.25% 4/15/2021 1,688,948 1,818,734 1.42

1,350,000 Mediacom Broadband LLC 6.38% 4/01/2023 1,338,998 1,404,599 1.10

700,000 Mediacom LLC 9.13% 8/15/2019 786,404 789,235 0.62

1,650,000 MetroPCS Wireless Inc. 6.63% 4/01/2023 1,726,186 1,773,305 1.39



1,475,000 MGM Resorts International 8.63% 2/01/2019 1,618,301 1,750,558 1.37

1,000,000 Michaels Stores Inc. 7.75% 11/01/2018 1,053,620 1,127,478 0.88

1,350,000 Millar Western Forest Products Ltd. 8.50% 4/01/2021 1,057,266 1,406,380 1.10

1,579,250 MTR Gaming Group Inc. 11.50% 8/01/2019 1,664,975 1,751,414 1.37

1,500,000 Mueller Water Products Inc. 7.38% 6/01/2017 1,546,244 1,616,052 1.27

1,600,000 New Albertsons Inc. 7.75% 6/15/2026 1,282,621 1,331,347 1.04

700,000 New Albertsons Inc. 8.00% 5/01/2031 560,714 588,003 0.46

1,500,000 Niska Gas Storage US LLC 8.88% 3/15/2018 1,540,651 1,606,161 1.26

1,100,000 NRG Energy Inc. 8.50% 6/15/2019 1,165,238 1,244,577 0.97

538,000 Ply Gem Industries Inc. 8.25% 2/15/2018 549,850 596,651 0.47

1,200,000 Precision Drilling Corp. 6.63% 11/15/2020 1,285,752 1,284,929 1.01

1,700,000 PulteGroup Inc. 6.38% 5/15/2033 1,731,409 1,690,294 1.32

1,650,000 Reynolds Group Holdings Ltd. 9.00% 4/15/2019 1,783,951 1,788,536 1.40

1,100,000 Service Corp. International 8.00% 11/15/2021 1,294,767 1,356,270 1.06

901,000 Tekni-Plex Inc. 9.75% 6/01/2019 936,096 1,015,145 0.80

1,450,000 Terex Corp. 11.25% 12/15/2018 1,484,590 1,652,052 1.29

250,000 Terex Corp. 6.50% 4/01/2020 260,361 269,342 0.21

1,325,000 Terex Corp. 6.00% 5/15/2021 1,322,284 1,412,667 1.11

1,100,000 Trinidad Drilling Ltd. 7.88% 1/15/2019 1,216,724 1,218,468 0.95

1,275,000 Trinseo Materials Operating SCA 8.75% 2/01/2019 1,311,329 1,283,001 1.01

1,775,000 United Rentals North America Inc. 7.63% 4/15/2022 1,905,115 2,022,339 1.58

1,800,000 USG Corp. 9.75% 1/15/2018 1,933,737 2,157,637 1.69

1,600,000 Verso Paper Holdings LLC 11.75% 1/15/2019 1,734,087 1,738,558 1.36

1,310,000 W&T Offshore Inc. 8.50% 6/15/2019 1,401,214 1,426,899 1.12

2,200,000 Windstream Corp. 7.00% 3/15/2019 2,275,072 2,312,187 1.81

1,300,000 Xerium Technologies Inc. 8.88% 6/15/2018 1,300,028 1,385,150 1.09

650,000 YCC Holdings LLC 10.25% 2/15/2016 672,882 701,146 0.55

116,767,154 121,850,978 95.43Euro Denominated

800,000 Ardagh Packaging Finance PLC 9.25% 10/15/2020 1,007,751 1,154,856 0.90

800,000 Carlson Wagonlit BV 7.50% 6/15/2019 1,008,389 1,112,478 0.87



700,000 Greif Luxembourg Finance SCA 7.38% 7/15/2021 921,750 1,080,898 0.85

1,200,000 Ineos Group Holdings Ltd. 6.50% 8/15/2018 1,590,796 1,578,131 1.24

475,000 Kerling PLC 10.63% 2/01/2017 592,145 680,667 0.53

700,000 KM Germany Holdings GmbH 8.75% 12/15/2020 1,003,485 989,650 0.78

600,000 Numericable Finance & Co. SCA 12.38% 2/15/2019 944,765 954,639 0.75

1,050,000 Obrascon Huarte Lain SA 7.63% 3/15/2020 1,367,081 1,492,683 1.17

720,000 Orion Engineered Carbons Bondco GmbH 10.00% 6/15/2018 939,078 1,079,110 0.85

700,000 RPG Byty s.r.o. 6.75% 5/01/2020 951,224 883,103 0.69

1,200,000 Servus Lux Holding SCA 7.75% 6/15/2018 1,607,377 1,616,735 1.27

1,000,000 Spie BondCo 3 SCA 11.00% 8/15/2019 1,363,844 1,460,478 1.14

700,000 Unitymedia Hessen GmbH & Co. 9.50% 3/15/2021 967,728 1,063,773 0.83

1,005,000 Wind Acquisition Finance SA 11.75% 7/15/2017 1,232,893 1,424,108 1.12

15,498,305 16,571,310 12.99

British Pounds Denominated

750,000 Cabot Financial (Luxembourg) SA 10.38% 10/01/2019 1,216,029 1,319,243 1.03

1,000,000 DFS Furniture Holdings PLC 7.63% 8/15/2018 1,579,212 1,658,124 1.30

750,000 Dixons Retail PLC 8.75% 9/15/2017 1,210,090 1,348,104 1.06

600,000 Lowell Group Financing PLC 10.75% 4/01/2019 932,475 1,053,398 0.83

750,000 Matalan Finance PLC 8.88% 4/29/2016 1,152,183 1,206,152 0.94

6,089,989 6,585,021 5.16Canadian Dollar Denominated

1,400,000 Cascades Inc. 7.75% 12/15/2017 1,453,437 1,539,699 1.21

1,453,437 1,539,699 1.21Swiss Franc Denominated

900,000 Matterhorn Mobile SA 6.75% 5/15/2019 979,803 1,026,834 0.80

979,803 1,026,834 0.80PRIVATE PLACEMENTSUnited States Dollar Denominated

1,460,000 Bumble Bee Acquisition Corp. 9.00% 12/15/2017 1,485,805 1,623,014 1.27

1,244,000 C&S Group Enterprises LLC 8.38% 5/01/2017 1,304,948 1,389,459 1.09

1,600,000 Calfrac Holdings L.P. 7.50% 12/01/2020 1,583,685 1,671,041 1.31

1,750,000 Chester Downs & Marina LLC 9.25% 2/01/2020 1,732,260 1,772,316 1.39



1,125,000 Clear Channel Worldwide Holdings Inc 7.63% 3/15/2020 1,116,803 1,219,456 0.96

770,000 Frac Tech Services LLC 8.13% 11/15/2018 803,470 841,758 0.66

1,500,000 Hercules Offshore Inc. 10.50% 10/15/2017 1,530,108 1,689,239 1.32

1,575,000 Palace Entertainment Holdings LLC 8.88% 4/15/2017 1,660,657 1,696,023 1.33

1,700,000 Pittsburgh Glass Works LLC 8.50% 4/15/2016 1,624,783 1,777,723 1.39

1,500,000 Realogy Group LLC 7.88% 2/15/2019 1,520,894 1,671,436 1.31

14,363,415 15,351,465 12.03

ASSET-BACKED AND MORTGAGE-BACKED SECURITIESUnited States Dollar Denominated

614,000 ACE Securities Corp., Class 'A2D' 0.47% 5/25/2036 288,500 349,725 0.27

1,731,000 GSAMP Trust, Class 'A2B' 0.35% 8/25/2036 936,704 1,064,070 0.83

510,225Securitized Asset Backed Receivables LLC Trust, Class 'A2A'0.33% 5/25/2037 267,047 283,380 0.22

105,525Securitized Asset Backed Receivables LLC, Class 'A2C' 0.35%7/25/2036 44,210 56,033 0.04

1,830,558Securitized Asset Backed Receivables LLC, Class 'A2B' 0.35%12/25/2036 865,562 962,590 0.75

609,267Securitized Asset Backed Receivables LLC Trust, Class 'A2C'0.41% 12/25/2036 287,005 322,815 0.25

1,191,411Securitized Asset Backed Receivables LLC, Class 'A2' 0.43%2/25/2037 480,492 579,573 0.45

1,272,522WaMu Mortgages Pass-Through Certficates,Series '2006-AR13', Class 'A1' 1.07% 10/25/2046 848,757 999,903 0.78

1,806,171MASTR Asset Backed Securities Trust, Class 'A3' 0.36%11/25/2036 909,172 1,109,334 0.87

1,257,196MASTR Asset Backed Securities Trust, Class 'A3' 0.31%8/25/2036 543,676 653,117 0.51

573,152MASTR Asset Backed Securities Trust, Class 'A5' 0.44%8/25/2036 247,860 304,504 0.24

1,942,323MASTR Asset Backed Securities Trust, Class 'A5' 0.41%10/25/2036 896,685 1,143,228 0.90

760,990 GSAMP Trust, Class 'A2B' 0.30% 3/25/2047 549,775 647,600 0.51

7,165,445 8,475,871 6.62EQUITIESUnited States Dollar Denominated

12,950 AT&T Inc. 427,371 483,347 0.38

11,000 Cedar Fair L.P. 429,765 480,424 0.38

12,660 CenturyLink Inc. 424,399 471,989 0.37

224,000 Frontier Communications Corp. 961,402 954,688 0.75

25,600 Huntsman Corp. 460,394 447,231 0.35

11,650 Iron Mountain Inc. 452,773 327,287 0.26

3,156,104 3,164,967 2.49

TERM LOANS



United States Dollar Denominated

573,563 Albertsons LLC. Term Loan B 5/21/2019 566,287 600,542 0.47

1,000,000 FairPoint Communications Inc. Term Loan B 2/14/2019 988,399 1,031,214 0.81

1,700,000 Inventiv Health Inc. Term Loan B 8/04/2016 1,740,885 1,757,547 1.38

3,295,571 3,389,302 2.66

Total investments 168,769,222 177,955,447 139.39

Liabilities, net of other assets (50,301,052) (39.39)

Total Net Assets of High Yield Strategic Trust 127,654,396 100.00




NOTES TO FINANCIAL STATEMENTS

1. THE FUND

Brookfield High Yield Strategic Income Fund (the “Fund”) is an investment fund established under thelaws of the Province of Ontario pursuant to a Declaration of Trust dated May 23, 2012. High YieldStrategic Trust (the “Trust”), and together with the Fund (the “Funds”), is an investment trustestablished under the laws of the Province of Ontario pursuant to a Declaration of Trust dated May 23,2012. The Fund effectively began operations on June 19, 2012 when it completed an initial publicoffering of 12,500,000 units (the “Units”) and subsequently issued 425,000 Units pursuant to an over-allotment option on June 29, 2012 at $10.00 per Unit (the “Offering”), for gross proceeds of $129.3million and net proceeds of $121.7 million after deducting issuance costs of approximately $7.6 million.

The investment objectives of the Fund are to (i) provide holders of Units (“Unitholders”) with tax-advantaged quarterly cash distributions; (ii) maximize total return for Unitholders through distributionsand capital appreciation; and (iii) preserve capital of the Fund by obtaining economic exposure to aportfolio (the “Portfolio”) comprised primarily of North American high yield debt.

Brookfield Investment Management (Canada) Inc. (“BIM Canada”) is the manager (the “Manager”) andthe trustee of the Funds. Brookfield Investment Management Inc. (“BIM”) is the investment manager(the “Investment Manager”) of the Funds. The Investment Manager makes all of the investment andtrading decisions on behalf of the Funds.

The Fund obtained exposure to the Portfolio through a forward agreement (the “Forward Agreement”)as explained below and in Note 4. The Fund invested the net proceeds of the Offering in a portfolio ofcommon shares of Canadian public companies (the “Common Share Portfolio”). The Fund then enteredinto the Forward Agreement with a Canadian chartered bank (the “Counterparty”) pursuant to whichthe Counterparty agreed to pay to the Fund on the scheduled settlement date of the ForwardAgreement as the purchase price for the Common Share Portfolio, an amount based on the value of theUnits of the Trust.

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with Part V of the Canadian Institute ofChartered Accountants (“CICA”) Handbook - Canadian generally accepted accounting principles(“GAAP”). The following is a summary of significant accounting policies followed by the Fund in thepreparation of these financial statements:

Valuation of investmentsInvestments are deemed to be classified as held for trading in accordance with CICA Handbook Section3855, Financial Instruments – Recognition and Measurement (“Section 3855”) and are recorded at theirfair value.

In the case of publicly-traded securities, such as the investments pledged under the ForwardAgreement, fair value means the closing bid price for long positions and the closing ask price for shortpositions. The Fund, through its exposure to the economics of the Trust, is also exposed to non-publiclytraded securities.

For bonds and bank debt, fair value means the bid price for long positions and the ask price for shortpositions, provided by independent security pricing services or broker quotes. Securities for whichreliable quotations are not readily available or not traded in an active market are valued at fair valueusing established valuation procedures. All investment transactions are accounted for on the tradedate. Realized gains and losses from investment transactions and unrealized appreciation or



depreciation in the value of investments are calculated on an average cost basis, excluding transactioncosts and the effect of foreign exchange fluctuations, which are disclosed separately.

Other assets and liabilitiesFor the purpose of categorization in accordance with Section 3855, accrued investment income isrecorded at cost or amortized cost. Similarly, margin payable, distributions payable and accountspayable and accrued liabilities are deemed to be other financial liabilities and are reported atamortized cost.

Investment transactions and income recognitionAll investment transactions are accounted for on the trade date. Dividend income is recognized on theex-dividend date and interest income is recognized as earned.

Transaction costsTransaction costs, such as brokerage commissions incurred on the purchase and sale of securities bythe Fund, are expensed and are included in operating expenses in the Statement of Operations.Transaction costs are incremental costs that are directly attributable to the acquisition, issue ordisposal of an investment, which include fees and commissions paid to agents, advisors, brokers anddealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties.

Foreign currency translationInvestments and other assets denominated in foreign currencies are translated into Canadian dollarsusing the rate of exchange prevailing on the trade date. Investment transactions and income andexpenses are translated at the rate of exchange on the date of such transactions. The fair values ofinvestments and other assets and liabilities in foreign currencies are translated at the period-endexchange rates.

All realized and unrealized foreign exchange adjustments are recorded in the Statement of Operations.

Forward foreign currency contractsForward foreign currency contracts, if applicable, are valued at current market value on each valuationdate. The value is determined as the gain or loss that would be realized if, on the valuation date, theposition of the forward foreign currency contracts were closed out.

Forward AgreementThe fair value of the Forward Agreement (see Note 4) is the gain or loss that would be realized on thevaluation date if the contract were closed out or expired. The unrealized appreciation (depreciation)and the realized gains (losses) on partial settlements of the Forward Agreement are included in theStatement of Operations.

Accounting estimatesThe preparation of the financial statements in accordance with Canadian GAAP requires the Manager tomake estimates and assumptions that affect the reported amounts of assets and liabilities at the dateof the financial statements and the reported amounts of income and expenses during the reportingperiod. Significant estimates were used in the valuation of the investments. Actual results could differfrom those estimates.

3. NET ASSETS PER UNIT

The net assets per Unit are the net assets of the Fund divided by the number of Units outstanding as atthe end of the financial period. Any difference between the net asset value per Unit for pricingpurposes and the net assets per Unit on the Statement of Net Assets is due to different pricingmethodologies used to calculate the net assets for financial reporting purposes (as described in Notes 2and 4) and the net asset value used for Fund pricing purposes. The following table reconciles the



difference between the published net asset value per Unit and the net assets per Unit reflected in thefinancial statements of the Fund as at June 30, 2013 and December 31, 2012:

June 30, 2013 December 31, 2012

TotalPer

Unit TotalPer

Unit

$ $ $ $

Net asset value 125,029,370 9.67 127,249,310 9.85

Section 3855 adjustments (424,391) (0.03) (390,087) (0.03)

Net assets per Statement of Net Assets 124,604,979 9.64 126,859,223 9.82

4. FORWARD AGREEMENT

In order to achieve its investment objectives, the Fund obtained economic exposure to the returns ofthe Trust by investing the net proceeds of its initial public offering in the Common Share Portfolio andentering into the Forward Agreement with the Counterparty. As at June 30, 2013, the Counterparty hada credit rating of A+ according to Standard and Poor’s Rating Services. The Fund does not investdirectly in the Trust. By virtue of the Forward Agreement, the returns of the Fund are dependent uponthe economic performance of the Trust and the Portfolio.

The Fund will partially settle the Forward Agreement prior to the Forward Agreement termination datein order to fund quarterly distributions as well as redemptions of Fund Units by Unitholders from timeto time and for payment of expenses of the Fund. The Forward Agreement has a scheduled terminationsettlement date (the “Forward Termination Date”) of June 19, 2017.

The Fund, like many closed-end funds in Canada, utilizes a forward agreement that is considered to bea tax advanced strategy. On March 21, 2013, the Government of Canada introduced a budget proposalthat will have a significant impact on investment funds that employ such tax advantages strategiesreferred to as “character conversions” in the budget. The Fund will monitor guidance as issued by theFederal Government with respect to the implementation of the budget proposals as certaingrandfathering provisions were proposed for forward agreements entered into prior to March 21, 2013provided the term of the forward agreement is not extended thereafter.

As at June 30, 2013, the unrealized gain on the Forward Agreement at fair value was $1,919,847. Thisunrealized gain represents the difference as at June 30, 2013 between the net asset value of theCommon Share Portfolio of $125,838,922 and the net asset value of the Trust of $127,758,769.

For financial statement reporting purposes, the value of the Common Share Portfolio includes theinvestments measured in accordance with Section 3855 of the CICA Handbook, which for publicly-listedsecurities is based on closing bid prices for securities held long and on closing ask prices for securitiesheld short, on a recognized stock exchange on which the investments are listed or principally traded.The following table reconciles the value of the Common Share Portfolio for financial reporting purposesto the fair value of the Forward Agreement:



As at June 30, 2013 As at December 31, 2013$ $

Fair value of the Common Share Portfolio,at closing bid prices 125,414,531 131,056,636

Valuation adjustment to the Common Share Portfolioto closing prices 424,391 390,087

Value of the Common Share Portfolio, at closing prices 125,838,922 131,446,723

Fair value of the Trust, at closing bid prices 127,654,396 130,371,336

Valuation adjustment to the Trust to closing prices 104,373 102,820

Net asset value of the Trust at closing prices 127,758,769 130,474,156

Gain (Loss) on Forward Agreement, at fair value 1,919,847 (972,567)

The investments of the Common Share Portfolio as at June 30, 2013 were as follows:

Number of Average Cost Fair ValueShares Security $ $

807,469 Athabasca Oil Corp. 8,379,439 5,248,549

483,846 Canfor Corp. 5,743,102 8,999,536

438,886 CGI Group Inc., Class 'A' 10,397,740 13,486,967

1,043,495 Detour Gold Group 12,177,587 8,598,399

615,112 First Majestic Silver Corp. 7,578,180 6,827,743

284,129 MEG Energy Corp. 10,399,027 8,160,185

1,062,032 New Gold Inc. 10,832,726 7,168,716

417,920 Paramount Resources Ltd., Class 'A' 10,396,705 14,861,235

555,094 Tahoe Resources Inc. 10,401,649 8,182,086

395,636 Tourmaline Oil Corp. 10,397,713 16,616,712

1,217,272 Transglobe Energy Corp. 9,967,907 7,936,613

213,803 Valeant Pharmaceuticals International Inc. 10,397,817 19,327,791

Total investments of the Common Share Portfolio 117,069,593 125,414,531

The investments of the Common Share Portfolio as at December 31, 2012 were as follows:

Number Average Cost Fair Valueof Shares Security $ $1,049,099 Athabasca Oil Corp. 10,886,933 10,942,103915,811 Canfor Corporation 10,870,394 15,165,830458,791 CGI Group Inc. 10,869,313 10,515,490297,015 MEG Energy Corp. 10,870,651 9,035,1961,110,196 New Gold Inc. 11,323,999 12,145,545216,324 Open Text Corporation 10,865,257 11,962,7171,344,624 Osisko Mining Corp. 10,870,156 10,676,315436,873 Paramount Resources Ltd. 10,868,204 13,949,355580,269 Tahoe Resources Inc. 10,873,392 10,549,290413,579 Tourmaline Oil Corp. 10,869,273 12,874,714223,499 Valeant Pharmaceuticals International Inc. 10,869,360 13,240,081

Total investments of the Common Share Portfolio 120,036,932 131,056,636



5. MANAGEMENT OF FINANCIAL RISKS

Through the Forward Agreement described in Note 4, the Fund is economically exposed to financialrisks of the Portfolio held by the Trust, which is comprised primarily of North American high yield debt.

The Fund and the Trust are exposed to various financial risks, including market risk (consisting ofcurrency risk, interest rate risk, and other price risk), credit risk and liquidity risk. The Fund and theTrust’s overall risk management programme seeks to minimize potentially adverse effects of those riskson the Fund’s financial performance by employing experienced portfolio managers and by continuousmonitoring of the Fund and Trust’s securities positions and markets. The Manager maintains acorporate governance structure that oversees the Fund and the Trust’s investment activities. The Trustmay use derivative financial instruments to mitigate certain risk exposures and is currently engaged ina series of foreign exchange contracts as described below.

Currency riskCurrency risk is the risk that the value of an investment will change due to fluctuations in foreignexchange rates.

The Funds’ net assets are measured in Canadian dollars and payments to Unitholders are made inCanadian dollars.

The Trust is exposed to currency risks as it may hold assets or have liabilities denominated incurrencies other than in Canadian dollars. As at June 30, 2013, the Trust was exposed to currency riskas the value of any assets or liabilities denominated in currencies other than the Canadian dollar willvary due to changes in foreign exchange rates. Currency risks of the Trust can be mitigated with theuse of forward foreign currency contracts. The following tables summarize the Trust’s exposure toforeign currency as at June 30, 2013:

Investments Cash

Other NetAssets/

(Liabilities)*

ForeignCurrencyContracts Total Net Asset

June 30, 2013 $ $ $ $ $ %

U.S. Dollar 153,772,282 3,107,574 (10,891,050) (154,886,044) (8,897,237) (6.97)

Euro 16,571,310 - 356,951 (16,808,572) 119,689 0.09

British Pound 6,585,021 - 144,084 (6,514,140) 214,965 0.17

Swiss Franc 1,026,834 - 25,589 (793,603) 258,821 0.20

Total 177,955,447 3,107,574 (10,364,425) (179,002,358) (8,303,762) (6.50)

*Other Net Assets includes borrowings of $10,639,023



The following tables summarize the Trust’s exposure to foreign currency as at December 31, 2012:

Investments Cash

Other NetAssets/

(Liabilities)*

ForeignCurrencyContracts Total Net Asset

December 31,2012 $ $ $ $ $ %

U.S. Dollar 141,063,976 135,392 (7,336,117) (140,432,333) (6,569,082) (4.62)

British Pound 16,297,362 92,985 434,894 (6,079,416) 10,745,825 7.56

Euro 6,063,939 121,389 156,043 (1,629,434) 4,711,937 3.31

Swiss Franc 1,023,655 - 24,965 (992,561) 56,059 0.04

Total 164,448,932 349,766 (6,720,215) (149,133,744) 8,944,739 6.29

*Other Net Assets includes borrowings of $9,988,227.

As at June 30, 2013, had the Canadian dollar strengthened or weakened by 1% against each of the othercurrencies with all other variables remaining constant, the net assets of the Trust would have increasedor decreased by $83,038 (December 31, 2012 – decreased or increased by $89,447). Not less than 70%of the Portfolio’s investments denominated in currencies other than the Canadian dollar are hedgedback to Canadian dollar.

Interest rate riskInterest rate risk arises from the possibility that changes in interest rates will affect future cash flowsor fair values of financial instruments.

As at June 30, 2013 and December 31, 2012, the Fund did not hold short-term deposit notes or otherinterest-bearing securities.

The Trust is exposed to interest rate risk from its holdings of fixed-rate debt instruments, the values ofwhich fluctuate due to changes in prevailing levels of market interest rates. As at June 30, 2013, theTrust’s debt instruments’ remaining terms to maturity were as follows:

June 30, 2013 Net Assets

Debt Instruments $ %

Less than 1 year 1 to 3 years 5,299,596 4.153 to 5 years 36,934,425 28.93Greater than 5 years 132,556,460 103.84Total 174,790,481 136.92

As at December 31, 2012, the Trust’s debt instruments’ remaining terms to maturity were as follows:

December 31, 2012Debt Instruments $

Net Assets%

Less than 1 year 1 to 3 years 1,167,150 0.903 to 5 years 28,444,249 21.82Greater than 5 years 134,473,635 103.14Total 164,085,034 125.86



Interest rate risk of the Trust is currently mitigated by the relatively short duration and high creditspread of the high yield bonds in the Portfolio. These characteristics make the Portfolio’s sensitivity tointerest rate risk relatively less than what would be experienced by a portfolio with longer durationinvestments that trade at tight spreads to government-backed fixed income securities. It would alsobe possible to hedge interest rate risk by shorting government-backed fixed income securities orengaging in various interest rate derivatives. As at December 31, 2012, the Trust had no such hedges inplace.

At June 30, 2013, if the prevailing interest rates had risen or declined by 0.25%, assuming a parallelshift in the yield curve, with all other variables held constant, the Trust’s net assets would havedecreased or increased, respectively, by approximately $2,459,107 (December 31, 2012 - $2,213,696).The Trust’s sensitivity to interest rate changes was estimated using the weighted average duration ofthe bonds. In practice, the actual results may differ from this sensitivity analysis and the differencescould be material.

Other price riskOther price risk is the risk that the value of financial instruments will fluctuate as a result of changes inmarket prices (other than those arising from interest rate risk or currency risk). Such changes may bethe result of factors affecting multiple instruments traded in a market, market segment or asset class.

Although the Fund’s Common Share Portfolio is comprised of equity securities that are subject tomarket price risk and the value of the Forward Agreement will fluctuate as a result of changes inmarket conditions, the Fund itself is not exposed to other price risk of the Common Share Portfolio asit is collateral for the Forward Agreement.

The Trust is exposed to other price risk of securities held in the Portfolio. The Trust may take outrightlong or short positions in any of its investments, which may include derivative instruments for purposesconsistent with its investment objectives and investment strategy and subject to its investmentrestrictions.

As at June 30, 2013, the Trust had no direct exposure to derivatives to mitigate price risks other thanthe currency swaps described above and had no securities sold short; however, all investments insecurities present a risk of loss of capital. The Investment Manager seeks to mitigate this risk throughcareful selection of securities and other financial instruments.

Credit riskCredit risk is the risk of non-payment of scheduled interest and/or principal payments.

As at June 30, 2013, the Fund did not hold short-term deposit notes or other interest-bearingsecurities. The Fund was exposed to credit risk through the Counterparty of the Forward Agreement.The Manager believes the Fund had minimal credit risk exposure due to the strong credit rating of theCounterparty.

The Trust is exposed to several types of credit risks including the risk that one or more investments inthe Portfolio will decline in price, or fail to pay interest or principal when due, because the issuer ofthe security experiences a decline in its financial status. As at June 30, 2013, the maximum exposureto any one debt issuer in the Portfolio was $3,334,061 representing 2.62% of net assets.

The performance of the Trust is also subject to general economic and specific industry conditions thatcould impact the fair value of one or more debt securities in the Portfolio. Securities with lower ratingstend to be more sensitive to these kinds of risks.



As at June 30, 2013, the Trust was invested in debt securities with the following credit ratings:

As at June 30, 2013 Net Assets TotalDebt Instruments by S&P Rating* % $

A- 1.30 1,657,709BB+ 8.09 10,327,156BB 11.07 14,129,639BB- 18.64 23,800,878B+ 26.61 33,962,517B 20.46 26,115,395B- 27.69 35,350,069CCC+ 14.28 18,229,545CCC 4.67 5,965,416CCC- 0.78 999,903CC 0.68 862,953Not rated** 2.66 3,389,302

Total 136.92 174,790,481

As at December 31, 2012, the Trust was invested in debt securities with the following credit ratings:

As at December 31, 2012Debt Instruments by S&P Rating*

Net Assets%

Total$

BBB+ or better 1.25 1,635,761BBB BBB- BB+ 2.91 3,788,407BB 5.67 7,387,975BB- 12.64 16,484,254B+ 28.58 37,262,849B 24.27 31,636,600B- 17.29 22,537,160CCC+ or lower 26.67 34,775,049Not rated** 6.58 8,576,979Total 125.86 164,085,034

* Or, if not rated by S&P, the comparable rating from Moody’s Investors Service** Not rated by Standard & Poor’s or Moody’s Investors Service

The Investment Manager seeks to mitigate the above credit risk through the careful selection ofinvestments, through the employment of experienced portfolio managers and through continuousmonitoring of the Trust’s securities positions and markets.

Another type of credit risk is exposure to the creditworthiness of the Fund and the Trust’s tradingcounterparties. All securities transactions executed by the Fund and Trust are settled upon deliveryusing approved brokers. The risk of payment default is considered negligible, as delivery of securitiessold is only made once the broker has received payment on behalf of the Fund or Trust. Payment is notmade on a purchase until the securities have been received by the broker on behalf of the Fund orTrust. The trade will fail if either party fails to meet its obligation.

The Trust may enter into forward foreign currency exchange contracts primarily to hedge againstforeign currency exchange rate risks on its non-Canadian dollar denominated investment securities. Inaddition to currency and market risk, forward foreign currency exchange contracts involve risks arising



from the possible inability of counterparties to meet the terms of their contracts from movement incurrency, security values, and interest rates. The Trust seeks to mitigate this risk through the carefulselection of its derivative counterparties.

Liquidity riskLiquidity risk is the risk that the Fund may not be able to settle or meet its obligation on time or at areasonable price.

The Fund maintains liquidity through its ability to carry out partial settlements of the ForwardAgreement.

The Trust has current financial liabilities outstanding, including but not limited to, margin loans andinterest payable on its margin loans, accounts payable and accrued liabilities. The Manager seeks tomitigate this liquidity risk by ensuring that a reasonable portion of the Trust’s investments trade inactive markets and can be sold readily. There can be no assurance that an adequate market for theinvestments will exist at all times, or that the prices at which the investments trade, accurately reflecttheir fair value. Low trading volumes of the investments could also make it difficult to liquidateholdings quickly.

6. BORROWINGS

In August 2012, the Trust established the ability to borrow using a prime brokerage account. The Trustsubsequently added leverage to the Portfolio through the margining of certain securities. Leverage isrestricted to 33% of the total assets of the Trust. Accordingly, at the time of borrowing, the maximumamount of leverage that the Trust could employ is 1.50:1 (total long positions, including leveragedpositions, divided by net assets of the Trust). As at June 30, 2013, the Trust had employed leverageequal to 27.7% (December 31, 2012 – 23.2%) of the total assets of the Trust, equating to $50.7 million(December 31, 2012 - $39.3 million). The minimum and maximum amount of borrowings outstandingduring the six months ended June 30, 2013 was $39.2 and $50.7 million, respectively. The minimumand maximum amount of borrowings outstanding during the period from June 19, 2012 to December 31,2012 was $0 and $39.3 million, respectively. The borrowings were used to grow the Trust’s investmentsand for working capital needs. Adding a controlled amount of leverage to the Trust is consistent withthe Trust’s objectives.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The CICA Handbook Section 3862 Financial Instruments — Disclosures (“Section 3862”) requiresenhanced disclosure of fair value and liquidity risk. This includes classification of the fair valuemeasurements associated with the financial instruments held by a fund. The classifications use a fairvalue hierarchy that reflects the significance of the inputs used in making the measurements. Thehierarchy has the following levels: quoted prices in an active market (Level 1—unadjusted inputs);inputs other than quoted prices (Level 2—directly or indirectly derived from observational marketdata); and inputs not based on observable market data (Level 3—unobservable inputs). In addition tothe above disclosure requirements, Section 3862 requires disclosure of significant transfers betweenLevels 1 and 2 since the prior reporting period, as well as reconciliation of Level 3 assets, disclosingseparately changes during the reporting period attributable to i) total gains or losses recognized in netinvestment income, and a description of where they are presented in the income statement, ii)purchases, sales, issues and settlements, and iii) transfers into or out of Level 3 and the reasons forthose transfers. Any significant transfers between Level 1 and Level 2 are disclosed. Further, for fairvalue measurements in Level 3, if changing one or more type of the inputs to reasonably possiblealternative assumptions would change fair value significantly, the entity shall state this fact anddisclose both the effect of those changes and how the effect was calculated.

The following tables provide a summary of the inputs used as at June 30, 2013 and December 31, 2012in valuing the Fund’s and the Trust’s investments carried at fair value:




As at June 30, 2013 Level 1 Level 2 Level 3 Total$ $ $ $

Investments, at fair value:

Equities 125,414,531 125,414,531

Forward agreement 1,919,847 1,919,847Total Investments, at fair value 125,414,531 1,919,847 127,334,378

As at December 31, 2012Level 1

$Level 2

$Level 3

$Total

$Investments, at fair value:

Equities 131,056,636 131,056,636Forward Agreement (972,567) (972,567)

Total Investments, at fair value 131,056,636 (972,567) 130,084,069

Regarding Level 3 investments, management has determined that the impact on fair values from usingreasonable alternative assumptions would not be significant.

High Yield Strategic Trust

Level 1 Level 2 Level 3 Total

As at June 30, 2013 $ $ $ $


Equities 3,164,967

3,164,967

Fixed Income

Corporate bonds

162,925,307

162,925,307

Asset-backed and Mortgage-backed securities

8,475,871

8,475,871

Term loans

3,389,302

3,389,302

Total Investments, at fair value 3,164,967 174,790,481

177,955,447

Level 1 Level 2 Level 3 Total

As at December 31, 2012 $ $ $ $


Equities 363,898

363,898

Fixed Income

Corporate bonds

153,674,717

153,674,717

Asset-backed and Mortgage-backed securities

10,410,317

10,410,317

Total Investments, at fair value 363,898 164,085,034

164,448,932



The following table summarizes changes in the Level 3 assets of the Fund for the six months endedJune 30, 2013 and for the period June 19 to December 31, 2012:


Level 3For the six months ended June 30, 2013 $Beginning balance, December 31, 2012 (972,567)Total gains

Net realized gains -Net unrealized appreciation 2,892,414

Net transfers into (out of) Level 3 assets -

Ending balance, June 30, 2012 1,919,847

For the period June 19 to December 31, 2012Level 3

$Beginning balance, June 19, 2012 Purchases, issuances and settlements Total gains

Net realized gains Net unrealized depreciation (972,567)

Net transfers into (out of) Level 3 Ending balance, December 31, 2012 (972,567)

During the period, there were no Level 3 assets held by the Trust, nor movements in or out of thecategory.

8. INCOME TAXES

The Fund qualifies as a mutual fund trust under the Income Tax Act (Canada) and, accordingly, is notsubject to tax on that portion of its income, including net realized capital gains for its taxation yearthat is paid or payable to Unitholders. Income tax on net realized capital gains not paid or payable willbe generally recoverable by virtue of refunding provisions contained in the Income Tax Act (Canada)and provincial income tax legislation, as redemptions occur. It is the intention of the Fund to pay allnet taxable income and sufficient net taxable gains so that the Fund will not be subject to incometaxes. The Fund may distribute more than it earns, in which case the excess distribution is a return ofcapital and is not taxable to Unitholders.

No provision for income taxes has been recorded in the accompanying financial statements as allincome and net realized capital gains are to be distributed to the Unitholders. Capital losses realized inexcess of those utilized to offset realized capital gains in the current taxation year can be carriedforward indefinitely and may be applied against future years’ capital gains. Non-capital losses may becarried forward for a period of 20 years and applied against future years’ taxable income. As atDecember 31, 2012, the Fund had $501,703 in non-capital losses which will expire in 2032.

9. EXPENSES OF THE FUND

An annual management fee equal to 0.3125% per annum of the net asset value of the Fund, calculateddaily and payable monthly in arrears, plus an amount calculated quarterly and paid as soon aspracticable after the end of each calendar quarter, equal to the service fee (the “Service Fee”), plusapplicable taxes, is paid to the Manager. As well, an annual management fee of 0.9375% based on thenet asset value of the Trust, calculated daily and payable monthly in arrears, is paid to the Manager(total overall annual management fee to the Funds of 1.25% excluding the Service Fee). The



management fee excluding the Service Fee, totaled $229,331 and for the Fund and $690,740 for theTrust for the six months ended June 30, 2013.

The Manager pays to registered dealers the Service Fee equal to 0.50% annually of the net asset valueper Unit for each Unit held by clients of the registered dealers, calculated and paid at the end of eachcalendar quarter, plus applicable taxes. The Service Fees totaled $324,718 for the six months endedJune 30, 2013.

The Manager is also eligible in each fiscal year to receive from the Trust 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 andissuances of units of the Trust, be equal to 15% of the amount by which the net asset value per unit ofthe Trust (calculated without taking into account any Performance Fee) exceeds 106.5% of theThreshold Amount. The Threshold Amount will be the greater of: (i) $10.00; and (ii) the net assetvalue per unit of the Trust at the end of the last fiscal year in which a Performance Fee was paid (afterpayment of such Performance Fee). Please refer to the Fund’s Prospectus for additional informationon the Performance Fee. No Performance Fee has been collected since the inception of the Fund.

Under the Forward Agreement, the Fund will pay to the Counterparty an annual fee of no greater than0.50% of the net asset value of the Fund plus a hedge fee, which may vary, based on the value of theCommon Share Portfolio, calculated and payable monthly in arrears. The forward fees totaled $350,377for the Fund for the six months ended June 30, 2013. The hedge fee is intended to compensate thecounterparty for the costs of hedging its exposure under the Forward Agreement. The hedging feestotaled $111,515 for the Fund for the six months ended June 30, 2013. The Fund pays for all ordinaryexpenses incurred in connection with its operation and administration, including but not limited to,fees payable to the Manager, administrator, custodian and other third party services providers, legal,accounting, audit and valuation fees and expenses. The Fund will also pay any extraordinary expenseswhich it may incur from time to time.

10. RELATED PARTY DISCLOSURE

The Manager and the Investment Manager are wholly-owned subsidiaries of Brookfield AssetManagement Inc. (“Brookfield”) and the Investment Manager manages the investment and tradingactivities of the Funds pursuant to a management agreement. Due to Brookfield’s ability to control theFunds, Brookfield, and its affiliates over which it has the ability to exercise control or significantinfluence, are related parties of the Funds by virtue of common control or common significantinfluence.

Transactions with related parties, including investment transactions, are conducted in the normalcourse of operations and are recorded at exchange amounts, which are equivalent to normal marketterms. Please refer to Note 9, “Expenses of the Fund”, which outlines the fees paid to the Manager bythe Funds.

During the year ended December 31, 2012, the Trust entered into cross transactions with BrookfieldGlobal High Yield UCITS Fund which is a related party of the Trust due to common control. TheInvestment Manager determined that these cross transactions complied with the Trust’s investmentrestrictions and that owning such securities was consistent with the Trust’s investment objectives. TheManager sought the approval of the Trust’s Independent Review Committee (the “IRC”) of the proposedcross transactions. The IRC provided its approval on the proposed cross transactions on the Manager’srecommendation.

As at June 30, 2013, Brookfield and its affiliates own a 7.74% interest in the Fund.

There were no other transactions conducted with related parties during the six month period endedJune 30, 2013 and the twelve month period ended December 31, 2012.



11. UNITHOLDERS’ EQUITY

The Fund is authorized to issue an unlimited number of redeemable and transferable Units of a singleclass, each of which represents an equal, undivided interest in the net assets of the Fund. Each Unit isentitled to one vote at all meetings of Unitholders and is entitled to participate equally with respect toany and all distributions made by the Fund, including distributions of net income and net realizedcapital gains, and distributions upon the termination of the Fund. Units are issued only as fully paid andare non-assessable.

The Declaration of Trust provides that the Fund may not issue additional Units except: (i) for netproceeds not less than 100% of the net asset value per Unit calculated as of the close of business on thebusiness day immediately prior to the pricing of such offering; (ii) by way of Unit distributions; or (iii)with the approval of Unitholders.

Commencing in July 2014, Units may be surrendered annually for redemption during the period fromJune 15th until 5:00 p.m. (Toronto time) on the 10th business day in July of each year (the “NoticePeriod”) if and only if the annual redemption condition (the “Annual Redemption Condition”),described below, has been met in such year. Units properly surrendered for redemption during theNotice Period will be redeemed on the last business day in July of each year (the “Annual RedemptionDate”) and the Unitholder will receive a redemption price per Unit equal to 100% of the net asset valueper Unit as determined on the Annual Redemption Date on or before the 15th business day of themonth following the Annual Redemption Date, less any costs and expenses incurred by the Fund inorder to fund such redemption, if any, including costs related to the partial settlements of the ForwardAgreement.

The Annual Redemption Condition states that Units may only be redeemed on an Annual RedemptionDate if the simple average of the Net Asset Values of the Units on each of the Thursdays occurring inthe month of May preceding the Annual Redemption Date is less than $10.00. On the first business dayfollowing the last Thursday in the month of May, the Manager will issue a press release stating theaverage Net Asset Value per Unit and whether the Annual Redemption Condition has been triggered.

12. CAPITAL TRANSACTIONS

Changes in the number of Units outstanding for the Fund for the six months ended June 30, 2013 andfor the period from June 19, 2012 to December 31, 2012 consisted of the following:

Six months endedJune 30, 2013

For the period June 19, 2012to December 31, 2012

Beginning balance 12,925,000 -

Subscription of Units - 12,925,000

Redemption of Units - -

Number of Units outstanding, end of period 12,925,000 12,925,000

Capital managementUnits issued and outstanding represent the capital for the Fund. The Fund has no restrictions or specificcapital requirements and is authorized to issue an unlimited number of transferable Units. Restrictionsand specific requirements on the redemption of Units are described in Note 11.

The Statement of Changes in Net Assets and the above table outline the relevant changes of the Fund’sUnits for the Period. The Fund manages its capital in accordance with its investment objectives andstrategies and the risk management practices outlined in Note 5 while maintaining sufficient liquidityto meet Unitholder redemptions.



13. DISTRIBUTIONS

In accordance with the Fund’s investment objective to provide Unitholders with quarterly cashdistributions, the Fund intends to make quarterly distributions to Unitholders of record on the lastbusiness day of March, June, September and December (each, a “Distribution Record Date”).Distributions will be paid on a business day designated by the Manager that will be no later than the15th business day of the month following the Distribution Record Date. The initial quarterlydistributions are targeted to be $0.1625 per Unit ($0.65 per annum representing an annual cashdistribution of 6.5% based on the $10.00 per Unit issue price). During the six months ended June 30,2013, the Fund paid two quarterly distributions of $0.1625 per Unit each. A cash distribution of $0.1625per Unit was declared on June 26, 2013 for Unitholders of record on June 28, 2013. Distributionspayable as of June 30, 2013 totalled $2,100,313 (December 31, 2012 - $2,100,313). The distributionwas subsequently paid to Unitholders in early July 2013. The Fund does not have a fixed quarterlydistribution.

In any year after such distributions, there would otherwise remain in the Fund additional net income ornet realized capital gains, the Fund intends to make, on or before December 31 of that year, a specialdistribution of such portion of the remaining net income and net realized capital gains as is necessaryto ensure the Fund will not be liable for income tax under the Income Tax Act (Canada).

14. FORWARD CURRENCY CONTRACTS

As at June 30, 2013, the Trust had entered into forward currency contracts with a fair value of a loss of$5,870,745 to deliver currencies at specified future dates as follows:

Unrealized

As at June 30, 2013 Maturity Gains /(Losses)

Foreign Exchange Contracts Date $

Bought CAD 153,858,608; Sold USD 151,150,000 @ 1.018 July 22, 2013 (5,670,795)

Bought CAD 16,808,572; Sold EUR 12,400,000 @ 0.738 July 22, 2013 (204,447)

Bought CAD 6,514,140; Sold GBP 12,640,000 @ 0.626 July 22, 2013 (16,179)

Bought CAD 793,603; Sold CHF 975,000 @ 0.949 July 22, 2013 (9,681)

Bought CAD 1,027,436; Sold USD 975,000 @ 1.054 July 22, 2013 (1,616)

Bought USD 3,945,000; Sold CAD 4,131,729 @ 0.955 July 22, 2013 31,973

Total (5,870,745)

15. FUTURE ACCOUNTING CHANGES

International Financial Reporting Standards (“IFRS”) replaced Canadian GAAP for publicly accountableenterprises other than investment funds. Under the general transition rules, publicly accountableenterprises, other than investment funds, adopted IFRS for the fiscal period beginning January 1, 2011.

On September 7, 2010, the Canadian Accounting Standards Board ("AcSB") approved an optional oneyear deferral of IFRS adoption for investment companies applying Accounting Guideline AcG 18,Investment Companies until fiscal years beginning on or after January 1, 2012. On January 12, 2011,the AcSB approved an additional one year extension to the optional one year deferral until fiscal yearsbeginning on or after January 1, 2013 and in December 2011 was further extended to January 1, 2014.Accordingly, the Fund will adopt IFRS no later than for the fiscal year beginning January 1, 2014, andwill issue its initial financial statements in accordance with IFRS, including comparative information, nolater than for the interim period ending June 30, 2014.



FUND INFORMATION

MANAGER AND TRUSTEE

Brookfield Investment Management (Canada) Inc.George E. MyhalDirector, President & Chief Executive Officer

Jonathan TyrasManaging Director, Chief Financial Officer, andGeneral Counsel

Gail CecilDirector, Managing Director

Kim G. ReddingDirector

INDEPENDENT REVIEW COMMITTEE

John P. Barratt (Chair)Corporate Director

James L. R. KellyPresidentEarth Power Inc.

Frank LochanCorporate Director

CONTACT INFORMATION

Brookfield High Yield Strategic Income Fund welcomes inquiries from Unitholders, analysts, mediarepresentatives or other interested parties.

Investment ManagerBrookfield Investment Management Inc.Brookfield Place250 Vesey StreetNew York, New York10281-1023t. 800.497.3746w. www.brookfieldim.com

Transfer Agent and RegistrarUnitholder inquiries relating to distributions,address changes and Unitholder accountinformation should be directed to the Fund’sTransfer Agent:

Valiant Trust Company710, 130 King Street WestToronto, Ontario M5X 1A9t. 866.313.1872 (toll-free North America)f. 855.375.6916 (toll-free North America)

International 416.360.1646e. [email protected]. www.valianttrust.com

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