Income Opportunities Fund |
October 31, 2022 | |||
1 | ||||
5 | ||||
6 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
17 | ||||
18 | ||||
27 | ||||
28 | ||||
29 | ||||
63 | ||||
65 | ||||
66 | ||||
68 |
Income Opportunities Fund |
October 31, 2022 | |||
• | We prefer credit to equities over the medium-term, with yield an increasingly precious commodity at a time of slowing growth and higher inflation. While duration is a shorter-term risk, we believe portfolios will benefit from adding some over the medium-term. |
• | We view credit as a strategic, long-term allocation in portfolios, and short-term volatility is neither a reason to delay investing in credit nor to seek a quick exit. Volatility is, typically, driven by transient factors and we remind investors that liquidity is thin if not costly when the market bottoms. |
• | Deciding where to allocate within credit depends on investor-specific requirements for volatility, duration risk, liquidity, return levels and the trade-off between return and seniority in the capital structure. |
• | In terms of fundamental risks to corporate credits, we note that revenue and EBITDA levels are robust, albeit slowing. While rising interest rates are unlikely to cause repayment or refinancing issues for the average issuer of a fixed-rate high yield bond, bottom-up credit analysis is vital to identifying the outliers that will come under pressure. Stress tests in our own portfolios suggest that prudent selection can insulate portfolios from a great deal of default risk among floating-rate credits, too. |
Asset Class |
YTD 2022 | |||||
US High Yield Bonds 1 |
-12.2% | |||||
US Leveraged Loans 2 |
-2.3% | |||||
10-Year US Treasury3 |
-18.6% | |||||
US Investment Grade Bonds 4 |
-19.1% | |||||
US Equities 5 |
-17.7% |
1 |
US High Yield Bonds is represented by the ICE BofA US HY Index. Source: Bloomberg. Information as of October 31, 2022 |
2 |
US Leveraged Loans is represented by Morningstar LSTA US Leveraged Loan Index. Source: Bloomberg. Information as of October 31, 2022 |
3 |
10-Year US Treasury is represented by J.P. Morgan 10-year Treasury. Source J.P. Morgan. Information as of October 31, 2022 |
4 |
US Investment Grade Bonds is represented by J.P. Morgan Chase JULI US High Grade Index. Source: J.P. Morgan. Information as of October 31, 2022 |
5 |
US Equities is represented by S&P 500 Total Return Index. Source: Bloomberg. Information as of October 31, 2022 |
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Average Annual Total Returns Year Ended October 31, 2022 |
One Year |
Five Year |
Since Inception (7/25/2013) |
Value of $10,000 investment at the time of inception as of 10/31/2022 |
||||||||||||
KKR Income Opportunities Fund — Market Price Return |
-27.01% |
1.18% |
3.14% |
$ |
13,312 |
|||||||||||
KKR Income Opportunities Fund — NAV Return |
-19.08% |
1.17% |
4.24% |
$ |
14,698 |
|||||||||||
ICE BofA Merrill Lynch High Yield Master II Index ® |
-11.42% |
1.91% |
3.75% |
$ |
14,071 |
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Reference Rate & Spread |
Interest Rate |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes | |||||||||||||
Leveraged Loans - 71.51% | ||||||||||||||||||||||
Aerospace & Defense - 1.99% | ||||||||||||||||||||||
Amentum Services Inc |
TL 2L B 12/21 |
SOFR (3M) + 7.50% |
10.86% |
2/15/2030 |
USA |
USD |
1,965,870 |
$ |
1,873,474 |
(b) | ||||||||||||
EaglePicher Technologies LLC |
TL 2L 02/18 |
LIBOR (1M) + 7.25% |
11.00% |
3/8/2026 |
USA |
USD |
1,957,223 |
978,612 |
||||||||||||||
Sequa Corp |
TL 1L 07/20 |
LIBOR (3M) + 6.75% |
9.76% |
11/28/2023 |
USA |
USD |
2,192,207 |
2,187,205 |
||||||||||||||
Alternative Carriers - 1.87% | ||||||||||||||||||||||
Segra |
TL 1L B 08/21 |
LIBOR (3M) + 4.50% |
8.17% |
10/4/2028 |
USA |
USD |
5,205,749 |
4,730,724 |
||||||||||||||
Apparel, Accessories & Luxury Goods - 6.17% | ||||||||||||||||||||||
Varsity Brands Inc |
TL 1L 11/17 |
LIBOR (1M) + 3.50% |
7.25% |
12/16/2024 |
USA |
USD |
16,810,607 |
15,659,585 |
||||||||||||||
Application Software - 10.76% | ||||||||||||||||||||||
Misys Ltd |
TL 1L 04/17 |
LIBOR (3M) + 3.50% |
6.87% |
6/13/2024 |
USA |
USD |
4,318,684 |
3,921,603 |
||||||||||||||
Misys Ltd |
TL 2L 04/17 |
LIBOR (3M) + 7.25% |
10.62% |
6/13/2025 |
USA |
USD |
8,063,622 |
6,047,757 |
||||||||||||||
Solera LLC |
TL 2L 06/21 |
LIBOR (1M) + 8.00% |
11.17% |
6/4/2029 |
USA |
USD |
11,074,727 |
10,908,606 |
||||||||||||||
TIBCO Software Inc |
TL 1L B 09/22 |
SOFR (3M) + 4.50% |
8.15% |
3/30/2029 |
USA |
USD |
7,001,400 |
6,404,111 |
||||||||||||||
Auto Parts & Equipment - 1.90% | ||||||||||||||||||||||
Innovative XCessories & Services LLC |
TL 1L 02/20 |
LIBOR (1M) + 4.25% |
7.82% |
3/5/2027 |
USA |
USD |
4,372,752 |
3,524,044 |
||||||||||||||
Rough Country LLC |
TL 2L 07/21 |
LIBOR (3M) + 6.50% |
10.17% |
7/30/2029 |
USA |
USD |
841,950 |
745,126 |
||||||||||||||
Wheel Pros Inc |
TL 1L B 05/21 |
LIBOR (1M) + 4.50% |
8.82% |
5/11/2028 |
USA |
USD |
769,782 |
567,233 |
||||||||||||||
Broadcasting - 5.68% | ||||||||||||||||||||||
NEP Broadcasting LLC |
TL 1L 05/20 |
LIBOR (3M) + 8.25% |
11.92% |
6/1/2025 |
USA |
USD |
1,589,989 |
1,604,299 |
(b) | |||||||||||||
NEP Broadcasting LLC |
TL 1L B 09/18 |
LIBOR (1M) + 3.25% |
7.00% |
10/20/2025 |
USA |
USD |
4,325,608 |
3,875,031 |
||||||||||||||
NEP Broadcasting LLC |
TL 1L B 09/18 |
EURIBOR (3M) + 3.50% |
4.69% |
10/20/2025 |
NLD |
EUR |
2,585,289 |
2,240,338 |
||||||||||||||
NEP Broadcasting LLC |
TL 2L 09/18 |
LIBOR (1M) + 7.00% |
10.75% |
10/19/2026 |
USA |
USD |
7,494,510 |
6,702,227 |
||||||||||||||
Building Products - 1.14% | ||||||||||||||||||||||
DiversiTech Holdings Inc |
TL 2L B 12/21 |
LIBOR (3M) + 6.75% |
10.42% |
12/15/2029 |
USA |
USD |
1,381,023 |
1,229,110 |
||||||||||||||
VC GB Holdings Inc (Visual Comfort) |
TL 2L 06/21 |
LIBOR (3M) + 6.75% |
9.63% |
7/23/2029 |
USA |
USD |
1,927,630 |
1,667,400 |
||||||||||||||
Construction & Engineering - 3.80% | ||||||||||||||||||||||
Total Safety US Inc |
TL 1L B 07/19 |
LIBOR (3M) + 6.00% |
7.27% |
8/18/2025 |
USA |
USD |
5,252,686 |
5,016,315 |
(a) | |||||||||||||
USIC Holdings Inc |
TL 2L 05/21 |
LIBOR (1M) + 6.50% |
10.25% |
5/14/2029 |
USA |
USD |
431,521 |
399,157 |
(a) | |||||||||||||
Yak Access LLC |
TL 1L B 05/18 |
LIBOR (3M) + 5.00% |
8.07% |
7/11/2025 |
USA |
USD |
5,622,555 |
3,288,182 |
||||||||||||||
Yak Access LLC |
TL 1L 11/22 |
SOFR (3M) + 8.25% |
12.90% |
1/27/2023 |
USA |
USD |
934,889 |
925,540 |
(a)(b) | |||||||||||||
Construction Machinery & Heavy Trucks - 1.96% | ||||||||||||||||||||||
Accuride Corp |
TL 1L B 10/17 |
LIBOR (3M) + 5.25% |
8.92% |
11/17/2023 |
USA |
USD |
5,774,436 |
4,982,270 |
||||||||||||||
Data Processing & Outsourced Services - 0.31% | ||||||||||||||||||||||
West Corp |
TL 1L 09/17 |
LIBOR (1M) + 4.00% |
8.41% |
10/10/2024 |
USA |
USD |
889,851 |
786,708 |
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Reference Rate & Spread |
Interest Rate |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes | |||||||||||||
Department Stores - 0.78% | ||||||||||||||||||||||
Belk Inc |
TL 1L 02/21 |
LIBOR (3M) + 7.50% |
10.48% |
7/31/2025 |
USA |
USD |
459,875 |
$ |
407,564 |
(a) | ||||||||||||
Belk Inc |
TL 1L EXIT 02/21 |
8.00% PIK, 5.00% |
10.00% |
7/31/2025 |
USA |
USD |
8,488,429 |
1,577,957 |
(a) (d) (e) | |||||||||||||
Diversified Metals & Mining - 0.86% | ||||||||||||||||||||||
Foresight Energy LLC |
TL 1L A 06/20 |
LIBOR (3M) + 8.00% |
11.67% |
6/30/2027 |
USA |
USD |
2,178,174 |
2,178,174 |
(a) (b) | |||||||||||||
Diversified Support Services - 0.48% | ||||||||||||||||||||||
Access CIG LLC |
TL 2L 02/18 |
LIBOR (3M) + 7.75% |
10.82% |
2/27/2026 |
USA |
USD |
1,292,375 |
1,227,756 |
||||||||||||||
Education Services - 1.75% | ||||||||||||||||||||||
Jostens Inc |
TL 1L 12/18 |
LIBOR (3M) + 5.50% |
9.17% |
12/19/2025 |
USA |
USD |
4,572,723 |
4,447,336 |
||||||||||||||
Financial Exchanges & Data - 0.23% | ||||||||||||||||||||||
IntraFi Network LLC |
TL 2L 11/21 |
LIBOR (1M) + 6.25% |
10.00% |
11/5/2029 |
USA |
USD |
623,220 |
584,269 |
||||||||||||||
Health Care Equipment - 5.81% | ||||||||||||||||||||||
Drive DeVilbiss Healthcare LLC |
TL 1L 03/21 |
4.00% PIK, SOFR (3M) + 9.50% |
11.75% |
6/1/2025 |
USA |
USD |
7,506,133 |
6,793,051 |
(d) | |||||||||||||
Drive DeVilbiss Healthcare LLC |
TL 1L 09/22 |
8.00% PIK, SOFR (3M) + 10.00% |
13.64% |
6/1/2025 |
USA |
USD |
987,698 |
983,056 |
(b) (d) | |||||||||||||
Orchid Orthopedic Solutions LLC |
TL 1L 02/19 |
LIBOR (3M) + 4.50% |
8.17% |
3/5/2026 |
USA |
USD |
5,657,532 |
4,960,948 |
||||||||||||||
Tecomet Inc |
TL 1L 10/17 |
LIBOR (3M) + 3.50% |
7.24% |
5/1/2024 |
USA |
USD |
2,264,117 |
1,972,136 |
||||||||||||||
Health Care Facilities - 0.47% | ||||||||||||||||||||||
ScionHealth |
TL 1L B 12/21 |
LIBOR (1M) + 5.25% |
9.00% |
12/23/2028 |
USA |
USD |
1,733,778 |
1,198,474 |
||||||||||||||
Health Care Services - 0.08% | ||||||||||||||||||||||
Paradigm Acquisition Corp |
TL 2L 10/18 LC |
LIBOR (1M) + 7.50% |
11.17% |
10/26/2026 |
USA |
USD |
213,465 |
204,927 |
||||||||||||||
Hotels, Resorts & Cruise Lines - 2.31% | ||||||||||||||||||||||
B&B Hotels SAS |
TL 1L B3A 01/20 |
EURIBOR (6M) + 3.88% |
3.88% |
7/31/2026 |
FRA |
EUR |
2,427,830 |
2,133,880 |
||||||||||||||
B&B Hotels SAS |
TL 1L B4 03/21 |
EURIBOR (6M) + 5.50% |
7.24% |
7/31/2026 |
FRA |
EUR |
1,159,680 |
1,079,204 |
||||||||||||||
Piolin BidCo SAU |
TL 1L B 05/20 |
EURIBOR (6M) + 7.50% |
7.73% |
9/16/2026 |
ESP |
EUR |
2,682,184 |
2,641,390 |
||||||||||||||
Human Resource & Employment Services - 1.04% | ||||||||||||||||||||||
SIRVA Worldwide Inc |
TL 1L 07/18 |
LIBOR (3M) + 5.50% |
8.57% |
8/4/2025 |
USA |
USD |
1,829,618 |
1,647,608 |
||||||||||||||
SIRVA Worldwide Inc |
TL 2L 07/18 |
LIBOR (3M) + 9.50% |
13.22% |
8/3/2026 |
USA |
USD |
1,149,740 |
997,687 |
||||||||||||||
Industrial Machinery - 0.61% | ||||||||||||||||||||||
CPM Holdings Inc |
TL 2L 10/18 |
LIBOR (1M) + 8.25% |
11.38% |
11/16/2026 |
USA |
USD |
1,321,319 |
1,275,073 |
||||||||||||||
Engineered Machinery Holdings Inc |
TL 2L 08/21 |
LIBOR (3M) + 6.00% |
9.67% |
5/21/2029 |
USA |
USD |
289,880 |
271,038 |
||||||||||||||
IT Consulting & Other Services - 4.56% | ||||||||||||||||||||||
PSAV Inc |
TL 1L B1 12/20 |
0.25% PIK, LIBOR (3M) + 3.25% |
6.64% |
3/3/2025 |
USA |
USD |
6,723,745 |
5,869,291 |
(d) | |||||||||||||
PSAV Inc |
TL 1L B3 12/20 |
10.00% PIK, 5.00% |
15.00% |
10/15/2026 |
USA |
USD |
2,125,489 |
2,150,463 |
(d) | |||||||||||||
PSAV Inc |
TL 2L 02/18 |
LIBOR (3M) + 7.25% |
10.06% |
9/1/2025 |
USA |
USD |
4,448,850 |
3,536,836 |
||||||||||||||
Leisure Facilities - 2.39% | ||||||||||||||||||||||
United PF Holdings LLC |
TL 1L 01/20 |
LIBOR (3M) + 4.00% |
8.46% |
12/30/2026 |
USA |
USD |
6,535,595 |
5,596,104 |
||||||||||||||
United PF Holdings LLC |
TL 1L B 06/20 |
LIBOR (3M) + 8.50% |
12.17% |
12/30/2026 |
USA |
USD |
487,442 |
458,196 |
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Reference Rate & Spread |
Interest Rate |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes |
|||||||||||||||||||||||
Life Sciences Tools & Services - 2.15% |
| |||||||||||||||||||||||||||||||
PAREXEL International Corp |
TL 2L 07/21 |
LIBOR (1M) + 6.50% |
10.25% |
11/15/2029 |
USA |
USD |
5,637,180 |
$ |
5,456,790 |
(b) |
||||||||||||||||||||||
Marine Ports & Services - 2.17% |
| |||||||||||||||||||||||||||||||
Direct ChassisLink Inc |
TL 2L B 04/19 |
LIBOR (3M) + 6.75% |
10.05% |
4/10/2026 |
USA |
USD |
5,509,006 |
5,492,672 |
||||||||||||||||||||||||
Publishing - 1.03% |
| |||||||||||||||||||||||||||||||
Emerald Expositions Holding Inc |
TL 1L B 11/17 |
LIBOR (1M) + 2.75% |
6.50% |
5/22/2024 |
USA |
USD |
2,713,438 |
2,606,610 |
||||||||||||||||||||||||
Research & Consulting Services - 0.17% |
| |||||||||||||||||||||||||||||||
TMF Group Holding BV |
TL 2L 12/17 |
EURIBOR (6M) + 6.88% |
8.06% |
5/4/2026 |
NLD |
EUR |
440,830 |
426,395 |
||||||||||||||||||||||||
Security & Alarm Services - 1.40% |
| |||||||||||||||||||||||||||||||
Monitronics International Inc |
TL 1L EXIT 08/19 |
LIBOR (3M) + 7.50% |
11.91% |
3/29/2024 |
USA |
USD |
5,334,696 |
3,547,599 |
||||||||||||||||||||||||
Specialized Consumer Services - 0.50% |
| |||||||||||||||||||||||||||||||
Learning Care Group Inc |
TL 1L B 05/20 |
LIBOR (3M) + 8.50% |
12.13% |
3/13/2025 |
USA |
USD |
1,265,677 |
1,257,766 |
||||||||||||||||||||||||
Specialty Chemicals - 6.34% |
| |||||||||||||||||||||||||||||||
Aruba Investments Inc |
TL 2L 10/20 |
LIBOR (1M) + 7.75% |
11.33% |
11/24/2028 |
USA |
USD |
1,841,010 |
1,678,384 |
||||||||||||||||||||||||
Flint Group GmbH |
TL 1L B 04/14 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
1,140,427 |
873,446 |
(d) |
|||||||||||||||||||||||
Flint Group GmbH |
TL 1L B3 05/15 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
9,272 |
7,102 |
(d) |
|||||||||||||||||||||||
Flint Group GmbH |
TL 1L B4 11/15 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
86,826 |
66,499 |
(d) |
|||||||||||||||||||||||
Flint Group GmbH |
TL 1L B5 02/17 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
143,332 |
109,777 |
(d) |
|||||||||||||||||||||||
Flint Group GmbH |
TL 1L B6 03/17 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
104,804 |
80,268 |
(d) |
|||||||||||||||||||||||
Flint Group GmbH |
TL 1L B7 04/14 |
0.75% PIK, EURIBOR (3M) + 4.25% |
0.75% |
9/21/2023 |
DEU |
EUR |
99,965 |
76,563 |
(d) |
|||||||||||||||||||||||
Vantage Specialty Chemicals Inc |
TL 1L B 10/17 |
LIBOR (3M) + 3.50% |
7.53% |
10/28/2024 |
USA |
USD |
10,647,345 |
10,202,606 |
||||||||||||||||||||||||
Vantage Specialty Chemicals Inc |
TL 2L 10/17 |
LIBOR (3M) + 8.25% |
11.32% |
10/27/2025 |
USA |
USD |
3,339,659 |
3,014,042 |
||||||||||||||||||||||||
Trading Companies & Distributors - 0.02% |
| |||||||||||||||||||||||||||||||
FleetPride Corporation |
TL 2L 01/19 |
LIBOR (1M) + 8.75% |
12.50% |
12/21/2026 |
USA |
USD |
64,180 |
62,415 |
||||||||||||||||||||||||
Trucking - 0.78% |
| |||||||||||||||||||||||||||||||
Kenan Advantage Group Inc/The |
TL 2L 08/21 |
LIBOR (1M) + 7.25% |
10.37% |
9/1/2027 |
USA |
USD |
2,135,010 |
1,977,553 |
||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||
TOTAL LEVERAGED LOANS (Amortized cost $205,094,640) |
$ |
181,393,562 |
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes |
|||||||||||||||||
High Yield Securities - 88.15% |
||||||||||||||||||||||||
Airlines - 2.55% |
||||||||||||||||||||||||
American Airlines Group Inc |
3.750% 03/2025 |
3/1/2025 |
USA |
USD |
7,341,000 |
$ |
6,468,742 |
(f) |
||||||||||||||||
Alternative Carriers - 1.32% |
||||||||||||||||||||||||
Zayo Group LLC |
6.125% 03/2028 |
3/1/2028 |
USA |
USD |
5,035,000 |
3,358,345 |
(f) |
|||||||||||||||||
Apparel, Accessories & Luxury Goods - 0.50% |
||||||||||||||||||||||||
Varsity Brands Inc |
L+8.000% 12/2024 |
12/22/2024 |
USA |
USD |
1,270,000 |
1,262,507 |
(b) (h) |
|||||||||||||||||
Application Software - 2.74% |
||||||||||||||||||||||||
Cision Ltd |
9.500% 02/2028 |
2/15/2028 |
USA |
USD |
6,449,000 |
2,953,449 |
(f) |
|||||||||||||||||
TIBCO Software Inc |
6.500% 03/2029 |
3/31/2029 |
USA |
USD |
4,610,000 |
4,005,297 |
(f) |
|||||||||||||||||
Auto Parts & Equipment - 1.93% |
||||||||||||||||||||||||
Truck Hero Inc |
6.250% 02/2029 |
2/1/2029 |
USA |
USD |
3,115,000 |
2,240,713 |
(f) |
|||||||||||||||||
Wheel Pros Inc |
6.500% 05/2029 |
5/15/2029 |
USA |
USD |
5,638,000 |
2,661,942 |
(f) |
|||||||||||||||||
Automotive Retail - 1.54% |
||||||||||||||||||||||||
Mavis Discount Tire Inc |
6.500% 05/2029 |
5/15/2029 |
USA |
USD |
4,846,000 |
3,900,594 |
(f) |
|||||||||||||||||
Broadcasting - 1.45% |
||||||||||||||||||||||||
Spotify USA Inc |
0.000% 03/2026 |
3/15/2026 |
USA |
USD |
4,598,000 |
3,673,802 |
(c) |
|||||||||||||||||
Building Products - 13.98% |
||||||||||||||||||||||||
Acproducts Inc (aka Cabinetworks) |
6.375% 05/2029 |
5/15/2029 |
USA |
USD |
11,955,000 |
6,163,221 |
(f) |
|||||||||||||||||
Cornerstone (Ply Gem Holdings Inc) |
8.750% 08/2028 |
8/1/2028 |
USA |
USD |
985,000 |
822,475 |
(f) |
|||||||||||||||||
LBM Borrower LLC |
6.250% 01/2029 |
1/15/2029 |
USA |
USD |
6,181,000 |
4,338,506 |
(f) |
|||||||||||||||||
LBM Borrower LLC |
7.750% 04/2027 |
4/1/2027 |
USA |
USD |
7,771,000 |
5,158,273 |
(f) |
|||||||||||||||||
Oldcastle Buildingenvelope Inc |
9.500% 04/2030 |
4/15/2030 |
USA |
USD |
713,000 |
605,436 |
(f) |
|||||||||||||||||
Patrick Industries Inc |
4.750% 05/2029 |
5/1/2029 |
USA |
USD |
4,261,000 |
3,223,809 |
(f) |
|||||||||||||||||
PrimeSource Building Products Inc |
5.625% 02/2029 |
2/1/2029 |
USA |
USD |
5,498,000 |
3,499,168 |
(f) |
|||||||||||||||||
PrimeSource Building Products Inc |
6.750% 08/2029 |
8/1/2029 |
USA |
USD |
6,177,000 |
4,072,150 |
(f) |
|||||||||||||||||
SRS Distribution Inc |
6.000% 12/2029 |
12/1/2029 |
USA |
USD |
7,576,000 |
6,194,933 |
(f) |
|||||||||||||||||
SRS Distribution Inc |
6.125% 07/2029 |
7/1/2029 |
USA |
USD |
1,706,000 |
1,389,832 |
(f) |
|||||||||||||||||
Cable & Satellite - 3.04% |
||||||||||||||||||||||||
Cablevision Lightpath LLC |
5.625% 09/2028 |
9/15/2028 |
USA |
USD |
1,048,000 |
834,748 |
(f) |
|||||||||||||||||
CSC Holdings LLC (Altice USA) |
5.000% 11/2031 |
11/15/2031 |
USA |
USD |
806,000 |
575,824 |
(f) |
|||||||||||||||||
CSC Holdings LLC (Altice USA) |
5.750% 01/2030 |
1/15/2030 |
USA |
USD |
4,702,000 |
3,606,128 |
(f) |
|||||||||||||||||
RCN Grande (Radiate) |
6.500% 09/2028 |
9/15/2028 |
USA |
USD |
4,251,000 |
2,688,439 |
(f) |
|||||||||||||||||
Commercial Printing - 1.91% |
||||||||||||||||||||||||
Multi-Color Corp |
10.500% 07/2027 |
7/15/2027 |
USA |
USD |
4,146,000 |
3,741,267 |
(f) |
|||||||||||||||||
Multi-Color Corp |
5.875% 10/2028 |
11/1/2028 |
USA |
USD |
1,240,000 |
1,079,463 |
(f) |
|||||||||||||||||
Commodity Chemicals - 1.14% |
||||||||||||||||||||||||
SI Group Inc |
6.750% 05/2026 |
5/15/2026 |
USA |
USD |
6,041,000 |
2,892,086 |
(f) |
|||||||||||||||||
Construction & Engineering - 2.26% |
||||||||||||||||||||||||
Maxim Crane Works LP / Maxim Finance Corp |
10.125% 08/2024 |
8/1/2024 |
USA |
USD |
5,952,000 |
5,735,556 |
(f) |
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes |
|||||||||||||||||
Construction Materials - 5.14% |
||||||||||||||||||||||||
Cemex Materials LLC |
7.700% - 07/2025 |
7/21/2025 |
|
USA |
|
|
USD |
|
|
12,842,000 |
|
$ |
13,034,630 |
|
|
(f) |
| |||||||
Data Processing & Outsourced Services - 1.77% |
||||||||||||||||||||||||
Xerox Business Services /Conduent |
6.000% 11/2029 |
11/1/2029 |
|
USA |
|
|
USD |
|
|
5,451,000 |
|
|
4,480,259 |
|
|
(f) |
| |||||||
Electronic Components - 3.46% |
||||||||||||||||||||||||
CommScope Inc |
6.000% 06/2025 |
6/15/2025 |
|
USA |
|
|
USD |
|
|
6,801,000 |
|
|
6,357,983 |
|
|
(f) |
| |||||||
CommScope Inc |
7.125% 07/2028 |
7/1/2028 |
|
USA |
|
|
USD |
|
|
2,826,000 |
|
|
2,400,159 |
|
|
(f) |
| |||||||
Health Care Equipment - 1.17% |
||||||||||||||||||||||||
Haemonetics Corp |
0.000% 03/2026 |
3/1/2026 |
|
USA |
|
|
USD |
|
|
3,563,000 |
|
|
2,957,290 |
|
|
(c) |
| |||||||
Health Care Facilities - 1.41% |
||||||||||||||||||||||||
CHS/Community Health Systems, Inc. |
6.125% 04/2030 |
4/1/2030 |
|
USA |
|
|
USD |
|
|
1,997,000 |
|
|
823,703 |
|
|
(f) |
| |||||||
CHS/Community Health Systems, Inc. |
6.875% 04/2028 |
4/1/2028 |
|
USA |
|
|
USD |
|
|
2,725,000 |
|
|
1,043,879 |
|
|
(f) |
| |||||||
CHS/Community Health Systems, Inc. |
6.875% 04/2029 |
4/15/2029 |
|
USA |
|
|
USD |
|
|
1,484,000 |
|
|
600,774 |
|
|
(f) |
| |||||||
LifePoint Hospitals Inc |
5.375% 01/2029 |
1/15/2029 |
|
USA |
|
|
USD |
|
|
1,727,000 |
|
|
1,105,798 |
|
|
(f) |
| |||||||
Hotels, Resorts & Cruise Lines - 11.54% |
||||||||||||||||||||||||
Carnival Corp |
5.750% 03/2027 |
3/1/2027 |
|
USA |
|
|
USD |
|
|
10,373,000 |
|
|
7,207,160 |
|
|
(f) |
| |||||||
Carnival Corp |
6.000% 05/2029 |
5/1/2029 |
|
USA |
|
|
USD |
|
|
4,931,000 |
|
|
3,278,780 |
|
|
(f) |
| |||||||
NCL Corp Ltd |
1.125% 02/2027 |
2/15/2027 |
|
USA |
|
|
USD |
|
|
2,997,000 |
|
|
2,300,198 |
|
|
(f) |
| |||||||
NCL Corp Ltd |
3.625% 12/2024 |
12/15/2024 |
|
USA |
|
|
USD |
|
|
4,074,000 |
|
|
3,543,960 |
|
|
(f) |
| |||||||
NCL Corp Ltd |
6.125% 03/2028 |
3/15/2028 |
|
USA |
|
|
USD |
|
|
689,000 |
|
|
536,728 |
|
|
(f) |
| |||||||
Royal Caribbean Cruises Ltd |
11.625% 08/2027 |
8/15/2027 |
|
USA |
|
|
USD |
|
|
2,325,000 |
|
|
2,233,674 |
|
|
(f) |
| |||||||
Royal Caribbean Cruises Ltd |
5.500% 04/2028 |
4/1/2028 |
|
USA |
|
|
USD |
|
|
5,880,000 |
|
|
4,544,652 |
|
|
(f) |
| |||||||
Viking Cruises Ltd |
5.000% 02/2028 |
2/15/2028 |
|
USA |
|
|
USD |
|
|
972,000 |
|
|
802,668 |
|
|
(f) |
| |||||||
Viking Cruises Ltd |
5.875% 09/2027 |
9/15/2027 |
|
USA |
|
|
USD |
|
|
2,512,000 |
|
|
1,991,142 |
|
|
(f) |
| |||||||
Viking Cruises Ltd |
7.000% 02/2029 |
2/15/2029 |
|
USA |
|
|
USD |
|
|
3,548,000 |
|
|
2,820,078 |
|
|
(f) |
| |||||||
Industrial Conglomerates - 1.56% |
||||||||||||||||||||||||
Unifrax I LLC / Unifrax Holding Co |
5.250% 09/2028 |
9/30/2028 |
|
USA |
|
|
USD |
|
|
2,959,000 |
|
|
2,360,294 |
|
|
(f) |
| |||||||
Unifrax I LLC / Unifrax Holding Co |
7.500% 09/2029 |
9/30/2029 |
|
USA |
|
|
USD |
|
|
2,371,000 |
|
|
1,592,162 |
|
|
(f) |
| |||||||
Industrial Machinery - 3.51% |
||||||||||||||||||||||||
SPX FLOW Inc |
8.750% 04/2030 |
4/1/2030 |
|
USA |
|
|
USD |
|
|
10,941,000 |
|
|
8,901,101 |
|
|
(f) |
| |||||||
Insurance Brokers - 4.67% |
||||||||||||||||||||||||
National Financial Partners Corp |
6.875% 08/2028 |
8/15/2028 |
|
USA |
|
|
USD |
|
|
13,892,000 |
|
|
11,837,582 |
|
|
(f) |
| |||||||
Integrated Oil & Gas - 1.07% |
||||||||||||||||||||||||
Occidental Petroleum Corp |
4.100% 02/2047 |
2/15/2047 |
|
USA |
|
|
USD |
|
|
1,990,000 |
|
|
1,579,797 |
|
||||||||||
Occidental Petroleum Corp |
4.200% 03/2048 |
3/15/2048 |
|
USA |
|
|
USD |
|
|
1,448,000 |
|
|
1,151,561 |
|
||||||||||
Leisure Facilities - 2.17% |
||||||||||||||||||||||||
Life Time Fitness Inc |
5.750% 01/2026 |
1/15/2026 |
|
USA |
|
|
USD |
|
|
1,713,000 |
|
|
1,597,467 |
|
|
(f) |
| |||||||
Merlin Entertainments PLC |
6.625% 11/2027 |
11/15/2027 |
|
IRL |
|
|
USD |
|
|
4,653,000 |
|
|
3,899,121 |
|
|
(f) |
| |||||||
Oil & Gas Storage & Transportation - 5.35% |
||||||||||||||||||||||||
Genesis Energy |
5.625% 06/2024 |
6/15/2024 |
|
USA |
|
|
USD |
|
|
5,336,000 |
|
|
5,222,397 |
|
||||||||||
Genesis Energy |
6.500% 10/2025 |
10/1/2025 |
|
USA |
|
|
USD |
|
|
2,842,000 |
|
|
2,729,106 |
|
Income Opportunities Fund |
October 31, 2022 | |||
Issuer |
Asset |
Maturity Date |
Country |
Currency |
Par |
Fair Value |
Footnotes |
|||||||||||||||
Global Partners LP / GLP Finance Corp |
6.875% 01/2029 |
1/15/2029 |
USA |
USD |
863,000 |
$ |
781,960 |
|||||||||||||||
Global Partners LP / GLP Finance Corp |
7.000% 08/2027 |
8/1/2027 |
USA |
USD |
1,045,000 |
994,863 |
||||||||||||||||
NGL Energy Partners LP / NGL Energy Finance Corp |
7.500% 02/2026 |
2/1/2026 |
USA |
USD |
4,218,000 |
3,822,915 |
(f) |
|||||||||||||||
Pharmaceuticals - 0.76% |
||||||||||||||||||||||
Revance Therapeutics Inc |
1.750% 02/2027 |
2/15/2027 |
USA |
USD |
1,938,000 |
1,914,986 |
||||||||||||||||
Real Estate Services - 0.79% |
||||||||||||||||||||||
Redfin Corp |
0.000% 10/2025 |
10/15/2025 |
USA |
USD |
3,864,000 |
2,013,144 |
(c) |
|||||||||||||||
Restaurants - 0.89% |
||||||||||||||||||||||
Golden Nugget Inc. |
6.750% 07/2030 |
1/15/2030 |
USA |
USD |
2,872,000 |
2,260,738 |
(f) |
|||||||||||||||
Security & Alarm Services - 1.30% |
||||||||||||||||||||||
Verisure Holding AB |
3.875% 07/2026 |
7/15/2026 |
SWE |
EUR |
2,592,000 |
2,298,662 |
(f) |
|||||||||||||||
Verisure Holding AB |
9.250% 10/2027 |
10/15/2027 |
SWE |
EUR |
956,000 |
977,010 |
(f) |
|||||||||||||||
Specialty Stores - 4.87% |
||||||||||||||||||||||
Douglas Holding AG |
6.000% 04/2026 |
4/8/2026 |
DEU |
EUR |
10,461,000 |
7,978,041 |
(f) |
|||||||||||||||
Douglas Holding AG |
8.250% 10/2026 |
10/1/2026 |
DEU |
EUR |
7,967,248 |
4,369,865 |
(f) |
|||||||||||||||
Trading Companies & Distributors - 2.36% |
||||||||||||||||||||||
TruckPro LLC |
11.000% 10/2024 |
10/15/2024 |
USA |
USD |
6,091,000 |
5,994,908 |
(f) |
|||||||||||||||
|
|
|||||||||||||||||||||
TOTAL HIGH YIELD SECURITIES (Amortized cost $285,043,489) |
$ |
223,487,900 |
Income Opportunities Fund |
October 31, 2022 | |||
TL | Term loan. |
DD | Delayed draw term loan. |
1L | First lien. |
2L | Second lien. |
(a) | Security considered restricted. |
(b) | Value determined using significant unobservable inputs. |
(c) | Zero coupon bond. |
(d) | Represents a payment-in-kind |
(e) | Non-income producing security. |
(f) | Securities exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may only be resold to qualified institutional buyers in transactions exempt from registration. |
(g) | Rate represents the money market fund’s average 7-day yield as of October 31, 2022. |
Income Opportunities Fund |
October 31, 2022 | |||
Assets |
||||
Investments, at fair value (cost $500,436,156) |
$ |
412,410,315 |
||
Cash and cash equivalents |
3,512,573 |
|||
Foreign currencies, at value (cost $1,152,744) |
1,121,885 |
|||
Dividends and interest receivable |
5,939,215 |
|||
Receivable for investments sold |
6,954,941 |
|||
|
|
|||
Total assets |
429,938,929 |
|||
|
|
|||
Liabilities |
||||
Credit facility |
122,403,850 |
|||
Mandatorily redeemable preferred shares (net of deferred offering costs of $559,174) |
49,440,826 |
|||
Payable for investments purchased |
2,468,301 |
|||
Trustees’ fees |
1,014,985 |
|||
Investment advisory fees payable |
404,064 |
|||
Other accrued expenses |
609,593 |
|||
|
|
|||
Total liabilities |
176,341,619 |
|||
|
|
|||
Commitments and Contingencies (Note 7) |
||||
Net assets |
$ |
253,597,310 |
||
|
|
|||
Net Assets |
||||
Paid-in capital — (unlimited shares authorized — $0.001 par value) |
$ |
361,982,215 |
||
Accumulated deficit |
(108,384,905 |
) | ||
|
|
|||
Net assets |
$ |
253,597,310 |
||
|
|
|||
Net asset value, price per share |
||||
(20,340,315 shares) |
$ |
12.47 |
||
|
|
Income Opportunities Fund |
October 31, 2022 | |||
Investment income |
||||
Interest income |
$ |
36,425,471 |
||
Payment-in-kind |
1,569,497 |
|||
Other income |
243,276 |
|||
|
|
|||
Total investment income |
38,238,244 |
|||
|
|
|||
Expenses |
||||
Investment advisory fees |
5,357,740 |
|||
Credit facility interest expense |
2,096,057 |
|||
Preferred shares interest expense |
1,979,815 |
|||
Legal fees |
300,247 |
|||
Administration fees |
155,546 |
|||
Tax expense |
131,873 |
|||
Trustees’ fees |
114,342 |
|||
Term loan fees |
113,824 |
|||
Custodian fees |
97,384 |
|||
Audit and tax fees |
80,659 |
|||
Shareholder reporting expense |
29,336 |
|||
Other expenses |
312,495 |
|||
|
|
|||
Total expenses |
10,769,318 |
|||
|
|
|||
Net investment income |
27,468,926 |
|||
|
|
|||
Realized and unrealized (losses) gains |
||||
Net realized losses on |
||||
Investments |
$ |
(3,483,257 |
) | |
Foreign currency transactions |
(501,629 |
) | ||
|
|
|||
Net realized losses |
$ |
(3,984,886 |
) | |
Net change in unrealized (depreciation) appreciation on |
||||
Investments |
(85,223,819 |
) | ||
Foreign currency translation |
(495,864 |
) | ||
Deferred Trustees’ fees |
194,485 |
|||
|
|
|||
Net change in unrealized depreciation |
(85,525,198 |
) | ||
Net realized and unrealized losses |
(89,510,084 |
) | ||
|
|
|||
Net decrease in net assets resulting from operations |
$ |
(62,041,158 |
) | |
|
|
Income Opportunities Fund |
October 31, 2022 | |||
Year Ended October 31, 2022 |
Year Ended October 31, 2021 |
|||||||
(Decrease) increase in net assets resulting from operations |
||||||||
Net investment income |
$ |
27,468,926 |
$ |
28,489,442 |
||||
Net realized (losses) gains |
(3,984,886 |
) |
13,343,980 |
|||||
Net change in unrealized (depreciation) appreciation |
(85,525,198 |
) |
22,725,701 |
|||||
|
|
|
|
|||||
Net (decrease) increase in net assets resulting from operations |
(62,041,158 |
) |
64,559,123 |
|||||
|
|
|
|
|||||
Distributions to shareholders from |
||||||||
Net investment income |
(25,628,796 |
) |
(25,628,796 |
) | ||||
|
|
|
|
|||||
Total distributions |
(25,628,796 |
) |
(25,628,796 |
) | ||||
|
|
|
|
|||||
Net (decrease) increase in net assets |
(87,669,954 |
) |
38,930,327 |
|||||
Net assets |
||||||||
Beginning of year |
341,267,264 |
302,336,937 |
||||||
|
|
|
|
|||||
End of year |
$ |
253,597,310 |
$ |
341,267,264 |
||||
|
|
|
|
Income Opportunities Fund |
October 31, 2022 | |||
Year Ended October 31, 2022 |
||||
Cash Flows from Operating Activities: |
||||
Net decrease in net assets resulting from operations |
$ |
(62,041,158 |
) | |
Adjustments to reconcile net decrease in net assets resulting from operations to net |
||||
cash provided by operating activities: |
||||
Proceeds from sales and repayments of investments |
186,596,952 |
|||
Purchases of investments |
(170,337,652 |
) | ||
Net change in unrealized depreciation of investments |
85,223,819 |
|||
Net realized losses from investments |
3,483,257 |
|||
Net accretion of premiums and discounts |
(2,511,818 |
) | ||
Payment-in-kind |
(1,569,497 |
) | ||
Net change in unrealized depreciation on foreign currency translation |
495,864 |
|||
Net change in unrealized appreciation on Deferred Trustees’ fees |
(194,485 |
) | ||
Amortization of deferred offering costs |
79,822 |
|||
Net realized gain on investments (foreign currency related) |
(1,015 |
) | ||
Changes in assets and liabilities: |
||||
Decrease in payable for investments purchased |
(28,849,524 |
) | ||
Decrease in receivable for investments sold |
15,440,222 |
|||
Increase in dividends and interest receivable |
1,243,869 |
|||
Increase in Trustees’ fees payable |
91,843 |
|||
Decrease in investment advisory fees payable |
(83,592 |
) | ||
Decrease in other accrued expenses |
(50,443 |
) | ||
|
|
|||
Net cash provided by operating activities |
27,016,464 |
|||
|
|
|||
Cash Flows from Financing Activities |
||||
Paydown of credit facility |
(47,149,034 |
) | ||
Proceeds from credit facility |
39,406,692 |
|||
Cash dividends paid to shareholders |
(25,628,796 |
) | ||
|
|
|||
Net cash used in financing activities |
(33,371,138 |
) | ||
|
|
|||
Effect of exchange rate changes on cash |
(29,851 |
) | ||
|
|
|||
Net decrease in cash and cash equivalents |
(6,384,525 |
) | ||
|
|
|||
Cash and Cash Equivalents |
||||
Beginning balance |
11,018,983 |
|||
|
|
|||
Ending balance |
$ |
4,634,458 |
||
|
|
|||
Supplemental disclosure of cash flow information: |
||||
Cash paid for interest expense |
$ |
4,139,196 |
Income Opportunities Fund |
October 31, 2022 | |||
Year Ended October 31, | ||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||
Per share operating performance (1) |
||||||||||||||||||||
Net asset value, beginning of year |
$ | 16.78 | $ | 14.86 | $ | 15.57 | $ | 17.24 | $ | 18.38 | ||||||||||
(Loss) income from investment operations |
||||||||||||||||||||
Net investment income |
1.35 | 1.40 | 1.39 | 1.49 | 1.51 | |||||||||||||||
Net realized and unrealized (losses) gains |
(4.40 | ) | 1.78 | (0.60 | ) | (1.66 | ) | (0.07 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
(3.05 | ) | 3.18 | 0.79 | (0.17 | ) | 1.44 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Distributions from |
||||||||||||||||||||
Net investment income |
(1.26 | ) | (1.26 | ) | (1.50 | ) | (1.50 | ) | (1.55 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total distributions |
(1.26 | ) | (1.26 | ) | (1.50 | ) | (1.50 | ) | (1.55 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Dilutive effect of rights offering |
— | — | — | — | (1.03 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$ | 12.47 | $ | 16.78 | $ | 14.86 | $ | 15.57 | $ | 17.24 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total return # |
(27.01)% | 36.24% | (3.58)% | 7.55% | 2.84% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ratios to average net assets |
||||||||||||||||||||
Expenses |
3.56% | 3.12% | 3.73% | 3.38% | 3.17% | |||||||||||||||
Net investment income |
9.08% | 8.49% | 9.65% | 9.07% | 8.63% | |||||||||||||||
Supplemental data |
||||||||||||||||||||
Market value/price |
$ | 11.08 | $ | 16.67 | $ | 13.25 | $ | 15.39 | $ | 15.77 | ||||||||||
Price discount |
(11.15)% | (0.66)% | (10.83)% | (1.16)% | (8.53)% | |||||||||||||||
Net assets, end of year (000’s) |
$ | 253,597 | $ | 341,267 | $ | 302,336 | $ | 316,670 | $ | 350,601 | ||||||||||
Portfolio turnover rate |
32.09% | 78.62% | 72.87% | 62.19% | 56.20% |
(1) |
Per share calculations were performed using average shares. |
# |
Total return is computed based on 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. |
Income Opportunities Fund |
October 31, 2022 | |||
1. |
Organization |
2. |
Summary of Significant Accounting Policies |
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
3. |
Risk Considerations |
Income Opportunities Fund |
October 31, 2022 | |||
4. |
Agreements |
5. |
Fair Value |
Investments in securities |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Leveraged loans |
$ |
— |
$ |
168,372,229 |
$ |
13,021,333 |
$ |
181,393,562 |
||||||||
High yield securities |
— |
222,225,393 |
1,262,507 |
223,487,900 |
||||||||||||
Preferred stocks |
— |
— |
387,585 |
387,585 |
||||||||||||
Common stocks |
2,638,105 |
— |
4,503,163 |
7,141,268 |
||||||||||||
Money market fund |
3,261,151 |
— |
— |
3,261,151 |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total investments in securities |
$ |
5,899,256 |
$ |
390,597,622 |
$ |
19,174,588 |
$ |
415,671,466 |
||||||||
|
|
|
|
|
|
|
|
Income Opportunities Fund |
October 31, 2022 | |||
Issuer (1) |
Asset | Par/Shares | Cost | Fair Value |
Acquisition Date |
|
% of Net Assets | |||||||||||||
Leveraged Loans |
||||||||||||||||||||
Belk Inc |
TL 1L 02/21 |
8,488,429 | $ | 8,387,326 | $ | 1,577,957 | 2/24/2021 |
0.62% | ||||||||||||
Belk Inc |
TL 1L 02/21 |
459,875 | 738,211 | 407,564 | 2/24/2021 |
0.16% | ||||||||||||||
Foresight Energy LLC |
TL 1L A 06/20 |
2,178,174 | 2,178,174 | 2,178,174 | 6/30/2020 |
0.86% | ||||||||||||||
Total Safety US Inc |
TL 1L B 07/19 |
5,252,686 | 5,062,590 | 5,016,315 | 8/13/2019 |
1.98% | ||||||||||||||
USIC Holdings Inc |
TL 2L 05/21 |
431,521 | 427,655 | 399,157 | 5/7/2021 |
0.16% | ||||||||||||||
Yak Access LLC |
TL 1L 11/22 |
934,889 | 925,540 | 925,540 | 10/28/2022 |
0.36% | ||||||||||||||
Common Stock |
||||||||||||||||||||
CTI Foods Holding Co LLC |
Common Stock |
955 | 112,798 | — | 5/3/2019 |
0.00% | ||||||||||||||
Foresight Energy LLC |
Common Stock |
320,381 | 3,665,560 | 4,080,359 | 6/30/2020 |
1.61% | ||||||||||||||
Trade Claim |
||||||||||||||||||||
Quorum Health Corp |
Trade Claim |
3,964,000 | 1,868,416 | 399,968 | 6/1/2018 |
0.16% | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total |
$ | 23,366,270 | $ | 14,985,034 | ||||||||||||||||
|
|
|
|
(1) | Refer to the Schedule of Investments for more details on securities listed. |
Leveraged Loans |
High Yield Securities |
Preferred Stocks |
Common Stocks |
|||||||||||||
Balance at October 31, 2021 |
$ | 9,485,763 | $ | — | $ | 409,050 | $ | 4,697,082 | ||||||||
Transfer into Level 3 |
— | 1,271,003 | — | — | ||||||||||||
Purchases |
3,820,132 | — | — | — | ||||||||||||
Sales and paydowns |
(43,026 | ) | — | — | — | |||||||||||
Settlements |
26,601 | 7,151 | — | — | ||||||||||||
Net change in depreciation |
(268,692 | ) | (15,647 | ) | (21,465 | ) | (193,919 | ) | ||||||||
Net realized gain |
555 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance as of October 31, 2022 |
$ | 13,021,333 | $ | 1,262,507 | $ | 387,585 | $ | 4,503,163 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net change in depreciation of investments held at October 31, 2022 |
$ | (268,692 | ) | $ | (15,647 | ) | $ | (21,465 | ) | $ | (193,919 | ) | ||||
|
|
|
|
|
|
|
|
Income Opportunities Fund |
October 31, 2022 | |||
Financial Asset |
Fair Value | Valuation Technique (1) |
Unobservable Inputs (2) |
Range (Weighted Average) (3) |
||||||||
Leveraged Loans |
$ | 13,021,333 | Yield Analysis | Yield | 7.1% - 15.5% (11.9%) |
|||||||
Discount Margin | 0.0% - 4.8% (3.9%) |
|||||||||||
EBITDA Multiple | 2.6x - 12.1x (9.7x) |
|||||||||||
Net Leverage | 0.6x - 11.3x (5.5x) |
|||||||||||
High Yield Securities |
$ | 1,262,507 | Yield Analysis | Yield | 14.0% | |||||||
Discount margin | 1.0% | |||||||||||
EBITDA multiple | 10.0x | |||||||||||
Net leverage | 7.1x | |||||||||||
Preferred Stocks |
$ | 387,585 | Market Comparables | LTM Revenue | 8.3x | |||||||
Illiquidity Discount | 20.0% | |||||||||||
FWD EBITDA | 8.0x | |||||||||||
Common Stocks |
$ | 4,503,163 | Market Comparables | FWD EBITDA | 2.6x - 8.0x (2.6x) |
|||||||
Illiquidity Discount | 15.0% - 20.0% |
|||||||||||
Discounted Cash Flows | WACC | 25.0% |
(1) | For the assets that have more than one valuation technique, the Fund may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0.0%-100.0%. When determining the weighting ascribed to each valuation methodology, the Fund considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100.0% weighting to a single methodology. |
(2) | The significant unobservable inputs used in the fair value measurement of the Fund’s assets and liabilities may include the last twelve months (“LTM”) EBITDA multiple, weighted average cost of capital, discount margin, probability of default, loss severity and constant prepayment rate. In determining certain of these inputs, management evaluates a variety of factors including economic, industry and market trends and developments, market valuations of comparable companies, and company specific developments including potential exit strategies and realization opportunities. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. |
(3) | Weighted average amounts are based on the estimated fair values. |
6. |
Investment Transactions |
Purchases |
$ | 170,337,652 | ||
Sales |
$ | 186,596,952 |
7. |
Commitments and Contingencies |
Income Opportunities Fund |
October 31, 2022 | |||
8. |
Federal Income Taxes |
Undistributed Net Investment Income |
Accumulated Net Realized Loss |
Paid-in Capital | ||
$(289,946) | $502,006 | $(212,060) |
Ordinary Income |
Total | |||||||
October 31, 2022* |
$ | 25,628,796 | $ | 25,628,796 | ||||
October 31, 2021 |
$ | 25,628,796 | $ | 25,628,796 |
* | The final tax character of any distribution declared during the year ended October 31, 2022 will be determined in January 2023 and reported to shareholders on IRS Form 1099-Div in accordance with federal income tax regulations. |
Undistributed Ordinary Income |
Net Unrealized Depreciation |
Other Temporary Differences |
Total Accumulated Losses | |||
$4,882,046 | $(84,689,862) | $(28,577,089) | $(108,384,905) |
Federal Tax Cost |
Aggregate Gross Unrealized Appreciation |
Aggregate Gross Unrealized Depreciation |
Net Unrealized Depreciation | |||
$500,555,393 | $2,559,203 | $(87,249,065) | $(84,689,862) |
Income Opportunities Fund |
October 31, 2022 | |||
9. |
Credit Facility |
Stated interest expense |
$ | 2,071,638 | ||
Unused commitment fees |
24,419 | |||
|
|
|||
Total interest expense |
$ | 2,096,057 | ||
|
|
|||
Weighted average interest rate |
1.55 | % | ||
Average borrowings |
$ | 134,377,072 |
10. |
Mandatorily Redeemable Preferred Shares |
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Total Outstanding Shares |
22,340,315 | |||
Total Shares Voted |
16,997,974 | |||
For |
16,547,980 | |||
Withheld |
449,994 |
Total Outstanding Shares |
2,000,000 | |||
Total Shares Voted |
1,040,000 | |||
For |
1,040,000 | |||
Withheld |
0 |
Income Opportunities Fund |
October 31, 2022 | |||
Name, Age and Address | Position(s) Held with the Fund |
Term of Office and Length of Service |
Principal Occupation(s) During Past Five Years and Other Relevant Experience |
Number of Portfolios in Fund Complex Overseen by Trustee (2) |
Other Directorships Held by Trustee (3) | |||||
Interested Trustees (1 ) | ||||||||||
Eric Mogelof (47) KKR Credit Advisors (US) LLC 555 California Street 50th Floor San Francisco, CA 94104 |
Trustee, Chair and President | Since December 2020 | Global head of KKR’s Client and Partner Group and Member of KKR (Since 2020); Head of U.S. Global Wealth Management (2017-2020) and Head of Asia Pacific (2014-2017), PIMCO. | 2 | None. | |||||
Independent Trustees (1 ) |
||||||||||
Tobin V. Levy (78) KKR Credit Advisors (US) LLC 555 California Street 50th Floor San Francisco, CA 94104 |
Trustee | Since July 2013 | Executive Vice President & Chief Financial Officer, Local Initiatives Support Corporation (non-profit support and resources) (2011-2014). | 2 | None. | |||||
Jeffrey L. Zlot (50) KKR Credit Advisors (US) LLC 555 California Street 50th Floor San Francisco, CA 94104 |
Trustee | Since July 2013 | Managing Director, Tiedemann Advisors (formerly, Tiedemann Wealth Management) (investment consultant and investment banking) (since 1997). | 2 | None. | |||||
Michael E. Cahill (71) KKR Credit Advisors (US) LLC 555 California Street 50th Floor San Francisco, CA 94104 |
Trustee | Since July 2013 | Executive Vice President (2008-2013) and Managing Director and General Counsel (1991-2013), The TCW Group, Inc. and Trust Company of the West (financial services firm). | 2 | None. | |||||
Catherine Sidamon-Eristoff (58) KKR Credit Advisors (US) LLC 555 California Street 50th Floor San Francisco, CA |
Trustee | Since December 2019 | Treasurer and Board Member, C-Change Conversations (non-profit organization) (Since 2017) Board Member, FlexPaths LLC (workplace strategy and consulting firm) (Since 2008) Managing Director, Constellation Wealth Advisors (financial services firm) (2007-2015). |
2 | None. |
(1) | “Independent Trustees” are those trustees who are not “interested persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Fund, and “Interested Trustees” are those trustees who are interested persons of the Fund. Mr. Mogelof is an Interested Trustee because he is a Member of KKR, the parent company of the Adviser. |
(2) | The Fund Complex is comprised of the Fund, KKR Real Estate Select Trust and KKR Credit Opportunities Portfolio. |
(3) | This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (i.e., “public companies”) or other investment companies registered under the 1940 Act. |
Income Opportunities Fund |
October 31, 2022 | |||
Name and Age | Position(s) Held with Fund |
Term of Office and Length of Service |
Principal Occupation(s) During Past Five Years and Other Relevant Experience | |||
Principal Officers who are not Trustees |
||||||
Thomas Murphy (55) | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since June 2017 | Chief Financial Officer, KKR Financial Holdings LLC (since 2015); Director (Finance & Accounting), KKR Credit Advisors (US) LLC (since 2012); Chief Accounting Officer, KKR Financial Holdings LLC (since 2009); Managing Director, KKR Credit Advisors (US) LLC (since 2021). | |||
Michael Nguyen (40) |
Chief Compliance Officer | Since June 2022 | Principal, KKR Credit Advisors (US) LLC (2013-present). | |||
Lori Hoffman (34) |
Secretary and Vice President | Since June 2022 | Principal, KKR Credit Advisors (US) LLC (2020-present); Associate, Dechert LLP (2013-2020). |
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Assumed Portfolio Total Return (net of expenses) |
(10.0 | )% | (5.0 | )% | 0.0 | % | 5.0 | % | 10.0 | % | ||||||||||
Common Share Total Return |
(18.3 | )% | (9.9 | )% | (1.5 | )% | 6.9 | % | 15.3 | % |
1. | Issue senior securities or borrow money, except the Fund may issue senior securities and/or borrow money (including through reverse repurchase agreements and dollar rolls) to the extent permitted by the 1940 Act, as amended from time to time, and as modified or supplemented from time to time by (i) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, and (ii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. The Fund does not have an investment policy limiting the amount of leverage that may be obtained through the use of covered reverse repurchase agreements. |
2. | Act as an underwriter of securities issued by others, except to the extent that, in connection with the disposition of loans or portfolio securities, it may be deemed to be an underwriter under applicable securities laws. |
3. | Invest in any security if as a result of such investment, 25% or more of the value of the Fund’s total assets, taken at market value at the time of each investment, are in the securities of issuers in any particular industry except (a) securities issued or guaranteed by the U.S. government and its agencies and instrumentalities or tax-exempt securities of state and municipal governments or their political subdivisions (however, not including private purpose industrial development bonds issued on behalf of non-government issuers), or (b) as otherwise provided by the 1940 Act, as amended from time to time, and as modified or supplemented from time to time by (i) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, and (ii) any exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. For purposes of this restriction, in the case of investments in loan participations between the Fund and a bank or other lending institution participating out the loan, the Fund will treat both the lending bank or other lending institution and the borrower as “issuers.” For purposes of this restriction, an investment in a repurchase agreement, reverse repurchase agreement, collateralized loan obligation, collateralized bond obligation, collateralized debt obligation or a swap or other derivative will be considered to be an investment in the industry (if any) of the underlying or reference security, instrument or asset. |
Income Opportunities Fund |
October 31, 2022 | |||
4. | Purchase or sell real estate, except that the Fund may: (a) acquire or lease office space for its own use, (b) invest in securities and/or other instruments of issuers that invest in real estate or interests therein or that are engaged in or operate in the real estate industry, (c) invest in securities and/or other instruments that are secured by real estate or interests therein, (d) purchase and sell mortgage-related securities and/or other instruments, (e) hold and sell real estate acquired by the Fund as a result of the ownership of securities and/or other instruments and (f) as otherwise permitted by the 1940 Act, as amended from time to time by (i) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, and (ii) any exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. |
5. | Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments; provided that this restriction shall not prohibit the Fund from purchasing or selling options, futures contracts and related options thereon, forward contracts, swaps, caps, floors, collars and any other financial or derivative instruments or from investing in securities or other instruments backed by physical commodities or as otherwise permitted by the 1940 Act, as amended from time to time, the rules and regulation promulgated by the SEC under the 1940 Act, as amended from time to time, or an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. |
6. | Make loans of money or property to any person, except (a) to the extent that securities, instruments, credit obligations or interests (including Senior Loans) in which the Fund may invest, or which the Fund may originate, are considered to be loans, (b) through the loan of portfolio securities, (c) by engaging in repurchase agreements or (d) as may otherwise be permitted by the 1940 Act, as amended from time to time, the rules and regulation promulgated by the SEC under the 1940 Act, as amended from time to time, or an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time. |
1. | Issue senior securities or borrow money, except as permitted by the 1940 Act and the rules and regulations thereunder. Currently, the 1940 Act and the rules and regulations thereunder generally limit the extent to which the Fund may utilize borrowings, together with any other senior securities representing indebtedness, to 33 and 1/3% of the Fund’s Managed Assets at the time utilized (less the Fund’s liabilities and indebtedness not represented by senior securities). In addition, the 1940 Act limits the extent to which the Fund may issue preferred shares plus senior securities representing indebtedness to 50% of the Fund’s Managed Assets (less the Fund’s liabilities and indebtedness not represented by senior securities). Indebtedness associated with reverse repurchase agreements and similar financing transactions may be aggregated with any other senior securities representing indebtedness for this purpose or be treated as derivatives transactions under the 1940 Act and the rules and regulations thereunder, depending on the Fund’s election under applicable SEC requirements. |
2. | Invest in any security if, as a result 25% or more of the value of the Fund’s total assets, taken at market value at the time of each investment, are in the securities of issuers in any particular industry except securities issued or guaranteed by the U.S. government and its agencies and instrumentalities or securities of state and municipal governments or their political subdivisions (however, not including private purpose industrial development bonds issued on behalf of non-government issuers). (For the avoidance of doubt, the Fund’s investments in private purpose industrial development bonds issued on behalf of non-government issuers will be subject to restriction 3). |
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
Income Opportunities Fund |
October 31, 2022 | |||
• | Information we receive from investors in subscription agreements, questionnaires and in other forms, such as name, address, account information, social security number, the types and amounts of investments, statements of net worth, telephone number, and other contact information; |
• | Information we receive from investors, affiliates and other companies about investors’ transactions with us, our affiliates, or other financial institutions with which we have relationships; and |
• | Information we receive from third parties such as demographic information and information collected to comply with law and regulation. |
• | For everyday business purposes: KKR shares personal information for everyday business purposes, such as to |
• | process your transactions; |
• | provide financial products or services to you; |
• | maintain your investment(s); |
• | secure business services, including printing, mailing, and processing or analyzing data; |
• | secure professional services, including accounting and legal services; or |
• | respond to court orders and legal investigations. |
• | For our marketing purposes: KKR shares personal information for our marketing purposes so that we can offer products and services to you. You cannot limit sharing by KKR for this reason. |
• | For joint marketing with other financial companies: KKR does not share personal information for joint marketing with other financial companies. |
• | For use by affiliates in providing products and services to you: KKR shares personal information for our affiliates’ use in providing you with products and services that meet your financial services needs. You cannot limit sharing by KKR for this reason. |
Income Opportunities Fund |
October 31, 2022 | |||
• | For the everyday business purposes of affiliates: KKR does not share personal information, including information about your credit worthiness, with our affiliates for their everyday business purposes. |
• | For use by affiliates to market to you: KKR does not share personal information with affiliates so that they can market to you. |
• | For use by KKR does not share personal information with non-affiliates to market to you: non-affiliates so that they can market to you. |
Item 2. Code of Ethics.
(a) | The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer and principal accounting officer. |
Item 3. Audit Committee Financial Expert.
(a)(1) The registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee.
(a)(2) Tobin V. Levy is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Deloitte & Touche LLP billed the Fund aggregate fees for services rendered to the Fund for the fiscal years as follows:
FYE 10/31/2022 | FYE 10/31/2021 | |||||||
(a)Audit Fees |
$ | 70,000 | $ | 65,000 | ||||
(b)Audit-Related Fees |
N/A | N/A | ||||||
(c)Tax Fees |
$ | 10,410 | $ | 10,000 | ||||
(d)All Other Fees |
N/A | N/A |
(e)(1) The Audit Committee pre-approves, to the extent required by applicable regulations (including paragraph (c)(7) of Rule 2-01 of Regulation S-X), (i) all audit and permitted non-audit services rendered by the independent accountants to the registrant and (ii) all non-audit services rendered by the independent accountants to the registrant’s investment adviser and to certain affiliates of the investment adviser.
(e)(2) The percentage of fees billed by Deloitte & Touche LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
FYE 10/31/2022 | FYE 10/31/2021 | |||||||
Audit-Related Fees |
N/A | N/A | ||||||
Tax Fees |
0 | % | 0 | % | ||||
All Other Fees |
N/A | N/A |
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by Deloitte & Touche LLP for the fiscal periods were $10,410 and $10,000, respectively.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
(a) 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. This standing audit committee is comprised of Mr. Tobin V. Levy, Mr. Jeffrey L. Zlot, Ms. Catherine B. Sidamon-Eristoff and Mr. Michael E. Cahill.
Item 6. Investments.
(a) Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The registrant’s proxy voting and corporate actions policy and procedures are as follows:
PROXY VOTING POLICY AND PROCEDURES
A. | General |
KKR Credit Advisors (US) LLC (the “Adviser”) provides investment advisory services to its Client, and invests the assets of these Clients in securities issued by public and private issuers. The Adviser has authority to vote proxies relating to such securities on behalf of its Clients. The Securities and Exchange Commission (the “SEC”) has adopted Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Under this rule, registered investment advisers that exercise voting authority over securities held in client portfolios are required to implement proxy voting policies and describe those policies to their clients.
This policy is designed to ensure that all proxies are voted in the best interest of the Adviser’s Clients, to provide disclosure of the Adviser’s proxy voting records and to ensure that certain documentation is retained.
B. | Proxy Voting Procedures |
To assist it in its proxy-voting responsibilities, the Adviser currently subscribes to proxy-related services offered by Institutional Shareholder Services, Inc. (“ISS”). ISS provides the Adviser with its independent analysis and recommendation with respect to generally all proxy proposals that the Adviser votes on behalf of its clients, with respect to both U.S. and non-U.S. securities of publicly traded companies.
The Adviser will have the responsibility of voting proxies that it receives on behalf of its Clients. The Adviser has engaged ISS to assist with its proxy voting, however, the Adviser retains ultimate voting discretion with respect to its Clients. The Adviser may depart from an ISS recommendation in order to avoid voting decisions believed to be contrary to the best interests of its Clients. In each instance where the Adviser votes contrary to the ISS recommendation, The Adviser’s Legal/Compliance, in conjunction with the Adviser’s investment analyst who provides coverage for the relevant issuer, will document the basis for its contrary voting decision.
In addition, the Adviser may choose not to vote proxies in certain situations, such as where the Adviser has deemed the cost of voting would exceed any anticipated benefit to the Adviser’s Clients or where a proxy is received by the Adviser for a security it no longer manages on behalf of its Clients. The Adviser’s Legal/Compliance, in conjunction with the Adviser’s investment analyst who provides coverage for the relevant issuer, will document the basis for the Adviser’s decision not to vote.
C. | Conflicts of Interest |
The Adviser may occasionally be subject to conflicts of interest in the voting of proxies due to business or personal relationships it maintains with persons having an interest in the outcome of certain votes. The Adviser, its affiliates and/or its employees may also occasionally have business or personal relationships with the proponents of proxy proposals, participants in proxy contests, corporate directors and officers or candidates for directorships.
If at any time, the Adviser becomes aware of an existing or potential conflict of interest relating to a particular proxy proposal, the Adviser’s Conflicts Committee (“Conflicts Committee”), or its designee, must be notified. Provided the Conflicts Committee has determined that a conflict or potential for a conflict exists, the proxy must be voted in alignment with the recommendation set forth by ISS. Appropriate documentation will be maintained by the Conflicts Committee.
D. | Proxy Voting Records |
In accordance with Rule 204-2 under the Advisers Act, the Adviser will maintain the following records in connection with the Adviser’s proxy voting policies and procedures:
• | a copy of the proxy voting policies and procedures; |
• | a copy of all proxy statements received regarding securities of its Clients; |
• | a record of each vote the Adviser casts on behalf of Firm Clients; |
• | records of the Adviser’s Client requests for proxy voting information, including a copy of each written request for information on how the Adviser voted proxies on behalf of the Client, and a copy of any written response by the Adviser to any Client request for information on how the Adviser voted proxies on its behalf; and |
• | any documentation prepared by the Adviser that was material to making a decision on how to vote, or that memorialized the basis for the voting decision. |
The foregoing records will be maintained and preserved in accordance with the Adviser’s Maintenance of Books and Records Policy.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Information presented is as of October 31, 2022
(a)(1) Investment Team
The Fund is positioned, under the management of the Adviser, to take advantage of the full resources of KKR & Co. Inc.’s (together with its affiliates, “KKR”) global network. With more than 2,400 employees in its business, including approximately 740 dedicated investment professionals, located in San Francisco, New York, Orlando, London, Dublin, Madrid, Hong Kong, Mumbai, Singapore and Sydney, the Adviser’s investment teams seek to leverage KKR’s private equity experience and extensive industry relationships in making strong investment choices on behalf of its clients. The investment professional of the Adviser, who has primary responsibility for day-to-day management and oversight of the Fund is Christopher A. Sheldon. Additionally, the US Leveraged Credit Investment Committee that exercises oversight over, and provides insight to, the investment activities of the Fund is comprised of:
Christopher A. Sheldon joined KKR in 2004, and is a Member of KKR. Mr. Sheldon serves as the Head of Leveraged Credit. Mr. Sheldon is a Portfolio Manager for the Adviser’s Leveraged Credit and Private Credit funds and portfolios. Mr. Sheldon is a member of the Adviser’s US Leveraged Credit Investment Committee, Global Private Credit Investment Committee and the Adviser’s Portfolio Management Committee. Prior to joining KKR, Mr. Sheldon was a vice president and senior investment analyst with Wells Fargo’s high yield securities group. Previously, Mr. Sheldon worked at Young & Rubicam Advertising and SFM Media Corporation in their media-planning departments. Mr. Sheldon holds a B.A. from Denison University.
Jeremiah S. Lane joined KKR in 2005, and is a Member of KKR. Mr. Lane is a Portfolio Manager for the Adviser’s Leveraged Credit funds and portfolios. Mr. Lane is a member of the Adviser’s US Leveraged Investment Committee, as well as a member of the Adviser’s Portfolio Management Committee. Prior to joining KKR, Mr. Lane worked as an associate in the investment banking/technology, media and telecom group at J.P. Morgan Chase. Mr. Lane holds an A.B. with honors in History from Harvard University.
(a)(2) Other Accounts Managed by the Portfolio Managers
The portfolio manager primarily responsible for the day-to-day management of the Fund also manages other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following table identifies, as of October 31, 2022: (i) the number of registered investment companies, pooled investment vehicles and other accounts managed by the portfolio manager; and (ii) the total assets under management (“AUM”) of such companies, vehicles and accounts, and the number and total AUM of such companies, vehicles and accounts with respect to which the advisory fee is based on performance.
Christopher A. Sheldon
Number of Accounts |
Assets of Accounts (in millions) |
Number of Accounts Subject to a Performance Fee |
Assets Subject to a Performance Fee (in millions) |
|||||||||||||
Registered Investment Companies |
2 | $ | 1,152 | — | $ | — | ||||||||||
Pooled Investment Vehicles Other Than Registered Investment Companies |
12 | $ | 27,084 | 6 | $ | 21,460 | ||||||||||
Other Accounts |
16 | $ | 4,971 | 9 | $ | 2,656 |
Jeremiah S. Lane
Number of Accounts |
Assets of Accounts (in millions) |
Number of Accounts Subject to a Performance Fee |
Assets Subject to a Performance Fee (in millions) |
|||||||||||||
Registered Investment Companies |
— | $ | — | — | $ | — | ||||||||||
Pooled Investment Vehicles Other Than Registered Investment Companies |
7 | $ | 74,436 | 1 | $ | 16,800 | ||||||||||
Other Accounts |
49 | $ | 22,465 | 1 | $ | 249 |
(a)(2)(iv) Conflicts Of Interest
The Adviser will experience conflicts of interest in connection with the management of the Fund, including, but not limited to, those discussed below. Dealing with conflicts of interest is complex and difficult, and new and different types of conflicts may subsequently arise.
• | The members, officers and other personnel of the Adviser allocate their time, resources and other services between the Fund and other investment and business activities in which they are involved, including other funds, investment vehicles and accounts managed by KKR. The Adviser intends to devote such time as shall be necessary to conduct the Fund’s business affairs in an appropriate manner. However, the Adviser will continue to devote the time, resources and other services necessary to managing its other investment and business activities, and the Adviser is not precluded from conducting activities unrelated to the Fund. Substantial time will be spent by such members, officers and personnel monitoring the investments of other funds, investment vehicles and accounts managed by KKR. |
• | The Adviser will, at times, compete with certain of its affiliates, including other entities it manages, for investments for the Fund, subjecting the Adviser to certain conflicts of interest in evaluating the suitability of investment opportunities and making or recommending acquisitions on the Fund’s behalf. The Adviser will receive advisory and other fees from the other entities it manages, and due to fee-offset provisions contained in the management agreements for such entities, the fees, at times, will not be proportionate to such entities’ investment accounts for any given transaction and the Adviser may have an incentive to favor entities from which it receives higher fees. |
• | The Fund has adopted the Adviser’s allocation policy, which is designed to fairly and equitably distribute investment opportunities over time among funds or pools of capital managed by the Adviser, which may include proprietary accounts, including investment or co-investment vehicles established for personnel of KKR or its affiliates. The Adviser’s allocation policy provides that once an investment has been approved and is deemed to be in the Fund’s best interest, the Fund will receive a pro rata share of the investment based on capital available for investment in the asset class being allocated. Determinations as to the amount of capital available for investment are based on such factors as: the amount of cash on-hand, existing commitments and reserves, the targeted leverage level, the targeted asset mix and diversification requirements, other investment policies and restrictions, and limitations imposed by applicable laws, rules, regulations or interpretations. The outcome of this determination will result in the allocation of all, some or none of an investment opportunity to the Fund. In addition, subject to applicable law, affiliates of the |
Adviser will, from time to time, invest in one of the Fund’s portfolio companies and hold a different class of securities than the Fund. To the extent that an affiliate of the Adviser holds a different class of securities than the Fund, its interests might not be aligned with the Fund’s. Notwithstanding the foregoing, the Adviser will act in the best interest of the Fund in accordance with its fiduciary duty to the Fund. |
• | The appropriate allocation among the Fund and other KKR funds and accounts of expenses and fees generated in the course of evaluating and making investments often will not be clear, especially where more than one KKR fund or account participates. The Adviser will determine, in its sole discretion, the appropriate allocation of investment-related expenses, including broken deal expenses incurred in respect of unconsummated investments and expenses more generally relating to a particular investment strategy, among the funds and accounts participating or that would have participated in such investments or that otherwise participate in the relevant investment strategy, as applicable, which could result in the Fund bearing more or less of these expenses than other participants or potential participants in the relevant investments. |
• | The compensation payable by the Fund to the Adviser will be approved by the Board consistent with the exercise of the requisite standard of care applicable to trustees under state law. Such compensation is payable, in most cases, regardless of the quality of the assets acquired, the services provided to the Fund or whether the Fund makes distributions to Shareholders. |
• | The Adviser and its affiliates will, at times, provide a broad range of financial services to companies in which the Fund invests, in compliance with applicable law, and will generally be paid fees for such services. In addition, affiliates of the Adviser could act as an underwriter or placement agent in connection with an offering of securities by one of the companies in the Fund’s portfolio. Any compensation received by the Adviser and its affiliates for providing these services will not be shared with the Fund and could be received before the Fund realizes a return on its investment. The Adviser will face conflicts of interest with respect to services performed for these companies, on the one hand, and investments recommended to the Fund, on the other hand. |
• | KKR engages in a broad range of business activities and invests in portfolio companies and other issuers whose operations could be substantially similar to the issuers of the Fund’s portfolio investments. The performance and operation of such competing businesses could conflict with and adversely affect the performance and operation of the issuers of the Fund’s portfolio investments and could adversely affect the prices and availability of business opportunities or transactions available to these issuers. |
• | From time to time, to the extent consistent with the 1940 Act and the rules and regulations promulgated thereunder, or with exemptive relief the Fund receives from the SEC, if any, the Fund and other clients for which the Adviser provides investment management services or carries on investment activities (including, among others, clients that are employee benefit plans subject to ERISA and related regulations) will make investments at different levels of an investment entity’s capital structure or otherwise in different classes of an issuer’s securities. These investments inherently give rise to conflicts of interest or perceived conflicts of interest between or among the various classes of securities held by the Fund and such other clients, including in the case of financial distress of the investment entity. |
• | KKR and the Adviser sponsor and advise, and expect in the future to sponsor and advise, a broad range of investment funds, vehicles, and other accounts, including proprietary vehicles, that make investments worldwide. KKR will, from time to time, also make investments for its own account, including, for example, through investment and co-investment vehicles established for KKR personnel and associates. The Adviser and its affiliates are not restricted from forming additional investment funds, from entering into other investment advisory relationships (including, among others, relationships with clients that are employee benefit plans subject to ERISA and related regulations) or from engaging in other business activities, even to the extent such activities are in competition with the Fund and/or involve substantial time and resources of the Adviser. For example, the Adviser could invest, on behalf of an affiliated fund, in a company that is a competitor of one of the Fund’s portfolio companies or that is a service provider, supplier, customer or other counterparty with respect to one of the Fund’s portfolio companies or the Adviser could, on behalf of other entities it manages, acquire assets originated by, or provide financing to, portfolio companies and other issuers in which the Fund invests. In providing advice and recommendations |
to, or with respect to, such investments and in dealing in such investments on behalf of such other affiliated fund, to the extent permitted by law, the Adviser or its affiliates will not take into consideration the interests of the Fund and its portfolio investments and issuers thereof. Accordingly, such advice, recommendations and dealings will result in conflicts of interest for the Adviser. In addition, the Adviser’s ability to effectively implement the Fund’s investment strategies will be limited to the extent that contractual obligations relating to these permitted activities restrict the Adviser’s ability to engage in transactions that it would otherwise be interested in pursuing. Affiliates of the Adviser, whose primary business includes the origination of investments, engage in investment advisory business with accounts that compete with the Fund. |
• | The Adviser and its affiliates will, from time to time, give advice and recommend securities to other clients that differs from, or is contrary to, advice given to or securities recommended or bought for the Fund even though their investment objectives are similar to the Fund’s. |
• | To the extent not restricted by confidentiality requirements or applicable law, the Adviser will, from time to time, apply experience and information gained in providing services to the Fund’s portfolio companies in providing services to competing companies invested in by affiliates’ other clients, which could have adverse consequences for the Fund or its portfolio investments. In addition, in providing services in respect of such portfolio companies and other issuers of portfolio investments, the Adviser or its affiliates will, from time to time, come into possession of information that it is prohibited from acting on (including on behalf of the Fund) or disclosing as a result of applicable confidentiality requirements or applicable law, even though such action or disclosure would be in the interests of the Fund. |
• | As a registered investment company, the Fund is limited in its ability to make investments in issuers in which the Adviser or its affiliates’ other clients have an investment. The Fund is limited in its ability to co-invest with the Adviser or one or more of its affiliates without an exemptive order from the SEC. On January 5, 2022, the SEC issued an exemptive order granting exemptive relief that expanded the Fund’s ability to co-invest with certain of its affiliates in privately negotiated transactions subject to restrictive conditions specified in the exemptive order intended to mitigate certain conflicts of interest. |
• | On February 1, 2021, KKR acquired control of Global Atlantic Financial Group Limited (“Global Atlantic”), a retirement and life insurance company. KKR, including the Adviser, will serve as Global Atlantic’s investment manager. KKR, including the Adviser, generally expects to treat any Global Atlantic account as a client account for the purposes of allocating investment opportunities and related fees and expenses. Certain Global Atlantic accounts may co-invest alongside the Fund in some or all investments in the Fund’s Private Credit Strategy. Due to the limited nature of many Private Credit investment opportunities, the Adviser expects that participation by Global Atlantic accounts in co-investment transactions will generally reduce the allocations otherwise available to other co-investing accounts, including the Fund. The establishment of Global Atlantic accounts investing directly in the Private Credit Strategy investments will create a conflict of interest in that KKR will be incentivized to allocate more attractive investments and scarce investment opportunities to these proprietary entities and accounts rather than to the Fund. To mitigate this conflict, KKR will allocate investment opportunities in a manner that is consistent with an allocation methodology established by KKR and its affiliates (including the Adviser), as described above, in a manner designed to ensure allocations of such opportunities are made on a fair and equitable basis over time. |
• | The Fund depends to a significant extent on the Adviser’s access to the investment professionals and senior management of KKR and the information and deal flow generated by the KKR investment professionals and senior management during the normal course of their investment and portfolio management activities. The senior management and the investment professionals of the Adviser source, evaluate, analyze and monitor the Fund’s investments. The Fund’s future success will depend on the continued service of the senior management team and investment professionals of the Adviser. |
• | The Adviser’s relationship with other advisory clients and with KKR could create a conflict of interest to the extent the Adviser becomes aware of inside information concerning investments or potential investment targets. KKR has adopted information-sharing policies and procedures which address both (i) the handling of confidential information and (ii) the information barrier that exists between the public and private sides |
of KKR. KKR has compliance functions to administer KKR’s information-sharing policies and procedures and monitor potential conflicts of interest. The Fund cannot assure its investors, however, that these procedures and practices will be effective. Although the Fund plans to leverage KKR’s firm-wide resources to help source, conduct due diligence on, structure, syndicate and create value for the Fund’s investments (to the extent permitted by applicable law), KKR’s information-sharing policies and procedures referenced above, as well as certain legal, contractual and tax constraints, could significantly limit the KKR’s ability to do so. For example, from time to time KKR’s personnel will be in possession of material non-public information with respect to the Fund’s investments or potential investments, and as a result, such professionals will be restricted by KKR’s information-sharing policies or by law or contract, from sharing such information with the KKR professionals responsible for making the Fund’s investment decisions, even where the disclosure of such information would be in the best interest of the Fund or would otherwise influence the decisions taken by such investment professionals with respect to such investment or potential investment. In addition, this conflict and these procedures and practices could limit the freedom of the Adviser to enter into or exit from potentially profitable investments for the Fund which could have an adverse effect on the Fund’s results of operations. Conversely, the Adviser could pursue investments for the Fund without obtaining access to confidential information otherwise in its or KKR’s possession, which information, if reviewed, might otherwise impact the Adviser’s judgment with respect to such investments. Accordingly, as a result of such restrictions, the investment activities of KKR’s other businesses will differ from, or be inconsistent with, the interests of and activities that are undertaken for the Fund and there can be no assurance that the Fund will be able to fully leverage all of the available resources and industry expertise of KKR’s other businesses. Additionally, there will be circumstances in which one or more individuals associated with the Adviser will be precluded from providing services to the Fund because of certain confidential information available to those individuals or to other parts of KKR. |
• | The nature of the Adviser’s businesses and the participation by its employees in creditors’ committees steering committees, or boards of directors of portfolio companies will, from time to time, result in the Adviser receiving material non-public information from time to time with respect to publicly held companies or otherwise becoming an “insider” with respect to such companies. With limited exceptions, KKR does not establish information barriers between its internal investment teams. Trading by KKR on the basis of such information, or improperly disclosing such information, could be restricted pursuant to applicable law and/or internal policies and procedures adopted by KKR to promote compliance with applicable law. Accordingly, the possession of “inside information” or “insider” status with respect to such an issuer by KKR or KKR personnel could, including where an appropriate information barrier does not exist between the relevant investment professionals or has been “crossed” by such professionals, significantly restrict the ability of the Adviser to deal in the securities of that issuer on behalf of the Fund, which could adversely impact the Fund, including by preventing the execution of an otherwise advisable purchase or sale transaction in a particular security until such information ceases to be regarded as material non-public information, which could have an adverse effect on the overall performance of such investment. In addition, affiliates of KKR in possession of such information could be prevented from disclosing such information to the Adviser, even where the disclosure of such information would be in the interests of the Fund. From time to time, the Adviser will also be subject to contractual “stand-still” obligations and/or confidentiality obligations that restrict its ability to trade in certain securities on behalf of the Fund. In certain circumstances, the Fund or the Adviser will engage an independent agent to dispose of securities of issuers in which KKR could be deemed to have material non-public information on behalf of the Fund. Such independent agent could dispose of the relevant securities for a price that is lower than the Adviser’s valuation of such securities which could take into account the material non-public information known to KKR in respect of the relevant issuer. |
• | The Adviser could develop new businesses such as providing investment banking, advisory and other services to corporations, financial sponsors, management or other persons. Such services could relate to transactions that could give rise to investment opportunities that are suitable for the Fund. In such case, the Adviser’s client would typically require the Adviser to act exclusively on its behalf, thereby precluding the Fund from participating in such investment opportunities. The Adviser would not be obligated to decline any such engagements in order to make an investment opportunity available to the Fund. In addition, the Adviser could come into the possession of information through these new businesses that limits the Fund’s ability to engage in potential transactions. |
• | The 1940 Act limits the Fund’s ability to invest in, or hold securities of, companies that are controlled by funds managed by KKR. Any such investments could create conflicts of interest between the Fund, the Adviser and KKR. The Adviser will also have, or enter into, advisory relationships with other advisory clients (including, among others, employee benefit plans subject to ERISA and related regulations) that could lead to circumstances in which a conflict of interest between the Adviser’s advisory clients could exist or develop. In addition, to the extent that another client of the Adviser or KKR holds a different class of securities than the Fund, the interest of such client and the Fund might not be aligned. As a result of these conflicts and restrictions, the Adviser could be unable to implement the Fund’s investment strategies as effectively as it could have in the absence of such conflicts or restrictions. In order to avoid these conflicts and restrictions, the Adviser could choose to exit these investments prematurely and, as a result, the Fund would forgo any future positive returns associated with such investments. |
• | Certain other KKR client accounts or proprietary accounts have investment objectives, programs, strategies and positions that are similar to, or conflict with, those of the Fund, or compete with, or have interests adverse to, the Fund. This type of conflict could affect the prices and availability of the securities or interests in which the Fund invests. KKR will, from time to time, give advice or take action with respect to the investments held by, and transactions of, other KKR client accounts or proprietary accounts that could be different from or otherwise inconsistent with the advice given or timing or nature of any action taken with respect to the investments held by, and timing or nature of any action taken with respect to the investments held by, and transactions of, the Fund. Such different advice and/or inconsistent actions could be due to a variety of reasons, including, without limitation, the differences between the investment objective, program, strategy and tax treatment of the other KKR client accounts or proprietary accounts and the Fund or the regulatory status of other KKR client accounts and any related restrictions or obligations imposed on KKR as a fiduciary thereof. Such advice and actions could adversely impact the Fund. |
• | KKR, for its own account or for the account of other KKR clients, could enter into real estate-related transactions with Fund portfolio companies. Such transactions could include, for example, buying or selling real estate assets, acquiring or entering into leasing arrangements or amending such arrangements or transferring options or rights of first refusal to acquire real estate assets. Such transactions, which do not involve securities, are not governed by restrictions on principal transactions and cross transactions but are subject to specific policies and procedures established by KKR to manage related conflicts. |
• | The 1940 Act prohibits the Fund from participating in certain transactions with certain of its affiliates including an Adviser-affiliated broker-dealer. The Fund generally is prohibited, for example, from buying or selling any securities from or to another client of the Adviser or of KKR. The 1940 Act also prohibits certain “joint” transactions with certain of the Fund’s affiliates, which in certain circumstances could include investments in the same portfolio company (whether at the same or different times to the extent the transaction involves jointness) or transactions in which a broker-dealer affiliated with the Adviser participates as principal with the Fund. If a person acquires more than 25% of the Fund’s voting securities, the Fund will generally be prohibited from buying or selling any security from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons. Similar restrictions limit the Fund’s ability to transact business with its officers or trustees or their affiliates. The SEC has interpreted the 1940 Act rules governing transactions with affiliates to prohibit certain “joint transactions” involving entities that share a common investment adviser. As a result of these restrictions, the scope of investment opportunities that would otherwise be available to the Fund will be limited. These investment opportunities will generally be made available to other funds, vehicles and accounts advised by the Adviser that are not subject to similar restrictions under the 1940 Act. |
• | The Fund’s shareholders are based in a wide variety of jurisdictions and take a wide variety of forms. Accordingly, they could have conflicting regulatory, legal, investment, tax, and other interests with respect to their investments in the Fund. The conflicting interests of individual shareholders relate to or arise from, among other things, the nature of investments made by the Fund, the selection, structuring, acquisition and |
management of investments, the timing of disposition of investments, internal investment policies of the shareholders and their target risk/return profiles. As a consequence, conflicts of interest could arise in connection with decisions made by the Adviser, including with respect to the nature or structuring of investments, which could be more beneficial for one shareholder than for another shareholder, especially with respect to shareholders’ individual tax situations. In addition, the Fund could make investments that have a negative impact on related investments made by the Fund in separate transactions. In selecting and structuring investments appropriate for the Fund, the Adviser will consider the investment and tax objectives of the Fund and its shareholders as a whole, not the investment, tax or other objectives of any shareholder individually. |
The Adviser and the portfolio managers may also face other potential conflicts of interest in managing the Fund, and the descriptions above are not a complete description of every conflict of interest that could be deemed to exist in managing the Fund and other funds and accounts advised or controlled by KKR.
(a)(3) Portfolio Manager Compensation
Consistent with KKR’s global, integrated culture, KKR has one firm-wide compensation and incentive structure based on a global profit and loss statement, which covers the portfolio manager. KKR’s compensation structure is designed to align the interests of the investment personnel serving the Fund with those of the Fund’s shareholders and to give everyone a direct financial incentive to ensure that all of KKR’s resources, knowledge and relationships around the world are utilized to maximize risk-adjusted returns for each strategy.
Each of KKR’s senior executives, including the portfolio manager responsible for the day-to-day management of the Fund, receives a base salary and is eligible for a cash bonus and equity compensation, as well as additional incentives including “dollars at work” in certain KKR fund investments (other than the Fund). The cash bonus, equity compensation and “dollars at work” are discretionary, and “dollars at work” and equity awards are typically subject to a vesting period of several years.
Compensation and other incentives are not formulaic, but rather are judgment and merit driven, and are determined based on a combination of overall firm performance, individual contribution and performance, business unit performance, and relevant market and competitive compensation practices for KKR’s various businesses and the individual roles/responsibilities within each of those businesses.
(a)(4) Securities Ownership of Portfolio Managers
As of the fiscal year ended October 31, 2022, the portfolio manager beneficially owned the following shares of the Fund:
Portfolio Manager |
Dollar Range of Equity Securities Owned** | |
Christopher A. Sheldon |
$100,001-$500,000 | |
Jeremiah S. Lane |
$10,001-$50,000 |
** | Ranges (None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, $100,001-$500,000, $500,001-$1,000,000 or over $1,000,000). |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
No purchases were made during the reporting period by or on behalf of the Fund or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the Fund’s equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781).
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees since the registrant last provided disclosure in response to this item.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report on Form N-CSR, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the investment company on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
(b) There have been no changes in the registrant’s internal control over financial reporting during the year ended October 31, 2022 that materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
The registrant did not engage in securities lending activities during the fiscal year reported on this Form N-CSR.
Item 13. Exhibits.
(a)(1) There have been no amendments to the Code of Ethics since filed with the October 31, 2021 Form N-CSR filing.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith.
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.
KKR Income Opportunities Fund |
By /s/ Eric Mogelof |
Eric Mogelof, President |
Date 01/06/2023 |
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/ Eric Mogelof |
Eric Mogelof, President |
Date 01/06/2023 |
By /s/ Thomas Murphy |
Thomas Murphy, Treasurer, Chief Accounting Officer & Chief Financial Officer |
Date 01/06/2023 |
I, Eric Mogelof, certify that:
1. | I have reviewed this report on Form N-CSR of KKR Income Opportunities Fund; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of trustees (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: | 01/06/2023 |
/s/ Eric Mogelof | ||||
Eric Mogelof President |
EX.99.906CERT
I, Thomas Murphy, certify that:
1. | I have reviewed this report on Form N-CSR of KKR Income Opportunities Fund; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of trustees (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: | 01/06/2023 | /s/ Thomas Murphy | ||||
Thomas Murphy Treasurer, Chief Accounting Officer & Chief Financial Officer |
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the KKR Income Opportunities Fund, does hereby certify, to such officers knowledge, that the report on Form N-CSR of the KKR Income Opportunities Fund for the period ended October 31, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the KKR Income Opportunities Fund for the stated period.
/s/ Eric Mogelof |
/s/ Thomas Murphy | |||
Eric Mogelof President KKR Income Opportunities Fund |
|
Thomas Murphy Treasurer, Chief Accounting Officer & Chief Financial Officer KKR Income Opportunities Fund |
Dated: | 01/06/2023 | Dated: | 01/06/2023 |
This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by KKR Income Opportunities Fund for purposes of Section 18 of the Securities Exchange Act of 1934.