RiverNorth
Opportunities Fund, Inc.
| Statement of Assets and Liabilities |
January
31, 2023 (Unaudited) |
| ASSETS: | |
|
| Investments, at value | |
$ | 372,118,104 | |
| Deposit with broker for securities sold short | |
| 46,699,086 | |
| Foreign currency, at value (Cost $160) | |
| 174 | |
| Receivable for investments sold | |
| 1,716,717 | |
| Interest receivable | |
| 767,218 | |
| Dividends receivable | |
| 292,601 | |
| Deferred offering costs (Note 6) | |
| 286,092 | |
| Prepaid and other assets | |
| 129,456 | |
| Total Assets | |
| 422,009,448 | |
| | |
| | |
| LIABILITIES: | |
| | |
| Securities sold short (Proceeds $45,225,372) | |
| 45,288,236 | |
| Dividend payable - Series A Cumulative Perpetual Preferred Shares | |
| 1,227,188 | |
| Payable for investments purchased | |
| 972,444 | |
| Payable to adviser | |
| 408,024 | |
| Payable to administrator | |
| 75,644 | |
| Accrued offering costs (Note 8) | |
| 159,264 | |
| Payable for custodian fees | |
| 8,374 | |
| Payable for professional fees | |
| 6,611 | |
| Other payables | |
| 1,523,940 | |
| Total Liabilities | |
| 49,669,725 | |
| Series A Cumulative Perpetual Preferred Shares, $0.0001 par value per share, 3,910,000 of shares authorized | |
| | |
| Series A Cumulative Perpetual Preferred Shares (6.00%, $25 liquidation value per share, 3,910,000 shares issued and outstanding) | |
$ | 97,750,000 | |
| Net Assets Attributable to Common Shareholders | |
$ | 274,589,723 | |
| | |
| | |
| NET ASSETS CONSIST OF: | |
| | |
| Paid-in capital | |
$ | 303,869,852 | |
| Total distributable earnings/(accumulated deficit) | |
| (29,280,129 | ) |
| Net Assets Attributable to Common Shareholders | |
$ | 274,589,723 | |
| | |
| | |
| PRICING OF SHARES: | |
| | |
| Net Assets Attributable to Common Shareholders | |
$ | 274,589,723 | |
| Shares of common stock outstanding (37,500,000 of shares authorized, at $0.0001 par value per share) | |
| 21,453,174 | |
| Net Asset Value Per Share Attributable to Common Shareholders | |
$ | 12.80 | |
| | |
| | |
| Cost of Investments | |
$ | 373,010,013 | |
See
Notes to Financial Statements.
| RiverNorth Opportunities
Fund, Inc. |
Statement
of Operations |
For the Six Months Ended January 31, 2023 (Unaudited)
| INVESTMENT INCOME: | |
|
| Dividends | |
$ | 9,875,118 | |
| Interest | |
| 1,461,809 | |
| Total Investment Income | |
| 11,336,927 | |
| | |
| | |
| EXPENSES: | |
| | |
| Investment advisory fees | |
| 2,133,783 | |
| Dividend and interest expense - short sales | |
| 363,231 | |
| Administration fees | |
| 93,407 | |
| Legal fees | |
| 62,809 | |
| Printing fees | |
| 52,527 | |
| Director fees | |
| 27,692 | |
| Insurance fees | |
| 12,985 | |
| Transfer agent fees | |
| 8,708 | |
| Custodian fees | |
| 7,796 | |
| Audit and tax fees | |
| 7,533 | |
| Other expenses | |
| 11,004 | |
| Total Expenses | |
| 2,781,475 | |
| Net Investment Income | |
| 8,555,452 | |
| | |
| | |
| REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | |
| | |
| Net realized gain/(loss) on: | |
| | |
| Investments | |
| (8,783,480 | ) |
| Securities sold short | |
| 620,037 | |
| Net realized loss | |
| (8,163,443 | ) |
| Net change in unrealized appreciation/depreciation on: | |
| | |
| Investments | |
| 10,826,504 | |
| Securities sold short | |
| (1,566,565 | ) |
| Net change in unrealized appreciation/depreciation | |
| 9,259,939 | |
| Net Realized and Unrealized Gain on Investments | |
| 1,096,496 | |
| Dividends to Series A Cumulative Perpetual Preferred Shares | |
$ | (2,932,500 | ) |
| Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations | |
$ | 6,719,448 | |
See
Notes to Financial Statements.
| Semi-Annual Report | January
31, 2023 |
23 |
RiverNorth
Opportunities Fund, Inc.
Statements
of Changes in Net Assets
| | |
For the Six | |
|
| | |
Months Ended | |
For the |
| | |
January 31, 2023 | |
Year Ended |
| | |
(Unaudited) | |
July 31, 2022 |
| OPERATIONS: | |
| | | |
| | |
| Net investment income | |
$ | 8,555,452 | | |
$ | 3,010,738 | |
| Net realized loss | |
| (8,163,443 | ) | |
| (644,785 | ) |
| Long-term capital gains from other investment companies | |
| – | | |
| 1,128,937 | |
| Net change in unrealized appreciation/depreciation | |
| 9,259,939 | | |
| (20,966,192 | ) |
| Net increase/(decrease) in net assets resulting from operations | |
| 9,651,948 | | |
| (17,471,302 | ) |
| Distributions to Series A Cumulative Perpetual Preferred Shareholders | |
| (2,932,500 | ) | |
| (1,634,610 | ) |
| Net increase/(decrease) in net assets attributable to common shareholders resulting from operations | |
| 6,719,448 | | |
| (19,105,912 | ) |
| | |
| | | |
| | |
| TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS: | |
| | | |
| | |
| From distributable earnings | |
| (19,528,379 | ) | |
| (15,769,747 | ) |
| From tax return of capital | |
| – | | |
| (22,464,896 | ) |
| Net decrease in net assets from distributions to common shareholders | |
| (19,528,379 | ) | |
| (38,234,643 | ) |
| | |
| | | |
| | |
| PREFERRED SHARE TRANSACTIONS: | |
| | | |
| | |
| Issuance and offering costs for Cumulative Perpetual Preferred Shares | |
| – | | |
| (3,699,671 | ) |
| Net decrease in net assets attributable to common shareholders from preferred share transactions | |
| – | | |
| (3,699,671 | ) |
| | |
| | | |
| | |
| COMMON SHARE TRANSACTIONS: | |
| | | |
| | |
| Proceeds from sales of shares, net of offering costs | |
| 38,034,976 | | |
| 95,791,104 | |
| Dividend Reinvestment | |
| 836,632 | | |
| 2,227,599 | |
| Net increase in net assets attributable to common shareholders from capital share transactions | |
| 38,871,608 | | |
| 98,018,703 | |
| | |
| | | |
| | |
| Net Increase in Net Assets Attributable to Common Shareholders | |
| 26,062,677 | | |
| 36,978,477 | |
| | |
| | | |
| | |
| NET ASSETS ATTRIBUTABLE TO COMMON SHAREHOLDERS: | |
| | | |
| | |
| Beginning of period | |
| 248,689,730 | | |
| 211,711,253 | |
| End of period | |
$ | 274,752,407 | | |
$ | 248,689,730 | |
| | |
| | | |
| | |
| OTHER INFORMATION: | |
| | | |
| | |
| Common Share Transactions: | |
| | | |
| | |
| Shares outstanding - beginning of period | |
| 18,291,243 | | |
| 12,436,466 | |
| Shares issued in connection with public offering | |
| 3,097,795 | | |
| 5,708,985 | |
| Shares issued as reinvestment of dividends | |
| 64,136 | | |
| 145,792 | |
| Shares outstanding - end of period | |
| 21,453,174 | | |
| 18,291,243 | |
See
Notes to Financial Statements.
Page
Intentionally Left Blank
| RiverNorth Opportunities Fund, Inc. |
Financial Highlights |
For
a share outstanding throughout the periods presented.
| Net asset value - beginning of
period |
| Income/(loss) from investment
operations: |
| Net investment income(b) |
| Net realized and unrealized gain/(loss) |
| Total income/(loss) from investment
operations |
| Less distributions to common
shareholders: |
| From net investment income |
| From net realized gains |
| From tax return of capital |
| Total distributions to common
shareholders |
| Less distributions to preferred
shareholders: |
| From net investment income(b) |
| Total distributions to preferred
shareholders |
| Common share transactions: |
| Dilutive effect of rights offering |
| Common share offering costs charged
to paid-in capital |
| Total common share transactions |
| Preferred Share issuance and offering
costs charged to paid-in capital |
| Total preferred share transactions |
| Net increase/(decrease) in net
asset value |
| Net asset value - end of period |
| Market price - end of period |
| Total Return -Net Asset Value(j) |
| Total Return - Market Price(j) |
| Supplemental Data: |
| Net assets, end of period (in
thousands) |
| Ratios to Average Net Assets
(including dividend expense and line of credit expense) |
| Total expenses |
| Net investment income |
| Ratios to Average Net Assets
(excluding dividend expense and line of credit expense) |
| Total expenses |
| Net investment income |
| Portfolio turnover rate |
| Borrowings at End of Period |
| Loan Payable (in thousands) |
| Asset Coverage Per $1,000 of loan
payable (in thousands)(m) |
| Cumulative Perpetual Preferred
Stock (in thousands) |
| Asset coverage per share of Cumulative
Perpetual Preferred Stock(n) |
Involuntary
liquidating preference per share of Series A Cumulative Perpetual Preferred Stock Average market value per share of Series A Cumulative
Preferred Stock
See
Notes to Financial Statements.
| RiverNorth Opportunities Fund, Inc. |
Financial Highlights |
For
a share outstanding throughout the periods presented.
For the Six
Months Ended
January 31, 2023
(Unaudited) | | |
For the
Year Ended
July 31, 2022 | | |
For the
Year Ended
July 31, 2021 | | |
For the
Year Ended
July 31, 2020 | | |
For the
Year Ended
July 31, 2019 | | |
For the
Period Ended
July 31, 2018(a) | |
| $ | 13.60 | | |
$ | 17.02 | | |
$ | 14.89 | | |
$ | 17.39 | | |
$ | 19.07 | | |
$ | 20.48 | |
| | 0.43 | | |
| 0.18 | | |
| 0.31 | | |
| 0.41 | | |
| 0.55 | | |
| 0.44 | |
| | 0.02 | | |
| (0.85 | ) | |
| 4.03 | | |
| (0.56 | ) | |
| 0.29 | | |
| 0.40 | |
| | 0.45 | | |
| (0.67 | ) | |
| 4.34 | | |
| (0.15 | ) | |
| 0.84 | | |
| 0.84 | |
| | (0.98 | ) | |
| (0.70 | ) | |
| (0.72 | ) | |
| (0.51 | ) | |
| (0.63 | ) | |
| (0.47 | ) |
| | – | | |
| (0.24 | ) | |
| (1.37 | ) | |
| (0.00 | )(c) | |
| (0.41 | ) | |
| (1.34 | ) |
| | – | | |
| (1.34 | ) | |
| – | | |
| (1.60 | ) | |
| (1.20 | ) | |
| (0.08 | ) |
| | (0.98 | ) | |
| (2.28 | ) | |
| (2.09 | ) | |
| (2.11 | ) | |
| (2.24 | ) | |
| (1.89 | ) |
| | (0.15 | ) | |
| (0.10 | ) | |
| – | | |
| – | | |
| – | | |
| – | |
| | (0.15 | ) | |
| (0.10 | ) | |
| – | | |
| – | | |
| – | | |
| – | |
| | (0.10 | )(d) | |
| (0.13 | )(e) | |
| (0.08 | )(f) | |
| (0.21 | )(g) | |
| (0.26 | )(h) | |
| (0.32 | )(i) |
| | (0.01 | ) | |
| (0.02 | ) | |
| (0.04 | ) | |
| (0.03 | ) | |
| (0.02 | ) | |
| (0.04 | ) |
| | (0.11 | ) | |
| (0.15 | ) | |
| (0.12 | ) | |
| 0.24 | | |
| (0.28 | ) | |
| (0.36 | ) |
| | (0.01 | ) | |
| (0.22 | ) | |
| – | | |
| – | | |
| – | | |
| – | |
| | (0.01 | ) | |
| (0.22 | ) | |
| – | | |
| – | | |
| – | | |
| – | |
| | (0.80 | ) | |
| (3.42 | ) | |
| 2.13 | | |
| (2.50 | ) | |
| (1.68 | ) | |
| (1.41 | ) |
| $ | 12.80 | | |
$ | 13.60 | | |
$ | 17.02 | | |
$ | 14.89 | | |
$ | 17.39 | | |
$ | 19.07 | |
| $ | 12.25 | | |
$ | 14.60 | | |
$ | 18.21 | | |
$ | 14.81 | | |
$ | 17.38 | | |
$ | 19.14 | |
| | 1.68 | %(k) | |
| (7.41 | %) | |
| 30.09 | % | |
| (1.75 | %) | |
| 3.77 | % | |
| 2.56 | %(k) |
| | (9.43 | %)(k) | |
| (7.10 | %) | |
| 39.94 | % | |
| (2.22 | %) | |
| 3.33 | % | |
| 2.84 | %(k) |
| $ | 274,752 | | |
$ | 248,690 | | |
$ | 211,711 | | |
$ | 139,166 | | |
$ | 124,664 | | |
$ | 101,624 | |
| | 2.18 | %(l) | |
| 1.91 | % | |
| 1.91 | % | |
| 2.06 | % | |
| 2.17 | % | |
| 2.07 | %(l) |
| | 6.69 | %(l) | |
| 1.18 | % | |
| 1.87 | % | |
| 2.59 | % | |
| 3.11 | % | |
| 3.03 | %(l) |
| | 1.90 | %(l) | |
| 1.58 | % | |
| 1.45 | % | |
| 1.54 | % | |
| 1.56 | % | |
| 1.72 | %(l) |
| | 6.97 | %(l) | |
| 1.51 | % | |
| 2.33 | % | |
| 3.11 | % | |
| 3.72 | % | |
| 2.68 | %(l) |
| | 36 | %(k) | |
| 119 | % | |
| 190 | % | |
| 133 | % | |
| 76 | % | |
| 74 | %(k) |
| | – | | |
| – | | |
| – | | |
$ | 7,500 | | |
| – | | |
| – | |
| | – | | |
| – | | |
| – | | |
| 19,556 | | |
| – | | |
| – | |
| $ | 97,750 | | |
$ | 97,750 | | |
| – | | |
| – | | |
| – | | |
| – | |
| | 95 | | |
| 89 | | |
| – | | |
| – | | |
| – | | |
| – | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| $ | 25.00 | | |
$ | 25.00 | | |
| – | | |
| – | | |
| – | | |
| – | |
| $ | 23.65 | | |
$ | 24.41 | | |
| – | | |
| – | | |
| – | | |
| – | |
See
Notes to Financial Statements.
| Semi-Annual
Report | January 31, 2023 |
27 |
| RiverNorth Opportunities Fund, Inc. |
Financial Highlights |
For
a share outstanding throughout the periods presented.
| (a) | Effective
July 16, 2018, the Board approved changing the fiscal year-end of the Fund from October
31 to July 31. |
| (b) | Calculated
using average common shares throughout the period. |
| (c) | Less
than ($0.005) per share. |
| (d) | Represents
the impact of the Fund's rights offering of 2,752,078 common shares in November 2022
at a subscription price per share based on a formula. For more details, please refer
to Note 8 of the Notes to Financial Statements. |
| (e) | Represents
the impact of the Fund's rights offering of 4,373,407 common shares in November 2021
at a subscription price per share based on a formula. For more details, please refer
to Note 8 of the Notes to Financial Statements. |
| (f) | Represents
the impact of the Fund's rights offering of 575,706 common shares in November 2020 at
a subscription price per share based on a formula. For more details, please refer to
Note 8 of the Notes to Financial Statements. |
| (g) | Represents
the impact of the Fund's rights offering of 2,163,193 common shares in November 2019
at a subscription price per share based on a formula. |
| (h) | Represents
the impact of the Fund's rights offering of 1,790,000 common shares in November 2018.
|
| (i) | Represents
the impact of the Fund's rights offering of 1,564,710 common shares in November 2017.
|
| (j) | Total
investment return is calculated assuming a purchase of a common share at the opening
on the first day and a sale at closing on the last day of each period reported. For purposes
of this calculation, dividends and distributions, if any, are assumed to be reinvested
at prices obtained under the Fund’s dividend reinvestment plan. Total investment
returns do not reflect brokerage commissions, if any. Periods less than one year are
not annualized. |
| (m) | Calculated
by subtracting the Fund's total liabilities (excluding the principal amount of Loan Payable)
from the Fund's total assets and dividing by the principal amount of the Loan Payable
and then multiplying by $1,000. |
| (n) | The
asset coverage ratio for a class of senior securities representing stock is calculated
as the Fund's total assets, less all liabilities and indebtedness not represented by
the Fund's senior securities, divided by secured senior securities representing indebtedness
plus the aggregate of the involuntary liquidation preference of secured senior securities
which are stock. With respect to the Preferred Stock, the asset coverage per share is
expressed in terms of dollar amounts per share of outstanding Preferred Stock (based
on a liquidation preference of $25). |
See
Notes to Financial Statements.
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
1.
ORGANIZATION
RiverNorth
Opportunities Fund, Inc. (the “Fund”) is a Maryland corporation registered as a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended (the “1940 Act”).
The
Fund’s investment objective is total return consisting of capital appreciation and current income. The Fund seeks to achieve
its investment objective by pursuing a tactical asset allocation strategy and opportunistically investing under normal circumstances
in closed-end funds, exchange-traded funds (“ETFs), business development companies (“BDCs” and collectively,
"Underlying Funds") and special purpose acquisition companies ("SPACs"). All Underlying Funds are registered
under the Securities Act of 1933, as amended (the “Securities Act”). The Fund incurs higher and additional expenses
when it invests in Underlying Funds. There is also the risk that the Fund may suffer losses due to the investment practices or
operations of the Underlying Funds. To the extent that the Fund invests in one or more Underlying Funds that concentrate in a
particular industry, the Fund would be vulnerable to factors affecting that industry and the concentrating Underlying Funds’
performance, and that of the Fund, may be more volatile than Underlying Funds that do not concentrate. In addition, one Underlying
Fund may purchase a security that another Underlying Fund is selling.
The
Fund may be converted to an open-end investment company at any time if approved by two-thirds of the Fund's Board of Directors
(the "Board") and at least two-thirds of the Fund’s total outstanding shares. If the Fund converted to an open-end
investment company, it would be required to redeem all preferred stock of the Fund then outstanding, if any (requiring in turn
that it liquidate a portion of its investment portfolio). Conversion to open-end status could also require the Fund to modify
certain investment restrictions and policies. The Board may at any time (but is not required to) propose conversion of the Fund
to open-end status, depending upon its judgment regarding the advisability of such action in light of circumstances then prevailing.
Under
normal circumstances, the Fund intends to maintain long positions in Underlying Funds, but may engage in short sales for investment
purposes. When the Fund engages in a short sale, it sells a security it does not own and, to complete the sale, borrows the same
security from a broker or other institution. The Fund may benefit from a short position when the shorted security decreases in
value.
2.
SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates: The preparation of the financial statements in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts
and disclosures, including the disclosure of contingent assets and liabilities, in the financial statements during the period
reported. Management believes the estimates and security valuations are appropriate; however, actual results may differ from those
estimates, and the security valuations reflected in the financial statements may differ from the value the Fund ultimately realizes
upon sale of the securities. The Fund is considered an investment company under GAAP and follows the accounting and reporting
guidance applicable to investment companies in the Financial Accounting Standards Board Accounting Standards Codification (“ASC”)
Topic 946. The financial statements have been prepared as of the close of the New York Stock Exchange (“NYSE”)
on January 31, 2023.
| Semi-Annual
Report | January 31, 2023 |
29 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
Portfolio
Valuation: The net asset value per share of the Fund is determined daily, on each day that the NYSE is open for trading, as
of the close of regular trading on the NYSE (normally 4:00 p.m. New York time). The Fund’s net asset value per share is
calculated by dividing the value of the Fund’s total assets, less its liabilities by the number of shares outstanding.
Effective
September 8, 2022, and pursuant to the requirements of Rule 2a-5 under the 1940 Act, the Board approved updated valuation procedures
for the Fund and designated the Adviser as the Fund's valuation designee to make all fair valuation determinations with respect
to the Fund's portfolio investments, subject to the Board's oversight. Marketable securities listed on foreign or U.S. securities
exchanges generally are valued at closing sale prices or, if there were no sales, at the mean between the closing bid and ask
prices on the exchange where such securities are primarily traded. Fixed income securities, including corporate bonds and convertible
corporate bonds are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services.
If the independent primary or secondary pricing service is unable to provide a price for a security, if the price provided by
the independent primary or secondary pricing service is deemed unreliable, or if events occurring after the close of the market
for a security but before the time as of which the Fund values its shares would materially affect net asset value, such security
will be valued at its fair value as determined in good faith under procedures approved by the valuation designee.
When
applicable, fair value of an investment is determined by the valuation designee. In fair valuing the Fund’s investments,
consideration is given to several factors, which may include, among others, the following: the fundamental business data relating
to the issuer, borrower, or counterparty; an evaluation of the forces which influence the market in which the investments are
purchased and sold; the type, size and cost of the investment; the information as to any transactions in or offers for the investment;
the price and extent of public trading in similar securities (or equity securities) of the issuer, or comparable companies; the
coupon payments, yield data/cash flow data; the quality, value and saleability of collateral, if any, securing the investment;
the business prospects of the issuer, borrower, or counterparty, as applicable, including any ability to obtain money or resources
from a parent or affiliate and an assessment of the issuer’s, borrower’s, or counterparty’s management; the
prospects for the industry of the issuer, borrower, or counterparty, as applicable, and multiples (of earnings and/or cash flow)
being paid for similar businesses in that industry; one or more independent broker quotes for the sale price of the portfolio
security; and other relevant factors.
Securities
Transactions and Investment Income: Investment security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income, which includes accretion of discounts and amortization of premiums calculated
using yield to maturity, is accrued and recorded as earned. Realized gains and losses from securities transactions and unrealized
appreciation and depreciation of securities are determined using the specific identification method for both financial reporting
and tax purposes.
Preferred
Stock: In accordance with ASC 480-10-25, the Fund's Series A Term preferred shares have been classified as equity on the Statement
of Assets and Liabilities. Refer to "Note 7. Cumulative Perpetual Preferred Stock" for further details.
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
Fair
Value Measurements: Investments and derivatives in the Fund are recorded at their fair value. The Fund discloses the classification
of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly
to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs
may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset
or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs
reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset
or liability that are developed based on the best information available.
Various
inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used
fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls
is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated
input levels are not necessarily an indication of the risk or liquidity associated with these investments.
These
inputs are categorized in the following hierarchy under applicable financial accounting standards:
| Level 1 – |
Unadjusted quoted
prices in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access
at the measurement date; |
| Level 2 – |
Quoted prices which
are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are
observable (either directly or indirectly) for substantially the full term of the asset or liability; and |
| Level 3 – |
Significant unobservable
prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little
or no market activity for the asset or liability at the measurement date. |
| Semi-Annual
Report | January 31, 2023 |
31 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
Special
Purpose Acquisition Company Risk: The Fund may invest in SPACs. SPACs are collective investment structures that pool funds
in order to seek potential acquisition opportunities. SPACs are generally publicly traded companies that raise funds through an
initial public offering (“IPO”) for the purpose of acquiring or merging with another company to be identified subsequent
to the SPAC’s IPO. The securities of a SPAC are often issued in “units” that include one share of common stock
and one right or warrant (or partial right or warrant) conveying the right to purchase additional shares or partial shares. Unless
and until an acquisition is completed, a SPAC generally invests its assets (less an amount to cover expenses) in U.S. Government
securities, money market fund securities and cash. SPACs and similar entities may be blank check companies with no operating history
or ongoing business other than to seek a potential acquisition. Accordingly, the value of their securities is particularly dependent
on the ability of the entity’s management to identify and complete a profitable acquisition. Certain SPACs may seek acquisitions
only in limited industries or regions, which may increase the volatility of their prices. If an acquisition or merger that meets
the requirements for the SPAC is not completed within a predetermined period of time, the invested funds are returned to the entity’s
shareholders, less certain permitted expenses. Accordingly, any rights or warrants issued by the SPAC will expire worthless. Certain
private investments in SPACs may be illiquid and/or be subject to restrictions on resale. Additionally, the Fund may acquire certain
private rights and other interests issued by a SPAC (commonly referred to as “founder shares”), which may be subject
to forfeiture or expire worthless and which typically have more limited liquidity than SPAC shares issued in an IPO. To the extent
the SPAC is invested in cash or similar securities, this may impact a Fund’s ability to meet its investment objective.
Private
Debt Risk: The Fund may invest in notes issued by private funds (“private debt”). Private debt often may be illiquid
and is typically not listed on an exchange and traded less actively than similar securities issued by public funds. For certain
private debt, trading may only be possible through the assistance of the broker who originally brought the security to the market
and has a relationship with the issuer. Due to the limited trading market, independent pricing services may be unable to provide
a price for private debt, and as such the fair value of the securities may be determined in good faith under procedures approved
by the Board, which typically will include the use of one or more independent broker quotes.
Rights
and Warrants Risks: Warrants are securities giving the holder the right, but not the obligation, to buy the stock of an issuer
at a given price (generally higher than the value of the stock at the time of issuance) during a specified period or perpetually.
Warrants do not carry with them the right to dividends or voting rights with respect to the securities that they entitle their
holder to purchase and they do not represent any rights in the assets of the issuer. As a result, warrants may be considered to
have more speculative characteristics than certain other types of investments. In addition, the value of a warrant does not necessarily
change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to its expiration
date.
Rights
are usually granted to existing shareholders of a corporation to subscribe to shares of a new issue of common stock before it
is issued to the public. The right entitles its holder to buy common stock
at a specified price. Rights have similar features to warrants, except that the life of a right is typically much shorter, usually
a few weeks.
| Semi-Annual
Report | January 31, 2023 |
33 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
On
October 28, 2020, the SEC adopted Rule 18f-4 under the 1940 Act providing for the regulation of the use of derivatives and certain
related instruments by registered investment companies. Rule 18f-4 prescribes specific value-at-risk leverage limits for certain
derivatives users. In addition, Rule 18f-4 requires certain derivatives users to adopt and implement a derivatives risk management
program (including the appointment of a derivatives risk manager and the implementation of certain testing requirements) and prescribes
reporting requirements in respect of derivatives. Subject to certain conditions, if a fund qualifies as a “limited derivatives
user,” as defined in Rule 18f-4, it is not subject to the full requirements of Rule 18f-4. In connection with the adoption
of Rule 18f-4, the SEC rescinded certain of its prior guidance regarding asset segregation and coverage requirements in respect
of derivatives transactions and related instruments. The Fund was required to comply with Rule 18f-4 beginning August 19, 2022
and has adopted procedures for investing in derivatives and other transactions in compliance with Rule 18f-4.Rule 18f-4 under
the 1940 Act requires funds that invest in derivatives above a specified amount to adopt and implement a derivatives risk management
program ("DRMP") administered by a derivatives risk manager that is appointed by and overseen by the fund's board of
trustees, and to comply with an outer limit on fund leverage risk based on value at risk, or "VaR." The Fund has established
a DRMP and appointed a derivatives risk manager to administer the DRMP, consistent with Rule 18f-4.
During
the six months ended January 31, 2023, the Fund invested in rights and warrants, which are disclosed in the Statement of Investments.
The
effect of derivative instruments on the Statement of Assets and Liabilities as of January 31, 2023:
| | |
Asset Derivatives | |
| |
| Risk Exposure | |
Statement of Assets and Liabilities Location | |
Value | |
| Equity Contracts (Rights) | |
Investments, at value | |
$ | 190,689 | |
| Equity Contracts (Warrants) | |
Investments, at value | |
| 413,909 | |
| | |
| |
$ | 604,598 | |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
The
effect of derivative instruments on the Statement of Operations for the six months ended January 31, 2023:
| Risk Exposure | |
Statement of Operations Location | |
Realized
Gain/(Loss)
on Derivatives | | |
Change in
Unrealized
Appreciation/
(Depreciation)
on Derivatives | |
| Equity Contracts (Rights) | |
Net realized gain/(loss) on investments/ Net change in unrealized appreciation/depreciation on investments | |
$ | (25,576 | ) | |
$ | 95,379 | |
| Equity Contracts (Warrants) | |
Net realized gain/(loss) on investments/ Net change in unrealized appreciation/depreciation on investments | |
| (380,444 | ) | |
| 348,497 | |
| Total | |
| |
$ | (406,020 | ) | |
$ | 443,876 | |
The
Fund’s average fair value of rights and warrants held for the six months ended January 31, 2023 were $146,915 and $384,575
respectively.
Market
and Geopolitical Risk: The value of your investment in the Fund is based on the market prices of the securities the Fund holds.
These prices change daily due to economic and other events that affect markets generally, as well as those that affect particular
regions, countries, industries, companies or governments. These price movements, sometimes called volatility, may be greater or
less depending on the types of securities the Fund owns and the markets in which the securities trade. The increasing interconnectivity
between global economies and financial markets increases the likelihood that events or conditions in one region or financial market
may adversely impact issuers in a different country, region or financial market. Securities in the Fund’s portfolio may
underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources,
natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence
of global events similar to those in recent years, such as terrorist attacks around the world, natural disasters, social and political
discord or debt crises and downgrades, among others, may result in market volatility and may have long term effects on both the
U.S. and global financial markets. It is difficult to predict when similar events affecting the U.S. or global financial markets
may occur, the effects that such events may have and the duration of those effects. Any such event(s) could have a significant
adverse impact on the value and risk profile of the Fund’s portfolio. There is a risk that you may lose money by investing
in the Fund.
Other: The
Fund holds certain investments which pay dividends to their shareholders based upon available funds from operations. It is
possible for these dividends to exceed the underlying investments’ taxable earnings and profits resulting in the
excess portion of such dividends being designated as a return of capital. Distributions received from investments in
securities that represent
a return of capital or long-term capital gains are recorded as a reduction of the cost of investments or as a realized gain, respectively.
| Semi-Annual
Report | January 31, 2023 |
35 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January
31, 2023 (Unaudited)
3.
INVESTMENT ADVISORY AND OTHER AGREEMENTS
Effective
October 1, 2022, RiverNorth Capital Management, LLC ("RiverNorth") serves as the adviser to the Fund under the Fund's
new Investment Advisory Agreement with RiverNorth (the "Advisory Agreement"). Pursuant to the Advisory Agreement, the
Fund pays RiverNorth an annual management fee of 1.30% of the Fund’s average daily managed assets, calculated as the total
assets of the Fund, including assets attributable to leverage, less liabilities other than debt representing leverage and any
preferred stock that may be outstanding, for the services and facilities it provides to the Fund (the “Unified Management
Fee”). Out of the Unified Management Fee, the Adviser will pay substantially all expenses of the Fund, including the compensation
of the Sub-Adviser, the cost of transfer agency, custody, fund administration, legal, audit, independent directors and other services,
except for costs, including interest expenses, of borrowing money or engaging in other types of leverage financing including,
without limit, through the use by the Fund of tender option bond transactions or preferred shares, distribution fees or expenses,
brokerage expenses, taxes and governmental fees, fees and expenses of any underlying funds in which the Fund invests, dividend
and interest expense on short positions, fees and expenses of the legal counsel for the Fund's independent directors, fees and
expenses associated with shareholder meetings involving certain non-routine matters, shareholder proposals or contested elections,
costs associated with any future share offerings, tender offers and other share repurchases and redemptions, and other extraordinary
expenses not incurred in the ordinary course of the Fund’s business. The Unified Management Fee is designed to pay substantially
all of the Fund’s expenses and to compensate the Adviser for providing services for the Fund.
Formerly,
ALPS Advisors, Inc. (“AAI”) served as the Fund’s investment adviser pursuant to an Investment Advisory Agreement
with the Fund. As compensation for its services to the Fund, AAI received an annual investment advisory fee of 1.00% based on
the Fund’s average daily Managed Assets (as defined below). Formerly RiverNorth served as the sub-adviser to the Fund pursuant
to an Investment Sub-Advisory Agreement between AAI and RiverNorth. As compensation for RiverNorth's services to the Fund as sub-adviser,
AAI paid RiverNorth an annual fee of 0.85% based on the Fund’s average daily Managed Assets.
ALPS
Fund Services, Inc. (‘‘AFS’’) serves as administrator to the Fund. Under an Administration, Bookkeeping
and Pricing Services Agreement, AFS is responsible for calculating the net asset values, providing additional fund accounting
and tax services, and providing fund administration and compliance-related services to the Fund. AFS is entitled to receive a
monthly fee, accrued daily based on the Fund’s average Managed Assets, as defined below, plus a fixed fee for completion
of certain regulatory filings and reimbursement for certain out-of-pocket expenses. Effective October 1, 2022, these fees are
paid by the Adviser, not the Fund, out of the Unified Management Fee.
DST
Systems, Inc. (‘‘DST’’), the parent company of AFS, serves as the Transfer Agent to the Fund. Under the
Transfer Agency Agreement, DST is responsible for maintaining all shareholder records of the Fund. DST is entitled to receive
an annual minimum fee of $22,500 per share class outstanding, plus out-of-pocket expenses. DST is a wholly-owned subsidiary of
SS&C Technologies Holdings, Inc. (“SS&C”), a publicly traded company listed on the NASDAQ Global Select Market.
Effective October 1, 2022, these fees are paid by the Adviser, not the Fund, out of the Unified Management Fee.
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
The Fund pays no salaries or compensation
to its officers or to interested Directors employed by the Adviser. For their services, the Directors of the Fund, who are not
employed by the Adviser, receive an annual retainer in the amount of $17,000, an additional $2,000 for attending each meeting of
the Board and $1,000 for attending a special meeting of the Board. In addition, the Independent Chairman receives an additional
$10,000 annually. The Directors not employed by the Adviser, are also reimbursed for all reasonable out-of-pocket expenses relating
to attendance at meetings of the Board. Effective October 1, 2022, these fees are paid by the Adviser, not the Fund, out of the
Unified Management Fee.
Certain officers of the Fund are also employees
of AAI and AFS. A Director is an officer of RiverNorth.
Managed Assets: For these purposes,
the term Managed Assets is defined as the total assets of the Fund, including assets attributable to leverage, minus liabilities
(other than debt representing leverage and any preferred stock that may be outstanding), calculated as of 4:00 p.m. Eastern time
on such day or as of such other time or times as the Board may determine in accordance with the provisions of applicable law and
of the declaration and bylaws of the Fund and with resolutions of the Board as from time to time in force.
4. NEW ACCOUNTING PRONOUNCEMENTS AND RULE
ISSUANCES
In December 2020, the SEC voted to adopt
a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes requirements for
determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to
perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market
quotations are “readily available” for purposes of Section 2(a)(41) of the 1940 Act, which requires a fund to fair
value a security when market quotations are not readily available, and the threshold for determining whether a fund must fair value
a security. The SEC also adopted new Rule 31a-4 under the 1940 Act, which sets forth the recordkeeping requirements associated
with fair value determinations. Finally, the SEC rescinded previously issued guidance on related issues, including the role of
a board in determining fair value and the accounting and auditing of fund investments. Rule 2a-5 and Rule 31a-4 became effective
on March 8, 2021, with a compliance date of September 8, 2022. Management has accessed the potential impact of the new rules on
the Fund's financial statements and the implementation does not have a material impact on the Fund's financial statements.
5. LEVERAGE
The Fund may use leverage for investment
purposes, which may include the use of borrowings, the issuance of preferred stock, and/or the use of derivatives or other transactions
that may provide leverage (such as the investment of proceeds received from selling securities short). The Adviser will assess
whether or not to engage in leverage based on its assessment of conditions in the debt and credit markets. Leverage, if used, may
take the form of a borrowing or the issuance of preferred stock, although the Fund currently anticipates that leverage will primarily
be obtained through the use of bank borrowings or other similar term loans.
The provisions of the 1940 Act further
provide that the Fund may borrow or issue notes or debt securities in an amount up to 33 1/3% of its total assets or may issue
preferred shares in an amount up to 50% of the Fund’s total assets (including the proceeds from leverage). Notwithstanding
each of the limits discussed above, the Fund may enter into derivatives or other transactions (e.g., total return swaps) that may
provide leverage (other than through borrowings or the issuance of preferred stock), but which are not subject to the above foregoing
limitations, if the Fund earmarks or segregates liquid assets (or enters into offsetting positions) in accordance with applicable
SEC regulations and interpretations to cover its obligations under those transactions and instruments. However, these transactions
will entail additional expenses (e.g., transaction costs) which will be borne by the Fund.
| Semi-Annual Report | January 31, 2023 |
37 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
If the net rate of return on the Fund’s
investments purchased with the leverage proceeds exceeds the interest or dividend rate payable on the leverage, such excess earnings
will be available to pay higher dividends to the Fund’s stockholders. If the net rate of return on the Fund’s investments
purchased with leverage proceeds does not exceed the costs of leverage, the return to stockholders will be less than if leverage
had not been used. The use of leverage magnifies gains and losses to stockholders. Since the stockholders pay all expenses related
to the issuance of debt or use of leverage, any use of leverage would create a greater risk of loss for stockholders than if leverage
is not used. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.
The Fund entered into a $65,000,000 credit
agreement for margin financing with Pershing LLC (the “Pershing Credit Agreement”). Per the Pershing Credit Agreement,
the Fund may borrow at an interest rate of 0.85% plus the Overnight Bank Funding Rate. Prior to March 20, 2022, the Fund borrowed
at an interest rate of 1.10% plus the Overnight Bank Funding Rate.
There was no outstanding balance on the
credit facility during the six months ended January 31, 2023.
6. DISTRIBUTIONS TO COMMON SHAREHOLDERS
The Fund intends to make regular monthly
distributions to stockholders at a constant and fixed (but not guaranteed) rate that is reset annually to a rate equal to a percentage
of the average of the Fund’s NAV per share (the “Distribution Amount”), as reported for the final five trading
days of the preceding calendar year (the “Distribution Rate Calculation”). The Distribution Amount is set by the Board
and may be adjusted from time to time. The Fund’s intention is that monthly distributions paid to stockholders throughout
a calendar year will be at least equal to the Distribution Amount (plus any additional amounts that may be required to be included
in a distribution for federal or excise tax purposes) and that, on the close of the calendar year, the Distribution Amount applicable
to the following calendar year will be reset based upon the new results of the Distribution Rate Calculation.
Dividends and distributions may be payable
in cash or shares of common stock, with stockholders having the option to receive additional common stock in lieu of cash. The
Fund may at times, in its discretion, pay out less than the entire amount of net investment income earned in any particular period
and may at times pay out such accumulated undistributed income in addition to net investment income earned in other periods in
order to permit the fund to maintain a more stable level of distributions. As a result, the dividend paid by the Fund to common
stockholders for any particular period may be more or less than the amount of net investment income earned by the Fund during such
period. Any distribution that is treated as a return of capital generally will reduce a shareholder’s basis in his or her
shares, which may increase the capital gain or reduce the capital loss realized upon the sale of such shares. Any amounts received
in excess of a shareholder’s basis are generally treated as capital gain, assuming the shares are held as capital assets.
The Fund’s ability to maintain a stable level of distributions to stockholders will depend on a number of factors, including
the stability of income received from its investments and the costs of any leverage. As portfolio and market conditions change,
the amount of dividends on the Fund’s common stock could change. For federal income tax purposes, the Fund is required to
distribute substantially all of its net investment income each year to both reduce its federal income tax liability and to avoid
a potential federal excise tax. The Fund intends to distribute all realized net capital gains, if any, at least annually.
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
7. CUMULATIVE PERPETUAL PREFERRED STOCK
At January 31, 2023, the Fund had issued
and outstanding 3,910,000 shares of Series A Cumulative Perpetual Preferred Stock, listed under trading symbol RIVPRA on the NYSE,
with a par value of $0.0001 per share and a liquidation preference of $25.00 per share plus accrued and unpaid dividends (whether
or not declared). The Fund issued 3,910,000 shares of Series A Cumulative Perpetual Preferred Stock on April 20, 2022. The Series
A Cumulative Perpetual Preferred Stock is entitled to voting rights and a dividend at a rate of 6.00% per year, paid quarterly,
based on the $25.00 liquidation preference before the common stock is entitled to receive any dividends. The Series A Cumulative
Perpetual Preferred Stock is generally not redeemable at the Fund’s option prior to May 15, 2027, and is subject to mandatory
redemption by the Fund in certain circumstances. On or after May 15, 2027, the Fund may redeem in whole, or from time to time in
part, outstanding Series A Cumulative Perpetual Preferred Stock at a redemption price per share equal to the per share liquidation
preference of $25.00 per share, plus accumulated and unpaid dividends, if any, through the date of redemption.
| Series | |
First
Redemption Date | |
Fixed Rate | | |
Shares
Outstanding | | |
Aggregate
Liquidation
Preference | | |
Fair Value | |
| Series A | |
May 15, 2027 | |
| 6.000% | | |
| 3,910,000 | | |
$ | 97,750,000 | | |
$ | 93,879,100 | |
8. CAPITAL TRANSACTIONS
The Fund’s authorized capital stock
consists of 37,500,000 shares of common stock, $0.0001 par value per share, all of which is initially classified as common shares.
Under the rules of the NYSE applicable to listed companies, the Fund is required to hold an annual meeting of stockholders in each
year.
Under the Fund’s Charter, the Board
is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock and authorize the issuance
of shares of stock without obtaining stockholder approval. Also, the Fund’s Board, with the approval of a majority of the
entire Board, but without any action by the stockholders of the Fund, may amend the Fund’s Charter from time to time to increase
or decrease the aggregate number of shares of stock of the Fund or the number of shares of stock of any class or series that the
Fund has authority to issue.
During the years ended July 31, 2021 and
January 31, 2023, the Board approved rights offerings to participating shareholders of record who were allowed to subscribe for
new common shares of the Fund. Record date shareholders received one right for each common share held on the respective record
dates. For every three rights held, a holder of the rights was entitled to buy one new common share of the Fund. Record date shareholders
who fully exercised all rights initially issued to them in the primary subscription were entitled to buy those common shares that
were not purchased by other record date shareholders. The Fund issued new shares of common stock at 95% of NAV per share for the
October 2, 2020 rights offering, and at 97.5% of NAV per share for the October 1, 2021 rights offering. Offering costs were charged
to paid-in-capital upon the exercise of the rights.
| Semi-Annual Report | January 31, 2023 |
39 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
The shares of common stock issued, subscription
price, and offering costs for the rights offerings were as follows:
| Record Date | |
Expiration
Date | |
Shares of
common
stock
issued | | |
Subscription
price | | |
Gross
Proceeds | | |
Offering
costs | | |
Net Proceeds | |
| October 1, 2021 | |
November 5, 2021 | |
| 4,373,407 | | |
$ | 16.81 | | |
$ | 73,516,972 | | |
$ | 191,237 | | |
$ | 73,325,735 | |
| October 14, 2022 | |
November 8, 2022 | |
| 2,752,078 | | |
$ | 11.97 | | |
$ | 32,942,374 | | |
$ | 154,306 | | |
$ | 32,788,068 | |
On August 31, 2018, the Fund entered into
a sales agreement with Jones Trading Institutional Services LLC (“Jones”), under which the Fund may from time to time
offer and sell up to 3,300,000 of the Fund's common stock in an “at-the-market” offering. On November 11, 2020, the
agreement with Jones was terminated and the Fund entered into a distribution agreement with ALPS Distributors, Inc. (“ADI”),
pursuant to which the Fund may offer and sell up to 3,196,130 shares of the Fund's common stock from time to time through ADI.
On September 17, 2021, the Fund entered into a new distribution agreement with ADI, pursuant to which the Fund may offer and sell
an additional 5,000,000 shares of the Fund's common stock from time to time through ADI, for a total of 8,196,130 shares.
The shares of common stock issued, gross
proceeds from the sale of shares, and commissions to Jones and ADI were as follows:
| Period Ended | |
Shares of
common stock
issued | | |
Gross Proceeds | | |
Commissions | | |
Offering Costs | | |
Net Proceeds | |
| July 31, 2022 | |
| 1,335,578 | | |
$ | 22,707,554 | | |
$ | 227,219 | * | |
$ | 14,966 | | |
$ | 22,465,369 | |
| January 31, 2023 | |
| 345,717 | | |
$ | 5,144,378 | | |
$ | 51,562 | * | |
$ | 8,378 | | |
$ | 5,084,438 | |
| * | Includes commissions in the amount of $45,415 and $10,289
retained by the Fund's related party distributor, ADI for the year ended July 31, 2022 and the six months ended January 31, 2023,
respectively. |
The Fund's 2020 rights offering and previous
at-the-market offerings were made under the shelf registration statement that was initially effective with the SEC on July 26,
2018. Offering costs incurred through January 31, 2023 as a result of the Fund's shelf registration statement initially effective
with the SEC on September 17, 2021 are approximately $859,430. The Fund's 2021 rights offerings, the current at-the-market offering
and preferred shares offering were made under this shelf registration statement. Management estimates an additional $477,972 of
costs expected to be incurred resulting in total offering costs of approximately $1,337,402. The Statement of Assets and Liabilities
reflects the current offering costs of $71,553 as accrued offering costs. These offering costs, as well as offering costs incurred
subsequent to January 31, 2023, will be charged to paid-in-capital upon the issuance of shares.
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
Additional shares of the Fund may be issued
under certain circumstances, including pursuant to the Fund’s Automatic Dividend Reinvestment Plan, as defined within the
Fund’s organizational documents. Additional information concerning the Automatic Dividend Reinvestment Plan is included within
this report.
9. PORTFOLIO INFORMATION
Purchases and Sales of Securities: For
the six months ended January 31, 2023, the cost of purchases and proceeds from sales of securities, excluding short-term securities,
were $145,738,399, and $131,743,094, respectively.
10. TAXES
Classification of Distributions:
Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes. The character of
distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization
for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was recorded by the Fund.
The tax character of distributions paid
during the year ended July 31, 2022 was as follows:
| | |
For the Year
Ended July 31, 2022 | |
| Ordinary Income (Common) | |
$ | 10,126,899 | |
| Ordinary Income (Preferred) | |
| 412,822 | |
| Tax-Exempt Income | |
| – | |
| Long-Term Capital Gain | |
| 5,642,848 | |
| Return of Capital | |
| 22,464,896 | |
| Total | |
$ | 38,647,465 | |
Tax Basis of Investments: Net unrealized
appreciation/(depreciation) of investments based on federal tax cost as of January 31, 2023, was as follows:
| Cost of investments for income tax purposes | |
$ | 230,861,396 | |
| Gross appreciation on investments (excess of value over tax cost)(a) | |
| 13,446,734 | |
| Gross depreciation on investments (excess of tax cost over value)(a) | |
| (15,165,383 | ) |
| Net unrealized depreciation on investments | |
$ | (1,718,649 | ) |
| (a) | Includes appreciation/(depreciation) on securities sold
short. |
| Semi-Annual Report | January 31, 2023 |
41 |
| RiverNorth Opportunities Fund, Inc. |
Notes to Financial Statements |
January 31, 2023 (Unaudited)
The differences between book-basis and
tax-basis are primarily due to wash sales, investments in passive foreign investment companies, and the tax treatment of certain
other investments.
Federal Income Tax Status: For federal
income tax purposes, the Fund currently qualifies, and intends to remain qualified, as a regulated investment company under the
provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, by distributing substantially all of its investment
company taxable net income and realized gain, not offset by capital loss carryforwards, if any, to its shareholders. No provision
for federal income taxes has been made.
As of and during the six months ended January
31, 2023, the Fund did not have a liability for any unrecognized tax benefits in the accompanying financial statements. The Fund
recognizes the interest and penalties, if any, related to the unrecognized tax benefits as income tax expense in the Statement
of Operations. Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax periods
and has concluded that no provision for federal income tax is required in the Fund’s financial statements. During the year,
the Fund did not incur any interest or penalties. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s
tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations
which is generally three years after the filing of the tax return.
11. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its officers and Directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund.
Additionally, in the normal course of business, the Fund enters into contracts with service providers that may contain general
indemnification clauses. The Fund’s maximum exposure under those arrangements is unknown, as this would involve future claims
that may be made against the Fund that have not yet occurred.
12. SUBSEQUENT EVENTS
Subsequent to January 31, 2023, the Fund
paid the following distributions:
| Ex-Date |
Record Date |
Payable Date |
Rate
(per share) |
| February 14, 2023 |
February 15, 2023 |
February 28, 2023 |
$0.1278 |
| March 14, 2023 |
March 15, 2023 |
March 31, 2023 |
$0.1278 |
| RiverNorth Opportunities Fund, Inc. |
Dividend Reinvestment Plan |
January 31, 2023 (Unaudited)
RiverNorth Opportunities Fund, Inc. (the
“Fund”) has a dividend reinvestment plan commonly referred to as an “opt-out” plan. Unless the registered
owner of the Fund’s shares of common stock (the “Common Shares”) elects to receive cash by contacting (the “Plan
Administrator”), all dividends declared on Common Shares will be automatically reinvested by the Plan Administrator for shareholders
in the Fund’s Automatic Dividend Reinvestment Plan (the “Plan”), in additional Common Shares. Common Shareholders
who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly
to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan
Administrator as dividend disbursing agent. Participation in the Plan is completely voluntary and may be terminated or resumed
at any time without penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise
such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Such
notice will be effective with respect to a particular dividend or other distribution (together, a “Dividend”). Some
brokers may automatically elect to receive cash on behalf of Common Shareholders and may re-invest that cash in additional Common
Shares.
Whenever the Fund declares a Dividend payable
in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares.
The Common Shares will be acquired by the Plan Administrator for the participants’ accounts, depending upon the circumstances
described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (“Newly Issued
Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open-Market Purchases”)
on the New York Stock Exchange (“NYSE”) or elsewhere. If, on the payment date for any Dividend, the closing market
price plus estimated brokerage commissions per Common Share is equal to or greater than the net asset value per Common Share, the
Plan Administrator will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly
Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the
Dividend by the Fund’s net asset value per Common Share on the payment date. If, on the payment date for any Dividend, the
net asset value per Common Share is greater than the closing market value plus estimated brokerage commissions (i.e., the Fund’s
Common Shares are trading at a discount), the Plan Administrator will invest the Dividend amount in Common Shares acquired on behalf
of the participants in Open-Market Purchases.
In the event of a market discount on the
payment date for any Dividend, the Plan Administrator will have until the last business day before the next date on which the Common
Shares trade on an “ex-dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the
“Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases. It is contemplated
that the Fund will pay monthly income Dividends. If, before the Plan Administrator has completed its Open-Market Purchases, the
market price per Common Share exceeds the net asset value per Common Share, the average per Common Share purchase price paid by
the Plan Administrator may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares
than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty
with respect to Open-Market Purchases, the Plan provides that if the Plan Administrator is unable to invest the full Dividend amount
in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period,
the Plan Administrator may cease making Open-Market Purchases and may invest the uninvested portion of the Dividend amount in Newly
Issued Common Shares at the net asset value per Common Share at the close of business on the Last Purchase Date.
| Semi-Annual Report | January 31, 2023 |
43 |
| RiverNorth Opportunities Fund, Inc. |
Dividend Reinvestment Plan |
January 31, 2023 (Unaudited)
The Plan Administrator maintains all shareholders’
accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders
for tax records. Common Shares in the account of each Plan participant will be held by the Plan Administrator on behalf of the
Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Administrator
will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with
the instructions of the participants.
Beneficial owners of Common Shares who
hold their Common Shares in the name of a broker or nominee should contact the broker or nominee to determine whether and how they
may participate in the Plan. In the case of Common Shareholders such as banks, brokers or nominees which hold shares for others
who are the beneficial owners, the Plan Administrator will administer the Plan on the basis of the number of Common Shares certified
from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with
respect to Common Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions
incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any
federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request
a sale of Common Shares through the Plan Administrator are subject to brokerage commissions.
The Fund reserves the right to amend or
terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves
the right to amend the Plan to include a service charge payable by the participants.
All correspondence or questions concerning
the Plan should be directed to the Plan Administrator at Mail Stop: RiverNorth Opp, 430 West 7th Street, Kansas City, MO 64105-1407.
| RiverNorth Opportunities Fund, Inc. |
Additional Information |
January 31, 2023 (Unaudited)
PORTFOLIO HOLDINGS
The Fund files a complete schedule of portfolio holdings
with the U.S. Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form
N-PORT within 60 days after the end of the period. Copies of the Fund’s Form N-PORT are available without a charge, upon
request, by contacting the Fund at 1-(844)-569-4750 and on the SEC’s website at http://www.sec.gov.
PROXY VOTING
A description of the Fund’s proxy voting policies
and procedures is available (1) without charge, upon request, by calling 1-(844)-569-4750, (2) on the Fund’s website located
at http://www.rivernorthcef.com, or (3) on the SEC’s website at http://www.sec.gov. Information regarding how the Fund voted
proxies relating to portfolio securities during the twelve-month period ended June 30th is available on the SEC’s website
at http://www.sec.gov.
UNAUDITED TAX INFORMATION
Of the distributions paid by the Fund from ordinary
income for the calendar year ended December 31, 2022, the following percentages met the requirements to be treated as qualifying
for the corporate dividends received deduction and qualified dividend income:
| |
Dividend Received Deduction |
Qualified Dividend Income |
| RiverNorth Opportunities Fund |
5.80% |
2.54% |
In early 2023, if applicable, shareholders of record
received this information for the distributions paid to them by the Funds during the calendar year 2022 via Form 1099. The Fund
will notify shareholders in early 2024 of amounts paid to them by the Fund, if any, during the calendar year 2023.
Pursuant to Section 852(b)(3) of the Internal Revenue
Code, RiverNorth Opportunities Fund designated $5,642,848 as long term capital gain dividends.
| Semi-Annual Report | January 31, 2023 |
45 |
| RiverNorth
Opportunities Fund, Inc. |
Data
Privacy Policies and Procedures |
| FACTS |
WHAT
DOES RIVERNORTH OPPORTUNITIES FUND DO WITH YOUR PERSONAL INFORMATION? |
| WHY? |
Financial
companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all
sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read
this notice carefully to understand what we do. |
| WHAT? |
The
types of personal information we collect and share depend on the product or service you have with us. This information can
include: |
| |
●
Social Security number
●
Assets
●
Retirement Assets
●
Transaction History
●
Checking Account Information |
●
Purchase History
●
Account Balances
●
Account Transactions
●
Wire Transfer Instructions |
| |
When
you are no longer our customer, we continue to share your information as described in this notice. |
| HOW? |
All
financial companies need to share customers’ personal information to run their everyday business. In the section below,
we list the reasons financial companies can share their customers’ personal information; the reasons RiverNorth Opportunities
Fund chooses to share; and whether you can limit this sharing. |
REASONS
WE CAN SHARE YOUR
PERSONAL INFORMATION |
DOES
RIVERNORTH
OPPORTUNITIES
INCOME FUND
SHARE? |
CAN
YOU
LIMIT THIS
SHARING? |
| For
our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court
orders and legal investigations, or report to credit bureaus |
Yes |
No |
| For
our marketing purposes – to offer our products and services to you |
No |
We
don't share |
| For
joint marketing with other financial companies |
No |
We
don't share |
| For
our affiliates’ everyday business purposes – information about your transactions and experiences |
No |
We
don't share |
| For
our affiliates’ everyday business purposes – information about your creditworthiness |
No |
We
don't share |
| For
nonaffiliates to market to you |
No |
We
don't share |
| QUESTIONS? |
Call
1-(844)-569-4750 |
|
|
| RiverNorth
Opportunities Fund, Inc. |
Data
Privacy Policies and Procedures |
| WHO
WE ARE |
|
| Who
is providing this notice? |
RiverNorth
Opportunities Fund |
| WHAT
WE DO |
|
| How
does RiverNorth Opportunities Fund protect my personal information? |
To
protect your personal information from unauthorized access and use, we use security measures
that comply with federal law. These measures include computer safeguards and secured
files and buildings.
Our
service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic
personal information. |
| How
does RiverNorth Opportunities Fund collect my personal information? |
We
collect your personal information, for example, when you
●
Open an account
●
Provide account information
●
Give us your contact information
●
Make deposits or withdrawals from your account
●
Make a wire transfer
●
Tell us where to send the money
●
Tells us who receives the money
●
Show your government-issued ID
●
Show your driver’s license
We
also collect your personal information from other companies. |
| Why
can’t I limit all sharing? |
Federal
law gives you the right to limit only:
●
Sharing for affiliates’ everyday business purposes – information about your
creditworthiness
●
Affiliates from using your information to market to you
●
Sharing for nonaffiliates to market to you
State
laws and individual companies may give you additional rights to limit sharing. |
| DEFINITIONS |
|
| Affiliates |
Companies
related by common ownership or control. They can be financial and nonfinancial companies.
●
RiverNorth Opportunities Fund does not share with our affiliates for marketing purposes. |
| Nonaffiliates |
Companies
not related by common ownership or control. They can be financial and nonfinancial companies.
●
RiverNorth Opportunities Fund does not share with nonaffiliates so they can market to you. |
| Joint
marketing |
A
formal agreement between nonaffiliated financial companies that together market financial
products or services to you.
●
RiverNorth Opportunities Fund does not jointly market. |
| Semi-Annual Report | January 31, 2023 |
47 |