|
ASSETS:
|
|
|
|
|
Investments, at value
|
|
$
|
165,103,498
|
|
|
Cash
|
|
|
182,588
|
|
|
Deposit with broker for securities sold short
|
|
|
13,780,390
|
|
|
Receivable for investments sold
|
|
|
3,070,638
|
|
|
Capital stock receivable
|
|
|
505,601
|
|
|
Receivable for reinvested fund shares
|
|
|
167,424
|
|
|
Interest receivable
|
|
|
67,166
|
|
|
Dividends receivable
|
|
|
50,943
|
|
|
Deferred offering costs (Note 6)
|
|
|
237
|
|
|
Prepaid and other assets
|
|
|
33,468
|
|
|
Total Assets
|
|
|
182,961,953
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Securities sold short (Proceeds $13,350,368)
|
|
|
13,561,373
|
|
|
Payable for investments purchased
|
|
|
1,777,037
|
|
|
Payable to adviser
|
|
|
142,394
|
|
|
Payable to administrator
|
|
|
48,936
|
|
|
Payable to transfer agent
|
|
|
6,701
|
|
|
Payable for director fees
|
|
|
33,852
|
|
|
Payable for custodian fees
|
|
|
14,278
|
|
|
Payable for professional fees
|
|
|
16,832
|
|
|
Payable for printing fees
|
|
|
137
|
|
|
Other payables
|
|
|
5,805
|
|
|
Total Liabilities
|
|
|
15,607,345
|
|
|
Net Assets
|
|
$
|
167,354,608
|
|
|
|
|
|
|
|
|
NET ASSETS CONSIST OF:
|
|
|
|
|
|
Paid-in capital
|
|
$
|
157,223,692
|
|
|
Total distributable earnings/(accumulated deficit)
|
|
|
10,130,916
|
|
|
Net Assets
|
|
$
|
167,354,608
|
|
|
|
|
|
|
|
|
PRICING OF SHARES:
|
|
|
|
|
|
Net Assets
|
|
$
|
167,354,608
|
|
|
Shares of common stock outstanding (37,500,000 of shares authorized, at $0.0001 par value per share)
|
|
|
10,157,100
|
|
|
Net asset value per share
|
|
$
|
16.48
|
|
|
|
|
|
|
|
|
Cost of Investments
|
|
$
|
152,428,125
|
|
See
Notes to Financial Statements.
|
RiverNorth
Opportunities Fund, Inc.
|
Statement
of Operations
|
|
For
the Six Months Ended January 31, 2021 (Unaudited)
|
|
INVESTMENT INCOME:
|
|
|
|
|
Interest
|
|
$
|
240,102
|
|
|
Dividends
|
|
|
4,144,072
|
|
|
Total Investment Income
|
|
|
4,384,174
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
Investment advisory fees
|
|
|
762,100
|
|
|
Administration fees
|
|
|
124,511
|
|
|
Transfer agent fees
|
|
|
12,186
|
|
|
Dividend expense - short sales
|
|
|
271,607
|
|
|
Interest expense on loan
|
|
|
7,878
|
|
|
Commitment fee on loan
|
|
|
9,063
|
|
|
Audit and tax fees
|
|
|
12,888
|
|
|
Legal fees
|
|
|
71,270
|
|
|
Custodian fees
|
|
|
16,766
|
|
|
Director fees
|
|
|
76,929
|
|
|
Printing fees
|
|
|
31,318
|
|
|
Insurance fees
|
|
|
12,867
|
|
|
Other expenses
|
|
|
16,468
|
|
|
Total Expenses
|
|
|
1,425,851
|
|
|
Net Investment Income
|
|
|
2,958,323
|
|
|
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
|
|
|
|
|
|
Net realized gain/(loss) on:
|
|
|
|
|
|
Investments
|
|
|
9,702,808
|
|
|
Securities sold short
|
|
|
(102,324
|
)
|
|
Net realized gain
|
|
|
9,600,484
|
|
|
Net change in unrealized appreciation/depreciation on:
|
|
|
|
|
|
Investments
|
|
|
14,572,153
|
|
|
Securities sold short
|
|
|
(188,271
|
)
|
|
Net change in unrealized appreciation/depreciation
|
|
|
14,383,882
|
|
|
Net Realized and Unrealized Gain on Investments
|
|
|
23,984,366
|
|
|
Net Increase in Net Assets Resulting from Operations
|
|
$
|
26,942,689
|
|
See
Notes to Financial Statements.
|
Semi-Annual
Report | January 31, 2021
|
17
|
|
RiverNorth
Opportunities Fund, Inc.
|
|
Statements of Changes
in Net Assets
|
|
|
|
For the Six
|
|
|
|
|
|
|
|
Months Ended
|
|
|
For the
|
|
|
|
|
January 31, 2021
|
|
|
Year Ended
|
|
|
|
|
(Unaudited)
|
|
|
July 31, 2020
|
|
|
OPERATIONS:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
2,958,323
|
|
|
$
|
3,581,914
|
|
|
Net realized gain/(loss)
|
|
|
9,600,484
|
|
|
|
(3,553,777
|
)
|
|
Long-term capital gains from other investment companies
|
|
|
—
|
|
|
|
781,074
|
|
|
Net change in unrealized appreciation/depreciation
|
|
|
14,383,882
|
|
|
|
(2,752,984
|
)
|
|
Net increase/(decrease) in net assets resulting from
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
26,942,689
|
|
|
|
(1,943,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL DISTRIBUTIONS TO SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
From distributable earnings
|
|
|
(10,396,451
|
)
|
|
|
(4,130,066
|
)
|
|
From tax return of capital
|
|
|
—
|
|
|
|
(14,461,878
|
)
|
|
Net decrease in net assets from distributions to
|
|
|
|
|
|
|
|
|
|
shareholders
|
|
|
(10,396,451
|
)
|
|
|
(18,591,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE TRANSACTIONS:
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of shares, net of offering costs
|
|
|
11,453,421
|
|
|
|
34,880,752
|
|
|
Dividend Reinvestment
|
|
|
188,479
|
|
|
|
157,190
|
|
|
Net increase in net assets from capital share
|
|
|
|
|
|
|
|
|
|
transactions
|
|
|
11,641,900
|
|
|
|
35,037,942
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets
|
|
|
28,188,138
|
|
|
|
14,502,225
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
139,166,470
|
|
|
|
124,664,245
|
|
|
End of period
|
|
$
|
167,354,608
|
|
|
$
|
139,166,470
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION:
|
|
|
|
|
|
|
|
|
|
Share Transactions:
|
|
|
|
|
|
|
|
|
|
Shares outstanding - beginning of period
|
|
|
9,348,465
|
|
|
|
7,167,356
|
|
|
Shares issued in connection with public offering
|
|
|
796,065
|
|
|
|
2,171,093
|
|
|
Shares issued as reinvestment of dividends
|
|
|
12,570
|
|
|
|
10,016
|
|
|
Shares outstanding - end of period
|
|
|
10,157,100
|
|
|
|
9,348,465
|
|
See
Notes to Financial Statements.
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 shareholders:
|
|
From
net investment income
|
|
From
net realized gains
|
|
From
tax return of capital
|
|
Total
distributions
|
|
Capital
share transactions:
|
|
Dilutive
effect of rights offering
|
|
Common
share offering costs charged to paid-in capital
|
|
Total
capital share transactions
|
|
Net
increase/(decrease) in net asset value
|
|
Net
asset value - end of period
|
|
Market
price - end of period
|
|
Total
Return(h)
|
|
Total
Return - Market Price(h)
|
|
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)(k)
|
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, 2021
(Unaudited)
|
|
|
For
the
Year Ended
July 31, 2020
|
|
|
For
the
Year Ended
July 31, 2019
|
|
|
For
the
Period Ended
July 31, 2018(a)
|
|
|
For
the
Year Ended
October 31, 2017
|
|
|
For
the Period
December 24, 2015
(Commencement of
Operations) to
October 31, 2016
|
|
|
$
|
14.89
|
|
|
$
|
17.39
|
|
|
$
|
19.07
|
|
|
$
|
20.48
|
|
|
$
|
19.72
|
|
|
$
|
19.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.31
|
|
|
|
0.41
|
|
|
|
0.55
|
|
|
|
0.44
|
|
|
|
0.42
|
|
|
|
0.68
|
|
|
|
2.46
|
|
|
|
(0.56
|
)
|
|
|
0.29
|
|
|
|
0.40
|
|
|
|
2.23
|
|
|
|
1.86
|
|
|
|
2.77
|
|
|
|
(0.15
|
)
|
|
|
0.84
|
|
|
|
0.84
|
|
|
|
2.65
|
|
|
|
2.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.07
|
)
|
|
|
(0.51
|
)
|
|
|
(0.63
|
)
|
|
|
(0.47
|
)
|
|
|
(0.53
|
)
|
|
|
(1.73
|
)
|
|
|
—
|
|
|
|
(0.00
|
)(c)
|
|
|
(0.41
|
)
|
|
|
(1.34
|
)
|
|
|
(1.36
|
)
|
|
|
(0.45
|
)
|
|
|
—
|
|
|
|
(1.60
|
)
|
|
|
(1.20
|
)
|
|
|
(0.08
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.07
|
)
|
|
|
(2.11
|
)
|
|
|
(2.24
|
)
|
|
|
(1.89
|
)
|
|
|
(1.89
|
)
|
|
|
(2.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.08
|
)(d)
|
|
|
(0.21
|
)(e)
|
|
|
(0.26
|
)(f)
|
|
|
(0.32
|
)(g)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.02
|
)
|
|
|
(0.04
|
)
|
|
|
—
|
|
|
|
(0.04
|
)
|
|
|
(0.11
|
)
|
|
|
(0.24
|
)
|
|
|
(0.28
|
)
|
|
|
(0.36
|
)
|
|
|
—
|
|
|
|
(0.04
|
)
|
|
|
1.59
|
|
|
|
(2.50
|
)
|
|
|
(1.68
|
)
|
|
|
(1.41
|
)
|
|
|
0.76
|
|
|
|
0.32
|
|
|
$
|
16.48
|
|
|
$
|
14.89
|
|
|
$
|
17.39
|
|
|
$
|
19.07
|
|
|
$
|
20.48
|
|
|
$
|
19.72
|
|
|
$
|
16.85
|
|
|
$
|
14.81
|
|
|
$
|
17.38
|
|
|
$
|
19.14
|
|
|
$
|
20.50
|
|
|
$
|
19.65
|
|
|
|
18.70
|
%
|
|
|
(1.75
|
%)
|
|
|
3.77
|
%
|
|
|
2.56
|
%
|
|
|
14.11
|
%
|
|
|
13.67
|
%
|
|
|
22.02
|
%
|
|
|
(2.22
|
%)
|
|
|
3.33
|
%
|
|
|
2.84
|
%
|
|
|
14.63
|
%
|
|
|
9.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
167,355
|
|
|
$
|
139,166
|
|
|
$
|
124,664
|
|
|
$
|
101,624
|
|
|
$
|
76,927
|
|
|
$
|
74,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.89
|
%(i)
|
|
|
2.06
|
%
|
|
|
2.17
|
%
|
|
|
2.07
|
%(i)
|
|
|
2.21
|
%
|
|
|
1.69
|
%(i)
|
|
|
3.92
|
%(i)
|
|
|
2.59
|
%
|
|
|
3.11
|
%
|
|
|
3.03
|
%(i)
|
|
|
2.03
|
%
|
|
|
4.03
|
%(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.52
|
%(i)
|
|
|
1.54
|
%
|
|
|
1.56
|
%
|
|
|
1.72
|
%(i)
|
|
|
1.75
|
%
|
|
|
N/A
|
|
|
|
4.29
|
%(i)
|
|
|
3.11
|
%
|
|
|
3.72
|
%
|
|
|
2.68
|
%(i)
|
|
|
1.57
|
%
|
|
|
N/A
|
|
|
|
100
|
%(j)
|
|
|
133
|
%
|
|
|
76
|
%
|
|
|
74
|
%(j)
|
|
|
162
|
%
|
|
|
113
|
%(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
$
|
7,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
See
Notes to Financial Statements.
|
|
|
Semi-Annual
Report | January 31, 2021
|
21
|
|
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 shares throughout the period.
|
|
|
(c)
|
Less than ($0.005) per share.
|
|
|
(d)
|
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 6 of the Notes to Financial Statements.
|
|
|
(e)
|
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. For more details please refer to Note 6 of the Notes to Financial Statements.
|
|
|
(f)
|
Represents the impact of the Fund’s rights offering of 1,790,000 common shares in November 2018.
|
|
|
(g)
|
Represents the impact of the Fund’s rights offering of 1,564,710 common shares in November 2017.
|
|
|
(h)
|
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.
|
|
|
(k)
|
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.
|
See Notes to Financial Statements.
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (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 and exchange-traded funds (“ETFs” and collectively, “Underlying Funds”) with a focus
on risk-adjusted returns. Underlying Funds also may include business development companies (“BDCs”) 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 (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.
The
Fund’s Articles of Amendment and Restatement (“Charter”) provides that, during calendar year 2021, the Fund will
call a shareholder meeting for the purpose of voting to determine whether the Fund should convert to an open-end management investment
company (such meeting date, as may be adjourned, the “Conversion Vote Date”). Such shareholder meeting may be adjourned
or postponed in accordance with the By-Laws of the Fund to a date in calendar year 2021. A vote on such Conversion Vote Date to
convert the Fund to an open-end management investment company under the Declaration requires approval by a majority of the Fund’s
total outstanding shares. A majority is defined as greater than 50% of the Fund’s total outstanding shares. If approved
by shareholders on the Conversion Vote Date, the Fund will seek to convert to an open-end management investment company within
12 months of such approval. If the requisite number of votes to convert the Fund to an open-end management investment company
is not obtained on the Conversion Vote Date, the Fund will continue in operation as a closed-end management investment company.
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.
|
Semi-Annual
Report | January 31, 2021
|
23
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
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 Topic
946. The financial statements have been prepared as of the close of the New York Stock Exchange (“NYSE”) on January
31, 2021.
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.
The
Board has established the following procedures for valuation of the Fund’s assets under normal market conditions. 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 Board.
When
applicable, fair value of an investment is determined by the Fund’s Fair Valuation Committee as a designee of the Board.
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.
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
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, 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.
Fair
Value Measurements: Investments in the Fund are recorded at their estimated 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, 2021
|
25
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
more
risky than long positions (purchases) in securities because the maximum sustainable loss on a security purchased is limited to
the amount paid for the security plus the transaction costs, whereas there is no maximum attainable price of the shorted security.
Therefore, in theory, securities sold short have unlimited risk. Short selling will also result in higher transaction costs (such
as interest and dividends), and may result in higher taxes, which reduce a fund’s return.
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. 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.
If an acquisition 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. Because SPACs and similar entities are in essence blank check companies
without operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent
on the ability of the entity’s management to identify and complete a profitable acquisition. There is no guarantee that
the SPACs in which the Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable.
Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices.
Investments in SPACs, which are typically traded in the over-the-counter market, may be considered illiquid and/or be subject
to restrictions on resale.
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.
|
Semi-Annual
Report | January 31, 2021
|
27
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
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.
During
the six months ended January 31, 2021, the Fund invested in rights and warrants, which are disclosed in the Statement of Investments.
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.
The
effect of derivative instruments on the Statement of Assets and Liabilities as of January 31, 2021:
|
|
|
Asset Derivatives
|
|
|
|
|
|
|
Statement of Assets and Liabilities
|
|
|
|
|
Risk Exposure
|
|
Location
|
|
Value
|
|
|
Equity Contracts (Rights)
|
|
Investments, at value
|
|
$
|
168,812
|
|
|
Equity Contracts (Warrants)
|
|
Investments, at value
|
|
|
1,732,740
|
|
|
|
|
|
|
$
|
1,901,552
|
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
The
effect of derivative instruments on the Statement of Operations for the six months ended January 31, 2021:
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Realized
|
|
|
Appreciation/
|
|
|
|
|
|
|
Gain/(Loss)
|
|
|
(Depreciation)
|
|
|
Risk Exposure
|
|
Statement of Operations Location
|
|
on Derivatives
|
|
|
on Derivatives
|
|
Equity Contracts
(Rights)
|
|
Net realized gain/(loss) on investments/ Net change in unrealized appreciation/depreciation
on investments
|
|
$
|
91,345
|
|
|
$
|
101,879
|
|
Equity Contracts
(Warrants)
|
|
Net realized gain/(loss) on investments/ Net change in unrealized appreciation/depreciation
on investments
|
|
|
1,830,777
|
|
|
|
756,699
|
|
|
Total
|
|
|
|
$
|
1,922,122
|
|
|
$
|
858,578
|
|
The
Fund’s average value of rights and warrants held for the six months ended January 31, 2021 were $134,553 and $1,364,942
respectively.
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.
3.
INVESTMENT ADVISORY AND OTHER AGREEMENTS
ALPS
Advisors, Inc. (“AAI”) serves as the Fund’s investment adviser pursuant to an Investment Advisory Agreement
with the Fund. As compensation for its services to the Fund, AAI receives an annual investment advisory fee of 1.00% based on
the Fund’s average daily Managed Assets (as defined below). Pursuant to an Investment Sub-Advisory Agreement, AAI has retained
RiverNorth Capital Management, LLC (“RiverNorth” or the “Sub-Adviser”) as the Fund’s sub-adviser and
AAI pays RiverNorth an annual fee of 0.85% based on the Fund’s average daily Managed Assets.
ALPS
Fund Services, Inc. (‘‘AFS’’), an affiliate of AAI, 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.
|
Semi-Annual
Report | January 31, 2021
|
29
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
DST
Systems, Inc. (‘‘DST’’), the parent company of AAI and 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 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.
The
Fund pays no salaries or compensation to its officers or to interested Directors employed by the Adviser or Sub-Adviser. For their
services, the Directors of the Fund, which are not affiliated with the Adviser or Sub-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, which are not affiliated
with the Adviser or Sub-Adviser, are also reimbursed for all reasonable out-of-pocket expenses relating to attendance at meetings
of the Board.
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.
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 Fund may utilize leverage in an aggregate amount of up to 15% of the Fund’s Managed Assets immediately
after such borrowings or issuance. However, the Fund is not required to decrease its use of leverage if leverage exceeds 15%,
but is less than 20% of the Fund’s Managed Assets due solely to changes in market conditions. Based on market conditions
at the time, the Fund may use such leverage in amounts that represent less than 15% of the Fund’s Managed Assets. The Sub-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.
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
However,
these transactions will entail additional expenses (e.g., transaction costs) which will be borne by the Fund.
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.
Prior
to its termination on November 17, 2020, the Fund had entered into a $15,000,000 secured line of credit agreement with State Street
Bank and Trust Company (“SSB”). For borrowing under this credit agreement, the Fund was charged either an interest
rate of:
|
|
(1)
|
1.00%
(per annum) plus the One-Month LIBOR (London Interbank Offered Rate)
|
or
|
|
(2)
|
as
of any day, the higher of (a) 1.05% (per annum) plus the daily Federal Funds Rate as
in effect on that day, or (b) 1.05% (per annum) plus the One-Month LIBOR as in effect
on that day.
|
For
borrowing under this credit agreement, the commitment fee on the daily unused loan balance of the line of credit accrued at a
rate of 0.25%. The Fund pledged its investment securities as the collateral for the line of credit per the terms of the agreement.
The average annualized interest rate charged, the average outstanding loan payable and the maximum outstanding loan payable for
the period from August 1, 2020 through November 17, 2020 was as follows:
|
Average Interest Rate*
|
|
|
1.16
|
%
|
|
Average Outstanding Loan Payable*
|
|
$
|
5,416,667
|
|
|
Maximum Outstanding Loan Payable
|
|
$
|
7,500,000
|
|
|
|
*
|
The
average is calculated based on the actual number of days with an outstanding loan payable.
|
On
November 25, 2020, 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 1.10% plus the Overnight
Bank Funding Rate. During the period from November 25, 2020 through January 31, 2021, the Fund had no balance outstanding under
the Pershing Credit Agreement.
5.
DISTRIBUTIONS
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
|
Semi-Annual
Report | January 31, 2021
|
31
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
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.
6.
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 year ended July 31, 2020 and the six month period ended January 31, 2021, 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
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
common
stock at 95% of NAV per share for the September 30, 2019 and October 2, 2020 rights offerings. Offering costs were charged to
paid-in-capital upon the exercise of the rights.
The
shares of common stock issued, subscription price, and offering costs for the rights offerings were as follows:
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
|
|
common stock
|
|
|
Subscription
|
|
|
|
|
|
Record Date
|
|
Expiration Date
|
|
issued
|
|
|
price
|
|
|
Offering costs
|
|
|
September 30, 2019
|
|
November 1, 2019
|
|
|
2,163,193
|
|
|
|
$16.20
|
|
|
|
$280,908
|
|
|
October 2, 2020
|
|
November 6, 2020
|
|
|
575,706
|
|
|
|
$14.08
|
|
|
|
$199,371
|
|
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 the distribution agreement with ADI, the Fund may offer and sell up to
3,196,130 of the Fund’s common stock from time to time through ADI.
The
shares of common stock issued, gross proceeds from the sale of shares, and commissions to Jones and ADI were as follows:
|
|
|
|
Shares of common
|
|
|
Gross
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
stock issued
|
|
|
Proceeds
|
|
|
Commissions
|
|
|
Net Proceeds
|
|
|
July 31, 2020
|
|
|
|
7,900
|
|
|
$
|
120,939
|
|
|
$
|
1,513
|
|
|
$
|
119,426
|
|
|
January 31, 2021
|
|
|
|
226,647
|
|
|
$
|
3,722,608
|
|
|
$
|
39,646
|
|
|
$
|
3,682,962
|
|
Offering
costs incurred through January, 31, 2021 as a result of the Fund’s shelf registration statement initially effective with the SEC
on July 26, 2018 are approximately $694,851. The Fund’s 2019 and 2020 rights offerings and the at-the-market offering were made
under this shelf registration statement. Management estimates an additional $135,031 of costs expected to be incurred resulting
in total offering costs of approximately $829,882. The Statement of Assets and Liabilities reflects the current offering costs
of $237 as deferred offering costs. These offering costs, as well as offering costs incurred subsequent to January 31, 2021, will
be charged to paid-in-capital upon the issuance of shares.
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.
7.
RESTRICTED SECURITIES
As
of January 31, 2021, investments in securities included a security that is considered restricted. Restricted securities are often
purchased in private placement transactions, are not registered under the Securities Act of 1933, and may have contractual restrictions
on resale.
|
Semi-Annual
Report | January 31, 2021
|
33
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Value as
|
|
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Description
|
|
Date
|
|
|
Cost
|
|
|
Value
|
|
|
Net Assets
|
|
|
Business Development Corp. of America
|
|
|
12/3/2019
|
|
|
$
|
725,000
|
|
|
$
|
724,454
|
|
|
|
0.43
|
%
|
|
TOTAL
|
|
|
|
|
|
$
|
725,000
|
|
|
$
|
724,454
|
|
|
|
0.43
|
%
|
8.
PORTFOLIO INFORMATION
Purchases
and Sales of Securities: For the six months ended January 31, 2021, the cost of purchases and proceeds from sales of securities,
excluding short-term securities, were $142,325,176, and $148,806,047, respectively.
9.
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
amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized
at fiscal year-end and are not available for the six months ended January 31, 2021.
The
tax character of distributions paid during the year ended July 31, 2020 was as follows:
|
|
|
For the Year
|
|
|
|
|
Ended July 31, 2020
|
|
|
Ordinary Income
|
|
$
|
4,006,046
|
|
|
Tax-Exempt Income
|
|
|
124,020
|
|
|
Return of Capital
|
|
|
14,461,878
|
|
|
Total
|
|
$
|
18,591,944
|
|
Tax
Basis of Investments: Net unrealized appreciation/(depreciation) of investments based on federal tax cost as of January 31,
2021, was as follows:
|
Cost of investments for income tax purposes
|
|
$
|
142,289,125
|
|
|
Gross appreciation on investments (excess of value over tax cost)(a)
|
|
|
11,051,549
|
|
|
Gross depreciation on investments (excess of tax cost over value)(a)
|
|
|
(1,122,206
|
)
|
|
Net unrealized appreciation on investments
|
|
$
|
9,929,343
|
|
|
(a) Includes appreciation/(depreciation)
on securities sold short.
|
|
RiverNorth Opportunities
Fund, Inc.
|
Notes to Financial Statements
|
January
31, 2021 (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, 2021, 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.
10.
RELATED PARTY TRANSACTIONS
The
Fund engaged in cross trades with other affiliated funds during the six month period ended January 31, 2021 pursuant to Rule 17a-7
under the 1940 Act. Generally, cross trading is the buying or selling of portfolio securities between funds to which the Adviser
or Sub-Adviser serves as the investment adviser or sub-adviser. The Board previously adopted procedures that apply to transactions
between the Fund and its affiliates pursuant to Rule 17a-7. At its regularly scheduled meetings, the Board reviews such transactions
as of the most current calendar quarter for compliance with the requirements set forth by Rule 17a-7 and the Fund’s procedures.
The procedures require that the transactions be a purchase or sale for no consideration other than cash payment against prompt
delivery of a security for which market quotations are readily available, and be consistent with the investment policies of the
Fund. During the six month period ended January 31, 2021, the Fund purchased securities in the amount of $4,505,848.
11.
SUBSEQUENT EVENTS
Distributions
Subsequent
to January 31, 2021, the Fund paid the following distributions:
|
|
|
|
Rate
|
|
Ex-Date
|
Record
Date
|
Payable
Date
|
(per
share)
|
|
February 10,
2021
|
February
11, 2021
|
February
26, 2021
|
$0.17
|
|
March 16,
2021
|
March
17, 2021
|
March
31, 2021
|
$0.17
|
|
Semi-Annual
Report | January 31, 2021
|
35
|
|
|
Approval
of Investment Advisory
|
|
RiverNorth
Opportunities Fund, Inc.
|
and
Sub-Advisory Agreements
|
|
|
January
31, 2021 (Unaudited)
|
At
the August 11, 2020 meeting (“Meeting”) of the Board of Directors (the “Board” or the “Directors”)
of RiverNorth Opportunities Fund, Inc. (the “Fund”), the Board, including those Directors who are not “interested
persons” of the Fund (the “Independent Directors”), as that term is defined in the Investment Company Act of
1940, as amended (the “1940 Act”), renewed an Investment Advisory Agreement between the Fund and ALPS Advisors, Inc.
(the “Adviser” or “AAI”), and an Investment Sub-Advisory Agreement, between the Adviser and RiverNorth
Capital Management, LLC (the “Sub-Adviser” or “RiverNorth”), with respect to the Fund (collectively, the
“Agreements”), upon the terms and conditions set forth therein.
The
Directors relied upon the advice of independent legal counsel and their own business judgment in determining the material factors
to be considered in evaluating the Agreements and the weight to be given to each such factor. The Directors’ conclusions
were based on an evaluation of all of the information provided and were not the result of any one factor. Moreover, each Director
may have afforded different weight to the various factors in reaching conclusions with respect to the Advisory Agreement and the
Sub-Advisory Agreement. Although not meant to be all-inclusive, the following discussion summarizes the factors considered and
conclusions reached by the Directors in the executive session and at the Meeting in determining to renew the Agreements.
Nature,
Extent, and Quality of Services. In examining the nature, extent and quality of the investment advisory services provided
by AAI, the Directors considered the qualifications, experience and capability of AAI’s management and other personnel and
the extent of care and conscientiousness with which AAI performs its duties. In this regard, the Directors considered, among other
matters, the process by which AAI performs oversight of the Fund, including ongoing due diligence regarding product structure,
resources, personnel, technology, performance, compliance and oversight of RiverNorth. The Board noted that the day to day team
servicing the Fund remained consistent and noted the quality and expertise of this team.
With
respect to the nature, extent and quality of the services provided by RiverNorth, the Directors considered RiverNorth’s
investment management process it uses in managing the assets of the Fund, including the experience and capability of RiverNorth’s
management and other personnel responsible for the portfolio management of the Fund and compliance with the Fund’s investment
policies and restrictions. The Board noted that the RiverNorth personnel servicing the Fund continued to be consistent. The Directors
also considered the continued favorable assessment provided by AAI as to the nature and quality of the services provided by RiverNorth
and the ability of RiverNorth to fulfill its contractual obligations. The partnership between AAI and RiverNorth were considered
by the Board, noting that the expanding operational and investment efficiencies of this partnership continue to benefit the Fund.
|
|
Approval
of Investment Advisory
|
|
RiverNorth
Opportunities Fund, Inc.
|
and
Sub-Advisory Agreements
|
|
|
January
31, 2021 (Unaudited)
|
Based
on the totality of the information considered, the Directors agreed that the Fund had already, and was likely to continue to benefit
from the nature, extent and quality of AAI’s and RiverNorth’s services based on their respective experience, operations
and resources and strong track record in their roles as the Fund’s adviser and sub-adviser, respectively.
Investment
Performance of the Fund. The Board reviewed the Fund’s investment performance over time and compared that performance
to other funds in a peer group comparison report from FUSE, an independent research firm that, among other services, provides
assistance to investment companies in connection with the advisory agreement approval process. The Board considered the Fund’s
NAV and market price returns relative to the returns for funds in the peer groups, noting on a NAV basis, the Fund had outperformed
the FUSE peer group median for the one-year, three-year and since inception periods. Using market price returns, the Directors
acknowledged that the Fund outperformed the FUSE peer group median return for the one-year and three-year periods. In comparison
to the benchmark, the Morningstar Moderate Aggressive Target Risk Index, the Board noted that the Fund underperformed for the
one-year, three-year and since inception periods. The Directors also considered the Fund’s strong risk adjusted returns
since inception, which they acknowledged were achieved despite the fact that the Fund has generally seen a bull-market since inception.
After considering all of the information provided, the Board agreed that the Fund’s performance supported the renewal of
the Agreements with AAI and RiverNorth.
Fees
and Expenses. The Board considered the fees payable under the Agreements and reviewed the information compiled by FUSE comparing
the Fund’s management fees and expense ratio to other funds in the peer group, the peer group created by RiverNorth, as
well as comparisons to fees paid by other funds advised by AAI and RiverNorth. It was noted that the Fund’s net management
fee and the Fund’s expense ratio (as a percentage of net assets) were both lower than the FUSE peer group medians. The Board
noted that the Fund was one of the smallest of any fund in either peer group, and accordingly, may not be benefiting from the
resulting economies of scale that these peer funds had achieved. Further, the Board noted the Fund’s management fee was
in-line or lower than most other CEFs advised by AAI after taking into account the sub-advisory fee paid by AAI to RiverNorth.
With regard to RiverNorth’s sub-advisory fee, the Directors considered that the fees charged by RiverNorth for its work
with the Fund were similar or lower to a majority of accounts managed by RiverNorth using similar strategies. The Directors further
considered AAI’s belief that the compensation payable to RiverNorth was reasonable, appropriate and fair in light of the
nature and quality of the services provided to the Fund.
The
Directors also noted the firms’ limited ability to control the Fund’s other expenses. Finally, the Directors considered
that these other expenses were more directly related to the size of the Fund, as these other Fund expenses generally were not
charged on an asset-level basis.
Profitability
and Economies of Scale. In reviewing the profitability information provided by each of AAI and RiverNorth, the Directors considered
whether the firms had realized (or would be expected to realize) economies of scale related to its work with the Fund such that
such economies should be shared with the Fund’s stockholders. The Board acknowledged that AAI had not yet begun to realize
profits indicating it had realized economies of scale with respect to its work with the Fund. The Board considered the information
provided by the Sub-Adviser regarding profitability from its relationship with the Fund. The Board noted that the Sub-Adviser’s
profitability was not a significant factor considered by the Board, as the sub-advisory fee is paid by the Adviser out of the
advisory fee
|
Semi-Annual
Report | January 31, 2021
|
37
|
|
|
Approval
of Investment Advisory
|
|
RiverNorth
Opportunities Fund, Inc.
|
and
Sub-Advisory Agreements
|
|
|
January
31, 2021 (Unaudited)
|
paid
to it by the Fund, and not by the Fund. With respect to whether assets had already risen, or would be expected to increase, to
a level such that economies of scale might be realized by AAI and RiverNorth, the Board considered each firm’s view that
the Fund’s closed-end structure limited the likelihood of significant future increases in the Fund’s asset levels
which would reach the point where the imposition of breakpoints in the management fees would be appropriate; noting the Fund’s
offerings had not changed this belief.
Indirect
Benefits. The Board considered any ancillary or indirect benefits that could accrue to AAI or RiverNorth as a result of their
relationships with the Fund. The Directors considered details related to certain marketing services provided by AAI, as well as
related to services that affiliates of AAI provided to the Fund: ALPS served as the Fund’s administrator and accountant,
and DST Systems, Inc., an affiliate of AAI and ALPS, served as the Fund’s transfer agent. The Board also considered that
RiverNorth did not expect to receive any such ancillary benefits beyond reputational benefits related to its role with Fund. The
Board concluded that the benefits accruing to AAI and RiverNorth by virtue of their relationships to the Fund appeared to be reasonable.
After
evaluation of the performance, fee and expense information and the profitability, ancillary benefits and other considerations
as described above, and in light of the nature, extent and quality of services provided by AAI and RiverNorth, the Board concluded
that the level of fees to be paid to each of AAI and RiverNorth was reasonable.
Conclusion.
Having requested and received such information from each of AAI and RiverNorth as the Board believed to be reasonably necessary
to evaluate the terms of the Agreements, and as assisted by the advice of independent counsel, the Board, including the Independent
Directors, concluded that renewal of the Agreements were in the best interests of the Fund and its stockholders.
|
RiverNorth
Opportunities Fund, Inc.
|
Dividend Reinvestment Plan
|
|
|
January
31, 2021 (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
|
Semi-Annual
Report | January 31, 2021
|
39
|
|
RiverNorth
Opportunities Fund, Inc.
|
Dividend Reinvestment Plan
|
|
|
January
31, 2021 (Unaudited)
|
Issued
Common Shares at the net asset value per Common Share at the close of business on the Last Purchase Date.
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, 2021 (Unaudited)
|
INVESTMENT
RESTRICTIONS
Except
as otherwise indicated, the Fund’s investment policies are not fundamental and may be changed without a vote of shareholders.
There can be no assurance the Fund’s investment objective will be met.
Any
investment restrictions herein that involve a maximum percentage of securities or assets shall not be considered to be violated
unless an excess over the percentage occurs immediately after and is caused by an acquisition or encumbrance of securities or
assets of, or borrowings by, the Fund.
As
a matter of fundamental policy, the Fund will not:
|
|
(1)
|
borrow
money, except as permitted under the 1940 Act, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time;
|
|
|
(2)
|
issue
senior securities, except as permitted under the 1940 Act and as interpreted or modified
by regulatory authority having jurisdiction, from time to time;
|
|
|
(3)
|
concentrate
its investments in a particular industry or group of industries (as the term “concentrate”
is used in the 1940 Act, as interpreted or modified by regulatory authority having jurisdiction,
from time to time), except to the extent that Underlying Funds in which the Fund invests
concentrate their investments in a particular industry or group of industries;
|
|
|
(4)
|
engage
in the business of underwriting securities issued by others, except to the extent that
the Fund may be deemed to be an underwriter in connection with the disposition of portfolio
securities;
|
|
|
(5)
|
purchase
or sell real estate, which term does not include securities of companies which deal in
real estate or mortgages or investments secured by real estate or interests therein,
except that the Fund reserves freedom of action to hold and to sell real estate acquired
as a result of the Fund’s ownership of securities;
|
|
|
(6)
|
purchase
or sell 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, future contracts and related options thereon, forward contracts,
swaps, caps, floors collars and any other financial instruments or from investing in
securities or other instruments backed by physical commodities or as otherwise permitted
by the 1940 Act and as interpreted or modified by regulatory authority having jurisdiction,
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;
|
|
|
(7)
|
With
respect to 75% of the Fund’s total assets, purchase the securities of any issuer
(except obligations of the United States Government and its instrumentalities and securities
of other investment companies) if, as a result, (a) more than 5% of the Fund’s
total assets would be invested in the securities of that issuer, or (b) the Fund would
hold more than 10% of the outstanding voting securities of that issuer; or
|
|
Semi-Annual
Report | January 31, 2021
|
41
|
|
RiverNorth
Opportunities Fund, Inc.
|
Additional Information
|
|
|
January
31, 2021 (Unaudited)
|
|
|
(8)
|
make
loans except as permitted under the 1940 Act and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
|
A
fundamental policy may not be changed without the approval of a majority of the outstanding voting securities of the Fund which,
under the 1940 Act and the rules thereunder and as used in this SAI, means the lesser of (1) 67% or more of the voting securities
present at such meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented
by proxy, or (2) more than 50% of the outstanding voting securities of the Fund.
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 1-855-830-1222 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
1-855-830-1222, (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, 2020, 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
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2.82%
|
8.05%
|
In
early 2021, if applicable, shareholders of record received this information for the distributions paid to them by the Funds during
the calendar year 2020 via Form 1099. The Fund will notify shareholders in early 2022 of amounts paid to them by the Fund, if
any, during the calendar year 2021.
CUSTODIAN
AND TRANSFER AGENT
State
Street Bank and Trust Company, located at State Street Financial Center, One Lincoln Street, Boston, MA 02111, serves as the Fund’s
custodian and maintains custody of the securities and cash of the Fund.
DST
Systems, Inc., located at 333 West 11th Street, 5th Floor, Kansas City, Missouri 64105, serves as the Fund’s transfer agent
and registrar.
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RiverNorth
Opportunities Fund, Inc.
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Additional Information
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|
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January
31, 2021 (Unaudited)
|
LEGAL
COUNSEL
Dechert
LLP, located at 1095 Avenue of the Americas, New York, New York 10036, serves as legal counsel to the Fund.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Cohen
& Company, Ltd. is the independent registered public accounting firm for the Fund.
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Semi-Annual
Report | January 31, 2021
|
43
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|
RiverNorth
Opportunities Fund, Inc.
|
Data
Privacy Policies and Procedures
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FACTS
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WHAT DOES RIVERNORTH OPPORTUNITIES
FUND DO WITH YOUR PERSONAL INFORMATION?
|
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WHY?
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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.
|
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WHAT?
|
The types of personal information we collect
and share depend on the product or service you have with us. This information can include:
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Social Security number
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Purchase History
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Assets
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Account Balances
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Retirement Assets
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Account Transactions
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Transaction History
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Wire Transfer Instructions
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Checking Account Information
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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
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No
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We don’t share
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For joint marketing with other financial companies
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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
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|
For nonaffiliates to market to you
|
No
|
We don’t share
|
|
QUESTIONS?
|
Call 1-855-838-9485
|
|
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.
|
|
|
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|
|
How
does RiverNorth
Opportunities
Fund collect my
personal
information?
|
We collect your personal information,
for example, when you
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●
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Open an account
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Provide account information
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Give us your contact information
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Make deposits or withdrawals from your account
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Make a wire transfer
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Tell us where to send the money
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Tells us who receives the money
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Show your government-issued ID
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Show your driver’s license
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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:
|
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●
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Sharing for affiliates’ everyday business
purposes – information about your creditworthiness
|
|
●
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Affiliates from using your information to market
to you
|
|
●
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Sharing for nonaffiliates to market to you
|
|
State laws and individual companies
may give you additional rights to limit sharing.
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DEFINITIONS
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|
|
Affiliates
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Companies related by common ownership
or control. They can be financial and nonfinancial companies.
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|
●
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RiverNorth Opportunities Fund does not share
with our affiliates for marketing purposes.
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|
Nonaffiliates
|
Companies not related by common ownership
or control. They can be financial and nonfinancial companies.
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|
●
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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.
|
|
●
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RiverNorth Opportunities Fund does not jointly
market.
|
|
Semi-Annual Report | January
31, 2021
|
45
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|
|
|
|
|
|
RiverNorth
Capital Management, LLC
|
ALPS
Advisors, Inc.
|
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325
N. LaSalle Street, Suite 645
|
1290
Broadway, Suite 1000
|
|
Chicago,
IL 60654
|
Denver,
CO 80203
|
Secondary
market support provided to the Fund by ALPS Advisors Inc.’s
affiliate, ALPS Portfolio Solutions Distributor, Inc., a FINRA
member.