| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
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.
| Annual Report | July 31,
2022 |
39 |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
During
the year ended July 31, 2022, 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 July 31, 2022:
| | |
Asset Derivatives | |
| |
| Risk Exposure | |
Statement of Assets and Liabilities
Location | |
Value | |
| Equity Contracts (Rights) | |
Investments, at fair value | |
$ | 156,540 | |
| Equity Contracts (Warrants) | |
Investments, at fair value | |
| 483,409 | |
| | |
| |
$ | 639,949 | |
The
effect of derivative instruments on the Statement of Operations for the year ended July 31, 2022:
| 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 | |
$ | 76,286 | | |
$ | (279,192 | ) |
| Equity Contracts (Warrants) | |
Net realized gain/(loss) on investments/ Net change in unrealized appreciation/depreciation on investments | |
| 145,728 | | |
| (1,446,042 | ) |
| Total | |
| |
$ | 222,014 | | |
$ | (1,725,234 | ) |
The
Fund’s average fair value of rights and warrants held for the year ended July 31, 2022 were $199,641 and $1,083,522 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.
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
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.
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 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.
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.
| Annual Report | July 31,
2022 |
41 |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
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 is currently assessing the potential
impact of the new rules on the Fund's financial statements and does not expect the implementation to 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 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. 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.
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
The
Fund has 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.
The
average annualized interest rate charged, the average outstanding loan payable and the maximum outstanding loan payable for the
year ended July 31, 2022 was as follows:
| Average Interest Rate* | |
| 1.23 | % |
| Average Outstanding Loan Payable* | |
$ | 37,277,372 | |
| Maximum Outstanding Loan Payable | |
$ | 60,000,000 | |
| * | The
average is calculated based on the actual number of days with an outstanding principal balance. |
At
July 31, 2022, the Fund had no principal balance outstanding.
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.
| Annual Report | July 31,
2022 |
43 |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
7.
CUMULATIVE PERPETUAL PREFERRED STOCK
At
July 31, 2022, 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 | | |
$ | 97,476,300 | |
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 July 31, 2022, 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.
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
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 2, 2020 | |
November 6, 2020 | | |
| 575,706 | | |
$ | 14.08 | | |
$ | 8,105,940 | | |
$ | 177,881 | | |
$ | 7,928,059 | |
| October 1, 2021 | |
November 5, 2021 | | |
| 4,373,407 | | |
$ | 16.81 | | |
$ | 73,516,972 | | |
$ | 191,237 | | |
$ | 73,325,735 | |
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, 2021 | | |
| 2,455,650 | | |
$ | 43,382,997 | | |
$ | 437,175 | * | |
$ | 194,394 | | |
$ | 42,751,428 | |
| July 31, 2022 | | |
| 1,335,578 | | |
$ | 22,707,554 | | |
$ | 227,219 | * | |
$ | 14,966 | | |
$ | 22,465,369 | |
| * | Includes
commissions in the amount of $84,904 and $45,415 retained by the Fund's related party
distributor, ADI for the years ended July 31, 2021 and July 31, 2022, 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 July 31, 2022 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 July 31, 2022, will be charged to paid-in-capital upon the issuance of
shares.
| Annual Report | July 31,
2022 |
45 |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
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.
RESTRICTED SECURITIES
As
of July 31, 2022, 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 release.
| Description |
Acquisition
Date |
Cost |
Fair
Value |
Value
as Percentage of Net
Assets |
| Business Development Corp. of America |
12/3/2019 |
$300,000 |
$289,759 |
0.11% |
10.
PORTFOLIO INFORMATION
Purchases
and Sales of Securities: For the year ended July 31, 2022, the cost of purchases and proceeds from sales of securities, excluding
short-term securities, were $509,480,573, and $354,408,603, respectively.
11.
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 and July 31, 2021 was as follows:
| | |
For the Year Ended July 31,
2022 | | |
For the Year Ended July 31,
2021 | |
| Ordinary Income (Common) | |
$ | 10,126,899 | | |
$ | 21,674,120 | |
| Ordinary Income (Preferred) | |
| 412,822 | | |
| – | |
| Tax-Exempt Income | |
| – | | |
| 172,302 | |
| Long-Term Capital Gain | |
| 5,642,848 | | |
| – | |
| Return of Capital | |
| 22,464,896 | | |
| – | |
| Total | |
$ | 38,647,465 | | |
$ | 21,846,422 | |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
Tax
Basis of Distributable Earnings: Tax components of distributable earnings are determined in accordance with income tax regulations
which may differ from composition of net assets reported under GAAP. For the year ended July 31, 2022, no differences were reclassified
between distributable earnings and paid-in capital. As of July 31, 2022, the components of distributable earnings on a tax basis
were as follows:
| Accumulated Capital and Other Losses | |
$ | (3,942,491 | ) |
| Unrealized Depreciation | |
| (15,006,590 | ) |
| Preferred Distributions Payable | |
| (1,221,788 | ) |
| Total | |
$ | (20,170,869 | ) |
Tax
Basis of Investments: Net unrealized appreciation/(depreciation) of investments based on federal tax cost as of July 31, 2022,
was as follows:
| Cost of investments for income tax purposes | |
$ | 359,354,816 | |
| Gross appreciation on investments (excess of value over tax cost)(a) | |
| 7,836,420 | |
| Gross depreciation on investments (excess of tax cost over value)(a) | |
| (22,843,010 | ) |
| Net unrealized depreciation on investments | |
$ | (15,006,590 | ) |
| (a) | Includes
appreciation/(depreciation) on securities sold short. |
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.
The
Fund elects to defer to the period ending July 31, 2023, post – October capital losses in the amount of:
| Fund | |
Amount | |
| Rivernorth Opportunities Fund, Inc. | |
$ | 3,007,666 | |
The
Fund elects to defer to the period ending July 31, 2023, specified late year ordinary losses in the amount of:
| Fund | |
Amount | |
| Rivernorth Opportunities Fund, Inc. | |
$ | 934,825 | |
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 year ended July 31, 2022, 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.
| Annual Report | July 31,
2022 |
47 |
| RiverNorth Opportunities
Fund, Inc. |
Notes
to Financial Statements |
July
31, 2022
12.
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.
13.
SUBSEQUENT EVENTS
Subsequent
to July 31, 2022, the Fund paid the following distributions:
| Ex-Date |
Record
Date |
Payable
Date |
Rate
(per share) |
| August 16, 2022 |
August
17, 2022 |
August 31, 2022 |
$0.17 |
| September 15, 2022 |
September
16, 2022 |
September 30, 2022 |
$0.17 |
Effective
October 1, 2022, RiverNorth Capital Management, LLC ("RiverNorth") will serve as the adviser to the Fund under the Fund's
new management agreement with RiverNorth (the "Management Agreement"). At a meeting of the Board of Directors held on
March 17, 2022, the Board considered and unanimously voted in favor of the Management Agreement between the Fund and RiverNorth.
Stockholders of the Fund received a related proxy statement describing the proposal and were asked to consider the approval of
the Management Agreement at a special stockholder meeting that took place on June 29, 2022. The Management Agreement will take
effect on October 1, 2022, and at that time, the Fund’s current investment advisory agreement with AAI and current sub-advisory
agreement RiverNorth will be terminated. For more information relating to the Board's consideration of the Management Agreement,
see Consideration and Approval of Advisory Agreement.
| RiverNorth
Opportunities Fund, Inc. |
Report
of Independent Registered Public Accounting Firm |
July
31, 2022
To
the Shareholders and Board of Directors of
RiverNorth
Opportunities Fund, Inc.
| RiverNorth Opportunities
Fund, Inc. |
Directors and Officers |
July
31, 2022 (Unaudited)
| (1) | Each
Director’s term is three years. |
| (2) | The
term “Fund Complex” means two or more registered investment companies that: |
| (a) | hold
themselves out to investors as related companies for purposes of investment and investor services; or |
| (b) | have
a common investment adviser or that have an investment adviser that is an affiliated person of the investment adviser of any of
the other registered investment companies. For Mr. Galley, Mr. Carter, Mr. Oakes and Mr. Hutchens, the Fund Complex consists of
the Fund, RiverNorth Managed Duration Municipal Income Fund Inc., RiverNorth Opportunistic Municipal Income Fund, Inc., RiverNorth
Specialty Finance Corporation, RiverNorth/DoubleLine Strategic Opportunity Fund, Inc., RiverNorth Funds (3 funds), RiverNorth
Flexible Municipal Income Fund, Inc., RiverNorth Flexible Municipal Income Fund II, Inc. and RiverNorth Managed Duration Municipal
Income Fund II, Inc. For Mr. Swanson, the Fund Complex consists of the Fund, RiverNorth Managed Duration Municipal Income Fund
Inc., RiverNorth Opportunistic Municipal Income Fund, Inc., RiverNorth Specialty Finance Corporation, RiverNorth/DoubleLine Strategic
Opportunity Fund, Inc., RiverNorth Funds (3 funds), RiverNorth Flexible Municipal Income Fund, Inc., RiverNorth Flexible Municipal
Income Fund II, Inc., RiverNorth Managed Duration Municipal Income Fund II, Inc., and ALPS Variable Investment Trust (7 funds). |
| | For
Mr. Raio, the Fund Complex consists of the Fund, RiverNorth Managed Duration Municipal Income Fund Inc., RiverNorth Opportunistic
Municipal Income Fund, Inc., RiverNorth Specialty Finance Corporation, RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.,
RiverNorth Flexible Municipal Income Fund, Inc., RiverNorth Flexible Municipal Income Fund II, Inc., and RiverNorth Managed Duration
Municipal Income Fund II, Inc. |
| (3) | The
numbers enclosed in the parentheticals represent the number of funds overseen in each respective directorship held by the Director.
Only includes public company directorships. |
| (4) | Officers
are elected annually. Each officer will hold such office until a successor has been elected by the Board. |
| (5) | Mr.
Galley is considered an “Interested Director” because of his affiliation with the Sub-Adviser. |
| (6) | Mr.
Raio is considered an “Interested Director” because of his current position as a director of FLX Distribution, which
the Sub-Adviser is an investor in and Mr. Galley is a Director of; and his prior affiliation with Wells Fargo Securities, LLC,
which previously served as a broker and underwriter for certain funds advised by the Sub-Adviser. |
| (7) | “Interested
Directors” refers to those Directors who constitute “interested persons” of the Fund as defined in the 1940
Act. |
The
Statement of Additional Information includes additional information about the Fund’s Directors and is available, without
charge, upon request by calling (toll-free) 1-(844)-569-4750.
| Annual Report | July 31,
2022 |
61 |
| RiverNorth Opportunities Fund, Inc. |
Additional Information |
July 31, 2022 (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
The Fund designate the following for federal income tax purposes
for the year ended July 31, 2022:
| |
Foreign Taxes Paid |
Foreign Source Income |
| RiverNorth Opportunities Fund |
$0 |
$0 |
| |
Tax-Exempt Percentage |
| RiverNorth Opportunities Fund |
0.00% |
Of the distributions paid by the Fund from
ordinary income for the calendar year ended December 31, 2021, 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 |
3.20% |
2.99% |
In early 2022, if applicable, shareholders
of record received this information for the distributions paid to them by the Funds during the calendar year 2021 via Form 1099.
The Fund will notify shareholders in early 2023 of amounts paid to them by the Fund, if any, during the calendar year 2022.
Pursuant to Section 852(b)(3) of the Internal
Revenue Code, RiverNorth Opportunities Fund designated $5,642,848 as long term capital gain dividends.
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.
| RiverNorth Opportunities Fund, Inc. |
Additional Information |
July 31, 2022 (Unaudited)
DST Systems, Inc., located at
333 West 11th Street, 5th Floor, Kansas City, Missouri 64105, serves as the Fund’s transfer agent and registrar.
LEGAL COUNSEL
Faegre Drinker Biddle & Reath LLP 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.
STOCKHOLDER MEETING RESULTS
On August 19, 2022, the Fund
held a Meeting of Stockholders to consider the proposals set forth below. The following votes were recorded:
Proposal 1: The election of two
(2) Directors of the Fund to a three-year term to expire at the Fund’s 2025 Annual Meeting of Stockholders or until their
successor is duly elected and qualified.
Election of David M. Swanson
as a Director of the Fund to a three-year term to expire at the Fund’s 2025 Annual Meeting of Stockholders or until his successor
is duly elected and qualified.
| | |
Shares Voted | | |
% of Shares Voted | |
| For | |
| 13,468,541 | | |
| 93.82 | % |
| Withheld | |
| 886,709 | | |
| 6.18 | % |
| Total | |
| 14,355,250 | | |
| 100.00 | % |
Election of Patrick W. Galley
as a Director of the Fund to a three-year term to expire at the Fund’s 2025 Annual Meeting of Stockholders or until his successor
is duly elected and qualified.
| | |
Shares Voted | | |
% of Shares Voted | |
| For | |
| 13,728,256 | | |
| 95.63 | % |
| Withheld | |
| 626,994 | | |
| 4.37 | % |
| Total | |
| 14,355,250 | | |
| 100.00 | % |
Proposal 2: The election of one
(1) Preferred Stock Director of the Fund to a three-year term to expire at the Fund’s 2025 Annual Meeting of Stockholders
or until their successor is duly elected and qualified.
Election of J. Wayne Hutchens
as a Director of the Preferred Shares to a three-year term to expire at the Fund’s 2025 Annual Meeting of Stockholders or
until his successor is duly elected and qualified.
| | |
Shares Voted | | |
% of Shares Voted | |
| For | |
| 1,552,488 | | |
| 84.38 | % |
| Withheld | |
| 287,333 | | |
| 15.62 | % |
| Total | |
| 1,839,821 | | |
| 100.00 | % |
| Annual Report | July 31, 2022 |
63 |
| RiverNorth Opportunities Fund, Inc. |
Additional Information |
July 31, 2022 (Unaudited)
On July 27, 2022, the Fund held a Meeting of Stockholders to
consider the proposal set forth below. The following votes were recorded:
Proposal 1: To approve a new investment advisory agreement
with RiverNorth Capital Management, LLC for the Fund
| | |
Shares Voted | | |
% of Shares Voted | |
| For | |
| 9,489,405 | | |
| 83.10 | % |
| Withheld | |
| 1,930,395 | | |
| 16.90 | % |
| Total | |
| 11,419,800 | | |
| 100.00 | % |
| RiverNorth Opportunities Fund, Inc. |
Consideration and Approval
of Advisory Agreement |
July 31, 2022 (Unaudited)
At the March 17, 2022 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”), approved
an management agreement between the Fund and RiverNorth Capital Management, LLC (the “Adviser” or “RiverNorth”),
with respect to the Fund (the “Agreement”), 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
Agreement 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 Agreement. Although not meant to be all-inclusive, the following
portion of the minutes summarizes the factors considered and conclusions reached by the Directors in the executive session and
at the Meeting in determining to approve the Agreement.
Nature, Extent and Quality of Services.
With respect to the nature, extent and quality of the services to be provided by RiverNorth, the Directors considered the investment
management process that RiverNorth 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 would remain unchanged. The Directors
also considered the continued favorable assessment provided by ALPS as to the nature and quality of the services provided by RiverNorth
and the ability of RiverNorth to fulfill its contractual obligations.
Based on the totality of the information
considered, the Directors agreed that the Fund would benefit from the nature, extent and quality of RiverNorth’s services,
as the Fund’s proposed adviser, based on its experience, operations and resources and strong track record in its role as
the Fund’s sub-adviser.
Indirect Benefits. The Board considered
any ancillary or indirect benefits that could accrue to RiverNorth as a result of its relationships with the Fund. 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 RiverNorth by virtue of its relationships to the Fund appeared to
be reasonable.
Costs of Services Provided and Profitability
to the Adviser and its Affiliates. While information concerning the actual profitability to the Adviser and its affiliates
with respect to the Management Agreement is not available (because the Management Agreement is not yet in effect), the Directors
received and considered information regarding the anticipated profitability to the Adviser in providing services to the Fund. In
conjunction with the consideration of the Management Agreement, the Directors also considered that the Adviser’s profitability
was not expected to change in the near term as a result of the transition to the unitary fee structure. The Directors reviewed
and discussed the profitability information. The Directors recognized that this information is not audited and represents the Adviser’s determination
of its and its affiliates’ revenues from the contractual services to be provided to the Fund, less expenses of providing
such services. The Directors also recognized that it is difficult to make direct comparisons of profitability from fund investment
advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations
and the fact that publicly-traded fund managers’ operating profits and net income are net of distribution and marketing
expenses. Based upon their review, the Directors concluded that the profitability to the Adviser was not unreasonable in light
of the services and benefits provided to the Fund.
| Annual Report | July 31, 2022 |
65 |
| RiverNorth Opportunities Fund, Inc. |
Consideration and Approval
of Advisory Agreement |
July 31, 2022 (Unaudited)
Profitability and Economies of Scale.
In connection with its review of the Management Agreement, the Board discussed potential economies of scale or other efficiencies
that may result from increases in the Fund’s asset levels. The Directors noted that the management fees and other expenses
paid by the Fund under the Management Agreement would be the same as or less than the amounts the Fund would have paid under the
prior structure, taking into account current leverage, noting that this may change as leverage changes over time. The Directors
further considered that stockholders would benefit because expenses would be limited even if Fund assets decrease. The Directors
also considered the fact that increases in assets may not lead to fee decreases even if economies of scale were achieved, but that
they will have the opportunity to further review the appropriateness of the fee payable to the Adviser under the Management Agreement
in the future.
Investment Performance. 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 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 approval of the Management Agreement with RiverNorth.
Fees and Expense. The Directors
considered the contractual unitary management fee rate that will be paid by the Fund to the Adviser and compared that rate to the
information provided by the Adviser concerning management fee rates paid by other funds. The Directors also considered information
comparing the management fee for the Fund to the expense ratios of funds and accounts with similar investment objectives or in
similar asset classes managed by the Adviser.
The Directors noted that the Fund’s
estimated unitary management fees were in line with fees for identified peer funds. After considering the factors identified above,
in light of the information, the Directors concluded that the proposed management fees were reasonable.
| RiverNorth Opportunities Fund, Inc. |
Consideration and Approval
of Advisory Agreement |
July 31, 2022 (Unaudited)
Conclusion. Having requested and
received such information from RiverNorth as the Board believed to be reasonably necessary to evaluate the terms of the Management
Agreement, and as assisted by the advice of independent counsel, the Board, including the Independent Directors, concluded that
the structures were reasonable and that approval of the Management Agreement was in the best interests of the Fund and its stockholders.
| Annual Report | July 31, 2022 |
67 |
| RiverNorth Opportunities Fund, Inc. |
Expense Example |
July 31, 2022 (Unaudited)
The following table is intended to assist
investors in understanding the fees and expenses (annualized) that an investor in Common Shares would bear, directly or indirectly.
The table is based on the capital structure of the Fund as of July 31, 2022.
The table shows Fund expenses as a percentage
of net assets attributable to Common Shares. The following table should not be considered a representation of the Fund’s
future expenses. Actual expenses may be greater or less than those shown below.
| Shareholder Transaction Expenses |
As a Percentage of Offering Price |
| Sales Load(1) |
—% |
| Expenses Borne by Common Stockholders of the Fund(1) |
—% |
| Dividend Reinvestment Plan Fees |
None(2) |
| Shareholder Transaction Expenses |
As
a Percentage of
Net Assets Attributable to
Common Shares (1)(6) |
| Management Fee(3) |
1.16% |
| Dividend and Interest Expense on Short Sales(4) |
0.27% |
| Interest Expense on borrowings(4) |
0.06% |
| Other Expenses(4) |
0.42% |
| Acquired Fund Fees and Expenses(5) |
1.24% |
| Total Annual Expenses |
3.15% |
Example(6)
The purpose of the following table is to
help a holder of Common Shares understand the fees and expenses that such holder would bear directly or indirectly. The following
example illustrates the expenses that you would pay on a $1,000 investment in Common Shares, assuming (1) that the Fund incurs
total annual expenses of 3.15% of its net assets in years 1 through 10 and (2) a 5% annual return.
| |
1 year |
3 years |
5 years |
10 years |
| Total Expenses Incurred |
$32 |
$97 |
$165 |
$345 |
The example should not be considered a representation
of future expenses. Actual expenses may be greater or less than those assumed.
| (1) | If Common Shares are sold to or through underwriters,
the Prospectus Supplement will set forth any applicable sales load and the estimated offering expenses borne by the Fund. |
| (2) | There will be no brokerage charges with respect to Common
Shares issued directly by the Fund under the dividend reinvestment plan. You will pay brokerage charges in connection with open
market purchases or if you direct the plan agent to sell your Common Shares held in a dividend reinvestment account. |
| (3) | The management fee is equal to 1.00% of the Fund’s
average daily Managed Assets, as opposed to net assets as shown in the table above. If leverage is used, Managed Assets will be
greater in amount than net assets, because Managed Assets includes borrowings for investment purposes. |
| RiverNorth Opportunities Fund, Inc. |
Expense Example |
July 31, 2022 (Unaudited)
| (4) | Other Expenses, Interest Expense on Borrowings and Dividend
and Interest Expense on Short Sales are estimated based on the Fund’s Annual report dated July 31, 2022. |
| (5) | The “Acquired Fund Fees and Expenses” disclosed
above are based on the expense ratios for the most recent fiscal year of the Underlying Funds in which the Fund anticipates investing,
which may change substantially over time and, therefore, significantly affect Acquired Fund Fees and Expenses. These amounts are
based on the total expense ratio disclosed in each Underlying Fund’s most recent stockholder report. Some of the Underlying
Funds in which the Fund intends to invest charge incentive fees based on the Underlying Funds’ performance. The 1.49% shown
as Acquired Fund Fees and Expenses reflects estimated operating expenses of the Underlying Funds and transaction-related fees.
Certain Underlying Funds in which the Fund intends to invest generally charge a management fee of 1.00% to 2.00%, which are included
in “Acquired Fund Fees and Expenses,” as applicable. The Acquired Fund Fees and Expenses disclosed above, however,
do not reflect any performance-based fees or allocations paid by the Underlying Funds that are calculated solely on the realization
and/or distribution of gains, or on the sum of such gains and unrealized appreciation of assets distributed in-kind, as such fees
and allocations for a particular period may be unrelated to the cost of investing in the Underlying Funds. Acquired Fund Fees
and Expenses are borne indirectly by the Fund, but they will not be reflected in the Fund’s financial statements; and the
information presented in the table will differ from that presented in the Fund’s financial highlights. |
| (6) | The example should not be considered a representation
of future expenses and includes the expenses of the offering. The example assumes that the estimated “Other Expenses”
set forth in the table are accurate and that all dividends and distributions are reinvested at the Common Share NAVs. Actual expenses
may be greater or less than those assumed. Moreover, the Fund’s actual rate of return may be greater or less than the hypothetical
5% annual return shown in the example. |
| Annual Report | July 31, 2022 |
69 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The following information in this annual
report is a summary of certain information about the Fund and changes since the Fund’s registration statement dated January
25, 2022 (the “prior disclosure date”). This information may not reflect all of the changes that have occurred since
you purchased the Fund.
Investment Objective
There have been no changes in the Fund’s
investment objective since the prior disclosure date that has not been approved by shareholders.
The Fund’s investment objective is total return consisting
of capital appreciation and current income.
Principal Investment Strategies
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, ETFs, and BDCs (collectively, “Underlying Funds”), and SPACs. BDCs are a type of closed-end fund that invests
in small companies in the initial stages of their development and are similar to venture capital funds. SPACs are collective investment
structures that pool funds in order to seek potential acquisition opportunities. RiverNorth Capital Management, LLC (the "Subadviser")
has the flexibility to change the Fund’s asset allocation based on its ongoing analysis of the equity, fixed income and alternative
asset markets. The Subadviser considers various quantitative and qualitative factors relating to the domestic and foreign securities
markets and economies when making asset allocation and security selection decisions. While the Subadviser continuously evaluates
these factors, material shifts in the Fund’s asset class exposures will typically take place over longer periods of time.
In addition, the Fund, in seeking to achieve its investment objective, will not take activist positions in the Underlying Funds
or SPACs.
Under normal market conditions, the Fund
will invest at least 80% of its Managed Assets in Underlying Funds and SPACs. The Fund directly, and therefore holders of common
stock ("Common Stockholders") indirectly, will bear the expenses of the Underlying Funds and SPACs.
Under normal market conditions: (i) no
more than 80% of the Fund’s Managed Assets will be invested in “equity” Underlying Funds and SPACs; (ii) no more
than 60% of the Fund’s Managed Assets will be invested in “fixed income” Underlying Funds and SPACs; (iii) no
more than 30% of the Fund’s Managed Assets will be invested in “global equity” Underlying Funds and SPACs; (iv)
no more than 15% of the Fund’s Managed Assets will be invested in “emerging market equity” Underlying Funds and
SPACs; (v) no more than 30% of the Fund’s Managed Assets will be invested in “high yield” (also known as “junk
bond”) and “senior loan” Underlying Funds and SPACs; (vi) no more than 15% of the Fund’s Managed Assets
will be invested in “emerging market income” Underlying Funds and SPACs; (vii) no more than 10% of the Fund’s
Managed Assets will be invested in “real estate” Underlying Funds and SPACs; and (viii) no more than 15% of the Fund’s
Managed Assets will be invested in “energy master limited partnership” (“MLP”) Underlying Funds and SPACs.
Underlying Funds and SPACs included in the 30% limitation applicable to investments in “global equity” Underlying Funds
and SPACs may include Underlying Funds and SPACs that invest a portion of their assets in emerging markets securities. The Fund
will also limit its investments in closed-end funds (including BDCs) that have been in operation for less than one year to no more
than 10% of the Fund’s Managed Assets. The Fund will
not invest in inverse ETFs and leveraged ETFs. The types of Underlying Funds and SPACs referenced in this paragraph will be categorized
in accordance with the fund categories established and maintained by Morningstar, Inc. The investment parameters stated above (and
elsewhere in this disclosure) apply only at the time of purchase. The Underlying Funds and SPACs in which the Fund invests will
not include those that are advised or subadvised by the Adviser, the Subadviser or their affiliates.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
In selecting closed-end funds, the Subadviser
opportunistically utilizes a combination of short-term and longer-term trading strategies to seek to derive value from the discount
and premium spreads associated with closed-end funds. The Fund benefits if it purchases a closed-end fund at a discount and the
discount narrows. In addition, the Fund may purchase closed-end funds at a premium if the Subadviser believes the premium will
increase. The Subadviser employs both a quantitative and qualitative approach in its selection of closed-end funds and has developed
proprietary screening models and trading algorithms to trade closed-end funds.
Under normal circumstances, the Fund intends
to maintain long positions in Underlying Funds and SPACs, however, 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. The Fund may also
at times establish hedging positions. Hedging positions may include short sales and derivatives, such as options and swaps (“Hedging
Positions”). Under normal market conditions, no more than 30% of the Fund’s Managed Assets will be in Hedging Positions.
The Fund’s investments in derivatives will be included under the 80% policy noted above so long as the underlying asset of
such derivatives is a closed-end fund or Underlying Fund, respectively. The Subadviser intends to use Hedging Positions to lower
the Fund’s volatility but they may also be used to seek to enhance the Fund’s return. A short sale is a transaction
in which the Fund sells a security that it does not own in anticipation of a decline in the market price of the security. To complete
the short sale, the Fund must arrange through a broker to borrow the security in order to deliver it to the buyer. The Fund is
obligated to replace the borrowed security by purchasing it at a market price at or prior to the time it must be returned to the
lender. The price at which the Fund is required to replace the borrowed security may be more or less than the price at which the
security was sold by the Fund. The Fund will incur a loss if the price of the security sold short increases between the date of
the short sale and the date on which the Fund replaces the borrowed security. The Fund will realize a gain if the price of the
security declines between those dates.
The Fund may attempt to enhance the return
on the cash portion of its portfolio (and not or hedging purposes) by investing in a total return swap agreement. A total return
swap agreement provides the Fund with a return based on the performance of an underlying asset, in exchange for fee payments to
a counterparty based on a specific rate. The difference in the value of these income streams is recorded daily by the Fund, and
is typically settled in cash at least monthly. If the underlying asset declines in value over the term of the swap, the Fund would
be required to pay the dollar value of that decline plus any applicable fees to the counterparty. The Fund may use its own NAV
or any other reference asset that the Subadviser chooses as the underlying asset in a total return swap. The Fund will limit the
notional amount of all total return swaps in the aggregate to 15% of the Fund’s Managed Assets. Using the Fund’s own
NAV as the underlying asset in the total return swap serves to reduce cash drag (the impact of cash on the Fund’s overall
return) by replacing it with the impact of market exposure based
upon the Fund’s own investment holdings. This type of total return swap would provide the Fund with a return based on its
NAV. Like any total return swap, the Fund would be subject to counterparty risk and the risk that its own NAV declines in value.
| Annual Report | July 31, 2022 |
71 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Use of Leverage
The Fund may borrow money and/or issue
preferred stock, notes or debt securities for investment purposes. These practices are known as leveraging. The Fund may utilize
leverage to purchase portfolio securities and for portfolio or cash management purposes. The Fund also may borrow money as a temporary
measure for extraordinary or emergency purposes, including settlement of securities transactions, which otherwise might require
untimely dispositions of the Fund’s portfolio securities. The Fund currently anticipates that if employed, leverage will
primarily be obtained through the use of bank borrowings or other similar term loans. The Underlying Funds and SPACs that the Fund
invests in may also use leverage. The Fund may be subject to certain restrictions on investments imposed by lenders or by one or
more rating agencies that may issue ratings for any senior securities issued by the Fund. Borrowing covenants or rating agency
guidelines may impose asset coverage or Fund composition requirements that are more stringent than those imposed on the Fund by
the 1940 Act.
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
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. These types of transactions have the potential to
increase returns to Common Stockholders, but they also involve additional risks. This additional leverage will increase the volatility
of the Fund’s investment portfolio and could result in larger losses than if the transactions were not entered into. However,
to the extent that the Fund enters into offsetting transactions or owns positions covering its obligations, the leveraging effect
is expected to be minimized or eliminated.
Under the 1940 Act, the Fund is not permitted
to incur indebtedness unless immediately after doing so the Fund has an asset coverage of at least 300% of the aggregate outstanding
principal balance of indebtedness (i.e., such indebtedness may not exceed 33 1/3% of the value of the Fund’s total assets
including the amount borrowed). Additionally, under the 1940 Act, the Fund may not declare any dividend or other distribution upon
any class of its shares, or purchase any such shares, unless the aggregate indebtedness of the Fund has, at the time of the declaration
of any such dividend or distribution or at the time of any such purchase, asset coverage of at least 300% after deducting the amount
of such dividend, distribution, or purchase price, as the case may be. With respect to the asset coverage for preferred stock,
under the 1940 Act, the Fund is not permitted to issue preferred stock unless immediately after such issuance the total asset value
of the Fund’s portfolio is at least 200% of the liquidation value of the outstanding preferred stock (i.e., such liquidation
value may not exceed 50% of the Fund’s Managed Assets). In addition, the Fund is not permitted to declare any cash dividend or other distribution on
its Common Shares unless, at the time of such declaration, the NAV of the Fund’s portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of such liquidation value of the preferred stock. If preferred
stock is issued, the Fund intends, to the extent possible, to purchase or redeem shares, from time to time, to maintain coverage
of any preferred stock of at least 200%. Normally, holders of Common Shares will elect the directors of the Fund except that the
holders of any preferred stock will elect two directors. In the event the Fund failed to pay dividends on its preferred stock for
two years, holders of preferred stock would be entitled to elect a majority of the directors until the dividends are paid.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Effects of Leverage
The following table is furnished in response
to requirements of the SEC. It is designed to illustrate the effect of leverage on total return on common shares, assuming investment
portfolio total returns (comprised of income, net expenses and changes in the value of investments held in the Fund’s portfolio)
of -10%, -5%, 0%, 5% and 10%. The table below reflects the Fund's continued use of Preferred Shares as of July 31, 2022 as a percentage
of total managed assets (including assets attributable to such leverage), and the annual return that the Fund's portfolio must
experience (net of expenses) in order to cover such costs. These assumed investment portfolio returns are hypothetical figures
and are not necessarily indicative of what the Fund’s investment portfolio returns will be. In other words, the Fund’s
actual returns may be greater or less than those appearing in the table below. The table further reflects the use of leverage representing
approximately 33 1/3% of the Fund’s Managed Assets and estimated leverage costs of 2.57%.
| Assumed Portfolio Return |
-10.00% |
-5.00% |
0.00% |
5.00% |
10.00% |
| Common Share Total Return |
-16.29% |
-8.79% |
-1.29% |
6.22% |
13.72% |
Total return is composed of two elements—the
dividends on common shares paid by the Fund (the amount of which is largely determined by the Fund’s net investment income
after paying the cost of leverage) and realized and unrealized gains or losses on the value of the securities the Fund owns. As
the table shows, leverage generally increases the return to common shareholders when portfolio return is positive or greater than
the costs of leverage and decreases return when the portfolio return is negative or less than the costs of leverage.
During the time in which the Fund is using
leverage, the amount of the fees paid to the Adviser (and from the Adviser to the Subadviser) for investment management services
(and subadvisory services) is higher than if the Fund did not use leverage because the fees paid are calculated based on the Fund’s
Managed Assets. This may create a conflict of interest between the Adviser and the Subadviser, on the one hand, and common shareholders,
on the other. Also, because the leverage costs are borne by the Fund at a specified interest rate, only the Fund’s common
shareholders bear the cost of the Fund’s management fees and other expenses. There can be no assurance that a leveraging
strategy will be successful during any period in which it is employed.
Market and Net Asset Value Information
The Fund’s Common Shares are listed
on the NYSE under the symbol “RIV.” The Fund’s Common Shares commenced trading on the NYSE in December 2015.
| Annual Report | July 31, 2022 |
73 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The Fund’s Common Shares have traded
both at a premium and a discount to NAV. The Fund cannot predict whether the Common Shares will trade in the future at a premium
or discount to NAV. The provisions of the 1940 Act generally require that the public offering price of Common Shares (less any
underwriting commissions and discounts) must equal or exceed the NAV per share of a company’s common stock (calculated within
48 hours of pricing). The Fund’s issuance of Common Shares may have an adverse effect on prices in the secondary market for
the Fund’s Common Shares by increasing the number of Common Shares available, which may put downward pressure on the market
price for the Fund’s Common Shares. Shares of common stock of closed-end investment companies frequently trade at a discount
from NAV.
The following table shows, for each fiscal
quarter since the quarter ended January 31, 2016: (i) high and low NAVs per share of common stock, (ii) the high and low sale prices
per share of common stock, as reported in the consolidated transaction reporting system, and (iii) the percentage by which the
Common Shares traded at a premium over, or discount from, the high and low NAVs per shares of common stock. The Fund’s NAV
per Common Share is determined on a daily basis.
| Quarter Ended |
Market Price |
NAV at |
Market Premium
(Discount) to NAV at |
| |
|
High |
Low |
Market
High |
Market
Low |
Market
High |
Market
Low |
| 2022 |
July 31 |
$15.10 |
$12.56 |
$14.06 |
$13.01 |
7.40% |
-3.46% |
| |
April 30 |
$16.68 |
$14.78 |
$15.87 |
$15.31 |
5.10% |
-3.46% |
| |
January 31 |
$17.69 |
$14.86 |
$17.09 |
$15.64 |
3.51% |
-4.99% |
| 2021 |
October 31 |
$18.75 |
$16.71 |
$17.12 |
$16.87 |
9.52% |
-0.95% |
| |
July 31 |
$18.75 |
$16.75 |
$17.24 |
$17.02 |
8.76% |
-1.59% |
| |
April 30 |
$17.88 |
$16.71 |
$17.23 |
$16.61 |
3.77% |
0.60% |
| |
January 31 |
$17.07 |
$13.81 |
$16.48 |
$14.53 |
3.58% |
-4.96% |
| 2020 |
October 31 |
$16.09 |
$13.75 |
$15.29 |
$14.49 |
5.23% |
-5.11% |
| |
July 31 |
$15.55 |
$12.52 |
$14.95 |
$13.58 |
4.01% |
-7.81% |
| |
April 30 |
$17.00 |
$8.65 |
$17.01 |
$11.72 |
-0.06% |
-26.19% |
| |
January 31 |
$17.10 |
$15.85 |
$17.30 |
$16.79 |
-1.16% |
-5.60% |
| 2019 |
October 31 |
$17.32 |
$16.09 |
$17.13 |
$16.90 |
1.11% |
-4.79% |
| |
July 31 |
$17.75 |
$16.44 |
$17.54 |
$17.14 |
1.20% |
-4.08% |
| |
April 30 |
$17.36 |
$16.44 |
$17.49 |
$17.50 |
-0.74% |
-6.06% |
| |
January 31 |
$17.30 |
$14.20 |
$17.79 |
$15.90 |
-2.75% |
-10.69% |
| 2018 |
October 31 |
$20.04 |
$16.76 |
$19.02 |
$17.57 |
5.36% |
-4.61% |
| |
July 31 |
$21.63 |
$18.80 |
$19.47 |
$18.98 |
11.09% |
0.96% |
| |
April 30 |
$21.36 |
$20.02 |
$19.76 |
$19.67 |
8.10% |
1.78% |
| |
January 31 |
$21.09 |
$19.10 |
$19.98 |
$19.87 |
5.56% |
-3.88% |
| 2017 |
October 31 |
$21.51 |
$19.70 |
$20.89 |
$20.59 |
2.97% |
-4.32% |
| |
July 31 |
$21.57 |
$19.42 |
$20.80 |
$20.68 |
3.70% |
-6.09% |
| |
April 30 |
$20.13 |
$19.19 |
$20.87 |
$20.56 |
-3.55% |
-6.66% |
| |
January 31 |
$19.65 |
$18.00 |
$20.21 |
$19.64 |
-2.77% |
-8.35% |
| 2016 |
October 31 |
$20.59 |
$18.67 |
$20.88 |
$20.33 |
-1.39% |
-8.17% |
| |
July 31 |
$19.71 |
$17.79 |
$20.70 |
$19.73 |
-4.78% |
-9.83% |
| |
April 30 |
$19.79 |
$15.31 |
$19.99 |
$17.73 |
-1.00% |
-13.65% |
| |
January 31 |
$20.81 |
$18.66 |
$18.03 |
$18.06 |
15.42% |
3.32% |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Risks
Investing in any investment company security
involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or
all of your investment. Investors should consider the following risk factors and special considerations associated with investing
in the Fund’s Common Shares.
Structural Risks:
Not a Complete Investment Program
The Fund is intended for investors seeking
capital appreciation and current income over the long-term, and is not intended to be a short-term trading vehicle. An investment
in the Common Shares of the Fund should not be considered a complete investment program. Each investor should take into account
the Fund’s investment objective and other characteristics as well as the investor’s other investments when considering
an investment in the Common Shares. An investment in the Fund may not be appropriate for all investors.
Risks Associated with Offerings of Additional Common Shares
The voting power of current Common Stockholders
will be diluted to the extent that current Common Stockholders do not purchase Common Shares in any future offerings of Common
Shares or do not purchase sufficient Common Shares to maintain their percentage interest. If the Fund is unable to invest the proceeds
of such offering as intended, the Fund’s per Common Share distribution may decrease and the Fund may not participate in market
advances to the same extent as if such proceeds were fully invested as planned. If the Fund sells Common Shares at a price below
NAV pursuant to the consent of Common Stockholders, shareholders will experience a dilution of the aggregate NAV per Common Share
because the sale price will be less than the Fund’s then-current NAV per Common Share. Similarly, were the expenses of the
offering to exceed the amount by which the sale price exceeded the Fund’s then current NAV per Common Share, shareholders
would experience a dilution of the aggregate NAV per Common Share. This dilution will be experienced by all shareholders, irrespective
of whether they purchase Common Shares in any such offering.
Additional Risks of Rights
There are additional risks associated with
an offering of subscription rights to purchase Common Shares (“Rights”). Shareholders who do not exercise their Rights
may, at the completion of such an offering, own a smaller proportional interest in the Fund than if they exercised their Rights.
As a result of such an offering, a shareholder may experience dilution in NAV per share if the subscription price per share is
below the NAV per share on the expiration date. If the subscription price per share is below the NAV per share of the Fund’s
Common Shares on the expiration date, a shareholder will experience an immediate dilution of the aggregate NAV of such shareholder’s
Common Shares if the shareholder does not participate in such an offering and the shareholder will experience a reduction in the
NAV per share of such shareholder’s Common Shares whether or not the shareholder participates in such an offering. Such a
reduction in NAV per share may have the effect of reducing market price of the Common Share. The Fund
cannot state precisely the extent of this dilution (if any) if the shareholder does not exercise such shareholder’s Rights
because the Fund does not know what the NAV per share will be when the offer expires or what proportion of the Rights will be exercised.
If the subscription price is substantially less than the then current NAV per Common Share at the expiration of a rights offering,
such dilution could be substantial. Any such dilution or accretion will depend upon whether (i) such shareholders participate in
the rights offering and (ii) the Fund’s NAV per Common Share is above or below the subscription price on the expiration date
of the rights offering. In addition to the economic dilution described above, if a Common Stockholder does not exercise all of
their rights, the Common Stockholders will incur voting dilution as a result of this rights offering. This voting dilution will
occur because the Common Stockholders will own a smaller proportionate interest in the Fund after the rights offering than prior
to the rights offering. There is a risk that changes in market conditions may result in the underlying Common Shares purchasable
upon exercise of the subscription rights being less attractive to investors at the conclusion of the subscription period. This
may reduce or eliminate the value of the subscription rights. If investors exercise only a portion of the rights, the number of
Common Shares issued may be reduced, and the Common Shares may trade at less favorable prices than larger offerings for similar
securities. Subscription rights issued by the Fund may be transferable or non-transferable rights. In a non-transferable rights
offering, Common Stockholders who do not wish to exercise their rights will be unable to sell their rights. In a transferrable
rights offering, the Fund will use its best efforts to ensure an adequate trading market for the rights; however, investors may
find that there is no market to sell rights they do not wish to exercise.
| Annual Report | July 31, 2022 |
75 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Leverage Risks
The Fund may borrow money, or issue debt
or preferred stock. Since the holders of Common Shares pay all expenses related to the issuance of debt or use of leverage, the
use of leverage through borrowing of money, issuance of debt securities or the issuance of preferred stock for investment purposes
creates risks for the holders of Common Shares. Leverage is a speculative technique that exposes the Fund to greater risk and increased
costs than if it were not implemented. Increases and decreases in the value of the Fund’s portfolio will be magnified when
the Fund uses leverage. As a result, leverage may cause greater changes in the Fund’s NAV. The Fund will also have to pay
interest on its borrowings or dividends on preferred stock, if any, which may reduce the Fund’s return. The leverage costs
may be greater than the Fund’s return on the underlying investment. The Fund’s leveraging strategy may not be successful.
If the Fund utilizes leverage in the form
of borrowing, it anticipates that the money borrowed for investment purposes will incur interest based on shorter-term interest
rates that would be periodically reset. So long as the Fund’s portfolio provides a higher rate of return, net of expenses,
than the interest rate on borrowed money, as reset periodically, the leverage may cause the holders of Common Shares to receive
a higher current rate of return than if the Fund were not leveraged. If, however, long-term and/or short-term rates rise, the interest
rate on borrowed money could exceed the rate of return on securities held by the Fund, reducing return to the holders of Common
Shares.
There is no assurance that a leveraging
strategy will be successful. Leverage involves risks and special considerations for Common Stockholders, including:
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
| ● | the likelihood of greater volatility of NAV, market price and dividend rate of the Common Shares than a comparable portfolio
without leverage; |
| ● | the risk that fluctuations in interest rates on borrowings or on short-term debt or in the interest
or dividend rates on any debt securities or preferred shares that the Fund must pay will reduce the return to the Common Stockholders; |
| ● | the effect of leverage in a declining market, which is likely to cause a greater decline in the
NAV of the Common Shares than if the Fund were not leveraged, may result in a greater decline in the market price of the Common
Shares; |
| ● | when the Fund uses financial leverage, the investment management fees payable to the Adviser and
the subadvisory fees payable by the Adviser to the Subadviser will be higher than if the Fund did not use leverage. This may create
a conflict of interest between the Adviser and the Subadviser, on the one hand, and the holders of Common Shares, on the other;
and |
| ● | leverage may increase operating costs, which may reduce total return. |
The use of leverage will require the Fund
to segregate assets to cover its obligations (or, if the Fund borrows money or issues preferred shares, to maintain asset coverage
in conformity with the requirements of the 1940 Act). While the segregated assets will be invested in liquid securities, they may
not be used for other operational purposes. Consequently, the use of leverage may limit the Fund’s flexibility and may require
that the Fund sell other portfolio investments to pay Fund expenses, to maintain assets in an amount sufficient to cover the Fund’s
leveraged exposure or to meet other obligations at a time when it may be disadvantageous to sell such assets. Certain types of
borrowings by the Fund may result in the Fund being subject to covenants in credit agreements relating to asset coverage and portfolio
composition requirements. The Fund may be subject to certain restrictions on investments imposed by guidelines of one or more rating
agencies, which may issue ratings for the short-term debt securities or preferred shares issued by the Fund. These guidelines may
impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. The Subadviser
does not believe that these covenants or guidelines will impede it from managing the Fund’s portfolio in accordance with
the Fund’s investment objective and policies if the Fund were to utilize leverage.
Leverage risk would also apply to the Fund’s
investments in Underlying Funds and SPACs to the extent an Underlying Fund or SPAC uses leverage.
Market Discount
The stock of closed-end management investment
companies often trade at a discount from their NAV, and the Fund’s Common Shares may likewise trade at a discount from NAV.
The trading price of the Fund’s Common Shares may be less than the NAV. The returns earned by Common Stockholders who sell
their Common Shares below NAV will be reduced. The Fund’s Common Shares are currently sold at a premium to NAV. This risk
would also apply to the Fund’s investments in closed-end funds.
| Annual Report | July 31, 2022 |
77 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Anti-Takeover Provisions
Maryland law and the Fund’s Charter
and Bylaws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert
the Fund to open-end status. These provisions could deprive the holders of Common Shares of opportunities to sell their Common
Shares at a premium over the then current market price of the Common Shares or at NAV. This risk would also apply to many of the
Fund’s investments in closed-end funds.
Investment-Related Risks
The risks listed below are in alphabetical
order. With the exception of Underlying Fund risk (and except as otherwise noted below), the following risks apply to the direct
investments the Fund may make, and generally apply to the Fund’s investments in Underlying Funds and SPACs. That said, each
risk described below may not apply to each Underlying Fund or SPAC investment. Similarly, an Underlying Fund may be subject to
additional or different risks than those described below.
Asset Allocation Risks
To the extent that the Subadviser’s
asset allocation strategy may fail to produce the intended result, the Fund’s return may suffer. Additionally, the active
asset allocation style of the Fund leads to changing allocations over time and represents a risk to investors who target fixed
asset allocations.
Convertible Securities Risks
The market value of convertible securities
tends to fall when prevailing interest rates rise. The value of convertible securities also tends to change whenever the market
value of the underlying common or preferred stock fluctuates. Convertible securities tend to be of lower credit quality
Defensive Measures
The Fund may invest up to 100% of its assets
in cash, cash equivalents and short-term investments as a defensive measure in response to adverse market conditions or opportunistically
at the discretion of the Subadviser. During these periods or during periods when an Underlying Fund invests defensively, the Fund
may not be pursuing its investment objective.
Derivatives Risks
The Fund and the Underlying Funds may enter
into derivatives transactions. Derivative transactions involve investment techniques and risks different from those associated
with investments in Underlying Funds. Generally, a derivative is a financial contract the value of which depends upon, or is derived
from, the value of an underlying asset, reference rate, or index, and may relate to individual debt or equity instruments, interest
rates, currencies or currency exchange rates, commodities, related indexes, and other assets. Derivatives can be volatile and involve
various types and degrees of risk, depending upon the characteristics of a particular derivative. Derivatives may entail investment
exposures that are greater than their cost would suggest, meaning that a small investment in a derivative could have a large potential
impact on the performance of a fund. A fund could experience a loss if derivatives
do not perform as anticipated, if they are not correlated with the performance of other investments which they are used to hedge
or if the fund is unable to liquidate a position because of an illiquid secondary market. The market for many derivatives is, or
can suddenly become, illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices of
derivatives. When used for speculative purposes, derivatives will produce enhanced investment exposure, which will magnify gains
and losses. Certain derivatives transactions may give rise to a form of leverage. The use of leverage may cause a fund to liquidate
portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage
may cause a fund to be more volatile than if it had not been leveraged. This is because leverage tends to exaggerate the effect
of any increase or decrease in the value of the fund’s portfolio securities. Further, using derivatives may include the risk
of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly, or at all, with the
value of the assets, reference rates or indexes they are designed to closely track. The Fund also will be subject to credit risk
with respect to the counterparties to the derivatives contracts purchased by the Fund. If a counterparty becomes bankrupt or otherwise
fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant
delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may
obtain only a limited recovery or may obtain no recovery in such circumstances.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Defaulted and Distressed Securities Risks
The Underlying Funds may invest directly
in defaulted and distressed securities. Legal difficulties and negotiations with creditors and other claimants are common when
dealing with defaulted or distressed companies. Defaulted or distressed companies may be insolvent or in bankruptcy. In the event
of a default, an Underlying Fund may incur additional expenses to seek recovery. The repayment of defaulted bonds is subject to
significant uncertainties, and in some cases, there may be no recovery of repayment. Defaulted bonds might be repaid only after
lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. Because of the
relative illiquidity of defaulted or distressed debt and equity securities, short sales are difficult, and most Underlying Funds
primarily maintain long positions. Some relative value trades are possible, where an investor sells short one class of a defaulted
or distressed company’s capital structure and purchases another. With distressed investing, often there is a time lag between
when an Underlying Fund makes an investment and when the Underlying Fund realizes the value of the investment. In addition, an
Underlying Fund may incur legal and other monitoring costs in protecting the value of the Underlying Fund’s claims.
Equity Securities Risks
While equity securities have historically
generated higher average returns than fixed income securities, equity securities have also experienced significantly more volatility
in those returns. An adverse event, such as an unfavorable earnings report, may depress the value of an issuer’s equity securities
held by an Underlying Fund. Equity security prices fluctuate for several reasons, including changes in investors’ perceptions
of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events
affecting the issuers occur. The value of a particular equity security may fall in value. The prices of stocks change in response
to many factors, including the historical and prospective earnings of the issuer, the value of its assets, management decisions, decreased demand
for an issuer’s products or services, increased production costs, general economic conditions, interest rates, currency exchange
rates, investor perceptions and market liquidity. The value of an Underlying Fund’s shares will go up and down due to movement
in the collective returns of the individual securities held by the Underlying Fund. Common stocks are subordinate to preferred
stocks and debt in a company’s capital structure, and if a company is liquidated, the claims of secured and unsecured creditors
and owners of preferred stocks take precedence over the claims of those who own Common Shares. In addition, equity security prices
may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
| Annual Report | July 31, 2022 |
79 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Exchange-Traded Note Risks
The Fund and the Underlying Funds may invest
in exchange-traded notes (“ETNs”), which are notes representing unsecured debt issued by an underwriting bank. ETNs
are typically linked to the performance of an index plus a specified rate of interest that could be earned on cash collateral.
The value of an ETN may be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity
in underlying markets, changes in the applicable interest rates, changes in the issuer’s credit rating and economic, legal,
political or geographic events that affect the referenced index. ETNs typically mature 30 years from the date of issue. The issuer’s
credit rating will be investment grade at the time of investment, however, the credit rating may be revised or withdrawn at any
time and there is no assurance that a credit rating will remain in effect for any given time period. If a rating agency lowers
the issuer’s credit rating, the value of the ETN will decline and a lower credit rating reflects a greater risk that the
issuer will default on its obligation. When a fund invests in ETNs, it will bear its proportionate share of any fees and expenses
associated with investment in such securities. Such fees reduce the amount of return on investment at maturity or upon redemption.
There may be restrictions on a fund’s
right to liquidate its investment in an ETN prior to maturity (for example, a fund may only be able to offer its ETN for repurchase
by the issuer on a weekly basis), since ETNs are meant to be held until maturity. A fund’s decision to sell its ETN holdings
may be limited by the availability of a secondary market.
Fixed Income Securities Risks
The Underlying Funds and the Fund may invest
in fixed income securities. Fixed income securities increase or decrease in value based on changes in interest rates. If rates
increase, the value of an Underlying Fund’s fixed income securities generally declines. On the other hand, if rates fall,
the value of the fixed income securities generally increases. The issuer of a fixed income security may not be able to make interest
and principal payments when due. This risk is increased in the case of issuers of high yield securities, also known as “junk
bonds.” If a U.S. Government agency or instrumentality in which an Underlying Fund invests defaults, and the U.S. Government
does not stand behind the obligation, the Underlying Fund’s share price or yield could fall. Securities of certain U.S. Government
sponsored entities are neither issued nor guaranteed by the U.S. Government. The Underlying Funds may invest in fixed income securities
of any credit quality, maturity or duration. Fixed income securities risks include components of the following additional risks:
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Credit
Risk. The issuer of a fixed income security may not be able to make interest and principal payments when due. Generally, the
lower the credit rating of a security, the greater the risk that the issuer will default on its obligation, which could result
in a loss to a fund. The Underlying Funds may invest in securities that are rated in the lowest investment grade category. Issuers
of these securities are more vulnerable to changes in economic conditions than issuers of higher grade securities.
High
Yield Securities Risk. The Underlying Funds may invest in high yield securities, also known as “junk bonds.” High
yield securities provide greater income and opportunity for gain, but entail greater risk of loss of principal. High yield securities
are predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with
the terms of the obligation. The market for high yield securities is generally less active than the market for higher quality
securities. This may limit the ability of a fund to sell high yield securities at the price at which it is being valued for purposes
of calculating NAV.
U.S.
Government Securities Risk. The Underlying Funds may invest in U.S. Government securities. The U.S. Government’s guarantee
of ultimate payment of principal and timely payment of interest on certain U.S. Government securities owned by an Underlying Fund
does not imply that the Underlying Fund’s shares are guaranteed or that the price of the Underlying Fund’s shares
will not fluctuate. In addition, securities issued by Freddie Mac, Fannie Mae and Federal Home Loan Banks are not obligations
of, or insured by, the U.S. Government. If a U.S. Government agency or instrumentality in which an Underlying Fund invests defaults
and the U.S. Government does not stand behind the obligation, the Fund’s NAV could fall.
Interest
Rate Risk. An Underlying Fund’s NAV and total return will vary in response to changes in interest rates. If rates increase,
the value of an Underlying Fund’s investments generally will decline, as will the Underlying Fund’s NAV. In typical
interest rate environments, the prices of longer-term fixed income securities generally fluctuate more than the prices of shorter-term
fixed income securities as interest rates change.
Sovereign
Obligation Risk. The Underlying Funds may invest in sovereign (i.e., foreign government) debt obligations. Investment in sovereign
debt obligations involves special risks not present in corporate debt obligations. The issuer of the sovereign debt or the governmental
authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the
Underlying Funds may have limited recourse in the event of a default. During periods of economic uncertainty, the market prices
of sovereign debt may be more volatile than prices of U.S. debt obligations. In the past, certain emerging markets have encountered
difficulties in servicing their debt obligations, withheld payments of principal and interest, and declared moratoria on the payment
of principal and interest on their sovereign debts. See also “Foreign Investing Risks” below.
Foreign
Investing Risks
The
Fund and the Underlying Funds may invest in foreign securities. Investments in foreign securities may be affected by currency
controls and exchange rates; different accounting, auditing, financial reporting, and legal standards and practices; expropriation;
changes in tax policy; social, political and economic instability; greater market volatility; differing securities market structures;
higher transaction
costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving
payment of dividends. In addition, changes in government administrations or economic or monetary policies in the United States
or abroad could result in appreciation or depreciation of the Fund’s or Underlying Fund’s securities. These risks
may be heightened in connection with investments in emerging or developing countries. To the extent that a Fund or Underlying
Fund invests in depositary receipts, the Fund or Underlying Fund will be subject to many of the same risks as when investing directly
in foreign securities. The effect of recent, worldwide economic instability on specific foreign markets or issuers may be difficult
to predict or evaluate, and some national economies continue to show profound instability, which may in turn affect their international
trading partners.
| Annual Report
| July 31, 2022 |
81 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Illiquid
Securities Risks
The
Underlying Funds may invest in illiquid securities. It may not be possible to sell or otherwise dispose of illiquid securities
both at the price and within the time period deemed desirable by a fund. Illiquid securities also may be difficult to value.
Initial
Public Offerings Risks
The
Fund and the Underlying Funds may purchase securities in initial public offerings (“IPOs”). Because securities sold
in an IPO frequently are volatile in price, the Fund or an Underlying Fund may hold IPO shares for a very short period of time.
This may increase the turnover of a fund’s portfolio and may lead to increased expenses to the fund, such as commissions
and transaction costs. By selling shares, a fund may realize taxable capital gains that it will subsequently distribute to shareholders.
Investing in IPOs has added risks because the shares are frequently volatile in price. As a result, their performance can be more
volatile and they face greater risk of business failure, which could increase the volatility of a fund’s portfolio.
The
Fund’s IPO investments may be in IPOs of Underlying Funds. There is a significant risk that the shares of closed-end funds
purchased in an IPO will trade at a price below their IPO price.
Investment
and Market Risks
An
investment in Common Shares is subject to investment risk, including the possible loss of the entire principal amount invested.
An investment in Common Shares represents an indirect investment in the Underlying Funds owned by the Fund. The value of the Underlying
Funds, like other market investments, may move up or down, sometimes rapidly and unpredictably. Overall stock market risks may
also affect the NAV of the Fund or the Underlying Funds. Factors such as domestic and foreign economic growth and market conditions,
interest rate levels and political events affect the securities markets. The Common Shares at any point in time may be worth less
than the original investment, even after taking into account any reinvestment of dividends and distributions.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Legislation,
Policy and Regulatory Risks
At
any time after the date of this annual report, legislation or additional regulations may be enacted that could negatively affect
the assets of the Fund or the issuers of such assets. Recent changes in the U.S. political landscape and changing approaches to
regulation may have a negative impact on the entities and/or securities in which the Fund or an Underlying Fund invests. Legislation
or regulation may also change the way in which the Fund or an Underlying Fund is regulated. New or amended regulations may be
imposed by the Commodity Futures Trading Commission (“CFTC”), the SEC, the Board of Governors of the Federal Reserve
System or other financial regulators, other governmental regulatory authorities or self-regulatory organizations that supervise
the financial markets that could adversely affect the Fund or the Underlying Funds. In particular, these agencies are empowered
to promulgate a variety of new rules pursuant to financial reform legislation in the United States. There can be no assurance
that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the
ability of the Fund to achieve its investment objective. The Fund and the Underlying Funds also may be adversely affected by changes
in the enforcement or interpretation of existing statutes and rules by these governmental regulatory authorities or self regulatory
organizations.
Management
Risks
The
Subadviser’s judgments about the attractiveness, value and potential appreciation of a particular asset class or individual
security in which the Fund invests may prove to be incorrect and there is no guarantee that the Subadviser’s judgment will
produce the desired results. Similarly, the Fund’s investments in Underlying Funds are subject to the judgment of the Underlying
Funds’ managers which may prove to be incorrect. In addition, the Subadviser will have limited information as to the portfolio
holdings of the Underlying Funds at any given time. This may result in the Subadviser having less ability to respond to changing
market conditions. The Fund may allocate its assets so as to under-emphasize or over-emphasize ETFs or other investments under
the wrong market conditions, in which case the Fund’s NAV may be adversely affected.
Market
Disruption and Geopolitical Risks
The
value of your investment in the Fund is based on the values of the Fund’s investments, which may change due to economic
and other events that affect markets generally, as well as those that affect particular regions, countries, industries, companies
or governments. These 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. The occurrence of such events may be sudden and unexpected, and 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, liquidity
and risk profile of the Fund’s portfolio, as well as its ability to sell securities to meet redemptions. There is a risk
that you may lose money by investing in the Fund.
| Annual Report
| July 31, 2022 |
83 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Social,
political, economic and other conditions and events, such as natural disasters, health emergencies (e.g., epidemics and pandemics),
terrorism, conflicts and social unrest, may occur and could significantly impact issuers, industries, governments and other systems,
including the financial markets. As global systems, economies and financial markets are increasingly interconnected, events that
once had only local impact are now more likely to have regional or even global effects. Events that occur in one country, region
or financial market will, more frequently, adversely impact issuers in other countries, regions or markets. These impacts can
be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat. These types of events
quickly and significantly impact markets in the U.S. and across the globe leading to extreme market volatility and disruption.
The extent and nature of the impact on supply chains or economies and markets from these events is unknown, particularly if a
health emergency or other similar event, such as the COVID-19 (the “Coronavirus”) outbreak, persists for an extended
period of time. Social, political, economic and other conditions and events, such as natural disasters, health emergencies (e.g.,
epidemics and pandemics), terrorism, conflicts and social unrest, could reduce consumer demand or economic output, result in market
closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial markets and
the Adviser’s investment advisory activities and services of other service providers, which in turn could adversely affect
the Fund’s investments and other operations. The value of the Fund’s investment may decrease as a result of such events,
particularly if these events adversely impact the operations and effectiveness of the Adviser or key service providers or if these
events disrupt systems and processes necessary or beneficial to the investment advisory or other activities on behalf the Fund.
Master
Limited Partnerships Risks
The
Underlying Funds may invest in MLPs. Investments in publicly traded MLPs, which are limited partnerships or limited liability
companies taxable as partnerships, involve some risks that differ from an investment in the common stock of a corporation, including
risks related to limited control and limited rights to vote on matters affecting MLPs, risks related to potential conflicts of
interest between an MLP and the MLP’s general partner, cash flow risks, dilution risks and risks related to the general
partner’s right to require unit-holders to sell their common units at an undesirable time or price. MLPs may derive income
and gains from the exploration, development, mining or production, processing, refining, transportation (including pipelines transporting
gas, oil, or products thereof), or the marketing of any mineral or natural resources. MLPs generally have two classes of owners,
the general partner and limited partners. When investing in an MLP, an Underlying Fund generally purchases publicly traded common
units issued to limited partners of the MLP. The general partner is typically owned by a major energy company, an investment fund,
the direct management of the MLP or is an entity owned by one or more of such parties. The general partner may be structured as
a private or publicly traded corporation or other entity. The general partner typically controls the operations and management
of the MLP through an up to 2% equity interest in the MLP plus, in many cases, ownership of common units and subordinated units.
Limited partners own the remainder of the partnership, through ownership of common units, and have a limited role in the partnership’s
operations and management. As compared to common stockholders
of a corporation, holders of MLP common units have more limited control and limited rights to vote on matters affecting the partnership.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
MLPs
are typically structured such that common units and general partner interests have first priority to receive quarterly cash distributions
up to an established minimum amount (“minimum quarterly distributions” or “MQD”). Common and general partner
interests also accrue arrearages in distributions to the extent the MQD is not paid. Once common and general partner interests
have been paid, subordinated units receive distributions of up to the MQD; however, subordinated units do not accrue arrearages.
Distributable cash in excess of the MQD paid to both common and subordinated units is distributed to both common and subordinated
units generally on a pro rata basis. The general partner is also eligible to receive incentive distributions if the general partner
operates the business in a manner which results in distributions paid per common unit surpassing specified target levels. As the
general partner increases cash distributions to the limited partners, the general partner receives an increasingly higher percentage
of the incremental cash distributions. A common arrangement provides that the general partner can reach a tier where it receives
50% of every incremental dollar paid to common and subordinated unit holders. These incentive distributions encourage the general
partner to streamline costs, increase capital expenditures and acquire assets in order to increase the partnership’s cash
flow and raise the quarterly cash distribution in order to reach higher tiers. Such results benefit all security holders of the
MLP.
MLP
common units represent a limited partnership interest in the MLP. MLP common units are listed and traded on U.S. securities exchanges,
with their value fluctuating predominantly based on prevailing market conditions and the success of the MLP. An Underlying Fund
may purchase MLP common units in market transactions. Unlike owners of common stock of a corporation, owners of MLP common units
have limited voting rights and have no ability to elect directors. In the event of liquidation, MLP common units have preference
over subordinated units, but not over debt or preferred units, to the remaining assets of the MLP.
MLPs
may be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. Certain
MLP securities may trade in lower volumes due to their smaller capitalizations. Accordingly, those MLPs may be subject to more
abrupt or erratic price movements and may lack sufficient market liquidity to enable an Underlying Fund to effect sales at an
advantageous time or without a substantial drop in price. As a result, these investments may be difficult to dispose of at a fair
price at the times when an Underlying Fund believes it is desirable to do so. MLPs are generally considered interest-rate sensitive
investments. During periods of interest rate volatility, these investments may not provide attractive returns, which may adversely
impact the overall performance of the Fund or an Underlying Fund.
MLPs
are subject to various risks related to the underlying operating companies they control, including dependence upon specialized
management skills and the risk that those operating companies may lack or have limited operating histories. The success an Underlying
Fund’s investments in an MLP will vary depending on the underlying industry represented by the MLP’s portfolio. Certain
MLPs in which an Underlying Fund may invest depend upon their parent or sponsor entities for the majority of their revenues.
Certain
MLPs in which an Underlying Fund may invest depend upon a limited number of customers for substantially all of their revenue.
Similarly, certain MLPs in which an Underlying Fund may invest depend upon a limited number of suppliers of goods or services
to continue their operations. The loss
of those customers or suppliers could have a material adverse effect on an MLP’s results of operations and cash flow, and
on its ability to make distributions to unit holders such as an Underlying Fund.
| Annual Report
| July 31, 2022 |
85 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The
benefit an Underlying Fund will derive from its investment in MLPs will be largely dependent on the MLPs being treated as partnerships
and not as corporations for federal income tax purposes. As a partnership, an MLP generally has no tax liability at the entity
level. If, as a result of a change in current law or a change in an MLP’s business, an MLP were treated as a corporation
for federal income tax purposes, such MLP would be obligated to pay federal income tax on its income at the corporate tax rate.
If an MLP were classified as a corporation for federal income tax purposes, the amount of cash available for distribution by the
MLP would be reduced and distributions received by an Underlying Fund would be taxed under federal income tax laws applicable
to corporate dividends (as dividend income, return of capital, or capital gain). Therefore, treatment of an MLP as a corporation
for federal income tax purposes would result in a reduction in the after-tax return to an Underlying Fund, likely causing a reduction
in the value of the Common Shares.
Micro-,
Small- and Medium-Sized Company Risks
The
Underlying Funds may invest in securities without regard to market capitalization. Investments in securities of micro-, small-
and medium-sized companies may be subject to more abrupt or erratic market movements than larger, more established companies,
because these securities typically are traded in lower volume and issuers are typically more subject to changes in earnings and
future earnings prospects. Small- and medium-sized companies often have narrower markets for their goods and/or services and more
limited managerial and financial resources than larger, more established companies. Furthermore, these companies often have limited
product lines, services, markets or financial resources, or are dependent on a small management group. Since these stocks are
not well-known to the investing public, do not have significant institutional ownership and are followed by relatively few security
analysts, there will normally be less publicly available information concerning these securities compared to what is available
for the securities of larger companies. Adverse publicity and investor perceptions, whether or not based on fundamental analysis,
can decrease the value and liquidity of securities held by the Fund. As a result, small- and medium-sized companies’ performance
can be more volatile and the companies face greater risk of business failure, which could increase the volatility of the Fund’s
portfolio. The risks are intensified for investments in micro-cap companies.
Options
and Futures Risks
The
Fund and the Underlying Funds may invest in options and futures contracts. The use of futures and options transactions entails
certain special risks. In particular, the variable degree of correlation between price movements of futures contracts and price
movements in the related securities position of the Fund or an Underlying Fund could create the possibility that losses on the
hedging instrument are greater than gains in the value of the Fund’s or Underlying Fund’s position. In addition, futures
and options markets could be illiquid in some circumstances and certain over-the-counter options could have no markets. As a
result, in certain markets, the Fund or an Underlying Fund might not be able to close out a transaction without incurring substantial
losses. Although the Fund’s or an Underlying Fund’s use of futures and options transactions for hedging should tend
to minimize the risk of loss due to a decline in the value of the hedged position, at the same time it will tend
to limit any potential gain to the Fund or an Underlying Fund that might result from an increase in value of the position. There
is also the risk of loss by the Fund or an Underlying Fund of margin deposits in the event of bankruptcy of a broker with whom
the Fund or Underlying Fund has an open position in a futures contract or option thereon. Finally, the daily variation margin
requirements for futures contracts create a greater ongoing potential financial risk than would purchases of options, in which
case the exposure is limited to the cost of the initial premium. However, because option premiums paid by the Fund or an Underlying
Fund are small in relation to the market value of the investments underlying the options, buying options can result in large amounts
of leverage. This leverage offered by trading in options could cause the Fund’s or an Underlying Fund’s NAV to be
subject to more frequent and wider fluctuation than would be the case if the Fund or Underlying Fund did not invest in options.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Options
transactions may be effected on securities exchanges or in the over-the-counter market. When options are purchased over-the-counter,
the Fund or an Underlying Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform
its obligations under the option contract. The counterparties to these transactions typically will be major international banks,
broker-dealers and financial institutions. Such options may also be illiquid, and in such cases, the Fund or an Underlying Fund
may have difficulty closing out its position. Banks, broker- dealers or other financial institutions participating in such transactions
may fail to settle a transaction in accordance with the terms of the option as written. In the event of default or insolvency
of the counterparty, the Fund or an Underlying Fund may be unable to liquidate an over-the-counter option position.
The
Fund may purchase put options. An Underlying Fund may purchase and sell call and put options with respect to specific securities,
and may write and sell covered or uncovered call and put options. A call option gives the purchaser of the call option, in return
for a premium paid, the right to buy the security underlying the option from the writer of the call option at a specified exercise
price within a specified time frame. A put option gives the purchaser of the put option, in return for a premium paid, the right
to sell the underlying security to the writer of the put option at a specified price within a specified time frame. A covered
call option is a call option with respect to an underlying security that a fund owns. A covered put option is a put option with
respect to which a fund has segregated cash or liquid securities to fulfill the obligation of the option. The purchaser of a put
or call option runs the risk of losing the purchaser’s entire investment, paid as the premium, in a relatively short period
of time if the option is not sold at a gain or cannot be exercised at a gain prior to expiration. In selling put options, there
is a risk that the Underlying Fund may be required to buy the underlying security at a disadvantageous price above the market
price. The un-covered writer of a call option is subject to a risk of loss if the price of the underlying security should increase,
and the un-covered writer of a put option is subject to a risk of loss if the price of the underlying security should decrease.
The Fund will not treat uncovered options as “senior securities” under the 1940 Act and instead, to address senior
security concerns, will segregate cash or liquid securities to fulfill its obligation under the options.
The
Fund may invest a significant portion of its total assets in Underlying Funds that write covered call options. To the extent
that an Underlying Fund writes a covered call option, it forgoes, during the option’s life, the opportunity to profit
from increases in the market value of the security covering the call option above the sum of the premium and the strike price
of the call, but has retained the risk of loss should the price of the underlying security decline. As the writer of the
option, the Underlying
Fund bears the market risk of an unfavorable change in the price of the security underlying a written option. As an Underlying
Fund writes covered calls over more of its portfolio, its ability to benefit from capital appreciation becomes more limited and
the risk of NAV erosion increases. To the extent an Underlying Fund experiences NAV erosion (which itself may have an indirect
negative effect on the market price of interests in the Underlying Fund, the Underlying Fund will have a reduced asset base over
which to write covered calls, which may eventually lead to reduced distributions to shareholders such as the Fund. The writer
of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an
option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation
under the option and must deliver the underlying security at the exercise price.
| Annual Report
| July 31, 2022 |
87 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
To
the extent that an Underlying Fund engages in selling options that trade in over-the-counter markets, the Underlying Fund may
be subject to additional risks. Participants in these markets are typically not subject to the same credit evaluation and regulatory
oversight as members of “exchange based” markets. By engaging in option transactions in these markets, an Underlying
Fund may take credit risk with regard to parties with which it trades and also may bear the risk of settlement default. These
risks may differ materially from those involved in exchange-traded transactions, which generally are characterized by clearing
organization guarantees, daily marking-to-market and settlement, and segregation and minimum capital requirements applicable
to intermediaries. Transactions entered into directly between two counterparties generally do not benefit from these protections,
which may subject an Underlying Fund to the risk that a counterparty will not settle a transaction in accordance with agreed terms
and conditions because of a dispute over the terms of the contract or because of a credit or liquidity problem. Such “counterparty
risk” is increased for contracts with longer maturities when events may intervene to prevent settlement.
The
Fund or an Underlying Fund may enter into futures contracts in U.S. domestic markets or on exchanges located outside of the United
States. Foreign markets may offer advantages, including trading opportunities or arbitrage possibilities, not available in the
United States. Foreign markets, however, may have greater risk potential than domestic markets. For example, some foreign exchanges
are principal markets, so that no common clearing facility exists and an investor may look only to the broker or counterparty
for the performance of the contract. Unlike trading on domestic commodity exchanges, trading on foreign commodity exchanges is
not regulated by the Commodity Futures Trading Commission.
There
can be no assurance that a liquid market will exist for any particular futures contract at any particular time. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made that day of a price beyond that limit or trading
may be suspended for specified periods during the trading day.
The
Fund or an Underlying Fund may purchase and sell single stock futures, stock index futures contracts, interest rate futures contracts,
currency futures and other commodity futures. A stock index future obligates a fund to pay or receive an amount of cash based
upon the value of a stock index at a specified date in the future, including the Standard & Poor’s 500 Composite Stock
Price Index, NASDAQ High Technology Index or similar foreign indices. An interest rate futures contract obligates
a fund to purchase or sell an amount of a specific debt security at a future date at a specified price. A currency futures contract
obligates a fund to purchase or sell an amount of a specific currency at a future date at a future price.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
If
the Fund or an Underlying Fund purchases an option and the price of the underlying stock fails to move in the expected direction,
the Fund or Underlying Fund will lose most or all of the amount the fund paid for the option, plus commission costs. If an Underlying
Fund writes (“sells”) an option and the price of the underlying stock fails to move in the expected direction, the
Underlying Fund’s losses could easily exceed the proceeds it received when it wrote the options.
Private
Debt Risk
The
Fund may invest in debt issued by non-listed funds and BDCs (“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 publically traded-vehicles.
For certain Private Debt investments, 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.
Real
Estate Investment Trust (“REIT”) Risks
The
Underlying Funds may invest in equity and mortgage REITs. Equity REITs invest in real estate, and mortgage REITs invest in loans
secured by real estate. Investing in REITs involves certain unique risks in addition to those risks associated with investing
in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management
skills, are not diversified, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs also
are subject to the possibilities of failing to qualify for tax free pass-through of income under the Internal Revenue Code of
1986, as amended (the “Code”), and failing to maintain their exemption from registration under the 1940 Act. Investment
in REITs involves risks similar to those associated with investing in small capitalization companies, and REITs (especially mortgage
REITs) are subject to interest rate risks. When interest rates decline, the value of a REIT’s investment in fixed rate obligations
can be expected to rise. Conversely, when interest rates rise, the value of a REIT’s investment in fixed rate obligations
can be expected to decline. By investing in REITs directly or indirectly through the Underlying Funds, the Fund will indirectly
bear its proportionate share of the expenses of the REITs. The expenses at the REIT level are not included in the Fund’s
expense table as acquired fund fees and expenses.
Securities
Lending Risks
The
Underlying Funds may engage in securities lending. Securities lending involves counterparty risk, including the risk that
the loaned securities may not be returned in a timely manner and/or a loss of rights in the collateral if the borrower or the
lending agent defaults. This risk is increased when an Underlying Fund’s loans are concentrated with a single or
limited number of borrowers. In addition, an Underlying Fund bears the risk of loss in connection with the investments of the
cash collateral
it receives from the borrower. To the extent that the value or return of an Underlying Fund’s investments of the cash collateral
declines below the amount owed to a borrower, the Underlying Fund may incur losses that exceed the amount it earned in lending
the security.
| Annual Report
| July 31, 2022 |
89 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Securities
Risks
The
value of the Fund or an Underlying Fund may decrease in response to the activities and financial prospects of individual securities
in the Fund’s portfolio.
Senior
Loan Risks
The
Underlying Funds may invest in senior secured floating rate and fixed-rate loans (“Senior Loans”). There is less readily
available and reliable information about most Senior Loans than is the case for many other types of instruments, including listed
securities. Senior Loans are not listed on any national securities exchange or automated quotation system and as such, many Senior
Loans are illiquid, meaning that an Underlying Fund may not be able to sell them quickly at a fair price. To the extent that a
secondary market does exist for certain Senior Loans, the market is more volatile than for liquid, listed securities and may be
subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods. The market for Senior Loans
could be disrupted in the event of an economic downturn or a substantial increase or decrease in interest rates. Senior Loans,
like most other debt obligations, are subject to the risk of default. Default in the payment of interest or principal on a Senior
Loan will result in a reduction of income to the Fund, a reduction in the value of the Senior Loan and a potential decrease in
the Fund’s NAV of the Common Shares.
The
Underlying Funds may acquire or hold Senior Loans of borrowers that are experiencing, or are more likely to experience, financial
difficulty, including Senior Loans issued to highly leveraged borrowers or borrowers that have filed for bankruptcy protection.
Borrowers may have outstanding debt obligations, including Senior Loans, that are rated below investment grade. An Underlying
Fund may invest a substantial portion of its assets in Senior Loans that are rated below investment grade or that are unrated
at the time of purchase but are deemed by the Underlying Fund’s adviser’s to be of comparable quality. The values
of Senior Loans of borrowers that have filed for bankruptcy protection or that are experiencing payment difficulty could be affected
by, among other things, the assessment of the likelihood that the lenders ultimately will receive repayment of the principal amount
of such Senior Loans, the likely duration, if any, of a lapse in the scheduled payment of interest and repayment of principal
and prevailing interest rates. There is no assurance that an Underlying Fund will be able to recover any amount on Senior Loans
of such borrowers or that sale of the collateral granted in connection with Senior Loans would raise enough cash to satisfy the
borrower’s payment obligation or that the collateral can or will be liquidated. In the event of bankruptcy, liquidation
may not occur and the bankruptcy court may not give lenders the full benefit of their senior position in the capital structure
of the borrower.
LIBOR
Risk
Certain
Senior Loans may be based on floating rates, such as LIBOR. On July 27, 2017, the Chief Executive of the UK Financial Conduct
Authority (“FCA”), which regulates LIBOR, announced that the FCA no longer persuades nor requires banks to submit
rates for the calculation of LIBOR. The FCA and ICE Benchmark Administrator have since announced that most LIBOR settings are
no longer published
and a majority of U.S. dollar LIBOR settings will cease publication after June 30, 2023. The U.S. Federal Reserve, based on the
recommendations of the New York Federal Reserve's Alternative Reference Rate Committee (comprised of major derivative market participants
and their regulators), has begun publishing Secured Overnight Financial Rate Data ("SOFR") that is intended to replace
U.S. dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun
publication. Markets are slowly developing in response to these new reference rates. Uncertainty related to the liquidity impact
of the change in rates, and how to appropriately adjust these rates at the time of transition, poses risks for the Fund. The expected
discontinuation of LIBOR could have a significant impact on the financial markets in general and may also present heightened risk
to market participants, including public companies, investment advisers, investment companies, and broker-dealers. The risks associated
with this discontinuation and transition will be exacerbated if the work necessary to effect an orderly transition to an alternative
reference rate is not completed in a timely manner. Accordingly, it is difficult to predict the full impact of the transition
away from LIBOR on the Fund or the Underlying Funds until new reference rates and fallbacks for both legacy and new instruments
and contracts are commercially accepted and market practices become settled. The transition process might lead to increased volatility
and illiquidity in markets for instruments whose terms currently include LIBOR. It could also lead to a reduction in the value
of some LIBOR-based investments. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period,
these effects could occur prior to the completion of the transition. All of the aforementioned may adversely affect the Fund’s
performance or NAV.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Short
Sale Risks
The
Fund and Underlying Funds may sell securities short. Positions in shorted securities are speculative and 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), directly or indirectly through the investments in Underlying Funds, and may result in higher taxes, which reduce
the Fund’s return.
If
a security sold short increases in price, a fund may have to cover its short position at a higher price than the short sale price,
resulting in a loss. With respect to a fund’s short positions, the Fund must borrow those securities to make delivery to
the buyer. A fund may not be able to borrow a security that it needs to deliver or it may not be able to close out a short position
at an acceptable price and may have to sell related long positions before it had intended to do so. As a result, a fund may not
be able to successfully implement its short sale strategy due to the limited availability of desired securities or for other reasons.
When
borrowing a security for delivery to a buyer, a fund also may be required to pay a premium and other transaction costs, which
would increase the cost of the security sold short. A fund must normally repay to the lender an amount equal to any dividends
or interest earned while the loan is outstanding. The amount of any gain will be decreased, and the amount of any loss increased,
by the amount of the premium, dividends, interest or expenses a fund may be required to pay in connection with the short sale.
Also, the lender of a security may terminate the loan at a time when a fund is unable to borrow the same security for delivery.
In that case, a fund would need to purchase a
replacement security at the then current market price or “buy in” by paying the lender an amount equal to the costs
of purchasing the security.
| Annual Report
| July 31, 2022 |
91 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Until
a fund replaces a borrowed security, it is required to maintain a segregated account of cash or liquid assets to cover the fund’s
short position. Securities held in a segregated account cannot be sold while the position they are covering is outstanding, unless
they are replaced with similar securities. Additionally, a fund must maintain sufficient liquid assets (less any additional collateral
held by the broker), marked-to-market daily, to cover its short sale obligations. This may limit a fund’s investment flexibility,
as well as its ability to meet redemption requests or other current obligations.
In
addition, until a fund replaces a borrowed instrument, a fund may also be required to maintain short sale proceeds with the lending
broker as collateral. Moreover, a fund will be required to make margin payments to the lender during the term of the borrowing
if the value of the security it borrowed (and sold short) increases. Thus, short sales involve credit exposure to the broker that
executes the short sales. In the event of the bankruptcy or other similar insolvency with respect to a broker with whom a fund
has an open short position, a fund may be unable to recover, or delayed in recovering, any margin or other collateral held with
or for the lending broker.
Because
a fund’s loss on a short sale arises from increases in the value of the security sold short, the loss is theoretically unlimited.
In certain cases, purchasing a security to cover a short position can itself cause the price of the security to rise further,
which would exacerbate the loss. Conversely, gains on short sales, after transaction and related costs, are generally the difference
between the price at which a fund sold the borrowed security and the price it paid to purchase the security for delivery to the
buyer. By contrast, a fund’s loss on a long position arises from decreases in the value of the security and is limited by
the fact that a security’s value cannot drop below zero.
By
investing the proceeds received from selling securities short, the Fund is using a form of leverage, which creates special risks.
The use of leverage may increase the Fund’s exposure to long equity positions and make any change in the Fund’s NAV
greater than it would be without the use of leverage. This could result in increased volatility of returns. There is no guarantee
that the Fund will leverage its portfolio, or if it does, that the Fund’s leveraging strategy will be successful. The Fund
also cannot guarantee that the use of leverage will produce a higher return on an investment.
Special
Purpose Acquisition Companies Risks
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. 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 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.
Investments in SPACs may be illiquid and/or be subject
to restrictions on resale. To the extent the SPAC is invested in cash or similar securities, this may impact a Fund’s ability
to meet its investment objective.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The
officers and directors of a SPAC may operate multiple SPACs and could have conflicts of interest in determining to which SPAC
a particular business opportunity should be presented. In such circumstances, there can be no assurance that a given business
opportunity would be presented to the SPAC in which the Fund holds an investment.
Structured
Notes Risks
The
Underlying Funds may invest in structured notes. Structured notes are subject to a number of fixed income risks including general
market risk, interest rate risk, and the risk that the issuer on the note may fail to make interest and/or principal payments
when due, or may default on its obligations entirely. In addition, because the performance of structured notes tracks the performance
of the underlying debt obligation, structured notes generally are subject to more risk than investing in a simple note or bond
issued by the same issuer. It is impossible to predict whether the referenced factor (such as an index or interest rate) or prices
of the underlying securities will rise or fall. To the extent that an Underlying Fund invests in structured notes, the Underlying
Fund may be more volatile than other funds that do not invest in structured notes. The actual trading prices of structured notes
may be significantly different from the principal amount of the notes. If an Underlying Fund sells the structured notes prior
to maturity, it may suffer a loss of principal. At final maturity, structured notes may be redeemed in cash or in kind, which
is at the discretion of the issuer. If the notes are redeemed in kind, a fund would receive shares of stock at a depressed price.
To the extent that a structured note is not principal-protected through an insurance feature, the note’s principal will
not be protected. In the case of a decrease in the value of the underlying asset, an Underlying Fund would receive shares at a
value less than the original amount invested; while an increase in the value of an underlying asset will not increase the return
on the note.
Swap
Risks
The
Fund and the Underlying Funds may enter into interest rate, index, total return and currency swap agreements. Swap agreements
are two-party contracts under which the fund and a counterparty, such as a broker or dealer, agree to exchange the returns (or
differentials in rates of return) earned or realized on an agreed-upon underlying asset or investment over the term of the swap.
The use of swap transactions is a highly specialized activity which involves strategies and risks different from those associated
with ordinary portfolio security transactions. If the Subadviser or an Underlying Fund’s investment adviser is incorrect
in its forecasts of default risks, market spreads, liquidity or other applicable factors or events, the investment performance
of the Fund or Underlying Fund would diminish compared with what it would have been if these techniques were not used. Swaps and
swap options can be used for a variety of purposes, including: to manage fund exposure to changes in interest or foreign currency
exchange rates and credit quality; as an efficient means of adjusting fund overall exposure to certain markets; in an effort to
enhance income or total return or protect the value of portfolio securities; to serve as a cash management tool; and to adjust
portfolio duration.
There
are risks in the use of swaps. Swaps could result in losses if interest or foreign currency exchange rates or credit quality changes
are not correctly anticipated. Total return swaps could result
in losses if the reference index, security, or investments do not perform as anticipated. Total return swaps involve an enhanced
risk that the issuer or counterparty will fail to perform its contractual obligations. Total return swaps may effectively add
leverage to the Fund’s portfolio because the Fund would be subject to investment exposure on the full notional amount of
the swap. To the extent the Fund or an Underlying Fund enters into a total return swap on equity securities, the Fund or the Underlying
Fund will receive the positive performance of a notional amount of such securities underlying the total return swap. In exchange,
the Fund or the Underlying Fund will be obligated to pay the negative performance of such notional amount of securities. Therefore,
the Fund or the Underlying Fund assumes the risk of a substantial decrease in the market value of the equity securities. The use
of swaps may not always be successful; using them could lower fund total return, their prices can be highly volatile, and the
potential loss from the use of swaps can exceed the fund’s initial investment in such instruments. Also, the other party
to a swap agreement could default on its obligations or refuse to cash out the fund’s investment at a reasonable price,
which could turn an expected gain into a loss.
| Annual Report
| July 31, 2022 |
93 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Currently,
certain categories of interest rate swaps are subject to mandatory clearing, and more are expected to be cleared in the future.
The counterparty risk for cleared derivatives is generally expected to be lower than for uncleared over-the-counter derivative
transactions as each party to a transaction looks only to the central clearing house for performance of obligations under the
transaction. However, there can be no assurance that a clearing house, or its members, will satisfy the clearing house’s
obligations to the fund or that the fund’s use of swaps will be advantageous.
Underlying
Fund Risks
The
Fund will invest in Underlying Funds such as other closed-end funds and ETFs. The expenses of the Fund will generally be higher
than the direct expenses of other fund shares. The Fund will indirectly bear fees and expenses charged by the Underlying Funds
in which the Fund invests in addition to the Fund’s direct fees and expenses. The Fund may also incur brokerage costs when
it purchases shares of Underlying Funds. Furthermore, investments in Underlying Funds could affect the timing, amount and character
of distributions to Common Stockholders and therefore may increase the amount of taxes payable by investors in the Fund. The value
of your investment in the Fund will go up and down with the prices of Underlying Fund shares (and other securities) in which the
Fund invests. Similarly, the value of the Fund’s investments in Underlying Funds will go up and down with the prices of
the securities in which the Underlying Funds invest.
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.
As
the Fund will invest at least 80% of its Managed Assets in Underlying Funds, the Fund’s performance will depend to a greater
extent on the overall performance of closed-end funds, ETFs, BDCs and SPACs generally, in addition to the performance of the specific
Underlying Funds (and other assets) in which the Fund invests. The use of leverage by Underlying Funds magnifies gains and losses
on amounts invested and increases the risks associated with investing in Underlying Funds. Further, the Underlying Funds are not
subject to the Fund’s investment policies and restrictions.
The Fund generally receives information regarding the portfolio holdings of Underlying Funds only when that information is made
available to the public. The Fund cannot dictate how the Underlying Funds invest their assets. The Underlying Funds may invest
their assets in securities and other instruments, and may use investment techniques and strategies, that are not described in
this disclosure. Common Stockholders will bear two layers of fees and expenses with respect to the Fund’s investments in
Underlying Funds because each of the Fund and the Underlying Fund will charge fees and incur separate expenses. In addition, subject
to applicable 1940 Act limitations, the Underlying Funds themselves may purchase securities issued by registered and unregistered
funds (e.g., common stock, preferred stock, auction rate preferred stock), and those investments would be subject to the risks
associated with Underlying Funds and unregistered funds (including a third layer of fees and expenses, i.e., the Underlying Fund
will indirectly bear fees and expenses charged by the funds in which the Underlying Fund invests, in addition to the Underlying
Fund’s own fees and expenses). An Underlying Fund with positive performance may indirectly receive a performance fee from
the Fund, even when the Fund’s overall returns are negative. Additionally, the Fund’s investment in an Underlying
Fund may result in the Fund’s receipt of cash in excess of the Underlying Fund’s earnings; if the Fund distributes
these amounts, the distributions could constitute a return of capital to Fund shareholders for federal income tax purposes. As
a result of these factors, the use of the fund of funds structure by the Fund could therefore affect the amount, timing and character
of distributions to shareholders.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The
Fund may invest in shares of closed-end funds that are trading at a discount to NAV or at a premium to NAV and closed-end funds
may not be able to outperform their benchmarks. There can be no assurance that the market discount on shares of any closed-end
fund purchased by the Fund will ever decrease. In fact, it is possible that this market discount may increase and the Fund may
suffer realized or unrealized capital losses due to further decline in the market price of the securities of such closed-end funds,
thereby adversely affecting the Fund’s NAV. The Fund’s investment in the Common Shares of closed-end funds that are
financially leveraged may create an opportunity for greater total return on its investment, but at the same time may be expected
to exhibit more volatility in market price and NAV than an investment in shares of investment companies without a leveraged capital
structure.
The
Fund may invest in BDCs. BDCs generally invest in less mature U.S. private companies or thinly traded U.S. public companies which
involve greater risk than well-established publicly-traded companies. While BDCs are expected to generate income in the form of
dividends, certain BDCs during certain periods of time may not generate such income. The Fund will indirectly bear its proportionate
share of any management fees and other operating expenses incurred by the BDCs and of any performance-based or incentive fees
payable by the BDCs in which it invests, in addition to the expenses paid by the Fund. A BDC’s incentive fee may be very
high, vary from year to year and be payable even if the value of the BDC’s portfolio declines in a given time period. Incentive
fees may create an incentive for a BDC’s manager to make investments that are risky or more speculative than would be the
case in the absence of such compensation arrangements, and may also encourage the BDC’s manager to use leverage to increase
the return on the BDC’s investments. The use of leverage by BDCs magnifies gains and losses on amounts invested and increases
the risks associated with investing in BDCs. A BDC may make investments with a larger amount of risk of volatility and loss of
principal than other investment options and may also be highly speculative and aggressive.
| Annual Report
| July 31, 2022 |
95 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
The
1940 Act imposes certain constraints upon the operations of a BDC. For example, BDCs are required to invest at least 70% of their
total assets primarily in securities of U.S. private companies or thinly traded U.S. public companies, cash, cash equivalents,
U.S. government securities and high quality debt investments that mature in one year or less. Generally, little public information
exists for private and thinly traded companies in which a BDC may invest and there is a risk that investors may not be able to
make a fully informed evaluation of a BDC and its portfolio of investments. With respect to investments in debt instruments, there
is a risk that the issuers of such instruments may default on their payments or declare bankruptcy. Many debt investments in which
a BDC may invest will not be rated by a credit rating agency and will be below investment grade quality. These investments are
commonly referred to as “junk bonds” and have predominantly speculative characteristics with respect to an issuer’s
capacity to make payments of interest and principal. Although lower grade securities are potentially higher yielding, they are
also characterized by high risk. In addition, the secondary market for lower grade securities may be less liquid than that of
higher rated securities. Certain BDCs may also be difficult to value since many of the assets of BDCs do not have readily ascertainable
market values.
Additionally,
a BDC may only incur indebtedness in amounts such that the BDC’s asset coverage ratio of total assets to total senior securities
equals at least 200% after such incurrence. These limitations on asset mix and leverage may affect the way that the BDC raises
capital. BDCs compete with other entities for the types of investments they make, and such entities are not necessarily subject
to the same investment constraints as BDCs.
Index-based
ETFs (and other index funds) in which the Fund may invest may not be able to replicate exactly the performance of the indices
they track or benchmark because the total return generated by the securities will be reduced by transaction costs incurred in
adjusting the actual balance of the securities. ETFs may trade at a price above (premium) or below (discount) their net asset
value, especially during periods of significant market volatility or stress, causing investors to pay significantly more or less
than the value of the ETF’s underlying portfolio. Certain ETFs traded on exchanges may be thinly traded and experience large
spreads between the “ask” price quoted by a seller and the “bid” price offered by a buyer. While the creation/redemption
feature is designed to make it likely that ETF shares normally will trade close to their NAVs, market prices are not expected
to correlate exactly to the shares’ NAVs due to timing reasons, supply and demand imbalances and other factors. In addition,
disruptions to creations and redemptions, adverse developments impacting market makers, authorized participants or other market
participants, high market volatility or lack of an active trading market for an ETF’s shares (including through a trading
halt) may result in market prices that differ significantly from its NAV or to the intraday value of the ETF’s holdings.
An active trading market for shares of an ETF may not develop or be maintained. When all or a portion of an ETF’s underlying
securities trade in a foreign market that is closed during the time the domestic market in which the ETF’s shares are listed
and traded is open, there may be changes between the last quote from the closed foreign market and the value of such underlying
security during the ETF’s trading day. In times of market stress, market makers or authorized participants may step away
from their respective roles in making a market in shares of the ETF and in executing purchase or redemption orders. During such
times, the ETF’s shares may trade at a wider than normal discount or premium and may possibly face trading halts. Additionally,
the underlying securities of an ETF may be traded outside of a collateralized settlement system, such as the National Securities
Clearing Corporation, a clearing agency that is registered with the SEC. There are a limited number of financial institutional
that may act as authorized participants that pose collateral for certain
trades on an agency basis. To the extent that these authorized participants exit the business or are unable to proceed with creation
and/or redemption orders with the ETF, and no other authorized participant is able to step forward, ETF shares may trade at a
discount to net asset value and possibly face trading halts and/or delisting. Additionally, in stressed market conditions, the
market for ETF shares may become less liquid in response to deteriorating liquidity in the markets for such ETF’s underlying
portfolio holdings, this may cause the shares of the ETF to trade at a wider than normal discount or premium. Furthermore, purchases
and redemptions of creation units primarily in cash rather than in-kind may cause an ETF to incur certain costs, such as brokerage
costs, taxable gains or other losses that it may not have incurred with an in-kind purchase or redemption. These costs may be
borne by the ETF and decrease the ETF’s NAV to the extent they are not offset by a transaction fee payable by an authorized
participant.
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
In
addition, index-based ETFs (and other index funds) will incur expenses not incurred by their applicable indices. Certain securities
comprising the indices tracked by these investments may, from time to time, temporarily be unavailable, which may further impede
the ability of the index-based ETFs and other index funds to track their applicable indices. Underlying Funds may not be able
to match or outperform their respective benchmarks. With sector ETFs, there is a risk that securities within the same group of
industries will decline in price due to sector-specific market or economic developments. The Fund may also invest in actively
managed ETFs that are subject to management risk as the ETF’s investment adviser will apply certain investment techniques
and risk analyses in making investment decisions. There can be no guarantee that these will produce the desired results.
Certain
of the Underlying Funds in which the Fund will invest may be taxed as regulated investment companies under Subchapter M of the
Code. To qualify and remain eligible for the special tax treatment accorded to regulated investment companies and their shareholders,
such Underlying Funds must meet certain source-of-income, asset diversification and annual distribution requirements. If an Underlying
Fund in which the Fund invests fails to qualify as a regulated investment company, such Underlying Fund would be liable for federal,
and possibly state, corporate taxes on its taxable income and gains. Such failure by an Underlying Fund could substantially reduce
the Underlying Fund’s net assets and the amount of income available for distribution to the Fund, which would in turn decrease
the total return of the Fund in respect of such investment.
The
Fund’s investments in Underlying Funds may be limited by provisions of the 1940 Act, which generally limit the amount the
Fund and its affiliates can invest in any one Underlying Fund to 3% of the Underlying Fund’s outstanding voting stock. As
a result, the Fund may hold a smaller position in an Underlying Fund than if it were not subject to this restriction. In addition,
to comply with provisions of the 1940 Act, in any matter upon which Underlying Fund stockholders are solicited to vote, the Subadviser
may be required to vote Underlying Fund shares in the same proportion as shares held by other stockholders of the Underlying Fund.
However, pursuant to exemptive orders issued by the SEC to various ETF sponsors, the Fund is permitted to invest in such Underlying
Funds in excess of the limits set forth in the 1940 Act subject to certain terms and conditions set forth in such exemptive orders.
| Annual Report
| July 31, 2022 |
97 |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
Warrant
Risks
The
Fund and the Underlying Funds may invest in warrants. 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. 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.
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 and SPACs 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; |
| RiverNorth Opportunities Fund, Inc. |
Summary of Updated Information
Regarding the Fund |
July 31, 2022 (Unaudited)
| (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 |
| (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
Manager Information
Since
the prior disclosure date, there have been no changes in the Fund’s portfolio managers or background.
Fund
Organizational Structure
Since
the prior disclosure date, there have been no changes in the Fund’s charter or by-laws that would delay or prevent a change
of control of the Fund that have not been approved by stockholders.
| Annual Report
| July 31, 2022 |
99 |
| 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. |
| Annual Report
| July 31, 2022 |
101 |
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|
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| |
|
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| RiverNorth
Capital Management, LLC |
|
ALPS
Advisors, Inc. |
| 360
South Rosemary Avenue, Suite 1420 |
|
1290
Broadway, Suite 1000 |
| West
Palm Beach, FL 33401 |
|
Denver,
CO 80203 |
Secondary
market support provided to the Fund by ALPS Advisors Inc.’s
affiliate, ALPS Portfolio Solutions Distributor, Inc., a FINRA
member.