N-Q 1 a13-21118_3nq.htm N-Q

 

As filed with the Securities and Exchange Commission on September 24, 2013

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

(811-22543)

 

KKR Income Opportunities Fund

(Exact name of registrant as specified in charter)

 

KKR Asset Management

555 California Street, 50th Floor

San Francisco, California 94104

(Address of principal executive offices) (Zip code)

 

U.S. Bancorp Fund Services. LLC

615 East Michigan Street

Milwaukee, WI 53202

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(415) 315-3620

 

 

Date of fiscal year end:

October 31, 2013

 

 

Date of reporting period:

July 31, 2013

 

 


 

Item 1. Schedule of Investments.

 


 

 Income Opportunities Fund

 

July 31, 2013

 

 

(Unaudited)

 

 

 

Schedule of Investments

 

 

 

 

 

Par†

 

Value

 

 

 

 

 

 

 

HIGH YIELD SECURITIES - 16.6%

 

 

 

 

 

Banks - 0.5%

 

 

 

 

 

SquareTwo Financial Corp.

 

 

 

 

 

11.625%, 04/01/2017

 

1,282,000

 

$

1,320,460

 

 

 

 

 

 

 

Capital Goods - 0.5%

 

 

 

 

 

Maxim Crane Works LP

 

 

 

 

 

12.250%, 04/15/2015 (a)

 

1,500,000

 

1,575,000

 

 

 

 

 

 

 

Consumer Durables & Apparel - 0.7%

 

 

 

 

 

Hot Topic, Inc.

 

 

 

 

 

9.250%, 06/15/2021 (a)

 

2,000,000

 

2,080,000

 

 

 

 

 

 

 

Diversified Financials - 0.3%

 

 

 

 

 

FTI Consulting, Inc.

 

 

 

 

 

6.000%, 11/15/2022

 

900,000

 

921,375

 

 

 

 

 

 

 

Health Care Equipment & Services - 2.2%

 

 

 

 

 

Select Medical Corp.

 

 

 

 

 

6.375%, 06/01/2021 (a)

 

6,500,000

 

6,305,000

 

 

 

 

 

 

 

Insurance - 1.4%

 

 

 

 

 

Towergate Finance PLC

 

 

 

 

 

10.500%, 02/15/2019 (a)

 

GBP  

2,500,000

 

3,974,291

 

 

 

 

 

 

 

Materials - 1.0%

 

 

 

 

 

American Rock Salt Co. LLC

 

 

 

 

 

8.250%, 05/01/2018 (a)

 

1,982,000

 

1,922,540

 

Kerling PLC

 

 

 

 

 

10.625%, 02/01/2017 (a)

 

EUR  

750,000

 

1,060,125

 

 

 

 

 

2,982,665

 

Media - 3.4%

 

 

 

 

 

CC Media Holdings, Inc.

 

 

 

 

 

7.625%, 03/15/2020

 

2,000,000

 

2,110,000

 

Good Sam Enterprises LLC

 

 

 

 

 

11.500%, 12/01/2016

 

570,000

 

609,900

 

Nara Cable Funding Ltd.

 

 

 

 

 

8.875%, 12/01/2018 (a)

 

3,000,000

 

3,150,000

 

Norcell Sweden Holding 2

 

 

 

 

 

10.750%, 09/29/2019 (a)

 

EUR  

2,700,000

 

3,864,871

 

 

 

 

 

9,734,771

 

Retailing - 0.7%

 

 

 

 

 

The Bon-Ton Department Stores, Inc.

 

 

 

 

 

8.000%, 06/15/2021 (a)

 

2,000,000

 

2,055,000

 

 

 

 

 

 

 

Software & Services - 2.2%

 

 

 

 

 

Epicor Software Corp.

 

 

 

 

 

9.000%, 06/15/2018 (a) (c)

 

1,000,000

 

1,007,500

 

iGATE Corp.

 

 

 

 

 

9.000%, 05/01/2016

 

5,000,000

 

5,393,750

 

 

 

 

 

6,401,250

 

 

1


 

 

 

Par†

 

Value

 

 

 

 

 

 

 

HIGH YIELD SECURITIES - 16.6% (continued)

 

 

 

 

 

Technology Hardware & Equipment - 0.7%

 

 

 

 

 

Sensata Technologies BV

 

 

 

 

 

4.875%, 10/15/2023 (a)

 

2,000,000

 

$

1,930,000

 

 

 

 

 

 

 

Telecommunication Services - 2.3%

 

 

 

 

 

GCI, Inc.

 

 

 

 

 

8.625%, 11/15/2019

 

2,000,000

 

2,075,000

 

6.750%, 06/01/2021

 

5,006,000

 

4,705,640

 

 

 

 

 

6,780,640

 

Utilities - 0.7%

 

 

 

 

 

Calpine Corp.

 

 

 

 

 

7.875%, 01/15/2023 (a)

 

2,000,000

 

2,170,000

 

 

 

 

 

 

 

TOTAL HIGH YIELD SECURITIES (amortized cost $48,431,582)

 

 

 

48,230,452

 

 

 

 

 

 

 

LEVERAGED LOANS - 3.7%

 

 

 

 

 

Food, Beverage & Tobacco - 2.6%

 

 

 

 

 

Arysta Lifescience SPC LLC, TL 2L 05/13

 

 

 

 

 

8.250%, 11/30/2020 (b)

 

3,800,000

 

3,828,500

 

CTI Foods Holding Co., LLC, TL 2L 05/13

 

 

 

 

 

8.250%, 06/28/2021 (b)

 

3,800,000

 

3,776,250

 

 

 

 

 

7,604,750

 

Insurance - 0.6%

 

 

 

 

 

Sedgwick Claims Management Service, Inc., TL 2L 05/13

 

 

 

 

 

8.000%, 12/12/2018 (b)

 

1,750,000

 

1,782,813

 

 

 

 

 

 

 

Technology Hardware & Equipment - 0.5%

 

 

 

 

 

Websense, Inc., TL 2L 05/13

 

 

 

 

 

8.250%, 12/24/2020 (b)

 

1,254,841

 

1,258,762

 

 

 

 

 

 

 

TOTAL LEVERAGED LOANS (amortized cost $10,699,559)

 

 

 

10,646,325

 

 

 

 

Shares

 

 

 

MONEY MARKET FUND - 100.3%

 

 

 

 

 

BlackRock Liquidity TempFund Portfolio

 

 

 

 

 

0.037%  (d)

 

291,375,000

 

291,375,000

 

TOTAL MONEY MARKET FUND (cost $291,375,000)

 

 

 

291,375,000

 

 

 

 

 

 

 

TOTAL INVESTMENTS (cost $350,506,141) †† - 120.6%

 

 

 

350,251,777

 

LIABILITIES EXCEEDING OTHER ASSETS, NET - (20.6)%

 

 

 

(59,762,680

)

NET ASSETS - 100.0%

 

 

 

$

290,489,097

 

 

†                               In U.S. Dollars unless otherwise indicated.

††                        At July 31, 2013, the tax basis cost of the Fund’s investments was $350,506,141 and the unrealized appreciation and depreciation were $7,500 and $(261,864), respectively.

(a)                       Securities exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended.  These securities may only be resold to qualified institutional buyers in transactions exempt from registration.  As of July 31, 2013, these securities amounted to $31,094,327, which represents 10.7% of net assets.

 

2


 

(b)                       Variable rate security, the coupon rate shown is the effective rate as of July 31, 2013.

(c)                        Represents a payment-in-kind security which may pay interest/dividend in additional par/shares.

(d)                       Seven-day yield as of July 31, 2013.

 

GBP - Great British Pound

EUR - Euro

PLC  - Public Limited Company

 

Country Weightings

 

 

 

(% of Net Assets)

 

 

 

 

 

 

 

United States

 

115.8

%

United Kingdom

 

1.7

%

Sweden

 

1.3

%

Ireland

 

1.1

%

Netherlands

 

0.7

%

 

 

120.6

%

Liabilities Exceeding Other Assets, Net

 

(20.6

)%

 

 

100.0

%

 

The table below sets forth information about the levels within the fair value hierarchy which the Fund’s investments were measured at July 31, 2013:

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Investments in Securities

 

 

 

 

 

 

 

 

 

High Yield Securities

 

$

—

 

$

48,230,452

 

$

—

 

$

48,230,452

 

Leveraged Loans

 

—

 

10,646,325

 

—

 

10,646,325

 

Money Market Fund

 

291,375,000

 

—

 

—

 

291,375,000

 

Total Investments in Securities

 

$

291,375,000

 

$

58,876,777

 

$

—

 

$

350,251,777

 

 

For information on the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to the Fund’s Prospectus.

 

3


 

Item 2. Controls and Procedures.

 

(a)          The Registrant’s President and Principal Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) (17 CFR 270.30a-3(c)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(d)).

 

(b)          There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) (17 CFR 270.30a-3(d)) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

 

Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)).  Filed herewith.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

KKR Income Opportunities Fund

 

 

By (Signature and Title)

/s/ Suzanne Donohoe

 

Suzanne Donohoe, President

 

Date

9/20/13

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

/s/ Suzanne Donohoe

 

Suzanne Donohoe, President

 

Date

9/20/13

 

By (Signature and Title)

/s/ Michael R. McFerran

 

Michael R. McFerran, Treasurer and Principal Financial Officer

 

Date

9/18/13