N-Q 1 a14-21124_1nq.htm N-Q

 

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, 2014

 

 

Date of reporting period:

July 31, 2014

 

 


 

Item 1. Schedule of Investments.

 


 

GRAPHIC

Income Opportunities Fund

July 31, 2014

(Unaudited)

 

Schedule of Investments

 

 

 

Par†

 

Value

 

HIGH YIELD SECURITIES - 82.4%

 

 

 

 

 

Aerospace & Defense - 2.6%

 

 

 

 

 

B/E Aerospace, Inc.

 

 

 

 

 

5.250%, 04/01/2022

 

3,368,000

 

$

3,650,070

 

Bombardier, Inc.

 

 

 

 

 

6.125%, 01/15/2023 (a) (h)

 

4,327,000

 

4,262,095

 

 

 

 

 

7,912,165

 

Airlines - 0.8%

 

 

 

 

 

Sabre, Inc.

 

 

 

 

 

8.500%, 05/15/2019 (a)

 

2,170,000

 

2,349,025

 

 

 

 

 

 

 

Banks - 4.9%

 

 

 

 

 

SquareTwo Financial Corp.

 

 

 

 

 

11.625%, 04/01/2017

 

15,009,000

 

14,671,298

 

 

 

 

 

 

 

Building Products - 2.5%

 

 

 

 

 

Calcipar SA

 

 

 

 

 

6.875%, 05/01/2018 (a) (h)

 

400,000

 

416,000

 

Jeld-Wen Escrow Corp.

 

 

 

 

 

12.250%, 10/15/2017 (a)

 

6,653,000

 

7,085,445

 

 

 

 

 

7,501,445

 

Chemicals - 2.3%

 

 

 

 

 

Ineos US Finance LLC

 

 

 

 

 

8.375%, 02/15/2019 (a)

 

2,600,000

 

2,808,000

 

Kleopatra Acquisition Corp.

 

 

 

 

 

11.000%, 08/15/2017 (a) (d)

 

EUR

1,060,000

 

1,483,262

 

Pinnacle Agriculture Holdings LLC

 

 

 

 

 

9.000%, 11/15/2020 (a)

 

2,139,000

 

2,299,425

 

 

 

 

 

6,590,687

 

Commercial Services & Supplies - 0.9%

 

 

 

 

 

Verisure Holding AB

 

 

 

 

 

8.750%, 09/01/2018 (a) (h)

 

EUR

1,950,000

 

2,781,126

 

 

 

 

 

 

 

Construction Materials - 8.4%

 

 

 

 

 

Cemex Materials LLC

 

 

 

 

 

7.700%, 07/21/2025 (a)

 

13,760,000

 

15,885,920

 

Summit Materials Holdings LP

 

 

 

 

 

10.500%, 01/31/2020

 

8,395,000

 

9,339,437

 

 

 

 

 

25,225,357

 

Electronic Equipment, Instruments & Components - 5.3%

 

 

 

 

 

Artesyn Technologies, Inc.

 

 

 

 

 

9.750%, 10/15/2020 (a)

 

9,594,000

 

9,450,090

 

Flextronics International Ltd.

 

 

 

 

 

5.000%, 02/15/2023 (h)

 

2,250,000

 

2,283,750

 

Sensata Technologies BV

 

 

 

 

 

4.875%, 10/15/2023 (a) (h)

 

3,882,000

 

3,843,180

 

 

 

 

 

15,577,020

 

Food & Staples Retailing - 1.1%

 

 

 

 

 

Brake Bros Ltd.

 

 

 

 

 

7.125%, 12/15/2018 (a) (h)

 

GBP

1,903,000

 

3,229,230

 

 

 

 

 

 

 

Health Care Providers & Services - 4.9%

 

 

 

 

 

Gentiva Health Services, Inc.

 

 

 

 

 

11.500%, 09/01/2018 (f)

 

1,080,000

 

1,144,800

 

 

1


 

 

 

Par†

 

Value

 

HIGH YIELD SECURITIES — 82.4% (continued)

 

 

 

 

 

Health Care Providers & Services — 4.9% (continued)

 

 

 

 

 

HealthSouth Corp.

 

 

 

 

 

5.750%, 11/01/2024

 

1,173,000

 

$

1,225,785

 

Select Medical Corp.

 

 

 

 

 

6.375%, 06/01/2021

 

11,825,000

 

12,120,625

 

 

 

 

 

14,491,210

 

Hotels, Restaurants & Leisure - 2.3%

 

 

 

 

 

Boyd Gaming Corp.

 

 

 

 

 

9.000%, 07/01/2020

 

1,946,000

 

2,082,220

 

Isle Of Capri Casinos, Inc.

 

 

 

 

 

5.875%, 03/15/2021

 

3,726,000

 

3,819,150

 

PizzaExpress Ltd.

 

 

 

 

 

8.625%, 08/01/2022 (a) (h)

 

GBP

225,000

 

374,170

 

6.625%, 08/01/2021 (a) (h)

 

GBP

218,000

 

362,070

 

 

 

 

 

6,637,610

 

Household Durables - 0.7%

 

 

 

 

 

Masonite International Corp.

 

 

 

 

 

8.250%, 04/15/2021 (a) (h)

 

2,015,000

 

2,156,050

 

 

 

 

 

 

 

Household Products - 1.4%

 

 

 

 

 

Harbinger Group, Inc.

 

 

 

 

 

7.875%, 07/15/2019

 

3,479,000

 

3,774,715

 

7.750%, 01/15/2022

 

471,000

 

479,243

 

 

 

 

 

4,253,958

 

Independent Power and Renewable Electricity Producers - 1.9%

 

 

 

 

 

NRG Energy, Inc.

 

 

 

 

 

6.625%, 03/15/2023

 

5,525,000

 

5,690,750

 

 

 

 

 

 

 

Insurance - 5.4%

 

 

 

 

 

Ambac Assurance Corp.

 

 

 

 

 

5.100%, 06/07/2020 (a)

 

1,671,000

 

1,871,520

 

Towergate Finance PLC

 

 

 

 

 

10.500%, 02/15/2019 (a) (h)

 

GBP

4,242,000

 

6,624,656

 

8.500%, 02/15/2018 (a) (h)

 

GBP

4,600,000

 

7,688,541

 

 

 

 

 

16,184,717

 

Internet Software & Services - 0.7%

 

 

 

 

 

VeriSign, Inc.

 

 

 

 

 

4.625%, 05/01/2023

 

1,000,000

 

975,000

 

West Corp.

 

 

 

 

 

5.375%, 07/15/2022 (a)

 

1,132,000

 

1,098,040

 

 

 

 

 

2,073,040

 

IT Services - 1.0%

 

 

 

 

 

iPayment Investors LP

 

 

 

 

 

10.250%, 05/15/2018

 

3,597,000

 

3,075,435

 

 

 

 

 

 

 

Machinery - 0.6%

 

 

 

 

 

The Manitowoc Co., Inc.

 

 

 

 

 

5.875%, 10/15/2022

 

1,544,000

 

1,655,940

 

 

2


 

 

 

Par†

 

Value

 

HIGH YIELD SECURITIES — 82.4% (continued)

 

 

 

 

 

Media - 10.6%

 

 

 

 

 

Cequel Communications Holdings LLC

 

 

 

 

 

5.125%, 12/15/2021 (a)

 

2,147,000

 

$

2,066,488

 

Charter Communications, Inc.

 

 

 

 

 

6.625%, 01/31/2022

 

1,842,000

 

1,934,100

 

Clear Channel Outdoor, Inc., Series B

 

 

 

 

 

7.625%, 03/15/2020

 

5,597,000

 

5,876,850

 

Intelsat Jackson Holdings SA

 

 

 

 

 

5.500%, 08/01/2023 (h)

 

6,104,000

 

5,859,840

 

Lamar Media Corp.

 

 

 

 

 

5.000%, 05/01/2023

 

6,053,000

 

6,000,036

 

Live Nation Entertainment, Inc.

 

 

 

 

 

7.000%, 09/01/2020 (a)

 

1,821,000

 

1,962,127

 

Sirius XM Holdings, Inc.

 

 

 

 

 

5.250%, 08/15/2022 (a)

 

1,956,000

 

2,044,020

 

4.625%, 05/15/2023 (a)

 

4,260,000

 

3,961,800

 

Virgin Media, Inc.

 

 

 

 

 

6.375%, 04/15/2023 (a) (h)

 

1,873,000

 

1,966,650

 

 

 

 

 

31,671,911

 

Multiline Retail - 1.3%

 

 

 

 

 

The Bon-Ton Department Stores, Inc.

 

 

 

 

 

8.000%, 06/15/2021

 

4,237,000

 

3,855,670

 

 

 

 

 

 

 

Multi-Utilities - 1.2%

 

 

 

 

 

Calpine Corp.

 

 

 

 

 

7.875%, 01/15/2023 (a)

 

3,126,000

 

3,399,525

 

5.875%, 01/15/2024 (a)

 

215,000

 

224,138

 

 

 

 

 

3,623,663

 

Oil, Gas & Consumable Fuels - 5.9%

 

 

 

 

 

Bill Barrett Corp.

 

 

 

 

 

7.000%, 10/15/2022

 

3,800,000

 

3,895,000

 

Hilcorp Energy I LP (Hilcorp Finance Co.)

 

 

 

 

 

8.000%, 02/15/2020 (a)

 

1,950,000

 

2,076,750

 

7.625%, 04/15/2021 (a)

 

425,000

 

455,813

 

SandRidge Energy, Inc.

 

 

 

 

 

7.500%, 02/15/2023

 

5,000,000

 

5,212,500

 

7.500%, 03/15/2021

 

5,761,000

 

5,991,440

 

 

 

 

 

17,631,503

 

Real Estate Management & Development - 1.2%

 

 

 

 

 

Realogy Group LLC

 

 

 

 

 

7.875%, 02/15/2019 (a)

 

3,494,000

 

3,686,170

 

 

 

 

 

 

 

Semiconductors & Semiconductor Equipment - 0.6%

 

 

 

 

 

Amkor Technology, Inc.

 

 

 

 

 

7.375%, 05/01/2018

 

1,819,000

 

1,887,212

 

 

 

 

 

 

 

Software - 2.6%

 

 

 

 

 

Datatel, Inc.

 

 

 

 

 

9.625%, 12/01/2018 (a) (d)

 

1,433,000

 

1,447,330

 

Epicor Software Corp.

 

 

 

 

 

9.000%, 06/15/2018 (a) (d)

 

6,045,000

 

6,165,900

 

 

 

 

 

7,613,230

 

 

3


 

 

 

Par†

 

Value

 

HIGH YIELD SECURITIES — 82.4% (continued)

 

 

 

 

 

Specialty Retail - 3.2%

 

 

 

 

 

Guitar Center, Inc.

 

 

 

 

 

6.500%, 04/15/2019 (a) (f)

 

4,085,000

 

$

3,880,750

 

Gymboree Corp.

 

 

 

 

 

9.125%, 12/01/2018

 

1,993,000

 

1,205,765

 

J.C. Penney Corp., Inc.

 

 

 

 

 

7.950%, 04/01/2017

 

449,000

 

446,755

 

7.650%, 08/15/2016

 

76,000

 

76,000

 

5.750%, 02/15/2018

 

100,000

 

91,500

 

5.650%, 06/01/2020

 

3,517,000

 

3,068,583

 

The Mens Wearhouse, Inc.

 

 

 

 

 

7.000%, 07/01/2022 (a) (f)

 

730,000

 

759,200

 

 

 

 

 

9,528,553

 

Textiles, Apparel & Luxury Goods - 2.1%

 

 

 

 

 

Hot Topic, Inc.

 

 

 

 

 

12.000%, 05/15/2019 (a) (d)

 

294,000

 

308,700

 

9.250%, 06/15/2021 (a)

 

5,391,000

 

5,930,100

 

 

 

 

 

6,238,800

 

Wireless Telecommunication Services - 6.0%

 

 

 

 

 

GCI, Inc.

 

 

 

 

 

8.625%, 11/15/2019

 

7,800,000

 

8,151,000

 

6.750%, 06/01/2021

 

6,006,000

 

6,021,015

 

Sprint Corp.

 

 

 

 

 

7.875%, 09/15/2023 (a)

 

1,642,000

 

1,761,045

 

T-Mobile USA, Inc.

 

 

 

 

 

6.625%, 11/15/2020

 

1,800,000

 

1,890,000

 

 

 

 

 

17,823,060

 

TOTAL HIGH YIELD SECURITIES (amortized cost $241,400,692)

 

 

 

245,615,835

 

 

 

 

 

 

 

LEVERAGED LOANS - 41.2%

 

 

 

 

 

Building Products - 0.9%

 

 

 

 

 

Gypsum Management & Supply, Inc., TL 2L 03/14

 

 

 

 

 

7.750%, 04/01/2022 (b)

 

2,661,800

 

2,681,764

 

 

 

 

 

 

 

Chemicals - 0.3%

 

 

 

 

 

Emerald Performance Materials LLC, TL 2L 07/14

 

 

 

 

 

N/A, 07/23/2022 (b) (c)

 

268,490

 

268,490

 

Monarch, TL 2L 04/13

 

 

 

 

 

8.250%, 04/03/2020 (b) (h)

 

593,751

 

607,110

 

 

 

 

 

875,600

 

Diversified Consumer Services - 1.1%

 

 

 

 

 

Education Management Corp., TL 1L C3 02/07

 

 

 

 

 

8.250%, 03/30/2018 (b)

 

4,936,683

 

3,261,741

 

 

 

 

 

 

 

Diversified Telecommunication Services - 0.9%

 

 

 

 

 

Lightower Fiber LLC, TL 2L 04/13

 

 

 

 

 

8.000%, 04/12/2021 (b)

 

2,143,669

 

2,165,106

 

The Telx Group, Inc., TL 2L 04/14

 

 

 

 

 

7.500%, 04/09/2021 (b)

 

352,020

 

352,462

 

 

 

 

 

2,517,568

 

Energy Equipment & Services - 1.5%

 

 

 

 

 

Sabine Oil & Gas LLC, TL 2L 12/12

 

 

 

 

 

8.750%, 12/31/2018 (b)

 

1,888,290

 

1,926,056

 

 

4


 

 

 

Par†

 

Value

 

LEVERAGED LOANS - 41.2% (Continued)

 

 

 

 

 

Energy Equipment & Services - 1.5% (Continued)

 

 

 

 

 

Willbros United States Holding, Inc., TL 1L B 08/13

 

 

 

 

 

11.000%, 08/07/2019 (b)

 

2,539,469

 

$

2,583,910

 

 

 

 

 

4,509,966

 

Food & Staples Retailing - 7.5%

 

 

 

 

 

Brake Bros Ltd., TL 2L D2 10/07 GBP

 

 

 

 

 

6.780%, 03/13/2017 (b) (f) (h)

 

GBP

10,159,484

 

16,798,542

 

California Pizza Kitchen, Inc., TL 1L 03/13

 

 

 

 

 

5.250%, 03/29/2018 (b)

 

5,724,553

 

5,491,993

 

 

 

 

 

22,290,535

 

Food Products - 4.3%

 

 

 

 

 

Arysta Lifescience SPC LLC, TL 2L 05/13

 

 

 

 

 

8.250%, 11/30/2020 (b) (h)

 

3,800,000

 

3,856,202

 

CSM Bakery Products, TL 2L 07/13

 

 

 

 

 

8.500%, 07/03/2021 (b) (e)

 

5,300,000

 

5,242,601

 

CTI Foods Holding Co. LLC, TL 2L 06/13

 

 

 

 

 

8.250%, 06/28/2021 (b)

 

3,800,000

 

3,828,500

 

 

 

 

 

12,927,303

 

Health Care Providers & Services - 4.4%

 

 

 

 

 

CHG Healthcare Services, Inc., TL 2L 11/12

 

 

 

 

 

9.000%, 11/19/2020 (b)

 

1,559,783

 

1,590,978

 

CRC Health Group, Inc., TL 2L 03/14

 

 

 

 

 

9.000%, 09/28/2021 (b)

 

11,327,530

 

11,476,260

 

 

 

 

 

13,067,238

 

Health Care Technology - 1.1%

 

 

 

 

 

ABILITY Network, Inc., TL 1L 05/14

 

 

 

 

 

6.000%, 05/14/2021 (b)

 

1,061,730

 

1,060,403

 

ABILITY Network, Inc., TL 2L 05/14

 

 

 

 

 

9.250%, 05/16/2022 (b)

 

1,618,920

 

1,635,109

 

Greenway Medical Technologies, TL 2L 10/13

 

 

 

 

 

9.250%, 11/04/2021 (b)

 

545,410

 

551,208

 

 

 

 

 

3,246,720

 

Hotels, Restaurants & Leisure - 2.0%

 

 

 

 

 

American Casino & Entertainment Properties LLC, TL 2L 06/13

 

 

 

 

 

11.250%, 01/03/2020 (b)

 

1,524,238

 

1,615,692

 

Caesars Entertainment Operating Co., Inc., TL 1L B6 01/08

 

 

 

 

 

6.990%, 01/28/2018 (b)

 

4,896,528

 

4,560,895

 

Caesars Entertainment Operating Co., Inc., TL 1L B7 05/14

 

 

 

 

 

9.750%, 01/28/2018 (b)

 

5,080

 

4,995

 

 

 

 

 

6,181,582

 

Household Durables - 0.1%

 

 

 

 

 

Algeco Scotsman Global Sarl, TL PIK 04/13

 

 

 

 

 

15.750%, 05/01/2018 (d) (h)

 

311,521

 

335,664

 

 

 

 

 

 

 

Insurance - 0.0%

 

 

 

 

 

AssuredPartners, Inc., TL 2L 03/14

 

 

 

 

 

7.750%, 04/02/2022 (b)

 

17,260

 

17,310

 

 

 

 

 

 

 

Internet Software & Services - 2.0%

 

 

 

 

 

Travelport LLC, TL 1L 06/13

 

 

 

 

 

6.250%, 06/26/2019 (b)

 

5,846,312

 

5,938,889

 

 

5


 

 

 

Par†

 

Value

 

LEVERAGED LOANS - 41.2% (Continued)

 

 

 

 

 

IT Services - 3.2%

 

 

 

 

 

iPayment Investors LP, TL 1L B 05/11

 

 

 

 

 

6.750%, 05/08/2017 (b)

 

9,522,742

 

$

9,427,514

 

 

 

 

 

 

 

Leisure Products - 1.0%

 

 

 

 

 

BRG Sports, TL 2L 04/14

 

 

 

 

 

10.250%, 04/15/2022 (b) (f)

 

2,809,440

 

2,837,534

 

 

 

 

 

 

 

Media - 2.2%

 

 

 

 

 

Catalina Marketing Corp., TL 2L 04/14

 

 

 

 

 

7.750%, 04/11/2022 (b)

 

1,155,960

 

1,138,621

 

CC Media Holdings, Inc., TL 1L B-NEW 05/08

 

 

 

 

 

3.805%, 01/29/2016 (b)

 

764,800

 

758,315

 

Learfield Communications, Inc., TL 2L 10/13

 

 

 

 

 

8.750%, 10/08/2021 (b)

 

128,930

 

130,864

 

Lee Enterprises, Inc., TL 1L 03/14

 

 

 

 

 

7.250%, 03/31/2019 (b)

 

4,543,894

 

4,596,921

 

 

 

 

 

6,624,721

 

Paper & Forest Products - 0.8%

 

 

 

 

 

Wilton Brands, Inc., TL 1L B 08/12

 

 

 

 

 

7.500%, 08/30/2018 (b)

 

2,615,784

 

2,504,613

 

 

 

 

 

 

 

Software - 2.1%

 

 

 

 

 

iParadigms Holdings LLC, TL 2L 07/14

 

 

 

 

 

N/A, 07/22/2022 (b) (c)

 

3,691,110

 

3,672,654

 

Triple Point Technology, Inc., TL 1L 07/13

 

 

 

 

 

5.250%, 07/10/2020 (b)

 

2,612,240

 

2,347,751

 

 

 

 

 

6,020,405

 

Specialty Retail - 5.0%

 

 

 

 

 

David’s Bridal, Inc., TL 1L B 10/12

 

 

 

 

 

5.000%, 10/11/2019 (b)

 

3,720,850

 

3,616,220

 

Gymboree Corp., TL 1L 02/11

 

 

 

 

 

5.000%, 02/23/2018 (b)

 

8,959,408

 

7,394,692

 

J.C. Penney Corp., Inc., TL 1L 05/13

 

 

 

 

 

6.000%, 05/22/2018 (b)

 

3,922.053

 

3,966,529

 

 

 

 

 

14,977,441

 

Technology Hardware, Storage & Peripherals - 0.6%

 

 

 

 

 

Websense, Inc., TL 2L 05/13

 

 

 

 

 

8.250%, 12/24/2020 (b)

 

1,902,351

 

1,916,619

 

 

 

 

 

 

 

Textiles, Apparel & Luxury Goods - 0.0%

 

 

 

 

 

OneStopPlus Group, TL 1L B 03/14

 

 

 

 

 

4.500%, 03/18/2021 (b) (f)

 

36,364

 

36,409

 

 

 

 

 

 

 

Trading Companies & Distributor - 0.2%

 

 

 

 

 

Maxim Crane Works LP (Maxim Finance Corp.), TL 2L B 11/13

 

 

 

 

 

10.250%, 11/26/2018 (b)

 

696,360

 

713,337

 

 

 

 

 

 

 

TOTAL LEVERAGED LOANS (amortized cost $123,357,103)

 

 

 

122,910,473

 

 

6


 

 

 

Shares

 

Value

 

COMMON STOCKS - 3.3%

 

 

 

 

 

Banks - 0.7%

 

 

 

 

 

Ally Financial, Inc. (g)

 

89,900

 

$

2,064,104

 

 

 

 

 

 

 

Health Care Providers & Services - 1.8%

 

 

 

 

 

Amedisys, Inc. (e) (g)

 

271,040

 

5,469,587

 

 

 

 

 

 

 

Hotels, Restaurants & Leisure - 0.8%

 

 

 

 

 

Amaya Gaming Group, Inc. (g) (h)

 

CAD

52,000

 

1,387,811

 

Pinnacle Entertainment, Inc. (g)

 

39,216

 

854,909

 

 

 

 

 

2,242,720

 

TOTAL COMMON STOCKS (cost $8,252,300)

 

 

 

9,776,411

 

 

 

 

 

 

 

PREFERRED STOCKS - 5.3%

 

 

 

 

 

Banks - 5.1%

 

 

 

 

 

Ally Financial, Inc.

 

 

 

 

 

7.000% (a)

 

13,108

 

13,042,460

 

Barclays Bank PLC, Series 5

 

 

 

 

 

8.125% (h)

 

81,469

 

2,101,085

 

 

 

 

 

15,143,545

 

Thrifts & Mortgage Finance - 0.2%

 

 

 

 

 

Federal Home Loan Mortgage Corp.

 

 

 

 

 

8.375% (g)

 

25,000

 

300,000

 

Federal National Mortgage Association

 

 

 

 

 

8.250% (g)

 

25,000

 

288,250

 

 

 

 

 

588,250

 

TOTAL PREFERRED STOCKS (cost $15,230,123)

 

 

 

15,731,795

 

 

 

 

 

 

 

 

 

Units

 

 

 

ESCROW UNIT - 0.2%

 

 

 

 

 

Independent Power and Renewable Electricity Producers - 0.2%

 

 

 

 

 

Edison Mission Energy

 

3,798,131

 

515,027

 

 

 

 

 

 

 

TOTAL ESCROW UNIT (cost $588,710)

 

 

 

515,027

 

 

 

 

 

 

 

TOTAL INVESTMENTS (amortized cost $388,828,928††) (i) - 132.4%

 

 

 

394,549,541

 

LIABILITIES EXCEEDING OTHER ASSETS, NET — (32.4)%

 

 

 

(96,600,116

)

NET ASSETS - 100.0%

 

 

 

$

297,949,425

 

 

7


 

†

In U.S. Dollars unless otherwise indicated.

††

At July 31, 2014, the tax basis cost of the Fund’s investments was $388,829,086 and the unrealized appreciation and depreciation were $12,758,697 and $(7,038,242), 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.  The total value of these securities as of July 31, 2014 was $131,206,813, which represents 44.0% of net assets.

(b)

Variable rate security, the coupon rate shown is the effective rate as of July 31, 2014.

(c)

Unsettled bank loan. Interest rate not available as of July 31, 2014.

(d)

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

(e)

Security considered restricted due to the Adviser’s knowledge of material non-public information. The total value of these securities as of July 31, 2014 was $10,712,188 and represented 3.6% of net assets.

(f)

Security considered illiquid, as defined by the Securities and Exchange Commission. The total value of these securities as of July 31, 2014 was $25,457,236 and represented 8.5% of net assets.

(g)

Non-income producing security.

(h)

Non-U.S. security.

(i)

All investments are held as collateral for the Fund’s credit facility.

 

 

CAD

Canadian Dollar

EUR

Euro

GBP

Great British Pound

 

The following are the details of the restricted securities held by the Fund:

 

 

 

 

 

 

 

 

 

 

 

% of

 

 

 

 

 

Acquisition

 

Amortized

 

 

 

Net

 

 

 

Par/Shares

 

date(s)

 

Cost

 

Value

 

Assets

 

Amedisys, Inc., Common Stock

 

271,040

 

08/05/2013 - 08/08/2013

 

3,799,455

 

5,469,587

 

1.8

%

CSM Bakery Products, TL 2L 07/13, 8.500%, 07/03/2021

 

5,300,000

 

08/01/2013 - 08/14/2013

 

5,315,518

 

5,242,601

 

1.8

%

 

Country Weightings:

 

 

 

(% of Net Assets)

 

 

 

 

 

 

 

United States

 

110.0

%

United Kingdom

 

13.1

%

Luxembourg

 

3.7

%

Canada

 

2.6

%

Japan

 

1.3

%

Sweden

 

0.9

%

Singapore

 

0.8

%

 

 

132.4

%

Liabilities Exceeding Other Assets, Net

 

(32.4

)%

 

 

100.0

%

 

The list of the open forward foreign currency contracts held by the Fund as of July 31, 2014 is as follows:

 

 

 

 

 

 

 

Unrealized

 

Settlement

 

Currency to

 

Currency to

 

Appreciation

 

Date

 

Deliver

 

Receive

 

(Depreciation)

 

07/09/2015

 

CAD

1,535,944

 

USD

1,400,279

 

$

2,987

 

10/09/2014

 

EUR

3,306,200

 

USD

4,474,649

 

46,426

 

10/09/2014

 

GBP

20,996,000

 

USD

35,705,491

 

279,249

 

 

 

 

 

 

 

$

328,662

 

 

8


 

A summary of the counterparties for the open forward foreign currency contracts held by the Fund at July 31, 2014 is as follows:

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

Settlement

 

Currency to

 

Currency to

 

Appreciation

 

Counterparty

 

Date

 

Deliver

 

Receive

 

(Depreciation)

 

JPMorgan Chase & Co.

 

10/09/2014-07/09/2015

 

$

(41,251,757

)

$

41,580,419

 

$

328,662

 

 

The table below sets forth information about the levels within the fair value hierarchy which the Fund’s investments were measured at July 31, 2014:

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Investments in Securities

 

 

 

 

 

 

 

 

 

High Yield Securities

 

$

—

 

$

245,615,835

 

$

—

 

$

245,615,835

 

Leveraged Loans

 

—

 

122,910,473

 

—

 

122,910,473

 

Preferred Stock

 

2,101,085

 

13,630,710

 

—

 

15,731,795

 

Common Stock

 

6,324,496

 

3,451,915

 

—

 

9,776,411

 

Escrow Unit

 

—

 

515,027

 

—

 

515,027

 

Total Investments in Securities

 

$

8,425,581

 

$

386,123,960

 

$

—

 

$

394,549,541

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Financial Derivative Instruments

 

 

 

 

 

 

 

 

 

Assets - Foreign Currency Contracts

 

$

—

 

$

328,662

 

$

—

 

$

328,662

 

Total Financial Derivative Instruments

 

$

—

 

$

328,662

 

$

—

 

$

328,662

 

 

For information on the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to the Fund’s most recent semi-annual or annual financial statements.

 

9


 

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

September 25, 2014

 

 

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

September 25, 2014

 

By (Signature and Title)

/s/ Roshan Chagan

 

Roshan Chagan, Treasurer and Chief Financial Officer

 

Date

September 25, 2014