N-CSR 1 fp0044949_ncsr.htm fp0045204

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

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number: 811-23166

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.
(Exact name of registrant as specified in charter)

 

325 North LaSalle Street, Suite 645, Chicago, Illinois 60654
(Address of principal executive offices) (Zip code)

 

Marcus L. Collins, Esq.

RiverNorth Capital Management, LLC

325 North LaSalle Street, Suite 645

Chicago, Illinois 60654
(Name and address of agent for service)

 

(312)832-1440

Registrant's telephone number, including area code

 

Date of fiscal year end: June 30, 2019

 

Date of reporting period: June 30, 2019

 

 

 

Item 1. Reports to Stockholders.

 

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website at https://www.rivernorth.com/closed-end-funds/opp, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank).

 

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account.

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Table of Contents

   

 

   

Portfolio Update

2

Asset Allocation

4

Schedule of Investments

5

Statement of Assets and Liabilities

21

Statement of Operations

22

Statements of Changes in Net Assets

23

Statement of Cash Flows

24

Financial Highlights

25

Notes To Financial Statements

27

Report of Independent Registered Public Accounting Firm

37

Additional Information

38

Directors & Officers

40

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Portfolio Update

June 30, 2019 (Unaudited)

 

What is the Fund’s investment strategy?

 

The RiverNorth/DoubleLine Strategic Opportunity Fund (“the Fund”) seeks to provide current income and overall total return.

 

RiverNorth Capital Management, LLC (“RiverNorth”) allocates the Fund’s Managed Assets among two principal strategies: Tactical Closed-End Fund (CEF) Income Strategy and Opportunistic Income Strategy. RiverNorth manages the Tactical Closed-End Fund Income Strategy and DoubleLine Capital LP (“DoubleLine”) manages the Opportunistic Income Strategy.

 

RiverNorth determines the portion of the Fund’s assets to allocate to each strategy based on market conditions. The Fund may allocate between 10% to 35% of its Managed Assets to the Tactical CEF Income Strategy and 65% to 90% of its Managed Assets to the Opportunistic Income Strategy.

 

The Tactical CEF Income Strategy typically invests in CEFs, business development companies (BDCs) and exchange-traded funds (ETFs). The Opportunistic Income Strategy primarily invests in agency and non-agency residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS) seeking to derive value from inefficiencies within the subsectors of the fixed income market while maintaining active risk constraints.

 

How did the RiverNorth/DoubleLine Strategic Opportunity Fund perform relative to its benchmark during the reporting period?

 

For the year ended June 30, 2019, the Fund returned 7.78% on a net asset value (NAV) basis and 8.50% on a market price basis. The Bloomberg Barclays US Aggregate Bond Index returned 7.87% during the same period.

 

What contributing factors were responsible for the RiverNorth/DoubleLine Strategic Opportunity Fund’s relative performance during the period?

 

RiverNorth Tactical Closed-End Fund Income Sleeve

 

The RiverNorth sleeve’s performance relative to the Fund’s index benefitted from positive NAV performance among closed-end funds that invest in high yield bonds. The sleeve’s exposure to bank loan closed-end funds detracted from performance as these funds’ NAV performance in general trailed the Fund benchmark’s performance over the period.

 

DoubleLine Opportunistic Income Sleeve

 

For the year ending June 30, 2019, the DoubleLine sleeve underperformed the Bloomberg Barclays Aggregate Bond Index return of 7.87%. The underperformance was primarily due to duration positioning and sector allocation as rates rallied sharply over the period with 2-year and 10-year U.S. Treasury yields falling 77 basis points (bps) and 86 bps, respectively. The Portfolio had a shorter duration than the benchmark over this period and also did not have any exposure to corporate bonds – which were the best-performing sector within the index. Nevertheless, every sector within the portfolio generated positive total returns; asset-backed securities (ABS) and mortgage-backed securities (MBS) were the largest contributors to performance. ABS returned nearly 9% due to strong underlying credit performance and tightening spreads. MBS, both agency-backed and non-agency

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Portfolio Update

June 30, 2019 (Unaudited)

 

backed, benefited from falling rates and low mortgage delinquencies. Collateralized loan obligations (CLOs) delivered positive total returns as well but were a relative performance laggard as falling interest rates dampened demand for their floating rate coupons.

 

How was the RiverNorth/DoubleLine Strategic Opportunity Fund positioned at the end of June 2019?

 

The Fund allocation was 22% RiverNorth Tactical Closed-End Fund Income and 78% DoubleLine Opportunistic Income. The biggest sector allocations are to non-agency MBS, agency MBS, and bank loans. The Fund is utilizing a line of credit to leverage the portfolio approximately 25%.

 

 

Past performance is no guarantee of future results.

 

The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of investment grade fixed-rate debt issues with maturities of at least one year. The index cannot be invested in directly and does not reflect fees and expenses.

 

Duration is a measure of the sensitivity of the price of a fixed income investment to a change in interest rates.

 

Basis Points (BPS or Bips): A common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001), and is used to denote the percentage change in a financial instrument.

 

Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value.

 

A credit spread is the difference in yield between two bonds of similar maturity but different credit quality. Widening credit spreads indicate growing concern about the ability of corporate (and other private) borrowers to service their debt. Narrowing credit spreads indicate improving private creditworthiness.

 

Annual Report | June 30, 2019

3

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Asset Allocation

June 30, 2019 (Unaudited)

 

ASSET ALLOCATION as of June 30, 2019

 

 

Percentages are based on total net assets of the Fund.

 

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(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

 

Value

 

CLOSED-END FUNDS - 22.35%(a)

    186,122  

BlackRock Corporate High Yield Fund, Inc.

  $ 1,995,228  
    365,675  

BlackRock Credit Allocation Income Trust

    4,742,805  
    65,805  

BlackRock Floating Rate Income Strategies Fund, Inc.

    817,298  
    349,822  

BrandywineGLOBAL Global Income Opportunities Fund, Inc.

    4,103,412  
    314,450  

Eaton Vance Limited Duration Income Fund

    3,977,793  
    33,958  

First Trust High Income Long/Short Fund

    510,049  
    58,001  

First Trust Senior Floating Rate Income Fund II

    698,912  
    311,898  

Franklin Templeton Limited Duration Income Trust

    3,003,578  
    457,841  

Invesco Senior Income Trust

    1,977,873  
    490,014  

Nuveen Credit Strategies Income Fund

    3,880,911  
    84,228  

Nuveen Floating Rate Income Fund

    829,646  
    190,920  

Prudential Global Short Duration High Yield Fund

    2,758,794  
    83,448  

Voya Prime Rate Trust

    397,212  
    190,814  

Wells Fargo Income Opportunities Fund

    1,572,307  
    215,147  

Western Asset Emerging Markets Debt Fund Inc.

    3,080,905  
    378,786  

Western Asset Global High Income Fund Inc.

    3,761,345  
    1,251,063  

Western Asset Global High Income Opportunity Fund Inc.

    6,417,953  
                 

TOTAL CLOSED-END FUNDS

       

(Cost $43,723,104)

    44,526,021  

 

Shares/Description

Rate

 

Maturity

   

Value

 

BUSINESS DEVELOPMENT COMPANY NOTES - 7.02%(a)

    39,541  

Capital Southwest Corp

5.95%

    12/15/2022       1,031,229  
    33,285  

KCAP Financial Inc

6.13%

    9/30/2022       835,454  
    227,236  

Oxford Square Capital Corp

6.50%

    3/30/2024       5,821,786  
    30,193  

Stellus Capital Investments

5.75%

    9/15/2022       767,808  
    156,646  

THL Credit, Inc.

6.75%

    12/30/2022       3,974,109  
    21,044  

THL Credit, Inc.

6.13%

    11/15/2021       542,935  
    39,330  

TriplePoint Venture Growth BDC Corp

5.75%

    7/15/2022       1,006,455  
                           

TOTAL BUSINESS DEVELOPMENT COMPANY NOTES

       

(Cost $13,717,621)

    13,979,776  

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

ASSET BACKED OBLIGATIONS - 5.27%(a)(b)

    2,546,875  

Blackbird Capital Aircraft

5.68%

    12/16/2041       2,651,172  
    1,715,000  

Coinstar Funding, LLC

5.22%

    4/25/2047       1,757,499  
    3,000,000  

InSite Issuer LLC

6.41%

    11/15/2046       3,117,934  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

5

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
    848,958  

Labrador Aviation Finance Limited

5.68%

    1/15/2042     $ 894,501  
    28,380  

SOFI Professional Loan Program Trust

0.00%

    8/17/2048       1,028,659  
    1,000,000  

SOFI Consumer Loan Program Trust(c)

4.73%

    1/26/2026       1,050,665  
                           

TOTAL ASSET BACKED OBLIGATIONS

       

(Cost $10,110,342)

    10,500,430  

 

Shares/Description

Rate

 

Maturity

   

Value

 

BANK LOANS - 5.46%(a)(c)

    200,509  

Acrisure LLC, Senior Secured First Lien Term Loan

3M US L + 4.25%

    11/22/2023       199,967  
    123,734  

AlixPartners LLP, Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    4/4/2024       123,614  
    9,459  

Allied Universal Holdco LLC, Senior Secured First Lien Term Loan

3M US L + 4.25%

    7/31/2026       9,436  
    95,540  

Allied Universal Holdco LLC, Senior Secured First Lien Term Loan B

3M US L + 4.25%

    7/31/2026       95,302  
    211,306  

Almonde, Inc., Senior Secured First Lien Term Loan

1M US L + 3.50%

    6/13/2024       206,259  
    206,540  

Applied Systems, Inc., Senior Secured First Lien Term Loan

3M US L + 3.25%

    9/19/2024       205,120  
    208,935  

AssuredPartners, Inc., Senior Secured First Lien Term Loan

3M US L + 3.50%

    10/22/2024       207,237  
    124,687  

Athenahealth Senior Secured First Lien Term Loan

3M US L + 4.50%

    2/11/2026       124,610  
    84,787  

Auris Luxembourg III Sarl, Senior Secured First Lien Term Loan

3M US L + 3.75%

    7/25/2025       85,063  
    70,312  

Bausch Health Companies, Inc., First Incremental Term Loan

3M US L + 2.75%

    11/27/2025       69,983  
    110,000  

Berry Global Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    5/23/2026       109,381  
    59,699  

BJ’s Wholesale Club Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    2/2/2024       59,830  
    64,673  

Blackhawk Network Holdings Inc., Senior Secured First Lien Term Loan

3M US L + 3.00%

    6/16/2025       64,290  

 

See Notes to Financial Statements.

 

6

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

Rate

 

Maturity

   

Value

 
    85,000  

Blackstone CQP Holdco LP, Senior Secured First Lein Term Loan

3M US L + 3.50%

    6/7/2024     $ 85,191  
    104,475  

Brookfield WEC Holdings, Inc., Senior Secured First Lien Term Loan

1M US L + 3.50%

    7/31/2025       104,468  
    105,000  

Calpine Corp., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    4/6/2026       104,967  
    216,141  

Canyon Valor Companies, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    6/16/2023       215,195  
    104,737  

Catalent Pharma Solutions Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.25%

    5/18/2026       104,868  
    206,859  

Change Healthcare Holdings LLC, Senior Secured First Lien Term Loan

3M US L + 2.75%

    3/1/2024       205,618  
    208,227  

CHG Healthcare Services, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.00%

    6/7/2023       207,463  
    215,114  

Colorado Buyer, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    5/1/2024       200,999  
    85,000  

CommScope Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.25%

    4/6/2026       84,872  
    194,158  

Concentra, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    6/1/2022       194,643  
    85,000  

CSC Holdings LLC, Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.00%

    4/15/2027       85,234  
    204,969  

Cvent, Inc., Guaranteed Senior Secured First Lien Term Loan

1M US L + 3.75%

    11/29/2023       202,919  
    49,800  

Edelman Financial Center LLC, Guaranteed Senior Secured First Lien Term Loan

1M US L + 3.25%

    7/21/2025       49,711  
    78,378  

Edgewater Generation LLC, Guaranteed Senior Secured First Lien Term Loan

1M US L + 3.75%

    12/12/2025       78,346  
    214,860  

Equian Buyer Corporation, Senior Secured First Lien Term Loan

1M US L + 3.25%

    5/20/2024       214,940  
    215,013  

Equinox Holdings, Inc., Senior Secured First Lien Term Loan

3M US L + 3.00%

    3/8/2024       214,700  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

7

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

Rate

 

Maturity

   

Value

 
    64,838  

EW Scripps Co., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    5/1/2026     $ 64,797  
    207,405  

Filtration Group Corporation, Senior Secured First Lien Term Loan

1M US L + 3.00%

    3/31/2025       207,312  
    64,675  

Forest City Enterprises LP, Senior Secured First Lien Term Loan

3M US L + 4.00%

    12/8/2025       65,025  
    197,980  

Garda World Security Corporation, Senior Secured First Lien Term Loan

3M US L + 3.50%

    5/24/2024       197,030  
    204,509  

Gentiva Health Services, Inc., Senior Secured First Lien Term Loan

3M US L + 3.75%

    7/2/2025       204,956  
    58,989  

GOBP Holdings Inc., Senior Secured First Lien Term Loan

1M US L + 3.75%

    10/22/2025       59,044  
    208,340  

Greeneden US Holdings LLC, Senior Secured First Lien Term Loan

3M US L + 3.50%

    2/1/2023       206,224  
    206,895  

Hayward Acquisition Corporation, Senior Secured First Lien Term Loan

3M US L + 3.50%

    8/5/2024       203,015  
    204,553  

Hyland Software, Inc., Senior Secured First Lien Term Loan

1M US L + 3.25%

    7/1/2024       203,467  
    197,984  

Informatica LLC, Senior Secured First Lien Term Loan

3M US L + 3.25%

    8/5/2022       198,397  
    203,965  

Intrawest Resorts, Senior Secured First Lien Term Loan

3M US L + 3.00%

    7/31/2024       203,550  
    114,133  

IRB Holding Corp., Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.25%

    2/5/2025       112,876  
    208,258  

Jaguar Holding Company II, Senior Secured First Lien Term Loan

1M US L + 2.50%

    8/18/2022       207,359  
    104,738  

JBS USA, Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    5/29/2026       104,708  
    214,509  

Kronos Inc., Senior Secured First Lien Term Loan

3M US L + 3.00%

    11/1/2023       214,308  
    207,966  

Life Time Fitness, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    6/10/2022       207,388  

 

See Notes to Financial Statements.

 

8

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

Rate

 

Maturity

   

Value

 
    65,000  

Messer Industries USA Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    10/1/2025     $ 64,208  
    159,216  

Milacron LLC, Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    9/28/2023       155,235  
    74,435  

Mitchell International Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.25%

    11/29/2024       71,231  
    206,500  

MLN US Holdco LLC, Senior Secured First Lien Term Loan

1M US L + 4.50%

    7/11/2025       197,897  
    201,765  

MPH Acquisition Holdings LLC, Senior Secured First Lien Term Loan

3M US L + 2.75%

    6/7/2023       193,442  
    133,985  

NCI Building Systems Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 3.75%

    4/12/2025       130,580  
    80,000  

Nexstar Broadcasting Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.75%

    7/31/2026       79,800  
    80,000  

Option Care, Senior Secured First Lien Term Loan

3M US L + 4.50%

    5/29/2026       79,900  
    130,000  

Oryx Midstream, Senior Secured First Lien Term Loan

3M US L + 4.00%

    5/22/2026       129,540  
    104,431  

Panther BF Aggregator, Senior Secured First Lien Term Loan

3M US L + 3.50%

    4/30/2026       103,811  
    206,674  

Pike Corporation, Guaranteed Senior Secured First Lien Term Loan

1M US L + 3.50%

    3/12/2025       207,210  
    185,712  

Plantronics, Inc., Senior Secured First Lien Term Loan

3M US L + 2.50%

    7/2/2025       184,862  
    201,407  

PODS LLC, Guaranteed Senior Secured First Lien Term Loan

1M US L + 2.75%

    12/6/2024       198,806  
    188,592  

Prime Security Services Borrower LLC, Senior Secured First Lien Term Loan

3M US L + 2.75%

    5/2/2022       187,540  
    158,999  

Project Alpha Intermediate Holding, Inc., Guaranteed Senior Secured First Lien Term Loan

6M US L + 3.50%

    4/26/2024       154,627  
    79,800  

Radiology Partners Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 4.75%

    7/9/2025       79,787  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

9

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

Rate

 

Maturity

   

Value

 
    207,690  

Redtop Acquisitions (CPA Global), Senior Secured First Lien Term Loan

3M US L + 3.25%

    11/1/2024     $ 204,160  
    179,200  

Refinitiv US Holdings, Inc., Senior Secured First Lien Term Loan

3M US L + 3.75%

    10/1/2025       174,076  
    165,134  

SCS Holdings, Inc., Senior Secured First Lien Term Loan

1M US L + 4.25%

    10/31/2022       166,269  
    130,490  

Securus Technologies Holdings, Inc., Senior Secured First Lien Term Loan

3M US L + 4.50%

    6/20/2024       121,791  
    186,712  

Select Medical Corporation, Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    3/6/2025       186,362  
    206,714  

Solera LLC, Guaranteed Senior Secured First Lien Term Loan

1M US L + 2.75%

    3/3/2023       205,455  
    201,988  

Sophia LP, Senior Secured First Lien Term Loan

3M US L + 3.25%

    9/30/2022       201,660  
    208,102  

Starfruit US Holdco, LLC, Senior Secured First Lein Term Loan

3M US L + 3.25%

    10/1/2025       205,371  
    90,438  

Transdigm, Inc., Guaranteed Senior Secured First Lien Term Loan

3M US L + 2.50%

    6/9/2023       88,927  
    54,450  

Travel Leaders Group LLC, Guaranteed Senior Secured First Lien Term Loan

1M US L + 4.00%

    1/25/2024       54,631  
    60,000  

UFC Holdings LLC, Senior Secured First Lien Term Loan

1M US L + 3.25%

    4/30/2026       59,962  
    30,393  

VeriFone Systems, Inc., Senior Secured First Lien Term Loan

3M US L + 4.00%

    8/20/2025       29,557  
    119,100  

Verscend Holdings Corporation, Senior Secured First Lien Term Loan

3M US L + 4.50%

    8/27/2025       119,417  
    180,558  

Vertafore Inc., Senior Secured First Lien Term Loan

1M US L + 3.25%

    6/4/2025       174,050  
    77,237  

Web.com, Senior Secured First Lien Term Loan

1M US L + 3.75%

    10/10/2025       76,288  
    13,000  

Westinghouse, Senior Secured First Lien Term Loan

3M US L + 3.75%

    8/1/2025       13,000  
                           

TOTAL BANK LOANS

       

(Cost $10,979,972)

    10,873,134  

 

See Notes to Financial Statements.

 

10

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

COLLATERALIZED LOAN OBLIGATIONS - 14.14%(a)

       

Apidos Ltd.

                 
    500,000  

Series 2015-21A(b)(c)

3M US L + 8.25%

    7/19/2027     $ 482,420  
    500,000  

Series 2016-24A(b)(c)

3M US L + 5.80%

    10/21/2030       477,259  
       

Atrium CDO Corp

                 
    500,000  

Series XIII 2017-13(b)(c)

3M US L + 6.05%

    11/21/2030       488,295  
    500,000  

Series 2018-14A-E(b)(c)

3M US L + 5.65%

    8/23/2030       470,730  
       

Babson CLO Ltd.

                 
    500,000  

Series 2018-4A(c)

3M US L + 5.82%

    10/15/2030       478,879  
       

Canyon Capital Ltd.

                 
    500,000  

Series 2016-1R(b)(c)

3M US L + 5.75%

    7/15/2031       456,042  
       

Carlyle Global Market Strategies

                 
    500,000  

Series 2013-3A(c)

3M US L + 5.50%

    10/15/2030       467,474  
    500,000  

Series 2014-2RA(b)(c)

3M US L + 5.35%

    5/15/2031       452,574  
       

Castlelake Aircraft Structured Trust

                 
    404,313  

Series 2018-1C(b)

6.63%

    6/15/2043       407,003  
    1,250,000  

Series 2019-1A(b)

0.00%

    4/15/2039       1,253,125  
       

Chenango Park CLO, Ltd.

                 
    500,000  

Series 2018-1A(b)(c)

3M US L + 5.80%

    4/15/2030       471,469  
       

CHL GMSR Issuer Trust

                 
    3,930,000  

Series 2018-GT1(b)(c)

1M US L + 2.75%

    5/25/2023       3,939,403  
       

CIM Trust

                 
    3,720,000  

Series 2017-3RR(b)(c)

10.62%

    1/29/2057       3,894,511  
       

Dorchester Park CLO Ltd.

                 
    500,000  

Series 2015-1A(b)(c)

3M US L + 5.00%

    4/20/2028       476,447  
       

Dryden Senior Loan Fund

                 
    500,000  

Series 2015-37R(b)(c)

3M US L + 5.15%

    1/15/2031       457,646  
    500,000  

Series 2015-40R(b)(c)

3M US L + 5.75%

    8/15/2031       473,996  
       

Fillmore Park CLO, Ltd.

                 
    500,000  

Series 2018-1A(b)(c)

3M US L + 5.40%

    7/15/2030       463,026  
       

FMC GMSR Issuer Trust

                 
    3,000,000  

Series 2019-GT1(b)

5.66%

    5/25/2026       3,033,432  
       

Gilbert Park CLO, Ltd.

                 
    500,000  

Series 2017-1A(b)(c)

3M US L + 6.40%

    10/15/2030       493,444  
       

Granite Point Mortgage Trust, Ltd.

                 
    999,000  

Series 2018-FL1(b)(c)

1M US L + 2.95%

    11/21/2035       1,007,734  
       

LCM Ltd Partnership

                 
    500,000  

Series 14A(b)(c)

3M US L + 5.50%

    7/20/2031       473,706  
    500,000  

Series 17A(b)(c)

3M US L + 6.00%

    10/15/2031       457,850  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

11

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
    500,000  

Series 27A(b)(c)

3M US L + 5.60%

    7/16/2031     $ 469,075  
       

Myers Park CLO, Ltd.

                 
    500,000  

Series 2018-1A(c)

3M US L + 5.50%

    10/20/2030       465,317  
       

Neuberger Berman Loan Advisors Ltd.

                 
    500,000  

Series 2018-23R(b)(c)

3M US L + 5.75%

    10/18/2027       483,549  
       

New Century Home Equity Loan Trust

                 
    2,541,806  

Series 2006-1(c)(d)

1M US L + 0.18%

    5/25/2036       2,412,467  
       

Octagon Investment Partners Ltd.

                 
    500,000  

Series 2016-26R(b)(c)

3M US L + 8.09%

    7/15/2030       461,675  
    500,000  

Series 2013-16R(b)(c)

3M US L + 5.75%

    7/17/2030       468,145  
       

RMAT

                 
    944,478  

Series 2015-PR2(b)

9.85%

    11/25/2035       928,935  
       

Voya Ltd.

                 
    500,000  

Series 2018-2A(b)(c)

3M US L + 5.25%

    7/15/2031       467,348  
       

Webster Park CLO Ltd.

                 
    500,000  

Series 2015-1A(b)(c)

3M US L + 5.50%

    7/22/2030       472,368  
       

Wind River CLO, Ltd.

                 
    500,000  

Series 2018-2A(b)(c)

3M US L + 5.75%

    7/15/2030       462,880  
                           

TOTAL COLLATERALIZED LOAN OBLIGATIONS

       

(Cost $28,819,679)

    28,168,224  

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

FOREIGN CORPORATE BONDS - 3.91%(a)

Argentina - 0.43%

                 
    150,000  

Banco Macro SA

6.75%

    11/4/2026       130,501  
    250,000  

Compania General Combust

9.50%

    11/7/2021       243,252  
    250,000  

Pampa Energia SA

7.50%

    1/24/2027       232,500  
    250,000  

YPF Sociedad Anonima

8.50%

    7/28/2025       251,020  
                        857,273  

Austria - 0.13%

                 
    250,000  

Klabin Austria GMBH

7.00%

    4/3/2049       264,700  
                           

Bermuda - 0.13%

                 
    250,000  

Geopark LTD

6.50%

    9/21/2024       258,438  
                           

 

See Notes to Financial Statements.

 

12

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

Brazil - 0.25%

                 
    250,000  

Banco BTG Pactual

7.75%

    2/15/2029     $ 261,563  
    250,000  

Banco do Brasil

6.25%

    4/15/2167       238,563  
                        500,126  

British Virgin Islands - 0.17%

                 
    100,000  

C10 Capital SPV LTD(c)

3M US L + 5.50%

    12/29/2049       99,850  
    239,500  

Star Energy Geothermal

6.75%

    4/24/2033       241,821  
                        341,671  

Canada - 0.24%

                 
    250,000  

Canacol Energy LTD

7.25%

    5/3/2025       261,250  
    231,376  

Stoneway Capital Corp.

10.00%

    3/1/2027       219,231  
                        480,481  

Cayman Islands - 0.27%

                 
    300,000  

CSN Islands XII

7.00%

    3/23/2167       272,250  
    250,000  

Latam Finance LTD

7.00%

    3/1/2026       261,625  
                        533,875  

Chile - 0.13%

                 
    250,000  

AES Gener SA

7.13%

    3/26/2079       267,065  
                           

Dominican Republic - 0.13%

                 
    250,000  

Aeropuertos Dominicanos

6.75%

    3/30/2029       263,750  
                           

Ireland - 0.13%

                 
    250,000  

C&W Senior Financing DAC

6.88%

    9/15/2027       259,400  
                           

Luxembourg - 0.50%

                 
    250,000  

Gilex Holding Sarl

8.50%

    5/2/2023       265,378  
    200,000  

JSL Europe

7.75%

    7/26/2024       204,500  
    250,000  

Millicom International Cellular

6.25%

    3/25/2029       268,903  
    250,000  

Minerva Luxembourg SA

5.88%

    1/19/2028       250,938  
                        989,719  

Mexico - 0.86%

                 
    250,000  

Banco Mercantil del Norte

7.63%

    1/6/2167       256,875  
    250,000  

BBVA Bancomer SA Texas

5.13%

    1/18/2033       241,500  
    243,750  

Cometa Energia SA

6.38%

    4/24/2035       251,672  
    250,000  

Credito Real Sab De CV

9.13%

    5/29/2163       253,940  
    250,000  

Financiera Independencia

8.00%

    7/19/2024       227,440  
    250,000  

Grupo Posadas Sab CV

7.88%

    6/30/2022       252,188  
    250,000  

Unifin Financiera SA DE

8.88%

    7/29/2025       230,628  
                        1,714,243  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

13

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

Netherlands - 0.27%

                 
    250,000  

Petrobras Global Finance

6.90%

    3/19/2049     $ 266,750  
    250,000  

VTR Finance BV

6.88%

    1/15/2024       259,688  
                        526,438  

Spain - 0.14%

                 
    250,000  

AI Candelaria Spain SLU(b)

7.50%

    12/15/2028       275,625  
                           

United Kingdom - 0.13%

                 
    250,000  

Vedanta Resources(b)

9.25%

    4/23/2026       254,321  
                           

TOTAL FOREIGN CORPORATE BONDS

       

(Cost $7,553,094)

    7,787,125  

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

U.S. CORPORATE BONDS - 0.39% (a)

Exploration & Production - 0.12%

                 
    250,000  

Gran Tierra Energy Inc.(b)

7.75%

    5/23/2027       246,375  
                           

Food & Beverage - 0.13%

                 
    250,000  

NBM US Holdings Inc.(b)

7.00%

    5/14/2026       263,813  
                           

Metals & Mining - 0.14%

                 
    300,000  

Freeport McMoran Inc.

5.45%

    3/15/2043       276,000  
                           

TOTAL U.S. CORPORATE BONDS

       

(Cost $758,601)

    786,188  

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

FOREIGN GOVERNMENT BONDS AND NOTES, SUPRANATIONALS AND FOREIGN AGENCIES - 0.13% (a)

Dominican Republic - 0.13%

                 
    250,000  

Dominican Republic(b)

6.40%

    6/5/2049       262,190  
                           

TOTAL FOREIGN GOVERNMENT BONDS AND NOTES, SUPRANATIONALS AND FOREIGN AGENCIES

(Cost $254,247)

    262,190  

 

 

See Notes to Financial Statements.

 

14

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS - 49.92%(a)

       

Atrium Hotel Portfolio Trust

                 
    433,000  

Series 2018-ATRM(b)(c)

1M US L + 3.40%

    6/15/2035     $ 436,956  
       

Banc of America Funding Corporation

                 
    2,322,302  

Series 2006-D(c)

3.62%

    5/20/2036       2,077,412  
       

Banc of America Merrill Lynch Large Loan Trust

                 
    730,000  

Series 2018-AHT D(b)(c)

1M US L + 2.50%

    3/15/2034       731,701  
       

Banc of America Mortgage Securities Inc.

                 
    2,433,217  

Series 2007-3

6.00%

    9/25/2037       2,383,164  
       

The Bancorp Commercial Mortgage Trust

                 
    631,000  

Series 2019-CRE5(b)(c)

1M US L + 2.35%

    3/17/2036       631,643  
       

Barclays Commercial Mortgage Securities Trust

                 
    682,000  

Series 2018-CBM(b)(c)

1M US L + 3.15%

    7/15/2037       690,495  
       

BB-UBS Trust

                 
    500,000  

Series 2012 - TFT(b)(c)

3.68%

    6/7/2030       481,377  
       

Bear Stearns Adjustable Rate Mortgage Trust

                 
    1,581,824  

Series 2006-2(c)

4.29%

    7/25/2036       1,504,981  
       

Bear Stearns Alt-A Trust

                 
    2,048,346  

Series 2005-10(c)

4.22%

    1/25/2036       1,923,303  
       

Braemar Hotels & Resorts Trust

                 
    402,000  

Series 2018-PRME F(b)(c)

1M US L + 2.90%

    6/15/2035       403,825  
       

BX Trust

                 
    321,000  

Series 2019-IMC D(b)(c)

1M US L + 1.90%

    4/17/2034       322,406  
       

Carbon Capital VI Commercial Mortgage

                 
    316,000  

Series 2019-FL2(b)(c)

1M US L + 2.85%

    11/18/2021       316,694  
       

Chase Mortgage Finance Corporation

                 
    3,705,015  

Series 2007-S4(c)

1M US L + 0.60%

    6/25/2037       1,866,406  
       

ChaseFlex Trust

                 
    2,974,197  

Series 2007-1

6.50%

    2/25/2037       1,788,504  
       

Citigroup Commercial Mortgage Trust

                 
    319,000  

Series 2018-TBR F(b)(c)

1M US L + 3.65%

    12/15/2036       321,884  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

15

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
       

Citigroup Mortgage Loan Trust Inc.

                 
    196,000  

Series 2015-GC27 D(b)(c)

4.57%

    2/12/2048     $ 182,950  
    2,069,511  

Series 2005-5(c)

4.28%

    10/25/2035       1,574,621  
    1,302,553  

Series 2007-AR5(c)

4.74%

    4/25/2037       1,251,861  
    256,000  

Series 2016-GC36 D(b)

2.85%

    2/10/2049       217,073  
       

Commercial Mortgage Trust

                 
    500,000  

Series 2012-CR4(b)(c)

4.72%

    10/17/2045       201,000  
    319,000  

Series 2013-LC13(b)(c)

5.45%

    8/10/2046       325,054  
    878,000  

Series 2018-HCLV(b)(c)

1M US L + 2.18%

    9/15/2033       878,743  
       

Countrywide Alternative Loan Trust

                 
    1,000,182  

Series 2005-48T1

5.50%

    11/25/2035       870,764  
    1,060,767  

Series 2005-63(c)

4.10%

    12/25/2035       975,271  
    3,392,575  

Series 2005-64CB

5.50%

    12/25/2035       2,996,777  
    1,366,410  

Series 2006-26CB

6.50%

    9/25/2036       1,107,793  
    2,961,076  

Series 2007-14T2

6.00%

    7/25/2037       2,113,400  
    2,937,978  

Series 2007-2CB

5.75%

    3/25/2037       2,517,090  
    2,460,689  

Series 2007-16CB

6.25%

    8/25/2037       2,051,973  
       

Countrywide Home Loans

                 
    2,329,835  

Series 2005-HYB1(c)(d)

1M US L + 0.60%

    3/25/2035       2,231,347  
    2,794,011  

Series 2007-9

5.75%

    7/25/2037       2,361,460  
    2,362,176  

Series 2007-HYB1(c)

3.57%

    3/25/2037       2,224,242  
       

Credit Suisse First Boston Mortgage Securities Corp.

                 
    1,617,813  

Series 2005-9

5.50%

    10/25/2035       1,440,241  
       

Credit Suisse Mortgage Trust

                 
    2,254,575  

Series 2006-7

6.75%

    8/25/2036       1,950,669  
    2,203,529  

Series 2007-1

6.00%

    2/25/2037       1,953,670  
       

First Horizon Alternative Mortgage Securities Trust

                 
    860,779  

Series 2005-AA8(c)

4.04%

    10/25/2035       797,676  
       

FREMF Mortgage Trust

                 
    5,500,000  

Series 2013-K713(b)(f)

0.10%

    4/25/2046       3,613  
    2,500,000  

Series 2013-K713 D(b)(e)

0.00%

    4/25/2046       2,386,500  
    218,033  

Series 2016-KF22(b)(c)

1M US L + 5.05%

    7/25/2023       226,350  
       

GMAC Commercial Mortgage Securities Inc.

                 
    500,000  

Series 2004-C3(b)(c)

5.14%

    12/10/2041       497,484  

 

See Notes to Financial Statements.

 

16

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
       

GS Mortgage Securities Trust

                 
    1,476,000  

Series 2014-GC26(b)(c)

4.67%

    11/13/2047     $ 1,272,025  
    325,000  

Series 2018-FBLU(b)(c)

1M US L + 3.25%

    11/15/2035       325,126  
    655,000  

Series 2018-TWR(b)(c)

1M US L + 3.92%

    7/15/2031       661,376  
       

Hawaii Hotel Trust

                 
    230,000  

Series 2019-MAUI F(b)(c)

1M US L + 2.75%

    5/17/2038       228,557  
       

Hospitality Mortgage Trust

                 
    230,000  

Series 2019-HIT G(b)(c)

1M US L + 3.90%

    11/17/2036       230,863  
       

IndyMac INDX Mortgage Loan Trust

                 
    1,518,883  

Series 04-AR4(c)

4.38%

    8/25/2034       1,519,250  
    3,061,157  

Series 2007-FLX6(c)(d)

1M US L + 0.25%

    9/25/2037       3,048,143  
       

JP Morgan Chase Commercial Mortgage Securities Corp.

                 
    111,818  

Series 2006-LDP9

5.34%

    5/15/2047       106,670  
    18,547  

Series 2007-LDPX(c)

5.46%

    1/15/2049       18,577  
    411,000  

Series 2011-C3(b)(c)

5.85%

    2/16/2046       394,368  
    500,000  

Series 2016-WIKI(b)(c)

4.14%

    10/5/2031       504,963  
    320,000  

Series 2019-MFP F

5.38%

    7/15/2036       320,800  
    109,000  

Series 2019-UES C(b)

4.34%

    5/5/2032       115,282  
    111,000  

Series 2019-UES D(b)(c)

4.60%

    5/5/2032       116,502  
    130,000  

Series 2019-UES E(b)(c)

4.60%

    5/5/2032       133,553  
    136,000  

Series 2019-UES F(b)(c)

4.60%

    5/5/2032       135,602  
    215,000  

Series 2019-UES G(b)(c)

4.60%

    5/5/2032       200,575  
       

JPMBB Commercial Mortgage Securities Trust

                 
    9,475,000  

Series 2013-C14(b)(c)(f)

1.12%

    8/17/2046       364,857  
    1,000,000  

Series 2013-C17(b)(c)

3.87%

    1/17/2047       890,709  
    402,000  

Series 2014-C23 E(b)(c)

3.36%

    9/17/2047       333,371  
    632,000  

Series 2015-C27(b)(c)

3.98%

    2/18/2048       614,209  
       

Luminent Mortgage Trust

                 
    2,217,858  

Series 06-3-11A1(c)(d)

1M US L + 0.20%

    5/25/2036       2,151,037  
    1,978,400  

Series 06-3-12A1(c)(d)

1M US L + 0.21%

    5/25/2036       1,894,399  
       

Mello Warehouse Securitization Trust

                 
    3,000,000  

Series 2019-1(b)(c)

1M US L + 5.50%

    6/25/2052       3,032,061  
       

Monarch Beach Report Trust

                 
    1,000,000  

Series 2018-MBMZ(b)(c)

1M US L + 4.96%

    7/16/2035       1,005,829  
       

Morgan Stanley BAML Trust

                 
    119,000  

Series 2015-C20(b)

3.07%

    2/15/2048       109,119  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

17

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
       

Morgan Stanley Capital Trust

                 
    350,000  

Series 2018-SUN(b)(c)

1M US L + 3.05%

    7/16/2035     $ 353,567  
       

MSCCG Trust

                 
    555,000  

Series 2018-SELF(b)(c)

1M US L + 3.05%

    10/15/2037       557,987  
       

Nomura Asset Acceptance Corporation

                 
    2,292,726  

Series 2005-AP3

5.19%

    8/25/2035       1,488,428  
       

NYT Mortgage Trust

                 
    315,000  

Series 2019-NYT(b)(c)

1M US L + 3.00%

    12/17/2035       319,318  
       

One Market Plaza Trust

                 
    319,000  

Series 2017-1MKT E(b)

4.14%

    2/10/2032       325,697  
       

PR Mortgage Loan Trust

                 
    2,483,600  

Series 2014-1(b)(c)

5.91%

    10/25/2049       2,371,128  
       

Residential Accredit Loans, Inc.

                 
    2,391,537  

Series 2007-QA5(c)

6.05%

    9/25/2037       2,308,242  
       

Residential Asset Securitization Trust

                 
    2,708,462  

Series 2005-A15

5.75%

    2/25/2036       1,910,158  
    2,676,631  

Series 2007-A5

6.00%

    5/25/2037       2,324,739  
       

Residential Funding Mortgage Securities I Trust

                 
    1,479,207  

Series 2005-SA2(c)

4.80%

    6/25/2035       1,323,432  
    3,116,445  

Series 2006-S8

6.00%

    9/25/2036       2,997,217  
       

Structured Adjustable Rate Mortgage Loan Trust

                 
    1,323,404  

Series 2005-22(c)

4.53%

    12/25/2035       1,274,102  
    2,614,816  

Series 2007-8(c)

4.30%

    9/25/2037       2,542,501  
       

Structured Asset Mortgage Investments Inc.

                 
    758,790  

Series 2005-AR7(c)

12M UST + 1.05%

    3/25/2046       846,868  
       

UBS-Barclays Commercial Mortgage Trust

                 
    500,000  

Series 2013-C5(b)(c)

4.21%

    3/12/2046       437,456  
       

Washington Mutual Mortgage Pass-Through Certificates Trust

                 
    1,852,217  

Series 2005-8

5.50%

    10/25/2035       1,805,216  
    1,706,311  

Series 2006-AR6(c)

3.73%

    8/25/2036       1,624,122  
    1,914,674  

Series 2006-AR10(c)

3.85%

    8/25/2046       1,876,528  
    1,439,841  

Series 2006-2

6.00%

    3/25/2036       1,495,204  
    2,078,525  

Series 2007-HY3(c)

3.94%

    3/25/2037       2,025,208  

 

See Notes to Financial Statements.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 
       

Wells Fargo Commercial Mortgage Trust

                 
    332,000  

Series 2016-C33(b)

3.12%

    3/17/2059     $ 300,007  
                           

TOTAL NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS

       

(Cost $103,071,546)

    99,453,321  

 

Principal Amount/Description

Rate

 

Maturity

   

Value

 

U.S. GOVERNMENT/AGENCY MORTGAGE BACKED SECURITIES - 23.93%(a)

       

Federal Home Loan Mortgage Corporation

                 
    4,212,460  

Series 3770

4.00%

    12/15/2040       4,596,024  
    203,814  

Series 3806(c)(f)(g)

6.45% - 1M US L

    12/15/2037       523  
    6,811,938  

Series 3966(c)(f)(g)

5.90% - 1M US L

    12/15/2041       897,744  
    2,418,113  

Series 4170(c)(g)

4.05% - 1M US L

    1/15/2033       2,300,627  
    4,598,975  

Series 4605

3.00%

    8/15/2046       4,404,261  
    4,825,865  

Series 4657

3.00%

    2/15/2047       4,771,469  
    4,347,014  

Series 4686

4.00%

    3/15/2047       4,678,682  
       

Federal National Mortgage Association

                 
    5,207,238  

Series 2011-101(c)(f)(g)

5.90% - 1M US L

    10/25/2041       763,152  
    4,626,433  

Series 2011-124(c)(f)(g)

6.50% - 1M US L

    12/25/2041       764,495  
    5,582,344  

Series 2012-20(c)(f)(g)

6.45% - 1M US L

    3/25/2042       814,007  
    4,220,818  

Series 2013-36

3.00%

    4/25/2043       4,262,240  
    6,000,000  

Series 2013-109(e)

0.00%

    7/25/2043       4,305,865  
    2,904,042  

Series 2014-38

3.00%

    9/25/2043       2,753,386  
    6,357,067  

Series 2014-58

3.00%

    9/25/2044       6,337,648  
    1,130,548  

Series 2016-26(c)(g)

7.62% - 1M US L

    11/25/2042       1,014,856  
       

Government National Mortgage Association

                 
    17,216,141  

Series 2013-155(c)(f)

0.17%

    9/16/2053       297,758  
    4,534,349  

Series 2017-17

3.50%

    2/20/2047       4,705,884  
                           

TOTAL U.S. GOVERNMENT/AGENCY MORTGAGE BACKED SECURITIES

       

(Cost $45,468,019)

    47,668,621  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

19

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Schedule of Investments

June 30, 2019

 

Shares/Description

 

Value

 

SHORT-TERM INVESTMENTS 4.35%(a)

Money Market Fund

       
    8,661,531  

Fidelity Institutional Government Portfolio (7 Day Yield 2.25%)(h)

  $ 8,661,531  
                 

TOTAL SHORT-TERM INVESTMENTS

       

(Cost $8,661,531)

    8,661,531  
                 

TOTAL INVESTMENTS - 136.87%

    272,666,561  

(Cost $273,117,756)

       

LIABILITIES IN EXCESS OF OTHER ASSETS (36.87)%

    (73,453,552 )

NET ASSETS - 100.00%

  $ 199,213,009  

 

Investment Abbreviations:

 

Libor - London Interbank Offered Rate

 

Libor Rates:

 

1M US L - 1 Month LIBOR as of June 30, 2019 was 2.40%

 

3M US L - 1 Month LIBOR as of June 30, 2019 was 2.32%

 

6M US L - 1 Month LIBOR as of June 30, 2019 was 2.20%

 

(a)

All or a portion of the security has been pledged as collateral in connection with an open credit agreement. At June 30, 2019, the value of securities pledged amounted to $272,666,561, which represents approximately 136.87% of net assets.

 

(b)

Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities have been deemed liquid under procedures approved by the Fund’s Board of Directors and may normally be sold to qualified institutional buyers in transactions exempt from registration. Total fair value of Rule 144A securities amounts to $60,736,696 which represents approximately 30.49% of net assets as of June 30, 2019.

 

(c)

Variable rate investment. Interest rates reset periodically. Interest rate shown reflects the rate in effect at June 30, 2019. For securities based on a published reference rate and spread, the reference rate and spread are indicated in the description above. Certain variable rate securities are not based on a published reference rate and spread, but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.

 

(d)

Step-up bond. The interest rate shown is the rate in effect as of June 30, 2019.

 

(e)

Denotes zero-coupon bond.

 

(f)

Interest only security.

 

(g)

Inverse floating rate security whose interest rate moves in the opposite direction of reference interest rates. Reference interest rates are typically based on a negative multiplier or slope. Interest rate may also be subject to a cap or floor.

 

(h)

Seven-day yield as of June 30, 2019.

 

See Notes to Financial Statements.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Statement of Assets and Liabilities

June 30, 2019

 

ASSETS:

       

Investment in securities:

       

At cost

  $ 273,117,756  

At value

  $ 272,666,561  

Interest receivable

    1,141,033  

Dividends receivable

    391,367  

Receivable for fund investments sold

    63,619  

Cash

    34,074  

Prepaid expenses and other assets

    4,325  

Total Assets

    274,300,979  
         

LIABILITIES:

       

Payable for fund investments purchased

    1,009,967  

Facility loan payable

    73,500,000  

Interest payable on facility loan

    44,620  

Payable for distributions

    89,273  

Payable to Adviser

    223,760  

Payable to Chief Compliance Officer

    1,146  

Payable for fund accounting, administration and transfer agent fees

    150,219  

Payable for audit fees

    30,892  

Payable for custodian fees

    6,737  

Other accrued expenses

    31,356  

Total Liabilities

    75,087,970  

Net Assets

  $ 199,213,009  
         

NET ASSETS CONSIST OF:

       

Paid-in capital

    202,703,460  

Total distributable earnings

    (3,490,451 )

Net Assets

  $ 199,213,009  
         

PRICING OF SHARES:

       

Shares of common stock outstanding (50,000,000 shares authorized, $0.0001 par value)

    11,013,787  

Net Asset Value Per Share

  $ 18.09  

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

21

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Statement of Operations

For the Year Ended June 30, 2019

 

INVESTMENT INCOME:

       

Interest income

  $ 12,860,687  

Dividend income

    3,726,025  

Total Investment Income

    16,586,712  
         

EXPENSES:

       

Investment Adviser fee

    2,726,026  

Interest expense on facility loan

    2,466,859  

Fund accounting, administration and transfer agent fees

    599,891  

Director expenses

    112,720  

Printing expenses

    95,116  

Facility loan fees

    76,040  

Legal expenses

    56,475  

Registration expenses

    45,253  

Chief Compliance Officer fee

    42,183  

Audit expenses

    30,999  

Custodian expenses

    28,890  

Insurance fees

    4,573  

Other expenses

    1,086  

Total Expenses

    6,286,111  

Net Investment Income

    10,300,601  
         

REALIZED AND UNREALIZED GAIN:

       

Net realized gain on:

       

Investments

    204,255  

Net change in unrealized depreciation on:

       

Investments

    4,172,754  

Net Realized and Unrealized Gain on Investments

  $ 4,377,009  

Net Increase in Net Assets Resulting from Operations

  $ 14,677,610  

 

See Notes to Financial Statements.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Statements of Changes in Net Assets

 

 

 

 

For the
Year Ended
June 30, 2019

   

For the
Year Ended
June 30, 2018

 

NET INCREASE IN NET ASSETS FROM OPERATIONS:

Net investment income

  $ 10,300,601     $ 11,680,633  

Net realized gain on investments and long-term capital gains from other investment companies

    204,255       1,689,455  

Net change in unrealized appreciation/(depreciation) on investments

    4,172,754       (8,744,049 )

Net increase/(decrease) in net assets resulting from operations

    14,677,610       4,626,039  
                 

DISTRIBUTIONS TO SHAREHOLDERS:

               

From distributable earnings

    (12,942,505 )     (15,396,536 )(a)

From tax return of capital

    (9,082,869 )     (3,437,041 )

Net decrease in net assets from distributions to shareholders

    (22,025,374 )     (18,833,577 )

Net Decrease in Net Assets

    (7,347,764 )     (14,207,538 )
                 

NET ASSETS:

               

Beginning of year

    206,560,773       220,768,311  

End of year

  $ 199,213,009       206,560,773  (b)
                 

SHARE TRANSACTIONS:

               

Shares sold

           

Shares issued in reinvestment of distributions

           

Beginning of year

    11,013,787       11,013,787  

End of year

    11,013,787       11,013,787  

 

(a)

Includes net realized gain distributions of $949,389, and distributions from net investment income of $14,447,147.

 

(b)

Including accumulated undistributed net investment income of $0.

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

23

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Statement of Cash Flows

For the Year Ended June 30, 2019

 

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

Net increase in net assets resulting from operations

  $ 14,677,610  

Adjustments to reconcile the change in net assets from operations to net cash provided by operating activities:

       

Purchases of long term investments

    (72,427,481 )

Proceeds from sale of long term investments

    77,207,021  

Net sales of short-term investments

    10,393,984  

Net accretion of premiums/discounts

    (2,295,197 )

Net realized gain on investments

    (204,255 )

Net change in unrealized depreciation on investments

    (4,172,754 )

Return of capital from other investment companies

    686,599  

Net realized paydown gain

    (1,482,820 )

Interest-only bond amortization

    996,060  

(Increase) and decrease in:

       

Interest and dividends receivable

    (393,367 )

Prepaid expenses and other assets

    15,829  

Receivable for fund investments sold

    (20,132 )

Increase and (decrease) in:

       

Payable for fund investments purchased

    (990,033 )

Payable to Adviser

    (6,785 )

Payable to Chief Compliance Officer

    (1,437 )

Interest payable on facility loan

    (8,729 )

Other accrued expenses

    14,803  

Payable for fund accounting, administration and transfer agent fees

    52,645  

Payable for custodian fees

    2,698  

Other accrued expenses

    (1 )

Net cash provided by operating activities

    22,044,258  
         

CASH FLOWS USED IN FINANCING ACTIVITIES

       

Cash dividends paid to common stockholders

    (22,010,184 )

Net cash used in financing activities

    (22,010,184 )
         

NET CHANGE IN CASH

    34,074  

Cash at beginning of year

     

Cash at end of year

  $ 34,074  
         

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION

Payable for distributions

  $ 89,273  

Cash paid for interest on facility loan

    2,551,629  

 

See Notes to Financial Statements.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Financial Highlights

 

 

 

 

For the
Year Ended
June 30, 2019

   

For the
Year Ended
June 30, 2018

   

For the
Period Ended
June 30, 2017
(a)

 

Net asset value - beginning of period

  $ 18.75     $ 20.04     $ 19.60  

Income/(Loss) from investment operations:

                       

Net investment income(b)

    0.94       1.06       0.94  

Net realized and unrealized gain/(loss) on investments

    0.40       (0.64 )     0.46  

Total income/(loss) from investment operations

    1.34       0.42       1.40  
                         

Less distributions:

                       

From net investment income

    (1.18 )     (1.40 )(c)     (0.92 )

From tax return of capital

    (0.82 )     (0.31 )        

Total distributions

    (2.00 )     (1.71 )     (0.92 )

Offering costs on issuance of common stock

                (0.04 )

Net increase/(decrease) in net asset value

    (0.66 )     (1.29 )     0.44  

Net asset value - end of period

  $ 18.09     $ 18.75     $ 20.04  

Per common share market value - end of period

  $ 17.06     $ 17.69     $ 19.54  
                         

Total return based on net asset value(d)

    7.78 %     2.12 %     7.10 %(e)
                         

Total return based on market value(d)

    8.50 %     (0.65 )%     2.50 %(e)
                         

Ratios/Supplemental Data:

                       

Net assets, end of period (in thousands)

  $ 199,213     $ 206,561       220,768  

Ratio of expenses to average net assets(f)(g)

    3.16 %     2.67 %     2.14 %(h)

Ratio of net investment income to average net assets(b)

    5.17 %     5.42 %     5.28 %(h)

Portfolio turnover rate

    27 %     23 %     35 %(e)

Facility loan payable (in thousands)

  $ 73,500     $ 73,500     $ 71,500  

Asset coverage per $1,000 of facility loan payable(i)

  $ 3,711     $ 3,811     $ 4,090  

 

(a)

Commenced operations on September 28, 2016.

(b)

Recognition of net investment income by the Fund is affected by the timing of the declarations of dividends by the underlying closed-end funds in which the Fund invests. The ratio does not include net investment income of the closed-end funds in which the Fund invests.

(c)

Includes net realized gain distributions of (0.09).

(d)

Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. The net asset value and market price returns will differ depending upon the level of any discount from or premium to net asset value at which the Fund’s shares traded during the period. Total return based on market value does not reflect sales load.

(e)

Not annualized.

(f)

Includes interest expenses of 1.23% for the year ended June 30, 2019, 0.87% for the year ended June 30, 2018 and 0.46%(e) for the period from September 28, 2016 (commencement of operations) through June 30, 2017.

 

See Notes to Financial Statements.

 

Annual Report | June 30, 2019

25

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Financial Highlights

 

 

(g)

Does not include expenses of the closed-end funds in which the Fund invests.

(h)

Annualized.

(i)

Calculated by subtracting the Fund’s total liabilities (excluding the facility loan and accumulated unpaid interest on facility loan) from the Fund’s total assets and dividing by the outstanding facility loan balance.

 

See Notes to Financial Statements.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

1. ORGANIZATION

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. (the “Fund”) is a closed-end management investment company that was organized as a Maryland corporation on June 22, 2016, and commenced investment operations on September 28, 2016. The investment adviser to the Fund is RiverNorth Capital Management, LLC (the “Adviser”). The Fund’s sub-adviser is DoubleLine Capital, LP (“Sub-Adviser”). The Fund is a diversified investment company with an investment objective to seek current income and overall total return.

 

The Fund seeks to achieve its investment objective by allocating its Managed Assets among two principal strategies; under normal market conditions, the Fund may allocate between 10% and 35% of its Managed Assets to the Tactical Closed-End Fund Income Strategy and 65% to 90% of its Managed Assets to the Opportunistic Income Strategy. The Adviser will determine the portion of the Fund’s Managed Assets to allocate to each strategy and may, from time to time, adjust the allocations.

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

 

The following is a summary of significant accounting policies followed by the Fund. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures and disclosure of contingent assets and liabilities in the financial statements during the reporting period. Management believes the estimates and security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected in the financial statements may differ from the value the Fund ultimately realizes upon sale of the securities. The Fund is considered an investment company for financial reporting purposes under GAAP and follows the accounting and reporting guidance applicable to investment companies as codified in Accounting Standards Codification (“ASC”) 946 – Investment Companies.

 

Security Valuation: The Fund’s assets and other financial instruments are generally valued at their market value using market quotations. If a market quotation is unavailable, a security may be valued at its estimated fair value as described in Note 3.

 

Security Transactions and Related Income: The Fund follows industry practice and records security transactions on the trade date basis. The specific identification cost basis method is used for determining gains or losses for financial statements and income tax purposes. Dividend income is recorded on the ex-dividend date or for certain foreign securities, when the information becomes available to the Fund and interest income and expenses are recorded on an accrual basis. Discounts and premiums on securities purchased are amortized or accreted using the effective interest method. Paydown gains and losses on mortgage-related and other asset-backed securities are recorded as components of interest income on the Statement of Operations. Interest only stripped mortgage-backed securities (IO strips) are securities that receive only interest payments from a pool of mortgage loans. Little to no principal will be received at the maturity of an IO strip; as a result, periodic adjustments are recorded to reduce the cost of the security until maturity. These adjustments are included in interest income.

 

Annual Report | June 30, 2019

27

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

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.

 

Share Valuation: The net asset value (the “NAV”) is generally calculated as of the close of trading on the New York Stock Exchange (“the Exchange”) (normally 4:00 p.m. Eastern time) every day the Exchange is open. The NAV is calculated by dividing the value of all of the securities and other assets of the Fund, less the liabilities (including accrued expenses and indebtedness), by the total number of common shares outstanding.

 

Federal Income Taxes: The Fund has been treated as, and intends to qualify each year for special tax treatment afforded to, a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (“IRC”). In order to qualify as a RIC, the Fund must, among other things, satisfy income, asset diversification and distribution requirements. As long as it so qualifies, the Fund will not be subject to U.S. federal income tax to the extent that it distributes annually its investment company taxable income and its “net capital gain”. If the Fund retains any investment company taxable income or net capital gain, it will be subject to U.S. federal income tax on the retained amount at regular corporate tax rates. In addition, if the Fund fails to qualify as a RIC for any taxable year, it will be subject to U.S. federal income tax on all of its income and gains at regular corporate tax rates.

 

Distributions to Shareholders: Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of recognition of certain components of income, expense, or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassification will have no effect on net assets, results of operations, or NAV per share of the Fund.

 

The Fund maintains a level distribution policy. The Fund distributes to shareholders regular monthly cash distributions of its net investment income. In addition, the Fund distributes its net realized capital gains, if any, at least annually.

 

At times, to maintain a stable level of distributions, the Fund may pay out less than all of its net investment income or pay out accumulated undistributed income, or return capital, in addition to current net investment income. 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.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

The Board of Directors (“Board”) approved the implementation of the level distribution policy to make monthly cash distributions to common shareholders, stated in terms of a rate equal to 12.5% of the average of the Fund’s NAV per share for the final five trading days of 2018, which amounted to $17.60. The Fund makes monthly distributions to common shareholders set at a level monthly rate of $0.18 per common share.

 

Previously the Board approved the adoption of a managed distribution plan in accordance with a Section 19(b) exemptive order whereby the Fund made monthly distributions to common shareholders set at a fixed monthly rate of $0.15 per common share.

 

The amount of the Fund’s distributions pursuant to the managed distribution plan are not related to the Fund’s performance and, therefore, investors should not make any conclusions about the Fund’s investment performance from the amount of the Fund’s distributions or from the terms of the Fund’s managed distribution plan. The Board may amend, suspend or terminate the managed distribution plan at any time without notice to shareholders.

 

3. SECURITIES VALUATION AND FAIR VALUE MEASUREMENTS

 

 

Fair value is defined as the price that a fund might reasonably expect to receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. GAAP establishes a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.

 

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability. This includes assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value including using such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

 

 

Level 1 – Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

 

 

Level 2 – Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

 

 

Level 3 – Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

 

Annual Report | June 30, 2019

29

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

Equity securities, including closed-end funds and business development company notes, are generally valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser or Sub-Adviser believes such prices more accurately reflect the fair market value of such securities. Securities that are traded on any stock exchange are generally valued by the pricing service at the last quoted sale price. Lacking a last sale price, an exchange traded security is generally valued by the pricing service at its mean price. Securities traded in the NASDAQ over-the-counter market are generally valued by the pricing service at the NASDAQ Official Closing Price.

 

Investments in mutual funds, including money market mutual funds, are generally priced at the ending NAV provided by the service agent of the funds. These securities will be categorized as Level 1 securities.

 

Domestic and foreign fixed income securities, including foreign and U.S. corporate bonds, U.S. Government bonds and notes, foreign government bonds and notes, supranationals and foreign agencies, non-agency collateralized mortgage obligations, U.S. Government/Agency mortgage backed securities, bank loans, and collateralized loan obligations are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services. Prices obtained from independent pricing services typically use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Data used to establish quotes includes analysis of cash flows, pre-payment speeds, default rates, delinquency assumptions and assumptions regarding collateral and loss assumptions. Bank loans are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services. Securities that use similar valuation techniques and inputs are categorized as Level 2 of the fair value hierarchy. To the extent the significant inputs are unobservable, the values generally would be categorized as Level 3.

 

Short-term investments in fixed income securities, excluding money market funds, with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. These securities will be classified as Level 2 securities.

 

In accordance with the Fund’s good faith pricing guidelines, the Adviser, Sub-Adviser, or Valuation Committee is required to consider all appropriate factors relevant to the value of securities for which it has determined other pricing sources are not available or reliable as described above. No single standard exists for determining fair value, because fair value depends upon the circumstances of each individual case. As a general principle, the current fair value of an issue of securities being valued by the Adviser, Sub-Adviser, or Valuation Committee would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accordance with this principle may, for example, be based on (i) a multiple of earnings; (ii) a discount from market of a similar freely traded security (including a derivative security or a basket of securities traded on other markets, exchanges or among dealers); or (iii) yield to maturity with respect to debt issues, or a combination of these and other methods. Good faith pricing is permitted

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

if, in the Adviser’s, Sub-Adviser’s, or the Valuation Committee’s opinion, the validity of market quotations appears to be questionable based on factors such as evidence of a thin market in the security based on a small number of quotations, a significant event occurs after the close of a market but before the Fund’s NAV calculation that may affect a security’s value, or the Adviser, Sub-Adviser or Valuation Committee is aware of any other data that calls into question the reliability of market quotations.

 

Good faith pricing may also be used in instances when the bonds the Fund invests in default or otherwise cease to have market quotations readily available. Investments in foreign securities, junk bonds or other thinly traded securities are more likely to trigger good faith pricing than other securities.

 

The following is a summary of the inputs used at June 30, 2019 involving the Fund’s assets:

 

   

Valuation Inputs

         

Investments in Securities at Value*

 

Level 1 –
Quoted Prices

   

Level 2 –
Other
Significant
Observable
Inputs

   

Level 3 –
Significant
Unobservable
Inputs

   

Total

 

Asset Backed Obligations

  $     $ 10,500,430     $     $ 10,500,430  

Bank Loans

          10,873,134             10,873,134  

Business Development Company Notes

    13,979,776                   13,979,776  

Closed-End Funds

    44,526,021                   44,526,021  

Collateralized Loan Obligations

          28,168,224             28,168,224  

Foreign Corporate Bonds

          7,787,125             7,787,125  

Foreign Government Bonds and Notes, Supranationals and Foreign Agencies

          262,190             262,190  

Non-Agency Collateralized Mortgage Obligations

          99,453,321             99,453,321  

U.S. Corporate Bonds

          786,188             786,188  

U.S. Government/Agency Mortgage Backed Securities

          47,668,621             47,668,621  

Short-Term Investments

    8,661,531                   8,661,531  

Total

  $ 67,167,328     $ 205,499,233     $     $ 272,666,561  

 

*

Refer to the Fund’s Schedule of Investments for a listing of securities by type.

 

4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

 

 

The Adviser serves as the investment adviser to the Fund. Under the terms of the management agreement (the “Agreement”), the Adviser, subject to the supervision of the Board, provides or arranges to be provided to the Fund such investment advice as it deems advisable and will furnish or arrange to be furnished a continuous investment program for the Fund consistent with the Fund’s

 

Annual Report | June 30, 2019

31

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

investment objectives and policies. As compensation for its management services, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly in arrears at an annual rate of 1.00% of the average daily managed assets of the Fund. Managed assets are defined as the total assets of the Fund, including assets attributable to leverage, minus liabilities.

 

DoubleLine Capital, LP is the investment sub-adviser to the Fund. Under the terms of the sub-advisory agreement, the Sub-Adviser, subject to the supervision of the Adviser and the Board, provides or arranges to be provided to the Fund such investment advice as deemed advisable and will furnish or arrange to be furnished a continuous investment program for the portion of assets managed in the Fund consistent with the Fund’s investment objective and policies. As compensation for its sub-advisory services, the Adviser is obligated to pay the Sub-Adviser a fee computed and accrued daily and paid monthly in arrears based on an annual rate of 0.50% of the average daily managed assets of the Fund.

 

U.S. Bancorp Fund Services, LLC, d/b/a U.S. Bank Global Fund Services (“Fund Services”) provides the Fund with fund administration and fund accounting services. Fund Services also serves as transfer, dividend paying and shareholder servicing agent for the Fund (“Transfer Agent”). As compensation for its services to the Fund, Fund Services receives an annual fee based on the Fund’s average daily managed assets, subject to certain minimums.

 

Officers of the Fund and Directors who are “interested persons” of the Fund or the Adviser receive no salary or fees from the Fund, except the Chief Compliance Officer. Each Director who is not an “interested person” receive a fee of $16,500 per year plus $1,500 per meeting attended. In addition, the lead Independent Director receives $250 annually, the Chair of the Audit Committee receives $500 annually, and the Chair of the Nominating and Corporate Governance Committee receives $250 annually. The Fund reimburses each Director and Officer for his or her travel and other expenses relating to the attendance at such meetings. Certain officers and/or interested directors of the Fund are also officers of the Adviser.

 

The Adviser provides a Chief Compliance Officer to the Fund. For the period from July 1, 2018 through June 30, 2019, the Fund incurred expenses of $42,183 for these services. Of that amount, the Fund owed the Adviser $1,146 for such expenses as of June 30, 2019.

 

5. FEDERAL INCOME TAXES

 

 

It is the Fund’s policy to meet the requirements of the IRC applicable to regulated investment companies, and to distribute all of their taxable net income to their shareholders. In addition, the Fund intends to pay distributions as required to avoid imposition of excise tax. Therefore, no federal income tax provision is required.

 

Tax Basis of Distributions to Shareholders: 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 were recorded by the Fund.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

The tax character of distributions paid by the Fund during the fiscal years ended June 30, 2018 and June 30, 2019, were as follows:

 

Fiscal Year Ended

 

Ordinary
Income

   

Net Long Term
Capital Gains

   

Return of
Capital

   

Total

 

June 30, 2018

  $ 15,389,348     $ 7,188     $ 3,437,041     $ 18,833,577  

June 30, 2019

    12,942,505             9,082,869       22,025,374  

 

Components of Distributable Earnings on a Tax Basis: The tax components of distributable earnings are determined in accordance with income tax regulations which may differ from the composition of net assets reported under GAAP. Accordingly, for the year ended June 30, 2019, certain differences were reclassified. These differences were primarily due to book/tax distribution differences and to the different tax treatment of certain other investments; the amounts reclassified did not affect net assets. The reclassifications were as follows:

 

Paid-in Capital

Total Distributable Earnings

$(226,649)

$226,649

 

At June 30, 2019, the components of distributable earnings on a tax basis for the Fund was as follows:

 

Undistributed
Ordinary Income

Undistributed
Long Term
Gain/(Loss)

Net Unrealized
Appreciation/
(Depreciation)

Other Accumulated
Gain/(Loss)

Total

$—

$—

$(544,237)

$(2,946,214)

$(3,490,451)

 

Unrealized Appreciation and Depreciation on Investments: As of June 30, 2019, net unrealized appreciation (depreciation) of investments based on federal tax costs was as follows:

 

Gross Appreciation
(excess of value over tax)

Gross Depreciation
(excess of tax cost
over value)

Net Unrealized
Appreciation/
(Depreciation)

Cost of Investments for
Income Tax Purposes

$7,799,831

$8,344,068

$(544,237)

$273,210,797

 

The difference between book and tax basis unrealized appreciation/(depreciation) for the Fund is attributable to wash sales.

 

The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on U.S. tax returns and state tax returns filed since inception of the Fund. No income tax returns are currently under examination. All tax years since commencement of operations remain subject to examination by the tax authorities in the United States. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

 

Annual Report | June 30, 2019

33

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

Capital Losses: As of June 30, 2019, the Fund had capital loss carryforwards which may reduce the Fund’s taxable income arising from future net realized gains on investments, if any, to the extent permitted by the IRC and thus may reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal tax pursuant to the IRC. The capital loss carryforwards may be carried forward indefinitely. Capital losses carried forward for the year ended June 30, 2019, were as follows:

 

Non-Expiring Short-Term

Non-Expiring Long-Term

$—

$2,946,214

 

6. INVESTMENT TRANSACTIONS

 

 

Investment transactions for the period from July 1, 2018 through June 30, 2019, excluding short-term investments, were as follows:

 

Purchases of Securities

Proceeds from Sales of Securities

$72,427,481

$77,206,974

 

7. REVOLVING CREDIT FACILITY

 

 

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 use leverage through borrowings or the issuance of preferred stock, in an aggregate amount of up to 33 1/3% of the Fund’s Total Assets immediately after such borrowings or issuance.

 

On December 16, 2016, the Fund entered into a $75,000,000 secured, revolving, evergreen credit facility with U.S. Bank National Association (“U.S. Bank”). The credit facility has a variable annual interest rate equal to one-month LIBOR plus 0.95 percent. The credit facility will accrue a commitment fee equal to an annual rate of 0.10 percent on $75,000,000.

 

The average principal balance and interest rate for the period during which the credit facility was utilized from July 1, 2018 through June 30, 2019 was approximately $73,500,000 and 3.31 percent, respectively. At June 30, 2019, the principal balance outstanding was $73,500,000 at an interest rate of 3.39 percent. For each day in the period from July 1, 2018 through June 30, 2019, the Fund reached its maximum amount outstanding of $73,500,000 on July 1, 2018. Securities that have been pledged as collateral for the borrowings are indicated in the Schedule of Investments.

 

8. INDEMNIFICATIONS

 

 

Under the Fund’s organizational documents, its officers and Directors are indemnified against certain liability 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 these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

9. CAPITAL SHARE TRANSACTIONS

 

 

The Fund’s authorized capital stock consists of 50,000,000 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.

 

The Fund has issued and outstanding 11,013,787 shares for the year ended June 30, 2019.

 

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.

 

10. RECENT ACCOUNTING PRONOUNCEMENTS

 

 

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management has adopted this guidance for the current reporting period.

 

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities. Under ASU 2017-08, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. ASU 2017-08 will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the fund.

 

In addition, in August 2018, the Securities and Exchange Commission (“Commission”) issued Final Rule Release No. 33-10532, Disclosure Update and Simplification, which in part amends certain financial statement disclosure requirements of Regulation S-X that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, GAAP, or changes in the information environment. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The amendments to Rule 6-04.17 of Regulation S-X (balance sheet) were amended to require presentation of the total, rather than the components of net assets, of distributable earnings on the balance sheet. Consistent with GAAP, funds will be required to disclose total distributable earnings. The amendments to Rule 6-09 of Regulation S-X (Statement of Changes in Net Assets) omit the requirement to separately state the sources of distributions paid as well as omit the requirement to parenthetically state the book basis amount of undistributed net investment income. Instead, consistent with GAAP, funds will be required to disclose the total amount of distributions paid, except that any tax return of capital must be separately disclosed. The requirements of the Final Rule Release are effective November 5, 2018.

 

Annual Report | June 30, 2019

35

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Notes To Financial Statements

June 30, 2019

 

11. SUBSEQUENT EVENTS

 

 

On July 31, 2019, the Fund paid a distribution in the amount of approximately $0.18 per share, for a total of $2,018,827.

 

The Fund has performed an evaluation of subsequent events through the date the financial statements were issued and has determined that no additional items require recognition or disclosure.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Report of Independent Registered Public Accounting Firm

June 30, 2019

 

To the Shareholders and Board of Directors of
RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. (the “Fund”) as of June 30, 2019, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the three periods in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2019, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2019, by correspondence with the custodian, agent banks, and brokers, or by other appropriate auditing procedures where replies from agent banks or brokers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the auditor of one or more of RiverNorth Capital Management, LLC’s investment companies since 2006.

 

COHEN & COMPANY, LTD.
Cleveland, Ohio
August 29, 2019

 

Annual Report | June 30, 2019

37

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Additional Information

June 30, 2019 (Unaudited)

 

PROXY VOTING POLICY

 

 

The Board of Directors of the Fund has delegated the voting of proxies for Fund securities to the Adviser pursuant to the Adviser’s proxy voting policies and procedures. Under these policies and procedures, the Adviser will vote proxies related to Fund securities in the best interest of the Fund and its shareholders.

 

A description of the Fund’s proxy voting policies and procedures is available (1) without charge, upon request, by calling 888-848-7569, (2) on the Fund’s website at http://rivernorth.com/closed-end-funds/opp, or on the SEC’s website at http://sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the period ended June 30 is available on the SEC’s website at http://sec.gov.

 

PORTFOLIO HOLDINGS DISCLOSURE POLICY

 

 

The Fund files a complete schedule of investments with the SEC for the first and third quarter of each fiscal year on Part F of Form N-PORT. The Fund’s first and third quarters end on March 31 and September 30. The Form N-PORT filing must be made within 60 days of the end of the quarter. The Fund’s Forms N-PORT (and its predecessor Form, Form N-Q) are available on the SEC’s website at www.sec.gov.

 

CERTIFICATIONS

 

 

The Fund’s President submitted to the New York Stock Exchange the initial CEO/CFO certification as required by Section 303A.12(a) of the NYSE listed Fund Manual.

 

TAX INFORMATION

 

 

Of the distributions paid by the Fund from ordinary income for the year ended June 30, 2019, the following percentages met the requirements to be treated as qualifying for the corporate dividends received deduction and qualified dividend income:

 

Dividends Received Deduction

Qualified Dividend Income

0.55%

0.67%

 

In addition, the Fund designated 68.21% of its taxable ordinary income distributions as interest related dividends under IRC §871(k)(1)(C), and 0.00% of its taxable ordinary income distributions as short-term capital gain distributions under IRC §871(k)(2)(C),

 

DIVIDEND REINVESTMENT PLAN

 

 

The Fund has a dividend reinvestment plan (the “Plan”) commonly referred to as an “opt out” plan. Each Common Shareholder who participates in the Plan will have all distributions of dividends and capital gains automatically reinvested in additional Common Shares. The automatic reinvestment of dividends and distributions in Common Shares will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends and distributions, even though such participants have not received any cash with which to pay the resulting tax.

 

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RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Additional Information

June 30, 2019 (Unaudited)

 

Common Shareholders who elect not to participate in the Plan will receive all distributions in cash. All correspondence or questions concerning the Plan, including how a Common Shareholder may opt out of the Plan, should be directed to U.S. Bancorp Fund Services, LLC, (855) 862-6092, 615 East Michigan Street, Milwaukee, Wisconsin 53202 (the “Plan Administrator”). Beneficial owners of Common Shares who hold their Common Shares in the name of a broker or nominee should contact the broker or nominee to determine whether and how they may participate in, or opt out of, the Plan.

 

PRIVACY POLICY

 

 

The Fund is committed to ensuring your financial privacy. This notice is being sent to comply with privacy regulations of the Securities and Exchange Commission. The Fund has in effect the following policy with respect to nonpublic personal information about its customers:

 

 

Only such information received from you, through application forms or otherwise, and information about your Fund transactions will be collected.

 

 

None of such information about you (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account).

 

 

Policies and procedures (including physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality of such information.

 

 

The Fund does not currently obtain consumer information. If the Fund were to obtain consumer information at any time in the future, it would employ appropriate procedural safeguards that comply with federal standards to protect against unauthorized access to and properly dispose of consumer information. For more information about the Fund’s privacy policies call (855) 830 1222 (toll free).

 

Annual Report | June 30, 2019

39

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Independent Directors

June 30, 2019

 

Name,
Address
1
and Year of
Birth

Position(s)
Held with
Fund

Term of
Office/
Length
of Time
Served

Principal
Occupation(s)
During Past 5 Years

Number
of
Portfolios
in Fund
Complex
Overseen
by
Director
2

Other Directorships
Held by Director
During Past 5 Years

John K. Carter
(1961)

Director

Initial term expires in 2021. Has served since 2019.

Partner, Law Office of John K. Carter, P.A. dba Carter Reymann Law, P.A. (a general practice and corporate law firm)(2015 to present); Managing Partner, Global Recruiters of St. Petersburg (a financial services consulting and recruiting firm) (2012 to 2015).

8

Carillon Mutual Funds (12 funds) (2016 to present); RiverNorth Marketplace Lending Corporation (1 fund) (2016 to present); RiverNorth Funds (3 funds) (2013 to present); RiverNorth Opportunities Fund, Inc. (1 fund)(2013 to present); RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present).

John S. Oakes
(1943)

Director

Initial term expires in 2021. Has served since 2019.

Principal, Financial Search and Consulting (a recruiting and consulting firm) (2013 to 2017).

8

RiverNorth Marketplace Lending Corporation (1 fund) (2016 to present); RiverNorth Funds (3 funds) (2010 to present); RiverNorth Opportunities Fund, Inc. (1 fund)(2013 to present); RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present).

 

40

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Independent Directors

June 30, 2019

 

Name,
Address
1
and Year of
Birth

Position(s)
Held with
Fund

Term of
Office/
Length
of Time
Served

Principal
Occupation(s)
During Past 5 Years

Number
of
Portfolios
in Fund
Complex
Overseen
by
Director
2

Other Directorships
Held by Director
During Past 5 Years

J. Wayne Hutchens
(1944)

Director

Initial term expires in 2022. Has served since 2019.

Mr. Hutchens is currently retired. Mr. Hutchens is Trustee of the Denver Museum of Nature and Science (2000 to present), Director of AMG National Trust Bank (June 2012 to present) and Trustee of Children’s Hospital Colorado (May 2012 to present). Prior to these positions, Mr. Hutchens spent 29 years in the banking industry, retiring as Chariman of Chase Bank Colorado.

3

ALPS Series Trust (9 funds) (2012 to present); RiverNorth Opportunities Fund, Inc. (1 fund)(2013 to present); RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present).

David M. Swanson
(1957)

Director

Initial term expires in 2022. Has served since 2019.

Founder & Managing Partner of SwanDog Strategic Marketing since 2006.

3

Managed Portfolio Series (37 funds) (2011 to present); Trustee, ALPS Variable Investment Trust (7 funds) (2006 to present); RiverNorth Opportunities Fund, Inc. (1 fund)(2013 to present); RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present).

 

1

The mailing address of each Director is 325 N. LaSalle Street, Suite 645, Chicago, IL 60654.

 

2

The “Fund Complex” consists of the RiverNorth Core Opportunity Fund, the RiverNorth/DoubleLine Strategic Income Fund and the RiverNorth/Oaktree High Income Fund, each a series of RiverNorth Funds Trust, RiverNorth Opportunities Fund, Inc., RiverNorth/DoubleLine Strategic Opportunity Fund, Inc., RiverNorth Marketplace Lending Corporation and RiverNorth Opportunistic Municipal Income Fund, Inc.

 

Annual Report | June 30, 2019

41

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Interested Director and Officers

June 30, 2019

 

Name,
Address
1
and Year of
Birth

Position(s)
Held with
Fund

Term of
Office/
Length
of Time
Served

Principal
Occupation(s)
During Past 5 Years

Number
of
Portfolios
in Fund
Complex
Overseen
by
Director
2

Other Directorships
Held by Director
During Past 5 Years

Patrick W. Galley(3)
(1975)

Director, Chairman and President

Initial term expires in 2020. Has served since 2019.

Chief Investment Officer, RiverNorth Capital Management, LLC. (2004 to present).

7

RiverNorth Marketplace Lending Corporation (1 fund) (2016 to present); RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. (1 fund) (2016 to present); RiverNorth Funds (3 funds) (2006 to present); RiverNorth Opportunities Fund, Inc. (1 fund)(2013 to present); RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present).

Jerry Raio(4)
(1965)

Director

Initial term expires in 2020. Has served since 2019.

Managing Director - Head of Retail Origination, Wells Fargo (2005 to 2018).

4

RiverNorth Opportunistic Municipal Income Fund, Inc. (1 fund) (2018 to present); RiverNorth Marketplace Lending Corporation (2018 to present)(1 fund).

Officers

         

Jonathan M. Mohrhardt
(1974)

Chief Financial Officer and Treasurer

Has served since 2019.

Chief Compliance Officer, Chief Operating Officer, RiverNorth Capital Management LLC (2011 to present) and President, Chief Executive Officer and Chief Compliance Officer.

N/A

Board of Managers RiverNorth Capital Management, LLC (2010 to present); Board of Directors RiverNorth Holdings, Co. (2010 to present).

 

42

(888) 848-7569 | www.rivernorth.com

 

 

RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.

Interested Director and Officers

June 30, 2019

 

Name,
Address
1
and Year of
Birth

Position(s)
Held with
Fund

Term of
Office/
Length
of Time
Served

Principal
Occupation(s)
During Past 5 Years

Number
of
Portfolios
in Fund
Complex
Overseen
by
Director
2

Other Directorships
Held by Director
During Past 5 Years

Marcus L. Collins
(1968)

Chief Compliance Officer and Secretary

Has served since 2019.

General Counsel, RiverNorth Capital Management, LLC (2012 to present), Chief Compliance Officer, RiverNorth Capital Management, LLC (2012 to present).

N/A

N/A

Angela Ter Maat
(1981)
c/o US Bancorp Fund Services LLC, dba U.S. Bank Global Fund Services
777 East Wisconsin Ave. Milwaukee, WI 53202

Assistant Secretary

Indefinite/August 2016 to Present

Vice President, US Bancorp Fund Services LLC,dba U.S. Bank Global Fund Services (2004 to present).

N/A

N/A

 

1

The mailing address of each Director and officer, unless otherwise noted, is 325 N. LaSalle Street, Suite 645, Chicago, IL 60654.

 

2

The “Fund Complex” consists of the RiverNorth Core Opportunity Fund, the RiverNorth/DoubleLine Strategic Income Fund and the RiverNorth/Oaktree High Income Fund, each a series of RiverNorth Funds Trust, RiverNorth Opportunities Fund, Inc., RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. and RiverNorth Marketplace Lending Corporation, and the RiverNorth Opportunistic Municipal Income Fund, Inc.

 

3

Patrick W. Galley is considered an “Interested” Director as defined in the 1940 Act, because he is an officer of the Company and Chief Investment Officer of the Fund’s investment adviser.

 

Annual Report | June 30, 2019

43

 

 

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Board of Directors

Patrick W. Galley, CFA, Chairman
John K. Carter
John S. Oakes
J. Wayne Hutchens
David M. Swanson
Jerry R. Raio

 

Investment Adviser

RiverNorth Capital Management, LLC

 

Sub Adviser

DoubleLine Capital, LP

 

Fund Administrator

U.S. Bank Global Fund Services

 

Transfer Agent and
Dividend Disbursing Agent

U.S. Bank Global Fund Services

 

Custodian

U.S. Bank, National Association

 

Independent Registered
Public Accounting Firm

Cohen & Company, Ltd.

 

 

RiverNorth Capital Management, LLC
325 N. LaSalle Street, Suite 645
Chicago, IL 60654
rivernorth.com

 

This report is provided for the general information of the shareholders of RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. This report is not intended for distribution to prospective investors in the Fund, unless preceded or accompanied by an effective prospectus.

 

 

 

 

Item 2. Code of Ethics.

 

(a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or any persons performing similar functions on behalf of the registrant.

 

(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:

 

(1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;

(3) Compliance with applicable governmental laws, rules, and regulations;

(4) The prompt internal reporting of violations of the code of ethics to an appropriate person or persons identified in the code of ethics; and

(5) Accountability for adherence to the code of ethics.

 

(c) Amendments: During the period covered by this report, no amendments were made to the provisions of the code of ethics adopted in 2(a) above.

 

(d) Waivers: During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted.

 

(e) Posting: We do not intend to post the code of ethics for the Officers or any amendments or waivers on a website.

 

(f) Availability: The code of ethics for the Officers can be obtained, free of charge by calling the toll free number for the appropriate Fund.

 

Item 3. Audit Committee Financial Expert.

 

The registrant’s board of directors has determined that there is at least one audit committee financial expert serving on its audit committee. J. Wayne Hutchens is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

 

Item 4. Principal Accountant Fees and Services.

 

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past fiscal year. “Audit services” refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for that fiscal year. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

 

 

 

  Year Ended
6/30/2019
Year Ended
6/30/2018
Audit Fees $26,000 $26,000
Audit-Related Fees $ - $ -
Tax Fees $5,000 $5,000
All Other Fees $ - $ -

 

The Audit Committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.

 

The percentage of fees billed by Cohen Fund Audit Services applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

 

 

Year Ended

6/30/2019

Year Ended

6/30/2018

Audit-Related Fees 0% 0%
Tax Fees 0% 0%
All Other Fees 0% 0%

 

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last year. The Audit Committee has considered whether the provision of non-audit services billed to the Adviser were compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.

 


Non-Audit Related Fees
Year Ended
6/30/2019
Year Ended
6/30/2018
Registrant $- $-
Registrant’s Investment Adviser $- $-

 

 

 

 

Item 5. Audit Committee of Listed Registrants.

 

The registrant is an issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, (the “Act”) and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Act. The independent members of the committee are as follows: John K. Carter, J. Wayne Hutchens, John S. Oakes and David M. Swanson.

 

Item 6. Investments.

 

(a)Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

 

The Board of Directors of the Fund has delegated responsibilities for decisions regarding proxy voting for securities held by the Fund to the Adviser or Subadviser. The Adviser or Subadviser will vote such proxies in accordance with its proxy policies and procedures. In some instances, the Adviser or Subadviser may be asked to cast a proxy vote that presents a conflict between the interests of the Fund’s shareholders, and those of the Adviser or Subadviser or an affiliated person of the Adviser or Subadviser. In such a case, the Adviser or Subadviser will abstain from making a voting decision and will forward all necessary proxy voting materials to the Fund to enable the Board of Directors to make a voting decision. The Adviser or Subadviser shall make a written recommendation of the voting decision to the Board of Directors, which shall include: (i) an explanation of why it has a conflict of interest; (ii) the reasons for its recommendation; and (iii) an explanation of why the recommendation is consistent with the Adviser’s (or Subadviser’s) proxy voting policies. The Board of Directors shall make the proxy voting decision that in its judgment, after reviewing the recommendation of the Adviser or Subadviser, is most consistent with the Adviser’s or Subadviser’s proxy voting policies and in the best interests of Fund shareholders. When the Board of Directors of the Fund is required to make a proxy voting decision, only the directors without a conflict of interest with regard to the security in question or the matter to be voted upon shall be permitted to participate in the decision of how the Fund’s vote will be cast. The Adviser and Subadviser vote proxies pursuant to the proxy voting policies and guidelines set forth in Appendix A and B, respectively, to this SAI.

 

 

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

 

Portfolio Managers

 

Patrick W. Galley and Stephen O’Neill are co-portfolio managers for the Fund for the Tactical Closed-End Fund Income Strategy.

 

Patrick W. Galley, CFA is a co-portfolio manager of the Fund. Mr. Galley is the Chief Investment Officer for the Adviser. Mr. Galley heads the Adviser’s research and investment team and oversees all portfolio management activities at the Adviser. Mr. Galley also serves as the President and Chairman of the RiverNorth Funds. Prior to joining the Adviser in 2004, he was most recently a Vice President at Bank of America in the Global Investment Bank’s Portfolio Management group, where he specialized in analyzing and structuring corporate transactions for investment management firms in addition to closed-end and open-end funds, hedge funds, funds of funds, structured investment vehicles and insurance/reinsurance companies. Mr. Galley graduated with honors from Rochester Institute of Technology with a B.S. in Finance. He has received the Chartered Financial Analyst (CFA) designation, is a member of the CFA Institute and is a member of the CFA Society of Chicago.

 

Stephen O’Neill, CFA is the Fund’s co-portfolio manager. Mr. O’Neill conducts qualitative and quantitative analysis of closed-end funds and their respective asset classes. Prior to joining RiverNorth Capital, Mr. O’Neill was most recently an Assistant Vice President at Bank of America in the Global Investment Bank’s Portfolio Management group. At Bank of America, he specialized in the corporate real estate, asset management and structured finance industries. Mr. O’Neill graduated magna cum laude from Miami University in Oxford, Ohio with a B.S. in Finance. Mr. O’Neill has received the Chartered Financial Analyst (CFA®) designation, is a member of the CFA Institute and is a member of the CFA Society of Chicago.

 

Compensation of Portfolio Managers

 

Mr. Galley’s and Mr. O’Neill’s total compensation includes a base salary fixed from year to year and a variable performance bonus consisting of cash incentives. The performance bonus reflects individual performance of the funds managed by the portfolio managers and the performance of the Adviser’s business as a whole. Mr. Galley and Mr. O’Neill also participate in a 401K program on the same basis as other officers of the Adviser.

 

Portfolio Manager Ownership of Fund Shares

 

The following table shows the dollar range of equity securities of the Fund beneficially owned by the portfolio managers of the Fund as of June 30, 2019.

 

Name of Portfolio Manager Dollar Range of Equity
Securities of the Fund
Patrick W. Galley $100,001-$500,000
Stephen A. O’Neill $100,001-$500,000

 

 

 

Conflicts of Interest

 

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other accounts. More specifically, portfolio managers who manage multiple funds are presented with the following potential conflicts:

 

The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. The management of multiple funds and accounts also may give rise to potential conflicts of interest if the funds and accounts have different objectives, benchmarks, time horizons and fees as the portfolio manager must allocate his time and investment ideas across multiple funds and accounts. Another potential conflict of interest may arise where another account has the same investment objective as the Fund, whereby the portfolio manager could favor one account over another.

 

With respect to securities transactions for the Fund, the Adviser determines which broker to use to execute each order, consistent with the duty to seek best execution of the transaction. A portfolio manager may execute transactions for another fund or account that may adversely impact the value of securities held by the Fund. Securities selected for funds or accounts other than the Fund may outperform the securities selected for the Fund. Further, a potential conflict could include a portfolio manager’s knowledge about the size, timing and possible market impact of Fund trades, whereby they could use this information to the advantage of other accounts and to the disadvantage of the Fund. These potential conflicts of interest could create the appearance that a portfolio manager is favoring one investment vehicle over another.

 

The management of personal accounts also may give rise to potential conflicts of interest. Although the portfolio manager generally does not trade securities in his or her own personal account, the Adviser and the Fund have each adopted a code of ethics that, among other things, permits personal trading by employees (including trading in securities that can be purchased, sold or held by the Fund) under conditions where it has been determined that such trades would not adversely impact client accounts. Nevertheless, the management of personal accounts may give rise to potential conflicts of interest, and there is no assurance that these codes of ethics will adequately address such conflicts.

 

The Adviser has adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

 

Other Accounts Managed

 

As of June 30, 2019, the portfolio managers of the Fund were responsible for the management of the following other accounts (in addition to the Fund):

 

  Number of Other Accounts Managed and Assets by Account Type
As of June 30, 2019
Portfolio Manager Registered Investment
Companies
(other than the Fund)
Registered Investment Companies Subject to Performance-Based Advisory Fees Other Pooled Investment Vehicles Other Pooled Investment Vehicles Subject to Performance-Based Advisory Fees Other
Accounts
Other Accounts Subject to Performance-Based Advisory Fees
Patrick W. Galley Number: 10
Assets: $3.025B
Number: 0
Assets: $0
Number: 4
Assets: $462M
Number: 4
Assets: $462M
Number: 2
Assets: $24M
Number: 1
Assets: $23M
Stephen O’Neill Number: 9
Assets: $2.805B
Number: 0
Assets: $0
Number: 3
Assets: $386M
Number: 3
Assets: $386M
Number: 2
Assets: $24M
Number: 1
Assets: $23M

 

 

 

 

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Period (a)
Total Number of Shares (or Units) Purchased
(b)
Average Price Paid per Share (or Unit)
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 1/1/19 – 1/31/19 0 0 0 0
Month #2 2/1/19 – 2/28/19 0 0 0 0
Month #3 3/1/19 – 3/31/19 0 0 0 0
Month #4 4/1/19 – 4/30/19 0 0 0 0
Month #5 5/1/19 – 5/31/19 0 0 0 0
Month #6 6/1/19 – 6/30/19 0 0 0 0
Total 0 0 0 0

 

Item 10. Submission of Matters to a Vote of Security Holders.

 

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.

 

Item 11. Controls and Procedures.

 

(a)The Registrant’s President and Chief Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

 

(b)There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

 

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

 

The registrant did not engage in securities lending activities during the fiscal year reported on this Form N-CSR.

 

Item 13. Exhibits.

 

(a)(1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy Item 2 requirements through filing of an exhibit. Filed herewith.

 

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the Registrant to 10 or more persons. None.

 

(b)Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished 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) RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.  
     
By (Signature and Title) /s/ Patrick W. Galley   
  Patrick W. Galley, President  
     
Date 9/9/19  

 

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/ Patrick W. Galley  
  Patrick W. Galley, President  
     
Date 9/9/19  
     
By (Signature and Title) /s/ Jonathan M. Mohrhardt  
  Jonathan M. Mohrhardt, Chief Financial Officer  
     
Date 9/9/19