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 811-23715
___________________________________________
OAKTREE DIVERSIED INCOME FUND INC.
(Exact name of registrant as specified in charter)
___________________________________________
Brookfield Place
225 Liberty Street, 35th Floor
New York, New York 10281-1048
(Address of principal executive offices) (Zip code)
Brian F. Hurley, Esq.
Brookfield Public Securities Group LLC
Brookfield Place
225 Liberty Street, 35th Floor
New York, New York 10281-1048
(Name and address of agent for service)
___________________________________________
(855) 777-8001
Registrant’s telephone number, including area code
Date of fiscal year end: December 31
Date of reporting period: June 30, 2024
Item 1. Reports to Stockholders.
(a)
|
| |
IN PROFILE Oaktree Fund Advisors, LLC (the “Adviser” or “Oaktree”) is an investment adviser registered with the SEC and is also an affiliate and related adviser of Oaktree Capital Management, L.P., an investment adviser registered with the SEC. Oaktree serves as the investment adviser to the Fund. Oaktree was founded in April 1995 and is a leader among global investment managers specializing in alternative investments. Oaktree manages assets across a wide range of investment strategies within four asset classes: Credit, Private Equity, Real Assets, and Listed Equities. As of June 30, 2024, Oaktree had $193 billion in assets under management. Brookfield Public Securities Group LLC (“PSG”) serves as the Administrator to the Fund. PSG is an indirect wholly-owned subsidiary of Brookfield Asset Management ULC with approximately $1 trillion of assets under management as of June 30, 2024, an unlimited liability company formed under the laws of British Columbia, Canada (“BAM ULC”). Brookfield Corporation, a publicly traded company (NYSE: BN; TSX: BN), holds a 75% interest in BAM ULC, while Brookfield Asset Management Ltd., a publicly traded company (NYSE: BAM; TSX: BAMA) (“Brookfield Asset Management”), holds a 25% interest in BAM ULC. In 2019, Brookfield acquired a majority interest in Oaktree. Oaktree Diversified Income Fund Inc. (the “Fund”) is managed by Oaktree Fund Advisors, LLC. The Fund uses its website as a channel of distribution of material company information. Financial and other material information regarding the Fund is routinely posted on and accessible at https://www.brookfieldoaktree.com/fund/oaktree-diversified-income-fund-inc |
|
| |
As permitted by regulations adopted by the 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 https://www.brookfieldoaktree.com/fund/oaktree-diversified-income-fund-inc, 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, investment adviser, bank or trust company) or, if you are a direct investor, by calling the Fund (toll-free) at 1-855-777-8001 or by sending an e-mail request to the Fund at info@brookfieldoaktree.com. You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you may contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you may call 1-855-777-8001 or send an email request to info@brookfieldoaktree.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held within the fund complex if you invest directly with the Fund. |
TABLE OF CONTENTS |
1 | ||
3 | ||
5 | ||
6 | ||
50 | ||
51 | ||
52 | ||
53 | ||
54 | ||
55 | ||
70 | ||
Board Considerations Relating to the Approval of the Investment Advisory Agreement | 71 | |
75 | ||
76 |
This report is for shareholder information. This is not a Prospectus intended for use in the purchase or sale of Fund shares.
NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED |
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
Dear Shareholders,
We are pleased to provide the Semi-Annual Report for the Oaktree Diversified Income Fund (the “Fund”) for the six month period ended June 30, 2024.
Risk assets performed well in both the first quarter and second quarter of 2024. As inflation remains above target, market expectations for policy rate cuts decreased significantly in the U.S., resulting in higher interest rates. The 10-year U.S. Treasury yield increased by 52 bps during the period to 4.4%. However, resilient economic growth continued to support risk assets, with global equities gaining 12.0% and global high yield spreads narrowing 23 bps. Global senior loans and high yield bonds had strong performance, returning 4.6% and 2.8%, respectively, while longer duration global investment grade bonds returned 0.5%. Overall, it was a profitable period to be invested in sub-investment grade rated credit.
The Fund’s diversified asset mix of both public and private debt investments provided investors with a net return of 5.64% during the six-month period, with each of the strategies contributing positively to the fund’s performance. High income was generated from the portfolio’s nearly 67% allocation to floating-rate debt, which accounted for over 75% of the fund’s returns over the period. Structured credit led performance, as collateralized loan obligation (CLO) debt tranches across ratings categories benefited from spread compression and high current income, and real estate debt was supported by gains in non-agency residential mortgage-backed securities (RMBS), hospitality-backed single asset single borrower (SASB) commercial mortgage-backed securities (CMBS) and commercial real estate (CRE) CLOs. Private credit also had strong returns, benefitting from strong performance among floating rate loans in the health care and industrial sectors. Senior loans in the U.S. and Europe also contributed positively to returns, benefitting from low duration, current income and tighter spreads. High yield bonds had strong performance in both the U.S. and Europe, benefiting from spread compression — although these longer duration securities lagged senior loans. Emerging markets debt gained, led by our corporate exposures in Latin America and Asia, as the portfolio’s holdings outperformed the broader market. Lastly, the portfolio’s allocation to global convertibles also performed well, outperforming the global convertible bond index.
Year-to-date, risk markets have benefitted from improving sentiment, reasonable fundamentals, and supportive technicals. The demand for sub-investment grade debt has increased in recent quarters, but the supply of new bonds hasn’t grown at the same pace. While positive technicals are likely to continue putting upward pressure on loan and bond prices in the near term, we anticipate a bumpier market performance over the next year due to two emerging risk factors: overleveraged borrowers and overextended consumers. Average fundamentals in the high yield bond and leveraged loan markets remain fairly sound, but tail risk — especially in the public and private loan markets — is continuing to grow as companies struggle with overleveraged capital structures put in place with the expectation that interest rates would remain near zero.
Additionally, over the last year, the economy has been supported by the resilience of the U.S. consumer. However, we’re beginning to see cracks emerge in the consumer lending market — particularly in the non-prime segment.
Finally, markets are exposed to potential volatility due to the uncertainty surrounding the upcoming U.S. elections. Given these risks, we have been positioning the portfolio to limit exposure to consumer dependent sectors/companies as well as credits less able to sustain their interest burdens, such as legacy media/telecom companies. Indeed, we believe we are in a credit pickers market.
Recently, we’ve continued to deploy capital into high yield bonds, structured credit, and senior loans, valuing the robust current income generated by our floating-rate assets, which complements the strong capital appreciation potential of our high-quality, fixed-rate assets. Within floating rate assets, we find that European senior loans offer attractive yields when hedged to U.S. dollars, and we think BB- and BBB-rated CLOs represent a risk-controlled way to add incremental spread to the portfolio. We believe we have a strong pipeline of private credit opportunities in both the sponsor-backed and non-sponsor segments. We are also excited about the opportunity in asset-backed finance, which offers the potential to diversify across a broad range of industries focused on contractual assets, such as pools of loans, leases, mortgages or other receivables. Within fixed-rate high yield bonds, we continue to prefer our “middle of the fairway” approach to quality which allows us to capture an attractive yield without being overexposed to segments of the market with elevated default/loss risk.
2024 Semi-Annual Report | 1 |
LETTER TO SHAREHOLDERS (continued) |
We believe credit selection will remain a key differentiator in investment outcomes as we see continued dispersion within risk markets. Recent market behavior has also emphasized the importance of income within a portfolio which can help insulate performance from macroeconomic volatility. Looking ahead, we believe the portfolio remains well-positioned with an average yield near 12%, an average price in the mid-90s and a duration under 1.2 years.
In addition to performance information and additional discussion of factors impacting the Fund, this report provides the Fund’s unaudited financial statements and schedules of investments as of June 30, 2024.
We welcome your questions and comments and encourage you to contact our Investor Relations team at 1-855-777-8001 or visit us at https://publicsecurities.brookfield.com for more information.
Thank you for your support.
Sincerely,
|
Brian F. Hurley |
President |
____________
1 Yield reflects yield to worst. Yield to worst is a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting.
These views represent the opinions of Oaktree Fund Advisors, LLC and are not intended to predict or depict the performance of any investment. These views are primarily as of the close of business on June 30, 2024 and subject to change based on subsequent developments.
Must be preceded or accompanied by a Prospectus.
Past performance is no guarantee of future results.
Investing involves risk. Principal loss is possible. Real assets includes real estate securities, infrastructure securities and natural resources securities. Property values may fall due to increasing vacancies or declining rents resulting from unanticipated economic, legal, cultural or technological developments. Infrastructure companies may be subject to a variety of factors that may adversely affect their business, including high interest costs, high leverage, regulation costs, economic slowdown, surplus capacity, increased competition, lack of fuel availability and energy conservation policies. Natural resources securities may be affected by numerous factors, including events occurring in nature, inflationary pressures and international politics.
Quasar Distributors, LLC is the distributor of Oaktree Diversified Income Fund Inc.
2 |
|
AVERAGE ANNUAL TOTAL RETURNS
As of June 30, 2024 | Six Months† | 1 Year | Since Inception* |
Class D Shares | 5.64% | 12.18% | 3.38% |
S&P/LSTA Leveraged Loan Index | 4.10% | 10.78% | 6.22% |
† Returns for less than one year are not annualized.
* Class D Shares commenced operations on November 1, 2021.
The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Disclosure
All returns shown in USD.
S&P/LSTA (Loans Syndications and Trading Association) Leveraged Loan Index tracks the largest leveraged-loan-to-market facilities, considering market weightings, spreads and interest payments.
An index does not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index. Index performance is shown for illustrative purposes only and does not predict or depict the performance of the Fund.
The Fund’s portfolio holdings are subject to change without notice. The mention of specific securities is not a recommendation or solicitation for any person to buy, sell or hold any particular security. There is no assurance that the Fund currently holds these securities. Please refer to the Schedule of Investments contained in this report for a full listing of fund holdings.
Performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance includes the reinvestment of income, dividends and capital gain distributions. To obtain performance information current to the most recent month-end, please call 1-855-862-5873. Performance reflects management fees and other fund expenses.
An investor should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing.
The Fund is subject to investment risks, including the possible loss of principal invested. Investing involves risk, and principal loss is possible. The Adviser employs an active approach to allocation across multiple credit sectors, but there is no guarantee that such allocation techniques will produce the desired results. General interest rate fluctuations may have a substantial negative impact on the Fund’s investments and investment opportunities, and, accordingly, may have a material adverse effect on the Fund’s rate of return. The Fund may invest in foreign securities, including, but not limited to, risk related to exchange rate changes, political and economic upheaval, and relatively low market liquidity, all of which are magnified in emerging markets. The Fund intends to invest in illiquid investments which can face significant difficulties and delays associated with such transactions, and the Fund may be unable to sell other illiquid investments when it desires to do so, resulting in the Fund obtaining a lower price or being required to retain the investment. Investments in derivatives involve special risks including correlation, counterparty, liquidity, operational, accounting and tax risks. These risks, in certain cases, may be greater than the risks presented by more traditional investments.
High-yield debt securities rated below investment grade are commonly referred to as “junk bonds” and are considered speculative. Investment by the Fund in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. Bank loans (including senior loans) are usually rated below investment grade, and the market for bank loans may be subject to irregular trading activity, wide bid/ask spreads, restrictions on resale, and extended trade settlement periods. The Fund’s investments in senior loans may be subject to greater levels of credit risk, call risk, settlement risk and liquidity risk than funds that do not invest in such securities. The Fund may invest in distressed securities of corporate issuers that are the subject of bankruptcy proceedings or otherwise in default as to the repayment of principal and/or interest or in significant risk of being in such default which is speculative and involves significant risk. Distressed Securities frequently do not produce income while they are outstanding and may require the Fund to bear certain extraordinary expenses
2024 Semi-Annual Report | 3 |
OAKTREE DIVERSIFIED INCOME FUND INC. |
in order to protect and recover its investment. The Fund may invest in loans that may be “covenant-lite,” generally loans that do not have financial maintenance covenants, which can cause the Fund to have fewer rights against a borrower and may have a greater risk of loss on such investments.
The Fund may invest in a variety of mortgage related and other asset-backed securities, which are subject to greater price volatility in relation to interest rate movements. Residential mortgage backed securities (RMBS) may be subject to prepayment risk, meaning that securities may be paid off more quickly than originally anticipated and the Fund will have to invest the proceeds in securities with lower yields. Commercial mortgage backed securities (CMBS) may be subject to extension risk, meaning that the value of CMBS may be adversely affected in rising interest rate environments when payments on underlying mortgages do not occur as anticipated, resulting in the extension of the security’s effective maturity and the related increase in interest rate sensitivity of a longer-term instrument. Investments in collateralized loan obligations (CLOs) carry additional risks including, but not limited to: 1) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; 2) the quality of the collateral may decline in value or default; 3) the possibility that the Fund may invest in CLOs that are subordinate to other classes; and 4) the complex structure of the security may produce disputes with the issuer or unexpected investment results.
Short term performance in particular is not a good indication of the Fund’s future performance and an investment should not be made based solely on returns.
These views represent the opinions of Oaktree Fund Advisors, LLC and are not intended to predict or depict the performance of any investment. These views are as of the close of business on June 30, 2024 and subject to change based on subsequent developments.
4 |
|
ASSETS BY SECTOR1 |
| |
Corporate Credit | ||
— Senior Loans (Syndicated) | 30.2% | |
— High Yield | 21.4% | |
— Emerging Markets | 2.0% | |
— Convertible Bonds | 0.4% | |
— Investment Grade | 0.0%2 | |
Total Corporate Credit | 54.0% | |
Structured Credit | ||
— Collateralized Loan Obligations | 15.2% | |
— Commercial Mortgage-Backed Securities | 4.0% | |
— Residential Mortgage-Backed Securities | 2.7% | |
— Asset-Backed Securities | 5.8% | |
Total Structured Credit | 27.7% | |
Private Credit | ||
— Senior Loans | 16.2% | |
— Preferred Stock | 0.7% | |
— Common Stock | 0.1% | |
— Warrants | 0.1% | |
Total Private Credit | 17.1% | |
Short-Term Investments |
| |
— Money Market Fund | 1.2% |
|
Total | 100.0% |
|
ASSETS BY GEOGRAPHY1 | ||
North America | 81.0% | |
Europe Ex UK | 10.9% | |
UK | 4.7% | |
Asia Ex Japan | 1.7% | |
South America | 1.5% | |
Africa | 0.2% |
|
Total | 100.0% |
|
____________
1 Percentages are based on total market value of investments.
2 Percentage is less than 0.1%.
2023 Annual Report | 5 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT – 63.5% |
| ||||||||||
Senior Loans (Syndicated) – 35.5% |
| ||||||||||
Aerospace & Defense – 1.2% |
| ||||||||||
Aernnova Aerospace | Spain | EUR | 450,000 | $ | 481,244 | ||||||
AI Convoy Luxembourg Sarl, | Luxembourg | 58,915 |
| 63,314 | |||||||
Bleriot US Bidco, Inc., | United States | USD | 750,000 |
| 754,406 | ||||||
Peraton Corp., | United States | 703,591 |
| 704,524 | |||||||
Standard Aero Ltd., | United States | 463,201 |
| 465,410 | |||||||
Standard Aero Ltd., | United States | 178,598 |
| 179,450 | |||||||
TransDigm, Inc., | United States | 620,312 |
| 622,136 | |||||||
Total Aerospace & Defense |
| 3,270,484 | |||||||||
Air Freight & Logistics – 0.1% |
| ||||||||||
Swissport, Term Loan | United States | EUR | 300,000 |
| 322,357 | ||||||
Automobile Components – 0.2% |
| ||||||||||
First Brands Group LLC, | United States | USD | 492,366 |
| 489,984 | ||||||
10.57% (3 mo. Term SOFR + 5.00%), 03/30/27 (a) | United States | 149,298 |
| 148,645 | |||||||
Total Automobile Components |
| 638,629 | |||||||||
Automobiles – 0.3% |
| ||||||||||
MajorDrive Holdings IV LLC, | United States | 694,384 |
| 696,481 | |||||||
Beverages – 0.5% |
| ||||||||||
Pegasus Bidco BV, | Netherlands | EUR | 250,000 |
| 268,629 | ||||||
9.06% (3 mo. Term SOFR + 3.75%), 07/12/29 (a) | Netherlands | USD | 492,525 |
| 496,012 | ||||||
Triton Water Holdings, Inc., | United States | 731,205 |
| 732,302 | |||||||
Total Beverages |
| 1,496,943 | |||||||||
____________
See Notes to Consolidated Financial Statements.
6 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Broadline Retail – 0.3% |
| ||||||||||
Action, Tranche B5 Term Loan | United States | USD | 750,000 | $ | 751,721 | ||||||
Building Products – 0.1% |
| ||||||||||
Aquiles Spain Bidco SA, | Spain | EUR | 300,000 |
| 311,957 | ||||||
Chemicals – 1.2% |
| ||||||||||
Akzo Nobel Specialty Chemicals, | United States | 300,000 |
| 320,331 | |||||||
Ineos Enterprises Holdings II Ltd., | United Kingdom | 250,000 |
| 269,495 | |||||||
INEOS Finance PLC, | Luxembourg | 247,403 |
| 264,500 | |||||||
Ineos Quattro Holdings UK Ltd., | United Kingdom | 250,000 |
| 267,718 | |||||||
Ineos US Finance, | Luxembourg | USD | 625,000 |
| 627,344 | ||||||
SCIH Salt Holdings, Inc., | United States | 898,370 |
| 900,055 | |||||||
Windsor Holdings III LLC, | United States | EUR | 160,000 |
| 171,967 | ||||||
9.32% (1 mo. Term SOFR + 4.00%), 08/01/30 (a) | United States | USD | 297,754 |
| 300,061 | ||||||
Total Chemicals |
| 3,121,471 | |||||||||
Commercial Services & Supplies – 3.0% |
| ||||||||||
Access CIG LLC, | United States | 945,250 |
| 952,491 | |||||||
Allied Universal Holdco LLC, | United States | 817,956 |
| 815,735 | |||||||
Apleona Holding GmbH, | Germany | EUR | 145,000 |
| 155,787 | ||||||
Atlas Luxco 4 SARL, | Luxembourg | 246,212 |
| 262,239 | |||||||
Garda World Security Corp., | Canada | USD | 997,462 |
| 1,004,943 | ||||||
Kings Buyer, | United States | 2,229,891 |
| 2,202,017 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 7 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Restaurant Technologies, Inc., | United States | USD | 844,960 | $ | 823,612 | ||||||
TMS International Corp., | United States | 495,009 |
| 498,106 | |||||||
Triangle, | Germany | EUR | 155,000 |
| 166,516 | ||||||
Trugreen LP, | United States | USD | 606,149 |
| 585,540 | ||||||
TTD Holding IV GmbH, | Germany | EUR | 250,000 |
| 267,371 | ||||||
USIC Holdings Inc., | United States | USD | 29,781 |
| 28,869 | ||||||
9.10% (3 mo. Term SOFR + 3.50%), 05/31/28 (a) | United States | 290,921 |
| 282,011 | |||||||
Total Commercial Services & Supplies |
| 8,045,237 | |||||||||
Communications Equipment – 0.3% |
| ||||||||||
Genesys Cloud Services Holdings II LLC, | United States | 741,699 |
| 746,072 | |||||||
Construction & Engineering – 0.9% |
| ||||||||||
ADB Companies LLC, | United States | 1,109,088 |
| 1,075,815 | |||||||
Artera Services LLC, | United States | 673,313 |
| 677,699 | |||||||
Tiger Acquisition LLC, | United States | 733,040 |
| 728,173 | |||||||
Total Construction & Engineering |
| 2,481,687 | |||||||||
Containers & Packaging – 1.0% |
| ||||||||||
Charter Next Generation, Inc., | United States | 989,776 |
| 992,647 | |||||||
Clydesdale Acquisition Holdings, Inc., | United States | 471,631 |
| 473,251 | |||||||
Kouti BV, | Netherlands | EUR | 200,000 |
| 214,499 | ||||||
Proampac PG Borrower LLC, | United States | USD | 361,696 |
| 363,007 | ||||||
9.33% (3 mo. Term SOFR + 4.00%), 09/15/28 (a) | United States | 547,385 |
| 549,369 | |||||||
Total Containers & Packaging |
| 2,592,773 | |||||||||
____________
See Notes to Consolidated Financial Statements.
8 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Distributors – 0.3% |
| ||||||||||
Dealer Tire Financial LLC, | United States | USD | 250,000 | $ | 250,000 | ||||||
9.08% (1 mo. Term SOFR + 3.75%), 12/14/27 (a) | United States | 651,327 |
| 651,597 | |||||||
Total Distributors |
| 901,597 | |||||||||
Diversified Consumer Services – 2.1% |
| ||||||||||
Adtalem Global Education, Inc., | United States | 750,000 |
| 754,841 | |||||||
AI Aqua Merger Sub, Inc., | United States | 492,576 |
| 494,009 | |||||||
9.57% (1 mo. Term SOFR + 4.25%), 07/31/28 (a) | United States | 28,522 |
| 28,597 | |||||||
9.58% (1 mo. Term SOFR + 4.25%), 07/31/28 (a) | United States | 41,043 |
| 41,151 | |||||||
9.58% (1 mo. Term SOFR + 4.25%), 07/31/28 (a) | United States | 330,435 |
| 331,302 | |||||||
Babilou, | France | EUR | 455,000 |
| 486,064 | ||||||
Cervantes Bidco SL, | Spain | 300,000 |
| 321,567 | |||||||
Houghton Mifflin Harcourt Co., | United States | USD | 690,750 |
| 659,096 | ||||||
KUEHG Corp., | United States | 649,103 |
| 652,391 | |||||||
Renaissance Holdings Corp., | United States | 844,506 |
| 844,899 | |||||||
University Support Services LLC, | Canada | 717,044 |
| 717,492 | |||||||
Verisure Holding AB, | Sweden | EUR | 250,000 |
| 266,992 | ||||||
Total Diversified Consumer Services |
| 5,598,401 | |||||||||
Diversified Telecommunication Services – 0.7% |
| ||||||||||
Altice France SA, | Luxembourg | 227,125 |
| 212,644 | |||||||
CCI Buyer, Inc., | United States | USD | 738,550 |
| 740,222 | ||||||
Cincinnati Bell, Inc., | United States | 719,972 |
| 718,428 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 9 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Numericable U.S. LLC, | France | EUR | 198,000 | $ | 157,945 | ||||||
Total Diversified Telecommunication Services |
| 1,829,239 | |||||||||
Electric Utilities – 0.1% |
| ||||||||||
Lackawanna Energy Center LLC, | United States | USD | 407,143 |
| 410,451 | ||||||
Electronic Equipment Instruments & Components – 0.5% |
| ||||||||||
LTI Holdings, Inc., | United States | 971,649 |
| 959,426 | |||||||
Sonicwall US Holdings Inc, | United States | 498,750 |
| 492,114 | |||||||
Total Electronic Equipment Instruments & Components |
| 1,451,540 | |||||||||
Entertainment – 0.8% |
| ||||||||||
City Football Group Ltd., | United Kingdom | 1,041,020 |
| 1,040,859 | |||||||
StubHub Holdco Sub LLC, | United States | EUR | 115,000 |
| 123,329 | ||||||
10.07% (1 mo. Term SOFR + 4.75%), 03/11/30 (a) | United States | USD | 940,372 |
| 941,844 | ||||||
Total Entertainment |
| 2,106,032 | |||||||||
Financial Services – 0.3% |
| ||||||||||
Chrysaor Bidco Sarl, | Luxembourg | 698,353 |
| 702,285 | |||||||
Chrysaor Bidco Sarl, | Luxembourg | 51,647 |
| 51,938 | |||||||
Total Financial Services |
| 754,223 | |||||||||
Food Products – 0.7% |
| ||||||||||
Fiesta Purchaser, Inc., | United States | 625,000 |
| 630,116 | |||||||
Froneri International Ltd., | United States | 427,546 |
| 427,790 | |||||||
Upfield USA Corp., | United States | 745,615 |
| 747,885 | |||||||
Total Food Products |
| 1,805,791 | |||||||||
____________
See Notes to Consolidated Financial Statements.
10 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Health Care Equipment & Supplies – 0.9% |
| ||||||||||
Auris Luxembourg III Sarl, | Denmark | EUR | 205,000 | $ | 219,221 | ||||||
Bausch + Lomb Corp., | United States | USD | 890,537 |
| 882,188 | ||||||
BVI Medical, Inc., | United States | EUR | 250,000 |
| 246,166 | ||||||
Medline Borrower, | United States | USD | 966,135 |
| 969,154 | ||||||
Total Health Care Equipment & Supplies |
| 2,316,729 | |||||||||
Health Care Providers & Services – 2.8% |
| ||||||||||
Baart Programs, Inc., | United States | 416,563 |
| 400,317 | |||||||
Baart Programs, Inc., | United States | 584,156 |
| 516,394 | |||||||
CHG Healthcare Services, Inc., | United States | 494,911 |
| 496,250 | |||||||
9.09% (3 mo. Term SOFR + 3.75%), 09/29/28 (a) | United States | 497,500 |
| 499,522 | |||||||
Covetrus, Inc., | United States | 902,707 |
| 874,981 | |||||||
Electron Bidco, Inc., | United States | 494,937 |
| 495,402 | |||||||
Global Medical Response, Inc., | United States | 527,234 |
| 511,680 | |||||||
HomeVi SASU, | France | EUR | 250,000 |
| 261,479 | ||||||
Inception Finco Sarl, | United States | USD | 550,000 |
| 554,040 | ||||||
IVC Acquisition Ltd., First Lien Tranche B Term Loan | United Kingdom | EUR | 250,000 |
| 267,802 | ||||||
Nidda Healthcare Holding GmbH, | Germany | 250,000 |
| 267,794 | |||||||
Schon Klinik SE, | Germany | 115,000 |
| 124,083 | |||||||
Southern Veterinary Partners LLC, | United States | USD | 993,840 |
| 997,155 | ||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 11 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Stada, | Germany | EUR | 170,000 | $ | 182,062 | ||||||
Surgery Center Holdings, | United States | USD | 550,000 |
| 552,098 | ||||||
VetStrategy Canada Holdings, Inc., | Canada | 648,003 |
| 650,027 | |||||||
Total Health Care Providers & Services |
| 7,651,086 | |||||||||
Health Care Technology – 0.9% |
| ||||||||||
athenaHealth Group, Inc., | United States | 926,472 |
| 924,591 | |||||||
FinThrive Software Intermediate Holdings, Inc., | United States | 2,082,000 |
| 1,440,057 | |||||||
Total Health Care Technology |
| 2,364,648 | |||||||||
Hotels, Restaurants & Leisure – 2.1% |
| ||||||||||
Alterra Mountain Co., | United States | 918,308 |
| 922,519 | |||||||
Carnival Corp., | United States | 572,281 |
| 575,861 | |||||||
Entain PLC, | United Kingdom | 262,677 |
| 263,427 | |||||||
Flynn Restaurant Group LP, | United States | 975,000 |
| 976,706 | |||||||
IRB Holding Corp., | United States | 497,468 |
| 497,841 | |||||||
Kingpin Intermediate Holdings LLC, | United States | 821,239 |
| 822,397 | |||||||
Ontario Gaming GTA LP, | Canada | 970,125 |
| 976,033 | |||||||
Whatabrands LLC, | United States | 778,404 |
| 779,479 | |||||||
Total Hotels, Restaurants & Leisure |
| 5,814,263 | |||||||||
Household Durables – 0.1% |
| ||||||||||
Hunter Douglas, Inc., | Netherlands | 299,502 |
| 297,952 | |||||||
____________
See Notes to Consolidated Financial Statements.
12 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Independent Power and Renewable Electricity Producers – 1.0% |
| ||||||||||
Edgewater Generation LLC, | United States | USD | 750,000 | $ | 749,587 | ||||||
Generation Bridge Northeast LLC, | United States | 488,987 |
| 492,654 | |||||||
Granite Generation LLC, | United States | 750,000 |
| 750,469 | |||||||
Helix Gen Funding LLC, | United States | 216,105 |
| 217,456 | |||||||
Lackawanna Energy Center LLC, | United States | 88,745 |
| 89,466 | |||||||
Talen Energy Supply LLC, | United States | 123,095 |
| 124,634 | |||||||
Talen Energy Supply LLC, | United States | 347,506 |
| 351,850 | |||||||
Total Independent Power and Renewable Electricity Producers |
| 2,776,116 | |||||||||
Insurance – 1.1% |
| ||||||||||
Amynta Agency Borrower, Inc., | United States | 700,000 |
| 702,562 | |||||||
Asurion LLC, | United States | 350,000 |
| 327,031 | |||||||
Asurion LLC, | United States | 639,151 |
| 632,958 | |||||||
HUB International Ltd., | United States | 373,127 |
| 374,372 | |||||||
8.58% (1 mo. Term SOFR + 3.25%), 06/20/30 (a) | United States | 935 |
| 938 | |||||||
Truist Insurance Holdings LLC, | United States | 400,000 |
| 409,000 | |||||||
USI, Inc., | United States | 548,625 |
| 549,311 | |||||||
Total Insurance |
| 2,996,172 | |||||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 13 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Interactive Media & Services – 0.5% |
| ||||||||||
GoodRx, Inc. | United States | USD | 750,000 | $ | 742,500 | ||||||
Neptune Bidco US, Inc., | United States | 550,000 |
| 519,062 | |||||||
Total Interactive Media & Services |
| 1,261,562 | |||||||||
Leisure Products – 0.2% |
| ||||||||||
Peloton Interactive, Inc., | United States | 600,000 |
| 601,650 | |||||||
Life Sciences Tools & Services – 0.9% |
| ||||||||||
Catalent Pharma Solutions, | United States | 300,000 |
| 300,563 | |||||||
eResearchTechnology, Inc., | United States | 889,207 |
| 894,604 | |||||||
Sotera Health Holdings LLC, | United States | 550,000 |
| 549,772 | |||||||
Star Parent, Inc., | United States | 600,000 |
| 600,237 | |||||||
Total Life Sciences Tools & Services |
| 2,345,176 | |||||||||
Machinery – 0.4% |
| ||||||||||
Delachaux Group SA, | France | EUR | 226,721 |
| 243,641 | ||||||
SPX FLOW, Inc., | United States | USD | 400,212 |
| 402,981 | ||||||
TK Elevator Midco GmbH, | Germany | EUR | 225,000 |
| 241,265 | ||||||
TSG Solutions, | France | 300,000 |
| 322,492 | |||||||
Total Machinery |
| 1,210,379 | |||||||||
Media – 1.6% |
| ||||||||||
Aragorn Parent Corp., | United States | USD | 646,861 |
| 649,894 | ||||||
Century DE Buyer LLC, | United States | 349,125 |
| 349,925 | |||||||
____________
See Notes to Consolidated Financial Statements.
14 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Directv Financing LLC, | United States | USD | 958,665 | $ | 961,781 | ||||||
Gray Television, Inc., | United States | 361,386 |
| 326,940 | |||||||
McGraw-Hill Education, Inc., | United States | 470,105 |
| 471,509 | |||||||
Univision Communications, Inc., | United States | 492,462 |
| 493,078 | |||||||
Virgin Media Bristol LLC, | United States | 185,000 |
| 175,122 | |||||||
Virgin Media, Inc., | United Kingdom | EUR | 115,000 |
| 122,458 | ||||||
WideOpenWest Finance, | United States | USD | 743,015 |
| 666,444 | ||||||
Total Media |
| 4,217,151 | |||||||||
Metals & Mining – 0.1% |
| ||||||||||
Arsenal AIC Parent LLC, | United States | 297,754 |
| 299,912 | |||||||
Oil, Gas & Consumable Fuels – 0.4% |
| ||||||||||
AL NGPL Holdings LLC, | United States | 289,855 |
| 291,123 | |||||||
Freeport LNG Investments LLP, | United States | 670,847 |
| 670,938 | |||||||
Total Oil, Gas & Consumable Fuels |
| 962,061 | |||||||||
Passenger Airlines – 0.4% |
| ||||||||||
Mileage Plus Holdings LLC, | United States | 1,000,000 |
| 1,021,590 | |||||||
Pharmaceuticals – 0.3% |
| ||||||||||
AI Sirona Luxembourg Acquisition Sarl, | Czech Republic | EUR | 250,000 |
| 268,499 | ||||||
Curium Bidco Sarl, | Luxembourg | USD | 321,756 |
| 323,568 | ||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 15 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Pharmanovia, | United Kingdom | EUR | 50,000 | $ | 53,471 | ||||||
Pharmanovia Bidco Ltd., | United Kingdom | 250,000 |
| 268,286 | |||||||
Total Pharmaceuticals |
| 913,824 | |||||||||
Professional Services – 1.9% |
| ||||||||||
Advantage Sales & Marketing, Inc., | United States | USD | 695,982 |
| 679,672 | ||||||
Amentum Government Services Holdings LLC, | United States | 29,924 |
| 30,092 | |||||||
9.44% (1 mo. Term SOFR + 4.00%), 01/22/27 (a) | United States | 77,797 |
| 78,089 | |||||||
Blackhawk Network Holdings, Inc., | United States | 750,000 |
| 752,580 | |||||||
DTI Holdco, Inc., | United States | 141,917 |
| 142,676 | |||||||
Eisner Advisory Group LLC, | United States | 323,375 |
| 326,947 | |||||||
Element Materials Technology Group US Holdings, Inc., | United States | 190,301 |
| 191,292 | |||||||
Element Materials Technology Group US Holdings, Inc., | United States | 87,831 |
| 88,289 | |||||||
Grant Thornton LLP, | United States | 600,000 |
| 602,469 | |||||||
Indy US Bidco LLC, | United States | EUR | 300,000 |
| 316,843 | ||||||
Indy US Holdco LLC, | United States | 150,000 |
| 160,844 | |||||||
Planet US Buyer LLC, | United States | USD | 625,000 |
| 629,765 | ||||||
Project Alpha Intermediate Holding, Inc., | United States | 349,125 |
| 350,628 | |||||||
Skopima Consilio Parent LLC, | United States | 912,879 |
| 913,286 | |||||||
Total Professional Services |
| 5,263,472 | |||||||||
____________
See Notes to Consolidated Financial Statements.
16 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Software – 3.8% |
| ||||||||||
Barracuda Networks, Inc., | United States | USD | 232,507 | $ | 232,406 | ||||||
Capstone Borrower, Inc., | United States | 379,435 |
| 381,095 | |||||||
Castle US Holding Corp., | United States | EUR | 243,655 |
| 168,091 | ||||||
Claudius Finance Sarl, | Luxembourg | 190,000 |
| 204,041 | |||||||
Cloud Software Group, Inc., | United States | USD | 855,942 |
| 856,319 | ||||||
9.93% (1 mo. Term SOFR + 4.50%), 03/19/31 (a) | United States | 350,000 |
| 351,395 | |||||||
Datasite, | United States | EUR | 450,000 |
| 481,928 | ||||||
Epicor Software Corp., | United States | USD | 498,750 |
| 501,451 | ||||||
I-Logic Technologies Bidco Ltd., | United Kingdom | EUR | 193,504 |
| 204,672 | ||||||
Instructure Holdings, Inc., | United States | USD | 283,550 |
| 283,727 | ||||||
ION Corporate Solutions Finance Sarl, | Luxembourg | EUR | 215,174 |
| 227,560 | ||||||
ION Trading Technologies Sarl, | Ireland | 248,721 |
| 254,965 | |||||||
McAfee, | United States | USD | 897,215 |
| 897,425 | ||||||
McAfee, | United States | EUR | 245,625 |
| 262,601 | ||||||
Mitchell International, Inc., | United States | USD | 650,000 |
| 645,281 | ||||||
Mitchell International, Inc., | United States | 310,000 |
| 309,808 | |||||||
Modena Buyer LLC, | United States | 500,000 |
| 488,672 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 17 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
P&I Personal & Informatik, | Germany | EUR | 500,000 | $ | 537,550 | ||||||
Polaris Newco LLC, | United States | 243,750 |
| 255,201 | |||||||
Proofpoint, Inc., | United States | USD | 657,130 |
| 658,487 | ||||||
Quartz Acquireco LLC, | United States | 297,750 |
| 298,308 | |||||||
RealPage, Inc., | United States | 775,008 |
| 754,609 | |||||||
Seine Finance SARL, | United States | EUR | 135,000 |
| 144,888 | ||||||
Suse, | United States | 300,000 |
| 322,169 | |||||||
Team.Blue Finco | Luxembourg | 300,000 |
| 316,265 | |||||||
UKG, Inc., | United States | USD | 250,000 |
| 251,229 | ||||||
Total Software |
| 10,290,143 | |||||||||
Specialty Retail – 0.9% |
| ||||||||||
EG America LLC, | United Kingdom | 950,000 |
| 940,105 | |||||||
Global Blue, | Netherlands | EUR | 160,000 |
| 167,256 | ||||||
LS Group OpCo Acquistion LLC, | United States | USD | 293,000 |
| 293,488 | ||||||
Motor Fuel Group, | United States | GBP | 250,000 |
| 316,727 | ||||||
Wand NewCo 3, Inc., | United States | USD | 737,000 |
| 742,723 | ||||||
Total Specialty Retail |
| 2,460,299 | |||||||||
Textiles, Apparel & Luxury Goods – 0.1% |
| ||||||||||
Amer Sports, | Sweden | EUR | 180,000 |
| 193,302 | ||||||
____________
See Notes to Consolidated Financial Statements.
18 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Transportation Infrastructure – 0.5% |
| ||||||||||
Apple Bidco LLC, | United States | USD | 992,500 | $ | 996,103 | ||||||
Boluda Towage, | Spain | EUR | 300,000 |
| 321,426 | ||||||
Total Transportation Infrastructure |
|
|
|
|
| 1,317,529 | |||||
Total Senior Loans (Syndicated) |
|
|
|
|
| 95,908,102 | |||||
High Yield – 25.1% |
| ||||||||||
Aerospace & Defense – 0.3% |
| ||||||||||
Bombardier, Inc. | Canada | USD | 120,000 |
| 121,817 | ||||||
8.75%, 11/15/30 (c) | Canada | 560,000 |
| 605,938 | |||||||
Spirit AeroSystems, Inc. | United States | 160,000 |
| 176,699 | |||||||
Total Aerospace & Defense |
| 904,454 | |||||||||
Automobile Components – 0.1% |
| ||||||||||
IHO Verwaltungs GmbH | Germany | EUR | 300,000 |
| 344,086 | ||||||
Automobiles – 0.5% |
| ||||||||||
Aston Martin Capital Holdings Ltd. | Jersey | USD | 750,000 |
| 739,774 | ||||||
JB Poindexter & Company, Inc. | United States | 575,000 |
| 596,413 | |||||||
Total Automobiles |
| 1,336,187 | |||||||||
Beverages – 0.1% |
| ||||||||||
Primo Water Holdings, Inc. | Canada | EUR | 200,000 |
| 203,424 | ||||||
Broadline Retail – 0.2% |
| ||||||||||
QVC, Inc. | United States | USD | 645,000 |
| 545,101 | ||||||
Chemicals – 0.9% |
| ||||||||||
INEOS Finance PLC | Luxembourg | EUR | 100,000 |
| 110,442 | ||||||
6.63%, 05/15/28 (e) | Luxembourg | 175,000 |
| 193,943 | |||||||
Nufarm Australia Ltd. | Australia | USD | 445,000 |
| 408,133 | ||||||
Olympus Water US Holding Corp. | United States | 280,000 |
| 255,058 | |||||||
7.25%, 06/15/31 (c) | United States | 275,000 |
| 273,582 | |||||||
9.63%, 11/15/28 | United States | EUR | 280,000 |
| 322,187 | ||||||
9.75%, 11/15/28 (c) | United States | USD | 380,000 |
| 402,504 | ||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 19 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
SK Invictus Intermediate II Sarl | United States | USD | 225,000 | $ | 203,978 | ||||||
Windsor Holdings III LLC | United States | 285,000 |
| 297,807 | |||||||
Total Chemicals |
| 2,467,634 | |||||||||
Commercial Services & Supplies – 1.4% |
| ||||||||||
Allied Universal Holdco LLC | United States | EUR | 305,000 |
| 298,375 | ||||||
4.63%, 06/01/28 (c) | United States | USD | 690,000 |
| 630,159 | ||||||
7.88%, 02/15/31 (c) | United States | 625,000 |
| 627,189 | |||||||
Iron Mountain, Inc. | United States | 435,000 |
| 417,053 | |||||||
LABL, Inc. | United States | 345,000 |
| 315,238 | |||||||
Prime Security Services Borrower LLC | United States | 901,000 |
| 888,762 | |||||||
TMS International Corp. | United States | 330,000 |
| 303,211 | |||||||
WASH Multifamily Acquisition, Inc. | United States | 430,000 |
| 420,758 | |||||||
Total Commercial Services & Supplies |
| 3,900,745 | |||||||||
Communications Equipment – 0.1% |
| ||||||||||
CommScope Technologies LLC | United States | 260,000 |
| 212,157 | |||||||
CommScope, Inc. | United States | 75,000 |
| 52,111 | |||||||
6.00%, 03/01/26 (c) | United States | 95,000 |
| 83,486 | |||||||
Total Communications Equipment |
| 347,754 | |||||||||
Construction & Engineering – 0.5% |
| ||||||||||
Assemblin Caverion | Sweden | EUR | 190,000 |
| 204,646 | ||||||
7.21% (3 mo. EURIBOR + 3.50%), 07/01/31 (a),(c) | Sweden | 295,000 |
| 316,430 | |||||||
Great Lakes Dredge & Dock Corp. | United States | USD | 340,000 |
| 303,786 | ||||||
Pike Corp. | United States | 440,000 |
| 422,793 | |||||||
8.63%, 01/31/31 (c) | United States | 220,000 |
| 233,325 | |||||||
Total Construction & Engineering |
| 1,480,980 | |||||||||
Consumer Finance – 0.2% |
| ||||||||||
FirstCash, Inc. | United States | 702,000 |
| 665,554 | |||||||
Containers & Packaging – 0.9% |
| ||||||||||
Ardagh Packaging Finance PLC | United States | EUR | 300,000 |
| 267,714 | ||||||
4.13%, 08/15/26 (c) | United States | USD | 525,000 |
| 456,279 | ||||||
5.25%, 08/15/27 (c) | United States | 260,000 |
| 162,217 | |||||||
____________
See Notes to Consolidated Financial Statements.
20 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Fiber Bidco SpA | Italy | EUR | 125,000 | $ | 135,543 | ||||||
Graham Packaging Company, Inc. | United States | USD | 285,000 |
| 269,531 | ||||||
Guala Closures SpA | Italy | EUR | 250,000 |
| 270,048 | ||||||
Intelligent Packaging Limited Finco, Inc. | Canada | USD | 435,000 |
| 421,675 | ||||||
Trivium Packaging Finance BV | Netherlands | EUR | 300,000 |
| 315,060 | ||||||
Total Containers & Packaging |
| 2,298,067 | |||||||||
Diversified – 0.2% |
| ||||||||||
Five Point Operating Company LP | United States | USD | 554,001 |
| 568,455 | ||||||
Diversified Consumer Services – 0.1% |
| ||||||||||
Verisure Midholding AB | Sweden | EUR | 310,000 |
| 324,665 | ||||||
Diversified Real Estate Investment Trusts – 0.1% |
| ||||||||||
Necessity Retail REIT, Inc. | United States | USD | 395,000 |
| 347,935 | ||||||
Diversified Telecommunication Services – 1.6% |
| ||||||||||
Altice Financing SA | Luxembourg | EUR | 300,000 |
| 249,446 | ||||||
Altice France SA | France | 100,000 |
| 75,198 | |||||||
4.13%, 01/15/29 | France | 350,000 |
| 250,084 | |||||||
British Telecommunications PLC | United Kingdom | GBP | 225,000 |
| 303,085 | ||||||
Cogent Communications Group, Inc. | United States | USD | 340,000 |
| 337,144 | ||||||
Consolidated Communications, Inc. | United States | 380,000 |
| 325,700 | |||||||
Frontier Communications Holdings LLC | United States | 290,000 |
| 273,505 | |||||||
6.75%, 05/01/29 (c) | United States | 155,000 |
| 142,329 | |||||||
Iliad Holding SASU | France | EUR | 300,000 |
| 320,618 | ||||||
Level 3 Financing, Inc. | United States | USD | 330,000 |
| 125,984 | ||||||
Lorca Telecom Bondco SA | Spain | EUR | 200,000 |
| 209,253 | ||||||
RAY Financing LLC | United States | 310,000 |
| 331,995 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 21 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Telecom Italia SpA | Italy | EUR | 100,000 | $ | 114,258 | ||||||
7.88%, 07/31/28 | Italy | 270,000 |
| 316,070 | |||||||
Telefonica Europe BV | Spain | 200,000 |
| 232,791 | |||||||
TMNL Holding BV | Netherlands | 295,000 |
| 298,993 | |||||||
Zayo Group Holdings, Inc. | United States | USD | 520,000 |
| 416,518 | ||||||
Total Diversified Telecommunication Services |
| 4,322,971 | |||||||||
Electric Utilities – 0.2% |
| ||||||||||
EDP – Energias de Portugal SA | Portugal | EUR | 200,000 |
| 213,119 | ||||||
Electricite de France SA | France | GBP | 300,000 |
| 370,466 | ||||||
Total Electric Utilities |
| 583,585 | |||||||||
Energy Equipment & Services – 0.3% |
| ||||||||||
Howard Midstream Energy Partners LLC | United States | USD | 180,000 |
| 190,630 | ||||||
Kodiak Gas Services LLC | United States | 350,000 |
| 359,055 | |||||||
Precision Drilling Corp. | Canada | 179,000 |
| 179,655 | |||||||
Total Energy Equipment & Services |
| 729,340 | |||||||||
Entertainment – 0.1% |
| ||||||||||
Banijay (LOV Banijay SASU) | France | EUR | 170,000 |
| 190,277 | ||||||
Financial Services – 0.8% |
| ||||||||||
Freedom Mortgage Corp. | United States | USD | 530,000 |
| 570,695 | ||||||
GTCR LLC | Netherlands | GBP | 250,000 |
| 339,378 | ||||||
NCR Atleos Escrow Corp. | United States | USD | 710,000 |
| 767,976 | ||||||
Worldpay | United States | 530,000 |
| 553,003 | |||||||
Total Financial Services |
| 2,231,052 | |||||||||
Food Products – 0.2% |
| ||||||||||
B&G Foods, Inc. | United States | 430,000 |
| 437,514 | |||||||
Fiesta Purchaser, Inc. | United States | 185,000 |
| 191,323 | |||||||
Total Food Products |
| 628,837 | |||||||||
____________
See Notes to Consolidated Financial Statements.
22 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Gas Utilities – 0.5% |
| ||||||||||
CQP Holdco LP | United States | USD | 165,000 | $ | 156,526 | ||||||
7.50%, 12/15/33 (c) | United States | 515,000 |
| 534,587 | |||||||
Suburban Propane Partners LP | United States | 590,000 |
| 531,825 | |||||||
Total Gas Utilities |
| 1,222,938 | |||||||||
Health Care Equipment & Supplies – 0.1% |
| ||||||||||
Medline Borrower LP | United States | 395,000 |
| 377,265 | |||||||
Health Care Providers & Services – 0.3% |
| ||||||||||
Community Health Systems, Inc. | United States | 205,000 |
| 191,083 | |||||||
10.88%, 01/15/32 (c) | United States | 260,000 |
| 270,930 | |||||||
Nidda Healthcare Holding GmbH | Germany | EUR | 100,000 |
| 110,175 | ||||||
Pediatrix Medical Group, Inc. | United States | USD | 295,000 |
| 261,107 | ||||||
Total Health Care Providers & Services |
| 833,295 | |||||||||
Health Care Technology – 0.0% |
| ||||||||||
MPH Acquisition Holdings LLC | United States | 160,000 |
| 120,978 | |||||||
Hotel & Resort Real Estate Investment Trusts – 0.3% |
| ||||||||||
Service Properties Trust | United States | 785,000 |
| 818,978 | |||||||
Hotels, Restaurants & Leisure – 2.3% |
| ||||||||||
Accor SA | France | EUR | 300,000 |
| 349,008 | ||||||
Bloomin’ Brands, Inc. | United States | USD | 1,015,000 |
| 916,419 | ||||||
Brinker International, Inc. | United States | 392,000 |
| 411,924 | |||||||
Carnival Corp. | United States | 490,000 |
| 484,338 | |||||||
Cirsa Finance International Sarl | Spain | EUR | 205,000 |
| 226,719 | ||||||
7.88%, 07/31/28 (e) | Spain | 300,000 |
| 340,510 | |||||||
8.37% (3 mo. EURIBOR + 4.50%), 07/31/28 (a),(c) | Spain | 115,000 |
| 124,703 | |||||||
CPUK Finance Ltd. | United Kingdom | GBP | 210,000 |
| 263,758 | ||||||
Fertitta Entertainment LLC | United States | USD | 160,000 |
| 140,631 | ||||||
Hilton Grand Vacations Borrower Escrow LLC | United States | 675,000 |
| 629,913 | |||||||
Legends Hospitality Holding Company LLC | United States | 440,000 |
| 436,372 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 23 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Lottomatica SpA | Italy | EUR | 165,000 | $ | 179,247 | ||||||
7.13%, 06/01/28 (e) | Italy | 115,000 |
| 130,241 | |||||||
Marriott Ownership Resorts, Inc. | United States | USD | 1,040,000 |
| 956,489 | ||||||
Six Flags Entertainment Corp | United States | 425,000 |
| 433,001 | |||||||
TUI Cruises GmbH | Germany | EUR | 285,000 |
| 312,776 | ||||||
Total Hotels, Restaurants & Leisure |
| 6,336,049 | |||||||||
Household Durables – 0.6% |
| ||||||||||
Adams Homes, Inc. | United States | USD | 572,000 |
| 587,321 | ||||||
Empire Communities Corp. | Canada | 805,000 |
| 820,094 | |||||||
Weekley Homes LLC | United States | 185,000 |
| 171,539 | |||||||
Total Household Durables |
| 1,578,954 | |||||||||
Independent Power and Renewable Electricity Producers – 0.3% |
| ||||||||||
Talen Energy Supply LLC | United States | 445,000 |
| 474,828 | |||||||
Vistra Operations Company, LLC | United States | 315,000 |
| 328,285 | |||||||
Total Independent Power and Renewable Electricity Producers |
| 803,113 | |||||||||
Insurance – 0.2% |
| ||||||||||
HUB International Ltd. | United States | 120,000 |
| 113,598 | |||||||
7.38%, 01/31/32 (c) | United States | 380,000 |
| 385,589 | |||||||
Total Insurance |
| 499,187 | |||||||||
IT Services – 0.1% |
| ||||||||||
Engineering – Ingegneria Informatica – SpA | Italy | EUR | 200,000 |
| 205,918 | ||||||
Life Sciences Tools & Services – 0.5% |
| ||||||||||
Eurofins Scientific SE | Luxembourg | 300,000 |
| 324,201 | |||||||
Sotera Health Holdings LLC | United States | USD | 965,000 |
| 967,640 | ||||||
Total Life Sciences Tools & Services |
| 1,291,841 | |||||||||
Machinery – 0.8% |
| ||||||||||
Alstom SA | France | EUR | 300,000 |
| 326,556 | ||||||
EMRLD Borrower LP | United States | 230,000 |
| 256,171 | |||||||
____________
See Notes to Consolidated Financial Statements.
24 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
IMA Industria Macchine Automatiche SpA | Italy | EUR | 220,000 | $ | 237,659 | ||||||
ProFrac Holdings II LLC | United States | USD | 1,242,000 |
| 1,231,195 | ||||||
Total Machinery |
| 2,051,581 | |||||||||
Media – 2.3% |
| ||||||||||
AMC Networks, Inc. | United States | 435,000 |
| 293,944 | |||||||
10.25%, 01/15/29 (c) | United States | 360,000 |
| 355,009 | |||||||
Block Communications, Inc. | United States | 310,000 |
| 277,866 | |||||||
Cablevision Lightpath LLC | United States | 710,000 |
| 628,565 | |||||||
5.63%, 09/15/28 (c) | United States | 415,000 |
| 335,069 | |||||||
CCO Holdings LLC | United States | 355,000 |
| 269,757 | |||||||
4.50%, 06/01/33 (c) | United States | 494,000 |
| 389,217 | |||||||
4.75%, 03/01/30 (c) | United States | 190,000 |
| 164,686 | |||||||
6.38%, 09/01/29 (c) | United States | 140,000 |
| 133,175 | |||||||
7.38%, 03/01/31 (c) | United States | 235,000 |
| 231,858 | |||||||
Clear Channel Outdoor Holdings, Inc. | United States | 685,000 |
| 690,035 | |||||||
Directv Financing LLC | United States | 520,000 |
| 489,539 | |||||||
Scripps Escrow II, Inc. | United States | 130,000 |
| 57,791 | |||||||
Sirius XM Radio, Inc. | United States | 915,000 |
| 747,618 | |||||||
4.13%, 07/01/30 (c) | United States | 160,000 |
| 136,791 | |||||||
5.50%, 07/01/29 (c) | United States | 214,000 |
| 201,185 | |||||||
Telenet Finance Luxembourg Notes Sarl | Belgium | 400,000 |
| 380,408 | |||||||
Virgin Media Secured Finance PLC | United Kingdom | GBP | 100,000 |
| 115,387 | ||||||
Virgin Media Vendor Financing Notes III DAC | United Kingdom | 200,000 |
| 226,273 | |||||||
Total Media |
| 6,124,173 | |||||||||
Metals & Mining – 0.3% |
| ||||||||||
Mineral Resources Ltd. | Australia | USD | 300,000 |
| 310,915 | ||||||
9.25%, 10/01/28 (c) | Australia | 380,000 |
| 399,297 | |||||||
Total Metals & Mining |
| 710,212 | |||||||||
Oil, Gas & Consumable Fuels – 1.2% |
| ||||||||||
Civitas Resources, Inc. | United States | 200,000 |
| 214,606 | |||||||
8.75%, 07/01/31 (c) | United States | 445,000 |
| 477,129 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 25 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Kosmos Energy Ltd. | Ghana | USD | 200,000 | $ | 197,978 | ||||||
7.50%, 03/01/28 | Ghana | 520,000 |
| 496,536 | |||||||
Venture Global LNG, Inc. | United States | 255,000 |
| 262,907 | |||||||
8.38%, 06/01/31 (c) | United States | 530,000 |
| 550,127 | |||||||
9.50%, 02/01/29 (c) | United States | 335,000 |
| 367,067 | |||||||
Vital Energy, Inc. | United States | 680,000 |
| 691,777 | |||||||
Total Oil, Gas & Consumable Fuels |
| 3,258,127 | |||||||||
Other – 0.9% |
| ||||||||||
Nidda BondCo GmbH | Germany | EUR | 187,565 |
| 201,604 | ||||||
OWS Cre Funding I LLC | United States | USD | 2,345,090 |
| 2,348,843 | ||||||
Total Other |
| 2,550,447 | |||||||||
Paper & Forest Products – 0.4% |
| ||||||||||
Mercer International, Inc. | Germany | 550,000 |
| 484,606 | |||||||
5.50%, 01/15/26 | Germany | 385,000 |
| 373,949 | |||||||
WEPA Hygieneprodukte GmbH | Germany | EUR | 125,000 |
| 125,506 | ||||||
Total Paper & Forest Products |
| 984,061 | |||||||||
Personal Care Products – 0.3% |
| ||||||||||
BellRing Brands, Inc. | United States | USD | 365,000 |
| 374,412 | ||||||
Ontex Group NV | Belgium | EUR | 295,000 |
| 312,570 | ||||||
Total Personal Care Products |
| 686,982 | |||||||||
Pharmaceuticals – 0.6% |
| ||||||||||
Bausch Health Companies, Inc. | United States | USD | 240,000 |
| 179,891 | ||||||
Cheplapharm Arzneimittel GmbH | Germany | EUR | 300,000 |
| 336,630 | ||||||
8.58% (3 mo. EURIBOR + 4.75%), 05/15/30 (a),(c) | Germany | 210,000 |
| 227,149 | |||||||
Endo Finance Holdings, Inc. | United States | USD | 940,000 |
| 971,233 | ||||||
Total Pharmaceuticals |
| 1,714,903 | |||||||||
Professional Services – 0.2% |
| ||||||||||
Mooney Group SpA | Italy | EUR | 250,000 |
| 267,855 | ||||||
Summer BC Holdco B SARL | Luxembourg | 200,000 |
| 212,282 | |||||||
Total Professional Services |
| 480,137 | |||||||||
____________
See Notes to Consolidated Financial Statements.
26 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Real Estate Management & Development – 0.6% |
| ||||||||||
Hunt Companies, Inc. | United States | USD | 765,000 | $ | 695,942 | ||||||
Kennedy-Wilson, Inc. | United States | 1,130,000 |
| 939,055 | |||||||
Total Real Estate Management & Development |
| 1,634,997 | |||||||||
Software – 1.9% |
| ||||||||||
Acuris Finance US, Inc. | United States | 310,000 |
| 275,623 | |||||||
Castor SpA | Italy | EUR | 300,000 |
| 316,285 | ||||||
Cedacri Mergeco SPA | Italy | 200,000 |
| 214,926 | |||||||
Cloud Software Group Holdings, Inc. | United States | USD | 1,350,000 |
| 1,297,431 | ||||||
Helios Software Holdings, Inc. | United States | EUR | 295,000 |
| 316,684 | ||||||
8.75%, 05/01/29 (c) | United States | USD | 620,000 |
| 631,903 | ||||||
ION Trading Technologies Sarl | Luxembourg | 535,000 |
| 489,422 | |||||||
NCR Corp. | United States | 600,000 |
| 565,591 | |||||||
NCR Voyix Corp. | United States | 130,000 |
| 118,933 | |||||||
Rocket Software, Inc. | United States | 820,000 |
| 834,117 | |||||||
Sabre GLBL, Inc. | United States | 150,000 |
| 144,370 | |||||||
Total Software |
| 5,205,285 | |||||||||
Specialty Retail – 0.4% |
| ||||||||||
CD&R Firefly Bidco PLC | United Kingdom | GBP | 220,000 |
| 282,237 | ||||||
Kepler SpA | Italy | EUR | 250,000 |
| 270,306 | ||||||
LCM Investments Holdings II LLC | United States | USD | 395,000 |
| 412,530 | ||||||
Total Specialty Retail |
| 965,073 | |||||||||
Textiles, Apparel & Luxury Goods – 0.3% |
| ||||||||||
Hanesbrands, Inc. | United States | 660,000 |
| 692,080 | |||||||
Trading Companies & Distributors – 0.7% |
| ||||||||||
ASP Unifrax Holdings, Inc. | United States | 450,000 |
| 246,915 | |||||||
Equipmentshare.Com Inc. | United States | 995,000 |
| 1,028,058 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 27 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Fortress Transportation and Infrastructure Investors LLC | United States | USD | 344,000 | $ | 360,362 | ||||||
Loxam SAS | France | EUR | 180,000 |
| 199,011 | ||||||
Total Trading Companies & Distributors |
| 1,834,346 | |||||||||
Transportation Infrastructure – 0.1% |
| ||||||||||
Heathrow Finance PLC | United Kingdom | GBP | 175,000 |
| 219,143 | ||||||
Wireless Telecommunication Services – 0.1% |
| ||||||||||
Vodafone Group PLC |
| United Kingdom | USD | 285,000 |
| 243,317 | |||||
Total High Yield |
|
|
|
|
| 67,864,483 | |||||
Emerging Markets – 2.4% |
| ||||||||||
Chemicals – 0.3% |
| ||||||||||
Braskem Idesa SAPI | Mexico | 1,000,000 |
| 759,314 | |||||||
Energy Equipment & Services – 0.4% |
| ||||||||||
Borr IHC Ltd. | Mexico | 923,918 |
| 968,381 | |||||||
Hotels, Restaurants & Leisure – 0.0% |
| ||||||||||
Grupo Posadas SAB de CV | Mexico | 20,000 |
| 18,050 | |||||||
Metals & Mining – 0.6% |
| ||||||||||
Samarco Mineracao SA | Brazil | 1,097,981 |
| 1,021,616 | |||||||
Vedanta Resources Finance II PLC | India | 752,000 |
| 744,354 | |||||||
Total Metals & Mining |
| 1,765,970 | |||||||||
Oil, Gas & Consumable Fuels – 0.3% |
| ||||||||||
Canacol Energy Ltd. | Colombia | 260,000 |
| 137,705 | |||||||
YPF SA | Argentina | 55,000 |
| 48,753 | |||||||
9.00%, 06/30/29 (h) | Argentina | 758,000 |
| 754,653 | |||||||
Total Oil, Gas & Consumable Fuels |
| 941,111 | |||||||||
Passenger Airlines – 0.5% |
| ||||||||||
Azul Secured Finance LLP | Brazil | 1,130,000 |
| 927,947 | |||||||
Latam Airlines Group SA | Chile | 204,000 |
| 227,241 | |||||||
13.38%, 10/15/29 | Chile | 77,000 |
| 88,563 | |||||||
Total Passenger Airlines |
| 1,243,751 | |||||||||
____________
See Notes to Consolidated Financial Statements.
28 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Real Estate Management & Development – 0.3% |
| ||||||||||
CIFI Holdings Group Company Ltd. | China | USD | 450,000 | $ | 45,225 | ||||||
6.00%, 07/16/25 (i) | China | 400,000 |
| 43,088 | |||||||
6.45%, 11/07/24 (i) | China | 200,000 |
| 22,500 | |||||||
Country Garden Holdings Company Ltd. | China | 200,000 |
| 16,520 | |||||||
7.25%, 04/08/26 (i) | China | 600,000 |
| 54,360 | |||||||
RKPF Overseas Ltd. | China | 500,000 |
| 206,570 | |||||||
6.00%, 09/04/25 | China | 500,000 |
| 179,875 | |||||||
Shimao Group Holdings Ltd. | China | 400,000 |
| 20,000 | |||||||
4.60%, 07/13/30 (i) | China | 200,000 |
| 11,600 | |||||||
5.20%, 01/16/27 (i) | China | 1,210,000 |
| 62,618 | |||||||
5.60%, 07/15/26 (i) | China | 400,000 |
| 20,712 | |||||||
6.13%, 08/21/24 (i) | China | 370,000 |
| 19,632 | |||||||
Sino-Ocean Land Treasure IV Ltd. | China | 200,000 |
| 13,000 | |||||||
4.75%, 08/05/29 (i) | China | 410,000 |
| 30,750 | |||||||
4.75%, 01/14/30 (i) | China | 400,000 |
| 28,452 | |||||||
Total Real Estate Management & Development |
|
|
|
|
| 774,902 | |||||
Total Emerging Markets |
|
|
|
|
| 6,471,479 | |||||
Convertible Bonds – 0.5% |
| ||||||||||
Aerospace & Defense – 0.0% |
| ||||||||||
Safran SA | France | EUR | 17,100 |
| 38,716 | ||||||
Automobiles – 0.0% |
| ||||||||||
Ford Motor Company | United States | USD | 35,000 |
| 35,472 | ||||||
Biotechnology – 0.0% |
| ||||||||||
Ascendis Pharma AS | Denmark | 17,000 |
| 18,984 | |||||||
Bridgebio Pharma, Inc. | United States | 12,000 |
| 9,562 | |||||||
2.50%, 03/15/27 | United States | 9,000 |
| 9,136 | |||||||
Halozyme Therapeutics, Inc. | United States | 8,000 |
| 8,913 | |||||||
INSMED, Inc. | United States | 5,000 |
| 10,556 | |||||||
MannKind Corp. | United States | 7,000 |
| 8,446 | |||||||
Sarepta Therapeutics, Inc. | United States | 11,000 |
| 14,179 | |||||||
Total Biotechnology |
| 79,776 | |||||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 29 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Broadline Retail – 0.0% |
| ||||||||||
Etsy, Inc. | United States | USD | 31,000 | $ | 24,457 | ||||||
Chemicals – 0.0% |
| ||||||||||
Resonac Holdings Corp. | Japan | JPY | 10,000,000 |
| 64,532 | ||||||
Commercial Services & Supplies – 0.0% |
| ||||||||||
Tetra Tech, Inc. | United States | USD | 11,000 |
| 12,944 | ||||||
Construction & Engineering – 0.0% |
| ||||||||||
Fluor Corp. | United States | 23,000 |
| 26,318 | |||||||
Diversified Telecommunication Services – 0.1% |
| ||||||||||
Cellnex Telecom SA | Spain | EUR | 100,000 |
| 108,777 | ||||||
Electric Utilities – 0.1% |
| ||||||||||
NextEra Energy Capital Holdings, Inc. | United States | USD | 26,000 |
| 29,757 | ||||||
PG&E Corp. | United States | 30,000 |
| 30,292 | |||||||
Southern Company | United States | 34,000 |
| 34,772 | |||||||
Total Electric Utilities |
| 94,821 | |||||||||
Electronic Equipment Instruments & Components – 0.0% |
| ||||||||||
Advanced Energy Industries, Inc. | United States | 16,000 |
| 16,762 | |||||||
Entertainment – 0.1% |
| ||||||||||
Liberty Media Corp. | United States | 31,000 |
| 33,035 | |||||||
Live Nation Entertainment, Inc. | United States | 17,000 |
| 18,835 | |||||||
Sea Ltd. | Singapore | 50,000 |
| 43,675 | |||||||
Total Entertainment |
| 95,545 | |||||||||
Financial Services – 0.0% |
| ||||||||||
Shift4 Payments, Inc. | United States | 37,000 |
| 35,132 | |||||||
Food Products – 0.0% |
| ||||||||||
Post Holdings, Inc. | United States | 6,000 |
| 6,609 | |||||||
Ground Transportation – 0.0% |
| ||||||||||
Lyft, Inc. | United States | 10,000 |
| 9,938 | |||||||
Uber Technologies, Inc. | United States | 23,000 |
| 27,405 | |||||||
Total Ground Transportation |
| 37,343 | |||||||||
____________
See Notes to Consolidated Financial Statements.
30 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Health Care Equipment & Supplies – 0.0% |
| ||||||||||
Alphatec Holdings, Inc. | United States | USD | 16,000 | $ | 15,542 | ||||||
Lantheus Holdings, Inc. | United States | 12,000 |
| 14,969 | |||||||
LivaNova USA, Inc. | United States | 23,000 |
| 25,947 | |||||||
Merit Medical Systems, Inc. | United States | 12,000 |
| 14,070 | |||||||
Total Health Care Equipment & Supplies |
| 70,528 | |||||||||
Health Care Providers & Services – 0.0% |
| ||||||||||
Guardant Health, Inc. | United States | 38,000 |
| 29,481 | |||||||
Health Care Technology – 0.0% |
| ||||||||||
Evolent Health, Inc. | United States | 17,000 |
| 15,381 | |||||||
Hotel & Resort Real Estate Investment Trusts – 0.0% |
| ||||||||||
Pebblebrook Hotel Trust | United States | 16,000 |
| 14,200 | |||||||
Hotels, Restaurants & Leisure – 0.1% |
| ||||||||||
Accor SA | France | EUR | 41,200 |
| 22,129 | ||||||
H World Group Ltd. | China | USD | 21,000 |
| 22,428 | ||||||
Just Eat Takeaway.com NV | United Kingdom | EUR | 100,000 |
| 100,871 | ||||||
Marriott Vacations Worldwide Corp. | United States | USD | 10,000 |
| 9,150 | ||||||
NCL Corp. Ltd. | United States | 11,000 |
| 13,401 | |||||||
Shake Shack, Inc. | United States | 50,000 |
| 43,500 | |||||||
Total Hotels, Restaurants & Leisure |
| 211,479 | |||||||||
Household Durables – 0.0% |
| ||||||||||
Meritage Homes Corp. | United States | 14,000 |
| 13,972 | |||||||
IT Services – 0.0% |
| ||||||||||
Akamai Technologies, Inc. | United States | 19,000 |
| 18,453 | |||||||
Media – 0.0% |
| ||||||||||
Cable One, Inc. | United States | 26,000 |
| 22,880 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 31 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Metals & Mining – 0.0% |
| ||||||||||
First Majestic Silver Corp. | Canada | USD | 26,000 | $ | 21,569 | ||||||
MP Materials Corp. | United States | 21,000 |
| 18,742 | |||||||
Total Metals & Mining |
| 40,311 | |||||||||
Multi-Utilities – 0.0% |
| ||||||||||
Veolia Environnement SA | France | EUR | 135,900 |
| 45,703 | ||||||
Oil, Gas & Consumable Fuels – 0.0% |
| ||||||||||
Green Plains, Inc. | United States | USD | 12,000 |
| 10,688 | ||||||
Professional Services – 0.0% |
| ||||||||||
Parsons Corp. | United States | 27,000 |
| 28,958 | |||||||
Semiconductors & Semiconductor Equipment – 0.0% |
| ||||||||||
MKS Instruments, Inc. | United States | 24,000 |
| 25,672 | |||||||
ON Semiconductor Corp. | United States | 20,000 |
| 19,235 | |||||||
SolarEdge Technologies, Inc. | United States | 18,000 |
| 16,497 | |||||||
Total Semiconductors & Semiconductor Equipment |
| 61,404 | |||||||||
Software – 0.1% |
| ||||||||||
BlackLine, Inc. | United States | 18,000 |
| 17,532 | |||||||
Envestnet, Inc. | United States | 30,000 |
| 32,295 | |||||||
Five9, Inc. | United States | 8,000 |
| 7,140 | |||||||
Nutanix, Inc. | United States | 16,000 |
| 18,736 | |||||||
PagerDuty, Inc. | United States | 13,000 |
| 14,027 | |||||||
Unity Software, Inc. | United States | 61,000 |
| 52,856 | |||||||
Total Software |
| 142,586 | |||||||||
Technology Hardware Storage & Peripherals – 0.0% |
| ||||||||||
Seagate HDD Cayman | United States | 14,000 |
| 19,173 | |||||||
Total Convertible Bonds |
| 1,422,401 | |||||||||
____________
See Notes to Consolidated Financial Statements.
32 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
CORPORATE CREDIT (continued) |
| ||||||||||
Investment Grade – 0.0% |
| ||||||||||
Banks – 0.0% |
| ||||||||||
Barclays PLC | United Kingdom | USD | 56,000 | $ | 56,945 | ||||||
Total Investment Grade |
| 56,945 | |||||||||
TOTAL CORPORATE CREDIT |
| 171,723,410 | |||||||||
STRUCTURED CREDIT – 32.7% |
| ||||||||||
Collateralized Loan Obligations – 17.9% |
| ||||||||||
37 Capital CLO | Cayman Islands | 1,500,000 |
| 1,537,728 | |||||||
13.75%, 2023-2A, Class E (3 mo. Term SOFR + 8.38%), 01/15/34 (a),(c) | Cayman Islands | 1,000,000 |
| 1,023,978 | |||||||
Anchorage Capital CLO Ltd. | Cayman Islands | 1,500,000 |
| 1,501,617 | |||||||
11.08%, 2023-26A, Class D (3 mo. Term SOFR + 5.75%), 07/19/34 (a),(c) | Cayman Islands | 500,000 |
| 519,245 | |||||||
12.94%, 2016-8A, Class ER2 (3 mo. Term SOFR + 7.61%), 10/27/34 (a),(c) | Cayman Islands | 1,500,000 |
| 1,481,445 | |||||||
12.94%, 2020-16A, Class ER (3 mo. Term SOFR + 7.61%), 01/19/35 (a),(c) | Cayman Islands | 1,000,000 |
| 990,731 | |||||||
Anchorage Credit Funding Ltd. | Cayman Islands | 750,000 |
| 703,532 | |||||||
6.85%, 2019-7A, Class E, 04/25/37 (c) | Cayman Islands | 1,000,000 |
| 936,308 | |||||||
12.26%, 2019-7A, Class SUB1, 04/25/37 (c) | Cayman Islands | 1,000,000 |
| 502,843 | |||||||
ARES CLO | Cayman Islands | 500,000 |
| 501,723 | |||||||
11.07%, 2023-68A, Class D (3 mo. Term SOFR + 5.75%), 04/25/35 (a),(c) | Jersey | 2,000,000 |
| 2,044,308 | |||||||
CBAM Ltd. | Cayman Islands | 571,000 |
| 546,135 | |||||||
Cerberus Loan Funding LP | United States | 1,000,000 |
| 1,023,325 | |||||||
Dryden 27 R Euro CLO 2017 DAC | Ireland | EUR | 500,000 |
| 513,226 | ||||||
Elevation CLO Ltd. | Cayman Islands | USD | 2,000,000 |
| 1,876,216 | ||||||
Elmwood CLO Ltd. | Cayman Islands | 1,750,000 |
| 1,758,362 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 33 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
Fortress Credit BSL Ltd. | Jersey | USD | 1,000,000 | $ | 1,003,750 | ||||||
13.48%, 2022-1A, Class E (3 mo. Term SOFR + 8.15%), 10/23/34 (a),(c) | Cayman Islands | 500,000 |
| 501,456 | |||||||
13.52%, 2020-1A, Class E (3 mo. Term SOFR + 8.19%), 10/20/33 (a),(c) | Cayman Islands | 1,000,000 |
| 1,003,584 | |||||||
Gallatin CLO Ltd. | Bermuda | 2,000,000 |
| 2,048,500 | |||||||
Harvest CLO XXVI | Ireland | EUR | 500,000 |
| 534,390 | ||||||
ICG US CLO Ltd. | Cayman Islands | USD | 1,000,000 |
| 985,883 | ||||||
13.04%, 2020-1A, Class ER (3 mo. Term SOFR + 7.71%), 01/20/35 (a),(c) | Cayman Islands | 1,000,000 |
| 910,061 | |||||||
Madison Park Funding Ltd. | Cayman Islands | 2,000,000 |
| 2,051,178 | |||||||
Marble Point CLO Ltd. | Cayman Islands | 1,750,000 |
| 1,717,249 | |||||||
13.09%, 2020-3A, Class ER (3 mo. Term SOFR + 7.50%), 01/19/34 (a),(c) | Cayman Islands | 625,000 |
| 630,167 | |||||||
Monroe Capital MML CLO LLC | United States | 2,000,000 |
| 2,020,072 | |||||||
Monroe Capital MML CLO XIII Ltd. | United States | 1,000,000 |
| 1,004,207 | |||||||
Mountain View Clo Ltd. | Cayman Islands | 1,000,000 |
| 1,002,838 | |||||||
Mountain View CLO Ltd. | Cayman Islands | 300,000 |
| 305,404 | |||||||
10.83%, 2023-1A, Class D (3 mo. Term SOFR + 5.50%), 09/14/36 (a),(c) | Cayman Islands | 300,000 |
| 312,160 | |||||||
OAK Hill European Credit Partners V Designated Activity Co. | Ireland | EUR | 1,750,000 |
| 1,874,437 | ||||||
12.77%, 2016-5A, Class FR (3 mo. EURIBOR + 8.87%), 01/21/35 (a),(c) | Ireland | 1,000,000 |
| 1,051,818 | |||||||
OZLM XXIII Ltd. | Cayman Islands | USD | 250,000 |
| 247,498 | ||||||
____________
See Notes to Consolidated Financial Statements.
34 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
Palmer Square European CLO | Ireland | EUR | 1,200,000 | $ | 1,287,383 | ||||||
12.75%, 2022-1A, Class F (3 mo. EURIBOR + 8.85%), 01/21/35 (a),(c) | Ireland | 1,250,000 |
| 1,306,056 | |||||||
Penta CLO | Ireland | 500,000 |
| 536,066 | |||||||
Rockford Tower CLO Ltd. | United States | USD | 750,000 |
| 752,876 | ||||||
Rockford Tower Europe DAC | Ireland | EUR | 500,000 |
| 527,707 | ||||||
RR Ltd. | Bermuda | USD | 1,000,000 |
| 1,014,586 | ||||||
Symphony CLO Ltd. | Cayman Islands | 438,000 |
| 398,665 | |||||||
THL Credit Wind River CLO Ltd. | Cayman Islands | 1,000,000 |
| 1,005,175 | |||||||
Toro European CLO | Ireland | EUR | 1,500,000 |
| 1,581,524 | ||||||
Trimaran Cavu Ltd. | Cayman Islands | USD | 900,000 |
| 905,692 | ||||||
Trinitas CLO XIV Ltd. | Cayman Islands | 500,000 |
| 503,876 | |||||||
Trinitas CLO XVIII Ltd. | Cayman Islands | 2,000,000 |
| 1,999,640 | |||||||
Total Collateralized Loan Obligations |
| 48,484,620 | |||||||||
Commercial Mortgage-Backed Securities – 4.8% |
| ||||||||||
ACREC LLC | United States | 107,000 |
| 106,965 | |||||||
ACRES Commercial Realty Ltd. | Cayman Islands | 321,000 |
| 297,002 | |||||||
AREIT Trust | United States | 109,000 |
| 108,808 | |||||||
Banc of America Commercial Mortgage Trust | United States | 10,000,000 |
| 142,518 | |||||||
BBCMS Mortgage Trust | United States | 877,000 |
| 788,312 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 35 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
BBCMS Trust | United States | USD | 270,000 | $ | 267,759 | ||||||
Benchmark Mortgage Trust | United States | 225,000 |
| 110,568 | |||||||
4.00%, 2024-V5, Class D, 01/10/57 (c) | United States | 36,000 |
| 30,698 | |||||||
7.20%, 2024-V5, Class C, 01/10/57 | United States | 57,000 |
| 58,436 | |||||||
Blackstone UK Student Housing Portfolio | United Kingdom | GBP | 236,000 |
| 286,990 | ||||||
BWAY Mortgage Trust | United States | USD | 677,000 |
| 434,794 | ||||||
BX Commercial Mortgage Trust | United States | 1,131,000 |
| 1,107,814 | |||||||
BX Trust | United States | 450,849 |
| 421,282 | |||||||
CD Mortgage Trust | United States | 489,000 |
| 376,374 | |||||||
Citigroup Commercial Mortgage Trust | United States | 741,000 |
| 715,728 | |||||||
CLNC Ltd. | Cayman Islands | 410,000 |
| 401,509 | |||||||
COMM Mortgage Trust | United States | 12,997,292 |
| 376,950 | |||||||
CSAIL Commercial Mortgage Trust | United States | 190,000 |
| 133,168 | |||||||
DBGS Mortgage Trust | United States | 1,000,000 |
| 586,414 | |||||||
GSMS Trust | United States | 580,000 |
| 577,609 | |||||||
Hilton USA Trust | United States | 105,000 |
| 66,937 | |||||||
4.93%, 2016-SFP, Class D, 11/05/35 (b),(c) | United States | 584,000 |
| 258,805 | |||||||
J.P. Morgan Chase Commercial Mortgage Securities Trust | United States | 1,084,000 |
| 1,061,634 | |||||||
Last Mile Logistics | United Kingdom | GBP | 207,000 |
| 261,984 | ||||||
Life Mortgage Trust | United States | USD | 125,820 |
| 121,693 | ||||||
MF1 LLC | United States | 232,000 |
| 232,706 | |||||||
____________
See Notes to Consolidated Financial Statements.
36 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
Natixis Commercial Mortgage Securities Trust | United States | USD | 493,500 | $ | 491,783 | ||||||
ONE Mortgage Trust | United States | 645,000 |
| 610,035 | |||||||
Taubman Centers Commercial Mortgage Trust | United States | 415,000 |
| 411,469 | |||||||
TRTX Issuer Ltd | Cayman Islands | 160,000 |
| 149,147 | |||||||
UK Logistics DAC | United Kingdom | GBP | 102,000 |
| 129,002 | ||||||
10.22%, 2024-1A, Class E (Daily SONIA + 5.00%), 05/17/34 (a),(c) | United Kingdom | 200,000 |
| 252,977 | |||||||
VMC Finance LLC | United States | USD | 800,000 |
| 761,061 | ||||||
8.95%, 2021-FL4, Class D (1 mo. Term SOFR + 3.61%), 06/16/36 (a),(c) | United States | 147,000 |
| 125,759 | |||||||
9.95%, 2021-HT1, Class B (1 mo. Term SOFR + 4.61%), 01/18/37 (a),(c) | United States | 643,000 |
| 630,353 | |||||||
Total Commercial Mortgage-Backed Securities |
| 12,895,043 | |||||||||
Residential Mortgage-Backed Securities – 3.2% |
| ||||||||||
BRAVO Residential Funding Trust | United States | 109,000 |
| 109,965 | |||||||
7.44%, 2023-NQM5, Class M1, 06/25/63 (c) | United States | 183,000 |
| 186,764 | |||||||
8.04%, 2024-NQM1, Class B1, 12/01/63 (c) | United States | 128,000 |
| 129,100 | |||||||
CHNGE Mortgage Trust | United States | 891,000 |
| 874,473 | |||||||
COLT Mortgage Loan Trust | United States | 138,000 |
| 138,082 | |||||||
Deephaven Residential Mortgage Trust | United States | 229,000 |
| 178,879 | |||||||
GCAT Trust | United States | 476,000 |
| 333,539 | |||||||
Imperial Fund Mortgage Trust | United States | 332,000 |
| 268,810 | |||||||
JP Morgan Mortgage Trust | United States | 100,000 |
| 99,194 | |||||||
MFA Trust | United States | 251,000 |
| 198,289 | |||||||
Morgan Stanley Residential Mortgage Loan Trust | United States | 446,000 |
| 432,144 | |||||||
NYMT Loan Trust | United States | 145,000 |
| 144,818 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 37 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
PRKCM Trust | United States | USD | 204,000 | $ | 196,263 | ||||||
6.87%, 2024-AFC1, Class M1, 03/25/59 (c) | United States | 66,000 |
| 65,821 | |||||||
7.56%, 2023-AFC1, Class M1, 02/25/58 (c) | United States | 371,000 |
| 374,809 | |||||||
8.01%, 2023-AFC4, Class B1, 11/25/58 (c) | United States | 293,000 |
| 291,316 | |||||||
8.06%, 2024-AFC1, Class B1, 03/25/59 (c) | United States | 176,000 |
| 176,068 | |||||||
8.15%, 2023-AFC2, Class B1, 06/25/58 (c) | United States | 100,000 |
| 99,825 | |||||||
Progress Residential Trust | United States | 212,000 |
| 203,724 | |||||||
PRPM LLC | United States | 1,000,000 |
| 983,848 | |||||||
RCKT Mortgage Trust | United States | 100,000 |
| 101,490 | |||||||
6.77%, 2024-CES1, Class M2, 02/25/44 (c) | United States | 100,000 |
| 101,549 | |||||||
Seasoned Credit Risk Transfer Trust | United States | 226,000 |
| 194,244 | |||||||
STAR Trust | United States | 170,000 |
| 164,003 | |||||||
Toorak Mortgage Trust | United States | 71,000 |
| 71,043 | |||||||
Towd Point Mortgage Trust | United States | 110,000 |
| 111,606 | |||||||
Verus Securitization Trust | United States | 118,000 |
| 118,188 | |||||||
6.82%, 2024-2, Class M1, 02/25/69 (c) | United States | 100,000 |
| 100,849 | |||||||
7.08%, 2023-INV2, Class A3, 08/25/68 (c),(h) | United States | 158,664 |
| 159,393 | |||||||
7.35%, 2023-INV2, Class M1, 08/25/68 (c) | United States | 187,000 |
| 188,766 | |||||||
7.56%, 2023-2, Class B1, 03/25/68 (c) | United States | 100,000 |
| 98,732 | |||||||
7.92%, 2023-7, Class B1, 10/25/68 (c) | United States | 634,000 |
| 633,394 | |||||||
8.13%, 2023-INV2, Class B1, 08/25/68 (c) | United States | 215,000 |
| 216,640 | |||||||
Western Mortgage Reference Notes | United States | 804,810 |
| 825,171 | |||||||
Total Residential Mortgage-Backed Securities |
| 8,570,799 | |||||||||
Asset-Backed Securities – 6.8% |
| ||||||||||
Financials – 6.8% |
| ||||||||||
Adams Outdoor Advertising LP | United States | 2,000,000 |
| 2,066,616 | |||||||
Castlelake Aircraft Securitization Trust | United States | 128,074 |
| 121,799 | |||||||
GAIA Aviation Ltd. | Cayman Islands | 2,040,194 |
| 1,393,058 | |||||||
Horizon Aircraft Finance III Ltd. | Cayman Islands | 1,444,426 |
| 1,258,084 | |||||||
Horizon Aircraft Finance Ltd. | United States | 646,794 |
| 590,303 | |||||||
Lunar Aircraft Ltd. | United States | 728,293 |
| 634,625 | |||||||
____________
See Notes to Consolidated Financial Statements.
38 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
STRUCTURED CREDIT (continued) |
| ||||||||||
METAL 2017-1 Ltd. | United States | USD | 1,372,628 | $ | 899,071 | ||||||
METAL LLC | United States | 284,797 |
| 91,847 | |||||||
Mosaic Solar Loan Trust | United States | 1,500,000 |
| 1,460,305 | |||||||
Pioneer Aircraft Finance Ltd. | Cayman Islands | 515,616 |
| 485,136 | |||||||
Sunnova Hestia II Issuer LLC | United States | 1,000,000 |
| 993,340 | |||||||
Thunderbolt Aircraft Lease | United States | 1,339,286 |
| 985,327 | |||||||
Veros Auto Receivables Trust | United States | 1,780,000 |
| 1,880,804 | |||||||
VSTJET | United States | 1,700,000 |
| 1,657,500 | |||||||
WAVE LLC | United States | 2,460,511 |
| 861,179 | |||||||
WAVE Trust | United States | 1,590,272 |
| 1,076,217 | |||||||
6.66%, 2017-1A, Class C, 11/15/42 (c) | United States | 1,190,753 |
| 244,104 | |||||||
Westlake Automobile Receivables Trust | United States | 164,000 |
| 159,518 | |||||||
Ziply Fiber Issuer LLC | United States | 1,500,000 |
| 1,502,219 | |||||||
Total Financials |
| 18,361,052 | |||||||||
Total Asset-Backed Securities |
| 18,361,052 | |||||||||
TOTAL STRUCTURED CREDIT |
| 88,311,514 | |||||||||
PRIVATE CREDIT – 20.2% |
| ||||||||||
Senior Loans – 19.1% |
| ||||||||||
Aerospace & Defense – 1.6% |
| ||||||||||
Galileo Parent, | United States | 530,335 |
| 530,335 | |||||||
Galileo Parent, Inc., | United States | 61,262 |
| 36,757 | |||||||
12.59% (3 mo. Term SOFR + 7.25%), 05/03/29 (a),(b),(j) | United States | 21,738 |
| 13,043 | |||||||
GASL Bermuda, | United States | 3,100,000 |
| 2,990,597 | |||||||
WP CPP Holdings, | United States | 831,326 |
| 826,338 | |||||||
WP CPP Holdings, | United States | 90,000 |
| — | |||||||
Total Aerospace & Defense |
| 4,397,070 | |||||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 39 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
Automobile Components – 0.9% |
| ||||||||||
Superior Industries International, Inc., | United States | USD | 2,573,425 | $ | 2,547,691 | ||||||
Biotechnology – 1.2% |
| ||||||||||
ADC Therapeutics, Inc., | United States | 1,135,543 |
| 1,107,154 | |||||||
Mesoblast, Inc., First Lien Term Loan | United States | 1,368,949 |
| 1,303,924 | |||||||
Seres Therapeutics, Inc., | United States | 329,000 |
| — | |||||||
Seres Therapeutics, Inc., | United States | 329,000 |
| — | |||||||
Seres Therapeutics, Inc., | United States | 585,000 |
| 585,000 | |||||||
Seres Therapeutics, Inc., | United States | 219,000 |
| 219,000 | |||||||
Total Biotechnology |
| 3,215,078 | |||||||||
Capital Markets – 0.4% |
| ||||||||||
Inspira, | United States | 344,000 |
| — | |||||||
Inspira, | United States | 103,000 |
| — | |||||||
Minotaur Acquisition, | United States | 1,035,000 |
| 1,014,818 | |||||||
Total Capital Markets |
| 1,014,818 | |||||||||
Commercial Services & Supplies – 0.8% |
| ||||||||||
Amspec Parent, | United States | 226,000 |
| — | |||||||
Amspec Parent LLC, | United States | 1,563,083 |
| 1,563,082 | |||||||
Amspec Parent, Inc., | United States | 212,000 |
| 2,261 | |||||||
Kings Buyer LLC, | United States | 310,246 |
| — | |||||||
____________
See Notes to Consolidated Financial Statements.
40 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
NFM & J LP, | United States | USD | 59,285 | $ | 2,905 | ||||||
13.25% (Prime + 4.75%), 11/30/27 (a),(b),(j) | United States | 51,078 |
| 2,503 | |||||||
NFM & J LP, | United States | 493,858 |
| 483,981 | |||||||
11.18% (3 mo. Term SOFR + 5.75%), 11/30/27 (a),(b),(j) | United States | 275,862 |
| 8,968 | |||||||
Total Commercial Services & Supplies |
| 2,063,700 | |||||||||
Communications Equipment – 0.6% |
| ||||||||||
Sorenson Communications, Term Loan | United States | 1,783,000 |
| 1,750,193 | |||||||
Sorenson Communications, Revolver | United States | 198,000 |
| — | |||||||
Total Communications Equipment |
| 1,750,193 | |||||||||
Containers & Packaging – 0.6% |
| ||||||||||
ASP-r-pac Acquisition Company LLC, | United States | 1,693,690 |
| 1,610,360 | |||||||
ASP-r-pac Acquisition Company LLC, | United States | 205,745 |
| 84,118 | |||||||
Total Containers & Packaging |
| 1,694,478 | |||||||||
Electrical Equipment – 0.3% |
| ||||||||||
Inventus Power, Inc., | United States | 94,000 |
| — | |||||||
Inventus Power, Inc., | United States | 819,639 |
| 801,116 | |||||||
Total Electrical Equipment |
| 801,116 | |||||||||
Food Products – 0.4% |
| ||||||||||
Protein For Pets Opco, | United States | 994,000 |
| 975,710 | |||||||
Protein For Pets Opco, | United States | 103,000 |
| — | |||||||
Total Food Products |
| 975,710 | |||||||||
Health Care Equipment & Supplies – 1.1% |
| ||||||||||
Touchstone Acquisition, Inc., | United States | 2,953,720 |
| 2,891,101 | |||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 41 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
Health Care Providers & Services – 1.8% |
| ||||||||||
LSL Holdco LLC, | United States | USD | 2,349,755 | $ | 2,202,895 | ||||||
LSL Holdco LLC, | United States | 273,606 |
| 256,505 | |||||||
LSL Holdco LLC, | United States | 266,412 |
| 199,809 | |||||||
Petvet Care Centers LLC, | United States | 2,350,110 |
| 2,298,878 | |||||||
11.32%, 11/15/30 (b),(j) | United States | 307,000 |
| — | |||||||
Petvet Care Centers LLC, | United States | 307,000 |
| — | |||||||
Total Health Care Providers & Services |
| 4,958,087 | |||||||||
Health Care Technology – 1.1% |
| ||||||||||
Establishment Labs Holdings, Inc., | United States | 1,241,920 |
| 1,220,186 | |||||||
Establishment Labs Holdings, Inc., | United States | 198,895 |
| 195,414 | |||||||
Establishment Labs Holdings, Inc., | United States | 184,290 |
| — | |||||||
Establishment Labs Holdings, Inc., | United States | 184,290 |
| — | |||||||
Impel Pharmaceuticals, Inc., | United States | 1,936,754 |
| 584,706 | |||||||
Impel Pharmaceuticals, Inc., | United States | 139,899 |
| 93,257 | |||||||
Impel Pharmaceuticals, Inc., | United States | 62,736 |
| 41,820 | |||||||
Impel Pharmaceuticals, Inc., | United States | 52,716 |
| 35,141 | |||||||
Next Holdco LLC, | United States | 827,925 |
| 827,925 | |||||||
11.32%, 11/08/30 (b),(j) | United States | 213,000 |
| — | |||||||
____________
See Notes to Consolidated Financial Statements.
42 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
Next Holdco LLC, | United States | USD | 80,000 | $ | — | ||||||
Total Health Care Technology |
| 2,998,449 | |||||||||
Hotels, Restaurants & Leisure – 2.0% |
| ||||||||||
Grove Hotel Parcel Owner LLC, | United States | 350,754 |
| — | |||||||
Grove Hotel Parcel Owner LLC, | United States | 175,377 |
| — | |||||||
Grove Hotel Parcel Owner LLC, | United States | 1,727,462 |
| 1,692,913 | |||||||
PFNY Holdings LLC, | United States | 3,558,479 |
| 3,384,470 | |||||||
PFNY Holdings LLC, | United States | 304,709 |
| 289,809 | |||||||
PFNY Holdings LLC, | United States | 173,352 |
| — | |||||||
Total Hotels, Restaurants & Leisure |
| 5,367,192 | |||||||||
Insurance – 0.6% |
| ||||||||||
Ardonagh Group Finance, | United States | 1,739,000 |
| 1,714,654 | |||||||
Ardonagh Midco, | United States | 160,000 |
| — | |||||||
Total Insurance |
| 1,714,654 | |||||||||
Interactive Media & Services – 0.6% |
| ||||||||||
Ancestry.com, Inc., | United States | 1,632,908 |
| 1,632,908 | |||||||
Machinery – 0.3% |
| ||||||||||
Truck-Lite Company, | United States | 972,563 |
| 955,251 | |||||||
Truck-Lite Company, | United States | 105,000 |
| — | |||||||
Truck-Lite Company, | United States | 103,950 |
| 3,439 | |||||||
Total Machinery |
| 958,690 | |||||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 43 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
Metals & Mining – 0.4% |
| ||||||||||
IAMGOLD Corp., | United States | USD | 975,000 | $ | 970,612 | ||||||
Pharmaceuticals – 0.4% |
| ||||||||||
Bioxcel Therapeutics, | United States | 381,373 |
| 305,098 | |||||||
Bioxcel Therapeutics, | United States | 625,975 |
| — | |||||||
Bioxcel Therapeutics, Inc., | United States | 250,390 |
| — | |||||||
Bioxcel Therapeutics, Inc., | United States | 375,585 |
| — | |||||||
Bioxcel Therapeutics, Inc., | United States | 919,357 |
| 735,485 | |||||||
Total Pharmaceuticals |
| 1,040,583 | |||||||||
Software – 4.0% |
| ||||||||||
Avalara, Inc., | United States | 2,491,000 |
| 2,491,000 | |||||||
Avalara, Inc., | United States | 249,000 |
| — | |||||||
CentralSquare Technologies, | United States | 582,495 |
| 568,981 | |||||||
CentralSquare Technologies, | United States | 66,000 |
| — | |||||||
Evergreen IX Borrower, | United States | 1,141,265 |
| 1,141,265 | |||||||
Evergreen IX Borrower, | United States | 127,000 |
| — | |||||||
Finastra USA, Inc., | United States | 1,458,345 |
| 1,440,116 | |||||||
Finastra USA, Inc., | United States | 147,977 |
| 15,891 | |||||||
ICIMS, Inc., | United States | 317,968 |
| — | |||||||
____________
See Notes to Consolidated Financial Statements.
44 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country | Principal | Value | |||||||
PRIVATE CREDIT (continued) |
| ||||||||||
ICIMS, Inc., | United States | USD | 1,754,873 | $ | 1,696,962 | ||||||
12.58% (3 mo. Term SOFR + 7.25%), 08/18/28 (a),(b) | United States | 253,659 |
| 249,600 | |||||||
ICIMS, Inc., | United States | 44,611 |
| 6,024 | |||||||
12.08% (3 mo. Term SOFR + 6.75%), 08/15/28 (a),(b),(j) | United States | 112,941 |
| 15,251 | |||||||
Monotype Imaging Holdings, | United States | 1,409,000 |
| 1,389,838 | |||||||
Monotype Imaging Holdings, | United States | 176,000 |
| — | |||||||
Monotype Imaging Holdings, | United States | 117,000 |
| — | |||||||
Pluralsight LLC, | United States | 659,000 |
| 362,450 | |||||||
Pluralsight LLC, | United States | 41,000 |
| 22,550 | |||||||
UserZoom Technologies, Inc., | United States | 1,348,000 |
| 1,337,890 | |||||||
Total Software |
|
|
|
|
| 10,737,818 | |||||
Total Senior Loans |
|
|
|
|
| 51,729,948 | |||||
|
|
|
| Shares |
|
| |||||
Preferred Stock – 0.9% |
| ||||||||||
Health Care Providers & Services – 0.1% |
| ||||||||||
Petvet Care Centers LLC | United States | 203 |
| 216,296 | |||||||
Health Care Technology – 0.8% |
| ||||||||||
athenahealth, Inc. | United States | 2,033 |
| 2,139,448 | |||||||
Total Preferred Stock |
| 2,355,744 | |||||||||
Common Stock – 0.1% |
| ||||||||||
Distributors – 0.1% |
| ||||||||||
RelaDyne | United States | 2,000 |
| 241,380 | |||||||
Total Common Stock |
| 241,380 | |||||||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 45 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Description |
| Country |
| Value | ||||||||
PRIVATE CREDIT (continued) |
|
| ||||||||||
Warrants – 0.1% |
|
| ||||||||||
Biotechnology – 0.1% |
|
| ||||||||||
ADC Therapeutics – | United States | 4,988 | $ | 6,235 |
| |||||||
Mesoblast, Inc. – | United States | 11,941 |
| 44,779 |
| |||||||
Mesoblast, Inc. – | United States | 46,443 |
| 123,074 |
| |||||||
Seres Therapeutics, Inc. – | United States | 4,735 |
| 1,657 |
| |||||||
Total Biotechnology |
| 175,745 |
| |||||||||
Health Care Technology – 0.0% |
|
| ||||||||||
Impel Pharmaceuticals, Inc. – | United States | 26,745 |
| — |
| |||||||
Innocoll Pharmaceuticals Ltd. – | United States | 20,192 |
| — |
| |||||||
Total Health Care Technology |
| — |
| |||||||||
Pharmaceuticals – 0.0% |
|
| ||||||||||
Bioxcel Therapeutics – | United States | 1,252 |
| 188 |
| |||||||
Bioxcel Therapeutics, Inc. – | United States | 4,359 |
| 436 |
| |||||||
Total Pharmaceuticals |
| 624 |
| |||||||||
Total Warrants |
|
| 176,369 |
| ||||||||
TOTAL PRIVATE CREDIT |
| 54,503,441 |
| |||||||||
SHORT-TERM INVESTMENTS – 1.5% |
|
| ||||||||||
Money Market Fund – 1.5% |
|
| ||||||||||
First American Government Obligations Fund – Class X, 5.23% (k) | United States | 3,935,261 |
| 3,935,261 |
| |||||||
TOTAL SHORT-TERM INVESTMENTS |
| 3,935,261 |
| |||||||||
Total Investments – 117.9% (l) |
| 318,473,626 |
| |||||||||
Liabilities in Excess of Other Assets – (17.9)% |
|
|
|
|
| (48,246,102 | ) | |||||
TOTAL NET ASSETS – 100.0% |
|
|
|
| $ | 270,227,524 |
| |||||
____________
See Notes to Consolidated Financial Statements.
46 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The following notes should be read in conjunction with the accompanying Consolidated Schedule of Investments.
(a) Variable rate security – Interest rate is based on reference rate and spread or based on the underlying assets. Interest rate may also be subject to a cap or floor. Securities that reference SOFR may be subject to a credit spread adjustment, particularly to legacy holdings that reference LIBOR that have transitioned to SOFR as the base lending rate.
(b) These securities are characterized as Level 3 securities within the disclosure hierarchy. Level 3 security values are determined using significant unobservable inputs. As of June 30, 2024, the total value of all such securities was $61,845,484 or 22.9% of net assets.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional buyers. As of June 30, 2024, the total value of all such securities was $137,819,514 or 51.0% of net assets.
(d) Paid in kind security which may pay interest in additional par.
(e) These assets are held in the Oaktree Diversified Income Fund (Cayman) Ltd., a Cayman Islands exempted company and wholly-owned subsidiary of the Fund.
(f) Restricted security. Purchased in a private placement transaction; resale to the public may require registration. As of June 30, 2024, the total value of all such securities was $3,088,731 or 1.1% of net assets.
(g) Regulation S security. These securities may be subject to transfer restrictions as defined by Regulation S. As of June 30, 2024, the total value of all such securities was $1,255,563 or 0.5% of net assets.
(h) Security is a “step up” bond where the coupon increases or steps up at a predetermined date. Interest rate shown is the rate in effect as of June 30, 2024.
(i) Issuer is currently in default on its regularly scheduled interest payment.
(j) As of June 30, 2024, the Fund had entered into the following commitments to fund various revolving and delayed draw senior secured and subordinated loans. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and there can be no assurance that such conditions will be satisfied. All values are reflected at par.
Company | Investment Type | Total revolving | Less: | Total | |||||||
Amspec Parent, Inc. | First Lien Delay Draw Term Loan | $ | 226 | $ | — | $ | 226 | ||||
Amspec Parent, Inc. | First Lien Revolver |
| 212 |
| 2 |
| 210 | ||||
Ardonagh Midco | First Lien Tranche B2 Delay Draw Term Loan |
| 160 |
| — |
| 160 | ||||
ASP-r-pac Acquisition Company LLC | First Lien Revolver |
| 206 |
| 89 |
| 117 | ||||
Avalara, Inc. | First Lien Revolver |
| 249 |
| — |
| 249 | ||||
Bioxcel Therapeutics, Inc. | First Lien Tranche D Term Loan |
| 626 |
| — |
| 626 | ||||
Bioxcel Therapeutics, Inc. | First Lien Tranche B Delay Draw Term Loan |
| 250 |
| — |
| 250 | ||||
Bioxcel Therapeutics, Inc. | First Lien Tranche C Delay Draw Term Loan |
| 376 |
| — |
| 376 | ||||
CentralSquare Technologies | First Lien Revolver |
| 66 |
| — |
| 66 | ||||
Establishment Labs Holdings, Inc. | First Lien Tranche C Delay Draw Term Loan |
| 184 |
| — |
| 184 | ||||
Establishment Labs Holdings, Inc. | First Lien Tranche D Delay Draw Term Loan |
| 184 |
| — |
| 184 | ||||
Evergreen IX Borrower | First Lien Revolver |
| 127 |
| — |
| 127 | ||||
Finastra USA, Inc. | First Lien Revolver |
| 148 |
| 16 |
| 132 | ||||
Galileo Parent, Inc. | First Lien Revolver |
| 22 |
| 13 |
| 9 | ||||
Galileo Parent, Inc. | First Lien Revolver |
| 16 |
| 10 |
| 6 | ||||
Galileo Parent, Inc. | First Lien Revolver |
| 45 |
| 27 |
| 18 | ||||
GASL Bermuda | Tranche B1 Revolver |
| 3,100 |
| 2,990 |
| 110 | ||||
Grove Hotel Parcel Owner LLC | First Lien Delay Draw Term Loan |
| 351 |
| — |
| 351 | ||||
Grove Hotel Parcel Owner LLC | First Lien Revolver Facility |
| 175 |
| — |
| 175 | ||||
ICIMS, Inc. | First Lien Revolver |
| 45 |
| 6 |
| 39 | ||||
ICIMS, Inc. | First Lien Delay Draw Term Loan |
| 318 |
| — |
| 318 | ||||
ICIMS, Inc. | First Lien Revolver |
| 113 |
| 16 |
| 97 | ||||
Inspira | First Lien Revolver |
| 103 |
| — |
| 103 | ||||
Inspira | First Lien Delay Draw Term Loan |
| 172 |
| — |
| 172 | ||||
Inspira | First Lien Delay Draw Term Loan |
| 172 |
| — |
| 172 | ||||
Inventus Power, Inc. | First Lien Revolver |
| 94 |
| — |
| 94 | ||||
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 47 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Company | Investment Type | Total revolving | Less: | Total | |||||||
Kings Buyer LLC | First Lien Revolver | $ | 310 | $ | — | $ | 310 | ||||
LSL Holdco LLC | First Lien Revolver |
| 266 |
| 212 |
| 54 | ||||
Monotype Imaging Holdings | First Lien Revolver |
| 176 |
| — |
| 176 | ||||
Monotype Imaging Holdings | First Lien Delay Draw Term Loan |
| 117 |
| — |
| 117 | ||||
Next Holdco LLC | First Lien Revolver |
| 80 |
| — |
| 80 | ||||
Next Holdco LLC | First Lien Term Loan |
| 213 |
| — |
| 213 | ||||
NFM & J LP | First Lien Revolver |
| 51 |
| 2 |
| 49 | ||||
NFM & J LP | First Lien Term Loan |
| 276 |
| 9 |
| 267 | ||||
NFM & J LP | First Lien Revolver |
| 59 |
| 3 |
| 56 | ||||
Petvet Care Centers LLC | First Lien Revolver |
| 307 |
| — |
| 307 | ||||
Petvet Care Centers LLC | First Lien Term Loan |
| 307 |
| — |
| 307 | ||||
PFNY Holdings LLC | First Lien Revolver |
| 173 |
| — |
| 173 | ||||
Protein For Pets Opco | First Lien Revolver |
| 103 |
| — |
| 103 | ||||
Seres Therapeutics, Inc. | First Lien Tranche B Delay Draw Term Loan |
| 329 |
| — |
| 329 | ||||
Seres Therapeutics, Inc. | First Lien Tranche C Delay Draw Term Loan |
| 329 |
| — |
| 329 | ||||
Sorenson Communications | Revolver |
| 198 |
| — |
| 198 | ||||
Truck-Lite Company | First Lien Delay Draw Term Loan |
| 105 |
| — |
| 105 | ||||
Truck-Lite Company | First Lien Revolver |
| 104 |
| 4 |
| 100 | ||||
WP CPP Holdings | First Lien Revolver |
| 90 |
| — |
| 90 | ||||
$ | 11,333 | $ | 3,399 | $ | 7,934 | ||||||
(k) The rate shown represents the seven-day yield as of June 30, 2024.
(l) These securities are pledged as collateral for the credit facility.
____________
See Notes to Consolidated Financial Statements.
48 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Forward Currency Contracts:
As of June 30, 2024, the following forward currency contracts were outstanding:
Settlement | Currency Purchased | Currency Sold | Counterparty | Unrealized Appreciation (Depreciation) | ||
7/18/2024 | 30,208,374 | EUR | 32,530,952 | USD | State Street Bank & Trust Co. | $(147,119) |
7/18/2024 | 65,372,846 | USD | 60,178,537 | EUR | State Street Bank & Trust Co. | 714,932 |
7/18/2024 | 4,014,170 | USD | 3,158,524 | GBP | State Street Bank & Trust Co. | 20,981 |
7/18/2024 | 465,439 | GBP | 587,264 | USD | State Street Bank & Trust Co. | 1,172 |
7/18/2024 | 67,428 | USD | 10,404,600 | JPY | State Street Bank & Trust Co. | 2,557 |
$592,523 | ||||||
Futures Contracts:
As of June 30, 2024, the following futures contracts were outstanding:
Description | Contracts Purchased | Expiration Date | Notional | Unrealized | |||||||
U.S. Treasury 2 Year Note | 10 | 9/30/2024 | $ | 2,042,188 | $ | (1,094 | ) | ||||
U.S. Treasury 5 Year Note | 75 | 9/30/2024 |
| 7,993,359 |
| 34,571 |
| ||||
| $ | 33,477 |
| ||||||||
Abbreviations: | ||
CMT | Constant Maturity Treasury Rate | |
EURIBOR | Euro Interbank Offered Rate | |
LIBOR | London Interbank Offered Rates | |
LLC | Limited Liability Corporation | |
LP | Limited Partnership | |
PLC | Public Limited Company | |
REIT | Real Estate Investment Trust | |
SOFR | Secured Overnight Financial Rate | |
SOFR30A | Secured Overnight Financial Rate 30 Day Average | |
SONIA | Sterling Overnight Index Average | |
Currencies: | ||
GBP | British Pound | |
EUR | Euro | |
JPY | Japanese Yen | |
USD | US Dollar | |
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 49 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Assets: |
|
| ||
Investments in securities, at value (Cost $326,351,160) | $ | 318,473,626 |
| |
Cash |
| 48,935 |
| |
Foreign currency, at value (Cost $293,123) |
| 293,069 |
| |
Cash on deposit with brokers for futures contracts |
| 403,018 |
| |
Interest receivable |
| 4,322,309 |
| |
Receivable for investments sold |
| 4,911,396 |
| |
Receivable for fund shares sold |
| 141,864 |
| |
Unrealized appreciation on forward currency contracts (Note 3) |
| 739,642 |
| |
Unrealized appreciation on unfunded loan commitments |
| 8,734 |
| |
Prepaid expenses |
| 26,518 |
| |
Total assets |
| 329,369,111 |
| |
Liabilities: |
|
| ||
Payable for credit facility (Note 6) |
| 40,000,000 |
| |
Deferred debt issuance costs (Note 6) |
| (230,961 | ) | |
Interest payable for credit facility (Note 6) |
| 32,993 |
| |
Payable for investments purchased |
| 18,633,666 |
| |
Unrealized depreciation on forward currency contracts (Note 3) |
| 147,119 |
| |
Payable for variation margin (Note 3) |
| 8,438 |
| |
Investment advisory fees payable (Note 4) |
| 353,173 |
| |
Accrued expenses |
| 197,159 |
| |
Total liabilities |
| 59,141,587 |
| |
Indemnifications, commitments and contingencies (Notes 4 and 10) |
|
|
| |
Net Assets | $ | 270,227,524 |
| |
Composition of Net Assets: |
|
| ||
Paid-in capital | $ | 282,499,333 |
| |
Accumulated losses |
| (12,271,809 | ) | |
Net Assets | $ | 270,227,524 |
| |
Shares Outstanding and Net Asset Value Per Share: |
|
| ||
Shares outstanding |
| 29,934,462 |
| |
Net asset value per share | $ | 9.03 |
|
____________
See Notes to Consolidated Financial Statements.
50 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. For the Six Months Ended June 30, 2024 |
Investment Income (Note 2): |
|
| ||
Interest (net of foreign withholding tax of $127,324) | $ | 14,973,628 |
| |
Total investment income |
| 14,973,628 |
| |
Expenses: |
|
| ||
Investment advisory fees (Note 4) |
| 1,769,706 |
| |
Audit and tax services |
| 117,894 |
| |
Fund accounting and sub-administration fees |
| 125,423 |
| |
Legal fees |
| 108,230 |
| |
Directors’ fees |
| 102,969 |
| |
Transfer agent fees |
| 60,569 |
| |
Miscellaneous |
| 41,179 |
| |
Reports to shareholders |
| 31,197 |
| |
Registration fees |
| 20,264 |
| |
Custodian fees |
| 13,671 |
| |
Insurance |
| 8,172 |
| |
Total operating expenses |
| 2,399,274 |
| |
Interest expense and credit facility fees (Note 6) |
| 1,424,195 |
| |
Net expense recoupment (Note 4) |
| 214,416 |
| |
Net expenses |
| 4,037,885 |
| |
Net investment income |
| 10,935,743 |
| |
Net realized gain (loss) on: |
|
| ||
Investments |
| (1,014,643 | ) | |
Foreign currency transactions |
| 19,688 |
| |
Forward currency contracts |
| (427,161 | ) | |
Futures contracts |
| (190,823 | ) | |
Net realized loss |
| (1,612,939 | ) | |
Net change in unrealized appreciation (depreciation) on: |
|
| ||
Investments |
| 2,633,747 |
| |
Unfunded loan commitments |
| 356 |
| |
Foreign currency translations |
| 3,463 |
| |
Foreign currency |
| (4,274 | ) | |
Forward currency contracts |
| 1,538,287 |
| |
Futures contracts |
| 33,477 |
| |
Net change in unrealized appreciation |
| 4,205,056 |
| |
Net realized and unrealized gain |
| 2,592,117 |
| |
Net increase in net assets resulting from operations | $ | 13,527,860 |
|
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 51 |
For the | For the | |||||||
Increase (Decrease) in Net Assets Resulting from Operations: |
|
|
|
| ||||
Net investment income | $ | 10,935,743 |
| $ | 16,422,370 |
| ||
Net realized loss |
| (1,612,939 | ) |
| (952,741 | ) | ||
Net change in unrealized appreciation |
| 4,205,056 |
|
| 5,552,516 |
| ||
Net increase in net assets resulting from operations |
| 13,527,860 |
|
| 21,022,145 |
| ||
Distributions to Shareholders: |
|
|
|
| ||||
Distributable earnings |
| (9,870,599 | ) |
| (15,645,010 | ) | ||
Total distributions paid |
| (9,870,599 | ) |
| (15,645,010 | ) | ||
Capital Share Transactions: |
|
|
|
| ||||
Proceeds from shares sold |
| 31,628,996 |
|
| 62,173,242 |
| ||
Reinvestment of distributions |
| 7,088,029 |
|
| 12,613,249 |
| ||
Repurchase of shares (Note 8) |
| (2,263,560 | ) |
| (1,748,478 | ) | ||
Net increase in net assets from capital share transactions |
| 36,453,465 |
|
| 73,038,013 |
| ||
Total increase in net assets |
| 40,110,726 |
|
| 78,415,148 |
| ||
Net Assets: |
|
|
|
| ||||
Beginning of period |
| 230,116,798 |
|
| 151,701,650 |
| ||
End of period | $ | 270,227,524 |
| $ | 230,116,798 |
| ||
Share Transactions: |
|
|
|
| ||||
Shares sold |
| 3,495,667 |
|
| 7,005,201 |
| ||
Shares reinvested |
| 786,861 |
|
| 1,431,970 |
| ||
Shares repurchased (Note 8) |
| (250,080 | ) |
| (196,752 | ) | ||
Net increase in shares outstanding |
| 4,032,448 |
|
| 8,240,419 |
| ||
____________
See Notes to Consolidated Financial Statements.
52 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. For the Six Months Ended June 30, 2024 |
Increase (Decrease) in Cash: |
|
| ||
Cash flows provided by (used for) operating activities: |
|
| ||
Net increase in net assets resulting from operations | $ | 13,527,860 |
| |
Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities: |
|
| ||
Purchases of long-term portfolio investments and principal payups |
| (108,120,838 | ) | |
Proceeds from disposition of long-term portfolio investments and principal paydowns |
| 52,984,025 |
| |
Net purchases and sales of short-term portfolio investments |
| 4,368,931 |
| |
Amortization of deferred debt issuance costs |
| 69,039 |
| |
Increase in receivable for investments sold |
| (2,604,287 | ) | |
Increase in interest receivable |
| (573,487 | ) | |
Decrease in prepaid expenses |
| 18,421 |
| |
Decrease in interest payable for credit facility |
| (25,844 | ) | |
Increase in payable for investments purchased |
| 11,470,496 |
| |
Increase in payable for variation margin |
| 8,438 |
| |
Increase in investment advisory fees payable |
| 94,573 |
| |
Decrease in accrued expenses |
| (16,957 | ) | |
Net accretion of discount on investments and other adjustments to cost |
| (1,012,518 | ) | |
Net change in unrealized appreciation on investments, unfunded loan commitments, foreign currency and forward currency contracts |
| (4,168,116 | ) | |
Net realized loss on investment transactions |
| 1,014,643 |
| |
Net cash used for operating activities |
| (32,965,621 | ) | |
Cash flows provided by financing activities: |
|
| ||
Proceeds from credit facility |
| 5,000,000 |
| |
Proceeds from shares sold |
| 31,489,082 |
| |
Distributions paid to shareholders, net of reinvestments |
| (2,782,570 | ) | |
Repurchase of shares |
| (2,263,560 | ) | |
Net cash provided by financing activities |
| 31,442,952 |
| |
Effect of exchange rate changes on cash |
| (4,274 | ) | |
Net decrease in cash |
| (1,526,943 | ) | |
Cash at beginning of period |
| 2,271,965 |
| |
Cash at end of period | $ | 745,022 |
| |
Supplemental Disclosure of Cash Flow Information: |
|
| ||
Interest payments on the credit facility for the six months ended June 30, 2024 totaled $1,450,039. |
| |||
Non-cash financing activities not included consist of reinvestment of distributions for the six months ended June 30, 2024 totaled $7,088,029. |
| |||
Reconciliation of Cash at the End of Period to the Consolidated Statement of Assets and Liabilities: |
| |||
Cash | $ | 48,935 |
| |
Foreign currency |
| 293,069 |
| |
Cash on deposit with brokers for futures contracts |
| 403,018 |
| |
Cash at end of period | $ | 745,022 |
| |
____________
See Notes to Consolidated Financial Statements.
2024 Semi-Annual Report | 53 |
Class D | For the | For the | For the | For the Period | ||||||||||||
Per Share Operating Performance: |
|
|
|
|
|
|
|
| ||||||||
Net asset value, beginning of period | $ | 8.88 |
| $ | 8.59 |
| $ | 9.94 |
| $ | 10.00 |
| ||||
Income from Investment Operations: |
|
|
|
|
|
|
|
| ||||||||
Net investment income2 |
| 0.40 |
|
| 0.78 |
|
| 0.50 |
|
| 0.02 |
| ||||
Net realized and change in unrealized gain (loss) |
| 0.10 |
|
| 0.20 |
|
| (1.20 | ) |
| (0.07 | ) | ||||
Net increase (decrease) in net asset value resulting from operations |
| 0.50 |
|
| 0.98 |
|
| (0.70 | ) |
| (0.05 | ) | ||||
Distributions to Shareholders: |
|
|
|
|
|
|
|
| ||||||||
From net investment income |
| (0.35 | ) |
| (0.69 | ) |
| (0.65 | ) |
| (0.01 | ) | ||||
Total distributions paid* |
| (0.35 | ) |
| (0.69 | ) |
| (0.65 | ) |
| (0.01 | ) | ||||
Net asset value, end of period | $ | 9.03 |
| $ | 8.88 |
| $ | 8.59 |
| $ | 9.94 |
| ||||
Total Investment Return†3 |
| 5.64 | % |
| 11.76 | % |
| (7.03 | )% |
| (0.37 | )% | ||||
Ratios to Average Net Assets/Supplementary Data: |
|
|
|
|
|
|
|
| ||||||||
Net assets, end of period (000s) | $ | 270,228 |
| $ | 230,117 |
| $ | 151,702 |
| $ | 150,092 |
| ||||
Gross operating expenses excluding interest expense4 |
| 1.93 | % |
| 2.03 | % |
| 1.96 | % |
| 5.55 | % | ||||
Gross operating expenses4 |
| 3.08 | % |
| 3.01 | % |
| 2.51 | % |
| 5.55 | % | ||||
Net expenses, including fee waivers and reimbursement or recoupment and excluding interest expense4 |
| 2.10 | % |
| 2.10 | % |
| 2.10 | % |
| 2.10 | % | ||||
Net expenses, including fee waivers and reimbursement or recoupment and interest expense4 |
| 3.25 | % |
| 3.08 | % |
| 2.65 | % |
| 2.10 | % | ||||
Net investment income4 |
| 8.81 | % |
| 8.81 | % |
| 5.64 | % |
| 1.51 | % | ||||
Net investment income (loss), excluding the effect of fee waivers and reimbursement or recoupment4 |
| 8.98 | % |
| 8.88 | % |
| 5.50 | % |
| (1.94 | )% | ||||
Portfolio turnover rate3 |
| 19 | % |
| 24 | % |
| 25 | % |
| 4 | % | ||||
The following table sets forth information regarding the Fund’s outstanding senior securities as of the end of each of the Fund’s last ten fiscal years, as applicable.
Fiscal or Period End | Total Amount | Asset Coverage | Involuntary | Average | Type of Senior | |||||||
June 30, 2024 (Unaudited) | $ | 40,000,000 | $ | 7,756 | N/A | N/A | Credit Facility | |||||
December 31, 2023 |
| 35,000,000 |
| 7,575 | N/A | N/A | Credit Facility | |||||
December 31, 2022 |
| 20,000,000 |
| 8,585 | N/A | N/A | Credit Facility | |||||
December 31, 20216 |
| N/A |
| N/A | N/A | N/A | N/A | |||||
____________
* Distributions for annual periods determined in accordance with federal income tax regulations.
† Total investment return is computed based upon the net asset value of the Fund’s shares and excludes the effects of sales charges or contingent deferred sales charges, if applicable. Distributions are assumed to be reinvested at the net asset value of the Class on the ex-date of the distribution.
1 Commencement of operations.
2 Per share amounts presented are based on average shares outstanding throughout the period indicated.
3 Not annualized for periods less than one year.
4 Annualized for periods less than one year.
5 Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness.
6 Commenced operations on November 1, 2021.
____________
See Notes to Consolidated Financial Statements.
54 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
1. Organization
Oaktree Diversified Income Fund Inc. (the “Fund”) was organized as a corporation under the laws of the State of Maryland on June 29, 2021. The Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, closed-end management investment company that continuously offers its shares of common stock, $0.001 par value per share (the “Common Shares”), and is operated as an “interval fund.” The Fund’s Class D shares commenced operations on November 1, 2021.
The Fund has two classes of shares: Class D and Class T shares. The Fund had applied for, and was granted, exemptive relief (the “Exemptive Relief”) by the Securities and Exchange Commission (the “SEC”) that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees. Currently, the Fund is only offering Class D shares.
Oaktree Fund Advisors, LLC (“Oaktree” or the “Adviser”), a Delaware limited liability company and a registered investment adviser under the Investment Advisers Act of 1940, as amended, serves as the investment adviser to the Fund. Oaktree was founded in April 1995 and is a leader among global investment managers specializing in alternative investments.
Brookfield Public Securities Group LLC (the “Administrator”), a wholly-owned subsidiary of Brookfield Asset Management Inc. (“Brookfield”), is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and serves as Administrator to the Fund. In 2019, Brookfield acquired a majority interest in the Adviser.
The Fund’s investment objective is to seek current income and attractive total return. The Fund seeks to achieve its investment objective by investing globally in high-conviction opportunities across Oaktree’s performing credit platform of high-yield bonds, senior loans, structured credit, emerging markets debt and convertibles, inclusive of both public and private credit sectors. High-yield bonds are also referred to as “below-investment grade rated securities” or “junk bonds,” as described in the Fund’s Prospectus. The Fund seeks to add value through three sources: (1) providing exposure to asset classes that require specialized expertise; (2) performing well in each asset class through proprietary, bottom-up and credit research; and (3) allocating capital opportunistically among asset classes based on Oaktree’s assessment of relative value.
Oaktree Diversified Income Fund (Cayman) Ltd. (the “Subsidiary”), a Cayman Islands exempted company and wholly-owned subsidiary of the Fund, was formed on November 11, 2021. The Subsidiary was established for the purpose of investing in certain Regulation S securities. As a wholly-owned subsidiary of the Fund, the financial results of the Subsidiary are included in the consolidated financial statements and financial highlights of the Fund. All investments held by the Subsidiary are disclosed in the Consolidated Schedule of Investments. The Fund may invest up to 25% of its total assets in the Subsidiary. The net assets of the Subsidiary at June 30, 2024 were $3,296,771, or 1.2% of the Fund’s consolidated net assets. The accompanying consolidated financial statements include the accounts of the Subsidiary. All inter-company accounts and transactions have been eliminated in consolidation.
2. Significant Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies.
Valuation of Investments: The Fund’s Board of Directors (the “Board”) has adopted procedures for the valuation of the Fund’s securities. The Adviser oversees the day to day responsibilities for valuation determinations under these procedures. The Board regularly reviews the application of these procedures to the securities in the Fund’s portfolio. The Adviser’s Valuation Committee is comprised of senior members of the Adviser’s management team.
2024 Semi-Annual Report | 55 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The Board has designated the Adviser as the valuation designee pursuant to Rule 2a-5 under the 1940 Act to perform fair value determination relating to any or all Fund investments. The Board oversees the Adviser in its role as the valuation designee in accordance with the requirements of Rule 2a-5 under the 1940 Act.
Investments in equity securities listed or traded on any securities exchange or traded in the over-the-counter market are valued at the last trade price as of the close of business on the valuation date. If the NYSE closes early, then the equity security will be valued at the last traded price before the NYSE close. Prices of foreign equities that are principally traded on certain foreign markets will generally be adjusted daily pursuant to a fair value pricing service approved by the Board in order to reflect an adjustment for the factors occurring after the close of certain foreign markets but before the NYSE close. When fair value pricing is employed, the value of the portfolio securities used to calculate the Fund’s net asset value (“NAV”) may differ from quoted or official closing prices. Investments in open-end registered investment companies, if any, are valued at the NAV as reported by those investment companies.
Debt securities, including U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities, are generally valued at the bid prices furnished by an independent pricing service or, if not valued by an independent pricing service, using bid prices obtained from active and reliable market makers in any such security or a broker-dealer. Valuations from broker-dealers or pricing services consider appropriate factors such as market activity, market activity of comparable securities, yield, estimated default rates, timing of payments, underlying collateral, coupon rate, maturity date, and other factors. Short-term debt securities with remaining maturities of sixty days or less are valued at amortized cost of discount or premium to maturity, unless such valuation, in the judgment of the Adviser’s Valuation Committee, does not represent fair value.
Bank Loans, Assignments, and Participations. Loans (including “Senior Loans” (as described below), delayed funding loans and revolving credit facilities) may be fixed-or floating-rate obligations. Loan interests may take the form of direct interests acquired during a primary distribution and may also take the form of assignments of, novations of or participations in a bank loan acquired in secondary markets. Senior floating rate loans may be made to or issued by U.S. or non-U.S. banks or other corporations (“Senior Loans”). Senior Loans include senior floating rate loans and institutionally traded senior floating rate debt obligations issued by asset-backed pools and other issuers, and interests therein. Loan interests may be acquired from U.S. or foreign commercial banks, insurance companies, finance companies or other financial institutions who have made loans or are members of a lending syndicate or from other holders of loan interests.
Senior Loans typically pay interest at rates which are re-determined periodically on the basis of a floating base lending rate (such as the London Inter-Bank Offered Rate, “LIBOR,” or a similar reference rate) plus a premium. Senior Loans are typically of below investment grade quality. Senior Loans generally (but not always) hold the most senior position in the capital structure of a borrower and are often secured with collateral. A Senior Loan is typically originated, negotiated and structured by a U.S. or foreign commercial bank, insurance company, finance company or other financial institution (an “Agent”) for a lending syndicate of financial institutions (“Lenders”). The Agent typically administers and enforces the Senior Loan on behalf of the other Lenders in the syndicate. In addition, an institution, typically but not always the Agent, holds any collateral on behalf of the Lenders.
Over-the-counter financial derivative instruments, such as forward currency contracts, options contracts, or swap agreements, derive their values from underlying asset prices, indices, reference rates, other inputs or a combination of these factors. These instruments are normally valued on the basis of evaluations provided by independent pricing services or broker dealer quotations. Depending on the instrument and the terms of the transaction, the value of the derivative instruments can be estimated by a pricing service provider using a series of techniques, such as simulation pricing models. The pricing models use issuer details and other inputs that are observed from actively quoted markets such as indices, spreads, interest rates, curves, dividends and exchange rates. Derivatives that use similar valuation techniques and inputs as described above are normally categorized as Level 2 of the fair value hierarchy.
56 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Securities for which market prices are not readily available, cannot be determined using the sources described above, or the Adviser’s Valuation Committee determines that the quotation or price for a portfolio security provided by a broker-dealer or an independent pricing service is inaccurate will be valued at a fair value determined by the Adviser’s Valuation Committee following the procedures adopted by the Adviser under the supervision of the Board. The Adviser’s valuation policy establishes parameters for the sources, methodologies, and inputs the Adviser’s Valuation Committee uses in determining fair value.
Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by the Adviser using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The Adviser reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on facts and circumstances known as of the valuation date and the application of valuation methodologies further described below. The fair value may also be based on a pending transaction expected to close after the valuation date. These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments in the future. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements.
The fair valuation methodology may include or consider the following guidelines, as appropriate: (1) evaluation of all relevant factors, including but not limited to, pricing history, current market level, supply and demand of the respective security; (2) comparison to the values and current pricing of securities that have comparable characteristics; (3) knowledge of historical market information with respect to the security; (4) other factors relevant to the security which would include, but not be limited to, duration, yield, fundamental analytical data, the Treasury yield curve, and credit quality. The fair value may be difficult to determine and thus judgment plays a greater role in the valuation process. Imprecision in estimating fair value can also impact the amount of unrealized appreciation or depreciation recorded for a particular portfolio security and differences in the assumptions used could result in a different determination of fair value, and those differences could be material. For those securities valued by fair valuations, the Adviser’s Valuation Committee reviews and affirms the reasonableness of the valuations based on such methodologies and fair valuation determinations on a regular basis after considering all relevant information that is reasonably available. There can be no assurance that the Fund could purchase or sell a portfolio security at the price used to calculate the Fund’s NAV.
A three-tier hierarchy has been established 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.
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.
The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
Level 1 | — | quoted prices in active markets for identical assets or liabilities | ||||
Level 2 | — | quoted prices in markets that are not active or other significant observable inputs (including, but not limited to: quoted prices for similar assets or liabilities, quoted prices based on recently executed transactions, interest rates, credit risk, etc.) | ||||
Level 3 | — | significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of assets or liabilities) |
2024 Semi-Annual Report | 57 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The following table summarizes the Fund’s investments valuation inputs categorized in the disclosure hierarchy as of June 30, 2024:
| Level 1 | Level 2 | Level 3 | Total | ||||||||
Corporate Credit |
|
|
|
| ||||||||
Senior Loans (Syndicated) | $ | — | $ | 91,713,559 | $ | 4,194,543 | $ | 95,908,102 | ||||
High Yield |
| — |
| 66,633,288 |
| 1,231,195 |
| 67,864,483 | ||||
Emerging Markets |
| — |
| 6,471,479 |
| — |
| 6,471,479 | ||||
Convertible Bonds |
| — |
| 1,422,401 |
| — |
| 1,422,401 | ||||
Investment Grade |
| — |
| 56,945 |
| — |
| 56,945 | ||||
Structured Credit |
|
|
|
| ||||||||
Collateralized Loan Obligations |
| — |
| 48,484,620 |
| — |
| 48,484,620 | ||||
Commercial Mortgage-Backed Securities |
| — |
| 12,636,238 |
| 258,805 |
| 12,895,043 | ||||
Residential Mortgage-Backed Securities |
| — |
| 8,570,799 |
| — |
| 8,570,799 | ||||
Asset-Backed Securities |
| — |
| 16,703,552 |
| 1,657,500 |
| 18,361,052 | ||||
Private Credit |
|
|
|
| ||||||||
Senior Loans |
| — |
| — |
| 51,729,948 |
| 51,729,948 | ||||
Preferred Stock |
| — |
| — |
| 2,355,744 |
| 2,355,744 | ||||
Common Stock |
| — |
| — |
| 241,380 |
| 241,380 | ||||
Warrants |
| — |
| — |
| 176,369 |
| 176,369 | ||||
Short-Term Investments |
|
|
|
| ||||||||
Money Market Fund |
| 3,935,261 |
| — |
| — |
| 3,935,261 | ||||
Total Investments | $ | 3,935,261 | $ | 252,692,881 | $ | 61,845,484 | $ | 318,473,626 | ||||
|
|
|
| |||||||||
Other Financial Instruments:(1) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Forward Currency Contracts | $ | — | $ | 592,523 | $ | — | $ | 592,523 | ||||
Futures Contracts |
| 33,477 |
| — |
| — |
| 33,477 | ||||
Unfunded Loan Commitments |
| — |
| — |
| 8,734 |
| 8,734 | ||||
Total | $ | 33,477 | $ | 592,523 | $ | 8,734 | $ | 634,734 | ||||
For further information regarding security characteristics, see the Consolidated Schedule of Investments.
____________
(1) Forward currency contracts, futures contracts and unfunded loan commitments are reflected at the net unrealized appreciation (depreciation) on the instruments.
The Fund used valuation approaches consistent with the income approach and market approach to determine fair value of certain Level 3 assets as of June 30, 2024. The valuation methodologies utilized by the Fund included discounted cash flows analysis, recent transaction analysis, market yield analysis and market comparable analysis and are described below.
The discounted cash flows analysis utilizes a discounted cash flow method that incorporates expected timing and level of cash flows, as well as assumptions in determining growth rates, income and expense projections, discount rates, capital structure, terminal values and other factors. The applicability and weight assigned to the income technique is determined based on the availability of reliable projections and comparable companies and transactions.
The recent transaction analysis utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable.
58 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The market yield analysis utilizes expected future cash flows, discounted using estimated current market rates. Discounted cash flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrowers. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral or the underlying value of the borrower, utilizing either the market or income techniques.
The market comparable analysis utilizes valuations of comparable public companies or transactions and generally seeks to establish the enterprise value of the portfolio company using a market multiple technique. This technique takes into account a specific financial measure (such as earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company. Consideration may also be given to such factors as acquisition price of the security, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company relative to its comparable companies, industry trends, general economic and market conditions and other factors deemed relevant. The applicability and weight assigned to the market technique is determined based on the availability of reliable projections and comparable companies and transactions.
The Fund may estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an enterprise value analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
The fair value of the Fund’s credit facility, which qualifies as a financial instrument under ASC Topic 825, Disclosures about Fair Values of Financial Instruments, approximates the carrying amount of $40,000,000 for the credit facility presented in the Consolidated Statement of Assets and Liabilities. As of June 30, 2024, this financial instrument is categorized as Level 2 within the disclosure hierarchy.
2024 Semi-Annual Report | 59 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The table below shows the significant unobservable valuation inputs that were used by the Adviser’s Valuation Committee to fair value the Level 3 investments as of June 30, 2024.
Quantitative Information about Level 3 Fair Value Measurement
Value as of June 30, | Valuation Approach | Valuation | Unobservable | Amount or | Impact to | ||||||||
Corporate Credit |
| ||||||||||||
Senior Loans | $ | 4,194,543 | Income | Discounted | Yield (Discount Rate | 10.0%-19.0% | Decrease | ||||||
High Yield | $ | 1,231,195 | Market | Discounted | Yield (Discount Rate | 12.0%-14.0% | Decrease | ||||||
Structured Credit |
| ||||||||||||
Commercial | $ | 258,805 | Market | Market | Market | $44.32 | Increase | ||||||
Asset-Backed | $ | 1,657,500 | Market | Market | Market | $97.50 | Increase | ||||||
Private Credit |
| ||||||||||||
Senior Loans | $ | 51,729,948 | Income | Discounted | Yield (Discount Rate | 8.0%-18.0% | Decrease | ||||||
| Market | Market | Market | $100.00 | Increase | ||||||||
| Market | Market | Earnings Multiple | 1.3x-1.8x | Increase | ||||||||
Preferred Stock | $ | 2,355,744 | Income | Discounted | Yield (Discount Rate | 14.0%-18.0% | Decrease | ||||||
Common Stock | $ | 241,380 | Market | Comparable | Earnings Multiple | 6x-8x(7x) | Increase | ||||||
Warrants | $ | 176,369 | Other | Black Scholes | Volatility | 50.0%-110.0% | Increase | ||||||
Total | $ | 61,845,484 | |||||||||||
____________
(1) The impact represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
60 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The following is a reconciliation of the assets in which significant unobservable inputs (Level 3) were used in determining fair value:
| Corporate | Structured | Private | Total | ||||||||||||
Balance as of December 31, 2023 | $ | 3,393,166 |
| $ | 272,728 |
| $ | 50,449,054 |
| $ | 54,114,948 |
| ||||
Accrued discounts (premiums) |
| 1,700 |
|
| 6,304 |
|
| 70,587 |
|
| 78,591 |
| ||||
Realized gain (loss) |
| 1,199 |
|
| — |
|
| (15,818 | ) |
| (14,619 | ) | ||||
Change in unrealized depreciation |
| (10,914 | ) |
| (20,227 | ) |
| (162,599 | ) |
| (193,740 | ) | ||||
Purchases at cost/corporate actions |
| 2,207,592 |
|
| 1,657,500 |
|
| 10,737,577 |
|
| 14,602,669 |
| ||||
Sales proceeds |
| (167,005 | ) |
| — |
|
| (8,208,268 | ) |
| (8,375,273 | ) | ||||
Transfers into Level 3 |
| — |
|
| — |
|
| 1,632,908 |
|
| 1,632,908 | (1) | ||||
Balance as of June 30, 2024 | $ | 5,425,738 |
| $ | 1,916,305 |
| $ | 54,503,441 |
| $ | 61,845,484 |
| ||||
Change in unrealized depreciation for Level 3 assets still held at the reporting date | $ | (5,339 | ) | $ | (16,249 | ) | $ | (93,218 | ) | $ | (114,806 | ) | ||||
____________
(1) Security transferred into Level 3 due to a decrease in observable inputs.
For further information regarding the security characteristics of the Fund, see the Consolidated Schedule of Investments.
Investment Transactions and Investment Income: Securities transactions are recorded on trade date. Realized gains and losses from securities transactions are calculated on the identified cost basis. Interest income is recorded on the accrual basis. Discounts and premiums on securities are accreted and amortized on a daily basis using the effective yield to maturity and yield to next methods, respectively and might be adjusted based on management’s assessment of the collectability of such interest. Dividend income is recorded on the ex-dividend date.
Foreign Currency Transactions: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not isolate the portion of gains or losses resulting from changes in foreign exchange rates on securities from the fluctuations arising from changes in market prices.
Reported net realized foreign exchange gains or losses arise from sales of securities, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid.
Expenses: Expenses directly attributable to the Fund are charged directly to the Fund, while expenses that are attributable to the Fund and other investment companies advised by the Adviser or its affiliates are allocated among the respective investment companies, including the Fund, based either upon relative average net assets, evenly, or a combination of average net assets and evenly.
Certain intermediaries such as banks, broker-dealers, financial advisers or other financial institutions charge a fee for sub-administration, sub-transfer agency and other shareholder services associated with shareholders whose shares are held in omnibus, other group accounts or accounts traded through registered securities clearing agents. The portion of this fee paid by the Fund is included within “Transfer agent fees” in the Consolidated Statement of Operations.
Distributions to Shareholders: The Fund declares and pays dividends quarterly from net investment income. To the extent these distributions exceed net investment income, they may be classified as return of capital. The Fund also pays distributions at least annually from its net realized capital gains, if any. Dividends and distributions are recorded on the ex-dividend date. All common shares have equal dividend and other distribution rights. A notice disclosing the source(s) of a distribution is provided after a payment is made from any source other than net investment income.
2024 Semi-Annual Report | 61 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
This notice is available on the Adviser’s website at https://www.brookfieldoaktree.com/fund/oaktree-diversified-income-fund-inc. Any such notice is provided only for informational purposes in order to comply with the requirements of Section 19(a) of the 1940 Act and not for tax reporting purposes. The tax composition of the Fund’s distributions for each calendar year is reported on IRS Form 1099-DIV.
Dividends from net investment income and distributions from realized gains from investment transactions have been determined in accordance with Federal income tax regulations and may differ from net investment income and realized gains recorded by the Fund for financial reporting purposes. These differences, which could be temporary or permanent in nature, may result in reclassification of distributions; however, net investment income, net realized gains and losses and net assets are not affected.
When Issued, Delayed Delivery Securities and Forward Commitments: The Fund may enter into forward commitments for the purchase or sale of securities, including on a “when issued” or “delayed delivery” basis, in excess of customary settlement periods for the type of security involved. In some cases, a forward commitment may be conditioned upon the occurrence of a subsequent event, such as approval and consummation of a merger, corporate reorganization or debt restructuring (i.e., a when, as and if issued security). When such transactions are negotiated, the price is fixed at the time of the commitment, with payment and delivery taking place in the future, generally a month or more after the date of the commitment. While it will only enter into a forward commitment with the intention of actually acquiring the security, the Fund may sell the security before the settlement date if it is deemed advisable. Securities purchased under a forward commitment are subject to market fluctuation, and no interest (or dividends) accrues to the Fund prior to the settlement date. The Fund will segregate with its custodian cash or liquid securities in an aggregate amount at least equal to the amount of its outstanding forward commitments.
Investments in Real Estate: The Fund may invest a portion of its assets in public and/or private debt investments and other real estate assets or real estate-related securities and obligations. The value of these debt investments and whether and to what extent such investments perform as expected will depend, in part, on the prevailing conditions in the market for real estate investment generally and, in particular, on the value of the underlying real estate asset collateral or real estate-related companies to which such debt investments relate. The real estate industry is cyclical in nature, and a deterioration of real estate fundamentals in the markets in which the Fund invests will have an adverse effect on the performance of the Fund’s investments. The value of real estate assets and real estate-related investments can fluctuate for various reasons. Real estate values can be seriously affected by interest rate fluctuations, changes in general and local economic conditions, bank liquidity, the availability of financing, changes in environmental and zoning laws, overbuilding and increased competition, changes in supply and demand fundamentals, an increase in property taxes, casualty or condemnation losses, bankruptcy or financial difficulty of a major tenant, regulatory limitations on rent, increased mortgage defaults and the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable. Reductions in value or cash flow could impair the Fund’s ability to make distributions to Common Shareholders, adversely impact its ability to effectively achieve its investment objective and reduce overall returns on investments.
Investments in Real Estate Loans: While the Fund intends to invest primarily in “performing” real estate debt securities, real estate loans underlying the securities acquired by the Fund may be non-performing at the time of their acquisition and/or may become non-performing following their acquisition for a wide variety of reasons. Such non-performing real estate loans may require a substantial amount of workout negotiations and/or restructuring, which may entail, among other things, a substantial reduction in the interest rate and a substantial writedown of the principal of such loan. However, even if a restructuring were successfully accomplished, a risk exists that, upon maturity of such real estate loan, replacement “takeout” financing will not be available. Purchases of participations in real estate loans raise many of the same risks as investments in real estate loans and also carry risks of illiquidity and lack of control.
Collateralized Loan Obligations (“CLOs”): The Fund may invest in CLOs and other securitizations, which are generally limited recourse obligations of the issuer (“Securitization Vehicles”) payable solely from the underlying assets (“Securitization Assets”) of the issuer or proceeds thereof. Holders of equity or other securities issued by Securitization Vehicles must rely solely on distributions on the Securitization Assets or proceeds thereof for payment in respect thereof. Consequently, the Fund will typically not have any direct rights against the issuer of, or the entity that sold, assets underlying the securitization. The Securitization Assets may include, without limitation, broadly
62 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
syndicated leverage loans, middle-market bank loans, CDO debt tranches, trust preferred securities, insurance surplus notes, asset-backed securities, mortgages, REITs, high-yield bonds, mezzanine debt, second-lien leverage loans, credit default swaps and emerging market debt and corporate bonds, which are subject to liquidity, market value, credit, interest rate, reinvestment and certain other risks.
New Accounting Pronouncements: In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, Reference Rate Reform (Topic 848) — Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
3. Derivative Financial Instruments
The Fund may purchase and sell derivative instruments such as exchange-listed and over-the counter put and call options on securities, financial futures, equity, fixed-income and interest rate indices, and other financial instruments. It may purchase and sell financial futures contracts and options thereon. Moreover, the Fund may enter into various interest rate transactions such as swaps, caps, floors or collars and enter into various currency transactions such as forward currency contracts, currency futures contracts, currency swaps or options on currency or currency futures or credit transactions and credit default swaps. The Fund may also purchase derivative instruments that combine features of several of these instruments. The Fund may invest in, or enter into, derivatives for a variety of reasons including to hedge certain market risks, to provide a substitute for purchasing or selling particular securities or to increase potential income gain.
Forward Currency Contracts: A forward currency contract (“forward contract”) is an agreement between two parties to buy or sell a currency at an agreed upon price for settlement at a future date. During the period the forward contract is in existence, changes in the value of the forward contract will fluctuate with changes in the currency exchange rates. The forward contract is marked to market daily and these changes are recorded as an unrealized gain or loss. Gain or loss on the purchase or sale of a forward contract is realized on the settlement date.
The Fund invests in forward contracts to hedge against fluctuations in the value of foreign currencies caused by changes in the prevailing currency exchange rates. The use of forward contracts involves the risk that the counterparties may be unable to meet the terms of their contracts and may be negatively impacted from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
The average quarterly U.S. dollar value of forward currency contracts to be delivered or received during the six months ended June 30, 2024 was $57,266,843, which represents the volume of activity during the period.
Financial Futures Contracts: A futures contract is an agreement between two parties to buy and sell a financial instrument for a set price on a future date. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking-to-market” on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin payments are made or received, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract.
The Fund invests in financial futures contracts to hedge against fluctuations in the value of portfolio securities caused by changes in prevailing market interest rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. The Fund is at risk that it may not be able to close out a transaction because of an illiquid market.
The average quarterly notional value of futures contracts outstanding during the six months ended June 30, 2024 was $8,610,708, which represents the volume of activity during the period.
2024 Semi-Annual Report | 63 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
Credit Default Swap Agreements: Credit default swap agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller (if any), coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. When the Fund acts as a seller of a credit default swap, it is exposed to many of the same risks of leverage described herein since if an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation.
Although the Fund may seek to realize gains by selling credit default swaps that increase in value, to realize gains on selling credit default swaps, an active secondary market for such instruments must exist or the Fund must otherwise be able to close out these transactions at advantageous times. In addition to the risk of losses described above, if no such secondary market exists or the Fund is otherwise unable to close out these transactions at advantageous times, selling credit default swaps may not be profitable for the Fund.
The Fund did not have any swap contracts outstanding during the six months ended June 30, 2024.
The following table sets forth the fair value of the Fund’s derivative instruments:
Derivatives | Consolidated Statement of Assets and Liabilities | Value as of June 30, | |||
Forward currency contracts | Unrealized appreciation on forward currency contracts (assets) | $739,642 |
| ||
Forward currency contracts | Unrealized depreciation on forward currency contracts (liabilities) | (147,119 | ) | ||
Futures contracts | Payable for variation margin (liabilities) | (8,438 | ) | ||
The following table sets forth the effect of derivative instruments on the Consolidated Statement of Operations for the six months ended June 30, 2024:
Derivatives | Location of Gains (Losses) on | Net Realized Loss | Net Change in | |||
Forward currency contracts | Forward currency contracts | $(427,161) | $1,538,287 | |||
Futures contracts | Futures contracts | (190,823) | 33,477 |
The Fund has not offset derivative assets and liabilities or financial assets, including cash, that may be received or paid as part of collateral arrangements. There is no enforceable master netting agreement in place that provides the Fund, in the event of counterparty default, the right to liquidate collateral and the right to offset a counterparty’s rights and obligations.
Below is the gross and net information about instruments and transactions eligible for offset in the Consolidated Statement of Assets and Liabilities as well as instruments and transactions subject to an agreement similar to a master netting arrangement as of June 30, 2024:
Collateral | ||||||||||||
| Gross Amounts | Gross | Net Amounts | Non-Cash Collateral (Pledged) Received | Collateral Pledged (Received) | Net Amount | ||||||
Assets: | ||||||||||||
Forward currency contracts | $739,642 | $ — | $739,642 | $ — | $ — | $739,642 | ||||||
Liabilities: | ||||||||||||
Forward currency contracts | $147,119 | $ — | $(147,119) | $ — | $ — | $(147,119) | ||||||
64 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
4. Investment Advisory Agreement and Transactions with Related Parties
The Fund has entered into an Investment Advisory Agreement (the “Advisory Agreement”) with the Adviser under which the Adviser is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. The Advisory Agreement provides that the Fund shall pay the Adviser a monthly fee for its services at an annual rate of 1.25% of the Fund’s average daily net assets plus the amount of borrowing for investment purposes (“Managed Assets”).
Pursuant to an operating expense limitation agreement (the “Expense Limitation Agreement”), the Adviser has contractually agreed to waive all or a portion of its investment advisory fees and/or to reimburse certain expenses of the Fund, including organizational expenses and offering costs, to the extent necessary to maintain the Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement (excluding any front-end or contingent deferred sales loads, brokerage commissions and other transactional expenses, acquired fund fees and expenses, interest (including, “Interest Payments on Borrowed Funds”), taxes, and extraordinary expenses, such as litigation; and other expenses not incurred in the ordinary course of the Fund’s business) at no more than 2.10% for Class D shares and 2.85% for Class T shares. The Expense Limitation Agreement will continue until at least April 30, 2025 and may not be terminated by the Fund or the Adviser before such time. Thereafter, the Expense Limitation Agreement may only be terminated or amended to increase the expense cap, provided that in the case of a termination by the Adviser, the Adviser will provide the Board with written notice of its intention to terminate the arrangement prior to the expiration of its then current term. Any waivers and/or reimbursements made by the Adviser are subject to recoupment from the Fund for a period not to exceed three years after the occurrence of the waiver and/or reimbursement, provided that the Fund may only make repayments to the Adviser if such repayment does not cause the Fund’s expense ratio (after the repayment is taken into account) to exceed the lesser of: (1) the expense cap in place at the time such amounts were waived; and (2) the Fund’s current expense cap.
The amount of investment advisory fees waived and/or expenses reimbursed available to be recouped before expiration is $49,066 which will expire during the fiscal year ending December 31, 2026. For the six months ended June 30, 2024, the Adviser recouped previously waived eligible expenses of $214,416 which is reflected on the Fund’s Consolidated Statement of Operations.
The Fund has entered into an administration agreement (“Administration Agreement”) with the Administrator and a sub-administration agreement with U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Sub-Administrator”). The Administrator and the Sub-Administrator perform administrative services necessary for the operation of the Fund, including maintaining certain books and records of the Fund and preparing reports and other documents required by federal, state and other applicable laws and regulations, and providing the Fund with administrative office facilities. The Adviser is responsible for any fees due to the Administrator and the Fund is responsible for any fees due to the Sub-Administrator.
Certain officers and/or directors of the Fund are officers and/or employees of the Administrator.
5. Purchases and Sales of Investments
For the six months ended June 30, 2024, purchases and sales of investments (including principal payups and paydowns), excluding short-term securities and U.S. government securities, were $108,120,838 and $52,984,025, respectively.
For the six months ended June 30, 2024, there were no purchases and sales of long-term U.S. Government securities.
6. Credit Facility
The Fund has established a Senior Secured Revolving Credit Facility (the “Credit Facility”) in the aggregate principal amount of up to $75,000,000 with Sumitomo Mitsui Banking Corporation (“Sumitomo”) for investment purposes subject to the limitations of the 1940 Act for borrowings by registered investment companies. The Credit Facility stated maturity date is December 31, 2025. The Fund pays interest in the amount of the Secured Overnight Financing Rate plus 1.25%
2024 Semi-Annual Report | 65 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
on the Credit Facility outstanding if the borrowing is a Eurodollar Loan as defined in the Credit Facility agreement, or the highest of (i) Sumitomo prime rate as announced by Sumitomo in New York City, (ii) the sum of (x) the Federal Funds Rate plus (y) 1.00%, and (iii) the sum of (x) the London interbank market with a one (1) month maturity plus (y) 1.00%, (“Base Rate”) plus 0.25% if the borrowing is a Base Rate Loan as defined in the Credit Facility agreement on the Credit Facility outstanding. The Fund also pays an unused commitment fee of 0.35% on the Credit Facility that is unused. For the six months ended June 30, 2024, the Fund amortized $76,032 in deferred debt issuance costs and is included in the interest expense on credit facility line on the Fund’s Consolidated Statement of Operations.
As of June 30, 2024, the Fund had outstanding borrowings of $40,000,000. For the six months ended June 30, 2024, the components of interest and unused commitment fees expense, average stated interest rates (i.e., rate in effect plus the spread) and average outstanding balances for the Credit Facility were as follows:
Stated interest expense | $ | 1,277,726 |
| |
Unused commitment fees |
| 70,437 |
| |
Amortization of debt issuance costs |
| 76,032 |
| |
Total interest expense and credit facility fees | $ | 1,424,195 |
| |
Average stated interest rate |
| 7.18 | % | |
Average outstanding balance | $ | 35,192,308 |
|
According to terms of the Credit Facility agreement, the Fund is required to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation, covenants related to maintaining a ratio of total assets (less total liabilities other than senior securities representing indebtedness) to senior securities representing indebtedness of the Fund of not less than 300%. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of June 30, 2024, the Fund was in compliance with the terms of the Credit Facility.
7. Capital Shares
The Fund is authorized to issue up to 1,000,000,000 shares of common stock, $0.001 par value per share, 500,000,000 of which have been classified as Class D shares and 500,000,000 of which have been classified as Class T shares (collectively, “Shares” and respectively, “Class D shares” and “Class T shares”). As of June 30, 2024, the Adviser owned 59% of the shares outstanding of Class D shares. The Board may, without any action by the shareholders, amend the Charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series that the Fund has authority to issue under the Charter and the 1940 Act. In addition, the Charter authorizes the Board, without any action by the shareholders, to classify and reclassify any unissued common shares and preferred stock into other classes or series of shares from time to time by setting or changing the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption for each class or series. Although the Fund has no present intention of doing so, it could issue a class or series of shares that could delay, defer or prevent a transaction or a change in control of the Fund that might otherwise be in the shareholders’ best interests. Under Maryland law, shareholders generally are not liable for the Fund’s debts or obligations.
All common shares offered will be, upon issuance, duly authorized, fully paid and nonassessable. Holders of common shares are entitled to receive distributions when authorized by the Board and declared by the Fund out of assets legally available for the payment of distributions. Holders of common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of the Fund’s securities. All common shares have equal distribution, liquidation and other rights. The Fund may offer multiple classes of common shares, which may be subject to differing fees and expenses. Distributions may vary among the classes as a result of the different fee structure of the classes.
66 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
8. Repurchase Offers
As a continuously offered, closed-end interval fund, the Fund has adopted a fundamental investment policy to make offers to repurchase Shares in order to provide liquidity to shareholders. No shareholder will have the right to require the Fund to repurchase its Shares, except as permitted by the Fund’s Interval Fund structure. No public market for the Shares exists, and none is expected to develop in the future. Consequently, shareholders generally will not be able to liquidate their investment other than as a result of repurchases of their Shares by the Fund, and then only on a limited basis.
The Fund has adopted, pursuant to Rule 23c-3 under the 1940 Act, a fundamental policy, which cannot be changed without shareholder approval, requiring the Fund to offer to repurchase at least 5% and up to 25% of its Shares at NAV on a quarterly basis.
During the six months ended June 30, 2024, the Fund completed two quarterly repurchase offers in which the Fund offered to repurchase up to 10% of its outstanding shares. The result of the repurchase offers were as follows:
| Repurchase Offer #1 | Repurchase Offer #2 | ||
Commencement Date | January 8, 2024 | April 8, 2024 | ||
Repurchase Request Deadline | February 12, 2024 | May 13, 2024 | ||
Repurchase Pricing Date | February 12, 2024 | May 13, 2024 | ||
Dollar Amount Repurchased | $868,825 | $1,394,735 | ||
Shares Repurchased | 96,644 | 153,436 |
9. Federal Income Tax Information
The Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income or excise tax provision is required. The Fund may incur an excise tax to the extent it has not distributed all of its taxable income on a calendar year basis.
GAAP provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. An evaluation of tax positions taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the taxing authority is required. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be booked as a tax expense in the current year and recognized as: a liability for unrecognized tax benefits; a reduction of an income tax refund receivable; a reduction of a deferred tax asset; an increase in a deferred tax liability; or a combination thereof. As of December 31, 2023, the Fund has determined that there are no uncertain tax positions or tax liabilities required to be accrued.
The Fund has reviewed the taxable years open for examination (i.e. not barred by the applicable statute of limitations) by taxing authorities of all major jurisdictions, including the Internal Revenue Service. As of December 31, 2023, open taxable periods consisted of the taxable periods ended December 31, 2021, December 31, 2022 and December 31, 2023. No examination of the Fund’s tax returns is currently in progress.
Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
The federal income tax information referenced below is as of the Fund’s most recently completed tax year-end of December 31, 2023.
2024 Semi-Annual Report | 67 |
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
The tax character of distributions paid for the year ended December 31, 2023 shown below were as follows:
Year Ended | |||
Ordinary income | $ | 15,645,010 | |
Total | $ | 15,645,010 | |
At December 31, 2023, the Fund’s most recently completed tax year-end, the components of net assets (excluding paid-in capital) on a tax basis were as follows:
Capital loss carryforwards(1) | $ | (4,395,889 | ) | |
Late year ordinary losses |
| (1,097,923 | ) | |
Other accumulated gains |
| 18,656 |
| |
Tax basis unrealized depreciation on investments and foreign currency |
| (10,453,914 | ) | |
Total tax basis net accumulated losses | $ | (15,929,070 | ) |
____________
(1) To the extent that future capital gains are offset by capital loss carryforwards, such gains will not be distributed.
The Fund deferred, on a tax basis, late year ordinary losses of $1,097,923.
As of December 31, 2023, the Fund had short-term and long-term capital loss carryforwards of $2,645,116 and $1,750,773, respectively. The capital loss carryforwards will not expire.
Federal Income Tax Basis: The federal income tax basis of the Fund’s investments, not including foreign currency translations, at December 31, 2023 was as follows:
Cost of Investments | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Depreciation | |||
$275,528,036 | $4,512,189 | $(14,966,103) | $(10,453,914) |
Capital Account Reclassifications: Because federal income tax regulations differ in certain respects from GAAP, income and capital gain distributions, if any, determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. These differences are primarily due to differing treatments for Section 988 currency. Permanent book and tax differences, if any, will result in reclassifications to paid-in capital or to undistributed capital gains. These reclassifications have no effect on net assets or NAV per share. Any undistributed net income and realized gain remaining at fiscal year end is distributed in the following year.
10.Indemnifications, Commitments and Contingencies
Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts with its vendors and others that provide for indemnification. The Fund’s maximum exposure under these arrangements is unknown, since this would involve the resolution of certain claims, as well as future claims that may be made, against the Fund. Thus, an estimate of the financial impact, if any, of these arrangements cannot be made at this time. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be unlikely.
In conjunction with the ownership of senior loans, the Fund is party to certain credit agreements, which may require the Fund to extend additional loans to investee companies. Commitments to extend credit include loan proceeds the Fund is obligated to advance, such as delayed draws or revolving credit arrangements. Commitments generally have fixed expiration dates or other termination clauses. Unrealized gains or losses associated with unfunded commitments are recorded in the consolidated financial statements and reflected as an adjustment to the fair value of the related security in the Consolidated Schedule of Investments. The par amount of the unfunded commitments
68 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. June 30, 2024 |
is not recognized by the Fund until it becomes funded. The Fund uses the same investment criteria in making these commitments as it does in making investments. The unfunded liability associated with these credit agreements is equal to the amount by which the contractual loan commitment exceeds the sum of the amount of funded debt and cash held in escrow, if any.
11.Subsequent Events
GAAP requires recognition in the financial statements of the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Consolidated Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made.
The Fund completed a quarterly repurchase offer in which the Fund offered to repurchase up to 10% of its outstanding shares on August 12, 2024. The result of the repurchase offer was as follows:
Repurchase Offer | ||
Commencement Date | July 8, 2024 | |
Repurchase Request Deadline | August 12, 2024 | |
Repurchase Pricing Date | August 12, 2024 | |
Dollar Amount Repurchased | $16,577,496 | |
Shares Repurchased | 1,813,730 |
Management has evaluated subsequent events in the preparation of the Fund’s financial statements and has determined that there are no additional events that require recognition or disclosure in the financial statements.
2024 Semi-Annual Report | 69 |
The stockholders of Oaktree Diversified Income Fund Inc. voted on the following proposals at a special meeting of stockholders held on Thursday, June 20, 2024, at 8:00 a.m., Eastern Time. The description of the proposal and number of shares voted are as follows:
Shares | Shares | Shares | |
1.1 To elect to the Fund’s Board of Directors Betty A. Whelchel, as an Independent Director Nominee | 22,253,381 | 971,477 | 26,384 |
1.2 To elect to the Fund’s Board of Directors Brian F. Hurley, as an Interested Director Nominee | 23,227,624 | — | 23,618 |
70 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. |
The Board of Directors (the “Board,” the members of which are referred to as “Directors”) of Oaktree Diversified Income Fund Inc. (the “Fund”), including the Directors who are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Directors”), of the Fund, considered and approved the continuation of the Investment Advisory Agreement (the “Advisory Agreement”) between the Fund and Oaktree Fund Advisors, LLC (the “Adviser” or “Oaktree”) for a successive one-year period at an in-person meeting held on May 22-23, 2024 (the “Meeting”).
In accordance with Section 15(c) of the 1940 Act, the Board requested, and Oaktree provided, materials relating to the Board’s consideration of whether to approve the continuation of the Advisory Agreement for the Fund. These materials included, among other things: (a) a summary of the services provided to the Fund by Oaktree; (b) information independently compiled and prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent third-party provider of mutual fund data, on fees and expenses of the Fund, as compared with a peer group and/or peer universe of funds, as applicable; (c) information on the profitability of Oaktree; (d) information about Oaktree’s general compliance policies and procedures and the services that it provides; (e) any “fall-out” benefits to Oaktree (i.e., ancillary benefits realized by Oaktree from its relationship with the Fund); (f) information relating to economies of scale; (g) information on Oaktree’s risk management processes; (h) information regarding brokerage and soft dollar practices; and (i) information about the key personnel of Oaktree who are involved in the investment management, administration, compliance and risk management activities with respect to the Fund, as well as current and projected staffing levels and compensation practices. In determining whether to approve the Advisory Agreement, the Board, including the Independent Directors considered a series of factors, to the extent applicable, including the role of Brookfield Public Securities Group LLC (“Brookfield”) as the Fund’s administrator.
In determining whether to approve the continuation of the Advisory Agreement, the Board, including the Independent Directors, considered at the Meeting, and from time to time, as appropriate, factors that it deemed relevant. The following discusses the primary factors relevant to the Board’s decision.
THE NATURE, EXTENT AND QUALITY OF THE SERVICES TO BE PROVIDED BY THE ADVISER. In considering the nature, extent and quality of the services provided by the Adviser to the Fund, the Board considered the responsibilities that the Adviser had to the Fund, including the provision of investment advisory services to the Fund, compliance with the Fund’s investment objectives and strategies, review of brokerage matters including with respect to trade allocation and best execution, oversight of general fund compliance with federal and state laws, and the implementation of Board directives as they relate to the Fund. The Board also considered the Adviser’s risk assessment and monitoring process, and the Adviser’s current level of staffing and its overall resources, as well as information regarding its investment personnel who provide services to the Fund. The Board also considered the personnel responsible for providing advisory services to the Fund and other key personnel of Oaktree, in addition to the current and projected staffing levels and compensation practices. The Board concluded, based on the Directors’ experience and interaction with Oaktree, that: (i) Oaktree would continue to be able to retain high quality personnel; (ii) Oaktree has exhibited a high level of diligence and attention to detail in carrying out its advisory and other responsibilities under the Advisory Agreement; (iii) Oaktree and Brookfield have been responsive to requests of the Board; and (iv) Oaktree and Brookfield have kept the Board apprised of developments relating to the Fund and the industry in general. The Board also considered Oaktree’s investment process and philosophy, as well as its responsibilities that include the development and maintenance of an investment program for the Fund that is consistent with the Fund’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services.
Additionally, the Board observed that pursuant to administration agreement with the Fund (the “Administration Agreement”), Brookfield, an indirect wholly-owned subsidiary of Brookfield Asset Management ULC, provides administrative services reasonably necessary for the Fund’s operations, other than those services that the Adviser provides to the Fund pursuant to the Advisory Agreement, including, among other responsibilities, the preparation and coordination of reports and other materials to be supplied to the Board; prepare and/or supervise the preparation and filing with the applicable regulatory authority of all securities filings, periodic financial reports, prospectuses, statements of additional information, marketing materials, tax returns, shareholder reports and other regulatory reports and filings required of the Fund; supervise and monitor the preparation of all required filings necessary to maintain the Fund’s qualification and/or registration to sell shares in all states where the Fund currently does, or intends to do business; coordinate the preparation, printing and mailing of all materials required to be sent
2024 Semi-Annual Report | 71 |
OAKTREE DIVERSIFIED INCOME FUND INC. |
to shareholders; coordinate the preparation and payment of Fund-related expenses; monitor and oversee the activities of the Fund’s other service providers; review and adjust as necessary the Fund’s daily expense accruals; monitor daily, monthly and periodic compliance with respect to the federal and state securities laws; send periodic information (i.e., performance figures) to service organizations that track investment company information; and perform such additional services as may be agreed upon by and among the Fund, Brookfield and Oaktree. The Board also noted that although Brookfield does not receive any compensation from the Fund under the Administration Agreement, Brookfield may receive compensation for its administrative services to the Fund from the Adviser out of its management fees. The Board also observed that Brookfield is responsible for the coordination and oversight of the Fund’s third-party service providers. As a result, in addition to the quality of the advisory services provided by Oaktree pursuant to the Advisory Agreement, the Board also considered the quality of the administrative and other services provided by Brookfield to the Fund pursuant to the Administration Agreement. In connection with the administrative services provided by Brookfield, the Board analyzed the structure and duties of Brookfield’s fund administration and accounting, operations and its legal and compliance departments to determine whether they are adequate to meet the needs of the Fund.
The Board’s conclusion was based, in part, upon the following: (i) a comprehensive description of the investment advisory and other services provided to the Fund; (ii) a list of personnel who furnish such services and a description of their duties and qualifications; (iii) performance data with respect to the Fund, including comparable investment companies and accounts managed by Oaktree; (iv) standardized industry performance data with respect to comparable investment companies and the performance of appropriate recognized indices; (v) recent financial statements of Oaktree and Brookfield; (vi) Oaktree’s and Brookfield’s culture of compliance and their commitment to compliance generally, as well as their risk management processes and attention to regulatory matters; and (vii) Oaktree’s reputation and its experience serving as an investment adviser and the experience of the team of portfolio managers that manage the Fund, as well as its experience serving as an investment adviser to other investment fund and institutional clients. The Board also reviewed Oaktree’s compliance and regulatory history and noted that there were no material regulatory or compliance issues that would potentially impact Oaktree from effectively serving as the investment adviser to the Fund. The Board concluded that the nature, extent and quality of the overall services provided under the Advisory Agreement, as well as the administrative services provided by Brookfield, were reasonable and appropriate in relation to the management fees and that the quality of services continues to be high.
THE PERFORMANCE OF THE FUND AND THE ADVISER. The Board, including the Independent Directors, also considered the investment performance of the Fund. The Board noted that it regularly reviews the performance of the Fund throughout the year. The Board further noted that, while it monitors performance of the Fund closely, performance information for the Fund is limited because the Fund has been in operation for just over one year. The Board considered the investment performance of the Fund in view of its importance to shareholders. In connection with this review, the Board received information regarding the investment performance of the Fund as compared to a group of funds with investment classifications and/or objectives comparable to those of the Fund (“Peer Universe”) and to an appropriate index or combination of indices identified by Broadridge (the “Broadridge Index”), as well as a focused peer group identified by Brookfield (“Peer Group”) and the Fund’s benchmark index (the “Benchmark Index”). At the Meeting, management also discussed the methodology used by Oaktree to select the funds included in the Peer Group. The performance information was presented for the periods ended March 31, 2024.
Oaktree Diversified Income Fund. The Board noted that the Fund’s performance was below the median of its Peer Universe for the one-year period (fourth quintile) and was above the median for the since inception period (third quintile). The Board further noted that the Fund outperformed its Broadridge Index for the one-year period and since inception period. In addition, the Board considered that the Fund’s performance was below the median of its Peer Group for the quarter ended March 31, 2024, below the median of its Peer Group for the one-year period, and below the median since inception. Finally, the Board noted that the Fund outperformed its Benchmark Index for the quarter ended March 31, 2024, and underperformed its Benchmark Index for the one-year and since inception periods.
THE COST OF THE ADVISORY SERVICES, AND THE PROFITABILITY TO THE ADVISER AND ITS AFFILIATES FROM THEIR RELATIONSHIP WITH THE FUND. The Board also received information regarding the management fees to be paid by the Fund to Oaktree pursuant to the Advisory Agreement. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of services to be provided and any potential additional benefits to be received by Oaktree, Brookfield or their affiliates in connection with providing such services to the Fund.
72 |
|
OAKTREE DIVERSIFIED INCOME FUND INC. |
To assist in analyzing the reasonableness of the management fees for the Fund, the Board received reports independently prepared by Broadridge. The reports showed comparative fee and expense information for the Fund’s expense group (“Expense Group”) and expense universe (“Expense Universe”), including rankings within each category, as determined by Broadridge. Brookfield identified the funds eligible for inclusion in the Expense Group. In considering the reasonableness of the management fees to be paid by the Fund to Oaktree, the Board was presented with a number of expense comparisons, including: (i) contractual and actual management fees; and (ii) actual total operating expenses. In considering the Fund’s total operating expenses, the Board also considered the level of fee waivers and expense reimbursements, as applicable, and the net expense caps contractually agreed upon by Oaktree with respect to the Fund. The Board acknowledged that it was difficult to make precise comparisons with other funds in the Expense Group and Expense Universe since the exact nature of services provided under the various fund agreements is often not apparent. The Board noted, however, that the comparative fee information provided by Broadridge as a whole was useful in assessing whether Oaktree was providing services at a cost that was competitive with other, similar funds. The Fund’s fee and expense rankings are discussed below relative to the median of the applicable expense grouping. In reviewing the expense rankings, the Board noted that a fund with fees and expenses that were below the median had fees and expenses that were less than the median fees and expenses of its peer group, while a fund with fees and expenses that were above the median had fees and expenses that were higher than the median fees and expenses of its peer group. The fund with the lowest expenses is ranked first and the fund with the highest expenses is ranked last within the applicable expense grouping.
Oaktree Diversified Income Fund. The Board considered and took note of the following with respect to the Fund: (i) the Fund’s contractual management fees at common asset levels ($250 million) were at the median of its Expense Group (ranked 3/5); (ii) the Fund’s actual total expenses for common and leveraged assets were below the median of its Expense Group (ranked 1/5) and above the median of its Expense Universe (ranked 45/65); (iii) the Fund’s actual total expenses for only common assets were below the median of its Expense Group (ranked 1/5) and Expense Universe (ranked 32/65); (iv) the Fund’s actual total expenses (excluding investment related expenses and taxes) for common and leveraged assets were at the median of its Expense Group (ranked 3/5) and above the median of the Expense Universe (ranked 65/65); (v) the Fund’s actual total expenses (excluding investment related expenses and taxes) for only common assets were below the median of its Expense Group (ranked 1/5) and above the median of the Expense Universe (ranked 58/65); (vi) the Fund’s actual management fees for common and leveraged assets were at the median of its Expense Group (ranked 3/5) and above the median of its Expense Universe (ranked 62/65); (vii) the Fund’s actual management fees for only common assets were below the median of its Expense Group (ranked 1/5) and above the median of the Expense Universe (ranked 50/65); (viii) the Fund’s actual non-management expenses for common and leveraged assets were above the median of its Expense Group (ranked 5/5) and Expense Universe (ranked 58/65); (ix) the Fund’s investment related expenses and taxes for common and leveraged assets were below the median of its Expense Group (ranked 1/5) and Expense Universe (ranked 9/65); (x) the Fund’s investment related expenses and taxes for only common assets were below the median of its Expense Group (ranked 1/5) and Expense Universe (ranked 4/65).
The Board was also asked to consider the management fees received by Oaktree with respect to other funds and accounts with similar investment strategies to the Fund, which include institutional and separately managed accounts. In comparing these fees, the Board considered certain differences between these accounts and the Fund, including the broader and more extensive scope of services provided to the Fund in comparison to institutional or separately managed accounts; the greater financial, regulatory and reputational risks in managing the Fund; and the impact on Oaktree and expenses associated with the more extensive regulatory regime to which the Fund is subject as compared to institutional or separately managed accounts.
The Board also considered Oaktree’s profitability and the benefits Oaktree and its affiliates received from its relationship with the Fund. Firstly, the Board noted that the Adviser had entered into a contractual expense limitation waiver for the Fund, in order to limit the Fund’s net operating expenses. The Board then reviewed Oaktree’s financial information and considered whether Oaktree had the financial resources necessary to attract and retain high quality investment management personnel and to provide a high quality of services. Additionally, the Board considered the reasonableness of the management fees payable under the Advisory Agreement and took into account that the fees were consistent with management fees that Oaktree charged to comparable funds.
2024 Semi-Annual Report | 73 |
OAKTREE DIVERSIFIED INCOME FUND INC. |
The Board concluded that Oaktree and Brookfield had the financial resources necessary to perform their obligations under the Advisory Agreement and the Administration Agreement, respectively, and to continue to provide the Fund with the high quality services provided in the past. The Board also concluded that the management fees were reasonable in light of the factors discussed above.
THE EXTENT TO WHICH ECONOMIES OF SCALE WILL BE REALIZED AS THE FUND GROWS AND WHETHER FEE LEVELS REFLECT THOSE ECONOMIES OF SCALE. The Board, including the Independent Directors, considered whether shareholders would benefit from economies of scale and whether there was potential for future realization of economies with respect to the Fund. The Board considered that as a result of being part of the Brookfield Fund Complex, the constituent funds, including the Fund, share common resources and may share certain expenses, and if the size of the complex increases, the Fund could incur lower expenses than it otherwise would achieve as a stand-alone entity. The Board noted, however, that although shareholders might benefit from lower operating expenses as a result of an increasing amount of assets spread over the fixed expenses of the Fund’s expense limitation agreement with the Adviser served to limit the Fund’s expenses until the Fund had the opportunity to grow its assets. The Board concluded that the management fee structure was reasonable in light of the factors discussed above.
OTHER FACTORS. In consideration of the Advisory Agreement, the Board also received information regarding Oaktree’s brokerage and soft dollar practices. The Board noted that, although Oaktree currently does not have any soft dollar arrangement in place, it follows the soft dollar practices and record keeping rules as promulgated under Section 28(e) of the Securities Exchange Act of 1934, as amended, and Rule 204-2 of the Investment Advisers Act of 1940, as amended. The Board considered that Oaktree is responsible for decisions to buy and sell securities for the Fund, selection of broker-dealers and negotiation of commission rates. The Board noted that it receives reports from Brookfield that include information on brokerage commissions and execution throughout the year. The Board then considered other benefits that may be realized by Oaktree from its relationship with both Brookfield and the Fund. Among them, the Board recognized the opportunity to provide advisory services to additional funds and accounts and the reputational benefits. The Board also considered that Oaktree and Brookfield manage their investment operations independently of each other subject to an information barrier between the firms. The Board concluded that the benefits that may accrue to the Adviser by virtue of the Adviser’s relationship to the Fund were fair and reasonable in light of the costs of providing investment advisory services to the Fund and the ongoing commitment of Brookfield and Oaktree to the Fund.
74 |
|
The Fund intends to distribute substantially all of its net investment income to shareholders in the form of dividends. The Fund intends to declare and pay distributions quarterly from net investment income. In addition, the Fund intends to distribute any net capital gains earned from the sale of portfolio securities to shareholders no less frequently than annually. Net short-term capital gains may be paid more frequently. Unless Common Shareholders specify otherwise, dividends will be reinvested in Shares of the Fund in accordance with the Fund’s dividend reinvestment plan. The Fund may pay distributions from sources that may not be available in the future and that are unrelated to the Fund’s performance, such as from offering proceeds and/or borrowings.
The Fund has adopted a Dividend Reinvestment Plan (the “Plan”) that provides that, unless Common Shareholders elect to receive their distributions in cash, they will be automatically reinvested by U.S. Bancorp Fund Services, LLC (the “Plan Administrator”), in additional Shares. If Common Shareholders elect to receive distributions in cash, they will receive them paid by check mailed directly to them by the Plan Administrator. The Plan Administrator can be contacted through mail by writing to U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or by phone at 1-855-862-5873.
Shares received under the Plan will be issued to Common Shareholders at their NAV on the ex-dividend date; there is no sales or other charge for reinvestment. Common Shareholders are free to withdraw from the Plan and elect to receive cash at any time by giving written notice to the Plan Administrator or by contacting the broker or dealer, who will inform the Fund.
The Plan Administrator provides written confirmation of all transactions in the shareholder accounts in the Plan, including information Common Shareholders may need for tax records. Any proxy Common Shareholders receive will include all Shares received under the Plan.
Automatically reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions.
The Fund and the Plan Administrator reserve the right to amend or terminate the Plan. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. If the Plan is amended to include such service charges, the Plan Administrator will include a notification to registered holders of Shares with the Plan Administrator.
Additional information about the Plan may be obtained from the Plan Administrator.
2024 Semi-Annual Report | 75 |
Brookfield Public Securities Group LLC (“PSG”), on its own behalf and on behalf of the funds managed by PSG and its affiliates, recognizes and appreciates the importance of respecting the privacy of our clients and shareholders. Our relationships are based on integrity and trust and we maintain high standards to safeguard your non-public personal information (“Personal Information”) at all times. This privacy policy (“Policy”) describes the types of Personal Information we collect about you, the steps we take to safeguard that information and the circumstances in which it may be disclosed.
If you hold shares of the Fund through a financial intermediary, such as a broker, investment adviser, bank or trust company, the privacy policy of your financial intermediary will also govern how your Personal Information will be shared with other parties.
WHAT INFORMATION DO WE COLLECT?
We collect the following Personal Information about you:
• Information we receive from you in applications or other forms, correspondence or conversations, including but not limited to name, address, phone number, social security number, assets, income and date of birth.
• Information about transactions with us, our affiliates, or others, including but not limited to account number, balance and payment history, parties to transactions, cost basis information, and other financial information.
• Information we may receive from our due diligence, such as your creditworthiness and your credit history.
WHAT IS OUR PRIVACY POLICY?
We may share your Personal Information with our affiliates in order to provide products or services to you or to support our business needs. We will not disclose your Personal Information to nonaffiliated third parties unless 1) we have received proper consent from you; 2) we are legally permitted to do so; or 3) we reasonably believe, in good faith, that we are legally required to do so. For example, we may disclose your Personal Information with the following in order to assist us with various aspects of conducting our business, to comply with laws or industry regulations, and/or to effect any transaction on your behalf;
• Unaffiliated service providers (e.g. transfer agents, securities broker-dealers, administrators, investment advisors or other firms that assist us in maintaining and supporting financial products and services provided to you);
• Government agencies, other regulatory bodies and law enforcement officials (e.g. for reporting suspicious transactions);
• Other organizations, with your consent or as directed by you; and
• Other organizations, as permitted or required by law (e.g. for fraud protection).
When we share your Personal Information, the information is made available for limited purposes and under controlled circumstances designed to protect your privacy. We require third parties to comply with our standards for security and confidentiality.
HOW DO WE PROTECT CLIENT INFORMATION?
We restrict access to your Personal Information to those persons who require such information to assist us with providing products or services to you. It is our practice to maintain and monitor physical, electronic, and procedural safeguards that comply with federal standards to guard client nonpublic personal information. We regularly train our employees on privacy and information security and on their obligations to protect client information.
CONTACT INFORMATION
For questions concerning our Privacy Policy, please contact our client services representative at 1-855-777-8001.
76 |
|
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
CORPORATE INFORMATION |
Investment Adviser
Oaktree Fund Advisors, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
www.oaktreefunds.com
Administrator
Brookfield Public Securities Group LLC
Brookfield Place
225 Liberty Street, 35th Floor
New York, New York 10281-1048
www.brookfield.com
Please direct your inquiries to:
Investor Relations
Phone: 1-855-777-8001
E-mail: info@brookfieldoaktree.com
Transfer Agent
Shareholder inquiries relating to distributions, address changes and shareholder account information should be directed to the Fund’s transfer agent:
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-855-862-5873
Fund Accounting Agent & Sub-Administrator
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, Illinois 60606
Legal Counsel
Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Custodian
U.S. Bank National Association
1555 North RiverCenter Drive, Suite 302
Milwaukee, Wisconsin 53212
Distributor
Quasar Distributors, LLC
111 East Kilbourn Avenue, Suite 2200
Milwaukee, Wisconsin 53202
Directors of the Fund | Chair of Board of Directors |
Officers of the Fund | President |
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov.
You may obtain a description of the Fund’s proxy voting policies and procedures, information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge, upon request by calling 1-855-777-8001, or go to the SEC’s website at www.sec.gov.
(b) Not applicable.
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Schedule of Investments is included as part of the report to stockholders filed under Item 1(a) of this Form.
(b) Not Applicable.
Item 7. Financial Statements and Financial Highlights for Open-End Investment Companies.
Not applicable to closed-end investment companies.
Item 8. Changes in and Disagreements with Accountants for Open-End Investment Companies.
Not applicable to closed-end investment companies.
Item 9. Proxy Disclosure for Open-End Investment Companies.
Not applicable to closed-end investment companies.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Investment Companies.
Not applicable to closed-end investment companies.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Statement Regarding Basis for Approval of Investment Advisory Contract is included as part of the report to stockholders filed under Item 1(a) of this Form.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Period | (a) | (b) | (c) | (d) | |||||
Month #1 (01/01/24-01/31/24) | — |
| — | — | — | ||||
Month #2 (02/01/24-02/29/24)(1) | 96,644 | $ | 8.99 | 96,644 | — | ||||
Month #3 (03/01/24-03/31/24) | — |
| — | — | — | ||||
Month #4 (04/01/24-04/30/24) | — |
| — | — | — | ||||
Month #5 (05/01/24-05/31/24)(2) | 153,436 | $ | 9.09 | 153,436 | — | ||||
Month #6 (06/01/24-06/30/24) | — |
| — | — | — | ||||
Total | 250,080 |
| — | 250,080 | — | ||||
____________
(1) On January 8, 2024, the Registrant offered to repurchase up to 10.0% of the Registrant’s total outstanding shares as of February 12, 2024 (the “Repurchase Request Deadline”). On the Repurchase Request Deadline, 96,644 shares representing 0.4% of the Registrant’s total outstanding shares were repurchased.
(2) On April 8, 2024, the Registrant offered to repurchase up to 10.0% of the Registrant’s total outstanding shares as of May 13, 2024 (the “Repurchase Request Deadline”). On the Repurchase Request Deadline, 153,436 shares representing 0.5% of the Registrant’s total outstanding shares were repurchased.
Item 15. 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 16. Controls and Procedures.
(a) The Registrant’s Principal Executive Officer and Principal 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
The registrant did not engage in securities lending activities during the fiscal period reported on this Form N-CSR.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) Not Applicable.
(b) Not Applicable.
Item 19. 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 an exhibit. Not Applicable.
(2) Any policy required by the listing standards adopted pursuant to Rule 10D-1 under the Exchange Act (17 CFR 240.10D-1) by the registered national securities exchange or registered national securities association upon which the registrant’s securities are listed. Not Applicable.
(4) 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. Not Applicable.
(5) Change in the registrant’s independent public accountant. Provide the information called for by Item 4 of Form 8-K under the Exchange Act (17 CFR 249.308). Unless otherwise specified by Item 4, or related to and necessary for a complete understanding of information not previously disclosed, the information should relate to events occurring during the reporting period. There was no change in the registrant’s independent public accountant for the period covered by this report.
(b) Certifications 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) | Oaktree Diversified Income Fund Inc. | |||||
By (Signature and Title)* | /s/ Brian F. Hurley | |||||
Brian F. Hurley, Principal Executive Officer | ||||||
Date | September 3, 2024 | |||||
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/ Brian F. Hurley | |||
Brian F. Hurley, Principal Executive Officer | ||||
Date | September 3, 2024 | |||
By (Signature and Title)* | /s/ Casey P. Tushaus | |||
Casey P. Tushaus, Principal Financial Officer | ||||
Date | September 3, 2024 | |||
____________
* Print the name and title of each signing officer under his or her signature.
iso4217:USD xbrli:shares