Dear Investors,
The Fund completed the third quarter of 2025, posting a return of 2.44%*, bringing the year-to-date (as of 9/30/2025) growth trajectory, with AUM increasing from performance to 7.73%*. Meanwhile, the Fund’s asset base also maintained a consistent approximately $90 million at the end of Q1 to $108 million in Q2 to $130 million at the end of this current quarter. The portfolio management team has continued to deliver steady results to its investors through the execution of our multi-strategy private lending approach.
At Liquid Strategies, we prioritize accessibility and transparency, values that we hope you’ve seen reflected in our communications and our team’s dedication. We would like to express our gratitude for your trust and support. We are constantly mindful of the responsibility that trust entails, and it shapes how we approach every decision we make with respect to managing the Niagara Income Opportunities Fund.
Thank you to all our investors and constituents for your support and confidence in our strategy.
Sincerely,
Mark Garfinkel, Connor Allen and the Liquid Strategies Team
*net of fees
The Niagara Income Opportunities Fund is a continuously offered, closed-end interval fund with a primary focus on current income generation through investment in a multistrategy portfolio of private and public credit investments with high current cash yields. The fund offers daily subscriptions and will offer to make quarterly repurchases at net asset value.
The private credit space spans a broad spectrum of niche lending opportunities. The Niagara portfolio combines different styles of private niche lending strategies into a single portfolio solution. A top priority for the Niagara portfolio team is risk management across three key pillars: 1) diversification, 2) credit management and 3) liquidity management. This focus enables the team to construct a portfolio with the proper balance of income and risk.
Diversification: The Niagara strategy seeks to mitigate the risk of capital loss through diversification by segment, strategy and number of loans across the portfolio. In addition, we establish concentration limitations and monitor and evaluate risk exposures across key portfolio metrics.
Credit management: The portfolio team focuses on lending strategy partners who have a proven ability to minimize downside risk and preserve capital. The team is committed to seeking out the highest-quality lending partners that align with our disciplined criteria, including stringent underwriting guidelines, risk mitigation with excess collateralization and strict loan terms and covenants, and a focus on niche, underbanked lending markets.
Liquidity management: The portfolio team manages the liquidity of the portfolio utilizing a combination of cash equivalents, readily marketable publicly traded securities and short-duration private investments to maintain adequate portfolio liquidity. In addition, the team strives to maintain a short average maturity of the portfolio investments to provide maximum flexibility with respect to liquidity while achieving the strategy goals of delivering high income.
During the third quarter, the portfolio management team deployed incoming capital across a combination of additions to existing positions as well as new investment opportunities, increasing the total number of private credit investments to well over 30 across 20 different strategy partners. The team continues to emphasize and build out the diversification of the underlying portfolio. This diversification across multiple investments, private credit asset classes and strategy partners is key to managing portfolio risk and a basic tenet of the fund’s approach. Furthermore, the team continues to focus on those areas of the private credit markets that are less crowded and starved for capital, leading to investments that we believe offer solid risk-adjusted returns.
Last quarter, we discussed the fund’s rising allocation to real estate lending, which continued into the third quarter, increasing to approximately 12%. Along those lines, the fund invested in a loan participation in a senior living facility with Red Oak Capital that was underwritten at a low loan-to-stabilized-value1 of 65%, with the goal of offering a combination of both income and upside equity participation upon the eventual sale or refinancing of the property. In addition, the fund made an initial investment with Tailor Ridge Capital, which specializes in residential real estate lending, helping real estate investors acquire and renovate or build single- and multifamily homes for resale. Lastly, the investment team continued scaling its positions in diamond finance participations, providing the fund with longer-duration rates of return from very short-duration investments ranging from three- to 12-month maturities. These investments are an integral component of the fund’s liquidity management strategy.
The third quarter of 2025 marked another strong stretch for U.S. large caps, led by resilient earnings, moderating inflation and investor optimism around artificial intelligence. The S&P 500 climbed approximately 8% during the quarter, bringing its year-to-date total return to nearly 15%. That performance extended a rally that began after the April sell-off—a distant memory—when tariff headlines briefly rattled markets. From those early April lows, the index has now risen more than 35% and notched 28 all-time highs by the end of September. September alone was one of the strongest in nearly three decades, underscoring how investor sentiment has swung from caution to confidence.
Momentum once again centered on mega-cap technology companies. Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta and Tesla—often dubbed the “Magnificent Seven”—continued to dominate index returns. Collectively, these firms accounted for roughly 42% of the S&P 500’s year-to-date gains and more than half of its price appreciation. Despite that leadership, market breadth has improved, with more than 300 of the 500 index constituents in positive territory for the third quarter; however, the equal-weighted S&P 500 did lag its cap-weighted counterpart by just over three percentage points, signaling leadership remains concentrated in the largest companies.
By the end of September, the S&P 500 traded around 23 times forward earnings, roughly one-third above its long-term average of around 17 times. The top 10 stocks commanded multiples close to 30 times—about 45% above their historical norms—and now represent more than 40% of the entire index’s market capitalization.
S&P 500 Price-to-Earnings (P/E) Ratio
Source: World PE Ratio Data (January 1871 – September 2025)
That concentration has left some investors uneasy even as fundamentals remain solid. GDP growth held near four percent in the second quarter, inflation moderated, and the Federal Reserve’s September rate cut reinforced expectations for a softer policy stance heading into year-end.
For the third quarter of 2025, the Niagara Income Opportunities Fund achieved a total return of 2.44%*, bringing the trailing 12-month total return to 10.44%*, compared with the Morningstar Leveraged Loan Index performance of 1.76% and 6.99% for the third quarter and trailing one year, respectively. Excess cash and liquidity had a modest negative impact on third-quarter results, as some of our investment opportunities were delayed and pushed into the fourth quarter. The team is actively engaged in closing these deals and getting excess cash to normalized levels. See the table of returns for the fund below.
Niagara vs Bloomberg U.S. Aggregate Bond3 Index – Trailing 12 months through September 30, 2025*
Past performance is no guarantee of future results
*returns are net of fees
The equity markets continue to plow ahead, buoyed by lower interest rates across the short- to intermediate-term maturities (0 to 10 years) of the yield curve, in spite of the continued uncertainty associated with tariffs and trade policy. With signs that inflation seems to be in check for now—under 3%—and employment numbers that are lagging somewhat, the Fed has cut rates by 25 basis points4 so far, with markets suggesting another one or two cuts to the key policy benchmark before the end of the year.
Lower rates have the potential to bring down returns of traditional private credit funds with higher allocations to floating-rate loans. As short-term rates fall, the rates that lenders receive on floating-rate loans will move lower. This is why our team focuses on lending strategies and investments that have a blend of fixed- and floating-rate loans; currently, the fund has approximately 62% of its investments tied to fixed-rate loans. Furthermore, many of our floating-rate strategies not only have rate floors, but others only float up. As a result of this positioning, we believe the portfolio’s mix of fixed- and floating-rate loans, along with existing rate floors, may help reduce the impact of falling rates on overall returns.
Furthermore, the team continues to actively source new investment opportunities that fit the strict criteria of our portfolio strategy. First, we participate in lending markets that are less efficient, where there is less competition for each loan. Here, lenders have an opportunity to identify smaller, high-quality borrowers where they can underwrite loans at higher rates yet with tighter covenants and terms, along with better loan collateralization. Second, we identify lending partners that have in-depth experience underwriting and structuring loans, along with a proven ability to minimize downside risk and preserve capital.
The landscape of private credit has also remained resilient in the face of recent economic uncertainties. While diversification does not eliminate risk, our exposure across multiple lending markets and partners may help reduce the impact of certain market-specific events. As we move into the fourth quarter, we maintain a constructive approach toward our lending markets and our disciplined approach to risk management.
As such, the portfolio management team constantly monitors and evaluates each portfolio investment to assess the impact of current economic conditions, trade policy and credit markets on the underlying business of our portfolio’s borrowers. We remain confident in our investment theses with all of our lending partners and the risk mitigation structures in place to weather potential economic or market volatility. Also, keep in mind that a heavy component of the Niagara underlying portfolio is focused on asset-based loans with low loan-to-value ratios. This means the loans are not necessarily tied to the cash flow of a business but rather are collateralized by a specific pool of cash flow, revenue or other specific, designated assets.
Enjoy the cooler fall weather and the approaching holiday season. We thank all of our investors for their confidence in the Niagara fund’s portfolio management team!
Past performance is no guarantee of future results
1The ratio of a loan amount to the projected value of a property once it reaches stabilized occupancy and income.
2Tracks the performance of U.S. dollar–denominated, high-yield senior secured loans
3Measures the performance of the broad U.S. investment-grade bond market
4A unit of measure equal to one one-hundredth of a percentage point (0.01%)
DISCLOSURES
An investment in the Fund’s shares is subject to risks. The value of the Fund’s investments will increase or decrease based on changes in the prices of the investments it holds. This will cause the value of the Fund’s shares to increase or decrease. You could lose money by investing in the Fund. By itself, the Fund does not constitute a complete investment program. Before investing in the Fund, you should consider carefully the following risks the Fund faces, together with the other information contained in this prospectus.
Since the Fund is non-diversified, it is subject to higher reduction of capital and volatility than a fund more proportionately allocated among a large number of securities. An investment in the Fund involves risk. The Fund is new with no significant operating history by which to evaluate its potential performance. There can be no assurance that the Fund’s strategy will be successful. The Fund may use leverage its investments by “borrowing.” The use of leverage increases both risk of loss and profit potential.
Shares of the Fund are not listed on any securities exchange, which makes them inherently illiquid.
There is no secondary market for the Fund’s shares, and it is not anticipated that a secondary market will develop.
Shares of the Fund are not redeemable. Thus, an investment in the Fund may not be suitable for investors who may need the money they invest in a specified time frame.
Although the Fund will offer to repurchase at least 5% of outstanding shares on a quarterly basis in accordance with the Fund’s repurchase policy, the Fund will not be required to repurchase shares at a shareholder’s option nor will shares be exchangeable for units, interests or shares of any security.
The Fund is not required to extend, and shareholders should not expect the Fund’s Board of Trustees to authorize, repurchase offers in excess of 5% of outstanding shares.
Regardless of how the Fund performs, an investor may not be able to sell or otherwise liquidate his, her or its shares whenever such investor would prefer and, except to the extent permitted under the quarterly repurchase offer, will be unable to reduce the shareholder’s exposure on any market downturn.
Liquid Strategies LLC (“Liquid”) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Liquid, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2A and our Form CRS.
Distributed by Foreside Fund Services, LLC, which is not affiliated with the Adviser