The correction runs in an unusual direction — it lifted reported income at both funds rather than exposing a shortfall, leaving net asset value and total return untouched.

August 11, 2026

Liquid Strategies has told shareholders in both of its interval funds that a set of numbers they were given nearly two years ago cannot be relied upon.

The Atlanta adviser has restated the semiannual financial statements for the period ended September 30, 2024 at Denali Structured Return Strategy Fund and Niagara Income Opportunities Fund, its two continuously offered closed-end interval funds. Management concluded that the originals, filed with the Securities and Exchange Commission on December 9, 2024, should no longer be relied upon, and refiled both reports in full in early August 2026 under the error-correction rules of ASC 250.

An error specific to loans held at cost

Accrued interest on certain credit investments had been folded into the carrying value of those investments rather than recognized separately as accrued interest receivable. The consequence was not a smaller portfolio or a lower net asset value. It was a mislabeling: money the funds had earned as interest showed up instead as appreciation in the value of the loans. Interest income, net investment income, net investment income per share and the related financial highlights were all understated, while unrealized appreciation was overstated by the same amount.

Both funds state that net assets and total return were unaffected. Denali’s 11.24 percent return for the six months and Niagara’s 5.23 percent stand as originally reported, and so do the September 30 net asset values of $11.19 and $10.33 per share. What changed is the composition of those returns — and for income vehicles sold on their yield, that is not a cosmetic distinction.

What moved at each fund

At Denali, $488,758 moved out of investment carrying value and into interest receivable:

• interest income for the six months, from $584,318 to $1,073,076;
• net investment income, from $501,170 to $989,928;
• net investment income per share, from 17 cents to 33 cents;
• the annualized ratio of net investment income to average net assets, from 3.11 percent to 6.14 percent.

At Niagara the adjustment was $858,303:

• interest income, from $1,493,613 to $2,351,916;
• net investment income, from $1,084,081 to $1,942,384;
• net investment income per share, from 23 cents to 36 cents;
• the net investment income ratio, from 4.32 percent to 6.92 percent.

Those ratios are the figures an allocator screens on when comparing income funds. Denali’s roughly doubled; Niagara’s rose by more than half.

A correction that runs the other way

The direction of the correction is worth dwelling on, because it runs opposite to the way accounting errors at credit vehicles usually surface. This restatement did not reveal a hole in a portfolio. It found that both funds were earning more current income, and generating less mark-to-model appreciation, than their published statements showed. For a fee-paying investor the economics were unchanged; for anyone assessing the durability of the income stream, the restated picture is the more favorable one.

The distribution arithmetic at Niagara illustrates the point. The fund paid 42 cents a share from net investment income over the period against originally reported net investment income of 23 cents. Restated, that figure is 36 cents. Denali declared no distributions in the period.

Where the error lived

The location of the problem says something about the structural exposure both portfolios carry. Denali held 37.2 percent of net assets in credit facilities and a further 7.7 percent in loan participations; at Niagara the figures were 41.7 percent and 7.8 percent. Those positions sit in Level 3 of the fair value hierarchy and are valued, as the funds disclose, generally at acquisition cost, adjusted only for a material change in rates on comparable notes or a fundamental change the manager becomes aware of. Denali carried $22.4 million of Level 3 assets against $48.2 million in total investments; Niagara carried $32.3 million against $71.2 million.

That is the mechanical setup for exactly this kind of error. When a loan is held at cost and interest accrues into its carrying value, there is no market price to contradict the drift, and the accrual reads as appreciation rather than as the coupon it is. Stated rates on individual credit positions across the two schedules ran from 8 percent to nearly 21 percent, so the amounts accruing between payment dates were not immaterial.

Twenty months, and a clean controls opinion

Roughly 20 months elapsed between the original December 2024 filings and the August 2026 amendments. Both funds report that the restatement affected no period other than the six months ended September 30, 2024, except where those amounts appear as comparative information.

In the same amended reports, the principal executive officer and principal financial officer of each fund concluded that disclosure controls and procedures were effective, and each fund reported no changes in internal control over financial reporting during the period covered that materially affected or were reasonably likely to materially affect that control. Neither report identifies a material weakness or describes any remediation of the process that produced the error.

The vehicles, and what advisers face

Both are Delaware statutory trusts registered as non-diversified, continuously offered closed-end funds operating as interval funds. Niagara commenced operations in December 2023 and Denali in March 2024, and each offers to repurchase no less than 5 percent of outstanding shares each quarter at net asset value, with board discretion to go as high as 25 percent. Liquid Strategies collects an advisory fee of 1.65 percent of average daily net assets at both funds; reimbursement held net expenses to 1.99 percent at Denali and 2.03 percent at Niagara for the period, against gross ratios of 3.22 percent and 2.64 percent.

Because the advisory fee is struck on net assets, and net assets did not change, the correction carries no fee consequence. Nor does it touch the quarterly repurchase price, which is set at net asset value.

For advisers holding either fund, the practical work is reconciling client reporting and any performance attribution built on the original semiannual figures, since the income and appreciation components of a period long since closed out have been redrawn. Both funds run on a March 31 fiscal year, and the periods that followed the restated one have already been reported on their original basis. Whether the accrual treatment those later reports applied matches the corrected methodology is the question the amendments themselves do not answer.

Cohen & Company serves as independent registered public accounting firm to both funds. Semiannual reports are unaudited.