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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 811-22554

 

 

Vertical Capital Income Fund

(Exact name of registrant as specified in charter)

 

80 Arkay Drive, Hauppauge, NY 11788

(Address of principal executive offices) (Zip code)

 

Richard Malinowski, Gemini Fund Services, LLC

17605 Wright Street, Omaha, Nebraska, 68130

(Name and address of agent for service)

 

Registrant's telephone number, including area code: 631-470-2734

 

Date of fiscal year end: 9/30

 

Date of reporting period: 3/31/18

 

 

Item 1. Reports to Stockholders.

 

           
           
           
           
           
           
           
           
           
           
  Vertical Capital Income Fund  
  Class A Class C Class I Class L  
  VCAPX VCCPX VCIPX VCPLX  
  Cusip: 92535C104 Cusip: 92535C401 Cusip: 92535C203 Cusip: 92535C302  
           
           
     
  Semi-Annual Report  
  March 31, 2018  
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
  Investor Information: 1-866-277-VCIF  
           
           
           
           
           
           
           
           
           
  This report and the financial statements contained herein are submitted for the general information of shareholders and are not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing contained herein is to be considered an offer of sale or solicitation of an offer to buy shares of the Vertical Capital Income Fund. Such offering is made only by prospectus, which includes details as to offering price and other material information.  
           
  Distributed by Northern Lights Distributors, LLC  
  Member FINRA  
     
     
     

 

 

(GRAPHICS)

 

May 31, 2018

 

Dear Shareholder,

 

We are pleased to report a successful mid-year update for the Vertical Capital Income Fund (the “Fund”). Consistent with our primary investment objective to seek current income, the Fund once again made continuous monthly distributions of approximately $0.19 per class A share for the six-month period ended March 31, 2018. In addition, a special distribution of approximately $0.21 per class A share was paid in December 2017 as a result of net capital gains realized on loan sales and loan payoffs during the last fiscal year ending September 30, 2017. For the six-month period ended March 31, 2018, the Fund produced a total return (load waived) of 3.18% per class A share, compared to one of its key benchmarks, the Barclays Capital Mortgage Backed Securities Index, which reported a total return of -1.04%. Including the maximum load, the Fund’s total return was -1.45% per class A share. Since inception, the Fund has produced an annualized total return of 8.38% per class A share. By contrast, the SEC Yield per class A share as of March 31, 2018 totaled 2.76%.

 

Update on Fund Strategy and Economic Outlook

 

During the last six months, the U.S. economy again continued to grow at a steady pace, averaging an annualized rate of approximately 2.6%. Forecasters predict more of the same helped by tax reform and strong employment, among other factors. The unemployment rate is the lowest it’s been in years at 4.1%. It is expected to bottom out around 3.7% later this year and remain in that range for the next two years. The market continued to add new jobs, but at a slower rate, as the economy reaches full employment. Wage growth is expected in some, but not all, portions of the economy.

 

The Federal Funds Rate has increased 0.75% since a year ago and 0.50% during the last six months. The Federal Open Market Committee continues to be hawkish on interest rates and many expect it to raise short-term rates four to five times over the next two years. The 10-year U.S. Treasury rate increased approximately 50bps over the last six months to 2.8% at the end of March 2018 and is now around 2.9%. The 30-year residential mortgage rate (which is typically bench-marked against the 10-year treasury) increased by 0.30% over the last six months to 4.3% and is expected to be at 5.0% by the end of 2018 or in early 2019.

 

Total residential mortgage originations were $1.71 trillion for calendar 2017, slightly higher than the $1.65 trillion projected six months ago. That number is expected to be closer to $1.6 trillion in 2018 and then rebound to higher levels in 2019. Refinance originations were $600 billion in 2017, 35% of the total, but are expected to drop by almost 30% to $430 billion in 2018. Although the refinance market overall is weaker due to higher interest rates, increased home values have boosted a portion of refinance activity known as “cash-out”, where homeowners can monetize the equity in their home for other purposes.

 

Home prices increased in 2017 in almost every major US market. Coupled with higher interest rates, home purchasers are now faced with increasing down payment requirements. This

 

 

(GRAPHICS)

 

situation tends to put pressure on home affordability and could force buyers out of the market. However, on a positive note, increased home values have encouraged more builders to enter the market, particularly in the entry-level segment, which has largely been ignored the past couple of years.

 

We continue to pursue investment opportunities in all types of residential mortgages, including non-qualified, performing, re-performing, long-term, short-term, fixed and adjustable. The Fund primarily invests in residential mortgage loans traded in the secondary market at a discount to their unpaid principal balances. The secondary whole loan market is part of the larger $10.5 trillion residential mortgage market and historically boasts a deep roster of institutional participants, along with a diverse universe of sellers and reasons for sale. As such, we are comfortable that we will continue to see an adequate supply of one-off and portfolio acquisitions, as well as disposition opportunities when it makes sense for us to sell.

 

Fund Results of Operations and Liquidity

 

We believe the Fund’s portfolio is currently well positioned. Total net assets as of the end of March were approximately $152 million comprised of investments in roughly 900 individual mortgage loans. We continue to see improvements in virtually every one of the portfolio’s key metrics, including lower current loan-to-values, higher effective interest rates, lower default rates and higher borrower FICO credit scores. All metrics are better than they were a year ago.

 

As in all prior periods the Fund, again, for the six months ended March 31, 2018, made continuous monthly cash distributions fully covered by current earnings. We continue to employ a conservative approach to managing the Fund’s balance sheet, maintaining a positive net working capital position and utilizing the Fund’s bank line of credit for short term bridge needs only.

 

The Fund’s current line of credit, which had a maturity date in January 2018, was extended into July 2018. We are in the process of negotiating a new bank line with a commitment amount substantially greater than the current line’s commitment, and with an overall cost of funds slightly less than the Fund’s current facility. Having additional credit capacity should allow us to better manage transactional activity and support shareholder redemption needs.

 

Distribution

 

Recently Provasi Capital Partners, the Fund’s dealer-manager, announced its intent to wind down its operations. Northern Lights remains the Fund’s statutory distributor, which allows the Fund to replace Provasi without interruption to the current offering or cancellation of any existing seller agreements.

 

Although Provasi is an affiliate of the advisor, the Fund’s management team remains in place without change to the advisor’s portfolio managers, third-party service providers or the Fund’s independent directors. Provasi’s decision to wind down its operations was made solely based on its own business plan and is not a reflection on the health, stability or viability of the Fund.

 

 

(GRAPHICS)

 

Other than distribution support, the Fund and the advisor did not rely on Provasi for any other services.

 

We appreciate your support and look forward to reporting another successful six months later this year.

 

Regards,

 

Robert J. Chapman
Chairman of the Board of Trustees and Co-Portfolio Manager

 

David Aisner
Co-Portfolio Manager

 

Past performance is neither indicative nor a guarantee of future results. The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. The investment return and principal value of an investment will fluctuate so that investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund’s investment Adviser has contractually agreed to reduce its fees and/or absorb expenses of the Fund, at least until 1/31/19, to ensure that the net annual Fund operating expenses will not exceed 1.85% (excluding borrowing costs, extraordinary expenses and Acquired Fund Fees and Expenses), subject to possible recoupment from the Fund in future years. Results shown reflect the Fund’s expense waiver, without which the results could have been lower. Without these waivers, the Fund’s total annual operating expenses, as of the Prospectus dated January 19, 2018, would be 2.86% (gross expenses) per class A share, and returns would have been lower. Please review the Fund’s prospectus for more information regarding the Fund’s fees and expenses. For performance information current to the most recent month-end, please go to provasicapital.com or call 866.655.3600.

 

This material contains forward-looking statements relating to the business and financial outlook of Vertical Capital Income Fund that are based on our current expectations, estimates, forecasts and projections and are not guarantees of future performance. There is no assurance that the Fund will achieve its investment objective. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this material.

 

Securities may be subject to prepayment risk because borrowers are typically able to prepay principal. The Fund will not invest in real estate directly, but, because the Fund will invest the majority of its assets in securities secured by real estate, its portfolio will be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio. Quarterly repurchases by the Fund of its shares typically will be funded from available cash or sales of portfolio securities. The sale of securities to fund repurchases could reduce the market price of those securities, which in turn would reduce the Fund’s net asset value.

 

3574 NLD-6/04/2018

 

 

Vertical Capital Income Fund
PORTFOLIO REVIEW (Unaudited)
March 31, 2018
 

The Fund’s performance figures for the period ended March 31, 2018, compared to its benchmark:

 

  Six Months One Year Three Years Five Years Since Inception * Since Inception **
The Vertical Capital Income Fund Class A 3.18% 3.37% 8.10% 8.46% 8.38% N/A
The Vertical Capital Income Fund Class A with load (1.45)% (1.27)% 6.44% 7.46% 7.59% N/A
The Vertical Capital Income Fund Class C N/A N/A N/A N/A N/A 0.80%
The Vertical Capital Income Fund Class I N/A N/A N/A N/A N/A 0.73%
The Vertical Capital Income Fund Class L N/A N/A N/A N/A N/A 0.73%
The Vertical Capital Income Fund Class L with load N/A N/A N/A N/A N/A (3.57)%
Bloomberg Barclays Capital Mortgage Backed Securities Index (1.04)% 0.77% 1.12% 1.80% 1.85% (0.31)%
             
*Class A commenced operations on December 30, 2011. The performance of the Fund is based on average annual returns.

 

**Class C, Class I, and Class L shares commenced operations on January 24, 2018. The performance of the Fund is based on average annual returns.

 

The Bloomberg Barclays Capital Mortgage Backed Securities Index is an unmanaged index composed of securities backed by mortgage pools of Ginnie Mae, Freddie Mac and Fannie Mae. Investors cannot invest directly in an index or benchmark.

 

Past performance is not predictive of future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than the original cost. Total return is calculated assuming reinvestment of all dividends and distributions. Total returns would have been lower had the Adviser not waived its fees and reimbursed a portion of the Fund’s expenses. The Fund’s total gross annual operating expenses are 2.86% for Class A, 3.61% for Class C, 2.61% for Class I and 3.11% for Class L per the latest Prospectus (see Financial Highlights for more current expense ratios). For performance information current to the most recent month-end, please call 1-866-277-VCIF.

 

 

 

PORTFOLIO COMPOSITION*** (Unaudited)
     
Mortgage Notes   100.0%
    100.0%
      
***   Based on Investments at Value as of March 31, 2018.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES - 95.7%              
$116,680   Loan ID 200003  Fixed  7.250%  9/1/2035  $103,851 
 250,062   Loan ID 200004  Fixed  7.990%  10/1/2036   262,565 
 66,647   Loan ID 200006  ARM  7.990%  1/1/2036   69,979 
 50,669   Loan ID 200008  ARM  4.250%  3/28/2035   44,867 
 50,168   Loan ID 200012  ARM  9.800%  7/1/2037   49,702 
 55,970   Loan ID 200013  Fixed  5.250%  9/1/2040   23,464 
 37,816   Loan ID 200016  ARM  10.375%  1/1/2031   39,706 
 50,688   Loan ID 200018  Fixed  7.000%  1/1/2033   51,243 
 99,298   Loan ID 200023  Fixed  5.875%  12/1/2050   88,057 
 125,716   Loan ID 200025  ARM  4.375%  3/1/2034   131,239 
 205,980   Loan ID 200026  Interest Only  4.750%  1/1/2050   137,326 
 228,102   Loan ID 200028  Fixed  4.875%  6/1/2050   231,979 
 210,974   Loan ID 200029  Fixed  6.310%  7/1/2037   162,438 
 330,489   Loan ID 200032  Fixed  3.130%  1/1/2051   290,150 
 551,764   Loan ID 200035  Fixed  4.625%  11/1/2050   477,600 
 64,005   Loan ID 200036  Fixed  7.940%  1/12/2034   67,205 
 159,630   Loan ID 200037  Fixed  7.800%  5/1/2035   150,676 
 116,998   Loan ID 200041  Fixed  4.875%  8/1/2039   119,265 
 40,334   Loan ID 200042  Fixed  7.000%  12/1/2037   42,351 
 61,059   Loan ID 200043  Fixed  6.125%  7/1/2039   64,112 
 34,524   Loan ID 200046  Fixed  8.000%  7/1/2027   36,250 
 51,522   Loan ID 200048  Fixed  5.500%  8/1/2039   53,872 
 153,304   Loan ID 200052  Fixed  5.125%  5/1/2040   157,570 
 54,507   Loan ID 200054  Fixed  8.250%  3/1/2039   57,232 
 81,578   Loan ID 200055  Fixed  10.000%  1/5/2036   85,657 
 125,943   Loan ID 200057  ARM  3.750%  10/1/2036   126,814 
 57,526   Loan ID 200059  Fixed  6.000%  8/1/2039   50,997 
 33,227   Loan ID 200060  Fixed  5.750%  8/1/2039   34,888 
 25,303   Loan ID 200065  ARM  8.125%  1/1/2037   26,568 
 212,667   Loan ID 200072  Fixed  0.000%  2/1/2051   170,514 
 141,666   Loan ID 200073  Fixed  0.000%  2/1/2026   114,323 
 140,897   Loan ID 200074  Fixed  0.000%  2/1/2031   113,703 
 198,013   Loan ID 200075  Fixed  4.250%  2/1/2042   194,987 
 164,178   Loan ID 200076  Fixed  4.250%  12/1/2041   160,890 
 28,883   Loan ID 200078  Fixed  7.000%  8/1/2036   28,779 
 131,922   Loan ID 200079  Fixed  4.500%  8/1/2049   67,494 
 66,626   Loan ID 200082  Fixed  8.250%  4/1/2040   58,177 
 182,143   Loan ID 200084  Fixed  7.000%  3/1/2039   151,236 
 194,622   Loan ID 200086  Fixed  4.250%  11/1/2050   147,066 
 221,440   Loan ID 200087  Fixed  6.000%  3/1/2051   198,523 
 120,599   Loan ID 200088  Fixed  7.000%  6/1/2039   99,998 
 262,119   Loan ID 200089  Fixed  3.875%  3/1/2052   197,940 
 272,843   Loan ID 200090  Fixed  4.000%  11/1/2036   62,181 
 129,982   Loan ID 200093  Fixed  5.000%  2/1/2038   133,282 
 234,469   Loan ID 200094  ARM  4.125%  9/1/2037   200,777 
 72,634   Loan ID 200102  Fixed  8.250%  3/1/2040   71,048 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$110,714   Loan ID 200110  Fixed  8.250%  8/1/2039  $114,073 
 143,826   Loan ID 200116  Fixed  7.125%  3/1/2039   135,711 
 122,984   Loan ID 200126  Fixed  8.250%  8/1/2039   126,804 
 71,258   Loan ID 200128  Fixed  4.710%  7/1/2037   43,735 
 453,320   Loan ID 200129  Fixed  4.625%  3/1/2052   366,966 
 30,624   Loan ID 200131  Fixed  3.875%  11/1/2027   29,353 
 120,198   Loan ID 200135  Fixed  4.375%  12/1/2042   118,783 
 123,513   Loan ID 200137  Fixed  4.500%  9/1/2042   122,588 
 39,692   Loan ID 200139  Fixed  4.625%  5/1/2027   39,850 
 76,534   Loan ID 200141  Fixed  4.250%  2/1/2042   75,333 
 123,758   Loan ID 200143  Fixed  3.000%  2/1/2037   112,630 
 384,953   Loan ID 200145  Fixed  4.000%  8/1/2051   274,227 
 100,089   Loan ID 200152  ARM  4.625%  9/1/2037   103,385 
 122,981   Loan ID 200157  Fixed  3.750%  1/1/2043   122,981 
 152,074   Loan ID 200158  Fixed  3.625%  12/1/2042   140,691 
 122,983   Loan ID 200160  Fixed  3.250%  2/1/2043   112,059 
 217,155   Loan ID 200162  Fixed  3.875%  7/1/2042   208,360 
 192,655   Loan ID 200165  Fixed  4.375%  12/1/2041   190,556 
 109,916   Loan ID 200166  Fixed  4.000%  2/1/2032   106,310 
 113,604   Loan ID 200168  Fixed  3.750%  10/1/2042   107,349 
 22,919   Loan ID 200169  Fixed  6.923%  9/1/2034   24,065 
 136,955   Loan ID 200172  Fixed  7.250%  2/1/2037   143,802 
 203,807   Loan ID 200173  Fixed  3.575%  10/1/2046   77,267 
 88,873   Loan ID 200174  Fixed  7.340%  4/1/2037   93,317 
 51,478   Loan ID 200175  Fixed  9.600%  5/1/2037   54,051 
 42,270   Loan ID 200177  Fixed  8.000%  1/11/2022   44,383 
 8,429   Loan ID 200179  Fixed  7.250%  7/27/2019   8,850 
 110,428   Loan ID 200181  Fixed  7.500%  6/1/2041   72,109 
 72,135   Loan ID 200184  Fixed  4.375%  12/1/2042   71,171 
 27,582   Loan ID 200185  Fixed  5.375%  6/1/2042   28,637 
 52,577   Loan ID 200186  Fixed  5.125%  8/1/2042   53,996 
 146,951   Loan ID 200188  Fixed  3.875%  2/1/2043   140,813 
 326,176   Loan ID 200190  Fixed  3.625%  11/1/2042   306,841 
 127,290   Loan ID 200191  Fixed  4.125%  11/1/2042   124,371 
 160,644   Loan ID 200194  Fixed  4.750%  9/1/2041   162,833 
 257,760   Loan ID 200195  Fixed  3.875%  3/1/2042   247,321 
 98,548   Loan ID 200196  Fixed  4.500%  1/1/2043   97,908 
 38,347   Loan ID 200197  Fixed  4.750%  11/1/2042   38,550 
 40,215   Loan ID 200198  Fixed  5.250%  10/1/2042   41,468 
 280,662   Loan ID 200199  Fixed  4.000%  9/1/2042   271,260 
 239,687   Loan ID 200200  Fixed  3.875%  9/1/2042   225,902 
 49,569   Loan ID 200201  Fixed  5.125%  8/1/2041   51,092 
 57,869   Loan ID 200202  Fixed  4.375%  12/1/2042   57,242 
 22,948   Loan ID 200206  Fixed  3.990%  12/1/2042   22,114 
 47,145   Loan ID 200208  Fixed  4.250%  1/1/2043   46,261 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$197,512   Loan ID 200209  Fixed  3.875%  8/1/2042  $189,613 
 55,317   Loan ID 200214  Fixed  5.750%  7/1/2039   58,082 
 112,442   Loan ID 200216  Fixed  5.750%  9/1/2039   117,332 
 141,624   Loan ID 200217  Fixed  5.250%  7/1/2040   146,367 
 72,986   Loan ID 200218  Fixed  4.250%  12/1/2041   70,805 
 195,602   Loan ID 200219  Fixed  4.250%  4/1/2043   192,135 
 210,077   Loan ID 200220  Fixed  3.875%  5/1/2043   176,480 
 160,564   Loan ID 200221  Fixed  4.250%  4/1/2043   158,192 
 196,896   Loan ID 200224  Fixed  4.000%  7/1/2043   190,823 
 80,343   Loan ID 200226  Fixed  5.250%  7/1/2041   83,385 
 49,846   Loan ID 200228  Fixed  4.625%  8/1/2042   49,842 
 143,037   Loan ID 200230  Fixed  3.500%  2/1/2043   133,103 
 67,203   Loan ID 200232  Fixed  3.875%  8/1/2042   64,516 
 114,662   Loan ID 200233  Fixed  2.990%  11/1/2027   102,344 
 91,322   Loan ID 200235  Fixed  3.750%  12/1/2042   86,665 
 116,080   Loan ID 200243  Fixed  3.750%  4/1/2043   109,709 
 26,951   Loan ID 200244  Fixed  5.000%  5/1/2042   27,350 
 197,755   Loan ID 200245  Fixed  3.875%  3/1/2043   189,429 
 89,375   Loan ID 200286  Fixed  4.500%  7/1/2043   89,080 
 98,776   Loan ID 200287  Fixed  4.375%  7/1/2043   97,510 
 330,765   Loan ID 200288  Fixed  4.375%  11/1/2041   327,962 
 283,975   Loan ID 200290  Fixed  4.250%  4/1/2043   279,215 
 201,474   Loan ID 200296  Fixed  3.250%  2/1/2043   183,589 
 173,815   Loan ID 200297  Fixed  3.375%  10/1/2042   160,005 
 190,086   Loan ID 200299  Fixed  3.625%  10/1/2042   178,607 
 117,047   Loan ID 200300  Fixed  8.400%  10/20/2037   122,899 
 107,891   Loan ID 200302  Fixed  9.875%  10/1/2035   112,516 
 135,947   Loan ID 200304  Fixed  7.250%  10/1/2033   142,745 
 43,830   Loan ID 200307  Fixed  6.500%  7/1/2031   46,022 
 41,012   Loan ID 200313  Fixed  8.500%  3/1/2028   43,063 
 294,410   Loan ID 200315  ARM  4.500%  6/1/2037   262,226 
 70,690   Loan ID 200317  Fixed  7.000%  9/1/2032   74,224 
 75,243   Loan ID 200326  Fixed  8.375%  10/1/2036   79,005 
 144,629   Loan ID 200327  Fixed  6.790%  10/26/2036   151,861 
 249,487   Loan ID 200330  Fixed  7.000%  8/1/2037   202,170 
 99,107   Loan ID 200332  Fixed  5.775%  10/1/2037   104,062 
 89,320   Loan ID 200334  Fixed  7.000%  1/1/2033   93,786 
 264,833   Loan ID 200335  Fixed  3.000%  11/1/2052   209,769 
 43,301   Loan ID 200337  Fixed  7.000%  10/1/2034   45,466 
 50,131   Loan ID 200338  ARM  10.500%  8/1/2029   52,638 
 149,676   Loan ID 200339  Fixed  2.000%  10/1/2033   130,316 
 32,468   Loan ID 200340  Fixed  7.000%  3/1/2030   34,092 
 287,135   Loan ID 200341  Fixed  7.000%  8/1/2035   177,618 
 60,649   Loan ID 200348  Fixed  6.500%  7/1/2038   63,681 
 234,921   Loan ID 200349  Fixed  7.000%  1/1/2037   159,369 
 53,684   Loan ID 200350  Fixed  7.500%  3/1/2029   56,368 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$75,591   Loan ID 200352  Fixed  7.000%  8/1/2030  $79,370 
 41,768   Loan ID 200355  ARM  8.875%  7/1/2032   17,082 
 112,556   Loan ID 200358  Fixed  5.000%  4/1/2025   113,264 
 68,396   Loan ID 200361  Fixed  7.500%  1/1/2034   71,816 
 109,787   Loan ID 200362  Fixed  5.000%  6/1/2045   39,012 
 63,255   Loan ID 200366  Fixed  6.250%  1/1/2033   66,417 
 171,647   Loan ID 200368  Fixed  4.500%  4/1/2036   171,789 
 78,328   Loan ID 200374  ARM  7.000%  5/1/2034   78,328 
 77,562   Loan ID 200377  ARM  3.500%  10/1/2036   72,017 
 226,889   Loan ID 200378  Fixed  5.500%  5/1/2045   196,707 
 181,869   Loan ID 200380  Fixed  4.220%  4/1/2049   156,882 
 383,596   Loan ID 200383  Fixed  5.030%  12/1/2046   393,748 
 289,656   Loan ID 200384  Fixed  5.000%  11/1/2047   215,822 
 143,044   Loan ID 200385  Fixed  8.250%  1/1/2040   150,196 
 217,810   Loan ID 200386  Fixed  9.000%  3/1/2041   179,983 
 119,128   Loan ID 200389  Fixed  4.820%  9/1/2047   106,396 
 197,220   Loan ID 200390  Fixed  4.780%  4/16/2047   161,660 
 164,936   Loan ID 200391  Fixed  4.000%  1/13/2035   160,380 
 65,057   Loan ID 200392  Fixed  10.000%  6/5/2034   68,309 
 125,180   Loan ID 200394  Fixed  7.150%  8/1/2037   131,439 
 78,598   Loan ID 200395  Fixed  4.860%  4/1/2047   69,462 
 71,316   Loan ID 200396  Fixed  10.000%  2/1/2036   74,882 
 97,017   Loan ID 200397  ARM  4.250%  9/1/2037   101,868 
 131,056   Loan ID 200398  Fixed  4.800%  2/1/2037   115,701 
 75,453   Loan ID 200399  Fixed  4.980%  6/1/2037   62,845 
 49,247   Loan ID 200403  Fixed  8.300%  10/15/2032   51,709 
 55,610   Loan ID 200404  Fixed  8.100%  5/1/2037   58,390 
 94,402   Loan ID 200405  Fixed  4.870%  12/1/2035   94,086 
 115,121   Loan ID 200406  Fixed  4.875%  10/1/2051   117,355 
 229,685   Loan ID 200407  Fixed  6.500%  4/1/2042   241,170 
 194,952   Loan ID 200408  Fixed  6.000%  4/1/2039   175,000 
 341,527   Loan ID 200409  Fixed  6.000%  2/1/2049   256,570 
 103,379   Loan ID 200411  Fixed  8.275%  6/1/2037   108,548 
 307,233   Loan ID 200412  Fixed  5.500%  6/1/2045   149,958 
 179,792   Loan ID 200416  Fixed  4.670%  8/1/2053   159,772 
 68,429   Loan ID 200417  Fixed  7.000%  5/1/2035   71,850 
 53,689   Loan ID 200418  Fixed  4.000%  6/1/2035   51,734 
 154,851   Loan ID 200419  Fixed  4.000%  12/19/2035   147,025 
 160,545   Loan ID 200420  Fixed  4.225%  4/10/2038   141,159 
 74,484   Loan ID 200421  Fixed  7.710%  8/1/2037   75,649 
 134,111   Loan ID 200422  Fixed  3.830%  8/1/2053   101,144 
 126,364   Loan ID 200423  Fixed  4.500%  6/1/2043   125,758 
 219,331   Loan ID 200430  Fixed  3.625%  7/1/2043   205,330 
 183,637   Loan ID 200431  Fixed  4.625%  7/1/2043   184,460 
 293,736   Loan ID 200432  Fixed  4.875%  5/1/2043   297,198 
 125,905   Loan ID 200433  Fixed  4.250%  8/1/2043   123,720 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$157,046   Loan ID 200434  Fixed  5.250%  10/1/2043  $162,340 
 196,564   Loan ID 200435  Fixed  4.625%  11/1/2052   195,937 
 205,792   Loan ID 200436  Fixed  3.750%  4/1/2043   194,708 
 43,170   Loan ID 200439  Fixed  5.000%  8/1/2041   39,879 
 191,124   Loan ID 200441  Fixed  6.000%  4/1/2045   147,545 
 153,887   Loan ID 200445  Fixed  5.250%  2/1/2039   159,327 
 46,233   Loan ID 200447  Fixed  5.875%  11/4/2034   48,544 
 77,919   Loan ID 200448  Fixed  5.750%  5/1/2042   68,731 
 123,091   Loan ID 200449  Fixed  5.000%  7/1/2041   116,906 
 350,162   Loan ID 200451  Fixed  6.250%  7/1/2038   367,671 
 14,605   Loan ID 200453  ARM  4.250%  3/1/2026   15,335 
 201,748   Loan ID 200457  Fixed  5.750%  12/10/2030   211,835 
 185,729   Loan ID 200460  Fixed  7.000%  7/1/2041   195,016 
 377,970   Loan ID 200462  Fixed  6.000%  7/1/2045   338,755 
 239,026   Loan ID 200465  Fixed  6.500%  7/1/2037   233,825 
 103,157   Loan ID 200468  Fixed  5.625%  12/1/2044   47,398 
 125,652   Loan ID 200469  Fixed  6.500%  7/1/2037   115,525 
 283,458   Loan ID 200473  Fixed  4.000%  12/1/2042   211,776 
 239,703   Loan ID 200474  Fixed  5.750%  11/1/2050   251,688 
 166,250   Loan ID 200475  Fixed  5.450%  7/1/2049   172,932 
 189,608   Loan ID 200476  Fixed  6.000%  9/1/2050   199,088 
 180,139   Loan ID 200477  Fixed  4.125%  12/1/2028   174,501 
 102,288   Loan ID 200482  Fixed  4.375%  11/1/2028   101,293 
 96,089   Loan ID 200483  Fixed  4.375%  11/1/2028   95,119 
 73,043   Loan ID 200485  Fixed  4.125%  2/1/2043   71,243 
 241,884   Loan ID 200486  Fixed  3.500%  1/1/2043   224,648 
 111,420   Loan ID 200489  Fixed  4.000%  3/1/2043   106,080 
 67,639   Loan ID 200490  Fixed  4.000%  11/1/2028   65,241 
 198,078   Loan ID 200491  Fixed  5.500%  10/1/2039   206,929 
 118,161   Loan ID 200492  Fixed  4.000%  1/1/2043   114,246 
 270,870   Loan ID 200494  Fixed  4.625%  10/1/2043   272,319 
 195,934   Loan ID 200496  Fixed  3.875%  2/1/2043   187,623 
 313,163   Loan ID 200497  Fixed  3.250%  4/1/2043   285,165 
 264,576   Loan ID 200499  Fixed  4.250%  1/1/2043   259,048 
 209,634   Loan ID 200500  Fixed  5.875%  2/1/2037   220,116 
 369,633   Loan ID 200504  Fixed  3.375%  3/1/2043   339,430 
 71,275   Loan ID 200507  Fixed  4.500%  9/1/2042   71,023 
 323,616   Loan ID 200514  Fixed  3.000%  4/1/2047   294,467 
 96,950   Loan ID 200515  Fixed  8.250%  2/1/2039   101,798 
 101,051   Loan ID 200517  Fixed  8.000%  5/1/2039   103,455 
 198,973   Loan ID 200518  Fixed  3.000%  12/1/2050   180,817 
 307,777   Loan ID 200519  Fixed  3.000%  11/1/2049   281,746 
 114,949   Loan ID 200524  Fixed  3.500%  6/1/2043   106,911 
 274,741   Loan ID 200525  Fixed  3.250%  12/1/2042   250,049 
 108,866   Loan ID 200527  Fixed  4.500%  12/1/2043   108,556 
 386,446   Loan ID 200529  Fixed  4.625%  2/1/2044   386,929 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$170,393   Loan ID 200531  Fixed  4.625%  11/1/2043  $170,044 
 107,697   Loan ID 200532  Fixed  3.250%  7/1/2043   97,912 
 107,596   Loan ID 200537  Fixed  4.500%  3/1/2042   106,212 
 81,977   Loan ID 200540  Fixed  3.875%  2/1/2043   78,526 
 52,089   Loan ID 200545  Fixed  4.375%  2/1/2029   51,401 
 119,330   Loan ID 200546  Fixed  5.375%  12/1/2043   123,332 
 165,360   Loan ID 200548  Fixed  5.250%  2/1/2044   170,506 
 214,645   Loan ID 200555  Fixed  4.375%  1/1/2044   213,074 
 134,181   Loan ID 200564  Fixed  4.875%  5/1/2039   136,829 
 509,376   Loan ID 200565  Interest Only  4.000%  6/1/2037   441,892 
 128,082   Loan ID 200567  Fixed  3.375%  5/1/2043   117,811 
 133,112   Loan ID 200571  Fixed  4.500%  7/1/2043   132,418 
 92,958   Loan ID 200573  Fixed  3.750%  9/1/2042   88,153 
 127,495   Loan ID 200574  Fixed  4.875%  1/1/2044   129,816 
 146,363   Loan ID 200577  Fixed  3.125%  4/1/2028   131,972 
 179,230   Loan ID 200578  Fixed  4.750%  8/1/2040   181,819 
 47,277   Loan ID 200579  Fixed  4.875%  5/1/2042   47,635 
 168,647   Loan ID 200580  Fixed  4.125%  11/1/2041   164,975 
 37,676   Loan ID 200581  Fixed  4.750%  9/1/2042   37,366 
 362,574   Loan ID 200582  Fixed  4.000%  11/1/2042   345,518 
 77,090   Loan ID 200583  Fixed  3.625%  9/1/2027   72,417 
 169,076   Loan ID 200585  Fixed  4.000%  6/1/2046   160,367 
 317,985   Loan ID 200586  Fixed  3.500%  1/1/2043   295,529 
 244,628   Loan ID 200588  Fixed  3.750%  5/1/2042   232,692 
 61,058   Loan ID 200590  Fixed  4.125%  7/1/2042   39,157 
 95,732   Loan ID 200592  Fixed  4.375%  6/1/2042   94,811 
 65,179   Loan ID 200593  Fixed  3.875%  6/1/2042   62,486 
 221,731   Loan ID 200594  Fixed  4.250%  4/1/2043   218,459 
 37,873   Loan ID 200597  Fixed  5.625%  2/1/2044   39,497 
 132,628   Loan ID 200598  Fixed  4.625%  2/1/2044   132,893 
 117,140   Loan ID 200599  Fixed  4.125%  2/1/2043   114,061 
 187,333   Loan ID 200600  Fixed  4.625%  4/1/2044   188,315 
 179,453   Loan ID 200602  Fixed  3.750%  3/1/2043   170,255 
 28,059   Loan ID 200603  Fixed  4.125%  6/1/2043   27,219 
 71,344   Loan ID 200604  Fixed  3.500%  1/1/2043   66,313 
 137,451   Loan ID 200605  Fixed  4.875%  11/1/2043   122,824 
 193,378   Loan ID 200607  Fixed  2.875%  11/1/2027   171,570 
 131,980   Loan ID 200608  Fixed  4.125%  11/1/2043   126,930 
 52,274   Loan ID 200611  Fixed  4.625%  5/1/2043   52,405 
 122,339   Loan ID 200612  Fixed  4.500%  2/1/2043   122,044 
 199,000   Loan ID 200613  Fixed  3.369%  1/1/2043   183,311 
 99,441   Loan ID 200615  Fixed  4.250%  8/1/2043   97,610 
 332,251   Loan ID 200616  Fixed  4.875%  2/1/2044   337,241 
 125,556   Loan ID 200618  Fixed  4.375%  5/1/2042   124,480 
 223,182   Loan ID 200620  Fixed  4.250%  10/1/2043   219,238 
 128,428   Loan ID 200621  Fixed  3.625%  1/1/2043   120,050 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$70,892   Loan ID 200623  Fixed  4.375%  12/1/2042  $70,016 
 247,888   Loan ID 200624  Fixed  4.125%  4/1/2043   241,614 
 128,384   Loan ID 200627  Fixed  4.250%  10/1/2043   126,176 
 68,076   Loan ID 200628  Fixed  3.250%  2/1/2028   61,993 
 162,221   Loan ID 200630  Fixed  5.250%  9/1/2043   167,689 
 336,749   Loan ID 200632  Fixed  5.250%  5/1/2044   346,796 
 220,069   Loan ID 200633  Fixed  5.125%  5/1/2044   225,128 
 225,707   Loan ID 200634  Fixed  4.375%  1/1/2044   223,487 
 95,301   Loan ID 200635  Fixed  3.750%  5/1/2029   89,528 
 142,268   Loan ID 200642  Fixed  5.000%  3/1/2044   130,565 
 115,258   Loan ID 200645  Fixed  5.000%  4/1/2044   117,670 
 139,382   Loan ID 200649  Fixed  4.375%  3/1/2044   114,718 
 126,685   Loan ID 200650  Fixed  4.875%  5/1/2044   126,765 
 253,804   Loan ID 200651  Fixed  3.625%  7/1/2043   237,622 
 136,231   Loan ID 200655  Fixed  3.375%  5/1/2043   125,254 
 147,472   Loan ID 200656  Fixed  6.875%  7/1/2037   137,524 
 143,496   Loan ID 200657  Fixed  4.875%  8/1/2051   146,260 
 176,687   Loan ID 200660  Fixed  5.875%  3/1/2038   185,521 
 207,150   Loan ID 200662  Fixed  5.000%  3/1/2044   211,448 
 67,396   Loan ID 200663  Fixed  4.750%  5/1/2044   68,180 
 293,507   Loan ID 200668  Fixed  3.625%  4/1/2043   275,923 
 152,099   Loan ID 200669  Fixed  5.250%  4/1/2044   155,973 
 57,926   Loan ID 200670  Fixed  4.375%  2/1/2029   57,266 
 231,756   Loan ID 200671  Fixed  4.625%  8/1/2043   232,015 
 152,743   Loan ID 200672  Fixed  3.750%  7/1/2043   144,399 
 302,687   Loan ID 200674  Fixed  4.500%  5/1/2044   301,250 
 240,789   Loan ID 200675  Fixed  5.125%  4/1/2044   246,803 
 110,601   Loan ID 200677  Fixed  3.625%  5/1/2028   103,715 
 452,859   Loan ID 200678  Fixed  4.375%  2/1/2044   447,719 
 249,190   Loan ID 200679  Fixed  5.000%  4/1/2044   201,654 
 186,075   Loan ID 200682  Fixed  4.875%  5/1/2044   164,910 
 123,610   Loan ID 200684  Fixed  4.875%  4/1/2044   125,946 
 225,107   Loan ID 200685  Fixed  4.875%  5/1/2044   228,088 
 219,350   Loan ID 200690  Fixed  4.250%  4/1/2044   215,977 
 279,973   Loan ID 200691  Fixed  4.500%  5/1/2044   279,912 
 238,625   Loan ID 200692  Fixed  4.625%  7/1/2044   238,337 
 104,431   Loan ID 200694  Fixed  4.500%  9/1/2043   103,980 
 46,964   Loan ID 200696  Fixed  3.750%  10/1/2042   44,652 
 133,027   Loan ID 200697  Fixed  4.500%  1/1/2044   109,424 
 183,072   Loan ID 200699  Fixed  4.125%  7/1/2044   177,617 
 90,369   Loan ID 200700  Fixed  4.250%  2/1/2044   88,637 
 163,708   Loan ID 200701  Fixed  4.750%  6/1/2044   165,063 
 94,612   Loan ID 200704  Fixed  4.375%  3/1/2043   93,247 
 129,635   Loan ID 200708  Fixed  4.875%  2/1/2044   132,229 
 49,946   Loan ID 200709  Fixed  4.375%  4/1/2043   49,400 
 113,536   Loan ID 200710  Fixed  4.500%  7/1/2044   113,536 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$111,803   Loan ID 200711  Fixed  3.750%  7/1/2043  $105,659 
 592,933   Loan ID 200714  Fixed  4.175%  11/1/2036   510,228 
 210,493   Loan ID 200716  ARM  4.132%  8/1/2037   122,690 
 139,065   Loan ID 200720  ARM  3.875%  4/1/2042   95,836 
 147,795   Loan ID 200726  Fixed  4.125%  9/1/2037   88,101 
 163,339   Loan ID 200727  Fixed  2.625%  7/1/2037   144,911 
 446,614   Loan ID 200730  ARM  4.125%  9/1/2036   450,719 
 193,171   Loan ID 200732  Fixed  4.125%  9/1/2027   189,193 
 224,920   Loan ID 200733  Fixed  3.750%  12/1/2042   213,635 
 235,554   Loan ID 200734  ARM  3.375%  4/1/2044   234,636 
 99,716   Loan ID 200735  Fixed  4.500%  6/1/2044   99,437 
 141,632   Loan ID 200736  Fixed  4.750%  5/1/2044   124,447 
 173,178   Loan ID 200742  Fixed  4.250%  4/1/2043   169,494 
 187,639   Loan ID 200744  Fixed  3.625%  6/1/2043   175,767 
 442,148   Loan ID 200748  Fixed  4.750%  12/1/2043   445,596 
 150,789   Loan ID 200749  Fixed  4.750%  9/1/2043   152,654 
 237,726   Loan ID 200750  Fixed  4.750%  5/1/2044   240,992 
 58,759   Loan ID 200753  Fixed  5.250%  5/1/2044   60,008 
 54,240   Loan ID 200755  Fixed  4.250%  6/1/2043   53,369 
 187,312   Loan ID 200756  Fixed  4.875%  11/1/2043   171,794 
 123,516   Loan ID 200759  Fixed  3.750%  6/1/2043   117,338 
 168,905   Loan ID 200760  Fixed  3.750%  6/1/2043   160,213 
 293,645   Loan ID 200762  Fixed  3.875%  5/1/2042   282,019 
 150,003   Loan ID 200763  Fixed  4.250%  11/1/2043   146,989 
 200,742   Loan ID 200765  Fixed  4.875%  11/1/2043   202,935 
 481,392   Loan ID 200766  Fixed  3.625%  12/1/2042   452,640 
 175,137   Loan ID 200771  Fixed  4.500%  4/1/2043   175,137 
 241,065   Loan ID 200772  Fixed  3.750%  3/1/2043   229,036 
 200,940   Loan ID 200774  Fixed  3.875%  7/1/2043   192,528 
 43,669   Loan ID 200775  Fixed  4.250%  4/1/2043   42,820 
 79,753   Loan ID 200776  Fixed  4.250%  3/1/2044   78,172 
 52,667   Loan ID 200777  Fixed  4.750%  6/1/2044   45,539 
 140,460   Loan ID 200779  Fixed  4.625%  8/1/2044   140,104 
 164,707   Loan ID 200781  Fixed  4.625%  9/1/2044   163,413 
 137,920   Loan ID 200783  Fixed  4.750%  9/1/2044   139,507 
 110,973   Loan ID 200785  Fixed  4.500%  8/1/2044   110,498 
 222,948   Loan ID 200786  Fixed  4.625%  7/1/2044   224,485 
 42,435   Loan ID 200787  Fixed  4.750%  9/1/2044   42,495 
 172,850   Loan ID 200788  Fixed  3.625%  12/1/2028   160,958 
 127,686   Loan ID 200789  Fixed  3.750%  9/1/2044   120,901 
 148,517   Loan ID 200790  Fixed  4.250%  8/1/2044   146,231 
 199,815   Loan ID 200791  Fixed  4.875%  6/1/2044   201,596 
 351,123   Loan ID 200792  Fixed  3.375%  1/1/2043   240,632 
 91,261   Loan ID 200795  Fixed  6.750%  8/1/2036   90,107 
 70,715   Loan ID 200796  Fixed  3.170%  12/1/2053   21,260 
 58,601   Loan ID 200799  Fixed  4.000%  2/5/2053   53,409 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$64,101   Loan ID 200800  Fixed  4.000%  1/1/2053  $56,189 
 353,021   Loan ID 200803  Fixed  3.410%  11/1/2050   203,934 
 152,359   Loan ID 200805  Fixed  4.625%  7/1/2050   109,256 
 157,066   Loan ID 200806  Fixed  5.000%  8/1/2049   107,782 
 57,161   Loan ID 200808  Fixed  4.250%  11/1/2050   25,162 
 115,523   Loan ID 200809  Fixed  5.000%  4/1/2050   64,466 
 236,600   Loan ID 200814  Fixed  8.250%  7/1/2039   246,950 
 279,325   Loan ID 200817  Fixed  5.000%  1/1/2050   180,061 
 129,576   Loan ID 200820  Fixed  4.000%  7/1/2044   125,304 
 204,962   Loan ID 200821  Fixed  4.250%  8/1/2044   201,642 
 79,812   Loan ID 200823  Fixed  4.250%  9/1/2044   78,516 
 217,612   Loan ID 200824  Fixed  4.250%  8/1/2044   209,699 
 104,204   Loan ID 200826  Fixed  4.375%  9/1/2044   102,419 
 181,813   Loan ID 200827  Fixed  3.875%  6/1/2044   173,288 
 232,106   Loan ID 200829  Fixed  4.375%  7/1/2043   229,625 
 202,721   Loan ID 200830  ARM  2.875%  7/1/2044   200,177 
 70,320   Loan ID 200831  Fixed  4.250%  10/1/2044   68,709 
 333,984   Loan ID 200832  Fixed  4.250%  10/1/2044   327,342 
 157,062   Loan ID 200834  Fixed  4.125%  7/1/2043   153,142 
 322,113   Loan ID 200835  Fixed  5.000%  8/1/2043   329,809 
 178,932   Loan ID 200838  Fixed  3.750%  8/1/2044   169,027 
 229,455   Loan ID 200839  Fixed  5.000%  5/1/2044   234,522 
 175,749   Loan ID 200842  Fixed  4.250%  8/1/2044   172,421 
 351,869   Loan ID 200843  Fixed  4.750%  10/1/2043   353,627 
 296,155   Loan ID 200844  Fixed  4.500%  7/1/2043   295,236 
 199,447   Loan ID 200846  Fixed  4.375%  11/1/2043   195,117 
 178,925   Loan ID 200847  Fixed  4.750%  10/1/2044   180,618 
 108,246   Loan ID 200853  Fixed  5.000%  4/1/2037   109,449 
 224,085   Loan ID 200855  ARM  4.551%  7/1/2037   194,207 
 199,313   Loan ID 200856  Fixed  6.500%  6/1/2042   124,222 
 260,421   Loan ID 200858  Fixed  3.000%  1/1/2053   222,113 
 163,825   Loan ID 200860  Fixed  3.000%  3/1/2052   108,218 
 420,947   Loan ID 200861  Fixed  2.000%  6/1/2054   275,253 
 246,030   Loan ID 200863  Fixed  3.000%  7/1/2052   208,300 
 259,462   Loan ID 200864  Fixed  4.000%  1/1/2037   97,113 
 261,320   Loan ID 200866  Fixed  2.000%  5/1/2053   217,930 
 111,342   Loan ID 200867  Fixed  2.370%  9/1/2053   93,411 
 197,288   Loan ID 200873  Fixed  3.525%  11/1/2053   79,778 
 192,940   Loan ID 200876  ARM  3.750%  5/1/2035   154,380 
 186,696   Loan ID 200880  Fixed  4.250%  6/1/2043   183,522 
 76,873   Loan ID 200883  Fixed  3.375%  5/1/2028   70,618 
 91,656   Loan ID 200886  Fixed  4.250%  10/1/2044   89,878 
 247,935   Loan ID 200887  Fixed  4.750%  9/1/2044   249,823 
 231,704   Loan ID 200888  Fixed  4.500%  9/1/2044   230,669 
 202,675   Loan ID 200891  Fixed  4.250%  10/1/2044   198,404 
 248,690   Loan ID 200892  Fixed  3.750%  9/1/2043   185,778 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$95,857   Loan ID 200894  Fixed  5.000%  10/1/2043  $97,952 
 220,262   Loan ID 200895  Fixed  3.875%  11/1/2043   211,159 
 190,915   Loan ID 200897  Fixed  4.750%  10/1/2044   191,345 
 363,120   Loan ID 200900  Fixed  4.375%  9/1/2044   360,509 
 646,100   Loan ID 200902  Fixed  4.250%  9/1/2044   635,859 
 246,725   Loan ID 200904  Fixed  5.125%  9/1/2044   253,362 
 395,445   Loan ID 200905  Fixed  5.375%  9/1/2044   406,908 
 300,107   Loan ID 200906  Fixed  4.875%  2/1/2035   305,856 
 354,573   Loan ID 200907  ARM  4.182%  8/1/2047   310,023 
 104,335   Loan ID 200908  Fixed  4.000%  6/1/2049   102,008 
 113,778   Loan ID 200909  Fixed  4.870%  3/1/2046   115,974 
 199,408   Loan ID 200910  Fixed  3.300%  4/1/2053   165,522 
 723,314   Loan ID 200912  Fixed  4.500%  3/1/2037   714,750 
 58,464   Loan ID 200913  Fixed  4.250%  5/1/2047   46,142 
 147,769   Loan ID 200914  Fixed  2.875%  12/1/2047   135,055 
 91,776   Loan ID 200916  Fixed  4.000%  10/1/2037   86,170 
 157,937   Loan ID 200917  Fixed  4.875%  1/1/2051   161,080 
 94,593   Loan ID 200921  ARM  4.750%  7/1/2051   99,322 
 418,232   Loan ID 200922  Fixed  3.340%  9/1/2053   397,726 
 504,641   Loan ID 200924  Fixed  5.500%  9/1/2051   527,105 
 316,483   Loan ID 200927  Fixed  3.000%  8/1/2038   291,413 
 119,343   Loan ID 200928  Fixed  4.800%  12/1/2036   121,054 
 159,202   Loan ID 200929  Fixed  4.625%  1/1/2043   159,452 
 386,380   Loan ID 200931  Fixed  4.250%  12/1/2052   332,722 
 298,010   Loan ID 200933  Fixed  4.250%  3/1/2043   292,963 
 112,690   Loan ID 200934  Fixed  3.810%  1/1/2043   107,362 
 175,303   Loan ID 200935  Fixed  3.875%  4/1/2043   168,174 
 191,713   Loan ID 200936  Fixed  4.000%  5/1/2042   185,600 
 119,869   Loan ID 200939  Fixed  4.170%  5/1/2042   117,595 
 195,690   Loan ID 200940  Fixed  3.250%  2/1/2043   178,234 
 113,944   Loan ID 200941  Fixed  3.780%  1/1/2043   108,355 
 275,494   Loan ID 200942  Fixed  4.000%  4/1/2043   266,438 
 103,042   Loan ID 200944  Fixed  4.500%  2/1/2044   101,851 
 284,355   Loan ID 200947  Fixed  4.000%  2/1/2043   274,874 
 127,994   Loan ID 200948  Fixed  4.625%  12/1/2042   127,629 
 277,535   Loan ID 200949  Fixed  3.875%  4/1/2043   266,135 
 179,357   Loan ID 200952  Fixed  3.875%  1/1/2043   171,945 
 115,826   Loan ID 200953  Fixed  3.750%  12/1/2042   109,832 
 373,294   Loan ID 200954  Fixed  3.625%  1/1/2043   350,401 
 323,103   Loan ID 200955  Fixed  3.250%  5/1/2043   294,584 
 261,181   Loan ID 200956  Fixed  5.000%  8/1/2051   267,968 
 94,837   Loan ID 200958  Fixed  3.875%  6/1/2043   90,763 
 412,811   Loan ID 200959  Fixed  4.000%  11/1/2042   399,761 
 360,631   Loan ID 200960  Fixed  3.500%  1/1/2043   335,071 
 176,434   Loan ID 200961  Fixed  4.750%  6/1/2043   178,172 
 203,287   Loan ID 200962  Fixed  4.250%  10/1/2044   199,767 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$116,780   Loan ID 200963  Fixed  4.750%  9/1/2044  $117,531 
 348,834   Loan ID 200964  Fixed  3.750%  7/1/2043   330,865 
 145,136   Loan ID 200966  Fixed  4.875%  7/1/2044   116,299 
 93,786   Loan ID 200968  Fixed  4.250%  11/1/2044   77,928 
 358,580   Loan ID 200969  Fixed  4.875%  8/1/2043   364,105 
 152,427   Loan ID 200974  Fixed  4.250%  10/1/2044   149,693 
 56,668   Loan ID 200975  Fixed  4.750%  12/1/2044   57,334 
 350,397   Loan ID 200977  Fixed  4.875%  9/1/2044   350,397 
 203,908   Loan ID 200983  Fixed  4.375%  8/1/2044   201,779 
 113,154   Loan ID 200987  Fixed  4.625%  10/1/2044   113,259 
 199,966   Loan ID 200989  Fixed  3.750%  6/1/2029   188,439 
 280,991   Loan ID 200992  Fixed  4.125%  5/1/2043   274,243 
 166,154   Loan ID 200993  Fixed  2.004%  7/15/2049   139,826 
 200,909   Loan ID 200994  Fixed  4.125%  5/1/2053   197,362 
 55,844   Loan ID 200996  Fixed  2.500%  8/1/2048   32,299 
 96,588   Loan ID 200997  Fixed  2.000%  3/1/2051   72,744 
 361,856   Loan ID 200998  Fixed  3.875%  12/1/2050   343,190 
 71,916   Loan ID 201000  Fixed  5.125%  2/1/2039   74,077 
 27,159   Loan ID 201002  Fixed  0.000%  10/1/2024   22,008 
 128,539   Loan ID 201005  Fixed  4.750%  7/1/2041   130,119 
 42,722   Loan ID 201006  Fixed  6.875%  3/1/2038   44,858 
 83,521   Loan ID 201007  Fixed  7.125%  4/1/2037   87,697 
 66,320   Loan ID 201009  Fixed  0.000%  4/1/2033   54,110 
 79,217   Loan ID 201010  Fixed  5.500%  4/1/2039   82,698 
 34,195   Loan ID 201011  Fixed  0.000%  2/1/2023   27,769 
 45,843   Loan ID 201012  Fixed  7.500%  12/1/2038   47,002 
 55,735   Loan ID 201013  Fixed  7.500%  12/1/2038   47,128 
 82,624   Loan ID 201014  Fixed  0.000%  2/1/2033   66,963 
 11,159   Loan ID 201015  Fixed  0.000%  3/29/2021   9,175 
 105,290   Loan ID 201016  Fixed  6.500%  2/1/2036   110,555 
 22,498   Loan ID 201017  Fixed  0.000%  4/1/2032   18,245 
 91,218   Loan ID 201020  Fixed  0.000%  10/1/2034   74,034 
 78,981   Loan ID 201022  ARM  3.750%  5/1/2037   63,919 
 140,451   Loan ID 201023  Fixed  6.450%  2/1/2036   128,915 
 79,148   Loan ID 201026  Fixed  7.750%  12/1/2035   80,536 
 106,667   Loan ID 201027  ARM  9.538%  3/1/2037   112,001 
 102,362   Loan ID 201030  Fixed  5.000%  7/1/2042   105,108 
 140,529   Loan ID 201032  Fixed  4.500%  11/1/2044   113,287 
 283,327   Loan ID 201033  Fixed  4.125%  12/1/2044   276,594 
 92,602   Loan ID 201036  Fixed  4.375%  12/1/2044   91,354 
 68,423   Loan ID 201037  Fixed  8.250%  7/1/2039   71,844 
 270,882   Loan ID 201040  Fixed  4.000%  11/1/2045   195,018 
 90,360   Loan ID 201041  Fixed  3.750%  11/1/2052   85,403 
 114,487   Loan ID 201043  Fixed  4.000%  4/1/2039   104,117 
 178,586   Loan ID 201044  Fixed  4.870%  3/29/2037   182,048 
 107,892   Loan ID 201045  Fixed  3.000%  7/1/2037   78,855 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$263,076   Loan ID 201046  Fixed  2.000%  4/1/2053  $201,846 
 108,206   Loan ID 201047  Fixed  3.625%  4/1/2053   95,110 
 172,362   Loan ID 201048  Fixed  3.000%  4/1/2052   128,896 
 65,027   Loan ID 201053  Fixed  3.860%  7/1/2053   62,802 
 209,866   Loan ID 201054  Fixed  2.400%  5/17/2050   175,920 
 585,663   Loan ID 201056  Fixed  2.000%  7/1/2054   498,926 
 165,853   Loan ID 201057  Fixed  2.000%  1/1/2050   121,892 
 130,255   Loan ID 201058  Fixed  2.500%  8/1/2037   109,253 
 110,245   Loan ID 201060  ARM  4.250%  7/1/2035   95,534 
 86,409   Loan ID 201061  Fixed  5.000%  2/1/2050   68,329 
 117,977   Loan ID 201062  Fixed  3.100%  4/1/2047   108,056 
 123,696   Loan ID 201063  Fixed  4.000%  9/1/2047   104,372 
 210,959   Loan ID 201065  Fixed  3.000%  7/1/2037   163,820 
 228,784   Loan ID 201066  Fixed  4.250%  12/1/2046   226,033 
 431,800   Loan ID 201067  Fixed  4.750%  1/1/2044   434,932 
 68,135   Loan ID 201069  Fixed  4.625%  12/1/2044   68,286 
 611,259   Loan ID 201070  Fixed  4.250%  2/1/2045   598,868 
 106,099   Loan ID 201072  Fixed  3.500%  3/1/2028   98,705 
 40,388   Loan ID 201073  Fixed  3.125%  4/1/2023   35,598 
 94,931   Loan ID 201075  Fixed  4.375%  10/1/2044   87,988 
 124,214   Loan ID 201076  Fixed  3.500%  12/1/2042   115,365 
 133,584   Loan ID 201077  Fixed  3.625%  7/1/2044   123,185 
 224,553   Loan ID 201084  Fixed  5.000%  8/1/2038   230,305 
 145,799   Loan ID 201086  Fixed  4.625%  11/1/2044   144,598 
 157,682   Loan ID 201091  Fixed  4.125%  1/1/2045   126,675 
 248,431   Loan ID 201092  Fixed  5.250%  4/1/2046   255,480 
 135,192   Loan ID 201093  Fixed  4.125%  9/1/2043   113,658 
 147,216   Loan ID 201094  Fixed  4.550%  3/1/2044   145,712 
 93,151   Loan ID 201100  Fixed  4.125%  7/1/2043   91,046 
 346,616   Loan ID 201101  Fixed  4.625%  3/1/2045   346,685 
 151,897   Loan ID 201103  ARM  2.875%  5/1/2044   151,320 
 158,542   Loan ID 201104  Fixed  4.375%  4/1/2045   156,353 
 77,557   Loan ID 201107  Fixed  5.150%  2/1/2036   79,115 
 151,839   Loan ID 201108  Fixed  4.750%  2/1/2054   135,183 
 516,403   Loan ID 201110  ARM  4.625%  4/1/2037   413,731 
 160,314   Loan ID 201111  Fixed  4.875%  4/1/2050   91,177 
 241,848   Loan ID 201112  Fixed  4.750%  8/1/2037   245,171 
 78,046   Loan ID 201113  Fixed  5.750%  12/1/2052   81,949 
 110,310   Loan ID 201114  Fixed  8.087%  5/1/2054   88,795 
 504,524   Loan ID 201115  Fixed  4.000%  2/1/2051   383,157 
 123,534   Loan ID 201119  Fixed  4.000%  5/1/2034   116,136 
 89,174   Loan ID 201121  Fixed  4.000%  10/1/2037   65,980 
 84,858   Loan ID 201122  Fixed  4.750%  11/1/2048   77,738 
 171,107   Loan ID 201123  Fixed  4.000%  7/1/2054   43,929 
 242,762   Loan ID 201124  Fixed  4.750%  4/1/2040   246,062 
 430,559   Loan ID 201126  Fixed  6.500%  4/1/2049   452,087 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$81,122   Loan ID 201127  ARM  3.750%  4/1/2037  $69,670 
 118,277   Loan ID 201130  Fixed  4.850%  12/1/2037   119,091 
 116,196   Loan ID 201131  Fixed  7.353%  5/1/2053   89,172 
 168,632   Loan ID 201132  Fixed  4.000%  7/1/2037   118,772 
 196,076   Loan ID 201134  Fixed  2.000%  10/1/2053   148,246 
 518,631   Loan ID 201135  Fixed  3.000%  6/1/2051   404,201 
 55,862   Loan ID 201138  Fixed  4.250%  3/1/2034   55,274 
 159,222   Loan ID 201139  Fixed  2.000%  11/1/2053   121,557 
 153,216   Loan ID 201140  Fixed  4.870%  1/1/2038   154,292 
 87,031   Loan ID 201143  Fixed  3.000%  11/1/2037   64,540 
 99,887   Loan ID 201144  Fixed  4.250%  9/1/2045   98,701 
 225,845   Loan ID 201145  Fixed  4.375%  4/1/2051   221,798 
 129,984   Loan ID 201146  Fixed  4.875%  8/1/2054   107,277 
 108,283   Loan ID 201147  Fixed  4.000%  11/1/2051   84,942 
 94,749   Loan ID 201148  Fixed  3.950%  10/1/2042   92,362 
 278,433   Loan ID 201149  Fixed  5.719%  6/1/2051   159,353 
 246,709   Loan ID 201153  Fixed  5.000%  6/1/2050   164,260 
 58,321   Loan ID 201154  ARM  4.250%  11/1/2041   52,662 
 93,704   Loan ID 201155  Fixed  2.000%  11/1/2053   58,801 
 63,583   Loan ID 201156  Fixed  5.000%  4/1/2050   47,192 
 287,299   Loan ID 201157  Fixed  4.000%  3/1/2055   279,735 
 201,131   Loan ID 201160  Fixed  4.920%  10/1/2049   137,067 
 378,175   Loan ID 201163  Fixed  4.750%  12/1/2049   236,648 
 163,605   Loan ID 201164  Fixed  4.250%  11/1/2051   161,915 
 110,184   Loan ID 201165  Fixed  4.750%  1/1/2044   111,292 
 428,819   Loan ID 201168  Fixed  3.000%  4/1/2052   318,177 
 106,023   Loan ID 201169  Fixed  5.934%  9/1/2037   94,529 
 64,647   Loan ID 201170  Fixed  4.375%  7/1/2037   63,482 
 106,968   Loan ID 201173  Fixed  3.000%  11/1/2047   51,295 
 144,993   Loan ID 201174  Fixed  4.750%  1/1/2053   147,005 
 62,122   Loan ID 201175  Fixed  5.000%  9/1/2044   63,671 
 133,278   Loan ID 201176  Fixed  4.250%  8/1/2053   130,266 
 302,551   Loan ID 201178  Fixed  3.193%  6/1/2051   217,791 
 298,333   Loan ID 201179  Fixed  4.000%  5/1/2051   186,897 
 301,330   Loan ID 201181  Fixed  4.500%  4/1/2034   264,797 
 132,272   Loan ID 201183  Fixed  3.375%  10/1/2052   104,347 
 62,651   Loan ID 201184  Fixed  4.000%  6/1/2049   61,233 
 255,297   Loan ID 201185  Fixed  5.760%  10/1/2053   215,354 
 80,496   Loan ID 201187  Fixed  2.000%  11/1/2048   41,600 
 157,879   Loan ID 201190  Fixed  4.250%  6/1/2051   156,205 
 212,664   Loan ID 201191  Fixed  3.000%  2/1/2037   205,247 
 621,233   Loan ID 201196  Fixed  2.000%  11/1/2036   482,776 
 170,836   Loan ID 201197  Fixed  5.125%  8/1/2037   174,055 
 331,038   Loan ID 201199  Fixed  5.125%  11/1/2046   308,742 
 282,782   Loan ID 201200  Fixed  4.500%  3/1/2044   282,648 
 286,546   Loan ID 201201  Fixed  4.500%  8/1/2044   285,403 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$446,221   Loan ID 201204  Fixed  3.750%  4/1/2045  $420,830 
 147,281   Loan ID 201205  Fixed  4.625%  1/1/2045   147,662 
 128,727   Loan ID 201206  Fixed  3.990%  4/1/2045   123,932 
 417,117   Loan ID 201207  Fixed  4.625%  8/1/2051   405,443 
 114,307   Loan ID 201208  Fixed  4.625%  4/1/2045   113,646 
 177,494   Loan ID 201209  Fixed  4.250%  4/1/2045   163,626 
 127,631   Loan ID 201211  Fixed  4.125%  7/1/2044   97,253 
 359,377   Loan ID 201212  Fixed  4.625%  3/1/2045   294,942 
 196,362   Loan ID 201213  Fixed  4.875%  8/1/2044   194,309 
 538,054   Loan ID 201214  ARM  2.875%  9/1/2043   517,408 
 261,638   Loan ID 201216  Fixed  3.500%  2/1/2043   199,534 
 100,620   Loan ID 201217  Fixed  3.875%  5/1/2045   75,718 
 124,744   Loan ID 201218  Fixed  4.125%  1/1/2045   105,574 
 63,986   Loan ID 201221  Fixed  3.250%  5/1/2043   65,483 
 47,653   Loan ID 201222  Fixed  5.125%  1/1/2045   47,713 
 209,721   Loan ID 201223  Fixed  3.875%  4/1/2030   211,104 
 59,621   Loan ID 201226  Fixed  5.000%  3/1/2045   60,526 
 75,442   Loan ID 201229  Fixed  3.250%  7/1/2024   73,812 
 122,908   Loan ID 201232  Fixed  4.500%  1/1/2045   120,830 
 254,994   Loan ID 201233  Fixed  4.500%  12/1/2044   251,745 
 232,633   Loan ID 201237  Fixed  3.750%  5/1/2045   220,231 
 156,405   Loan ID 201240  Fixed  4.250%  10/1/2045   149,426 
 293,755   Loan ID 201241  Fixed  4.375%  7/1/2045   291,428 
 224,548   Loan ID 201242  Fixed  4.625%  11/1/2044   222,872 
 109,450   Loan ID 201243  Fixed  4.625%  11/1/2045   109,096 
 396,447   Loan ID 201244  Fixed  4.500%  6/1/2045   387,674 
 113,406   Loan ID 201245  Fixed  4.750%  8/1/2044   114,538 
 184,952   Loan ID 201247  Fixed  4.250%  5/1/2045   137,841 
 99,912   Loan ID 201248  Fixed  4.875%  7/1/2044   100,927 
 461,694   Loan ID 201249  Fixed  4.625%  8/1/2045   405,574 
 59,795   Loan ID 201250  Fixed  4.250%  10/1/2045   58,371 
 129,780   Loan ID 201251  Fixed  4.500%  8/1/2045   114,260 
 6,488   Loan ID 201253  ARM  8.750%  3/1/2019   6,813 
 157,359   Loan ID 201254  ARM  8.375%  9/1/2034   165,227 
 240,975   Loan ID 201255  ARM  8.000%  6/1/2035   253,024 
 30,247   Loan ID 201256  ARM  10.500%  10/1/2021   31,760 
 237,895   Loan ID 201257  Fixed  4.500%  5/1/2044   234,471 
 90,302   Loan ID 201258  Fixed  4.500%  6/1/2045   43,624 
 119,056   Loan ID 201259  Fixed  4.625%  1/1/2046   118,248 
 170,872   Loan ID 201260  Fixed  4.750%  9/1/2045   171,322 
 60,130   Loan ID 201262  Fixed  4.200%  1/1/2046   63,136 
 49,842   Loan ID 201263  Fixed  4.750%  10/1/2045   44,082 
 355,536   Loan ID 201265  Fixed  4.750%  6/1/2045   357,816 
 144,833   Loan ID 201266  Fixed  4.500%  2/1/2046   143,067 
 235,108   Loan ID 201268  Fixed  4.250%  6/1/2045   230,492 
 124,157   Loan ID 201269  Fixed  4.375%  12/1/2045   74,112 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$151,107   Loan ID 201270  Fixed  4.125%  2/1/2045  $146,426 
 252,802   Loan ID 201271  Fixed  4.500%  6/1/2045   247,124 
 139,307   Loan ID 201272  Fixed  4.750%  11/1/2044   140,194 
 239,950   Loan ID 201273  Fixed  4.500%  12/1/2045   237,760 
 216,552   Loan ID 201274  Fixed  4.125%  10/1/2045   205,553 
 191,406   Loan ID 201278  Fixed  3.750%  12/1/2045   154,834 
 368,487   Loan ID 201280  Fixed  4.500%  4/1/2046   351,485 
 152,441   Loan ID 201281  Fixed  4.875%  7/1/2044   154,386 
 128,979   Loan ID 201282  Fixed  5.250%  1/1/2046   131,747 
 110,345   Loan ID 201283  Fixed  4.250%  11/1/2045   106,528 
 130,266   Loan ID 201284  Fixed  3.625%  2/1/2029   129,735 
 32,044   Loan ID 201285  Fixed  4.625%  11/1/2028   32,668 
 109,651   Loan ID 201286  Fixed  4.375%  12/1/2045   107,997 
 85,046   Loan ID 201289  Fixed  4.000%  3/1/2045   81,371 
 247,324   Loan ID 201290  Fixed  4.750%  7/1/2045   249,432 
 302,932   Loan ID 201291  Fixed  5.000%  8/1/2045   306,254 
 80,860   Loan ID 201292  Fixed  4.500%  5/1/2045   84,903 
 36,950   Loan ID 201293  Fixed  4.875%  9/1/2045   36,972 
 125,497   Loan ID 201294  Fixed  4.625%  2/1/2046   122,302 
 97,648   Loan ID 201295  Fixed  4.500%  12/1/2045   82,344 
 759,673   Loan ID 201296  Fixed  4.250%  2/1/2046   735,342 
 339,759   Loan ID 201297  Fixed  4.875%  8/1/2045   344,269 
 253,960   Loan ID 201299  Fixed  4.250%  12/1/2045   185,527 
 196,583   Loan ID 201300  Fixed  4.750%  3/1/2046   194,652 
 73,091   Loan ID 201301  Fixed  4.550%  10/1/2044   72,424 
 135,249   Loan ID 201302  Fixed  4.250%  5/1/2045   131,974 
 97,217   Loan ID 201303  Fixed  3.875%  3/1/2045   92,703 
 225,898   Loan ID 201304  Fixed  4.125%  2/1/2046   214,354 
 148,132   Loan ID 201305  Fixed  4.625%  8/1/2044   147,872 
 117,056   Loan ID 201306  Fixed  3.875%  9/1/2045   108,463 
 167,723   Loan ID 201307  Fixed  4.250%  11/1/2045   126,977 
 62,311   Loan ID 201308  Fixed  4.625%  11/1/2045   61,718 
 162,256   Loan ID 201309  Fixed  4.000%  9/1/2045   135,748 
 187,098   Loan ID 201310  Fixed  4.750%  9/1/2045   148,729 
 136,695   Loan ID 201311  Fixed  4.375%  3/1/2046   133,678 
 322,194   Loan ID 201313  Fixed  4.625%  1/1/2046   321,442 
 112,629   Loan ID 201315  Fixed  4.375%  9/1/2045   110,522 
 161,848   Loan ID 201316  Fixed  4.500%  2/1/2046   121,303 
 166,971   Loan ID 201317  Fixed  5.250%  2/1/2046   170,309 
 85,431   Loan ID 201318  Fixed  4.750%  11/1/2045   66,383 
 172,271   Loan ID 201319  Fixed  4.375%  10/1/2045   148,844 
 164,358   Loan ID 201320  Fixed  4.000%  10/1/2045   157,913 
 98,037   Loan ID 201321  Fixed  4.000%  1/1/2046   60,676 
 123,563   Loan ID 201323  Fixed  4.375%  7/1/2045   121,243 
 135,748   Loan ID 201324  Fixed  5.250%  4/1/2046   136,033 
 207,675   Loan ID 201325  Fixed  4.500%  5/1/2046   199,360 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$177,024   Loan ID 201326  Fixed  4.625%  3/1/2046  $174,911 
 208,424   Loan ID 201327  Fixed  4.250%  9/1/2045   203,617 
 191,371   Loan ID 201328  Fixed  4.250%  11/1/2045   161,165 
 159,665   Loan ID 201329  Fixed  4.250%  11/1/2045   129,091 
 270,181   Loan ID 201330  Fixed  4.375%  6/1/2046   264,616 
 357,186   Loan ID 201331  Fixed  4.250%  10/1/2044   353,233 
 348,178   Loan ID 201333  Fixed  3.875%  1/1/2046   321,700 
 192,629   Loan ID 201335  Fixed  4.750%  1/1/2046   192,309 
 190,582   Loan ID 201336  Fixed  4.750%  1/1/2046   146,122 
 135,770   Loan ID 201338  Fixed  4.375%  10/1/2045   133,421 
 417,435   Loan ID 201339  Fixed  4.625%  7/1/2045   426,388 
 125,441   Loan ID 201340  Fixed  4.375%  7/1/2045   69,066 
 144,851   Loan ID 201341  Fixed  4.050%  11/1/2045   138,244 
 144,795   Loan ID 201342  Fixed  4.750%  7/1/2045   145,661 
 87,422   Loan ID 201343  Fixed  4.250%  11/1/2045   84,967 
 73,390   Loan ID 201344  Fixed  5.000%  7/1/2044   74,846 
 136,279   Loan ID 201345  Fixed  4.125%  5/1/2045   115,151 
 473,326   Loan ID 201347  Fixed  5.750%  5/1/2046   473,326 
 453,133   Loan ID 201348  Fixed  6.500%  5/1/2046   472,462 
 238,070   Loan ID 201349  Fixed  5.625%  2/1/2046   243,743 
 243,231   Loan ID 201350  Fixed  4.000%  6/1/2045   197,777 
 62,533   Loan ID 201351  Fixed  4.500%  4/1/2045   47,209 
 73,637   Loan ID 201352  Fixed  4.875%  3/1/2045   73,912 
 507,071   Loan ID 201354  Fixed  3.375%  7/1/2046   490,868 
 134,610   Loan ID 201355  Fixed  5.250%  12/1/2045   137,771 
 104,463   Loan ID 201356  Fixed  4.625%  10/1/2045   104,119 
 150,896   Loan ID 201358  Fixed  4.875%  7/1/2045   133,190 
 190,808   Loan ID 201359  Fixed  4.250%  9/1/2045   186,634 
 145,450   Loan ID 201361  Fixed  5.250%  7/1/2044   148,748 
 125,183   Loan ID 201363  Fixed  4.250%  2/1/2046   105,368 
 112,841   Loan ID 201364  Fixed  3.875%  4/1/2046   91,668 
 343,794   Loan ID 201365  Fixed  4.250%  10/1/2045   334,806 
 275,644   Loan ID 201366  Fixed  4.500%  6/1/2046   232,080 
 111,322   Loan ID 201367  Fixed  4.000%  10/1/2045   105,491 
 48,111   Loan ID 201368  Fixed  5.125%  2/1/2045   48,987 
 183,570   Loan ID 201370  Fixed  4.250%  7/1/2046   148,624 
 101,285   Loan ID 201371  Fixed  4.125%  4/1/2046   93,629 
 261,596   Loan ID 201372  Fixed  4.625%  8/1/2046   251,472 
 157,844   Loan ID 201373  Fixed  5.125%  4/1/2046   160,916 
 608,476   Loan ID 201374  Fixed  4.500%  5/1/2040   607,775 
 145,144   Loan ID 201375  Fixed  4.500%  6/1/2045   141,693 
 271,619   Loan ID 201376  Fixed  4.375%  5/1/2046   265,789 
 305,413   Loan ID 201377  Fixed  3.875%  5/1/2046   317,788 
 68,338   Loan ID 201379  Fixed  5.000%  10/1/2045   69,170 
 431,736   Loan ID 201380  Fixed  4.500%  5/1/2046   425,589 
 318,666   Loan ID 201381  Fixed  4.875%  7/1/2045   322,384 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$312,453   Loan ID 201382  Fixed  4.625%  9/1/2045  $307,058 
 135,760   Loan ID 201383  Fixed  4.125%  12/1/2045   138,669 
 79,492   Loan ID 201384  Fixed  4.375%  10/1/2045   79,814 
 140,833   Loan ID 201385  Fixed  4.625%  12/1/2045   147,875 
 80,461   Loan ID 201386  Fixed  5.250%  5/1/2046   84,485 
 64,648   Loan ID 201387  Fixed  5.250%  8/1/2029   67,262 
 451,020   Loan ID 201389  Fixed  7.125%  6/1/2046   473,571 
 237,871   Loan ID 201390  Fixed  5.125%  9/1/2045   240,996 
 400,626   Loan ID 201391  Fixed  5.125%  10/1/2045   405,597 
 170,652   Loan ID 201392  Fixed  3.750%  2/1/2046   132,453 
 430,569   Loan ID 201393  Fixed  3.750%  4/1/2056   424,698 
 80,473   Loan ID 201394  Fixed  6.700%  6/1/2034   80,636 
 85,781   Loan ID 201395  Fixed  6.300%  7/1/2044   78,999 
 72,550   Loan ID 201396  Fixed  5.000%  9/1/2046   74,371 
 267,776   Loan ID 201397  Fixed  4.125%  1/1/2046   253,196 
 83,179   Loan ID 201399  Fixed  5.000%  11/1/2045   84,167 
 86,642   Loan ID 201400  Fixed  4.750%  7/1/2044   86,921 
 92,052   Loan ID 201401  Fixed  4.750%  10/1/2044   92,310 
 146,904   Loan ID 201402  Fixed  4.750%  8/1/2044   115,342 
 94,998   Loan ID 201403  Fixed  4.750%  8/1/2044   74,536 
 136,444   Loan ID 201404  Fixed  4.750%  10/1/2044   107,544 
 72,189   Loan ID 201405  Fixed  5.250%  8/1/2044   74,223 
 55,651   Loan ID 201406  Fixed  4.250%  6/1/2046   53,394 
 243,521   Loan ID 201407  Fixed  4.875%  1/1/2046   241,538 
 167,146   Loan ID 201408  Fixed  4.125%  1/1/2046   161,917 
 76,676   Loan ID 201409  Fixed  4.500%  12/1/2045   75,740 
 164,672   Loan ID 201411  Fixed  4.750%  12/1/2045   165,838 
 142,925   Loan ID 201412  Fixed  5.750%  12/1/2045   132,593 
 338,599   Loan ID 201413  Fixed  4.500%  7/1/2045   287,537 
 75,322   Loan ID 201414  Fixed  4.250%  7/1/2044   59,852 
 58,893   Loan ID 201415  Fixed  8.000%  4/1/2034   61,837 
 55,683   Loan ID 201416  Fixed  10.000%  7/1/2033   58,467 
 62,260   Loan ID 201417  Fixed  6.000%  8/1/2037   65,373 
 43,077   Loan ID 201419  Fixed  10.000%  11/1/2033   45,231 
 58,537   Loan ID 201420  Fixed  9.000%  10/1/2031   61,464 
 47,226   Loan ID 201421  Fixed  11.500%  7/1/2027   49,587 
 57,701   Loan ID 201422  Fixed  4.625%  10/1/2046   55,768 
 694,986   Loan ID 201423  ARM  3.875%  6/1/2045   698,944 
 291,384   Loan ID 201424  Fixed  4.125%  10/1/2044   277,780 
 671,376   Loan ID 201425  Fixed  3.875%  4/1/2046   635,862 
 318,069   Loan ID 201426  Fixed  4.875%  3/1/2044   321,615 
 546,882   Loan ID 201428  ARM  3.250%  4/1/2045   544,453 
 354,062   Loan ID 201430  Fixed  4.500%  2/1/2044   312,201 
 198,105   Loan ID 201431  Fixed  4.875%  5/1/2045   174,584 
 282,469   Loan ID 201432  Fixed  5.000%  8/1/2046   279,662 
 99,587   Loan ID 201434  Fixed  4.375%  6/1/2046   104,566 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$91,606   Loan ID 201436  Fixed  4.375%  5/1/2045  $96,186 
 130,042   Loan ID 201437  Fixed  4.750%  5/1/2046   111,921 
 711,760   Loan ID 201438  ARM  3.375%  4/1/2046   704,655 
 181,300   Loan ID 201439  Fixed  5.000%  12/1/2045   184,055 
 320,920   Loan ID 201440  Fixed  4.625%  7/1/2046   270,541 
 100,949   Loan ID 201441  Fixed  4.750%  10/1/2045   100,026 
 301,076   Loan ID 201442  Fixed  4.875%  12/1/2045   298,452 
 558,429   Loan ID 201443  Fixed  3.875%  8/1/2046   528,210 
 51,844   Loan ID 201444  Fixed  4.500%  11/1/2044   51,179 
 103,315   Loan ID 201445  Fixed  4.875%  1/1/2045   104,178 
 100,277   Loan ID 201446  Fixed  4.875%  1/1/2045   101,197 
 255,219   Loan ID 201447  Fixed  4.875%  10/1/2044   258,070 
 111,901   Loan ID 201448  Fixed  4.750%  1/1/2045   112,213 
 94,378   Loan ID 201449  Fixed  4.000%  8/1/2044   99,097 
 226,049   Loan ID 201451  Fixed  4.250%  6/1/2045   221,163 
 189,059   Loan ID 201453  Fixed  5.250%  9/1/2046   189,894 
 189,058   Loan ID 201454  Fixed  5.250%  9/1/2046   190,200 
 186,829   Loan ID 201455  Fixed  4.500%  5/1/2046   183,148 
 213,132   Loan ID 201456  Fixed  4.125%  7/1/2046   203,545 
 134,142   Loan ID 201457  Fixed  3.875%  4/1/2046   90,321 
 238,098   Loan ID 201458  Fixed  3.875%  9/1/2046   216,416 
 229,265   Loan ID 201459  Fixed  4.375%  9/1/2044   226,456 
 159,402   Loan ID 201460  Fixed  4.250%  7/1/2045   155,791 
 273,448   Loan ID 201461  Fixed  4.125%  12/1/2044   263,651 
 298,436   Loan ID 201462  Fixed  4.375%  11/1/2044   289,178 
 478,704   Loan ID 201463  Fixed  4.750%  11/1/2044   478,396 
 303,025   Loan ID 201464  Fixed  4.375%  6/1/2045   254,218 
 102,632   Loan ID 201465  Fixed  5.125%  12/1/2044   104,145 
 278,057   Loan ID 201466  Fixed  4.500%  12/1/2044   274,498 
 46,654   Loan ID 201467  Fixed  5.250%  3/1/2044   47,982 
 140,080   Loan ID 201469  Fixed  4.375%  2/1/2045   137,697 
 284,055   Loan ID 201470  Fixed  4.375%  10/1/2044   279,779 
 227,043   Loan ID 201471  Fixed  4.500%  1/1/2045   224,881 
 151,961   Loan ID 201472  Fixed  4.000%  11/1/2044   159,559 
 309,859   Loan ID 201473  Fixed  4.500%  2/1/2045   303,725 
 48,878   Loan ID 201474  Fixed  6.625%  12/1/2036   51,322 
 93,957   Loan ID 201475  ARM  5.625%  9/1/2036   98,655 
 136,287   Loan ID 201476  ARM  7.990%  2/1/2037   143,101 
 87,471   Loan ID 201477  Fixed  6.750%  11/1/2036   91,845 
 108,162   Loan ID 201478  Fixed  4.625%  10/1/2045   108,225 
 129,823   Loan ID 201479  Fixed  4.500%  5/1/2046   128,423 
 161,461   Loan ID 201480  Fixed  4.250%  11/1/2045   157,952 
 70,186   Loan ID 201481  Fixed  4.375%  7/1/2046   59,300 
 137,022   Loan ID 201482  Fixed  4.625%  6/1/2045   135,601 
 300,392   Loan ID 201483  Fixed  4.125%  12/1/2045   243,153 
 76,798   Loan ID 201484  Fixed  4.500%  10/1/2046   75,440 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$64,388   Loan ID 201485  Fixed  5.750%  3/1/2038  $67,608 
 39,741   Loan ID 201486  Fixed  3.875%  9/1/2028   39,633 
 165,878   Loan ID 201487  Fixed  4.625%  2/1/2052   174,172 
 218,381   Loan ID 201488  Fixed  4.250%  1/1/2041   185,657 
 93,185   Loan ID 201489  Fixed  4.750%  3/1/2046   93,173 
 108,166   Loan ID 201490  Fixed  4.750%  9/1/2045   107,478 
 228,493   Loan ID 201491  Fixed  4.250%  2/1/2046   220,891 
 383,969   Loan ID 201492  Fixed  4.625%  1/1/2047   316,192 
 518,900   Loan ID 201495  Fixed  10.000%  4/1/2018   515,008 
 80,983   Loan ID 201499  Fixed  4.750%  5/1/2045   80,914 
 111,473   Loan ID 201500  Fixed  4.500%  1/1/2044   111,000 
 108,817   Loan ID 201502  Fixed  5.250%  4/1/2044   112,215 
 150,266   Loan ID 201503  Fixed  5.000%  7/1/2046   148,070 
 456,090   Loan ID 201504  Fixed  4.500%  7/1/2045   444,893 
 97,508   Loan ID 201505  ARM  5.750%  9/1/2046   101,883 
 307,003   Loan ID 201506  Fixed  5.000%  2/1/2047   273,608 
 63,613   Loan ID 201507  Fixed  4.750%  7/1/2044   50,054 
 224,156   Loan ID 201508  Fixed  5.000%  2/1/2047   201,939 
 237,723   Loan ID 201509  Fixed  5.000%  12/1/2046   209,055 
 159,633   Loan ID 201510  Fixed  3.990%  1/1/2047   133,023 
 80,599   Loan ID 201511  Fixed  4.375%  1/1/2046   78,546 
 175,263   Loan ID 201512  Fixed  4.375%  7/1/2046   146,588 
 127,376   Loan ID 201513  Fixed  4.000%  1/1/2046   133,745 
 69,699   Loan ID 201514  Fixed  3.875%  7/1/2046   65,491 
 139,140   Loan ID 201515  Fixed  5.125%  4/1/2047   137,263 
 142,684   Loan ID 201516  Fixed  3.875%  4/1/2046   134,251 
 326,252   Loan ID 201517  Fixed  4.625%  6/1/2046   323,377 
 412,576   Loan ID 201518  Fixed  4.875%  1/1/2047   418,145 
 96,626   Loan ID 201519  Fixed  4.750%  9/1/2045   97,128 
 79,200   Loan ID 201522  Fixed  9.750%  4/1/2018   77,616 
 83,043   Loan ID 201523  Fixed  5.125%  7/1/2045   83,026 
 312,322   Loan ID 201525  ARM  7.500%  9/1/2046   327,939 
 156,616   Loan ID 201526  Fixed  5.250%  5/1/2044   141,913 
 374,802   Loan ID 201527  Fixed  4.375%  7/1/2046   365,978 
 82,714   Loan ID 201528  Fixed  4.625%  1/1/2046   78,596 
 222,100   Loan ID 201531  Fixed  9.500%  9/1/2018   217,658 
 507,909   Loan ID 201533  Fixed  4.750%  5/1/2046   506,946 
 46,780   Loan ID 201534  Fixed  4.875%  5/1/2047   44,838 
 335,990   Loan ID 201535  Fixed  4.875%  8/1/2047   332,599 
 481,754   Loan ID 201536  Fixed  3.375%  4/1/2045   364,561 
 134,292   Loan ID 201537  Fixed  5.000%  10/1/2046   131,525 
 45,920   Loan ID 201538  Fixed  8.000%  5/4/2020   47,404 
 54,327   Loan ID 201539  Fixed  6.750%  4/30/2020   43,182 
 91,200   Loan ID 201540  Fixed  11.500%  9/1/2018   88,920 
 201,117   Loan ID 201543  Fixed  4.000%  12/1/2046   154,555 
 235,415   Loan ID 201544  Fixed  3.750%  9/1/2047   242,983 
                    

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
PORTFOLIO OF INVESTMENTS (Unaudited)(Continued)
March 31, 2018

 

Principal      Loan Type  Interest Rate  Maturity  Fair Value 
     MORTGAGE NOTES (Continued) - 95.7%           
$277,559   Loan ID 201545  Fixed  4.000%  9/1/2047  $255,617 
 259,926   Loan ID 201546  Fixed  4.375%  1/1/2047   220,549 
 86,000   Loan ID 201547  Fixed  8.500%  3/1/2019   86,000 
 80,900   Loan ID 201548  Fixed  12.000%  9/1/2018   80,495 
 149,500   Loan ID 201549  Fixed  12.500%  10/1/2018   147,257 
 145,056   Loan ID 201550  Fixed  5.000%  2/1/2047   145,156 
 205,299   Loan ID 201551  Fixed  4.500%  2/1/2047   115,424 
 138,889   Loan ID 201552  Fixed  4.000%  8/1/2047   133,645 
 84,500   Loan ID 201553  Fixed  9.000%  11/1/2018   84,077 
 29,925   Loan ID 201554  Fixed  9.500%  11/1/2018   29,775 
 297,319   Loan ID 201555  Fixed  4.875%  7/1/2047   259,487 
 48,200   Loan ID 201556  Fixed  4.990%  12/1/2047   38,617 
 134,419   Loan ID 201558  Fixed  4.500%  8/1/2047   99,806 
 137,297   Loan ID 201561  Fixed  3.990%  4/1/2047   103,659 
 100,803   Loan ID 201562  Fixed  4.625%  5/1/2047   95,545 
 175,890   Loan ID 201563  Fixed  5.875%  12/1/2047   173,087 
 155,100   Loan ID 201564  Fixed  9.500%  2/1/2019   153,549 
 170,100   Loan ID 201565  Fixed  11.000%  2/1/2019   169,249 
 75,000   Loan ID 201566  Fixed  11.500%  2/1/2019   73,875 
 115,287   Loan ID 201579  Fixed  4.750%  12/1/2036   69,172 
 495,890   Loan ID 201580  Fixed  7.630%  4/1/2047   401,671 
 157,210,562   TOTAL MORTGAGE NOTES (Cost - $127,533,180)      145,903,041 
                    
     TOTAL INVESTMENTS (Cost - $127,533,180) (a) - 95.7%     $145,903,041 
     OTHER ASSETS IN EXCESS OF LIABILITIES - 4.3%      6,508,772 
     NET ASSETS - 100.0%     $152,411,813 
                    

ARM - Adjustable Rate Mortgage

 

(a)Represents cost for financial reporting purposes. Aggregate cost for federal tax purposes is the same as there are no book to tax differences.

 

Unrealized appreciation:  $19,981,974 
Unrealized depreciation:   (1,612,113)
Net unrealized appreciation:  $18,369,861 
      

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
March 31, 2018

 

Assets:     
Investments in Securities at Market Value (identified cost $127,533,180)  $145,903,041 
Cash   4,207,192 
Receivable for Investment Securities Sold and Principal Paydowns   2,223,290 
Interest Receivable   2,042,156 
Receivable for Fund Shares Sold   5,917 
Prepaid Expenses and Other Assets   688,165 
Total Assets   155,069,761 
      
Liabilities:     
Line of Credit   2,500,000 
Payable for Securities Purchased   53,963 
Accrued Advisory Fees   23,477 
Distribution (12b-1) Fees Payable   8 
Related Party Payable   39,693 
Accrued Expenses and Other Liabilities   40,807 
Total Liabilities   2,657,948 
      
Net Assets  $152,411,813 
      
Composition of Net Assets:     
At March 31, 2018, Net Assets consisted of:     
Paid-in-Capital  $133,176,601 
Accumulated Net Investment Loss   (3,947)
Accumulated Net Realized Gain From Investments   869,298 
Net Unrealized Appreciation on Investments   18,369,861 
Net Assets  $152,411,813 
      

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)(Continued)
March 31, 2018

 

Net Asset Value Per Share     
Class A Shares:     
Net Assets  $152,310,586 
Shares of Beneficial Interest Outstanding (no par value; unlimited shares authorized)   12,350,001 
Net Asset Value (Net Assets/Shares Outstanding) and Redemption Price per Share  $12.33 
Offering Price per Share (maximum sales charge of 5.75%)  $13.08 
      
Class C Shares:     
Net Assets  $101,201 
Shares of Beneficial Interest Outstanding (no par value; unlimited shares authorized)   8,163 
Net Asset Value (Net Assets/Shares Outstanding), Offering Price and Redemption Price per Share (a)  $12.40 
      
Class I Shares:     
Net Assets  $13 
Shares of Beneficial Interest Outstanding (no par value; unlimited shares authorized)   1 
Net Asset Value (Net Assets/Shares Outstanding), Offering Price and Redemption Price per Share  $12.42 (b)
      
Class L Shares:     
Net Assets  $13 
Shares of Beneficial Interest Outstanding (no par value; unlimited shares authorized)   1 
Net Asset Value (Net Assets/Shares Outstanding) and Redemption Price per Share  $12.42 (b)
Offering Price per Share (maximum sales charge of 4.25%)  $12.97 
      
(a)Early Withdrawal Charge on Shares Repurchased Less Than 365 Days After Purchase of 1.00%

 

(b)NAV does not recalculate due to rounding.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
STATEMENT OF OPERATIONS (Unaudited)
For the Six Months Ended March 31, 2018

 

Investment Income:     
Interest Income  $3,975,110 
Total Investment Income   3,975,110 
      
Expenses:     
Investment Advisory Fees   977,902 
Distribution (12b-1) Fees:     
Class C   8 
Security Servicing Fees   269,096 
Transfer Agent Fees   117,852 
Audit Fees   87,784 
Administration Fees   87,709 
Insurance Expense   82,273 
Security Pricing Expense   81,217 
Interest Expense   77,300 
Custody Fees   62,253 
Trustees’ Fees   60,296 
Legal Fees   52,897 
Printing Expense   52,161 
Line of Credit Fees   42,581 
Non 12b-1 Shareholder Expense   40,893 
Shareholder Servicing Fee   33,859 
Chief Compliance Officer Fees   30,782 
Fund Accounting Fees   26,557 
Registration & Filing Fees   22,533 
Advisor Transition Expenses, Net   7,522 
Miscellaneous Expenses   7,651 
Total Expenses   2,221,126 
Less: Expenses Reimbursed by Adviser   (646,827)
Net Expenses   1,574,299 
Net Investment Income   2,400,811 
      
Net Realized and Unrealized Gain on Investments:     
Net Realized Gain from:     
Investments   1,158,165 
Net Change in Unrealized Appreciation on:     
Investments   1,388,216 
Net Realized and Unrealized Gain on Investments   2,546,381 
      
Net Increase in Net Assets Resulting From Operations  $4,947,192 
      

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
STATEMENT OF CHANGES IN NET ASSETS

 

   For the Six Months   For the Year 
   Ended   Ended 
   March 31, 2018 (a)     September 30, 2017 
   (Unaudited)     
Operations:          
Net Investment Income  $2,400,811   $5,324,698 
Net Realized Gain from Investments   1,158,165    2,504,489 
Net Change in Unrealized (Depreciation) Appreciation on Investments   1,388,216    (2,373,901)
Net Increase in Net Assets Resulting From Operations   4,947,192    5,455,286 
           
Distributions to Shareholders From:          
Net Investment Income:          
Class A ($0.19 and $0.40 per share, respectively)   (2,387,885)   (5,477,460)
Class C ($0.03 and $0.00 per share, respectively)   (235)   — 
Net Realized Gains:          
Class A ($0.21 and $0.10 per share, respectively)   (2,683,322)   (1,392,065)
Total Distributions to Shareholders   (5,071,442)   (6,869,525)
           
Beneficial Interest Transactions:          
Proceeds from Shares Issued:          
Class A   5,346,550    11,991,479 
Class C   100,013    — 
Class I   13    — 
Class L   13    — 
Distributions Reinvested:          
Class A   2,656,157    3,372,021 
Class C   235    — 
Cost of Shares Redeemed:          
Class A   (16,197,005)   (35,327,491)
Net Decrease in Net Assets from Beneficial Interest Transactions   (8,094,024)   (19,963,991)
           
Total Decrease in Net Assets   (8,218,274)   (21,378,230)
           
Net Assets:          
Beginning of Period   160,630,087    182,008,317 
End of Period (including undistributed net investment loss of $(3,947) and $(16,638)  $152,411,813   $160,630,087 
           
(a)The Vertical Capital Income Fund Class C, Class I, and Class L commenced operations on January 24, 2018

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
STATEMENT OF CHANGES IN NET ASSETS (Continued)

 

   For the Six Months   For the Year 
   Ended   Ended 
   March 31, 2018 (a)     September 30, 2017 
   (Unaudited)     
Share Activity          
Class A:          
Shares Sold   420,003    1,079,378 
Shares Reinvested   213,627    270,734 
Shares Redeemed   (1,301,728)   (2,913,215)
Net Decrease in Shares of Beneficial Interest Outstanding   (668,098)   (1,563,103)
           
Class C:          
Shares Sold   8,144    — 
Shares Reinvested   19    — 
Net Increase in Shares of Beneficial Interest Outstanding   8,163    — 
           
Class I:          
Shares Sold   1    — 
Net Increase in Shares of Beneficial Interest Outstanding   1    — 
           
Class L:          
Shares Sold   1    — 
Net Increase in Shares of Beneficial Interest Outstanding   1    — 
           
(a)The Vertical Capital Income Fund Class C, Class I, and Class L commenced operations on January 24, 2018

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Statement of Cash Flows (Unaudited)
For the Six Months Ended March 31, 2018

 

Decrease in Cash     
Cash Flows Provided by (Used for) Operating Activities:     
Net Increase in Net Assets Resulting from Operations  $4,947,192 
      
Adjustments to Reconcile Net Increase in Net Assets Resulting from Operations to Net Cash Provided by Operating Activities:     
      
Purchases of Long-Term Portfolio Investments   (4,527,877)
Proceeds from Sale of Long-Term Portfolio Investments and Principal Paydowns   11,891,369 
Increase in Interest Receivable   (347,494)
Increase in Receivable for Investment Securities Sold and Principal Paydowns   (1,093,006)
Increase in Prepaid Expenses and Other Assets   (202,013)
Increase in Payable for Securities Purchased   41,913 
Decrease in Accrued Advisory Fees   (12,254)
Increase in Distribution (12b-1) Fees Payable   8 
Increase in Related Party Payable   6,221 
Decrease in Accrued Expenses and Other Liabilities   (105,060)
Amortization of Deferred Financing Fees   42,581 
Net Amortization on Investments   (297,704)
Net Realized Gain on Investments   (1,158,165)
Change in Unrealized Appreciation on Investments   (1,388,216)
      
Net Cash Provided by Operating Activities   7,797,495 
      
Cash Flows Provided by/(Used) for Financing Activities:     
Proceeds from Sale of Shares   5,475,261 
Redemption of Shares   (16,197,005)
Dividends Paid to Shareholders, Net of Reinvestments   (2,415,050)
Deferred Financing Costs   (20,100)
Proceeds from Line of Credit   7,500,000 
Payments on Line of Credit   (5,000,000)
Net Cash Used for Financing Activities   (10,656,894)
      
Net Decrease in Cash   (2,859,399)
Cash at Beginning of Period   7,066,591 
Cash at End of Period  $4,207,192 
      

Supplemental disclosure of Cash Flow Information:

 

Non-Cash Financing Activities Included Reinvestment of Distributions During the Fiscal Period of $2,656,392 Cash Paid for Interest of $77,957.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Financial Highlights
Class A
 
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.

 

   Six Months   Year   Year   Year   Year   Year 
   Ended   Ended   Ended   Ended   Ended   Ended 
   March 31, 2018   September 30, 2017   September 30, 2016   September 30, 2015   September 30, 2014   September 30, 2013 
   (Unaudited)                     
Net Asset Value, Beginning of Period  $12.34   $12.49   $11.53   $11.04   $10.87   $10.58 
                               
From Operations:                              
Net investment income (a)   0.18    0.39    0.36    0.41    0.51    0.50 
Net gain (loss) from investments (both realized and unrealized)   0.21    (0.04)(b)   1.33    0.56    0.27    0.28 
Total from operations   0.39    0.35    1.69    0.97    0.78    0.78 
                               
Distributions to shareholders from:                              
Net investment income   (0.19)   (0.40)   (0.38)   (0.44)   (0.56)   (0.42)
Net realized gains   (0.21)   (0.10)   (0.35)   (0.04)   (0.05)   (0.07)
Total distributions   (0.40)   (0.50)   (0.73)   (0.48)   (0.61)   (0.49)
                               
Net Asset Value, End of Period  $12.33   $12.34   $12.49   $11.53   $11.04   $10.87 
                               
Total Return (c)   3.18% (i)   2.81%   15.10%   8.86%   7.29%   7.42%
                               
Ratios/Supplemental Data                              
Net assets, end of period (in 000’s)  $152,311   $160,630   $182,008   $160,382   $108,610   $39,987 
Ratio of gross expenses to average net assets   2.84% (d)(e)(h)   2.74% (d)(e)   2.95% (d)(e)   2.67% (d)(e)   2.32% (d)   3.20%
Ratio of net expenses to average net assets   2.01% (d)(e)(h)   2.04% (d)(e)   2.26% (d)(e)   2.33% (d)(e)   1.91% (d)   1.85%
Ratio of net investment income to average net assets   2.99% (d)(e)(h)   3.24% (d)(e)   2.98% (d)(e)   3.54% (d)(e)   4.68% (d)   4.61%
Portfolio turnover rate   3.03% (i)   17.69%   13.72%   2.58%   8.37%   11.68%
Loan Outstanding, End of Period (000s)  $2,500   $—   $—   $13,522   $3,500   $— 
Asset Coverage Ratio for Loan Outstanding (f)   6196% (i)   0%   0%   1286%   3203%   0%
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding (f)  $61,965   $—   $—   $12,672   $32,031   $— 
Weighted Average Loans Outstanding (000s) (g)  $2,500   $14,368   $12,330   $12,372   $3,398   $— 
Weighted Average Interest Rate on Loans Outstanding   4.46% (i)   3.88%   3.41%   3.25%   3.25%   0.00%
                               
 
(a)Per share amounts are calculated using the annual average shares method, which more appropriately presents the per share data for the period.

 

(b)The amount of net gain (loss) on investments (both realized and unrealized) per share does not accord with the amounts reported in the Statement of Operations due to timing of purchases and redemptions of Fund shares.

 

(c)Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes the effect of sales charges.

 

Had the Adviser not waived expenses, total returns would have been lower.

 

(d)Ratio includes 0.15%, 0.14%, 0.20%, 0.27% and 0.06% for the six months ended March 31, 2018 and years ended September 30, 2017, 2016, 2015 and 2014, respectively, that attributed to interest expenses and fees.

 

(e)Ratio includes 0.01%, 0.05%, 0.21% and 0.21% for the six months ended March 31, 2018 and years ended September 30, 2017, 2016 and the year ended 2015, respectively, that attributed to advisory transition expenses.

 

(f)Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.

 

(g)Based on monthly weighted average.

 

(h)Annualized.

 

(i)Not annualized.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Financial Highlights
Class C
 
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.

 

   Period * 
   Ended 
   March 31, 2018 
   (Unaudited) 
Net Asset Value, Beginning of Period  $12.33 
      
From Operations:     
Net investment income (a)   0.02 
Net gain from investments (both realized and unrealized)   0.08 
Total from operations   0.10 
      
Distributions to shareholders from:     
Net investment income   (0.03)
Total distributions   (0.03)
      
Net Asset Value, End of Period  $12.40 
      
Total Return (b)   0.80% (g)
      
Ratios/Supplemental Data     
Net assets, end of period (in 000’s)  $101 
Ratio of gross expenses to average net assets   3.59% (c)(f)
Ratio of net expenses to average net assets   2.76% (c)(f)
Ratio of net investment income to average net assets   2.24% (c)(f)
Portfolio turnover rate   3.03% (g)
Loan Outstanding, End of Period (000s)  $2,500 
Asset Coverage Ratio for Loan Outstanding (d)   6196% (g)
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding (d)  $61,965 
Weighted Average Loans Outstanding (000s) (e)  $2,500 
Weighted Average Interest Rate on Loans Outstanding   4.46% (g)
      
 
*The Vertical Capital Income Fund Class C commenced operations on January 24, 2018.

 

(a)Per share amounts are calculated using the annual average shares method, which more appropriately presents the per share data for the period.

 

(b)Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes the effect of sales charges.

 

Had the Adviser not waived expenses, total returns would have been lower.

 

(c)Ratio includes 0.16% for the period ended March 31, 2018 that attributed to interest expenses and fees.

 

(d)Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.

 

(e)Based on monthly weighted average.

 

(f)Annualized.

 

(g)Not annualized.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Financial Highlights
Class I
 
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.

 

   Period * 
   Ended 
   March 31, 2018 
   (Unaudited) 
Net Asset Value, Beginning of Period  $12.33 
      
From Operations:     
Net gain from investments (both realized and unrealized)   0.09 
Total from operations   0.09 
      
Net Asset Value, End of Period  $12.42 
      
Total Return (a)   0.73% (f)
      
Ratios/Supplemental Data     
Net assets, end of period  $13 (g)
Ratio of gross expenses to average net assets   2.59% (b)(e)
Ratio of net expenses to average net assets   1.76% (b)(e)
Ratio of net investment income to average net assets   3.24% (b)(e)
Portfolio turnover rate   3.03% (f)
Loan Outstanding, End of Period (000s)  $2,500 
Asset Coverage Ratio for Loan Outstanding (c)   6196% (f)
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding (c)  $61,965 
Weighted Average Loans Outstanding (000s) (d)  $2,500 
Weighted Average Interest Rate on Loans Outstanding   4.46% (f)
      
 
*The Vertical Capital Income Fund Class I commenced operations on January 24, 2018.

 

(a)Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes the effect of sales charges.

 

Had the Adviser not waived expenses, total returns would have been lower.

 

(b)Ratio includes 0.16% for the period ended March 31, 2018 that attributed to interest expenses and fees.

 

(c)Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.

 

(d)Based on monthly weighted average.

 

(e)Annualized.

 

(f)Not annualized.

 

(g)Actual net assets, not truncated.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Financial Highlights
Class L
 
The table below sets forth financial data for one share of beneficial interest outstanding throughout each period presented.

 

   Period * 
   Ended 
   March 31, 2018 
   (Unaudited) 
Net Asset Value, Beginning of Period  $12.33 
      
From Operations:     
Net gain from investments (both realized and unrealized)   0.09 
Total from operations   0.09 
      
Net Asset Value, End of Period  $12.42 
      
Total Return (a)   0.73% (f)
      
Ratios/Supplemental Data     
Net assets, end of period  $13 (g)
Ratio of gross expenses to average net assets   3.09% (b)(e)
Ratio of net expenses to average net assets   2.26% (b)(e)
Ratio of net investment income to average net assets   2.74% (b)(e)
Portfolio turnover rate   3.03% (f)
Loan Outstanding, End of Period (000s)  $2,500 
Asset Coverage Ratio for Loan Outstanding (c)   6196% (f)
Asset Coverage, per $1,000 Principal Amount of Loan Outstanding (c)  $61,965 
Weighted Average Loans Outstanding (000s) (d)  $2,500 
Weighted Average Interest Rate on Loans Outstanding   4.46% (f)
      
 
*The Vertical Capital Income Fund Class L commenced operations on January 24, 2018.

 

(a)Total returns are historical in nature and assume changes in share price, reinvestment of dividends and capital gains distributions, if any, and excludes the effect of sales charges.

 

Had the Adviser not waived expenses, total returns would have been lower.

 

(b)Ratio includes 0.16% for the period ended March 31, 2018 that attributed to interest expenses and fees.

 

(c)Represents value of net assets plus the loan outstanding at the end of the period divided by the loan outstanding at the end of the period.

 

(d)Based on monthly weighted average.

 

(e)Annualized.

 

(f)Not annualized.

 

(g)Actual net assets, not truncated.

 

The accompanying notes are an integral part of these financial statements.

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)
March 31, 2018

 

1.ORGANIZATION

 

Vertical Capital Income Fund (the “Fund”), was organized as a Delaware statutory trust on April 8, 2011 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, closed-end management investment company that operates as an interval fund with a continuous offering of Fund shares. The investment objective of the Fund is to seek income. The Fund currently offers four classes of shares: Class A, Class C, Class I and Class L. Class A shares commenced operations on December 30, 2011. Class C, Class I, and Class L shares commenced operations on January 24, 2018. The Fund currently offers shares at net asset value plus a maximum sales charge of 5.75% and 4.25% for Class A and Class C, respectively. Oakline Advisors, LLC, serves as the Fund’s investment adviser.

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies” including FASB Accounting Standard Update ASU 2013-08. The following is a summary of significant accounting policies and reporting policies used in preparing the financial statements. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Fund amortizes premiums and discounts using the effective interest rate method. Offering expenses are amortized over 12 months following the time they are incurred.

 

The preparation of financial statements in conformity with 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 income and expenses for the period. Actual results could differ from those estimates.

 

Investment Security Valuation

 

Mortgage Notes – The Fund uses an independent third-party pricing service, approved by the Fund’s Board of Trustees (“the Board”), to value its Mortgage Notes on a daily basis. The third-party pricing servicer uses a cash flow forecast and valuation model that focuses on forecasting the frequency, timing and severity of mortgage loss behavior. The model incorporates numerous observable loan-level factors such as unpaid principal balance, remaining term of the loan and coupon rate as well as macroeconomic data including yield curves, spreads to the Treasury curves and home price indexes. The model also includes a number of unobservable factors and assumptions (such as voluntary and involuntary prepayment speeds, delinquency rates, foreclosure timing, and others) to determine a fair value. While the model requires a minimum set of data to develop a reasonable fair value, the model is capable of accepting additional data elements. The model makes certain assumptions unless a specific data element is included, in which case it uses the additional data. Not all assumptions have equal weighting in the model. Using assumptions in this manner is a part of the Fund’s valuation policy and procedures and provides consistency in the application of valuation assumptions. The third-party pricing servicer also benchmarks their pricing model against observable pricing levels being quoted by a range of market participants active in the purchase and sale of residential mortgage loans. The combination of loan level criteria and daily market adjustments produces a daily price for each Mortgage Note relative to current public market conditions.

 

Prior to purchase, each Mortgage Note goes through a due diligence process that includes considerations such as underwriting borrower credit, employment history, property valuation, and delinquency history with an overall emphasis on repayment of the Mortgage Notes. The purchase price of the Mortgage Notes reflects the overall risk relative to the findings of this due diligence process.

 

The Fund invests primarily in Mortgage Notes secured by residential real estate. The market or liquidation value of each type of residential real estate collateral may be adversely affected by numerous factors, including rising interest

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

rates; changes in the national, state and local economic climate and real estate conditions; perceptions of prospective buyers of the safety, convenience and attractiveness of the properties; maintenance and insurance costs; changes in real estate taxes and other expenses; adverse changes in governmental rules and fiscal policies; adverse changes in zoning laws; natural disasters and other factors beyond the control of the borrowers.

 

The Fund’s investments in Mortgage Notes are subject to liquidity risk because there is a limited secondary market for Mortgage Notes. Liquidity risk exists when particular investments of the Fund would be difficult to purchase or sell, possibly preventing the Fund from selling such illiquid securities at an advantageous time or price, or possibly requiring the Fund to dispose of other investments at unfavorable times or prices in order to satisfy its obligations. Securities for which current market quotations are not readily available, such as the Mortgage Notes the Fund invests in, or for which quotations are not deemed to be representative of market values are valued at fair value as determined in good faith by or under the direction of the Board in accordance with the Trust’s Portfolio Securities Valuation Procedures (the “Procedures”). The Procedures consider, among others, the following factors to determine a security’s fair value: the nature and pricing history (if any) of the security; whether any dealer quotations for the security are available; and possible valuation methodologies that could be used to determine the fair value of the security.

 

The valuation inputs and subsequent outputs are reviewed and maintained on a daily basis. Any calibrations or adjustments to the model that may be necessary are done on an as-needed basis to facilitate fair pricing. Financial markets are monitored daily relative to the interest rate environment. If other available market data indicates that the pricing data from the third-party service is materially inaccurate, or pricing data is unavailable, the Fund undertakes a review of other available prices and takes additional steps to determine fair value. In all cases, the Fund validates its understanding of methodology and assumptions underlying the fair value used.

 

The Fund follows guidance in ASC 820, Fair Value Measurement, where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the market participants at the measurement date. The Fund utilizes various methods to measure the fair value of its investments on a recurring basis. Notwithstanding, the actual sale price of a Mortgage Note will likely be different than its fair value determined under ASC 820. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:

 

Level 1 – Unadjusted quoted prices in active markets for identical and/or similar assets and liabilities that the Fund has the ability to access at the measurement date.

 

Level 2 – Other significant observable inputs other than quoted prices included in Level 1 for the asset or liability, either directly or indirectly. These inputs may include quoted prices for similar investments or identical investments in an active market, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

 

Level 3 – Significant unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

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

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

As of March 31, 2018, management estimated that the carrying value of cash and cash equivalents, accounts receivable, prepaid expenses and other assets, payables for securities purchased, accrued advisory fees, related party payables, and accrued and other liabilities were at amounts that reasonably approximated their fair value based on their highly-liquid nature and short-term maturities. This is considered a Level 1 valuation technique.

 

The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. The following tables summarize the inputs used as of March 31, 2018 for the Fund’s assets measured at fair value:

                 
Assets  Level 1   Level 2   Level 3   Total 
Mortgage Notes  $—   $—   $145,903,041   $145,903,041 
Total  $—   $—   $145,903,041   $145,903,041 

 

There were no transfers between levels during the current period presented. It is the Fund’s policy to record transfers into or out of levels at the end of the reporting period.

 

The following is a reconciliation of assets in which Level 3 inputs were used in determining value:

 

   Mortgage Notes   Total 
Beginning Balance  $150,422,448   $150,422,448 
Net realized gain (loss)   1,222,582    1,222,582 
Change in unrealized depreciation   1,388,216    1,388,216 
Cost of purchases   4,527,877    4,527,877 
Proceeds from sales and principal paydowns   (11,955,786)   (11,955,786)
Purchase discount amortization   297,704    297,704 
Ending balance  $145,903,041   $145,903,041 

 

The total change in unrealized appreciation included in the Statement of Operations attributable to Level 3 investments still held at March 31, 2018 is $1,776,196.

 

The following table provides quantitative information about the Fund’s Level 3 values, as well as its inputs, as of March 31, 2018. The table is not all-inclusive, but provides information on the significant Level 3 inputs.

 

                        Weighted  
                   Range of    Average of  
              Unobservable    Unobservable    Unobservable  
     Value   Valuation Technique    Inputs    Inputs    Inputs  
  Mortgage Notes  $145,903,041   Comprehensive pricing model with emphasis on discounted cash flows    Constant prepayment rate    0-51.2%    9.7%  
               Deliquency    0-1764 days    15 days  
               Loan-to-Value    2-291%    84.0%  
               Discount Rate    0.05-14.0%    5.2%  
  Closing Balance  $145,903,041                     

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

A change to the unobservable input may result in a significant change to the value of the investment as follows:

 

Security Transactions and      
Investment Income -  Impact to Value if  Impact to Value if
Investment Security  Input Increases  Input Decreases
Constant Prepayment Rate  Increase  Decrease
Delinquency  Decrease  Increase
Loan to Value  Decrease  Increase
Discount rate  Decrease  Increase

 

Cash and Cash Equivalents – Cash and cash equivalents include cash and overnight investments in interest-bearing demand deposits with a financial institution with maturities of three months or less. The Fund maintains deposits with a high quality financial institution in an amount that is in excess of federally insured limits.

 

Security Transactions and Investment Income – Investment security transactions are accounted for on a trade date basis. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and federal income tax purposes. Interest income is recorded on the accrual basis. Purchase discounts and premiums on securities are accreted and amortized over the life of the respective securities using the effective interest method.

 

Interest Income on Non-Accrual Loans – The Fund discontinues the accrual of interest on loans when, in the opinion of management, there is an assessment that the borrower will likely be unable to meet all contractual payments as they become due.

 

Credit Facility – On February 5, 2013, the Fund entered into a revolving line of credit agreement with Sunwest Bank for investment purposes and to help maintain the Fund’s liquidity, subject to the limitations of the 1940 Act for borrowings. The maximum amount of borrowing allowed under the agreement was the lesser of $15 million or 33% of the eligible portion of the Fund’s loans. The Fund entered into the Amended and Restated Credit Agreement (“Amended Agreement”) on June 29, 2016. Borrowings under the Amended Agreement continue to bear interest at a rate equal to the Wall Street Journal Prime, with a floor rate of 3.50%, per annum, on the outstanding principal balance and the maximum amount of borrowing allowed continues to be the lesser of $15 million or 33% of the eligible portion of the Fund’s loans. The Amended Agreement matured on January 5, 2018 and has subsequently been extended until July 5, 2018. The Amended Agreement is secured by assets of the Fund. During the six months ended March 31, 2018 the Fund incurred deferred financing fees of $20,100, all of which was amortized at March 31, 2018. During the six months ended March 31, 2018, the Fund utilized the line of credit. The average amount of borrowing outstanding for the period was $2,500,000 and the total interest expense was $77,300. The outstanding balance under the line of credit was $2,500,000 at March 31, 2018.

 

Federal Income Taxes – The Fund intends to continue to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute all of its taxable income, if any, to shareholders. Accordingly, no provision for Federal income taxes is required in the financial statements.

 

The Fund recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Fund’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken by the Fund in its 2015 - 2017 tax returns, which remain open for examination, or expected to be taken in the Fund’s 2018 tax returns. The Fund identified its major tax jurisdictions as U.S. Federal jurisdictions where the Fund makes significant investments; however, the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. The Fund accounts for interest and penalties for any uncertain tax positions as a component of income tax expense. No interest or penalty expense was recorded during the six months ended March 31, 2018.

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

Distributions to Shareholders – Distributions from investment income, if any, are declared and paid monthly and are recorded on the ex-dividend date. The Fund will declare and pay net realized capital gains not previously distributed, if any, annually. The board’s decision to declare distributions will be influenced by its obligation to ensure that the Fund maintains its federal tax status as a Registered Investment Company (“RIC”). In order to qualify as a RIC, the Fund must derive a minimum of 90% of its income from capital gains, interest or dividends earned on investments and must distribute a minimum of 90% of its net investment income in the form of interest, dividends or capital gains to its shareholders. Otherwise, the Fund may be subject to an excise tax from the IRS.

 

The character of income and gains to be distributed is determined in accordance with Federal income tax regulations, which may differ from GAAP. These “book/tax” differences are considered either temporary (i.e., deferred losses, capital loss carry forwards) or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require classification.

 

Indemnification – The Trust indemnifies its officers and Trustees for certain liabilities that may arise from the performance of their duties to the Trust. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, management of the Fund expects the risk of loss due to these warranties and indemnities to be remote.

 

3.INVESTMENT IN RESTRICTED SECURITIES

 

The Fund may invest in Restricted Securities (those which cannot be offered for public sale without first being registered under the Securities Act of 1933) that are consistent with the Fund’s investment objectives and investment strategies. Investments in Restricted Securities are valued at fair value as determined in good faith in accordance with procedures adopted by the Board of Trustees. The Fund would typically have no rights to compel the obligor or issuer of a Restricted Security to register such a Restricted Security under the 1933 Act. No such securities were owned by the Fund at March 31, 2018.

 

4.INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES

 

The business activities of the Fund are overseen by the Board, which is responsible for the overall management of the Fund.

 

Advisory Fees – Pursuant to an Advisory Agreement with the Fund, the Advisor, under the oversight of the Board, directs certain of the daily operations of the Fund and supervises the performance of administrative and professional services provided by others. As compensation for its services and the related expenses borne by the Advisor, the Fund pays the adviser a management fee, computed and accrued daily and paid monthly, at an annual rate of 1.25% of the average daily net assets of the Fund. For the six months ended March 31, 2018 the Advisor earned advisory fees of $977,902.

 

The Advisor has contractually agreed to waive all or part of its management fees and/or make payments to limit Fund expenses (exclusive of any front-end or contingent deferred loads, taxes, leverage interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, expenses of investing in underlying funds, or extraordinary expenses such as litigation and advisor transition expenses) at least until January 31, 2019, so that the total annual operating expenses of the Fund do not exceed 1.85% of the average daily net assets of the Fund. The Fund incurred advisor transition expenses totaling $7,522 during the six months ended March 31, 2018 associated with the transition from the prior adviser in 2015. These expenses are not subject to the operating expense limitation. Waivers and expense reimbursements may be recouped by the Advisor from the Fund

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

within three years of when the amounts were waived only if the fund expenses are lower than both the lesser of the current expense cap and the expense cap in place at the time of waiver. For the six months ended March 31, 2018, the Advisor waived advisory fees of $646,827. Expenses subject to recapture by the Advisor amounted to $178,366 that will expire on September 30, 2018, $1,063,215 that will expire on September 30, 2019, and $1,196,051 that will expire on September 30, 2020.

 

Distributor – The distributor of the Fund is Northern Lights Distributors, LLC (the “Distributor”). The Board of Trustees of the Fund has adopted, on behalf of the Fund, a Shareholder Servicing Plan to pay for certain shareholder services. Under the Plan, the Fund may pay up to 0.25% per year of its average daily net assets for such shareholder service activities. The Fund does not pay shareholder servicing fees to the Distributor. For the six months ended March 31, 2018, the Fund incurred shareholder servicing fees of $33,859.

 

The Distributor acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s Class A, Class C, Class I shares and Class L shares. The Distributor received $24,450 and $1,000 in underwriting commissions and $3,098 and $0 was retained by the principal underwriter for Class A and Class C, respectively, during the period ended March 31, 2018.

 

The Fund, with respect to its Class C and Class L shares, is authorized under a “Distribution Plan” to pay to the Distributor a Distribution Fee for certain activities relating to the distribution of shares to investors and maintenance of shareholder accounts. These activities include marketing and other activities to support the distribution of the Class C shares. The Plan operates in a manner consistent with Rule 12b-1 under the 1940 Act, which regulates the manner in which an open-end investment company may directly or indirectly bear the expenses of distributing its shares. Although the Fund is not an open-end investment company, it has undertaken to comply with the terms of Rule 12b-1 as a condition of an exemptive order under the 1940 Act which permits it to have asset based distribution fees. Under the Distribution Plan, the Fund pays the Distributor a Distribution Fee at an annual rate of 0.75% and 0.25% of average daily net assets attributable to Class C shares and Class L shares, respectively. Pursuant to the Distribution Plan, the Fund incurred $8 for Class C and $0 for Class L during the period ended March 31, 2018.

 

In addition, certain affiliates of the Distributor provide services to the Fund as follows:

 

Gemini Fund Services, LLC (“GFS”), an affiliate of the Distributor, provides administration, fund accounting, and transfer agent services to the Trust. Pursuant to a separate servicing agreement with GFS, the Fund pays GFS customary fees for providing administration, fund accounting and transfer agency services to the Fund. Certain officers of the Fund are also officers of GFS, and are not paid any fees directly by the Fund for serving in such capacities. For the six months ended March 31, 2018 GFS earned $232,118.

 

Northern Lights Compliance Services, LLC (“NLCS”) - NLCS, an affiliate of GFS and the Distributor, provides a Chief Compliance Officer to the Fund, as well as related compliance services, pursuant to a consulting agreement between NLCS and the Fund. Under the terms of such agreement, NLCS receives customary fees from the Fund. For the six months ended March 31, 2018 NLCS earned $30,782.

 

Blu Giant, LLC (“Blu Giant”) – Blu Giant, an affiliate of GFS and the Distributor, provides EDGAR conversion and filing services as well as print management services for the Fund on an ad-hoc basis. For the provision of these services, Blu Giant receives customary fees from the Fund. For the six months ended March 31, 2018 Blu Giant earned $17,861.

 

Trustees – The Fund pays each Trustee who is not affiliated with the Fund or advisor a quarterly fee of $5,000 and the lead unaffiliated Trustee a quarterly fee of $10,000. Additionally, each unaffiliated Trustee receives $2,500 per meeting as well as reimbursement for any reasonable expenses incurred attending meetings. The “interested persons” who serve as Trustees of the Fund receive no compensation for their services as Trustees. None of the executive officers receive compensation from the Fund.

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

5.INVESTMENT TRANSACTIONS

 

The cost of purchases and proceeds from sales and paydowns of investment securities, other than U.S. Government securities and short-term investments, for the six months ended March 31, 2018 amounted to $4,527,877 and $11,891,369 respectively.

 

6.REPURCHASE OFFERS

 

Pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended, the Fund offers shareholders on a quarterly basis the option of redeeming shares, at net asset value, of no less than 5% and no more than 25% of the shares outstanding. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer, although each shareholder will have the right to require the Fund to purchase up to and including 5% of such shareholder’s shares in each quarterly repurchase. Limited liquidity will be provided to shareholders only through the Fund’s quarterly repurchases.

 

During the six months ended March 31, 2018, the Fund completed two quarterly repurchase offers. In those offers, the Fund offered to repurchase up to 5% (and an additional 2% at the Fund’s discretion) of the number of its outstanding shares as of the Repurchase Pricing Dates. The results of those repurchase offers were as follows:

         
   Repurchase   Repurchase 
   Offer #1   Offer #2 
Commencement Date   09/14/17    12/13/2017 
Repurchase Request Deadline   10/24/17    1/23/2018 
Repurchase Pricing Date   10/24/17    1/23/2018 
Net Asset Value as of Repurchase          
Pricing Date  $12.54   $12.29 
Amount Repurchased *  $8,221,895   $7,931,054 
Percentage of Outstanding Shares          
Repurchased   5.00%   5.00%
Percentage of Outstanding Shares          
Tendered   26.89%   28.68%

 

*Repurchases were made on a pro-rata basis.

 

The following repurchase offer occurred subsequent to the reporting period:

  
Repurchase 
Offer 
 03/29/18 
 04/27/18 
 04/27/18 
   
$12.20 
$7,553,708 
   
 5.00%
 40.15%

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018

 

7.DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL

 

The tax character of distributions paid during the fiscal years ended September 30, 2017 and September 30, 2016 was as follows:

 

   Fiscal Year Ended   Fiscal Year Ended 
   September 30, 2017   September 30, 2016 
Ordinary Income  $5,975,551   $5,780,415 
Long-Term Capital Gain   893,974    4,392,290 
Return of Capital   —    — 
   $6,869,525   $10,172,705 
           

As of September 30, 2017, the components of accumulated earnings/ (deficit) on a tax basis were as follows:

 

Undistributed   Undistributed   Post October Loss   Capital Loss   Other   Unrealized   Total 
Ordinary   Long-Term   and   Carry   Book/Tax   Appreciation/   Accumulated 
Income   Gains   Late Year Loss   Forwards   Differences   (Depreciation)   Earnings/(Deficits) 
$764,643   $1,629,812   $—   $—   $(16,638)  $16,981,645   $19,359,462 
                                 

The amount listed under other book/tax differences for the Fund is primarily attributable to tax adjustments for defaulted bonds.

 

Permanent book and tax differences, primarily attributable to the reclassification of Fund distributions and tax adjustments for defaulted bonds, resulted in reclassification for the year ended September 30, 2017 as follows:

 

Paid   Undistributed   Accumulated 
In   Net Investment   Net Realized 
Capital   Income (Loss)   Gains (Loss) 
$—   $110,565   $(110,565)
             
8.NEW ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contract with Customers, to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted only as of annual reporting periods beginning after December 15, 2016. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years, or “full retrospective” and one requiring prospective application of the new standard with disclosure of results under old standards, or “modified retrospective.” The Fund completed its initial assessment in evaluating the potential impact on its financial statements and based on its initial assessment determined that its financial contracts are excluded from the scope of ASU 2014-09. As a result of the scope exception for financial contracts, Fund management has determined that there will be no material changes to the recognition timing and classification of revenues and expenses. Management continues to evaluate the impact the guidance will have on the Fund’s financial statements when adopted, but believe it will not have a material impact on the financial statements or disclosures.

 

 

Vertical Capital Income Fund
Notes to Financial Statements (Unaudited)(Continued)
March 31, 2018
 
9.SUBSEQUENT EVENTS

 

The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the 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. Management has determined that other than those disclosed in these financial statements, there were no other subsequent events to report through the issuance of these financial statements.

 

 

Supplemental Information (Unaudited)

 

Approval of Investment Advisory Agreement

 

Approval of Investment Advisory Agreement with Oakline Advisors, LLC

 

At a meeting held on November 9, 2017 (the “November Meeting”), the Board of Trustees (the “Board”) of the Vertical Capital Income Fund (the “Fund”), including a majority of the Trustees who are not “interested persons” (the “Independent Trustees”), as such term is defined by the Investment Company Act of 1940, as amended (the “1940 Act”), approved the renewal of the investment management agreement (the “Advisory Agreement”) between Oakline Advisors, LLC (the “Adviser” or “Oakline”) and the Fund. Matters considered by the Trustees in connection with the Board’s renewal of the Advisory Agreement included the following:

 

Nature, Extent and Quality of Services. The Trustees discussed Oakline’s history and portfolio management experience. They noted that Oakline and its affiliates served a variety of clients, and managed approximately $330 million in assets across its real estate investment trust (“REIT”), closed end funds and DST/Net Lease platform (a real estate related investment vehicle). The Trustees reviewed the background and experience of Oakline’s investment team, noting that key personnel remained unchanged from the previous approval. The Trustees noted the varied and extensive experience of the portfolio management and compliance teams. The Trustees further noted the Adviser had provided a high level of expertise and diligence in performing investment advisory services for the Fund. The Trustees specifically noted the Adviser’s attentiveness to out-of-market factors such as catastrophic events and the expertise employed in their independent valuations as a response to such events. After further discussion, the Trustees concluded that they are satisfied with Oakline and believe Oakline will continue to provide quality advisory services to the Fund.

 

Performance. The Trustees reviewed the performance of the Fund as compared to its peer group and benchmark indices for the one-year and three-year periods. They discussed that the Fund had outperformed both the Barclays US MBS Index and the Barclays US Aggregate Bond Index for both periods, but slightly underperformed the average performance of the interval fund group for both periods. The Trustees acknowledged the small size of the Fund compared to some significantly larger funds in the peer group as well as funds with differing investment objectives. The Trustees also considered the quality of investments in the Fund. The Trustees considered Oakline’s experience in the residential mortgage market and its ability to increase the quality of investments in the Fund while outperforming its benchmark indices suggested that Oakline had the capacity to continue to provide positive returns for shareholders.

 

Fees and Expenses. The Trustees noted that Oakline charged an advisory fee of 1.25% and the Fund had an expense ratio of 2.05%. The Trustees noted that both Oakline’s management fee and expense ratio were below that of the interval fund peer group, with an average fee of 1.36% and an average expense ratio of 2.59%. The Trustees further considered that Oakline agreed to renew its contractual fee waiver until January 31, 2019, limiting the Fund’s total expense ratio to 1.85%. After further discussion, the Trustees concluded that the advisory fee was reasonable.

 

 

Supplemental Information (Unaudited)(Continued)

 

Profitability. The Trustees reviewed a profitability analysis provided by Oakline, and discussed Oakline’s estimated profitability in connection with its relationship with the Fund. The Trustees considered that Oakline did not earn a profit through its relationship with the Fund and as such, excessive profit was not an issue at this time.

 

Economies of Scale. The Trustees considered that the Fund had not yet reached a size where material economies of scale had been reached. The Trustees did note the absence of breakpoints in Oakline’s fee schedule. They considered Oakline’s representation that it could benefit from economies as certain expenses of the Adviser are leveraged across Oakline’s shared services platform and firm resources. After further discussion, the Trustees agreed that the matter of economies of scale would be revisited in connection with the renewal of the agreement as the Fund grows in assets.

 

Conclusion. Having requested and received such information from Oakline as the Trustees believed to be reasonably necessary to evaluate the terms of the advisory agreement with Oakline, and as assisted by the advice of Counsel, the Trustees concluded that the fee structure was reasonable and that approval of the Oakline advisory agreement was in the best interests of the shareholders of Vertical Capital Income Fund.

 

 

PRIVACY NOTICE

 

Rev. May 2012

 

FACTS WHAT DOES VERTICAL CAPITAL INCOME FUND DO WITH YOUR PERSONAL INFORMATION?
   
Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
   
What? The types of personal information we collect and share depend on the product or service you have with us. This information can include:
   
   ■ Social Security number ■ Purchase History
         
  ■ Assets ■ Account Balances
         
  ■ Retirement Assets ■ Account Transactions
         
  ■ Transaction History ■ Wire Transfer Instructions
         
  ■ Checking Account Information    
   
  When you are no longer our customer, we continue to share your information as described in this notice.
   
How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Vertical Capital Income Fund chooses to share; and whether you can limit this sharing.

  

Reasons we can share your personal information Does Vertical
Capital Income
Fund share?		 Can you limit this sharing?

For our everyday business purposes –

such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus

 Yes No

For our marketing purposes –

to offer our products and services to you

 No We don’t share
For joint marketing with other financial companies No We don’t share

For our affiliates’ everyday business purposes –

information about your transactions and experiences

 No We don’t share

For our affiliates’ everyday business purposes –

information about your creditworthiness

 No We don’t share
For nonaffiliates to market to you No We don’t share

 

Questions?          Call 1-866-277-VCIF

 

 

Rev. May 2012

 

 Who we are

Who is providing this notice?

 

Vertical Capital Income Fund

What we do
How does Vertical Capital Income Fund protect my personal information?

To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

 

Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.

How does Vertical Capital Income Fund collect my personal information?

We collect your personal information, for example, when you

 

■    Open an account

 

■    Provide account information

 

■    Give us your contact information

 

■    Make deposits or withdrawals from your account

 

■    Make a wire transfer

 

■    Tell us where to send the money

 

■    Tells us who receives the money

 

■    Show your government-issued ID

 

■    Show your driver’s license

 

We also collect your personal information from other companies.

Why can’t I limit all sharing?

Federal law gives you the right to limit only

 

■     Sharing for affiliates’ everyday business purposes – information about your creditworthiness

 

■      Affiliates from using your information to market to you

 

■      Sharing for nonaffiliates to market to you

 

State laws and individual companies may give you additional rights to limit sharing.

Definitions
Affiliates

Companies related by common ownership or control. They can be financial and nonfinancial companies.

 

■    Vertical Capital Income Fund does not share with our affiliates.

Nonaffiliates

Companies not related by common ownership or control. They can be financial and nonfinancial companies

 

■    Vertical Capital Income Fund does not share with nonaffiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

 

■    Vertical Capital Income Fund doesn’t jointly market.

           

 

 

How to Obtain Proxy Voting Information

 

Information regarding how the Fund votes proxies relating to portfolio securities for the 12 month period ended June 30th as well as a description of the policies and procedures that the Fund used to determine how to vote proxies is available without charge, upon request, by calling 1-866-277-VCIF by referring to the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.

 

How to Obtain 1st and 3rd Fiscal Quarter Portfolio Holdings

 

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-Q. Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (1-800-SEC-0330). The information on Form N-Q is available without charge, upon request, by calling 1-866-277-VCIF.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Adviser
Oakline Advisors, LLC
14675 Dallas Parkway, Suite 600
Dallas, Texas 75254

 

Administrator
Gemini Fund Services, LLC
80 Arkay Drive
Hauppauge, NY 11788

 

 

Item 2. Code of Ethics.

 

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 Companies. Not applicable.

 

Item 6. Schedule of Investments. See Item 1.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable for semi-annual reports.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable for semi-annual reports.

 

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable.

 

Item 10. Submission of Matters to a Vote of Security Holder. None.

 

Item 11. Controls and Procedures.

 

(a)       Based on an evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of filing date of this Form N-CSR, the principal executive officer and principal financial officer of the Registrant have concluded that the disclosure controls and procedures of the Registrant are reasonably designed to ensure that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported by the filing date, including that information required to be disclosed is accumulated and communicated to the Registrant’s management, including the Registrant’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)       There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report (in the registrant’s second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12. Exhibits.

 

(a)(1) Code of Ethics filed herewith.

 

(a)(2) Certification(s) required by Section 302 of the Sarbanes-Oxley Act of 2002 (and Item 11(a)(2) of Form N-CSR) are filed herewith.

 

(a)(3) Not applicable.

 

(b) Certification(s) required by Section 906 of the Sarbanes-Oxley Act of 2002 (and Item 11(b) of Form N-CSR) are filed herewith.

 

  

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Vertical Capital Income Fund

 

By (Signature and Title)

* /s/ Michael D. Cohen

Michael D. Cohen, President

 

Date 6/5/18

 

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/ Michael D Cohen

Michael D. Cohen, President

 

Date 6/5/18

 

By (Signature and Title)

* /s/ Robert Chapman

Robert Chapman, Treasurer

 

Date 6/5/18

 

* Print the name and title of each signing officer under his or her signature.

 

 

Exhibit 99.CERT

 

CERTIFICATIONS

 

I, Michael D. Cohen, certify that:

 

1.       I have reviewed this report on Form N-CSR of the Vertical Capital Income Fund;

 

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 ) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 for the registrant and have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report (in the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.       The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: 6/5/18                                                   /s/ Michael D. Cohen

Michael D. Cohen, President

 

 

 

 

 

 

 

 

 

I, Robert Chapman, certify that:

 

1.       I have reviewed this report on Form N-CSR of the Vertical Capital Income Fund;

 

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

 

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 ) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 for the registrant and have:

 

a)       designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)       designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)       evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation;

d)       disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report (in the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.       The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)       all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b)       any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: 6/5/18                                                    /s/ Robert Chapman

Robert Chapman, Treasurer

 

 

EX-99.906CERT

 

 

certification

Michael D. Cohen, President, and Robert Chapman, Treasurer of the Vertical Capital Income Fund (the “Registrant”), each certify to the best of his or her knowledge that:

1.       The Registrant’s periodic report on Form N-CSR for the period ended March 31, 2018 (the “Form N-CSR”) fully complies with the requirements of Sections 15(d) of the Securities Exchange Act of 1934, as amended; and

2.       The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

President                                                 Treasurer

Vertical Capital Income Fund                   Vertical Capital Income Fund

 

 

/s/ Michal D. Cohen                                 /s/ Robert Chapman

Michael D. Cohen                                    Robert Chapman

 

Date: 6/5/18                                           Date: 6/5/18

 

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Vertical Capital Income Fund and will be retained by the Vertical Capital Income Fund and furnished to the Securities and Exchange Commission (the “Commission”) or its staff upon request.

 

This certification is being furnished to the Commission solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form N-CSR filed with the Commission.