~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~

Note 11. Related Party Transactions

As of ~~December~~March 31, ~~2017~~2020 and September 30, ~~2017,~~2019, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amount of ~~$6.3~~$8.7 million and ~~$6.8~~$10.2 million, respectively, reflecting the unpaid portion of the base management fees and incentive fees payable to Oaktree. Oaktree ~~and FSM.~~has voluntarily deferred the payment of Part I incentive fees earned during the three months ended March 31, 2020.

~~New~~ Investment Advisory Agreement

~~Effective October 17, 2017 and as of December 31, 2017, the~~The Company is party to the ~~New~~ Investment Advisory ~~Agreement with Oaktree.~~Agreement. Under the ~~New~~ Investment Advisory Agreement, the Company pays Oaktree a fee for its services under the ~~New~~ Investment Advisory Agreement consisting of two components: a base management fee and an incentive fee. The cost of both the base management fee payable to Oaktree and any incentive fees earned by Oaktree is ultimately borne by common stockholders of the Company.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Prior to October 17, 2017, the Company was externally managed by Fifth Street Management LLC (the "Former Adviser”), an indirect, partially-owned subsidiary of Fifth Street Asset Management Inc., pursuant to an investment advisory agreement between the Company and the Former Adviser (the "Former Investment Advisory Agreement"), which was terminated on October 17, 2017.

Unless earlier terminated as described below, the ~~New~~ Investment Advisory Agreement will remain in effect until ~~October 17, 2019~~September 30, 2021 and thereafter from year-to-year if approved annually by the Board of Directors of the Company or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the directors of the Company who are not interested persons. The ~~New~~ Investment Advisory Agreement will automatically terminate in the event of its assignment. The ~~New~~ Investment Advisory Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The ~~New~~ Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of the outstanding voting securities of the Company.

Base Management Fee

Under the ~~New~~ Investment Advisory Agreement, the base management fee onis calculated at an annual rate of 1.50% of total gross assets, including any investment made with borrowings, but excluding cash and cash ~~equivalents, is 1.50%.~~equivalents. The base management fee is payable quarterly in arrears and the fee for any partial month or quarter is appropriately prorated. Effective May 3, 2019, the base management fee on the Company’s gross assets, including any investments made with borrowings, but excluding any cash and cash equivalents, that exceed the product of (A) 200% and (B) the Company’s net asset value will be 1.00%. For the avoidance of doubt, the 200% will be calculated in accordance with the Investment Company Act and will give effect to exemptive relief the Company received from the SEC with respect to debentures issued by a small business investment company subsidiary.

For the ~~period from October 17, 2017 to December~~three and six months ended March 31, ~~2017,~~2020, the base management fee incurred under the Investment Advisory Agreement was $5.3 million and $10.9 million, respectively. For the three and six months ended March 31, 2019, the base management fee (net of waivers) incurred under the ~~New~~ Investment Advisory Agreement was ~~$4.4~~$5.7 million ~~which was payable to Oaktree. For the period from October 17, 2017 to December 31, 2017, Oaktree voluntarily~~ and ~~irrevocably waived a portion of the base management fee, which resulted in waivers of less than $0.1 million.~~$11.2 million, respectively.

Incentive Fee

The incentive fee consists of two parts. Under the ~~New~~ Investment Advisory Agreement, the first part of the incentive fee (the “incentive fee on income” or "Part I incentive fee") is calculated and payable quarterly in arrears based upon the “pre-incentive fee net investment income” of the Company for the immediately preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter (i.e., a “hurdle rate”), expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed quarter, of 1.50%, subject to a “catch up” feature.

For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the ~~New~~ Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID debt, instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Under the ~~New~~ Investment Advisory Agreement, the calculation of the incentive fee on income for each quarter is as follows:

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~

No incentive fee is payable to Oaktree in any quarter in which the Company’s pre-incentive fee net investment income does not exceed the preferred return rate of 1.50% (the “preferred return”) on net assets;

100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the preferred return but is less than or equal to 1.8182% in any fiscal quarter is payable to Oaktree. This portion of the incentive fee on income is referred to as the “catch-up” provision, and it is intended to provide Oaktree with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets in any fiscal quarter; and

For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets, the ~~subordinated~~ incentive fee on income is equal to 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the preferred return and catch-up will have been achieved.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

There is no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle.

For the ~~period from October 17, 2017 to December~~three and six months ended March 31, ~~2017,~~2020, the first part of the incentive fee ~~(net of waivers)~~(incentive fee on income) incurred under the ~~New~~ Investment Advisory Agreement was ~~$0.7 million. To ensure compliance~~$3.4 million and $6.4 million, respectively. For the three and six months ended March 31, 2019, the first part of the ~~transactions contemplated by the Purchase Agreement, Oaktree entered into a two-year contractual~~incentive fee ~~waiver with the Company that will waive, to the extent necessary, any management or incentive fees payable~~(incentive fee on income) incurred under the ~~New~~ Investment Advisory Agreement ~~that exceed what would have been paid~~was $3.8 million and $7.5 million (prior to waivers), respectively. Oaktree has voluntarily deferred the Former Adviser in the aggregate under the Former Investment Advisory Agreement. Amounts potentially subject to waiver are accrued quarterly on a cumulative basis and, to the extent required, any fees will be waived or reimbursed as soon as practicable after the endpayment of ~~the two-year period. As of December 31, 2017, Oaktree had accrued an aggregate amount of $0.1 million of~~Part I incentive fees ~~potentially subject to waiver.~~earned during the three months ended March 31, 2020.

Under the ~~New~~ Investment Advisory Agreement, the second part of the incentive fee ~~will be~~(the "capital gains incentive fee") is determined and payable in arrears as of the end of each fiscal year (or upon termination of the ~~investment advisory agreement,~~Investment Advisory Agreement, as of the termination date) commencing with the fiscal year ~~ending~~ended September 30, 2019 and ~~will equal~~equals 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ~~ending~~ended September 30, 2019 through the end of each subsequent fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees under the ~~New~~ Investment Advisory Agreement. Any realized capital gains, realized capital losses, unrealized capital appreciation and unrealized capital depreciation with respect to the Company’s portfolio as of the end of the fiscal year ~~ending~~ended September 30, 2018 ~~will be~~are excluded from the calculations of the second part of the incentive fee. For the year ended September 30, 2019, the Company incurred $4.6 million of capital gains incentive fees under the Investment Advisory Agreement (prior to waivers).

GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a theoretical "liquidation basis." A fee so calculated and accrued would not be payable under applicable law and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts ultimately paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation. Any realized capital gains and losses and cumulative unrealized capital appreciation and depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the GAAP accrual. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 17.5% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees payable or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or any accrued capital gains incentive fee will become payable under the Investment Advisory Agreement. For the three and six months ended March 31, 2020, the Company reversed $6.6 million and $5.6 million of previously accrued capital gains incentive fees, respectively. For the three and six months ended March 31, 2019, the Company recorded a $8.2 million and $10.0 million capital gains incentive fee accrual (prior to waivers), respectively. The Company did not have any cumulative accrued capital gains incentive fees payable as of March 31, 2020.

To ensure compliance with Section 15(f) of the Investment Company Act, Oaktree entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which Oaktree waived any management or incentive fees payable under the Investment Advisory Agreement that exceeded what would have been paid to the Former Adviser in the aggregate under the Former Investment Advisory Agreement. The contractual amount of fees permanently waived at the end of the two-year period was $3.9 million. Prior to the end of the two-year period, amounts potentially subject to waiver under the two-year contractual fee waiver were accrued quarterly based on a theoretical “liquidation basis.” As of September 30, 2019, the Company had accrued cumulative fee waivers of $9.1 million. During the three months ended December 31, 2019, the Company reversed $5.2 million of

previously accrued fee waivers since the two-year fee waiver period has ended.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

The following table provides a roll-forward of the accrued waiver balance and illustrates the impact of the end of the two-year contractual fee waiver period:



($ in millions)
Accrued fee waivers as of September 30, 2019 (1)	$	9.1
Reversal of previously accrued fee waivers (2)	(5.2		)
Contractual fees waived under the Investment Advisory Agreement (3)	(3.9		)
Accrued fee waivers as of March 31, 2020	$	—


(1)	Calculated in accordance with GAAP as of September 30, 2019 and is based on a hypothetical liquidation basis.

(2)

Reflects the reversal of fee waivers that were previously accrued based on a hypothetical liquidation basis when the two-year contractual fee waiver was in effect. This reversal was recognized in connection with the expiration of the two-year contractual fee waiver, which ended on October 17, 2019, and is reflected in reversal of fees waived in the Consolidated Statement of Operations for the six months ended March 31, 2020.


(3)	Reflects the amount of fees permanently waived pursuant to the two-year contractual fee waiver.

As of September 30, 2019, the capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers) was $0.8 million as shown below:



($ in millions)	September 30, 2019 (1)
Capital gains incentive fee payable under the Investment Advisory Agreement (prior to waivers)	$	4.6
Contractual fees waived	(3.9		)
Capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers)	$	0.8


(1)	Amounts may not sum due to rounding.

Indemnification

The ~~New~~ Investment Advisory ~~agreement~~Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of ~~the Investment Adviser's~~Oaktree's services under the ~~investment advisory agreement or otherwise as the Investment Adviser.~~

~~Collection and Disbursement of Fees Owed to FSM~~

Under the Former Investment Advisory Agreement described below, both the base management fee and incentive fee on income were calculated and paid to FSM at the end of each quarter. In order to ensure that FSM receives the compensation earned during the quarter ending December 31, 2017, the initial payment of the base management fee and incentive fee on income under the New Investment Advisory Agreement will cover the entire quarter in which the New Investment Advisory Agreement became effective, and be calculated at a blended rate that will reflect fee rates under the respective investment advisory agreements for the portion of the quarter in which FSM and Oaktree were serving as investment adviser. This structure will allow Oaktree to pay FSM in early 2018, the pro rata portion of the fees that were earned by, but not paid to, FSM for services rendered to the Company prior to October 17, 2017.

~~Former Investment Advisory Agreement~~

The following is a description of the fourth amended and restated investment advisory agreement between FSM and the Company (the “Former Investment Advisory Agreement”), which was terminated on October 17, 2017. The Former Investment Advisory Agreement, dated March 20, 2017, was effective January 1, 2017 through its termination on October 17, 2017. The Former Investment

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~

Advisory Agreement amended and restated the Company’s third amended and restated investment advisory agreement with FSM, which was effective as of January 1, 2016, to impose a total return hurdle provision and reduce the “preferred return.”

Through October 17, 2017, the Company paid FSM a fee for its services under the Former Investment Advisory Agreement consisting of two components: a base management fee and an incentive fee. The cost of both the base management fee paid to FSM and any incentive fees earned by FSM were ultimately borne by common stockholders of the Company.

~~Base Management Fee~~

As of January 1, 2016, the base management fee was calculated at an annual rate of 1.75% of the Company’s gross assets, including any borrowings for investment purposes but excluding cash and cash equivalents. The base management fee was payable quarterly in arrears and the fee for any partial month or quarter was appropriately prorated.

For the period from October 1, 2017 to October 17, 2017 and the three months ended December 31, 2016, the base management fee incurred under the investment advisory agreements with FSM was $1.1 million (net of waivers) and $8.6 (net of waivers), respectively, all of which were payable to FSM. For the period from October 1, 2017 to October 17, 2017 and the three months ended December 31, 2016, FSM voluntarily waived a portion of the base management fee, which resulted in waivers of less than $0.1 million and $0.1 million, respectively.

~~Incentive Fee~~

The incentive fee paid to FSM had two parts. The first part was calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding fiscal quarter. Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding quarter, was compared to a “hurdle rate” of 1.75% per quarter (2% for periods prior to January 1, 2017), subject to a “catch-up” provision measured as of the end of each quarter. The Company’s net investment income used to calculate this part of the incentive fee was also included in the amount of its gross assets used to calculate the 1.75% base management fee. The operation of the incentive fee with respect to the Company’s pre-incentive fee net investment income for each quarter was as follows:

No incentive fee was payable to FSM in any fiscal quarter in which the Company’s pre-incentive fee net investment income did not exceed the preferred return rate of 1.75% (2% for periods prior to January 1, 2017) (the “preferred return”);

100% of the Company’s pre-incentive fee net investment income, if any, that exceeded the preferred return rate but was less than or equal to 2.1875% (2.5% for periods prior to January 1, 2017) in any fiscal quarter was payable to FSM. This portion of the Company’s pre-incentive fee net investment income (which exceeds the preferred return rate but is less than or equal to 2.1875% (2.5% for periods prior to January 1, 2017)) is referred to as the “catch-up.” The “catch-up” provision was intended to provide FSM with an incentive fee of 20% on all of the Company’s pre-incentive fee net investment income as if a preferred return rate did not apply when the Company’s pre-incentive fee net investment income exceeded 2.1875% in any quarter (2.5% for periods prior to January 1, 2017); and

For any quarter in which the Company’s pre-incentive fee net investment income, if any, exceeded 2.1875% on net assets (2.5% for periods prior to January 1, 2017) , the subordinated incentive fee on income was equal to 20% of the amount of the Company’s pre-incentive fee net investment income as the preferred return and catch-up would have been achieved.

From January 1, 2017 to October 17, 2017, in the event the cumulative subordinated incentive fee on income accrued for the Lookback Period (after giving effect to any reduction(s) pursuant to this paragraph for any prior fiscal quarters of the Lookback Period but not the quarter of calculation) exceeded 20.0% of the cumulative net increase in net assets resulting from operations during the Lookback Period, then the subordinated incentive fee on income for the quarter was reduced by an amount equal to (1) 25% of the subordinated incentive fee on income calculated for such quarter (prior to giving effect to any reduction pursuant to this paragraph) less (2) any base management fees waived by FSM for such fiscal quarter. For this purpose, the “cumulative net increase in net assets resulting from operations” was an amount, if positive, equal to the sum of pre-incentive fee net investment income, base management fees, realized gains and losses and unrealized capital appreciation and depreciation of the Company for the Lookback Period. “Lookback Period” meant the period commencing January 1, 2017 and ending on the last day of the fiscal quarter for which the subordinated incentive fee on income was being calculated.

There was no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there was no clawback of amounts previously paid if subsequent quarters were below the quarterly hurdle and there was no delay of payment if prior quarters were below the quarterly hurdle.

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~

The second part of the incentive fee was determined and payable in arrears as of the end of each fiscal year (or upon termination of the Former Investment Advisory Agreement, as of the termination date) and equaled 20% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees, provided that, the incentive fee determined as of September 30, 2008 was calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation from inception.

For the period from October 1, 2017 to October 17, 2017, no incentive fee was incurred under the Prior Investment Advisory Agreement. For the three months ended December 31, 2016, incentive fees incurred under the investment advisory agreement with FSM were $4.1 million.

~~GAAP Accruals~~

GAAP requires the Company to accrue for the theoretical capital gain incentive fee that would be payable after giving effect to the net unrealized capital appreciation. A fee so calculated and accrued would not be payable under either the New Investment Advisory Agreement or ~~the~~otherwise as investment advisory agreements with FSM, and may never be paid based upon the computation of capital gain incentive fees in subsequent periods. Amounts ultimately paid under the New Investment Advisory Agreement will be consistent with the formula reflected in the New Investment Advisory Agreement. The Company did not accrue for capital gain incentive fees as of December 31, 2017 because the capital gain incentive fee under the New Investment Advisory Agreement will not be charged until the fiscal year ending September 30, 2019.adviser.

Administrative Services

The Company ~~entered into~~is party to the ~~New~~ Administration Agreement with Oaktree ~~Administrator on October 17, 2017.~~Administrator. Pursuant to the ~~New~~ Administration Agreement, Oaktree Administrator provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the ~~New~~ Administration Agreement. Oaktree Administrator may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Oaktree Administrator makes reports to the Company’s Board of Directors of its performance of obligations under the ~~New~~ Administration Agreement and furnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, in each case, as it shall determine to be desirable or as reasonably required by the Company’s Board of Directors; provided that Oaktree Administrator shall not provide any investment advice or recommendation.

Oaktree Administrator also provides portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s stockholders and all other materials filed with the SEC. In addition, Oaktree Administrator assists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

For providing these services, facilities and personnel, the Company reimburses Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the ~~New~~ Administration Agreement, including the Company’s allocable portion of the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and the Company’s allocable portion of the costs of compensation and related expenses of its Chief Financial Officer, Chief Compliance Officer, their staffs and other non-investment professionals at Oaktree that perform duties for the Company. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. The ~~New~~ Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The ~~New~~ Administration Agreement may also be terminated, without penalty, upon the vote of a majority of the Company’s outstanding voting securities.

~~Prior to its termination by its terms on October 17, 2017 and throughout~~For the ~~Company’s 2017 fiscal year,~~three months ended March 31, 2020, the Company ~~was party to~~accrued administrative expenses of $0.5 million, including $0.1 million of general and administrative expenses. For the Former Administration Agreement with the Former Administrator. The Former Administrator was a wholly-owned subsidiary of FSM. Pursuant to the Former Administration Agreement, the Former Administrator provided services substantially similar to those provided by Oaktree Administrator as described above. For providing these services, facilities and personnel,six months ended March 31, 2020, the Company ~~reimbursed~~accrued administrative expenses of $1.0 million, including $0.1 million of general and administrative expenses. For the three months ended March 31, 2019, the Company accrued administrative expenses of $0.5 million, including $0.1 million of general and administrative expenses. For the six months ended March 31, 2019, the Company accrued administrative expenses of $1.3 million, including $0.2 million of general and administrative expenses.

As of each of March 31, 2020 and September 30, 2019, $2.7 million was included in “Due to affiliate” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to Oaktree Administrator.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

the Former Administrator the allocable portion of overhead and other expenses incurred by it in performing its obligations under the Former Administration Agreement, including rent and the allocable portion of the costs of compensation and related expenses of its Chief Financial Officer and Chief Compliance Officer and their staffs. Such reimbursement was at cost, with no profit to, or markup by, the Former Administrator. The Former Administration Agreement with FSC CT was terminable by either party without penalty upon 60 days' written notice to the other party.

For the three months ended December 31, 2017, the Company accrued administrative expenses of $0.7 million, including $0.2 million of general and administrative expenses. Of these amounts, $0.2 million was due to the Former Administrator for administrative expenses incurred prior to October 17, 2017 and $0.5 million was due to Oaktree Administrator. For the three months ended December 31, 2016, the Company accrued administrative expenses of $1.4 million, including $0.9 million of general and administrative expenses, which were due to the Former Administrator.

As of December 31, 2017 and September 30, 2017, $1.5 million and $1.8 million was included in “Due to affiliate” in the Consolidated Statements of Assets and Liabilities, respectively, reflecting the unpaid portion of administrative expenses payable to the Former Administrator and Oaktree Administrator.

Note 12. Financial Highlights

Three months ended
December 31, 2017 Three months ended
December 31, 2016
Net asset value at beginning of period $6.16 $7.97
Net investment income (4) 0.09 0.16
Net unrealized depreciation on investments and secured borrowings (4) (0.31) (0.52)
Net realized loss on investments and secured borrowings (4) — (0.16)
Distributions to stockholders (4) (0.13) (0.18)
Net issuance/repurchases of common stock (4) — 0.04
Net asset value at end of period $5.81 $7.31
Per share market value at beginning of period $5.47 $5.81
Per share market value at end of period $4.89 $5.37
Total return (1) (8.37)% (4.44)%
Common shares outstanding at beginning of period 140,960,651 143,258,785
Common shares outstanding at end of period 140,960,651 140,960,651
Net assets at beginning of period $867,657 $1,142,288
Net assets at end of period $819,595 $1,030,272
Average net assets (2) $849,181 $1,090,244
Ratio of net investment income to average net assets (5) 6.22% 8.48%
Ratio of total expenses to average net assets (excluding fee waiver and insurance recovery) (5) 9.67% 10.60%
Effect of fee waivers (5) (0.06)% (0.02)%
Effect of insurance recoveries (5) —% (0.22)%
Ratio of net expenses to average net assets (5) 9.61% 10.36%
Ratio of portfolio turnover to average investments at fair value 12.76% 8.75%
Weighted average outstanding debt (3) $651,826 $1,168,790
Average debt per share (4) $4.62 $8.18
Asset coverage ratio 230.61% 217.39%



(Share amounts in thousands)	Three months ended March 31, 2020	Three months ended March 31, 2019	Six months ended March 31, 2020	Six months ended March 31, 2019
Net asset value per share at beginning of period	$6.61	$6.19	$6.60	$6.09
Net investment income (1)	0.16	0.13	0.22	0.25
Net unrealized appreciation (depreciation) (1)	(1.15)	0.15	(1.14)	0.10
Net realized gains (losses) (1)	(0.19)	0.18	(0.16)	0.30
Provision for income tax (expense) benefit (1)	0.01	—	0.01	—
Distributions to stockholders	(0.10)	(0.10)	(0.19)	(0.19)
Net asset value per share at end of period	$5.34	$6.55	$5.34	$6.55
Per share market value at beginning of period	$5.46	$4.23	$5.18	$4.96
Per share market value at end of period	$3.24	$5.18	$3.24	$5.18
Total return (2)	(38.91)%	24.68%	(34.49)%	8.63%
Common shares outstanding at beginning of period	140,961	140,961	140,961	140,961
Common shares outstanding at end of period	140,961	140,961	140,961	140,961
Net assets at beginning of period	$931,082	$872,362	$930,630	$858,035
Net assets at end of period	$752,224	$923,456	$752,224	$923,456
Average net assets (3)	$846,610	$901,507	$891,012	$885,507
Ratio of net investment income to average net assets (4)	10.82%	7.97%	6.87%	7.93%
Ratio of total expenses to average net assets (4)	5.37%	12.79%	6.55%	11.54%
Ratio of net expenses to average net assets (4)	5.37%	9.24%	7.71%	9.40%
Ratio of portfolio turnover to average investments at fair value	10.80%	7.26%	17.56%	18.18%
Weighted average outstanding debt (5)	$623,696	$610,891	$556,264	$612,649
Average debt per share (1)	$4.42	$4.33	$3.95	$4.35
Asset coverage ratio at end of period (6)	205.85%	254.12%	205.85%	254.12%

__________



(1)	Calculated based upon weighted average shares outstanding for the period.
(2)	Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP.
~~(2)~~(3)	Calculated based upon the weighted average net assets for the period.
~~(3)~~(4)	Interim periods are annualized.
(5)	Calculated based upon the weighted average of ~~loans payable for the period.~~
~~(4)~~	~~Calculated based upon weighted average shares~~debt outstanding for the period.
~~(5)~~(6)	~~Interim periods are annualized.~~Based on outstanding senior securities of $704.8 million and $597.6 million as of March 31, 2020 and 2019, respectively.

Note 13. Derivative Instruments

The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement ("ISDA Master Agreement") with its derivative counterparty, JPMorgan Chase Bank, N.A. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. No cash collateral has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to the Company's forward currency contracts.

Net unrealized gains or losses on foreign currency contracts are included in “net unrealized appreciation (depreciation)” and net realized gains or losses on forward currency contracts are included in “net realized gains (losses)” in the accompanying Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

~~Note 13. Unsecured Notes~~

~~2019 Notes~~

On February 26, 2014, the Company issued $250.0 million in aggregate principal amount of its 4.875% unsecured notes due 2019 (the "2019 Notes") for net proceeds of $244.4 million after deducting OID of $1.4 million, underwriting commissions and discounts of $3.7 million and offering costs of $0.5 million. The OID on the 2019 Notes is amortized based on the effective interest method over the term of the notes.

The 2019 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the supplemental indenture, dated February 26, 2014 (collectively, the "2019 Notes Indenture"), between the Company and the Trustee. The 2019 Notes are the Company's general unsecured obligations that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2019 Notes. The 2019 Notes rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated. The 2019 Notes effectively rank junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness. The 2019 Notes rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities.

Interest on the 2019 Notes is paid semi-annually on March 1 and September 1 at a rate of 4.875% per annum. The 2019 Notes mature on March 1, 2019 and may be redeemed in whole or in part at any time or from time to time at the Company's option prior to maturity.

The 2019 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with (regardless of whether the Company is subject to) the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring the Company to provide financialCertain information to the holders of the 2019 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the 2019 Notes Indenture. The Company may repurchase the 2019 Notes in accordance with the 1940 Act and the rules promulgated thereunder. In addition, holders of the 2019 Notes can require the Company to repurchase the 2019 Notes at 100% of their principal amount upon the occurrence of certain change of control events as described in the 2019 Notes Indenture. The 2019 Notes were issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. During the three months ended December 31, 2017 and 2016, the Company did not repurchase any of the 2019 Notes in the open market.

~~For each of the three months ended December 31, 2017 and 2016, the Company recorded interest expense of $3.3 million~~ related to the ~~2019 Notes.~~

AsCompany’s foreign currency forward contracts is presented below as of ~~December~~March 31, ~~2017, there were $250.0 million of 2019 Notes outstanding, which had a carrying value and fair value of $248.6 million and $250.7 million, respectively.~~

~~2024 Notes~~

On October 18, 2012, the Company issued $75.0 million in aggregate principal amount of its 5.875% unsecured 2024 Notes for net proceeds of $72.5 million after deducting underwriting commissions of $2.2 million and offering costs of $0.3 million.

The 2024 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the first supplemental indenture, dated October 18, 2012 (collectively, the "2024 Notes Indenture"), between the Company and the Trustee. The 2024 Notes are the Company's unsecured obligations and rank senior in right of payment to the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2024 Notes; equal in right of payment to the Company's existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company's secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries or financing vehicles.

Interest on the 2024 Notes is paid quarterly in arrears on January 30, April 30, July 30 and October 30, at a rate of 5.875% per annum. The 2024 Notes mature on October 30, 2024 and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after October 30, 2017. As of October 17, 2017, the 2024 Notes were listed on the New York Stock Exchange2020.

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~



Description	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Gross Amount of Recognized Assets		Gross Amount of Recognized Liabilities			Balance Sheet Location of Net Amounts
Foreign currency forward contract	$	19,756	£	14,850	8/18/2020	$	1,310	$	—		Derivative asset
Foreign currency forward contract	$	14,532	€	13,213	8/31/2020	$	—	$	(42	)	Derivative asset
						$	1,310	$	(42	)

~~under the trading symbol “OSLE” with a par value of $25.00 per note. Prior to October 17, 2017, the 2024 Notes were listed on the New York Stock Exchange under the trading symbol "FSCE".~~

The 2024 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with (regardless of whether the Company is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act and with the restrictions on dividends, distributions and purchase of capital stock set forth in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring the Company to provide financialCertain information to the holders of the 2024 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 2024 Notes Indenture. The Company may repurchase the 2024 Notes in accordance with the 1940 Act and the rules promulgated thereunder. Any 2024 Notes repurchased by the Company may, at the Company's option, be surrendered to the Trustee for cancellation, but may not be reissued or resold by the Company. Any 2024 Notes surrendered for cancellation will be promptly canceled and no longer outstanding under the 2024 Notes Indenture. During the three months ended December 31, 2017 and 2016, the Company did not repurchase any of the 2024 Notes in the open market.

~~For each of the three months ended December 31, 2017 and December 31, 2016, the Company recorded interest expense of $1.2 million~~ related to the ~~2024 Notes.~~

AsCompany’s foreign currency forward contracts is presented below as of ~~December 31, 2017, there were $75.0 million of 2024 Notes outstanding, which had a carrying value and fair value of $73.6 million and $75.6 million, respectively.~~

~~2028 Notes~~

In April and May 2013, the Company issued $86.3 million in aggregate principal amount of its 6.125% unsecured 2028 Notes for net proceeds of $83.4 million after deducting underwriting commissions of $2.6 million and offering costs of $0.3 million.

The 2028 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the second supplemental indenture, dated April 4, 2013 (collectively, the "2028 Notes Indenture"), between the Company and the Trustee. The 2028 Notes are the Company's unsecured obligations and rank senior in right of payment to the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2028 Notes; equal in right of payment to the Company's existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company's secured indebtedness (including existing unsecured indebtedness that it later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries or financing vehicles.

Interest on the 2028 Notes is paid quarterly in arrears on January 30, April 30, July 30 and October 30, at a rate of 6.125% per annum. The 2028 Notes mature on April 30, 2028 and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after April 30, 2018. As of October 17, 2017, the 2028 Notes are listed on the NASDAQ Global Select Market under the trading symbol "OCSLL" with a par value of $25.00 per note. Prior to October 17, 2017, the 2028 Notes were listed on the NASDAQ Global Select Market under the trading symbol "FSCFL."

The 2028 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with (regardless of whether it is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring the Company to provide financial information to the holders of the 2028 Notes and the Trustee if it ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 2028 Notes Indenture. The Company may repurchase the 2028 Notes in accordance with the 1940 Act and the rules promulgated thereunder. Any 2028 Notes repurchased by the Company may, at its option, be surrendered to the Trustee for cancellation, but may not be reissued or resold by the Company. Any 2028 Notes surrendered for cancellation will be promptly canceled and no longer outstanding under the 2028 Notes Indenture. During the three months ended December 31, 2017 and 2016, the Company did not repurchase any of the 2028 Notes in the open market.

~~For each of the three months ended December 31, 2017 and 2016, the Company recorded interest expense of $1.4 million related to the 2028 Notes.~~

~~As of December 31, 2017, there were $86.3 million of 2028 Notes outstanding, which had a carrying value and fair value of $84.3 million and $86.9 million, respectively.~~

~~Note 14. Secured Borrowings~~

~~See Note 2 "Secured Borrowings" for a description of the Company's accounting treatment of secured borrowings.~~

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~

As of December 31, 2017, there were $13.5 million of secured borrowings outstanding. As of December 31, 2017, secured borrowings at fair value totaled $11.6 million and the fair value of the investment that is associated with these secured borrowings was $40.6 million. These secured borrowings were the result of the Company's completion of partial loan sales totaling $22.8 million of a senior secured debt investment during the fiscal year ended September 30, 2014 that did not meet the definition of a participating interest. As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings. The Company receives loan servicing fees as it continues to serve as administrative agent for this investment. As a result, the Company earns servicing fees in connection with the loans that were partially sold. During the three months ended December 31, 2017, there were no net repayments on secured borrowings. During the three months ended December 31, 2016, there were $4.5 million of net repayments on secured borrowings.2019.

For the three months ended December 31, 2017 and December 31, 2016, the secured borrowings bore interest at a weighted average interest rate of 7.91% and 8.94%, respectively. For the three months ended December 31, 2017 and 2016, the Company recorded interest expense of $0.3 million and $0.4 million, respectively, related to the secured borrowings.



Description	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Gross Amount of Recognized Assets		Gross Amount of Recognized Liabilities		Balance Sheet Location of Net Amounts
Foreign currency forward contract	$	22,161	£	17,910	10/15/2019	$	76	$	—	Derivative asset
Foreign currency forward contract	$	19,193	€	17,150	11/29/2019	$	414	$	—	Derivative asset
						$	490	$	—

Note ~~15.~~14. Commitments and Contingencies

~~SEC Examination and Investigation~~

On March 23, 2016, the Division of Enforcement of the SEC sent document subpoenas and document preservation notices to the Company, FSAM, FSCO GP LLC - General Partner of Fifth Street Opportunities Fund, L.P. ("FSOF") and OCSI. The subpoenas sought production of documents relating to a variety of issues principally related to the activities of FSM, including those raised in an ordinary-course examination of FSM by the SEC’s Office of Compliance Inspections and Examinations that began in October 2015, and in the previously disclosed securities class actions and other previously disclosed litigation. The subpoenas were issued pursuant to a formal order of private investigation captioned In the Matter of the Fifth Street Group of Companies, No. HO-12925, dated March 23, 2016, which addresses (among other things) (i) the valuation of the Company's portfolio companies and investments, (ii) the expenses allocated or charged to the Company and OCSI, (iii) FSOF’s trading in the securities of publicly traded business development companies, (iv) statements to the Board of Directors, other representatives of pooled investment vehicles, investors, or prospective investors concerning the fair value of the Company's portfolio companies or investments as well as expenses allocated or charged to the Company and OCSI, (v) various issues relating to adoption and implementation of policies and procedures under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), (vi) statements and/or potential omissions in the entities’ SEC filings, (vii) the entities’ books, records, and accounts and whether they fairly and accurately reflected the entities’ transactions and dispositions of assets, and (viii) several other issues relating to corporate books and records. The formal order cites various provisions of the Securities Act of 1933, as amended, the Exchange Act and the Advisers Act, as well as rules promulgated under those Acts, as the bases of the investigation. The Company is cooperating with the Division of Enforcement investigation, has produced requested documents, and has been communicating with Division of Enforcement personnel. The Investment Adviser is not subject to these subpoenas.

Off-Balance Sheet Arrangements

The Company may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its companies. As of ~~December~~March 31, ~~2017,~~2020, the Company's only off-balance sheet arrangements consisted of ~~$98.7~~$91.6 million of unfunded commitments, which was comprised of ~~$88.0~~$86.7 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and ~~$9.4~~$3.5 million related to unfunded limited partnership interests. As of September 30, ~~2017,~~2019, the Company's only off-balance sheet arrangements consisted of ~~$118.1~~$88.3 million of unfunded commitments, which was comprised of ~~$107.3~~$83.5 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and ~~$9.5~~$3.5 million related to unfunded limited partnership interests. Such commitments are subject to ~~its~~the portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company's Consolidated Statements of Assets and Liabilities.

A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I LLC equity interests, and limited partnership interests) as of December 31, 2017 and September 30, 2017 is shown in the table below:

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I LLC subordinated notes and LLC equity interests and limited partnership interests) as of March 31, 2020 and September 30, 2019 is shown in the table below:

December 31, 2017 September 30, 2017
Lift Brands Holdings, Inc. $ 15,000
$ 15,000
P2 Upstream Acquisition Co. 10,000
10,000
Valet Merger Sub, Inc. 9,326
9,326
Edge Fitness, LLC 6,215
8,353
InMotion Entertainment Group, LLC 5,545
7,544
EOS Fitness Opco Holdings, LLC 5,000
5,000
Dominion Diagnostics, LLC (1) 4,180
4,180
Impact Sales, LLC 3,236
3,234
Pingora MSR Opportunity Fund I, LP (limited partnership interest) 3,095
2,760
WeddingWire, Inc. 3,000
3,000
Keypath Education, Inc. 3,000
3,000
Motion Recruitment Partners LLC 2,900
2,900
OmniSYS Acquisition Corporation 2,500
2,500
Ping Identity Corporation 2,500
2,500
Datto Inc. 2,356
—
Traffic Solutions Holdings, Inc. 2,248
2,998
4 Over International, LLC 2,232
2,232
New IPT, Inc. 2,229
2,229
Refac Optical Group 2,080
2,080
SPC Partners VI, L.P. (limited partnership interest) 1,862
2,000
Metamorph US 3, LLC (1) 1,470
1,470
TransTrade Operators, Inc. (1)(2) 1,393
1,052
Senior Loan Fund JV 1, LLC 1,328
1,328
Edmentum, Inc. (1) 932
2,664
Riverside Fund V, LP (limited partnership interest) 539
539
Webster Capital III, L.P. (limited partnership interest) 482
736
Sterling Capital Partners IV, L.P. (limited partnership interest) 474
490
Tailwind Capital Partners II, L.P. (limited partnership interest) 469
391
Beecken Petty O'Keefe Fund IV, L.P. (limited partnership interest) 468
472
Ministry Brands, LLC 375
1,708
Moelis Capital Partners Opportunity Fund I-B, L.P. (limited partnership interest) 365
365
RCP Direct II, LP (limited partnership interest) 364
364
Cenegenics, LLC (1) 297
297
Riverside Fund IV, LP (limited partnership interest) 254
254
ACON Equity Partners III, LP (limited partnership interest) 231
239
Bunker Hill Capital II (QP), LP (limited partnership interest) 183
183
RCP Direct, LP (limited partnership interest) 178
184
SPC Partners V, L.P. (limited partnership interest) 148
159
Riverlake Equity Partners II, LP (limited partnership interest) 129
129
Milestone Partners IV, LP (limited partnership interest) 84
180
Baird Capital Partners V, LP (limited partnership interest) 54
—
BeyondTrust Software, Inc. —
5,995
Thing5, LLC —
3,000
Garretson Firm Resolution Group, Inc. —
508
Sailpoint Technologies, Inc. —
1,500
Systems, Inc. —
3,030
Total $ 98,721
$ 118,073



	March 31, 2020		September 30, 2019
Assembled Brands Capital LLC	$	33,143	$	35,182
WPEngine, Inc.	26,348		—
Dominion Diagnostics, LLC	5,887		—
Corrona, LLC	4,273		—
PaySimple, Inc.	3,985		12,250
Pingora MSR Opportunity Fund I-A, LP	3,500		3,500
MRI Software LLC	2,857		—
Accupac, Inc.	2,346		—
Acquia Inc.	2,240		—
New IPT, Inc.	2,229		2,229
Apptio, Inc.	1,538		1,538
Senior Loan Fund JV I, LLC	1,328		1,328
iCIMs, Inc.	882		882
Ministry Brands, LLC	425		800
Coyote Buyer, LLC	352		—
GKD Index Partners, LLC	231		1,156
P2 Upstream Acquisition Co.	—		9,000
Sorrento Therapeutics, Inc.	—		7,500
4 Over International, LLC	—		1,977
Mindbody, Inc.	—		3,048
Thruline Marketing, Inc.	—		3,000
TerSera Therapeutics, LLC	—		4,200
PLATO Learning Inc. (1)	—		746
Total	$	91,564	$	88,336

___________

(1) This investment was on cash or PIK non-accrual status as of ~~December~~March 31, ~~2017~~2020 and September 30, ~~2017.~~

~~(2) This portfolio company does not have the ability to draw on this unfunded commitment as of December 31, 2017.~~

~~OAKTREE SPECIALTY LENDING CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in thousands, except share and per share amounts, percentages and as otherwise indicated)~~2019.

Note ~~16.~~15. Subsequent Events

The Company’s management evaluated subsequent events through the date of issuance of the Consolidated Financial Statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in the Consolidated Financial Statements as of and for the three and six months ended ~~December~~March 31, ~~2017,~~2020, except as discussed below:

Distribution Declaration

On ~~February 5, 2018,~~April 30, 2020, the Company’s Board of Directors declared a quarterly ~~dividend~~distribution of ~~$0.085~~$0.095 per share, payable in cash on ~~March~~June 30, ~~2018~~2020 to stockholders of record on ~~March~~June 15, ~~2018.~~2020.

Investment Advisory Agreement

On May 4, 2020, Oaktree effected the novation of the Investment Advisory Agreement to Oaktree Fund Advisors, LLC, a registered investment adviser under common control with Oaktree. Immediately following such novation, the Company and Oaktree Fund Advisors, LLC entered into a new investment advisory agreement with the same terms, including fee structure, as the Investment Advisory Agreement.

OAKTREE SPECIALTY LENDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

Credit Facility Amendment

On May 6, 2020, the Company amended its revolving credit facility (i) to reduce the minimum shareholders' equity covenant from $700 million to $550 million, (ii) to increase the interest rate margin up to 2.75% on LIBOR loans or 1.75% on alternative base rate loans if the Company's minimum shareholders' equity is below $700 million depending on its senior coverage ratio and (iii) to reduce the maximum size of the facility under the "accordion" feature to the greater of $800 million or the Company's net worth on the date of such increase.

Schedule 12-14

Oaktree Specialty Lending Corporation

Schedule of Investments in and Advances to Affiliates

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

~~Three~~Six months ended ~~December~~March 31, ~~2017~~2020

(unaudited)

Portfolio Company/Type of Investment (1) Cash Interest Rate Industry Principal Net Realized Gain (Loss)
Amount of
Interest,
Fees or
Dividends
Credited in
Income (2)

Fair Value
at October 1,
2017

Gross
Additions (3)

Gross
Reductions (4)

Fair Value
at December 31, 2017
% of Total Net Assets
Control Investments
Traffic Solutions Holdings, Inc. Construction & engineering
First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 8.70 % $ 36,661
$ —
$ 1,088
$ 36,568
$ 186
$ (92 ) $ 36,662
4.5 %
First Lien Revolver, LIBOR+6% (1% floor) cash due 4/1/2021 7.70 % 2,000
—
37
1,250
750
—
2,000
0.2 %
LC Facility, 6% cash due 4/1/2021 4,752
—
64
4,752
—
—
4,752
0.6 %
746,114 Series A Preferred Units, 10% —
—
—
7,700
—
—
7,700
0.9 %
746,114 Common Stock Units —
—
—
—
—
—
—
— %
TransTrade Operators, Inc. (7) Air freight and logistics

First Lien Term Loan, 5% cash due 12/31/2017 15,973
—
—
1,810
—
—
1,810
0.2 %
First Lien Revolver, 8% cash due 12/31/2017 7,757
—
—
—
—
—
—
— %
596.67 Series A Common Units —
—
—
—
—
—
—
— %
4,000 Series A Preferred Units in TransTrade Holdings LLC —
—
—
—
—
—
—
— %
5,200,000 Series B Preferred Units in TransTrade Holdings LLC —
—
—
—
—
—
—
— %
First Star Speir Aviation Limited (6) Airlines

First Lien Term Loan, 9% cash due 12/15/2020 32,510
—
634
41,395
464
(9,348 ) 32,511
4.0 %
100% equity interest —
—
—
3,926
3,011
—
6,937
0.8 %
First Star Bermuda Aviation Limited (6) Airlines

First Lien Term Loan, 9% cash 3% PIK due 8/19/2018 11,868
—
406
11,868
—
—
11,868
1.4 %
100% equity interest —
—
—
2,323
4,993
—
7,316
0.9 %
Eagle Hospital Physicians, LLC Healthcare services

Earn-out —
—
—
4,986
97
—
5,083
0.6 %
Senior Loan Fund JV I, LLC (5) Multi-sector holdings

Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC 6.52 % 100,804
—
1,754
101,030
—
(226 ) 100,804
12.3 %
Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC 27,463
—
1,006
27,641
—
(178 ) 27,463
3.4 %
87.5% LLC equity interest —
—
—
5,525
—
(645 ) 4,880
0.6 %
Ameritox Ltd. (7) Healthcare services

First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 6.69 % 39,438
—
—
4,445
361
(6 ) 4,800
0.6 %
14,090,126.4 Class A Preferred A Units in Ameritox Holdings II, LLC —
—
—
—
—
—
—
— %
1,602,260.83 Class B Preferred A Units in Ameritox Holdings II, LLC —
—
—
—
—
—
—
— %
4,930.03 Common Units in Ameritox Holdings II, LLC —
—
—
—
—
—
—
— %

New IPT, Inc. Oil & gas equipment services

First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 6.69 % $ 4,107
$ —
$ 67
$ 4,107
$ —
$ —
$ 4,107
0.5 %
Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 6.79 % 2,504
—
41
2,504
—
—
2,504
0.3 %
First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 6.69 % 1,009
—
18
1,009
—
—
1,009
0.1 %
50.087 Class A Common Units in New IPT Holdings, LLC —
—
—
736
227
—
963
0.1 %
AdVenture Interactive, Corp. Advertising

9,073 shares of common stock —
—
—
13,818
—
(7,397 ) 6,421
0.8 %
Keypath Education, Inc. Advertising

First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 8.69 % 19,960
—
435
19,960
—
—
19,960
2.4 %
First Lien Revolver, LIBOR+7% (1% floor) cash due 4/3/2022 8.69 % —
—
4
—
—
—
—
— %
9,073 Class A Units in FS AVI Holdco, LLC —
—
—
7,918
66
—
7,984
1.0 %
Total Control Investments $ 306,806
$ —
$ 5,554
$ 305,271
$ 10,155
$ (17,892 ) $ 297,534
36.3 %

Affiliate Investments
Caregiver Services, Inc. Healthcare services
Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019 9,752
—
265
9,665
43
—
9,708
1.2 %
1,080,399 shares of Series A Preferred Stock, 10% —
—
—
2,534
—
(373 ) 2,161
0.3 %
AmBath/ReBath Holdings, Inc. Home improvement retail

First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2018 22,552
—
864
22,957
169
(574 ) 22,552
2.8 %
4,668,788 shares of Preferred Stock —
—
—
1,827
221
—
2,048
0.2 %
Total Affiliate Investments $ 32,304
$ —
$ 1,129
$ 36,983
$ 433
$ (947 ) $ 36,469
4.4 %
Total Control & Affiliate Investments $ 339,110
$ —
$ 6,683
$ 342,254
$ 10,588
$ (18,839 ) $ 334,003
40.8 %



Portfolio Company/Type of Investment (1)	Cash Interest Rate		Industry	Principal			Net Realized Gain (Loss)		Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value at October 1, 2019		Gross Additions (3)		Gross Reductions (4)			Fair Value at March 31, 2020		% of Total Net Assets
Control Investments
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units							$	—	$	—	$	—	$	—	$	—		$	—	—	%
34,984,460.37 Preferred Units							—		—		34,984		—		(7,346		)	27,638		3.7	%
Dominion Diagnostics, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024	6.46	%		$	27,799		—		172		—		27,869		(70		)	27,799		3.7	%
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024	6.46	%		5,260			—		35		—		5,260		—			5,260		0.7	%
30,030.8 Common Units in DD Healthcare Services Holdings, LLC				—			—		—		—		18,626		(8,511		)	10,115		1.3	%

First Star Speir Aviation Limited (5)			Airlines
First Lien Term Loan, 9.00% cash due 12/15/2020				11,510			—		600		11,510		42		(42		)	11,510		1.5	%
100% equity interest				—			—		—		4,630		—		(1,465		)	3,165		0.4	%
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.45	%		2,605			—		112		3,256		—		(651		)	2,605		0.3	%
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.45	%		1,009			—		40		1,009		—		—			1,009		0.1	%
50.087 Class A Common Units in New IPT Holdings, LLC						��	—		—		2,903		—		(1,307		)	1,596		0.2	%
Senior Loan Fund JV I, LLC (6)			Multi-Sector Holdings
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	8.73	%		96,250			—		4,341		96,250		—		(4,079		)	92,171		12.3	%
87.5% LLC equity interest							—		—		30,052		—		(30,052		)	—		—	%
Thruline Marketing, Inc.			Advertising																	—	%
First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022				—			—		257		18,146		—		(18,146		)	—		—	%
First Lien Revolver, LIBOR+7.75% cash due 4/3/2022				—			—		1		—		—		—			—		—	%
9,073 Class A Units in FS AVI Holdco, LLC							—		—		6,438		—		(2,039		)	4,399		0.6	%
Total Control Investments				$	144,433		$	—	$	5,558	$	209,178	$	51,797	$	(73,708	)	$	187,267	24.9	%

Affiliate Investments
Assembled Brands Capital LLC			Specialized Finance
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023	6.99	%		$	7,623		$	—	$	262	$	5,585	$	2,038	$	(1,508	)	$	6,115	0.8	%
1,609,201 Class A Units							—		—		782		135		—			917		0.1	%
1,019,168.80 Preferred Units, 6%							—		—		1,019		31		—			1,050		0.1	%
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029							—		—		—		—		—			—		—	%
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%				—			—		—		1,784		—		(452		)	1,332		0.2	%
Total Affiliate Investments				$	7,623		$	—	$	262	$	9,170	$	2,204	$	(1,960	)	$	9,414	1.3	%
Total Control & Affiliate Investments				$	152,056		$	—	$	5,820	$	218,348	$	54,001	$	(75,668	)	$	196,681	26.1	%

______________________


(1)	The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments.


(2)	Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories.

(3)

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.

(4)

Gross reductions include decreases in the cost basis of ~~investment~~investments resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)

First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.


(6)	Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required).

~~(6)~~

First Star Bermuda Aviation Limited and First Star Speir Aviation Limited are wholly-owned holding companies formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding companies to be investment companies under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding companies and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding companies are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.


~~(7)~~	~~This investment was on cash non-accrual status as of December 31, 2017 and September 30, 2017.~~

Schedule 12-14

Oaktree Specialty Lending Corporation

Schedule of Investments in and Advances to Affiliates

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

~~Three~~Six months ended ~~December~~March 31, ~~2016~~2019

(unaudited)

Portfolio Company/Type of Investment (1) Cash Interest Rate Industry Principal Net Realized Gain (Loss)
Amount of
Interest,
Fees or
Dividends
Credited in
Income (2)

Fair Value
at October 1,
2015

Gross
Additions (3)

Gross
Reductions (4)

Fair Value
at December 31, 2016
% of Total Net Assets
Control Investments
Traffic Solutions Holdings, Inc. Construction & engineering
First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 8.00 % $ 36,278
$ —
$ 1,050
$ 36,328
$ 310
$ (360 ) $ 36,278
3.5 %
First Lien Revolver, LIBOR+7% (1% floor) cash due 4/1/2021 8.00 % 1,800
—
53
2,800
2
(1,002 ) 1,800
0.2 %
LC Facility, 6% cash due 4/1/2021 3,518
—
58
3,518
2
(2 ) 3,518
0.3 %
746,114 Series A Preferred Units - Granted —
—
676
20,094
1,919
—
22,013
2.1 %
746,114 Common Stock Units - Granted —
—
—
—
378
—
378
— %
TransTrade Operators, Inc. (7) Air freight and logistics

First Lien Term Loan, 11% cash 3% PIK due 12/31/2017 15,973
—
6
7,046
642
(6 ) 7,682
0.7 %
First Lien Revolver, 8% cash due 12/31/2017 8,220
—
—
—
1,335
(1,335 ) —
— %
596.67 Series A Common Units - Granted —
—
—
—
—
—
—
— %
4,000,000 Series A Preferred Units in TransTrade Holdings LLC - Purchased —
—
—
—
—
—
—
— %
5,200,000 Series B Preferred Units in TransTrade Holding LLC - Purchased —
—
—
—
—
—
—
— %
First Star Aviation, LLC (6) Airlines

10,104,401 Common Units —
(3,767 ) —
2,413
87
(2,500 ) —
— %
First Star Speir Aviation Limited (6) Airlines

First Lien Term Loan, 9% cash due 12/15/2020 41,395
—
647
54,214
1,846
(14,665 ) 41,395
4.0 %
100% equity interest —
—
—
2,839
—
(98 ) 2,741
0.3 %
First Star Bermuda Aviation Limited (6) Airlines

First Lien Term Loan, 9% cash 3% PIK due 8/19/2018 11,868
—
267
11,851
58
(41 ) 11,868
1.2 %
100% equity interest —
—
—
5,729
(130 ) (605 ) 4,994
0.5 %
Eagle Hospital Physicians, LLC Healthcare services

First Lien Term Loan A, 8% PIK due 4/30/2017 14,175
—
286
13,875
300
—
14,175
1.4 %
First Lien Term Loan B, 8.1% PIK due 4/30/2017 3,970
—
81
3,887
83
—
3,970
0.4 %
First Lien Revolver, 8% cash due 4/30/2017 1,913
—
43
1,913
19
(19 ) 1,913
0.2 %
4,100,000 Class A Common Units —
—
—
7,421
—
(7,188 ) 233
— %
Senior Loan Fund JV I, LLC (5) Multi-sector holdings

Subordinated Note, LIBOR+8% cash due 5/2/2021 —
(19,857 ) 2,859
129,004
16,546
(145,550 ) —
— %
Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC 6.76 % 101,030
—
171
—
101,030
—
101,030
9.8 %
Class B Mezzanine Secured Deferrable Fixed Rate Notes due 2036 in SLF Repack Issuer 2016 LLC 24,756
—
92
—
24,756
—
24,756
2.4 %
87.5% equity interest —
—
700
13,708
150
—
13,858
1.3 %



Portfolio Company/Type of Investment (1)	Cash Interest Rate		Industry	Principal		Net Realized Gain (Loss)		Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value at October 1, 2018		Gross Additions (3)		Gross Reductions (4)			Fair Value at March 31, 2019		% of Total Net Assets
Control Investments
First Star Speir Aviation Limited (5)			Airlines
First Lien Term Loan, 9.00% cash due 12/15/2020				$	32,510	$	—	$	976	$	32,510	$	722	$	(722	)	$	32,510	3.5	%
100% equity interest				—		—		—		—		967		(100		)	867		0.1	%
New IPT, Inc.			Oil & gas equipment services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	7.60	%		4,107		—		170		4,107		—		—			4,107		0.4	%
Second Lien Term Loan, LIBOR+5.10% cash due 9/17/2021	7.70	%		601		—		39		1,453		—		(851		)	602		0.1	%
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	7.60	%		1,009		—		43		1,009		—		—			1,009		0.1	%
50.087 Class A Common Units in New IPT Holdings, LLC				—		—		—		2,291		612		—			2,903		0.3	%
Senior Loan Fund JV I, LLC (6)			Multi-sector holdings
Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC				—		—		2,036		99,813		—		(99,813		)	—		—	%
Class B Mezzanine Secured Deferrable Fixed Rate Notes, 10.00% cash due 2036 in SLF Repack Issuer 2016 LLC				—		—		707		29,520		67		(29,587		)	—		—	%
Subordinated Note, LIBOR+7.00% cash due 12/29/2028	9.51	%		96,250		—		2,388		—		96,250		—			96,250		10.4	%
87.5% LLC equity interest				—		—		—		41		37,734		(7,191		)	30,584		3.3	%
Thruline Marketing, Inc.			Advertising
First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022	9.60	%		18,146		—		880		18,146		—		—			18,146		2.0	%
First Lien Revolver, LIBOR+7.75% cash due 4/3/2022				—		—		8		—		—		—			—		—	%
9,073 Class A Units in FS AVI Holdco, LLC				—		—		—		7,984		—		(1,546		)	6,438		0.7	%
Total Control Investments				$	152,623	$	—	$	7,247	$	196,874	$	136,352	$	(139,810	)	$	193,416	20.9	%

Affiliate Investments
Assembled Brands Capital LLC			Specialized finance
First Lien Delayed Draw Term Loan LIBOR+6.00% cash due 10/17/2023	8.60	%		$	1,835	$	—	$	44	$	—	$	1,835	$	—		$	1,835	0.2	%
764,376.60 Class A Units				—		—		—		—		764		—			764		0.1	%
583,190.81 Class B Units				—		—		—		—		—		—			—		—	%
Caregiver Services, Inc.			Healthcare services
1,080,399 shares of Series A Preferred Stock, 10.00%				—		—		—		2,161		—		(182		)	1,979		0.2	%
Total Affiliate Investments				$	1,835	$	—	$	44	$	2,161	$	2,599	$	(182	)	$	4,578	0.5	%
Total Control & Affiliate Investments				$	154,458	$	—	$	7,291	$	199,035	$	138,951	$	(139,992	)	$	197,994	21.4	%

Express Group Holdings LLC (7) Oil & gas equipment services

First Lien Term Loan, PRIME+6% (1% floor) cash due 9/3/2019 10.75 % $ 12,506
$ —
$ —
$ 1,193
$ —
$ (1,193 ) $ —
— %
First Lien Revolver, PRIME+3.5% (3.5% floor) cash due 3/4/2019 7.00 % 6,090
—
—
6,090
—
(5,211 ) 879
0.1 %
Last-In Revolver, PRIME+3.5% (3.5% floor) cash due 10/7/2016 7.00 % 3,000
—
53
3,000
—
—
3,000
0.3 %
14,033,391 Series B Preferred Units —
—
—
—
—
—
—
— %
280,668 Series A Preferred Units —
—
—
—
—
—
—
— %
1,456,344 Common Units —
—
—
—
—
—
—
— %
Ameritox Ltd. Healthcare services

First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 6.00 % 31,498
—
734
31,039
459
—
31,498
3.1 %
14,090,126.4 Class A Preferred A Units in Ameritox Holdings II, LLC —
—
—
15,437
720
—
16,157
1.6 %
1,602,260.83 Class B Preferred A Units in Ameritox Holdings II, LLC —
—
—
1,755
82
—
1,837
0.2 %
4,930.03 Common Units in Ameritox Holdings II, LLC —
—
—
13,113
—
(6,925 ) 6,188
0.6 %
Total Control Investments $ 317,990
$ (23,624 ) $ 7,776
$ 388,267
$ 150,594
$ (186,700 ) $ 352,161
34.2 %
Affiliate Investments

Caregiver Services, Inc. Healthcare services

Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019 9,573
—
293
9,549
49
(26 ) 9,572
0.9 %
1,080,399 shares of Series A Preferred Stock, 10% —
—
—
4,079
—
(117 ) 3,962
0.4 %
AmBath/ReBath Holdings, Inc. Home improvement retail

First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2017 24,015
—
1,398
24,268
416
(548 ) 24,136
2.3 %
4,668,788 shares of Preferred Stock —
—
—
1,873
—
(82 ) 1,791
0.2 %
Total Affiliate Investments $ 33,588
$ —
$ 1,691
$ 39,769
$ 465
$ (773 ) $ 39,461
3.8 %
Total Control & Affiliate Investments $ 351,578
$ (23,624 ) $ 9,467
$ 428,036
$ 151,059
$ (187,473 ) $ 391,622
38.0 %

This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial ~~Statements.~~Statements as of March 31, 2019 included in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2019.

______________________


(1)	The principal amount and ownership detail are shown in the Company's Consolidated Schedules of ~~Investments.~~Investments as of March 31, 2019 included in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2019.


(2)	Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories.

(3)

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, ~~and~~ accrued PIK interest (net of non-accrual amounts), and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.

(4)

(5)

First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be investment companies under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding companies are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entity.


(6)	Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required).

~~(6)~~

First Star Aviation, LLC, First Star Bermuda Aviation Limited and First Star Speir Aviation Limited are wholly-owned holding companies formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding companies to be investment companies under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding companies and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding companies are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.


~~(7)~~	~~This investment was on cash non-accrual status as of December 31, 2016.~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in connection with our Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q.

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

our future operating results and distribution projections;

the ability of Oaktree Capital Management, L.P., or Oaktree, ~~or our Investment Adviser, to find lower-risk investments~~ to reposition our portfolio and to implement ~~our Investment Adviser’s~~Oaktree's future plans with respect to our business;

the ability of Oaktree to attract and retain highly talented professionals;

our business prospects and the prospects of our portfolio companies;

the impact of the investments that we expect to make;

the ability of our portfolio companies to achieve their objectives;

our expected financings and ~~investments;~~investments and additional leverage we may seek to incur in the future;

the adequacy of our cash resources and working capital;

the timing of cash flows, if any, from the operations of our portfolio companies; and

the cost or potential outcome of any litigation to which we may be a party.

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in ~~“Item~~“Item 1A. Risk ~~Factors”~~Factors” in our annual report on Form 10-K for the year ended September 30, ~~2017~~2019 and elsewhere in this quarterly report on Form 10-Q.

Other factors that could cause actual results to differ materially include:

changes or potential disruptions in our operations, the economy, financial markets ~~and~~or political environment;

risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or ~~natural disasters;~~the COVID-19 pandemic;

future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to ~~business development companies~~Business Development Companies or regulated investment companies, or RICs;

general considerations associated with the COVID-19 pandemic; and

other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the Securities and Exchange Commission, or the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

~~Except as otherwise specified, references to the “Company,” “we,” “us,” and “our,” refer to Oaktree Specialty Lending Corporation and its consolidated subsidiaries.~~

All dollar amounts in tables are in thousands, except share and per share amounts ~~percentages~~ and as otherwise indicated.

Business Overview

We are a specialty finance company ~~dedicated~~that looks to ~~providing~~provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a ~~business development company~~Business Development Company under the Investment Company Act of 1940, as amended, or the ~~1940~~Investment Company Act. In addition, we have qualified and elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes.

As of ~~October 17, 2017,~~March 31, 2020, we are externally managed by Oaktree ~~a subsidiary of Oaktree Capital Group, LLC, or “OCG”, a global investment manager specializing in alternative investments,~~ pursuant to an investment advisory agreement, ~~between us and~~as amended from time to time, or the Investment ~~Adviser, or~~Advisory Agreement, between the ~~New Investment Advisory Agreement.~~Company and Oaktree. Oaktree Fund Administration, LLC, or the Oaktree Administrator, ~~or OFA,~~ a subsidiary of ~~our Investment Adviser, also~~Oaktree, provides certain administrative and other services necessary for us to ~~operate. Prior~~operate pursuant to ~~October 17, 2017,~~an administration agreement, as amended from time to time, or the Administration Agreement.

We seek to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. We may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions. Our portfolio may also include certain structured finance and other non-traditional structures. We invest in companies that typically possess business models we ~~were externally managed~~expect to be resilient in the future with underlying fundamentals that will provide strength in economic downturns. We intend to deploy capital across credit and ~~advised by Fifth Street Management LLC, or FSM or the Former Adviser,~~economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams, and we ~~were named Fifth Street Finance Corp.~~

~~We generally lend~~may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree’s credit and structuring expertise, including during the COVID-19 pandemic. Sponsors may include financial sponsors, such as an institutional investor or a private equity firm, or a strategic entity seeking to invest in ~~small and mid-sized companies, primarily in connection with investments by private equity sponsors. Our investment objective~~a portfolio company. Oaktree is ~~to maximize our portfolio’s total return by generating current income from our debt investments, and to a lesser extent, capital appreciation from our equity investments.~~

Our Investment Adviser intends to reposition our portfolio into investments that are better aligned with our Investment Adviser's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles. We expect that our Investment Adviser will focusgenerally focused on middle-market companies, which we define as companies with enterprise values of between $100 million and $750 million. Going forward, we expect our portfolio to include a mix of approximately 40% to 60% of first and 35% to 55% of second lien loans, including asset backed loans, unitranche loans, mezzanine loans, approximately 5% to 15% of unsecured loans and 0% to 10% of preferred equity and certain equity co-investments. Our portfolio may also include certain structured finance and other non-traditional structures. We expect to target investments of $30 million to $50 million, on average, although we may invest more or less in certain portfolio companies. We generally invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “high yield” and “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.

Oaktree intends to continue to reposition our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles. Since becoming our investment adviser, Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments. Certain additional information on such categorization and our portfolio composition ~~will be~~is included in ~~our~~ investor ~~presentation to be filed~~presentations that we file with the SEC.

~~During~~ Since becoming our investment adviser, Oaktree has reduced the ~~fiscal year ending September 30, 2018,~~investments it has identified as non-core by over $700 million at fair value. Over time, Oaktree ~~also~~ intends to rotate us out of the remaining non-core investments, which were approximately ~~$80~~$142 million at fair value as of March 31, 2020. Oaktree periodically reviews designations of investments ~~with spreads~~as core and non-core and may change such designations over LIBOR of less than 4.0% and, over time, to reduce our exposure to smaller investments of less than $10 million. Oaktree will seek to redeploy capital from realization of existing investments into Oaktree-originated investments with higher yields.time.

During the three months ended December 31, 2017, the integration of our operational infrastructure, including accounting, valuation, compliance and information technology processes and systems, into the Oaktree platform was completed, and we believe that we will realize synergies and cost savings, including from trade settlement and internal audit functions, as a result of this integration.

Business Environment and Developments

The opportunity set in credit is still dominated by the search for yield as central banks in Japan and Europe continue their accommodative monetary policies. This glut of capital is resulting in significant inflows into sub-investment grade credit from investors, including private equity sponsors, seeking higher spreads as investment grade and highly rated sub-investment grade credit trade at close-to-historically tight levels.

During the quarter ended December 31, 2017, the spread on the BAML High Yield Single B Index ranged between 3.34% and 3.99% and was 3.69% as of December 31, 2017. In addition, during the quarter ended December 31, 2017, the Credit Suisse Leveraged Loan Index spread ranged between 3.70% and 3.88% and was 3.75% as of December 31, 2017. The weighted average annual yield on our portfolio of 9.0% as of December 31, 2017 compares favorably in the current environment.

We believe that the ~~fundamentals~~economic impact of ~~middle-market companies remain strong,~~the COVID-19 pandemic has contributed to significant market volatility and disruption, which ~~drove~~may have lasting effects on the ~~highest lending level~~U.S. and global financial markets and have caused (and may cause further) economic uncertainties or deterioration in ~~three years.~~ the performance of the middle market in the United States and worldwide.

In particular, the disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets, significant write-offs in the financial sector and re-pricing of credit risk in the broadly syndicated market. This widening of spreads makes it more difficult for middle market businesses to access capital as lenders could become more selective in evaluating investment opportunities, equity sponsors delay transactions given earnings uncertainty and sellers are hesitant to accept lower purchase price multiples.

In this type of environment, we believe attractive risk-adjusted returns can be achieved by ~~investing~~making loans to companies in ~~companies that cannot efficiently access traditional debt capital markets. We~~the middle market. Given the breadth of Oaktree’s investment platform, we believe that ~~the Company has~~we have the resources and experience to source, diligence and structure investments in these companies and isare well placed to generate attractive returns for investors.

~~New Investment Advisory Agreement with Oaktree~~

~~Upon the closing~~We have proactively taken a number of actions to evaluate and support our portfolio companies in light of the ~~transactions,~~COVID-19 pandemic, including outreach to a variety of management teams and sponsors. We have established a dialogue with many of our portfolio companies and are especially focused on those that might have moderate to higher risk of material impacts from COVID-19. We believe that these efforts to identify vulnerable credits will allow us to address potential problems early and provide constructive solutions to our portfolio companies.

As of March 31, 2020, 90.6% of our debt investment portfolio (at fair value) and 90.9% of our debt investment portfolio (at cost) bore interest at floating rates indexed to the London Interbank Offered Rate, or LIBOR, and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower’s option. As a result of the COVID-19 pandemic and the related decision of the U.S. Federal Reserve to reduce certain interest rates, LIBOR decreased in March 2020. A prolonged reduction in interest rates will result in a decrease in our total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction of our incentive fee on income. In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of LIBOR by the end of 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities. Although there have been a few issuances utilizing SOFR or the ~~Transaction, contemplated by the Asset Purchase Agreement, or the Purchase Agreement, by and among Oaktree,~~Sterling Over Night Index Average, an alternative reference rate that is based on transactions, it remains unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR. If LIBOR ceases to exist, we may need to renegotiate any credit agreements extending beyond 2021 with our Former Adviser and, for certain limited purposes, Fifth Street Asset Management Inc., or FSAM, the indirect, partial owner of our Former Adviser, and Fifth Street Holdings L.P., the direct, partial owner of our Former Adviser, on October 17, 2017, Oaktree became the investment adviser to each of Oaktree Strategic Income Corporation, or OCSI, and us, and Oaktree paid gross cash consideration of $320 million to our Former Adviser. The closing of the Transaction resulted in an assignment for purposes of the 1940 Act of our investment advisory agreement with FSM, or the Former Investment Advisory Agreement, and, as a result, its immediate termination. The material terms of the services to be provided under the New Investment Advisory Agreement, other than the fee structure, are substantially the same as the Former Investment Advisory Agreement, except that services are provided by Oaktree. See “Note 11. Related Party Transactions-New Investment Advisory Agreement” and “-Administrative Services” in the notes to the accompanying Consolidated Financial Statements.prospective portfolio

~~In order~~companies that utilize LIBOR as a factor in determining the interest rate and may also need to ~~ensure~~renegotiate the terms of the Credit Facility (as defined below), which matures in 2024. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the ~~Transaction complied~~administrative agent may identify a replacement reference rate, typically with ~~Section 15(f)~~the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the ~~1940 Act, Oaktree and our Former Adviser agreed~~lenders under the facility, or the consent of each lender, prior to ~~certain conditions. First, for~~identifying a ~~period of three years after the closing~~replacement reference rate. Certain of the ~~Transaction, at least 75%~~loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist. It remains unclear whether the cessation of LIBOR will be delayed due to COVID-19 or what form any delay may take, and there are no assurances that there will be a delay. It is also unclear what the ~~members~~duration and severity of ~~our Board~~COVID-19 will be, and whether this will impact LIBOR transition planning. COVID-19 may also slow regulators’ and others’ efforts to develop and implement alternative reference rates, which could make LIBOR transition planning more difficult, particularly if the cessation of ~~Directors must~~LIBOR is not ~~be interested persons of Oaktree or our Former Adviser. Second, an “unfair burden” must~~delayed but alternatives do not be imposed on us as a result of the closing of the Transaction or any express or implied terms, conditions or understandings applicable thereto during the two-year period after the closing of the Transaction.develop.

Critical Accounting Policies

Basis of Presentation

Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services-Investment Companies, or ASC 946.

Investment Valuation

~~We report our investments for which current market values are not readily available at fair value.~~ We value our investments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices ~~derived from such prices~~ over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments’ complexity.

Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as ~~follow:~~follows:

Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.

Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using ~~“bid”~~"bid" and ~~“ask”~~"ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.

Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, ~~our Investment Adviser~~Oaktree obtains and analyzes readily available market quotations provided by ~~independent~~ pricing ~~services~~vendors and brokers for all of our ~~first lien and second lien, or senior secured, debt~~ investments for which quotations are available. In determining the fair value of a particular investment, pricing ~~services~~vendors and brokers use observable market information, including both binding and non-binding indicative quotations.

~~Our Investment Adviser~~We seek to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we seek to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by ~~independent~~ pricing ~~services~~vendors and ~~company specific data that could affect the credit quality and/or fair value~~brokers

based on available market information, including trading activity of the ~~investment. Investments for which market quotations~~subject or similar securities, or by performing a comparable security analysis to ensure that fair values are ~~readily available may be valued at such market quotations.~~reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In ~~order~~addition to ~~validate market quotations, our Investment Adviser looks at a number~~ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, we do not adjust any of ~~factors to determine if~~the prices received from these sources.

If the quotations obtained from pricing vendors or brokers are ~~representative of fair value, including the source and nature of the quotations. Our Investment Adviser does~~determined to not ~~adjust the prices unless it has a reason to believe market quotations~~be reliable or are not reflective of the fair value of an investment. Examples of events that would cause market quotations to not reflect fair value could include cases when a security trades infrequently causing a quoted purchase or sale price to become stale or in the event of a “fire sale” by a distressed seller. In these instances,readily available, we value such investments by using ~~the valuation procedure that we use with respect to assets for which market quotations are not readily available (as discussed below).~~

If the quotation provided by the pricing service is based on only one or two market sources, we perform additional procedures to corroborate such information, which may include the market yield technique discussed below and a quantitative and qualitative assessmentany of ~~the credit quality and market trends affecting the portfolio company.~~

~~We perform detailed valuations of our debt and equity investments for which market quotations are not readily available or are deemed not to represent fair value of the investments. We typically use~~ three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value, or EV, of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that we are deemed to control under the ~~1940~~Investment Company Act. To estimate the EV of a portfolio company, ~~the Investment Adviser~~Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. ~~The Investment Adviser~~Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase ~~price multiples~~prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company’s assets and (vii) offers from third parties to buy the portfolio company. We may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and we consider the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions and industry-specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable.

We estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.

Our Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments:

The quarterly valuation process begins with each portfolio company or investment being initially valued by ~~our Investment Adviser’s~~Oaktree’s valuation team in conjunction with ~~the Investment Adviser’s~~Oaktree’s portfolio management team and investment professionals responsible for each portfolio investment;

•Preliminary valuations are then reviewed and discussed with management of ~~our Investment Adviser;~~Oaktree;

Separately, independent valuation firms engaged by our Board of Directors prepare valuations of our investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to us and provide such reports to ~~our Investment Adviser~~Oaktree and the Audit Committee of our Board of Directors;

~~The Investment Adviser~~Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;

The Audit Committee reviews the preliminary valuations with ~~our Investment Adviser,~~Oaktree, and ~~our Investment Adviser~~Oaktree responds and supplements the preliminary valuations to reflect any discussions between ~~our Investment Adviser~~Oaktree and the Audit Committee;

The Audit Committee makes a recommendation to our full Board of Directors regarding the fair value of the investments in our portfolio; and

Our Board of Directors discusses valuations and determines the fair value of each investment in our portfolio.

The fair value of our investments as of ~~December~~March 31, ~~2017~~2020 and September 30, ~~2017~~2019 was determined in good faith by our Board of Directors. Our Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the

determination of the fair value of a portion of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. As of ~~December~~March 31, ~~2017, 69.2%~~2020, 92.4% of our portfolio at fair value was valued either based on market quotations, the transactions precedent approach or corroborated by independent valuation firms. However, our Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

As of ~~December~~March 31, ~~2017~~2020 and September 30, ~~2017,~~2019, approximately ~~94.7%~~92.7% and ~~95.4%~~97.1%, respectively, of our total assets represented investments at fair value.

Revenue Recognition

Interest ~~and Dividend~~ Income

Interest income, adjusted for accretion of original issue discount, or OID, is recorded on ~~the~~an accrual basis to the extent that such amounts are expected to be collected. We stop accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. As of ~~December~~March 31, ~~2017,~~2020, there were ~~eight~~three investments on which we had stopped accruing cash and/or payment in kind, or PIK, interest or OID income.

In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company. When we receive nominal cost equity, we allocate our cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.

~~We generally recognize dividend income~~For our secured borrowings, the interest earned on the ~~ex-dividend date. Distributions received~~entire loan balance is recorded within interest income and the interest earned by the buyer from ~~equity investments are evaluated to determine if~~ the ~~distribution should be~~partial loan sales is recorded as dividend income or a return of capital. Generally, we will not record distributions from such equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reductionwithin interest expense in the ~~cost basis~~Consolidated Statements of ~~the investment.~~

~~Fee Income~~

We receive a variety of fees in the ordinary course of business, including servicing, advisory, amendment, structuring and prepayment fees, which are classified as fee income and recognized as they are earned.

We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. Exit fees are payable upon the exit of a debt security. These fees are to be paid to us upon the sooner to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. A percentage of these fees is included in net investment income over the life of the loan. As of December 31, 2017, we had a receivable for $1.5 million in aggregate exit fees of one portfolio investment upon the future exit of this investment.Operations.

PIK Interest Income

Our investments in debt securities may contain PIK interest provisions. PIK interest, which typically represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We generally cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect the portfolio company to be able to pay all principal and interest due. Our decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; our assessment of the portfolio company's business development success; information obtained by us in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. ~~Based on this and other information, we determine whether to cease accruing PIK interest on a loan or debt security when it is determined that PIK interest is no longer collectible.~~ Our determination to cease accruing PIK interest ~~on a loan or debt security~~ is generally made well before our full write-down of ~~such~~a loan or debt security. In addition, if it is subsequently determined that we will not be able to collect any previously accrued PIK interest, the fair value of ~~our~~the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on our debt investments increases the recorded cost bases of these investments in our Consolidated Financial Statements ~~and, as a result, increases the cost bases of these investments~~including for purposes of computing the capital gains incentive fee payable by us to ~~our Investment Adviser.~~

Oaktree. To maintain our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders, ~~as distributions,~~ even though we have not yet collected the cash and may never do so. ~~Accumulated PIK interest was $70.2 million,~~

Fee Income

Oaktree may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by us upon the investment closing date. We may also receive additional

fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or ~~5.0%, of~~ the ~~fair value of our portfolio of investments as of December 31, 2017 and $69.4 million, or 4.5%, of fair value~~services are rendered.

We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. These fees are typically paid to us upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.

Dividend Income

We generally recognize dividend income on the record date. Distributions received from equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of ~~September 30, 2017. The net increases in loan balances~~capital. Generally, we will not record distributions from such equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a ~~result~~return of ~~contractual PIK arrangements~~capital are ~~separately identified~~recorded as a reduction in ~~our Consolidated Statements~~the cost basis of ~~Cash Flows.~~the investment.

Portfolio Composition

Our investments principally consist of loans, ~~purchased~~common and preferred equity ~~investments~~ and ~~equity grants~~warrants in privately-held companies and ~~SLF~~Senior Loan Fund JV I, LLC, or SLF JV I. Our loans are typically secured by a first, second or subordinated lien on the assets of the portfolio company and generally have terms of up to ten years (but an expected average life of between three and four years). We believe the environment for direct lending remains active, and, as a result, a number of our portfolio companies were able to refinance and repay their loans during the three months ended December 31, 2017.

During the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2020, we originated ~~$183.0~~$407.1 million of investment commitments in 1341 new and ~~one~~12 existing portfolio companies and funded ~~$200.2~~$387.9 million of investments.

During the ~~three~~six months ended ~~December~~March 31, ~~2017,~~2020, we received ~~$196.4~~$251.5 million ~~in connection with the full repayments and~~of proceeds from prepayments, exits, ~~of nine of our investments and an additional $88.4 million in connection with~~ other paydowns and sales ~~of investments.~~and exited 17 portfolio companies.

A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables:


	December 31, 2017		September 30, 2017		March 31, 2020		September 30, 2019
Cost:
Senior secured debt	72.44	%	74.73	%	77.94	%	77.35	%
Subordinated debt	7.70		6.42		6.37		6.88
Debt investments in SLF JV I	7.65		7.32		5.91		6.36
Common equity and warrants					4.32		3.48
LLC equity interests of SLF JV I	0.96		0.92		3.03		3.26
Purchased equity	6.86		6.40
Equity grants	2.91		2.78
Limited partnership interests	1.48		1.43
Preferred equity					2.43		2.67
Total	100.00	%	100.00	%	100.00	%	100.00	%



DELAWARE (State or jurisdiction of incorporation or organization)		26-1219283 (I.R.S. Employer Identification No.)

333 South Grand Avenue, 28th Floor Los Angeles, CA (Address of principal executive office)		90071 (Zip Code)




Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	OCSL	The Nasdaq Stock Market LLC




		PART I — FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements:
		Consolidated Statements of Assets and Liabilities as of ~~December~~March 31, ~~2017~~2020 (unaudited) and September 30, ~~2017~~2019	1
		Consolidated Statements of Operations (unaudited) for the three and six months ended ~~December~~March 31, ~~2017~~2020 and ~~2016~~2019	2
		Consolidated Statements of Changes in Net Assets (unaudited) for the three and six months ended ~~December~~March 31, ~~2017~~2020 and ~~2016~~2019	3
		Consolidated Statements of Cash Flows (unaudited) for the ~~three~~six months ended ~~December~~March 31, ~~2017~~2020 and ~~2016~~2019	4
		Consolidated Schedule of Investments (unaudited) as of ~~December~~March 31, ~~2017~~2020	5
		Consolidated Schedule of Investments as of September 30, ~~2017~~2019	17
		Notes to Consolidated Financial Statements (unaudited)	3028
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		72
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		9597
Item 4.	Controls and Procedures		97100
		PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		97101
Item 1A.	Risk Factors		98101
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		98102
Item 3.	Defaults Upon Senior Securities		98102
Item 4.	Mine Safety Disclosures		98102
Item 5.	Other Information		98102
Item 6.	Exhibits		98103
Signatures			~~100~~103



	December 31, 2017 (unaudited)			September 30, 2017
ASSETS
Investments at fair value:
Control investments (cost December 31, 2017: $438,415; cost September 30, 2017: $444,826)	$	297,534		$	305,271
Affiliate investments (cost December 31, 2017: $33,397; cost September 30, 2017: $33,743)	36,469			36,983
Non-control/Non-affiliate investments (cost December 31, 2017: $1,204,629; cost September 30, 2017: $1,279,096)	1,081,401			1,199,501
Total investments at fair value (cost December 31, 2017: $1,676,441; cost September 30, 2017: $1,757,665)	1,415,404			1,541,755
Cash and cash equivalents	45,435			53,018
Restricted cash	319			6,895
Interest, dividends and fees receivable	9,082			6,892
Due from portfolio companies	5,368			5,670
Receivables from unsettled transactions	8,869			—
Deferred financing costs	6,443			1,304
Other assets	3,260			514
Total assets	$	1,494,180		$	1,616,048
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	3,490		$	2,417
Base management fee and Part I incentive fee payable	6,286			6,750
Due to affiliate	1,534			1,815
Interest payable	6,547			3,167
Amounts payable to syndication partners	—			1
Director fees payable	176			184
Payables from unsettled transactions	33,465			58,691
Credit facilities payable	205,000			255,995
Unsecured notes payable (net of $4,432 and $4,737 of unamortized financing costs as of December 31, 2017 and September 30, 2017, respectively)	406,486			406,115
Secured borrowings at fair value (proceeds of $13,489 as of December 31, 2017 and September 30, 2017)	11,601			13,256
Total liabilities	674,585			748,391
Commitments and contingencies (Note 15)
Net assets:
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding as of December 31, 2017 and September 30, 2017	1,409			1,409
Additional paid-in-capital	1,579,278			1,579,278
Net unrealized depreciation on investments and secured borrowings	(259,149		)	(215,677		)
Net realized loss on investments and secured borrowings	(478,301		)	(478,010		)
Accumulated overdistributed net investment income	(23,642		)	(19,343		)
Total net assets (equivalent to $5.81 and $6.16 per common share as of December 31, 2017 and September 30, 2017, respectively) (Note 12)	819,595			867,657
Total liabilities and net assets	$	1,494,180		$	1,616,048



	þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934



	¨ o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934



	March 31, 2020 (unaudited)			September 30, 2019
ASSETS
Investments at fair value:
Control investments (cost March 31, 2020: $255,739; cost September 30, 2019: $224,255)	$	187,267		$	209,178
Affiliate investments (cost March 31, 2020: $10,487; cost September 30, 2019: $8,449)	9,414			9,170
Non-control/Non-affiliate investments (cost March 31, 2020: $1,362,354; cost September 30, 2019: $1,280,310)	1,195,506			1,219,694
Total investments at fair value (cost March 31, 2020: $1,628,580; cost September 30, 2019: $1,513,014)	1,392,187			1,438,042
Cash and cash equivalents	89,509			15,406
Interest, dividends and fees receivable	6,217			11,167
Due from portfolio companies	1,774			2,616
Receivables from unsettled transactions	1,868			4,586
Deferred financing costs	5,671			6,396
Deferred offering costs	45			—
Deferred tax asset, net	821			—
Derivative assets at fair value	1,268			490
Other assets	2,267			2,335
Total assets	$	1,501,627		$	1,481,038
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	1,750		$	1,589
Base management fee and incentive fee payable	8,739			10,167
Due to affiliate	2,651			2,689
Interest payable	1,681			2,296
Payables from unsettled transactions	35,896			59,596
Deferred tax liability	—			704
Credit facility payable	404,825			314,825
Unsecured notes payable (net of $3,645 and $2,708 of unamortized financing costs as of March 31, 2020 and September 30, 2019, respectively)	293,861			158,542
Total liabilities	749,403			550,408
Commitments and contingencies (Note 14)
Net assets:
Common stock, $0.01 par value per share, 250,000 shares authorized; 140,961 shares issued and outstanding as of March 31, 2020 and September 30, 2019	1,409			1,409
Additional paid-in-capital	1,487,774			1,487,774
Accumulated overdistributed earnings	(736,959		)	(558,553		)
Total net assets (equivalent to $5.34 and $6.60 per common share as of March 31, 2020 and September 30, 2019, respectively) (Note 12)	752,224			930,630
Total liabilities and net assets	$	1,501,627		$	1,481,038


	Three months ended December 31, 2017			Three months ended December 31, 2016			Three months ended March 31, 2020			Three months ended March 31, 2019			Six months ended March 31, 2020			Six months ended March 31, 2019
Interest income:
Control investments	$	3,203		$	4,445		$	2,393		$	2,852		$	4,944		$	6,191
Affiliate investments	949			1,008			138			22			252			35
Non-control/Non-affiliate investments	25,565			38,301			27,149			31,231			52,808			63,398
Interest on cash and cash equivalents	221			119			218			204			299			474
Total interest income	29,938			43,873			29,898			34,309			58,303			70,098
PIK interest income:
Control investments	1,191			1,560			—			—			—			67
Affiliate investments	176			201
Non-control/Non-affiliate investments	500			1,076			1,946			2,280			3,107			3,045
Total PIK interest income	1,867			2,837			1,946			2,280			3,107			3,112
Fee income:
Control investments	120			309			8			7			14			13
Affiliate investments	4			482			5			5			10			9
Non-control/Non-affiliate investments	907			2,777			2,037			1,120			3,097			2,312
Total fee income	1,031			3,568			2,050			1,132			3,121			2,334
Dividend and other income:
Dividend income:
Control investments	1,040			1,462			277			523			600			976
Non-control/Non-affiliate investments	—			20
Total dividend and other income	1,040			1,482
Total dividend income							277			523			600			976
Total investment income	33,876			51,760			34,171			38,244			65,131			76,520
Expenses:
Base management fee	5,590			8,614			5,295			5,731			10,902			11,299
Part I incentive fee	830			4,063			3,444			3,813			6,432			7,541
Part II incentive fee							(6,608		)	8,170			(5,557		)	9,990
Professional fees	2,898			1,064			669			499			1,309			1,465
Board of Directors fees	176			197
Directors fees							142			142			285			285
Interest expense	9,584			13,189			7,215			8,970			13,750			17,874
Administrator expense	494			531			393			406			821			1,169
General and administrative expenses	1,116			1,468			780			705			1,312			1,336
Loss on legal settlements	—			3
Total expenses	20,688			29,129			11,330			28,436			29,254			50,959
Fees waived	(134		)	(61		)
Insurance recoveries	—			(602		)
Reversal of fees waived / (fees waived)							—			(7,901		)	5,200			(9,465		)
Net expenses	20,554			28,466			11,330			20,535			34,454			41,494
Net investment income	13,322			23,294			22,841			17,709			30,677			35,026
Unrealized appreciation (depreciation) on investments:
Unrealized appreciation (depreciation):
Control investments	(1,326		)	1,339			(55,392		)	3,868			(53,395		)	(1,952		)
Affiliate investments	(168		)	26			(1,730		)	(181		)	(1,794		)	(181		)
Non-control/Non-affiliate investments	(43,633		)	(75,721		)	(108,651		)	17,108			(106,243		)	16,324
Net unrealized depreciation on investments	(45,127		)	(74,356		)
Net unrealized (appreciation) depreciation on secured borrowings	1,655			(84		)
Realized gain (loss) on investments and secured borrowings:
Secured borrowings							—			(76		)	—			(95		)
Foreign currency forward contracts							2,240			753			778			401
Net unrealized appreciation (depreciation)							(163,533		)	21,472			(160,654		)	14,497
Realized gains (losses):
Control investments	—			(23,624		)	777			—			777			—
Non-control/Non-affiliate investments	(291		)	528			(24,777		)	25,899			(20,938		)	42,660
Net realized loss on investments and secured borrowings	(291		)	(23,096		)
Net decrease in net assets resulting from operations	$	(30,441	)	$	(74,242	)
Net investment income per common share — basic	$	0.09		$	0.16
Loss per common share — basic	$	(0.22	)	$	(0.52	)
Weighted average common shares outstanding — basic	140,961			142,853
Net investment income per common share — diluted	$	0.09		$	0.16
Loss per common share — diluted (Note 5)	$	(0.22	)	$	(0.52	)
Weighted average common shares outstanding — diluted	140,961			142,853
Distributions per common share	$	0.125		$	0.18
Extinguishment of unsecured notes payable							(2,541		)	—			(2,541		)	—
Foreign currency forward contracts							61			(686		)	(490		)	515
Net realized gains (losses)							(26,480		)	25,213			(23,192		)	43,175
Provision for income tax (expense) benefit							1,705			91			1,545			(495		)
Net realized and unrealized gains (losses), net of taxes							(188,308		)	46,776			(182,301		)	57,177
Net increase (decrease) in net assets resulting from operations							$	(165,467	)	$	64,485		$	(151,624	)	$	92,203
Net investment income per common share — basic and diluted							$	0.16		$	0.13		$	0.22		$	0.25
Earnings (loss) per common share — basic and diluted (Note 5)							$	(1.17	)	$	0.46		$	(1.08	)	$	0.65
Weighted average common shares outstanding — basic and diluted							140,961			140,961			140,961			140,961



	Three months ended December 31, 2017			Three months ended December 31, 2016
Operating activities:
Net decrease in net assets resulting from operations	$	(30,441	)	$	(74,242	)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
Net unrealized depreciation on investments	45,127			74,356
Net unrealized appreciation (depreciation) on secured borrowings	(1,655		)	84
Net realized loss on investments and secured borrowings	291			23,096
PIK interest income	(1,867		)	(2,837		)
Recognition of fee income	(1,031		)	(3,568		)
Accretion of original issue discount on investments	(2,997		)	(2,201		)
Accretion of original issue discount on unsecured notes payable	66			66
Amortization of deferred financing costs	1,341			999
Changes in operating assets and liabilities:
Fee income received	1,031			3,583
Decrease in restricted cash	6,576			11,315
(Increase) decrease in interest, dividends and fees receivable	(2,190		)	3,285
Decrease in due from portfolio companies	302			958
(Increase) decrease in receivables from unsettled transactions	(8,869		)	5,346
Decrease in insurance recoveries receivable	—			759
(Increase) decrease in other assets	(2,746		)	372
Increase in accounts payable, accrued expenses and other liabilities	1,073			1,534
Decrease in base management fee and Part I incentive fee payable	(464		)	(3,557		)
Decrease in due to affiliate	(281		)	(145		)
Increase in interest payable	3,380			5,148
Increase (decrease) in payables from unsettled transactions	(25,226		)	13,269
Decrease in director fees payable	(8		)	(369		)
Decrease in legal settlements payable	—			(530		)
Increase (decrease) in amounts payable to syndication partners	(1		)	1,030
Purchases of investments and net revolver activity	(200,166		)	(104,153		)
Principal payments received on investments (scheduled payments)	14,149			6,371
Principal payments received on investments (payoffs)	196,415			209,241
PIK interest income received in cash	1,103			3,434
Proceeds from the sale of investments	74,296			6,427
Net cash provided by operating activities	67,208			179,071
Financing activities:
Distributions paid in cash	(17,327		)	(24,024		)
Borrowings under credit facilities	35,000			84,000
Repayments of borrowings under credit facilities	(85,995		)	(158,882		)
Repayments of secured borrowings	—			(4,503		)
Repurchases of common stock under stock repurchase program	—			(12,500		)
Repurchases of common stock under dividend reinvestment plan	(294		)	(1,250		)
Deferred financing costs paid	(6,175		)	—
Net cash used by financing activities	(74,791		)	(117,159		)
Net increase (decrease) in cash and cash equivalents	(7,583		)	61,912
Cash and cash equivalents, beginning of period	53,018			117,923
Cash and cash equivalents, end of period	$	45,435		$	179,835
Supplemental information:
Cash paid for interest	$	4,797		$	6,976
Non-cash operating activities:
Purchases of investments from restructurings	$	—		$	(125,693	)
Proceeds from investment restructurings	$	—		$	125,693
Non-cash financing activities:
Issuance of shares of common stock under dividend reinvestment plan	$	294		$	1,250



Portfolio Company/Type of Investment (1)(2)(3)(4)(5)	Cash Interest Rate (6)		Industry	Principal (7)		Cost		Fair Value		Notes
Control Investments										(8)(9)
C5 Technology Holdings, LLC			Data Processing & Outsourced Services
829 Common Units						$	—	$	—	(20)
34,984,460.37 Preferred Units						34,984		27,638		(20)
						34,984		27,638
Dominion Diagnostics, LLC			Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024	6.46	%		$	27,799	27,799		27,799		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024	6.46	%		5,260		5,260		5,260		(6)(19)(20)
30,030.8 Common Units in DD Healthcare Services Holdings, LLC						18,626		10,115		(20)
						51,685		43,174
First Star Speir Aviation Limited			Airlines							(10)
First Lien Term Loan, 9.00% cash due 12/15/2020				11,510		2,097		11,510		(11)(20)
100% equity interest						8,500		3,165		(11)(12)(20)
						10,597		14,675
New IPT, Inc.			Oil & Gas Equipment & Services
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021	6.45	%		2,605		2,605		2,605		(6)(20)
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021	6.45	%		1,009		1,009		1,009		(6)(19)(20)
50.087 Class A Common Units in New IPT Holdings, LLC						—		1,596		(20)
						3,614		5,210
Senior Loan Fund JV I, LLC			Multi-Sector Holdings							(14)
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028	8.73	%		96,250		96,250		92,171		(6)(11)(20)
87.5% LLC equity interest						49,322		—		(11)(16)(19)
						145,572		92,171
Thruline Marketing, Inc.			Advertising
9,073 Class A Units in FS AVI Holdco, LLC						9,287		4,399		(20)
						9,287		4,399
Total Control Investments (24.9% of net assets)						$	255,739	$	187,267

Affiliate Investments										(17)
Assembled Brands Capital LLC			Specialized Finance
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023	6.99	%		$	7,623	$	7,623	$	6,115	(6)(19)(20)
1,609,201 Class A Units						765		917		(20)
1,019,168.80 Preferred Units, 6%						1,019		1,050		(20)
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029						—		—		(20)
						9,407		8,082
Caregiver Services, Inc.			Health Care Services
1,080,399 shares of Series A Preferred Stock, 10%						1,080		1,332		(20)
						1,080		1,332
Total Affiliate Investments (1.3% of net assets)						$	10,487	$	9,414

Non-Control/Non-Affiliate Investments										(18)
4 Over International, LLC			Commercial Printing
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022	7.45	%		$	5,738	$	5,710	$	5,528	(6)(20)
First Lien Revolver, LIBOR+6.00% cash due 6/7/2021	7.45	%		2,232		2,214		2,150		(6)(20)
						7,924		7,678
99 Cents Only Stores LLC			General Merchandise Stores
First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022	6.07	%		19,380		19,085		13,889		(6)
						19,085		13,889



Portfolio Company/Type of Investment (1)(2)(5)(9)(14)	Cash Interest Rate (13)		Industry	Principal (8)		Cost		Fair Value
Control Investments (3)(15)
Traffic Solutions Holdings, Inc.			Construction and engineering
First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)	8.70	%		$	36,661	$	36,637	$	36,662
First Lien Revolver, LIBOR+6% (1% floor) cash due 4/1/2021 (13)	7.70	%		2,000		1,997		2,000
LC Facility, 6% cash due 4/1/2021				4,752		4,748		4,752
746,114 Series A Preferred Units, 10%						20,029		7,700
746,114 Shares of Common Stock						5,316		—
						68,727		51,114
TransTrade Operators, Inc.			Air freight & logistics
First Lien Term Loan, 5% cash due 12/31/2017 (22)(24)				15,973		15,574		1,810
First Lien Revolver, 8% cash due 12/31/2017 (22)(24)				7,757		7,757		—
596.67 Series A Common Units						—		—
4,000 Series A Preferred Units in TransTrade Holdings LLC						4,000		—
5,200,000 Series B Preferred Units in TransTrade Holdings LLC						5,200		—
						32,531		1,810
First Star Speir Aviation Limited (11)(16)			Airlines
First Lien Term Loan, 9% cash due 12/15/2020				32,510		25,194		32,511
100% equity interest (6)						8,500		6,937
						33,694		39,448
First Star Bermuda Aviation Limited (11)(16)			Airlines
First Lien Term Loan, 9% cash 3% PIK due 8/19/2018				11,868		11,868		11,868
100% equity interest (6)						5,192		7,316
						17,060		19,184
Eagle Hospital Physicians, LLC			Healthcare services
Earn-out (19)						7,851		5,083
						7,851		5,083
Senior Loan Fund JV I, LLC (11)(17)(18)			Multi-sector holdings
Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC (13)	6.52	%		100,804		100,804		100,804
Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC				27,463		27,463		27,463
87.5% LLC equity interest (25)						16,172		4,880
						144,439		133,147
Ameritox Ltd.			Healthcare services
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)(22)	6.69	%		39,438		37,533		4,800
14,090,126.4 Class A Preferred Units in Ameritox Holdings II, LLC						14,090		—
1,602,260.83 Class B Preferred Units in Ameritox Holdings II, LLC						1,602		—
4,930.03 Class A Units in Ameritox Holdings II, LLC						29,049		—
						82,274		4,800
New IPT, Inc.			Oil & gas equipment services
First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (13)	6.69	%		4,107		4,107		4,107
Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)	6.79	%		2,504		2,504		2,504
First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)	6.69	%		1,009		1,009		1,009
50.087 Class A Common Units in New IPT Holdings, LLC						—		963
						7,620		8,583
AdVenture Interactive, Corp.			Advertising
9,073 shares of common stock						13,611		6,421
						13,611		6,421
Keypath Education, Inc.			Advertising
First Lien Term Loan, LIBOR+7% (1% floor) cash due 4/3/2022 (13)	8.69	%		19,960		19,960		19,960
First Lien Revolver, LIBOR+7% (1% floor) cash due 4/3/2022 (13)	8.69	%		—		—		—
9,073 Class A Units in FS AVI Holdco, LLC						10,648		7,984
						30,608		27,944
Total Control Investments (36.3% of net assets)						$	438,415	$	297,534



Derivative Instrument	Notional Amount to be Purchased		Notional Amount to be Sold		Maturity Date	Counterparty	Cumulative Unrealized Appreciation /(Depreciation)
Foreign currency forward contract	$	19,756	£	14,850	8/18/2020	JPMorgan Chase Bank, N.A.	$	1,310
Foreign currency forward contract	$	14,532	€	13,213	8/31/2020	JPMorgan Chase Bank, N.A.	(42		)
							$	1,268


(1)	All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.


(2)	See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.


(3)	Control Investments generally are defined by the Investment Company Act of 1940, as amended ("1940 Act"), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.


~~(4)~~	~~Affiliate Investments generally are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.~~


~~(5)~~	Equity ownership may be held in shares or units of companies related to the portfolio companies.


~~(6)~~	~~Income producing through payment of dividends or distributions.~~


~~(7)~~	~~Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.~~


~~(8)~~	~~Principal includes accumulated payment in kind ("PIK") interest and is net of repayments.~~


~~(9)~~(4)	Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.


~~(10)~~(5)	Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.


~~(15)~~(8)	Control Investments generally are defined by the Investment Company Act of 1940, as amended (the "Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.


(12)	Income producing through payment of dividends or distributions.


~~(20)~~	Payments on the Company's investment in Maverick Healthcare Group, LLC ("Maverick Healthcare") are currently past due. In May 2017, the Company entered into a forbearance agreement with Maverick Healthcare in which the Company has temporarily agreed not to take action against Maverick Healthcare. As of December 31, 2017, the forbearance agreement extends to February 28, 2018.


~~(22)~~(17)	Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.


(18)	Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.


(19)	Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.


(20)	As of March 31, 2020, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820.


(21)	This investment was on cash non-accrual status as of ~~December~~March 31, ~~2017.~~2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.


~~(23)~~(22)	This investment was on PIK non-accrual status as of ~~December~~March 31, ~~2017.~~2020. PIK non-accrual status is inclusive of other non-cash income, where applicable.


~~(24)~~	~~As of December 31, 2017, payments on the Company's investment in TransTrade Operators, Inc. were past due.~~


~~(25)~~	~~This investment was valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels.~~


~~(8)~~	~~Principal includes accumulated PIK interest and is net of repayments.~~

Large accelerated filer þ¨

Accelerated filer ¨þ

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Smaller reporting company ¨

~~(Do not check if a smaller reporting company)~~

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨