FS Credit Income Fund NCSR Certified annual shareholder report (management investment company)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-23221

FS Credit Income Fund

(Exact name of registrant as specified in charter)

201 Rouse Boulevard
Philadelphia, Pennsylvania
(Address of principal executive offices)

19112
(Zip code)

Michael C. Forman
FS Credit Income Fund
201 Rouse Boulevard
Philadelphia, Pennsylvania 19112
(Name and address of agent for service)

Registrant’s telephone number, including area code: (215) 495-1150

Date of fiscal year end: October 31

Date of reporting period: October 31, 2018

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Item 1. Reports to Stockholders.

The annual report (the “Annual Report”) of FS Credit Income Fund (the “Fund”) for the fiscal year ended October 31, 2018 transmitted to shareholders pursuant to Rule 30e-1 promulgated under the Investment Company Act of 1940, as amended (the “1940 Act”), is as follows:

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FS Credit Income Fund

2018
Annual Report

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FS Credit Income Fund

PORTFOLIO REVIEW

The following tables summarize the portfolio composition, industry classification and top 10 holdings of our investment portfolio as of October 31, 2018 (unaudited):

Portfolio composition (by fair value)
Senior Secured Loans—First Lien					12%
Senior Secured Loans—Second Lien					4%
Senior Secured Bonds					19%
Unsecured Bonds					40%
CLO/Structured Credit					22%
Emerging Markets Debt					3%
					100%

Top 10 Holdings (by fair value)
Puerto Rico Sales Tax Financing Corp.					5%
Frontier Communications Corp.					3%
Altice Europe N.V.					2%
Bausch Health Corp.					2%
Caixa Bank SA					2%
Verscend Holdings LLC					2%
AHP Health Partners, Inc.					2%
BPP Pristine US Mezz A LLC					2%
Nine Energy Service, Inc.					2%
Solocal Group					1%

Industry classification (by fair value)
USD CLO					11%
EUR CLO					11%
Municipal					8%
Media Entertainment					7%
Oil & Gas					6%
Chemicals					5%
Telecommunications					4%
Commercial Banks					4%
Oil & Gas Services					4%
Pharmaceuticals					3%
Internet					2%
Independent Oil & Gas					2%
Healthcare					2%
Other Financial					2%
Mining					2%
Healthcare-Services					2%
Transportation					2%
Retailers					2%
Healthcare-Products					1%
Technology					1%
Commercial Services					1%
Aerospace/Defense					1%
Pipelines					1%
Coal					1%
Other					15%
					100%

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FS Credit Income Fund

OFFICERS AND BOARD OF TRUSTEES

Officers

MICHAEL C. FORMAN
Chairman, Chief Executive Officer & President

EDWARD T. GALLIVAN, JR.
Chief Financial Officer

STEPHEN S. SYPHERD
Vice President, Treasurer & Secretary

JAMES F. VOLK
Chief Compliance Officer

Board of Trustees

MICHAEL C. FORMAN
Chairman, Chief Executive Officer & President

STEVEN SHAPIRO
Trustee
Partner and Executive Committee Member,
GoldenTree Asset Management

HOLLY E. FLANAGAN
Trustee
Managing Director, Gabriel Investments

BRIAN R. FORD
Trustee
Retired Partner, Ernst & Young LLP

JOSEPH P. UJOBAI
Trustee
Executive Vice President,
SEI Investments Company

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FS Credit Income Fund

Annual Report for the Year Ended October 31, 2018

	Page
Report of Independent Registered Public Accounting Firm		1
Schedule of Investments		2
Statement of Assets and Liabilities		22
Statement of Operations		24
Statement of Changes in Net Assets		25
Statement of Cash Flows		26
Financial Highlights		27
Notes to Financial Statements		30
Supplemental Information (Unaudited)		56

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of FS Credit Income Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of FS Credit Income Fund (the “Fund”), including the schedule of investments, as of October 31, 2018, and the related statements of operations, cash flows, changes in net assets and the financial highlights for the year then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at October 31, 2018, the results of its operations, its cash flows, changes in its net assets and its financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018, by correspondence with the custodians and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

We have served as auditor of one or more FS Investments investment companies since 2013.

Philadelphia, Pennsylvania
December 28, 2018

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FS Credit Income Fund

Schedule of Investments
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Senior Secured Loans—First Lien—13.5%
Abaco Energy Technologies LLC, L + 950, 1.0% Floor, 11/20/2020	(d)	Independent Oil & Gas		$	451		$	449		$	453
AHP Health Partners, Inc., L + 450, 1.0% Floor, 6/30/2025	(d)	Healthcare			673			667			677
Aleris International, Inc., L + 475, 1.0% Floor, 2/27/2023	(d)	Metals and Mining			673			667			680
California Resources Corp., L + 475, 1.0% Floor, 12/31/2022	(d)	Independent Oil & Gas			1,168			1,195			1,189
Comet Bidco Limited, L + 500, 1.0% Floor, 9/30/2024	(d)	Consumer Cyclical Services			701			682			694
CONSOL Energy, Inc., L + 600, 1.0% Floor, 11/28/2022	(d)	Metals and Mining			245			251			252
East Valley Tourist Development Authority, L + 800, 1.0% Floor, 12/17/2021	(d)	Leisure			1,107			1,107			1,126
Financial & Risk US Holdings, Inc., L + 375, 10/1/2025	(d)	Technology			245			244			243
Genworth Financial, Inc., L + 450, 1.0% Floor, 3/7/2023	(d)	Life Insurance			189			188			193
Holland & Barrett International, E + 425, 1.0% Floor, 8/9/2024	(d)	Consumer Cyclical Services		€	400			456			443
Jo-Ann Stores, Inc., L + 500, 1.0% Floor, 10/20/2023	(d)	Retailers		$	263			262			264
McDermott Technology Americas Inc., L + 500, 1.0% Floor, 5/12/2025	(d)	Oil Field Services			328			327			325
Modacin France SAS, E + 450, 1.25% PIK, 11/20/2020	(d)(e)	Retailers		€	435			451			299
Neiman Marcus Group Ltd., LLC, L + 325, 1.0% Floor, 10/25/2020	(d)	Retailers		$	1,011			937			923
NMI Holdings, Inc., L + 475, 1.0% Floor, 5/17/2023	(d)	Property & Casualty Insurance			309			308			312
Onex TSG Holdings II Corp., L + 400, 1.0% Floor, 7/31/2022	(d)	Healthcare			88			88			88
Patterson Medical Holdings, Inc., L + 475, 1.0% Floor, 8/28/2022	(d)	Healthcare			910			874			876
Premier Oil plc, L + 500, 1.0% Floor, 5/31/2021	(d)(e)	Independent Oil & Gas			291			274			275
Premier Oil plc, L + 500, 1.0% Floor, 5/31/2021	(d)(e)	Independent Oil & Gas			955			899			900
Quorum Health Corp., L + 675, 1.0% Floor, 4/29/2022	(d)(e)	Healthcare			157			159			159
R.R. Donnelley & Sons Co., L + 500, 1/15/2024	(d)	Media Entertainment			775			767			770
R1 RCM, Inc., L + 525, 5/8/2025	(d)	Other Financial			713			708			713

See notes to financial statements.

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FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Red Ventures, LLC, L + 400, 11/8/2024	(d)	Media Entertainment		$	262		$	260		$	263
Seadrill Partners Finco LLC, L + 600, 1.0% Floor, 2/21/2021	(d)	Oil Field Services			485			432			452
UTEX Industries Inc., L + 400, 1.0% Floor, 5/22/2021	(d)	Chemicals			562			560			553
Valeant Pharmaceuticals International, Inc., L + 300, 1.0% Floor, 6/2/2025	(d)	Pharmaceuticals			101			100			101
Verifone Systems, Inc., L + 400, 8/20/2025	(d)	Technology			250			249			250
Verscend Holding Corp., L + 450, 8/9/2025	(d)	Technology			570			566			575
VVC Holding Corp., L + 425, 1.0% Floor, 7/9/2025	(d)	Healthcare			570			559			567
Total Senior Secured Loans—First Lien								14,686			14,615
Senior Secured Loans—Second Lien—4.3%
Asurion LLC, L + 650, 8/4/2025	(d)	Property & Casualty Insurance			450			449			463
BPP Pristine US Mezz A LLC, L + 450, 1.0% Floor, 6/24/2020	(d)(k)	Other Financial			1,900			1,885			1,881
DG Investment Intermediate Holdings 2, Inc., L + 675, 0.8% Floor, 2/2/2026	(d)	Other Industrial			290			289			292
Jo-Ann Stores, Inc., L + 850, 1.0% Floor, 5/21/2024	(d)	Retailers			325			320			321
Onex TSG Holdings II Corp., L + 850, 1.0% Floor, 7/31/2023	(d)(e)	Healthcare			320			320			318
UTEX Industries Inc., L + 725, 1.0% Floor, 5/22/2022	(d)	Chemicals			960			944			940
Verifone Systems, Inc., L + 800, 8/20/2026	(d)	Technology			420			417			420
Total Senior Secured Loans—Second Lien								4,624			4,635
Senior Secured Bonds—21.1%
ABG Orphan Holdco Sarl, 14.0%, 2/28/2021	(g)	Engineering & Construction			114			111			120
Altice Financing SA, 7.5%, 5/15/2026	(f)(g)	Media Entertainment			400			386			378
Altice France SA, 7.4%, 5/1/2026	(f)(g)	Media Entertainment			200			196			192
Altice France SA, 5.9%, 2/1/2027	(f)(g)	Media Entertainment		€	215			251			251
Altice France SA, 8.1%, 2/1/2027	(f)(g)	Media Entertainment		$	1,685			1,711			1,670
Ambac LSNI LLC, 7.4%, 2/12/2023	(f)(g)	Insurance			1,001			1,014			1,012
Avantor, Inc., 4.8%, 10/1/2024	(g)	Healthcare-Products		€	928			1,102			1,074
Avon International Operations, Inc., 7.9%, 8/15/2022	(f)(g)	Household Products		$	803			804			816
BCD Acquisition, Inc., 9.6%, 9/15/2023	(f)(g)	Auto Manufacturers			674			725			714
Belden, Inc., 3.4%, 7/15/2027	(g)	Electrical Compo & Equipment		€	253			281			276
CGG Holding US, Inc., 7.9%, 5/1/2023	(f)(g)	Oil & Gas Services			105			129			127

See notes to financial statements.

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FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Chembulk Holding LLC, 8.0%, 2/2/2023	(f)(g)	Transportation		$	400		$	401		$	406
CSI Compressco LP/CSI Compressco Finance, Inc., 7.5%, 4/1/2025	(f)(g)	Oil & Gas Services			1,432			1,442			1,453
Denbury Resources, Inc., 9.3%, 3/31/2022	(f)(g)	Oil & Gas			610			643			637
Denbury Resources, Inc., 5.5%, 5/1/2022		Oil & Gas			175			152			151
Denbury Resources, Inc., 7.5%, 2/15/2024	(f)(g)	Oil & Gas			534			534			524
Drax Finco Plc, 6.6%, 11/1/2025	(f)(g)	Electric			235			235			235
Eagle Bulk Shipco LLC, 8.3%, 11/28/2022	(g)	Transportation			846			855			870
EP Energy LLC/Everest Acquisition Finance, Inc., 7.8%, 5/15/2026	(f)(g)	Oil & Gas			390			391			390
Frontier Communications Corp., 8.5%, 4/1/2026	(f)(g)	Telecommunications			1,860			1,810			1,733
HCA, Inc., 6.5%, 2/15/2020	(g)	Healthcare-Services			599			621			619
HCA, Inc., 4.5%, 2/15/2027	(g)	Healthcare-Services			268			267			261
Hexion, Inc., 6.6%, 4/15/2020	(g)	Chemicals			154			143			136
Hexion, Inc., 10.4%, 2/1/2022	(f)(g)	Chemicals			1,008			998			910
Hot Topic, Inc., 9.3%, 6/15/2021	(f)(g)	Retail			621			587			616
Hudbay Minerals, Inc., 7.3%, 1/15/2023	(f)(g)	Mining			155			156			156
Hudbay Minerals, Inc., 7.6%, 1/15/2025	(f)(g)	Mining			208			209			209
JW Aluminum Continuous Cast Co., 10.3%, 6/1/2026	(f)(g)	Mining			27			27			27
L Brands, Inc., 6.9%, 11/1/2035	(g)	Retail			134			113			114
L Brands, Inc., 6.8%, 7/1/2036	(g)	Retail			271			221			224
Nomad Foods Bondco Plc, 3.3%, 5/15/2024	(g)	Food		€	421			496			482
Northern Oil and Gas, Inc., 9.5%, 5/15/2023	(g)	Oil & Gas		$	67			70			69
Northern Oil and Gas, Inc., 9.5%, 5/15/2023	(f)(g)	Oil & Gas			181			188			186
Pacific Drilling First Lien Escrow Issuer Ltd., 8.4%, 10/1/2023	(f)(g)	Oil & Gas			602			607			609
Pacific Drilling Second Lien Escrow Issuer Ltd., 11.0%, 4/1/2024	(f)(g)	Oil & Gas			101			101			106
Perstorp Holding AB, 11.0%, 9/30/2021	(g)	Chemicals			547			593			590
Platin 1426 GmbH, 5.4%, 6/15/2023		Machinery-Diversified		€	175			203			193
Solocal Group, 8.0%, 3/15/2022		Internet			1,358			1,593			1,535
Tendam Brands SAU, 5.0%, 9/15/2024	(g)	Retail			220			247			233
Teva Pharmaceutical Finance Netherlands III B.V., 6.0%, 4/15/2024	(g)	Pharmaceuticals		$	218			215			217
Transocean Phoenix 2 Ltd., 7.8%, 10/15/2024	(f)(g)	Oil & Gas Services			1,036			1,075			1,074
Urban One, Inc., 7.4%, 4/15/2022	(f)(g)	Media Entertainment			1,030			1,025			1,015
Wind Tre SpA, 5.0%, 1/20/2026	(f)	Telecommunications			313			266			266
Total Senior Secured Bonds								23,194			22,876

See notes to financial statements.

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FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Unsecured Bonds—44.4%
ABN AMRO Bank N.V., 4.8%	(g)	Commercial Banks		€	200		$	223		$	215
AHP Health Partners, Inc., 9.8%, 7/15/2026	(f)(g)	Healthcare-Services		$	1,223			1,206			1,246
American Tire Distributors, Inc., 10.3%, 3/1/2022	(f)(h)	Distribution/Wholesale			453			466			79
Apex Tool Group LLC/BC Mountain Finance, Inc., 9.0%, 2/15/2023	(f)(g)	Hand/Machine Tools			300			294			276
Aruba Investments, Inc., 8.8%, 2/15/2023	(f)(g)	Chemicals			1,389			1,429			1,426
Banco de Sabadell SA, 6.5%, 5/18/2022	(g)	Commercial Banks		€	600			682			660
Banff Merger Sub, Inc., 9.8%, 9/1/2026	(f)(g)	IT Services		$	386			386			373
Banff Merger Sub, Inc., 8.4%, 9/1/2026	(g)	IT Services		€	200			231			225
Bausch Health Companies, Inc., 4.5%, 5/15/2023	(g)	Pharmaceuticals			2,099			2,359			2,307
Bombardier, Inc., 7.8%, 3/15/2020	(f)(g)	Aerospace/Defense		$	465			489			482
CaixaBank SA, 5.3%, 3/23/2026	(g)	Commercial Banks		€	2,200			2,343			2,280
CBS Radio, Inc., 7.3%, 11/1/2024	(f)(g)	Media Entertainment		$	1,075			1,040			1,017
Citigroup, Inc., 6.0%	(g)	Commercial Banks			74			75			73
Compass Group Diversified Holdings LLC, 8.0%, 5/1/2026	(f)(g)	Investment Company Security			271			273			277
Consolidated Energy Finance SA, 6.5%, 5/15/2026	(f)(g)	Chemicals			300			298			299
CrownRock LP/CrownRock Finance, Inc., 5.6%, 10/15/2025	(f)(g)	Oil & Gas			331			316			315
Endeavor Energy Resources LP/EER Finance, Inc., 5.5%, 1/30/2026	(f)(g)	Oil & Gas			385			377			396
Ensco PLC, 7.8%, 2/1/2026	(g)	Oil & Gas			1,380			1,312			1,288
Ferroglobe Plc/Globe Specialty Metals, Inc., 9.4%, 3/1/2022	(f)(g)	Mining			543			573			572
Frontier California, Inc., 6.8%, 5/15/2027	(g)	Telecommunications			2			2			2
Frontier Communications Corp., 9.0%, 8/15/2031	(g)	Telecommunications			2,740			1,859			1,702
Frontier Florida LLC, 6.9%, 2/1/2028	(g)	Telecommunications			4			4			4
Frontier North, Inc., 6.7%, 2/15/2028	(g)	Telecommunications			523			457			464
Hilcorp Energy I LP/Hilcorp Finance Co., 6.3%, 11/1/2028	(f)(g)	Oil & Gas			186			186			179
IAMGOLD Corp., 7.0%, 4/15/2025	(f)(g)	Mining			745			768			740
Intertape Polymer Group, Inc., 7.0%, 10/15/2026	(f)(g)	Packaging & Containers			201			201			202
InterXion Holding N.V., 4.8%, 6/15/2025	(f)(g)	Software		€	940			1,110			1,112
Intesa Sanpaolo SpA, 7.8%	(g)	Commercial Banks			410			511			477
Jaguar Holding Co. II/Pharmaceutical Product Development LLC, 6.4%, 8/1/2023	(f)(g)	Commercial Services		$	249			250			250

See notes to financial statements.

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FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
KLX, Inc., 5.9%, 12/1/2022	(f)(g)	Aerospace/Defense		$	952		$	989		$	981
LGI Homes, Inc., 6.9%, 7/15/2026	(f)(g)	Home Builders			1,110			1,102			1,052
Liberty Interactive LLC, 4.0%, 11/15/2029	(g)	Media Entertainment			795			564			550
Liberty Interactive LLC, 3.8%, 2/15/2030	(g)	Media Entertainment			1,404			979			969
Lloyds Banking Group PLC, 7.5%	(g)	Commercial Banks			815			815			820
Mallinckrodt International Finance SA/ Mallinckrodt CB LLC, 5.6%, 10/15/2023	(f)(g)	Healthcare-Products			505			426			436
Marriott Ownership Resorts, Inc./ILG LLC, 6.5%, 9/15/2026	(f)(g)	Lodging			274			274			277
Methanex Corp., 5.7%, 12/1/2044	(g)	Chemicals			1,019			992			954
Natural Resource Partners LP/NRP Finance Corp., 10.5%, 3/15/2022	(g)	Coal			600			639			641
Netflix, Inc., 3.6%, 5/15/2027	(g)	Internet		€	213			249			240
Nine Energy Service, Inc., 8.8%, 11/1/2023	(f)(g)	Oil & Gas Services		$	1,820			1,820			1,854
Oasis Petroleum, Inc., 6.3%, 5/1/2026	(f)(g)	Oil & Gas			300			301			294
Parsley Energy LLC/Parsley Finance Corp., 5.4%, 1/15/2025	(f)(g)	Oil & Gas			100			102			98
Parsley Energy LLC/Parsley Finance Corp., 5.3%, 8/15/2025	(f)(g)	Oil & Gas			762			756			737
Performance Food Group, Inc., 5.5%, 6/1/2024	(f)(g)	Distribution/Wholesale			272			268			263
Puerto Rico Commonwealth Aqueduct & Sewer Auth., 5.0%, 7/1/2019	(g)	Municipal			460			403			425
Puerto Rico Commonwealth Aqueduct & Sewer Auth., 6.2%, 7/1/2038	(g)	Municipal			140			126			126
Puerto Rico Electric Power Auth., 5.3%, 7/1/2019	(g)(h)	Municipal			10			7			6
Puerto Rico Electric Power Auth., 5.0%, 7/1/2020	(g)(h)	Municipal			110			71			71
Puerto Rico Electric Power Auth., 5.0%, 7/1/2021	(g)(h)	Municipal			60			39			39
Puerto Rico Electric Power Auth., 5.0%, 7/1/2021	(g)(h)	Municipal			5			3			3
Puerto Rico Electric Power Auth., 3.8%, 7/1/2022	(g)(h)	Municipal			5			3			3
Puerto Rico Electric Power Auth., 5.3%, 7/1/2022	(g)(h)	Municipal			55			35			35
Puerto Rico Electric Power Auth., 5.3%, 7/1/2026	(g)(h)	Municipal			160			104			103
Puerto Rico Electric Power Auth., 5.3%, 7/1/2027	(g)(h)	Municipal			315			205			203
Puerto Rico Electric Power Auth., 5.0%, 7/1/2027	(g)(h)	Municipal			15			10			10

See notes to financial statements.

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FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Puerto Rico Electric Power Auth., 5.4%, 7/1/2028	(g)(h)	Municipal		$	55		$	34		$	35
Puerto Rico Electric Power Auth., 5.3%, 7/1/2028	(g)(h)	Municipal			25			16			16
Puerto Rico Electric Power Auth., 5.0%, 7/1/2029	(g)(h)	Municipal			400			261			258
Puerto Rico Electric Power Auth., 6.0%, 7/1/2030	(g)(h)	Municipal			25			16			16
Puerto Rico Electric Power Auth., 5.3%, 7/1/2031	(g)(h)	Municipal			120			78			77
Puerto Rico Electric Power Auth., 5.3%, 7/1/2035	(g)(h)	Municipal			10			6			6
Puerto Rico Electric Power Auth., 6.8%, 7/1/2036	(g)(h)	Municipal			190			126			125
Puerto Rico Electric Power Auth., 5.5%, 7/1/2038	(g)(h)	Municipal			200			127			129
Puerto Rico Electric Power Auth., 6.3%, 7/1/2040	(g)(h)	Municipal			5			3			3
Puerto Rico Electric Power Auth., 6.1%, 7/1/2040	(g)(h)	Municipal			195			122			124
Puerto Rico Electric Power Auth., 7.0%, 7/1/2043	(g)(h)	Municipal			80			53			53
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.4%, 8/1/2020	(g)(h)	Municipal			50			24			25
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2021	(g)(h)	Municipal			900			274			442
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2023	(g)(h)	Municipal			25			8			12
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2026	(g)(i)(j)	Municipal			25			11			11
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2026	(g)(i)(j)	Municipal			5			2			2
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.1%, 8/1/2028	(g)(h)	Municipal			5			4			4
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2028	(g)(i)(j)	Municipal			25			10			10
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2028	(g)(h)	Municipal			30			9			15
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.1%, 8/1/2029	(g)(h)	Municipal			10			5			5
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.1%, 8/1/2029	(g)(h)	Municipal			75			37			37
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2030	(g)(i)(j)	Municipal			5			2			2

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2031	(g)(i)(j)	Municipal		$	10		$	3		$	3
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.8%, 8/1/2032	(g)(h)	Municipal			4,910			1,553			2,412
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2034	(g)(i)(j)	Municipal			245			35			34
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.0%, 8/1/2034	(g)(h)	Municipal			5			4			4
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2035	(g)(i)(j)	Municipal			10			3			3
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 4.9%, 8/1/2036	(g)(h)	Municipal			5			4			4
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.1%, 8/1/2036	(g)(h)	Municipal			1,330			928			1,071
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.8%, 8/1/2037	(g)(h)	Municipal			45			14			22
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2037	(g)(h)	Municipal			75			36			36
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.1%, 8/1/2038	(g)(h)	Municipal			5			4			4
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2039	(g)(i)(j)	Municipal			25			5			5
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.4%, 8/1/2039	(g)(h)	Municipal			45			14			22
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.4%, 8/1/2039	(g)(h)	Municipal			30			9			15
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.3%, 8/1/2040	(g)(h)	Municipal			90			75			73
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.0%, 8/1/2040	(g)(h)	Municipal			80			66			65
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2040	(g)(h)	Municipal			15			7			7
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2041	(g)(i)(j)	Municipal			5			1			1
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.3%, 8/1/2041	(g)(h)	Municipal			230			107			112
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.0%, 8/1/2042	(g)(h)	Municipal			265			121			130
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.5%, 8/1/2042	(g)(h)	Municipal			170			75			82
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2043	(g)(i)(j)	Municipal			2,635			653			706
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.3%, 8/1/2043	(g)(h)	Municipal			55			17			27

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.0%, 8/1/2043	(g)(h)	Municipal		$	50		$	24		$	24
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 6.5%, 8/1/2044	(g)(h)	Municipal			120			58			59
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2044	(g)(i)(j)	Municipal			2,235			504			568
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 8/1/2046	(g)(i)(j)	Municipal			225			45			51
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 5.3%, 8/1/2057	(g)(h)	Municipal			40			33			33
SemGroup Corp/Rose Rock Finance Corp., 5.6%, 11/15/2023	(g)	Pipelines			1,265			1,213			1,198
SemGroup Corp., 6.4%, 3/15/2025	(g)	Pipelines			245			234			235
Shelf Drill Holdings Ltd., 8.3%, 2/15/2025	(f)(g)	Oil & Gas			882			895			885
Spectrum Brands Holdings, 7.8%, 1/15/2022	(g)	Holding Companies-Diversified			204			211			209
Springleaf Finance Corp., 7.1%, 3/15/2026	(g)	Diversified Financial Services			251			252			238
Sprint Capital Corp., 8.8%, 3/15/2032	(g)	Telecommunications			395			431			431
Sprint Communications, Inc., 6.0%, 11/15/2022	(g)	Telecommunications			70			73			71
Sprint Corp., 7.9%, 9/15/2023	(g)	Telecommunications			125			135			134
Sprint Corp., 7.1%, 6/15/2024	(g)	Telecommunications			100			104			102
Sterling Entertainment Enterprises, LLC, 10.3%, 1/15/2025	(k)	Media Entertainment			813			801			863
SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., 7.5%, 6/15/2025	(f)(g)	Coal			736			749			753
Teck Resources Ltd., 6.1%, 10/1/2035	(g)	Mining			395			412			405
Teck Resources Ltd., 6.3%, 7/15/2041	(g)	Mining			197			207			197
Teck Resources Ltd., 5.4%, 2/1/2043	(g)	Mining			46			44			42
Teekay Shuttle Tankers LLC, 7.1%, 8/15/2022	(g)	Transportation			600			607			593
Tesla Energy Operations, Inc., 1.6%, 11/1/2019	(g)	Energy-Alternate Sources			389			357			368
Transocean, Inc., 9.0%, 7/15/2023	(f)(g)	Oil & Gas			460			495			484
Uber Technologies, Inc., 7.5%, 11/1/2023	(e)(f)	Internet			124			125			124
Uber Technologies, Inc., 8.0%, 11/1/2026	(e)(f)	Internet			1,080			1,080			1,085
Verscend Escrow Corp., 9.8%, 8/15/2026	(f)(g)	Commercial Services			1,218			1,218			1,223
Vizient, Inc., 10.4%, 3/1/2024	(f)(g)	Pharmaceuticals			969			1,070			1,057
XPO Logistics, Inc., 6.1%, 9/1/2023	(f)(g)	Transportation			245			252			251
Total Unsecured Bonds								47,593			48,056

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Collateralized Loan Obligation (CLO) / Structured Credit—24.7%
Adagio V CLO DAC, 3.2%, 10/15/2031		EUR CLO		€	200		$	235		$	227
ALM XVIII Ltd., 5.4%, 1/15/2028	(f)	USD CLO		$	290			290			291
Anchorage Capital Europe CLO 2 DAC, 3.5%, 5/15/2031	(f)	EUR CLO		€	250			292			285
Ares European CLO B.V., 2.9%, 10/15/2030		EUR CLO			560			655			630
Ares European CLO B.V., 2.9%, 10/15/2030		EUR CLO			1,290			1,497			1,450
Ares XXXVII CLO Ltd., 5.1%, 10/15/2030	(f)	USD CLO		$	250			247			248
Ares XXXVR CLO Ltd., 5.3%, 7/15/2030	(f)	USD CLO			250			250			251
Atrium XII, 5.3%, 4/22/2027	(f)	USD CLO			250			250			250
Babson Euro CLO 2015-1 B.V., 1.5%, 10/25/2029		EUR CLO		€	305			350			340
Bain Capital Credit CLO 2018-2, 4.3%, 7/19/2031	(f)	USD CLO		$	250			250			250
Battalion CLO IX Ltd., 5.7%, 7/15/2031	(f)	USD CLO			710			710			711
Black Diamond CLO 2014-1 Ltd., 7.7%, 10/17/2026		USD CLO			260			258			259
Black Diamond CLO 2017-2 DAC, 5.1%, 1/20/2032		EUR CLO		€	200			223			216
BlueMountain CLO XXIII Ltd., 10/20/2031	(e)(f)(j)	USD CLO		$	300			300			300
BlueMountain Fuji EUR CLO III DAC, 3.1%, 1/15/2031		EUR CLO		€	615			712			698
Cairn CLO IV B.V., 5.7%, 1/30/2028		EUR CLO			200			231			220
Cairn CLO VI B.V., 3.1%, 7/25/2029		EUR CLO			425			496			482
Canyon Capital CLO 2016-1 Ltd., 4.3%, 7/15/2031	(f)	USD CLO		$	250			250			250
Carlyle Global Market Strategies CLO 2014-4-R Ltd., 5.3%, 7/15/2030	(f)	USD CLO			250			250			250
Carlyle Global Market Strategies Euro CLO 2014-1 Ltd., 2.9%, 7/15/2031		EUR CLO		€	340			396			380
Carlyle Global Market Strategies Euro CLO 2014-2 Ltd., 11/17/2031	(e)(j)	EUR CLO		€	285			328			323
Carlyle Global Market Strategies Euro CLO 2015-2 DAC, 2.7%, 9/21/2029		EUR CLO			140			163			158
Carlyle Global Market Strategies Euro CLO 2015-3 DAC, 2.6%, 7/15/2030		EUR CLO			275			323			303
Cathedral Lake CLO 2013 Ltd., 4.7%, 10/15/2029	(f)	USD CLO		$	275			275			276
CFIP CLO 2017-1 Ltd., 4.5%, 1/18/2030	(f)	USD CLO			285			285			286

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Clarinda Park CLO DAC, 3.7%, 11/15/2029		EUR CLO		€	280		$	327		$	317
Dartry Park CLO DAC, 3.0%, 4/28/2029		EUR CLO			100			116			113
Dartry Park CLO DAC, 5.7%, 4/28/2029		EUR CLO			100			116			114
Euro-Galaxy IV CLO B.V., 3.1%, 7/30/2030		EUR CLO			280			330			317
Grosvenor Place CLO 2015-1 B.V., 5.4%, 10/30/2029		EUR CLO			100			121			113
Grosvenor Place CLO 2015-1 B.V., 1.6%, 10/30/2029		EUR CLO			100			123			112
Grosvenor Place CLO 2015-1 B.V., 2.5%, 10/30/2029		EUR CLO			100			118			111
Harvest CLO IX DAC, 3.0%, 2/15/2030		EUR CLO			195			226			222
Harvest CLO X DAC, 4.7%, 11/15/2028		EUR CLO			117			139			133
Harvest CLO X DAC, 2.5%, 11/15/2028		EUR CLO			390			452			442
Harvest CLO XX DAC, 10/20/2031	(e)(j)	EUR CLO			380			437			432
Harvest CLO XX DAC, 10/20/2031	(e)(j)	EUR CLO			100			115			113
ICG US CLO Ltd. ICG 2014 1A CR 144A, 5.6%, 1/20/2030	(f)	USD CLO		$	250			250			251
Jubilee CLO 2014-XI B.V., 5.4%, 4/15/2030		EUR CLO		€	130			150			143
Jubilee CLO 2014-Xii B.V., 2.9%, 4/15/2030		EUR CLO			155			175			175
Jubilee CLO 2015-XVI B.V., 6.9%, 12/15/2029		EUR CLO			250			284			276
Jubilee CLO 2016-XVII B.V., 3.5%, 4/15/2031		EUR CLO			100			116			114
Jubilee CLO 2017-XVIII B.V., 3.1%, 1/15/2030		EUR CLO			345			401			391
Kingsland IX Ltd., 4.3%, 4/28/2031	(f)	USD CLO		$	200			200			200
Kingsland IX Ltd., 4.9%, 4/28/2031	(f)	USD CLO			200			200			200
Kingsland IX Ltd., 5.7%, 4/28/2031	(f)	USD CLO			200			198			200
KKR CLO 16 Ltd., 6.6%, 1/20/2029	(f)	USD CLO			250			253			251
Madison Park Funding XX Ltd., 5.5%, 7/27/2030	(f)	USD CLO			350			350			351
Man GLG US CLO 2018-2 Ltd., 10/15/2028	(e)(f)(k)(j)	USD CLO			510			508			510
MP CLO VII Ltd., 5.1%, 10/18/2028	(f)	USD CLO			250			250			250
MP CLO VIII Ltd., 8.0%, 10/28/2027	(f)	USD CLO			250			251			250
Neuberger Berman CLO XV, 5.5%, 10/15/2029	(f)	USD CLO			670			672			671
Neuberger Berman CLO XX Ltd., 4.8%, 1/15/2028	(f)	USD CLO			250			250			249
OAK Hill European Credit Partners VII DAC, 10/20/2031	(e)(j)	EUR CLO		€	100			116			113

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
OAK Hill European Credit Partners VII DAC, 10/20/2031	(e)(j)	EUR CLO		€	125		$	145		$	142
OCP CLO 2015-10 Ltd., 5.1%, 10/26/2027	(f)	USD CLO		$	250			250			249
OCP CLO 2015-8 Ltd., 4.3%, 4/17/2027	(f)	USD CLO			595			595			594
OCP CLO 2017-14 Ltd., 4.3%, 11/20/2030	(f)	USD CLO			250			250			249
Octagon Investment Partners XXII Ltd., 4.4%, 1/22/2030	(f)	USD CLO			250			251			249
Orwell Park CLO Designated Activity Co., 4.5%, 7/18/2029		EUR CLO		€	200			236			221
Park Avenue Institutional Advisers CLO Ltd. 2017-1, 4.5%, 11/14/2029	(f)	USD CLO		$	250			251			251
Phoenix Park CLO DAC, 2.5%, 10/29/2031		EUR CLO		€	190			220			215
Preferred Term Securities XX Ltd./Preferred Term Securities XX, Inc., 2.8%, 3/22/2038	(f)	USD CDO		$	437			333			398
Preferred Term Securities XXIV Ltd./ Preferred Term Securities XXIV, Inc., 2.7%, 3/22/2037	(f)	USD CDO			438			330			390
Regatta XI Funding Ltd., 5.3%, 7/17/2031	(f)	USD CLO			250			250			248
Rockford Tower Europe CLO 2018-1 DAC, 12/20/2031	(e)(f)(j)	EUR CLO		€	250			284			283
RR 4 Ltd., 5.4%, 4/15/2030	(f)	USD CLO		$	250			250			249
Shackleton 2013-III CLO Ltd., 5.5%, 7/15/2030	(f)	USD CLO			250			250			248
Shackleton 2015-VII-R CLO Ltd., 5.7%, 7/15/2031	(f)	USD CLO			250			250			251
Sorrento Park CLO DAC, 2.7%, 11/16/2027		EUR CLO		€	250			285			283
Sound Point CLO V-R Ltd., 5.4%, 7/18/2031	(f)	USD CLO		$	710			710			711
Sound Point CLO VI-R Ltd., 5.9%, 10/20/2031	(f)	USD CLO			320			320			321
Sound Point CLO XX Ltd., 5.3%, 7/26/2031	(f)	USD CLO			460			460			460
St Pauls CLO II DAC, 3.4%, 2/15/2030		EUR CLO		€	225			263			256
Steele Creek CLO 2017-1 Ltd., 5.3%, 1/15/2030	(f)	USD CLO		$	250			247			248
Symphony CLO XIX Ltd., 5.0%, 4/16/2031	(f)	USD CLO			250			248			248
TCI-Cent CLO 2017-1 Income Note Issuer Ltd., 6.1%, 7/25/2030	(f)	USD CLO			500			503			503
Tikehau CLO B.V., 4.6%, 8/4/2028		EUR CLO		€	170			198			188
Tikehau CLO B.V., 2.4%, 8/4/2028		EUR CLO			165			193			183
Tikehau CLO IV B.V., 3.3%, 10/15/2031		EUR CLO			215			249			245

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Amortized Cost			Fair Value(c)
Toro European CLO 2 DAC, 3.3%, 10/15/2030		EUR CLO		€	255		$	300		$	290
Toro European CLO 3 DAC, 3.3%, 4/15/2030		EUR CLO			180			209			204
Tymon Park CLO DAC, 6.8%, 1/21/2029		EUR CLO			250			285			277
Tymon Park CLO Ltd., 4.6%, 1/21/2029		EUR CLO			100			121			110
Vibrant CLO VI Ltd., 4.9%, 6/20/2029	(f)	USD CLO		$	425			427			427
VOYA CLO Ltd., 4.8%, 1/18/2029	(f)	USD CLO			250			250			249
Webster Park CLO Ltd., 5.4%, 7/20/2030	(f)	USD CLO			250			250			250
Willow Park CLO 1X C, 2.8%, 1/15/2031		EUR CLO		€	270			309			304
York CLO-3 Ltd., 4.9%, 10/20/2029		USD CLO		$	288			288			288
Total Collateralized Loan Obligation / Structured Credit								27,020			26,750
Emerging Markets Debt—2.5%
Oi S.A., 10.0%, 7/27/2025	(g)	Wirelines			597			599			631
Provincia de Entre Rios Argentina, 8.8%, 2/8/2025	(g)	Municipal			1,905			1,853			1,471
Provincia de la Rioja, 9.8%, 2/24/2025	(g)	Provincial			830			858			673
Total Emerging Markets Debt								3,310			2,775

Portfolio Company(a)	Footnotes	Industry	Number of Shares		Cost			Fair Value(c)
Preferred Stock—0.2%
Verscend Technologies, Inc., 12.3%	(k)	Healthcare-Software		200			194			195
Total Preferred Stock							194			195
Common Stock—0.3%
Oi S.A. ADR		Wirelines		93,102			380			340
Total Common Stock							380			340
TOTAL INVESTMENTS—111.0%						$	121,001			120,242
LIABILITIES IN EXCESS OF OTHER ASSETS—(11.0)%	(l)									(11,950)
NET ASSETS—100.0%									$	108,292

Investments Sold Short

Portfolio Company(a)	Footnotes	Industry	Principal Amount(b)			Proceeds			Fair Value(c)
U.S. Treasury—(0.9)%
U.S. Treasury Note, 2.4%, 5/15/2027	(j)	Sovereign		$	647		$	(619)		$	(611)
U.S. Treasury Note, 2.9%, 8/15/2028	(j)	Sovereign			94			(92)			(92)
U.S. Treasury Note, 2.8%, 8/15/2047	(j)	Sovereign			358			(336)			(316)
Total Investments Sold Short							$	(1,047)		$	(1,019)

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Forward Foreign Currency Exchange Contracts

Counterparty	Contract Settlement Date	Currency to be Received	Value		Currency to be Delivered	Value		Unrealized Appreciation			Unrealized Depreciation
JPMorgan Chase Bank, N.A.	12/19/2018	USD		6	BRL		23		$	—		$	—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		5	BRL		18			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		10	BRL		38			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		8	BRL		31			—			—
State Street Bank and Trust Company	12/19/2018	USD		10	BRL		36			—			1
State Street Bank and Trust Company	12/19/2018	USD		8	BRL		29			—			—
JPMorgan Chase Bank, N.A.	11/26/2018	USD		35	BRL		130			—			3
JPMorgan Chase Bank, N.A.	11/26/2018	USD		42	BRL		158			—			3
JPMorgan Chase Bank, N.A.	12/19/2018	USD		23	BRL		85			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		19	BRL		70			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		107	BRL		401			—			7
JPMorgan Chase Bank, N.A.	12/19/2018	USD		130	BRL		487			—			9
JPMorgan Chase Bank, N.A.	12/19/2018	USD		150	BRL		561			—			2
JPMorgan Chase Bank, N.A.	12/19/2018	USD		182	BRL		682			—			2
JPMorgan Chase Bank, N.A.	12/19/2018	USD		497	EUR		437			2			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		750	EUR		659			14			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		630	EUR		554			13			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		308	EUR		271			6			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		379	EUR		333			12			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		508	EUR		446			16			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		357	EUR		314			12			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		539	EUR		474			14			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		364	EUR		320			9			—
State Street Bank and Trust Company	12/19/2018	USD		1,035	EUR		910			27			—
State Street Bank and Trust Company	12/19/2018	USD		364	EUR		320			4			—
State Street Bank and Trust Company	12/19/2018	USD		434	EUR		381			3			—
State Street Bank and Trust Company	12/19/2018	USD		572	EUR		503			4			—
State Street Bank and Trust Company	12/19/2018	USD		830	EUR		729			5			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		241	EUR		212			3			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		423	EUR		372			5			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		225	EUR		198			7			—
State Street Bank and Trust Company	12/19/2018	USD		401	EUR		352			10			—
State Street Bank and Trust Company	12/19/2018	USD		576	EUR		506			17			—
BNP Paribas Securities Co.	12/19/2018	USD		471	EUR		414			23			—
BNP Paribas Securities Co.	12/19/2018	USD		96	EUR		84			5			—
State Street Bank and Trust Company	12/19/2018	USD		44	EUR		39			2			—
State Street Bank and Trust Company	12/19/2018	USD		535	EUR		470			27			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		373	EUR		328			18			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		109	EUR		96			5			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		69	EUR		61			3			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		472	EUR		415			23			—

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Counterparty	Contract Settlement Date	Currency to be Received	Value		Currency to be Delivered	Value		Unrealized Appreciation			Unrealized Depreciation
State Street Bank and Trust Company	12/19/2018	USD		447	EUR		393		$	24		$	—
State Street Bank and Trust Company	12/19/2018	USD		996	EUR		875			52			—
State Street Bank and Trust Company	12/19/2018	USD		343	EUR		301			16			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		196	EUR		172			7			—
State Street Bank and Trust Company	12/19/2018	USD		365	EUR		321			15			—
State Street Bank and Trust Company	12/19/2018	USD		390	EUR		343			15			—
State Street Bank and Trust Company	12/19/2018	USD		543	EUR		477			16			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		775	EUR		681			24			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		338	EUR		297			13			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		637	EUR		560			24			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		274	EUR		241			11			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		282	EUR		248			11			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		513	EUR		451			21			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		2,268	EUR		1,993			82			—
JPMorgan Chase Bank, N.A.	12/19/2018	USD		752	EUR		661			29			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		35	USD		9			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		29	USD		8			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		6	USD		2			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		7	USD		2			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		94	USD		25			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		76	USD		20			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		8	USD		2			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		7	USD		2			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		35	USD		9			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		43	USD		11			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		35	USD		9			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		48	USD		13			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		40	USD		11			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		231	USD		62			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		282	USD		75			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		119	USD		32			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		145	USD		39			1			—
JPMorgan Chase Bank, N.A.	11/26/2018	BRL		130	USD		35			—			—
JPMorgan Chase Bank, N.A.	11/26/2018	BRL		158	USD		42			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		15	USD		4			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		18	USD		5			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		50	USD		13			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		40	USD		11			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		46	USD		12			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		55	USD		15			2			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		43	USD		11			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		36	USD		10			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		26	USD		7			1			—

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Counterparty	Contract Settlement Date	Currency to be Received	Value		Currency to be Delivered	Value		Unrealized Appreciation			Unrealized Depreciation
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		32	USD		9		$	1		$	—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		43	USD		11			1			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		107	USD		29			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	BRL		129	USD		34			—			—
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		1,079	USD		1,228			—			22
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		796	USD		906			—			16
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		902	USD		1,026			—			19
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		570	USD		649			—			5
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		686	USD		780			—			7
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		1,393	USD		1,585			—			58
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		2,811	USD		3,198			—			116
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		2,094	USD		2,383			—			86
JPMorgan Chase Bank, N.A.	12/19/2018	EUR		4,130	USD		4,699			—			39
Total Forward Foreign Currency Exchange Contracts									$	665		$	395

Futures Contracts

Description	Number of Contracts	Position	Expiration Date	Notional Amount		Unrealized Appreciation			Unrealized Depreciation
Interest Rate Futures
U.S 10-Year Treasury Note	33	Short	12/19/2018		3,970		$	62		—
Total Interest Rate Futures							$	62		—

Cross-Currency Swaps

Counterparty

Fund Pays

Fund
Receives

Notional
Amount of
Currency
Delivered

Notional
Amount of
Currency
Received

Expiration
Date

Period
Payment
Frequency

Fair
Value(c)

Unrealized
Appreciation

Unrealized
Depreciation

JPMorgan Chase Bank, N.A.

3 Month EURIBOR
plus a spread of
(0.19%)

3 Month
USD
LIBOR

EUR 5,312

USD 6,038

8/20/2023

Quarterly

—

JPMorgan Chase Bank, N.A.

3 Month EURIBOR
plus a spread of
(0.16375%)

3 Month
USD
LIBOR

EUR 6,206

USD 7,232

7/20/2023

Quarterly

200

—

JPMorgan Chase Bank, N.A.

3 Month EURIBOR
plus a spread of
(0.2335%)

3 Month
USD
LIBOR

EUR 963

USD 1,123

6/1/2023

Quarterly

—

JPMorgan Chase Bank, N.A.

3 Month EURIBOR
plus a spread of
(0.195%)

3 Month
USD
LIBOR

EUR 3,162

USD 3,642

10/5/2023

Quarterly

—

JPMorgan Chase Bank, N.A.

3 Month EURIBOR
plus a spread of
(0.33375%)

3 Month
USD
LIBOR

EUR 1,556

USD 1,872

1/16/2023

Quarterly

122

—

Total Cross-Currency Swaps

447

—

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Interest Rate Swaps

Counterparty	Fund Pays		Fund Receives	Notional Amount	Expiration Date		Period Payment Frequency	Fair Value(c)	Unrealized Appreciation			Unrealized Depreciation
JPMorgan Chase Bank, N.A.		2.88%	3 Month LIBOR	USD 1,204		7/9/2023	Semi-Annually	$13		$	13		$	—
JPMorgan Chase Bank, N.A.		2.98%	3 Month LIBOR	USD 1,485		3/4/2029	Semi-Annually	35			35			—
JPMorgan Chase Bank, N.A.		3.23%	3 Month LIBOR	USD 137		4/29/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.26%	3 Month LIBOR	USD 49		4/25/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.25%	3 Month LIBOR	USD 130		4/26/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.26%	3 Month LIBOR	USD 166		4/18/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.26%	3 Month LIBOR	USD 138		4/26/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.31%	3 Month LIBOR	USD 136		4/24/2029	Semi-Annually	(1)			—			1
JPMorgan Chase Bank, N.A.		3.29%	3 Month LIBOR	USD 280		4/23/2029	Semi-Annually	(1)			—			1
JPMorgan Chase Bank, N.A.		3.32%	3 Month LIBOR	USD 981		4/11/2029	Semi-Annually	(6)			—			6
JPMorgan Chase Bank, N.A.		3.33%	3 Month LIBOR	USD 74		4/11/2029	Semi-Annually	(1)			—			1
JPMorgan Chase Bank, N.A.		3.31%	3 Month LIBOR	USD 246		4/12/2029	Semi-Annually	(1)			—			1
JPMorgan Chase Bank, N.A.		3.17%	3 Month LIBOR	USD 498		4/1/2029	Semi-Annually	4			4			—
JPMorgan Chase Bank, N.A.		3.09%	3 Month LIBOR	USD 16		3/18/2029	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.08%	3 Month LIBOR	USD 31		3/18/2024	Semi-Annually	—			—			—
JPMorgan Chase Bank, N.A.		3.17%	3 Month LIBOR	USD 217		4/1/2029	Semi-Annually	2			2			—
JPMorgan Chase Bank, N.A.		2.86%	3 Month LIBOR	USD 864		6/29/2023	Semi-Annually	10			10			—
JPMorgan Chase Bank, N.A.		2.89%	3 Month LIBOR	USD 648		6/27/2023	Semi-Annually	7			7			—
JPMorgan Chase Bank, N.A.		2.87%	3 Month LIBOR	USD 1,512		7/2/2023	Semi-Annually	17			17			—
JPMorgan Chase Bank, N.A.		3.05%	3 Month LIBOR	USD 189		12/14/2048	Semi-Annually	9			9			—
Total Interest Rate Swaps								$87		$	97		$	10

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Total Return Debt Swaps(k)

Counterparty

Fund
Pays

Fund
Receives

Notional
Amount

Expiration
Date

Periodic
Payment
Frequency

Fair
Value(c)

Unrealized
Appreciation

Unrealized
Depreciation

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

South Carolina State
Housing Finance and
Development Authority
Multifamily Housing
Revenue Bonds
(Wyndham Pointe
Apartments Project,
6.60%, 9/1/2048)
Series 2004

USD 362

12/1/2021

Monthly

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

Texas Department of
Housing and
Community Affairs
Multifamily Housing
Revenue Bonds
(Santora Villas
Apartments, 5.80%,
5/1/2047) Series 2007

USD 619

6/1/2023

Monthly

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

City of Los Angeles
Multifamily Housing
Revenue Bonds
(Lexington Preservation
Apartments, 6.50%,
9/1/2043), Series 2005D

USD 439

6/1/2022

Monthly

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

California Statewide
Communities
Development Authority
Multifamily Housing
Revenue Bonds
(Parkview Senior
Apartments Project,
5.75%, 2/1/2049),
Series 2005U

USD 178

9/1/2022

Monthly

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.30%

District of Columbia
Housing Finance
Agency Multifamily
Housing Revenue
Bonds (Galen Terrace
Apartments Project,
6.00%, 2/1/2049),
Series 2006

USD 221

3/1/2022

Monthly

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.30%

City of Los Angeles
Multifamily Housing
Revenue Bonds
(Windward Preservation
Apartments, 5.85%,
10/1/2044), Series 2006C

USD 403

6/1/2023

Monthly

—

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Counterparty

Fund
Pays

Fund
Receives

Notional
Amount

Expiration
Date

Periodic
Payment
Frequency

Fair
Value(c)

Unrealized
Appreciation

Unrealized
Depreciation

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

California Statewide
Communities
Development Authority
Multifamily Housing
Revenue Bonds (Rose of
Sharon Senior Homes,
5.85%, 3/1/2045)
Series 2006PP

USD 273

6/1/2023

Monthly

(1)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.30%

California Statewide
Communities
Development Authority
Multifamily Housing
Revenue Bonds (La
Mission Village
Apartments Project,
5.75%, 6/1/2049),
Series 2006Q

USD 223

6/1/2023

Monthly

(1)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.30%

San Antonio Housing
Finance Corporation
Multifamily Housing
Revenue Bonds (Artisan
at Salado Heights,
5.80%, 5/1/2050),
Series 2006

USD 700

6/1/2023

Monthly

(1)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

Texas Department of
Housing and
Community Affairs
Multifamily Housing
Revenue Bonds
(Churchill at Pinnacle
Park, 6.55%, 7/1/2044),
Series 2004

USD 494

9/1/2021

Monthly

(1)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

District of Columbia
Housing Finance
Agency Multifamily
Housing Revenue
Bonds (Carver
Apartments Project,
5.88%, 10/1/2049),
Series 2006

USD 369

6/1/2023

Monthly

(2)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

Louisiana Housing
Finance Agency
Multifamily Housing
Revenue Bonds (The
Crossings Apartments,
6.15%, 5/1/2048)
Series 2006

USD 374

6/1/2023

Monthly

(2)

—

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

Counterparty

Fund
Pays

Fund
Receives

Notional
Amount

Expiration
Date

Periodic
Payment
Frequency

Fair
Value(c)

Unrealized
Appreciation

Unrealized
Depreciation

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

City of Roseville,
Minnesota Multifamily
Housing Revenue
Bonds (Centennial
Apartments Project,
5.75%, 1/1/2051)
Series 2007

USD 609

9/1/2025

Monthly

(2)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.30%

Sacramento Housing
Authority Multifamily
Revenue Bonds (Willow
Glen Apartments,
5.75%, 4/1/2056),
Series 2007F

USD 247

6/1/2023

Monthly

(2)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

San Antonio Housing
Finance Corporation
Multifamily Housing
Revenue Bonds (The
Villas at Costa Cadiz,
6.50%, 1/1/2049)
Series 2004

USD 409

12/1/2021

Monthly

(2)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

San Antonio Housing
Finance Corporation
Multifamily Housing
Revenue Bonds (Costa
Miranda Apartments
Project, 6.10%,
10/1/2050), Series 2006

USD 601

6/1/2023

Monthly

(2)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

Massachusetts
Development Finance
Agency Housing
Revenue Bonds (East
Canton Apartments
Project, 5.90%,
5/1/2055) Series 2006A

USD 587

6/1/2023

Monthly

(4)

—

Bank of America,
N.A.

SIFMA Municipal
Swap Index plus a
spread of 1.45%

Houston Housing
Finance Corporation
Multifamily Housing
Revenue Bonds
(Kensington Place
Apartments, 6.50%,
2/1/2048), Series 2004

USD 631

9/1/2021

Monthly

(5)

—

Total Total Return Debt Swaps

(16)

(a)

Security may be an obligation of one or more entities affiliated with the named company.

(b)

Denominated in U.S. dollars unless otherwise noted.

(c)

Fair value is determined by the board of trustees of FS Credit Income Fund (the “Fund”). See Notes 2 and 8 for information on the Fund’s policy regarding valuation of investments, fair value hierarchy levels and other significant accounting policies.

(d)

Certain variable rate securities in the Fund’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of October 31, 2018, the one-month, two-month and three-month London Interbank Offered Rate (“L”) was 2.31%, 2.40% and 2.56%, respectively, and the three-month Euro Interbank Offered Rate (“E”) was (0.32)%.

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Schedule of Investments (continued)
As of October 31, 2018
(in thousands, except share amounts)

(e)

Position or portion thereof unsettled as of October 31, 2018.

(f)

Exempt from registration under Rule 144A of the Securities Act of 1933, as amended. Such securities may be deemed liquid by the investment adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $50,914, which represents approximately 47.0% of net assets as of October 31, 2018.

(g)

Security or portion thereof is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage International, Ltd. (“BNP”). Securities may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) promulgated under the Securities Exchange Act of 1934, as amended, subject to terms and conditions governing the prime brokerage facility with BNP. As of October 31, 2018, there were no securities rehypothecated by BNP.

(h)

Security is in default.

(i)

Issued with a zero coupon. Income is recognized through the accretion of discount.

(j)

Security is non-income producing.

(k)

Security is classified as Level 3 in the Fund’s fair value hierarchy (See Note 8).

(l)

Includes the effect of forward foreign currency exchange contracts, futures contracts, swap positions and investments sold short.

ADR—American Depositary Receipt.

EURIBOR—Euro Interbank Offered Rate (As of October 31, 2018, Three Month EURIBOR was (0.32)%)

LIBOR—London Interbank Offered Rate (As of October 31, 2018, Three Month LIBOR was 2.56%)

BRL—Brazilian Real.

EUR—Euro.

USD—U.S. Dollar.

SIFMA—Securities Industry and Financial Markets Association.

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Statement of Assets and Liabilities
(in thousands, except share and per share data)

	October 31, 2018
Assets
Investments, at fair value (amortized cost—$121,001)		$	120,242
Cash			5,270
Restricted cash			1,233
Collateral held at broker(1)			1,239
Receivable for investments sold			584
Receivable from Fund shares sold			866
Reimbursement due from adviser(2)			138
Interest receivable			1,292
Unrealized appreciation on forward foreign currency exchange contracts			665
Unrealized appreciation on swap contracts			553
Receivable for variation margin on open futures			62
Swap income receivable			96
Prepaid expenses and other assets			41
Total assets		$	132,281
Liabilities
Financing arrangement payable		$	10,175
Investments sold short, at fair value (proceeds $1,047)			1,019
Unrealized depreciation on forward foreign currency exchange contracts			395
Unrealized depreciation on swap contracts			35
Due to custodian			3,932
Payable for investments purchased			7,683
Swap income payable			74
Management fees payable			474
Administrative services expense payable			12
Accounting and administrative fees payable			38
Professional fees payable			88
Trustees’ fees payable			2
Interest payable for short sales			10
Other accrued expenses and liabilities			52
Total liabilities		$	23,989
Net assets		$	108,292
Commitments and contingencies ($230)(3)
Composition of net assets
Common shares, $0.001 par value, unlimited shares authorized		$	8
Capital in excess of par value			108,135
Accumulated earnings (deficit)			149
Net assets		$	108,292
Class A Shares
Net Assets		$	900
Shares Outstanding			69,904
Net Asset Value Per Share (net assets ÷ shares outstanding)		$	12.87
Maximum Offering Price Per Share ($12.87 ÷ 94.25% of net asset value per share)		$	13.66

See notes to financial statements.

TABLE OF CONTENTS

FS Credit Income Fund

Statement of Assets and Liabilities (continued)
(in thousands, except share and per share data)

	October 31, 2018
Class I Shares
Net Assets		$	107,317
Shares Outstanding			8,322,844
Net Asset Value Per Share (net assets ÷ shares outstanding)		$	12.89
Class T Shares
Net Assets		$	75
Shares Outstanding			5,832
Net Asset Value Per Share (net assets ÷ shares outstanding)		$	12.90
Maximum Offering Price Per Share ($12.90 ÷ 96.50% of net asset value per share)		$	13.37

(1)

Represents cash on deposit at broker.

(2)

See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

(3)

See Note 11 for a discussion of the Fund’s commitments and contingencies.

See notes to financial statements.

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FS Credit Income Fund

Statement of Operations
(in thousands)

	Year Ended October 31, 2018
Investment income
Interest income		$	3,430
Fee income			84
Total investment income			3,514
Operating expenses
Management fees			1,007
Administrative services expenses			190
Accounting and administrative fees			101
Interest expense			101
Professional fees			285
Trustees’ fees			6
Other general and administrative expenses			225
Total operating expenses			1,915
Less: Expense reimbursement(1)			(698)
Net operating expenses			1,217
Net investment income			2,297
Realized and unrealized gain/loss
Net realized gain (loss) on investments			620
Net realized gain (loss) on forward foreign currency exchange contracts			(12)
Net realized gain (loss) on swap contracts			212
Net realized gain (loss) on investments sold short			9
Net realized gain (loss) on futures contracts			(47)
Net realized gain (loss) on foreign currency			23
Net change in unrealized appreciation (depreciation) on investments			(759)
Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts			270
Net change in unrealized appreciation (depreciation) on swap contracts			518
Net change in unrealized appreciation (depreciation) on investments sold short			28
Net change in unrealized appreciation (depreciation) on futures contracts			62
Net change in unrealized gain (loss) on foreign currency			29
Total net realized gain (loss) and unrealized appreciation (depreciation)			953
Net increase (decrease) in net assets resulting from operations		$	3,250

(1)

See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

See notes to financial statements.

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FS Credit Income Fund

Statement of Changes in Net Assets
(in thousands)

	Year Ended October 31, 2018
Operations
Net investment income		$	2,297
Net realized gain (loss)			805
Net change in unrealized appreciation (depreciation) on investments			(759)
Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts			270
Net change in unrealized appreciation (depreciation) on swap contracts			518
Net change in unrealized appreciation (depreciation) on investments sold short			28
Net change in unrealized appreciation (depreciation) on futures contracts			62
Net change in unrealized gain (loss) on foreign currency			29
Net increase (decrease) in net assets resulting from operations			3,250
Shareholder distributions(1)
Distributions to shareholders
Class A			(9)
Class I			(3,095)
Class T			(1)
Total distributions to shareholders			(3,105)
Net decrease in net assets resulting from shareholder distributions			(3,105)
Capital share transactions(2)
Net increase in net assets resulting from capital share transactions			108,047
Total increase in net assets			108,192
Net assets at beginning of year			100
Net assets at end of year		$	108,292

(1)

See Note 5 for a discussion of the sources of distributions paid by the Fund.

(2)

See Note 3 for a discussion of the Fund’s common share transactions.

See notes to financial statements.

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FS Credit Income Fund

Statement of Cash Flows
(in thousands)

	Year Ended October 31, 2018
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations		$	3,250
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments			(186,902)
Proceeds from sales and repayments of investments			66,560
Securities sold short, net			1,047
Net realized (gain) loss on investments			(620)
Net change in unrealized (appreciation) depreciation on investments			759
Net change in unrealized (appreciation) depreciation on forward foreign currency exchange contracts			(270)
Net change in unrealized (appreciation) depreciation on investments sold short			(28)
Net change in unrealized (appreciation) depreciation on swap contracts			(518)
Net change in unrealized (appreciation) depreciation on futures contracts			(62)
Accretion of discount/amortization of premium, net			(39)
(Increase) decrease in collateral held at broker			(1,239)
(Increase) decrease in receivable for investments sold			(584)
(Increase) decrease in reimbursement due from adviser(1)			(138)
(Increase) decrease in interest receivable			(1,292)
(Increase) decrease in swap income receivable			(96)
(Increase) decrease in prepaid expenses and other assets			(41)
Increase (decrease) in payable for subscriptions received in advance			(19,900)
Increase (decrease) in due to custodian			3,932
Increase (decrease) in payable for investments purchased			7,683
Increase (decrease) in management fees payable			474
Increase (decrease) in administrative services expenses payable			12
Increase (decrease) in accounting and administrative fees payable			38
Increase (decrease) in professional fees payable			88
Increase (decrease) in swap income payable			74
Increase (decrease) in interest payable for short sales			10
Increase (decrease) in trustees’ fees payable			2
Increase (decrease) in other accrued expenses and liabilities			52
Net cash provided by (used in) operating activities			(127,748)
Cash flows from financing activities
Issuance of common shares			105,476
Reinvestment of shareholder distributions			1,973
Repurchases of common shares			(268)
Shareholder distributions			(3,105)
Borrowings under financing arrangement(2)			39,041
Repayments under credit facility(2)			(28,866)
Net cash provided by financing activities			114,251
Total increase (decrease) in cash			(13,497)
Cash at beginning of year			20,000
Cash and restricted cash at end of year(3)		$	6,503

(1)

See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

(2)

See Note 9 for a discussion of the Fund’s financing arrangement. During the year ended October 31, 2018, the Fund paid $101 of interest expense on the financing arrangement.

(3)

Balance includes cash of $5,270 and restricted cash of $1,233. Restricted cash is the cash collateral required to be posted pursuant to the Fund’s total return debt swap contracts.

See notes to financial statements.

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FS Credit Income Fund

Financial Highlights—Class A Shares
(in thousands, except share and per share data)

	Period from June 1, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:(1)
Net asset value, beginning of period		$	12.89
Results of operations
Net investment income(2)			0.23
Net realized gain (loss) and unrealized appreciation (depreciation) on investments			0.12
Net increase (decrease) in net assets resulting from operations			0.35
Shareholder Distributions(3)
Distributions from net investment income			(0.37)
Net decrease in net assets resulting from shareholder distributions			(0.37)
Net asset value, end of period		$	12.87
Shares outstanding, end of period			69,904
Total return(4)(5)			2.72%
Ratio/Supplemental Data:
Net assets, end of period		$	900
Ratio of net investment income to average net assets(6)(7)			4.30%
Ratio of total expenses to average net assets(6)			4.28%
Ratio of expense reimbursement from adviser to average net assets(6)			(1.59)%
Ratio of net expenses to average net assets(6)			2.69%
Portfolio turnover rate			114%
Asset coverage ratio per unit(8)			11.64

(1)

Per share data may be rounded in order to compute the ending net asset value per share.

(2)

The per share data was derived by using the average number of common shares outstanding during the period.

(3)

The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class A common share during the period.

(4)

The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Fund’s investment portfolio during the period on a per class basis and does not represent an actual return to shareholders.

(5)

Information presented is not annualized.

(6)

Average daily net assets is used for this calculation. Data is annualized.

(7)

If the adviser had not reimbursed certain expenses, the ratio of net investment income to average net assets would have been 2.71% for the period ended October 31, 2018. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

(8)

Asset coverage per unit is the ratio of the carrying value of the Fund’s total assets available to cover senior securities, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

See notes to financial statements.

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FS Credit Income Fund

Financial Highlights—Class I Shares
(in thousands, except share and per share data)

	Year Ended October 31, 2018
Per Share Data:(1)
Net asset value, beginning of year		$	12.50
Results of operations
Net investment income(2)			0.56
Net realized gain (loss) and unrealized appreciation (depreciation)			0.39
Net increase (decrease) in net assets resulting from operations			0.95
Shareholder distributions(3)
Distributions from net investment income			(0.56)
Net decrease in net assets resulting from shareholder distributions			(0.56)
Net asset value, end of year		$	12.89
Shares outstanding, end of year			8,322,844
Total return(4)			7.68%
Ratio/Supplemental Data:
Net assets, end of year		$	107,317
Ratio of net investment income to average net assets(5)(6)			4.38%
Ratio of total expenses to average net assets(5)			3.65%
Ratio of expense reimbursement from adviser to average net assets(5)			(1.33)%
Ratio of net expenses to average net assets(5)			2.32%
Portfolio turnover rate			114%
Asset coverage ratio per unit(7)			11.64

(1)

Per share data may be rounded in order to compute the ending net asset value per share.

(2)

The per share data was derived by using the average number of common shares outstanding during the year ended October 31, 2018.

(3)

The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class I common share during the period.

(4)

(5)

Average daily net assets is used for this calculation.

(6)

If the adviser had not reimbursed certain expenses, the ratio of net investment income to average net assets would have been 3.05% for the year ended October 31, 2018. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

(7)

See notes to financial statements.

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FS Credit Income Fund

Financial Highlights—Class T Shares
(in thousands, except share and per share data)

	Period from August 14, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:(1)
Net asset value, beginning of period		$	13.03
Results of operations
Net investment income(2)			0.12
Net realized gain (loss) and unrealized appreciation (depreciation) on investments			(0.07)
Net increase (decrease) in net assets resulting from operations			0.05
Shareholder distributions(3)
Distributions from net investment income			(0.18)
Net decrease in net assets resulting from shareholder distributions			(0.18)
Net asset value, end of period		$	12.90
Shares outstanding, end of period			5,832
Total return(4)(5)			0.39%
Ratio/Supplemental Data:
Net assets, end of period		$	75
Ratio of net investment income to average net assets(6)(7)			4.28%
Ratio of total expenses to average net assets(6)			4.18%
Ratio of expense reimbursement from adviser to average net assets(6)			(1.14)%
Ratio of net expenses to average net assets(6)			3.04%
Portfolio turnover rate			114%
Asset coverage ratio per unit(8)			11.64

(1)

Per share data may be rounded in order to compute the ending net asset value per share.

(2)

The per share data was derived by using the average number of common shares outstanding during the period.

(3)

The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class T common share during the applicable period.

(4)

(5)

Information presented is not annualized.

(6)

Average daily net assets is used for this calculation. Data is annualized.

(7)

If the adivser had not reimbursed certain expenses, the ratio of net investment income to average net assets would have been 3.14% for the period ended October 31, 2018. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates.

(8)

See notes to financial statements.

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FS Credit Income Fund

Notes to Financial Statements
(in thousands, except share and per share amounts)

Note 1. Principal Business and Organization

FS Credit Income Fund (the “Fund”) was formed as a Delaware statutory trust under the Delaware Statutory Trust Act on October 27, 2016 and commenced investment operations on November 1, 2017. Prior to commencing investment operations, the Fund had no operations except for matters relating to its organization and registration as a non-diversified, closed-end management investment company.

The Fund is a continuously offered, non-diversified, closed-end management investment company that operates as an interval fund pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund offers five classes of shares of beneficial interest—Class A Shares, Class I Shares, Class L Shares, Class M Shares and Class T Shares (as defined below), which are substantially the same except that each class of shares has different sales charges and expenses. The Fund has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company (“RIC”) as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (“Code”).

The Fund’s investment objective is to provide attractive total returns, which will include current income and capital appreciation. Under normal investment conditions, the Fund will invest at least 80% of its assets (including borrowings for investment purposes) in debt obligations. The securities acquired by the Fund may include all types of debt and equity obligations and may have varying terms with respect to collateralization, seniority or subordination, purchase price, convertibility, interest payments and maturity. There is no geographical or currency limitation on securities acquired by the Fund. The Fund may purchase debt and equity securities of non-U.S. governments and corporate entities domiciled outside of the U.S., including emerging market issuers.

The investment adviser to the Fund, FS Credit Income Advisor, LLC (“FS Credit Income Advisor”), oversees the management of the Fund’s activities and is responsible for developing investment guidelines with the GoldenTree Sub-Advisor (as defined below) and overseeing investment decisions for the Fund’s portfolio. FS Credit Income Advisor has engaged GoldenTree Asset Management Credit Advisor LLC (the “GoldenTree Sub-Advisor”), a wholly owned subsidiary of GoldenTree Asset Management LP (“GoldenTree”), to act as the Fund’s investment sub-adviser and make investment decisions for the Fund’s portfolio, subject to the oversight of FS Credit Income Advisor.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying financial statements of the Fund have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The Fund is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Accounting Standards Codification Topic 946, Financial Services—Investment Companies. The Fund has evaluated the impact of subsequent events through the date the financial statements were issued.

Use of Estimates: The preparation of the Fund’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded and all amounts are in thousands, except share and per share amounts.

Cash and Cash Equivalents: The Fund considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Fund invests its cash in an institutional money market fund, which is stated at fair value. The Fund’s uninvested cash is maintained with a high credit quality financial institution.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

Valuation of Portfolio Investments: The Fund determines the net asset value (“NAV”) of its common shares on each day that the New York Stock Exchange (“NYSE”) is open for business as of the close of the regular trading session. Each Class A share of beneficial interest (“Class A Share”), Class L share of beneficial interest (“Class L Share”) and Class T share of beneficial interest (“Class T Share”) is offered at NAV plus the applicable sales load, while each Class I share of beneficial interest (“Class I Share”) and Class M share of beneficial interest (“Class M Share”) is offered at NAV. The Fund calculates NAV per share on a class-specific basis. The NAV of a class of shares depends on the number of shares of the applicable class outstanding at the time the NAV is determined. As such, the NAV of each class of shares may vary if the Fund sells different amounts of shares per class, among other things. The Fund calculates NAV by subtracting liabilities (including accrued expenses and distributions) from the total assets of the Fund (the value of securities, plus cash or other assets, including interest and distributions accrued but not yet received) and dividing the result by the total number of outstanding common shares. The Fund’s assets and liabilities are valued in accordance with the principles set forth below.

FS Credit Income Advisor values the Fund’s assets in good faith pursuant to the Fund’s valuation policy and consistently applied valuation process, which was developed by the audit committee of the Fund’s board of trustees (“Board”) and approved by the Board. Portfolio securities and other assets for which market quotes are readily available are valued at market value. In circumstances where market quotes are not readily available, the Board has adopted methods for determining the fair value of such securities and other assets, and has delegated the responsibility for applying the valuation methods to FS Credit Income Advisor. On a quarterly basis, the Board reviews the valuation determinations made with respect to the Fund’s investments during the preceding quarter and evaluates whether such determinations were made in a manner consistent with the Fund’s valuation process.

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Fund expects that its portfolio will primarily consist of securities listed or traded on a recognized securities exchange or automated quotation system (“Exchange-Traded Security”) or securities traded on a privately negotiated OTC secondary market for institutional investors for which indicative dealer quotes are available (“OTC Security”).

For purposes of calculating NAV, the Fund uses the following valuation methods:

•

The market value of each Exchange-Traded Security is the last reported sale price at the relevant valuation date on the composite tape or on the principal exchange on which such security is traded.

•

If no sale is reported for an Exchange-Traded Security on the valuation date or if a security is an OTC Security, the Fund values such investments using quotations obtained from an independent third-party pricing service, which provides prevailing bid and ask prices that are screened for validity by the service from dealers on the valuation date. If a quoted price obtained from such service is deemed by FS Credit Income Advisor to be unreliable (and therefore, not readily available), FS Credit Income Advisor may recommend that the investment be fair valued by some other means, including, but not limited to, a valuation provided by an approved independent third

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

party valuation firm. For investments for which an independent third-party pricing service is unable to obtain quoted prices, the Fund will obtain bid and ask prices directly from dealers who make a market in such investments. In all such cases, investments are valued at the mid-point of the average bid and ask prices obtained from such sources, unless there is a compelling reason to use some other value within the bid-ask range and the justification is documented and retained by FS Credit Income Advisor’s management team.

•

To the extent that the Fund holds investments for which no active secondary market exists and, therefore, no bid and ask prices can be readily obtained, the Fund will value such investments at fair value as determined in good faith by FS Credit Income Advisor, under supervision of the Board, in accordance with the Fund’s valuation policy and pursuant to authority delegated by the Board. In making such determination, it is expected that FS Credit Income Advisor, under supervision of the Board, may rely upon valuations obtained from an approved independent third-party valuation firm.

With respect to these investments for which market quotations are not readily available, the Fund will undertake a multi-step fair valuation process each quarter, as described below:

•

Weekly and as of each quarter end, FS Credit Income Advisor’s management team will review and document preliminary valuations for each investment, which valuations may be obtained from an approved independent third-party valuation service, if applicable;

•

Quarterly, FS Credit Income Advisor’s management team will provide the audit committee of the Board with preliminary valuations for each investment;

•

The preliminary valuations will then be presented to and discussed with the audit committee of the Board;

•

The audit committee of the Board will review the preliminary valuations and FS Credit Income Advisor’s management team, together with any approved independent third-party valuation service, if applicable, will respond to and supplement the preliminary valuations to reflect any comments provided by the audit committee of the Board;

•

The audit committee of the Board will also be provided with the weekly valuations of each investment that had been fair valued throughout the most recently completed quarter;

•

Following its review, the audit committee of the Board will approve the fair valuation of the Fund’s investments and will recommend that the Board similarly approve the fair valuation of the Fund’s investments; and

•

The Board will discuss the valuation of the Fund’s investments and will determine the fair value of each such investment in the portfolio in good faith based on various statistical and other factors, including the input and recommendation of FS Credit Income Advisor, the audit committee of the Board and any approved independent third-party valuation service, if applicable.

Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the Fund’s financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on the Fund’s financial statements. In making its determination of fair value, FS Credit Income Advisor, under supervision of the Board, may use any approved independent third-party pricing or valuation services; provided that FS Credit Income Advisor, under supervision of the Board, shall not be required to determine fair value in accordance with the valuation provided by any single source, and FS Credit Income Advisor, under supervision of the Board, shall retain the discretion to use

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

any relevant data, including information obtained by FS Credit Income Advisor, any investment sub-adviser or from any approved independent third-party valuation or pricing service, that FS Credit Income Advisor, under supervision of the Board, deems to be reliable in determining fair value under the circumstances.

Below is a description of factors that FS Credit Income Advisor, any approved independent third-party valuation service and the Board may consider when determining the fair value of the Fund’s investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, these factors may be incorporated into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the portfolio company in relation to the face amount of its outstanding debt and the quality of the collateral securing its debt investments.

For convertible debt securities, fair value will generally approximate the fair value of the debt plus the fair value of an option to purchase the underlying security (the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

For equity interests, various factors may be considered in determining fair value, including, but not limited to, multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a company or the Fund’s actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or an acquisition, recapitalization, restructuring or other related items.

FS Credit Income Advisor, any approved independent third-party valuation service and the Board may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the companies, the acquisition price of such investment or industry practices in determining fair value. FS Credit Income Advisor, any approved independent third-party valuation service and the Board may also consider the size and scope of a company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the size of the company relative to comparable firms, as well as such other factors as FS Credit Income Advisor, under supervision of the Board, and any approved independent third-party valuation service, if applicable, may consider relevant in assessing fair value.

When the Fund receives warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Such warrants or other equity securities will subsequently be valued at fair value. Portfolio securities that carry certain restrictions on sale will typically be valued at a discount from the public market value of the security, where applicable.

If events materially affecting the price of foreign portfolio securities occur between the time when their price was last determined on such foreign securities exchange or market and the time when the Fund’s NAV was last calculated (for example, movements in certain U.S. securities indices which demonstrate strong correlation to movements in certain foreign securities markets), such securities may be valued at their fair value as determined in good faith in accordance with procedures established by the Board. For purposes of calculating NAV, all assets and liabilities initially expressed in foreign currencies will be converted into U.S. dollars at prevailing exchange rates as may be determined in good faith by FS Credit Income Advisor, under supervision of the Board, in consultation with any approved independent third-party valuation service, if applicable.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

Forward foreign currency exchange contracts typically will be valued at their quoted daily prices obtained from an independent third party. Interest rate futures traded on exchanges will be valued daily at their last sale price. Swaps typically will be valued at their daily prices obtained from an independent third party. The aggregate settlement values and notional amounts of the forward foreign currency exchange contracts, interest rate futures and swaps will not be recorded in the statement of assets and liabilities. Fluctuations in the value of the forward foreign currency exchange contracts, interest rate futures and swaps will be recorded in the statement of assets and liabilities as an asset (liability) and in the statement of operations as unrealized appreciation (depreciation) until closed, when they will be recorded as net realized gain (loss).

The Board is solely responsible for the valuation of the Fund’s portfolio investments at fair value as determined in good faith pursuant to the Fund’s valuation policy and consistently applied valuation process. The Board has delegated day-to-day responsibility for implementing the Fund’s valuation policy to FS Credit Income Advisor’s management team, and has authorized FS Credit Income Advisor’s management team to utilize independent third-party valuation and pricing services that have been approved by the Board. The audit committee of the Board is responsible for overseeing FS Credit Income Advisor’s implementation of the Fund’s valuation process.

Revenue Recognition: Security transactions are accounted for on the trade date. The Fund records interest income on an accrual basis to the extent that it expects to collect such amounts. The Fund records dividend income and distributions on the ex-date. The Fund does not accrue as a receivable interest on loans or dividends on securities if it has reason to doubt its ability to collect such income. The Fund’s policy is to place investments on non-accrual status when there is reasonable doubt the interest income will be collected. The Fund considers many factors relevant to an investment when placing it on or removing it from non-accrual status, including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Fund will receive any previously accrued interest, then the previously recognized interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on the Fund’s judgment.

Loan origination fees, original issue discount, and market discount are capitalized and such amounts are amortized as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. The Fund records prepayment premiums on loans and securities as fee income when it receives such amounts.

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency: Gains or losses on the sale of investments are calculated by using the specific identification method. The Fund measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses, when gains or losses are realized. Net change in unrealized gains or losses on foreign currency reflects the change in the value of receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

Organization and Offering Costs: Organization costs include, among other things, the cost of formation as a Delaware statutory trust, including the cost of legal services and other fees pertaining to the Fund’s

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

organization. For the period from October 27, 2016 (Inception) through October 31, 2017, the Fund incurred organization costs of $128, which were paid by Franklin Square Holdings, L.P. (“FS Investments”), the Fund’s sponsor and an affiliate of FS Credit Income Advisor (see Note 4).The Fund did not incur any organization costs during the year ended October 31, 2018. FS Investments has agreed to assume the Fund’s organization costs and will not seek reimbursement of such costs. Offering costs primarily include marketing expenses, salaries and other direct expenses of FS Credit Income Advisor’s and GoldenTree’s personnel and employees of their affiliates while engaged in registering and marketing the Fund’s common shares. Effective April 6, 2018, FS Investments has agreed to assume all of the Fund’s prior and future offering costs and will not seek reimbursement of such costs. For the periods from October 27, 2016 (Inception) through October 31, 2017 and from November 1, 2017 through April 6, 2018, the Fund incurred offering costs of $934 and $747, respectively, which were paid on its behalf by FS Investments (see Note 4).

Income Taxes: The Fund has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. To maintain the Fund’s qualification as a RIC, the Fund must, among other things, meet certain source-of-income and asset diversification requirements and distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income,” which is generally the Fund’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. As a RIC, the Fund will not have to pay corporate-level U.S. federal income taxes on any income that it distributes to its shareholders. The Fund intends to make distributions in an amount sufficient to maintain its RIC status each year and to avoid any U.S. federal income taxes on income so distributed. The Fund will also be subject to nondeductible U.S. federal excise taxes if it does not distribute at least 98% of net ordinary income, 98.2% of capital gain net income, if any, and any recognized and undistributed income from prior years for which it paid no U.S. federal income taxes.

Uncertainty in Income Taxes: The Fund evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in the Fund’s financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Fund recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense on its statement of operations. During the year ended October 31, 2018, the Fund did not incur any interest or penalties.

The Fund has analyzed the tax positions taken on U.S. federal and state income tax returns for all open tax years, and has concluded that no provision for income tax for uncertain tax positions is required in the Fund’s financial statements. The Fund’s U.S. federal and state income and U.S. federal excise tax returns for tax years for which the applicable statutes of limitations have not yet expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Forward foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

Interest Rate Futures Contracts: The Fund enters into interest rate futures contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, changes in interest rates (interest rate risk). An interest rate futures contract is an agreement between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Interest rate futures contracts, when used by the Fund, help to manage the overall exposure to rising interest rates.

Cross-currency Swaps: The Fund enters into cross-currency swaps to gain or mitigate exposure on foreign currency exchange rate risk. Cross-currency swaps are contracts in which interest cash flows are exchanged between two parties based on the notional amounts of two different currencies. Cross-currency swaps, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated. Cross-currency swaps involve an agreement to exchange notional amounts at a later date at either the same exchange rate, a specified rate or the then-current spot rate.

Interest Rate Swaps: The Fund enters into interest rate swaps to help hedge against interest rate risk exposure and to maintain the Fund’s ability to generate income at prevailing market rates. An interest rate swap contract is an exchange of interest rates between counterparties. The value of the fixed rate bonds that the Fund holds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, the Fund may enter into interest rate swap agreements. Interest rate swap agreements involve the exchange by the Fund with another party for their respective commitment to pay or receive interest on the notional amount of principal.

Total Return Swaps: Total return swaps are entered into by the Fund to obtain exposure to a security or market without owning such security or investing directly in such market or to exchange the risk/return of one market with another market. Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (distributions plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. If the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting fixed or floating interest rate obligation, the Fund receives payment from or makes a payment to the counterparty.

Distributions: Distributions to the Fund’s shareholders will be recorded as of the record date. Subject to the discretion of the Board and applicable legal restrictions, the Fund currently intends to authorize, declare and pay ordinary cash distributions on a quarterly basis. Subject to the Board’s discretion and applicable legal restrictions, the Fund from time to time may also pay special interim distributions in the form of cash or shares. At least annually, the Fund intends to authorize and declare special cash distributions of net long-term capital gains, if any.

Recent Accounting Pronouncements: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-13, Fair Value Measurement — Disclosures Framework — Changes to Disclosure Requirements of Fair Value Measurement (Topic 820), or ASU 2018-13, which introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Fund is currently evaluating the impact of ASU 2018-13 on its financial statements.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

In March 2017, FASB issued Accounting Standards Update 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities, or ASU 2017-08, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Fund is currently evaluating the impact of ASU 2017-08 on its financial statements.

Note 3. Share Transactions

Below is a summary of transactions with respect to the Fund’s common shares during the year ended October 31, 2018:

	Period from June 1, 2018 (Commencement of Operations) through October 31, 2018
Class A Shares	Shares		Amount
Gross Proceeds from Offering		69,741		$	915
Reinvestment of Distributions		163			2
Total Gross Proceeds		69,904			917
Commissions and Dealer Manager Fees		—			(8)
Net Proceeds from Class A Share Transactions		69,904		$	909

	For the Year Ended October 31, 2018
Class I Shares	Shares		Amount
Gross Proceeds from Offering		8,182,579		$	105,350
Reinvestment of Distributions		152,312			1,970
Total Gross Proceeds		8,334,891			107,320
Share Repurchase Program		(20,047)			(258)
Net Proceeds from Class I Share Transactions		8,314,844		$	107,062

	Period from August 14, 2018 (Commencement of Operations) through October 31, 2018
Class T Shares	Shares		Amount
Gross Proceeds from Offering		6,507		$	88
Reinvestment of Distributions		66			1
Total Gross Proceeds		6,573			89
Commissions and Dealer Manager Fees		—			(3)
Net Proceeds to the Fund		6,573			86
Share Repurchase Program		(741)			(10)
Net Proceeds from Class T Share Transactions		5,832			76
Net Proceeds to the Fund		8,390,580		$	108,047

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions (continued)

Status of Continuous Public Offering

Since commencing its continuous public offering and through December 12, 2018, the Fund sold 191,959, 8,864,495 and 10,738 of Class A Shares, Class I Shares and Class T Shares, respectively, for gross proceeds of $2,475, $114,102 and $144, respectively, including shares issued pursuant to its distribution reinvestment plan (“DRP”). As of December 12, 2018, the Fund raised total gross proceeds of $116,821, including $100 of seed capital contributed by Michael C. Forman in June 2017 (see Note 4).

Share Repurchase Program

The Fund operates as an interval fund under Rule 23c-3 of the 1940 Act and, as such, provides a limited degree of liquidity to shareholders. As an interval fund, the Fund has adopted a fundamental policy to offer to repurchase at regular intervals a specified percentage of its outstanding shares at the NAV of the applicable class.

Once each quarter, the Fund will offer to repurchase at NAV no less than 5% and no more than 25% of the outstanding shares of the Fund, unless such offer is suspended or postponed in accordance with regulatory requirements (as discussed below). The offer to purchase shares is a fundamental policy that may not be changed without the vote of the holders of a majority of the Fund’s outstanding voting securities (as defined in the 1940 Act). Shareholders will be notified in writing of each quarterly repurchase offer and the date the repurchase offer ends (“Repurchase Request Deadline”). Shares will be repurchased at the respective NAV per share determined as of the close of regular trading on the NYSE no later than the 14th day after the Repurchase Request Deadline, or the next business day if the 14th day is not a business day.

The Board, or a committee thereof, in its sole discretion, will determine the number of shares for each share class that the Fund will offer to repurchase (“Repurchase Offer Amount”) for a given Repurchase Request Deadline. The Repurchase Offer Amount, however, will be no less than 5% and no more than 25% of the total number of shares outstanding on the Repurchase Request Deadline. Typically, the Repurchase Offer Amount will be 5% of the shares outstanding on the Repurchase Request Deadline. Repurchase offers in excess of this amount will be made solely at the discretion of the Board.

If shareholders tender for repurchase more than the Repurchase Offer Amount for a given repurchase offer, the Fund may, but is not required to, repurchase an additional amount of shares not to exceed 2% of the outstanding shares of the Fund on the Repurchase Request Deadline. If the Fund determines not to repurchase more than the Repurchase Offer Amount, or if shareholders tender shares in an amount exceeding the Repurchase Offer Amount plus 2% of the outstanding shares on the Repurchase Request Deadline, the Fund will repurchase the shares on a pro rata basis. However, the Fund may accept all shares tendered for repurchase by shareholders who own less than one hundred shares and who tender all of their shares, before prorating other amounts tendered. In addition, the Fund will accept the total number of shares tendered in connection with required minimum distributions from an individual retirement account or other qualified retirement plan.

The Fund may suspend or postpone a repurchase offer only: (a) if making or effecting the repurchase offer would cause the Fund to lose its status as a RIC under the Code; (b) for any period during which the NYSE or any market on which the securities owned by the Fund are principally traded is closed, other than customary weekend and holiday closings, or during which trading in such market is restricted; (c) for any period during which an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable, or during which it is not reasonably practicable for the Fund fairly to determine the value of its net assets; or (d) for such other periods as the U.S. Securities and Exchange Commission (“SEC”) may by order permit for the protection of shareholders of the Fund.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions (continued)

During the fiscal year ended October 31, 2018, the fund engaged in repurchase offers as follows:

Repurchase Request Deadline	Repurchase offer Amount (as a percentage of outstanding shares)			Number of Shares Repurchased (all classes)		Percentage of Outstanding Shares Tendered (all classes)
January 31, 2018			5%		—		—
April 30, 2018			5%		—		—
July 30, 2018			5%		—		—
October 29, 2018		��	5%		20,788		0.25%
Total					20,788

Distribution Plan

The Fund, with respect to its Class L, Class M and Class T Shares, is authorized under a distribution plan to pay to the Fund’s distributor a distribution fee for certain activities relating to the distribution of shares to investors and maintenance of shareholder accounts. These activities include marketing and other activities to support the distribution of the Class L, Class M and Class T Shares. The plan operates in a manner consistent with Rule 12b-1 under the 1940 Act, which regulates the manner in which an open-end investment company may directly or indirectly bear the expenses of distributing its shares. Although the Fund is not an open-end investment company, it has undertaken to comply with the terms of Rule 12b-1 as a condition of an exemptive order under the 1940 Act which permits it to have asset-based distribution fees. Under the distribution plan, the Fund pays a distribution fee at an annual rate of 0.25% of average daily net assets attributable to the applicable share classes for remittance to financial intermediaries, as compensation for distribution and/or maintenance of shareholder accounts performed by such financial intermediaries for beneficial shareholders of the Fund.

Shareholder Service Expenses

The Fund has adopted a shareholder services plan with respect to its Class A, Class L and Class T Shares under which the Fund may compensate financial industry professionals or firms for providing ongoing services in respect of clients with whom they have distributed shares of the Fund. Such services may include (i) electronic processing of client orders, (ii) electronic fund transfers between clients and the Fund, (iii) account reconciliations with the Fund’s transfer agent, (iv) facilitation of electronic delivery to clients of Fund documentation, (v) monitoring client accounts for back-up withholding and any other special tax reporting obligations, (vi) maintenance of books and records with respect to the foregoing, (vii) responding to customer inquiries of a general nature regarding the Fund; (viii) responding to customer inquiries and requests regarding Statements of Additional Information, shareholder reports, notices, proxies and proxy statements, and other Fund documents; (ix) assisting customers in changing account options, account designations and account addresses, and (x) such other information and liaison services as the Fund or FS Credit Income Advisor may reasonably request. Under the shareholder services plan, the Fund, with respect to Class A, Class L and Class T Shares, may incur expenses on an annual basis up to 0.25% of its average daily net assets attributable to Class A, Class L and Class T Shares, respectively.

Note 4. Related Party Transactions

Compensation of the Investment Adviser, Sub-Adviser and their Affiliates

Pursuant to the investment advisory agreement, (as amended, “Investment Advisory Agreement”), dated as of September 18, 2017, by and between the Fund and FS Credit Income Advisor, FS Credit Income Advisor is entitled to a management fee in consideration of the advisory services provided by FS Credit Income Advisor to the Fund. FS Credit Income Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and is an affiliate of the Fund.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (continued)

Pursuant to the investment sub-advisory agreement (“Sub-Advisory Agreement”), dated as of September 18, 2017, by and among the Fund, FS Credit Income Advisor and the GoldenTree Sub-Advisor, the GoldenTree Sub-Advisor is entitled to receive a sub-advisory fee (payable out of the management fee) equal to 0.775% (on an annualized basis) of the Fund’s average daily gross assets.

The management fee is calculated and payable quarterly in arrears at the annual rate of 1.60% of the Fund’s average daily gross assets during such period. Prior to April 6, 2018, the management fee was 1.75% of the Fund’s average daily gross assets. All or any part of the management fee not taken as to any quarter will be deferred without interest and may be taken in any such other quarter as FS Credit Income Advisor may determine. The management fee for any partial quarter will be appropriately prorated.

Pursuant to an Administration Agreement, dated as of September 18, 2017, entered into between the Fund and FS Credit Income Advisor (as amended, the “Administration Agreement”), the Fund reimburses FS Credit Income Advisor and the GoldenTree Sub-Advisor, as applicable, for their respective actual costs incurred in providing administrative services to the Fund, including the allocable portion of the compensation and related expenses of certain personnel of FS Investments and the GoldenTree Sub-Advisor providing administrative services to the Fund on behalf of FS Credit Income Advisor, subject to the limitations set forth in the Administration Agreement and the New Expense Limitation Agreement (as defined below). Such services include general ledger accounting, fund accounting, legal services, investor relations and other administrative services. FS Credit Income Advisor also performs, or oversees the performance of, the Fund’s corporate operations and required administrative services, which includes being responsible for the financial records that the Fund is required to maintain and preparing reports to the Fund’s shareholders and reports filed with the SEC. In addition, FS Credit Income Advisor assists the Fund in calculating its NAV, overseeing the preparation and filing of its tax returns and the printing and dissemination of reports to the Fund’s shareholders, and generally overseeing the payment of the Fund’s expenses and the performance of administrative and professional services rendered to the Fund by others. FS Credit Income Advisor is required to allocate the cost of such services to the Fund based on factors such as assets, revenues, time allocations and/or other methods.

The Fund’s Board reviews the methodology employed in determining how the expenses are allocated to the Fund and the proposed allocation of the administrative expenses among the Fund and certain affiliates of FS Credit Income Advisor. The Fund’s Board then assesses the reasonableness of such reimbursements for expenses allocated to the Fund based on the breadth, depth and quality of such services as compared to the estimated cost to the Fund of obtaining similar services from third-party service providers known to be available. In addition, the Fund’s Board considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Fund’s Board, among other things, compares the total amount paid to FS Credit Income Advisor for such services as a percentage of the Fund’s net assets to the same ratios reported by other comparable investment companies. The Fund will not reimburse FS Credit Income Advisor for any services for which it receives a separate fee or for any administrative expenses allocated to a controlling person of FS Credit Income Advisor.

Reimbursements of administrative expenses to FS Credit Income Advisor are subject to the terms of the Administration Agreement and applicable expense limitation (as defined below), and the GoldenTree Sub-Advisor has agreed, pursuant to the Sub-Advisory Agreement, to defer amounts owed to it for certain administrative services during periods in which FS Credit Income Advisor is waiving expenses or making payments pursuant to the New Expense Limitation Agreement. Reimbursement of administrative expenses is ultimately subject to the limitations contained in the Administration Agreement and the New Expense Limitation Agreement and FS Credit Income Advisor and the GoldenTree Sub-Advisor have agreed to share such reimbursements pro rata, with priority being given to the then-oldest unreimbursed expenses.

Pursuant to the Administration Agreement, FS Credit Income Advisor will be reimbursed for the administrative services performed by it on behalf of the Fund; provided, however, that (1) such costs are

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (continued)

reasonably allocated by FS Credit Income Advisor to the Fund on the basis of assets, revenues, time allocations and/or other method; (2) such reimbursement shall be subject to any expense limitation of the Fund in effect at the time at which such reimbursement is otherwise payable; and (3) FS Credit Income Advisor shall not be entitled to reimbursement for any expenses relating to the salaries and direct expenses of administrative personnel paid by FS Credit Income Advisor (and the Fund shall have no obligation to pay any such expenses) to the extent that certain third-party expenses incurred by the Fund, whether directly or indirectly by FS Credit Income Advisor or GoldenTree, in connection with administering the Fund’s business exceed 0.25% of the average net assets attributable to each class of shares.

FS Investments funded the Fund’s offering costs in the amount of $934 and $747 for the period from October 27, 2016 (Inception) through October 31, 2017 and for the period from November 1, 2017 through April 6, 2018, respectively. Effective April 6, 2018, FS Investments agreed to assume all of the Fund’s prior and future offering costs and will not seek reimbursement of such costs.

The following table describes the fees and expenses accrued under the Investment Advisory Agreement and the Administration Agreement during the year ended October 31, 2018:

Related Party

Source Agreement

Description

Amount

FS Credit Income Advisor

Investment Advisory Agreement

Management Fee(1)

1,007

FS Credit Income Advisor

Administration Agreement

Administrative Services Expenses(2)

190

(1)

During the year ended October 31, 2018, $533 in management fees were paid to FS Credit Income Advisor. As of October 31, 2018, $474 in management fees were payable to FS Credit Income Advisor.

(2)

During the year ended October 31, 2018, $167 of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Fund by FS Credit Income Advisor and the remainder related to other reimbursable expenses. The Fund paid $178 in administrative services expenses to FS Credit Income Advisor during the year ended October 31, 2018.

Capital Contributions by FS Investments and GoldenTree

In June 2017, pursuant to a private placement, Michael C. Forman, a principal of FS Credit Income Advisor, contributed $100 to purchase approximately 8,000 Class I common shares at $12.50 per share (“Seed Investment”).

In November 2017, FS Investments, GoldenTree and their affiliates collectively purchased $19,900 of Class I Shares and in June 2018, FS Investments purchased $17,283 of Class I Shares. As of December 12, 2018, the Board, individuals and entities affiliated with FS Credit Income Advisor and GoldenTree held approximately $66 million of Class I Shares. FS Investments, GoldenTree, and their respective employees, partners, officers and affiliates may own a significant percentage of the Fund’s outstanding shares for the foreseeable future. This ownership will fluctuate as other investors subscribe for shares in the Fund’s continuous public offering and any other offerings the Fund may determine to conduct in the future, and as the Fund repurchases shares pursuant to its quarterly repurchase offers. Depending on the size of this ownership at any given point in time, it is expected that these affiliates will, for the foreseeable future, either control the Fund or be in a position to exercise a significant influence on the outcome of any matter put to a vote of shareholders.

Expense Limitation Agreement

Pursuant to the expense limitation agreement (the “2017 Expense Limitation Agreement”), dated as of September 18, 2017, by and between FS Credit Income Advisor and the Fund, FS Credit Income Advisor agreed to pay or waive, on a quarterly basis, the “ordinary operating expenses” (as defined below) of the Fund to the extent that such expenses exceed 0.00% per annum of the Fund’s average daily net assets attributable to the applicable class of shares for the twelve months beginning October 3, 2017, the date of

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (continued)

effectiveness of the Fund’s initial registration statement on Form N-2. The 2017 Expense Limitation Agreement remained in effect until April 5, 2018. For the purpose of the 2017 Expense Limitation Agreement, “ordinary operating expenses” for a class of shares consist of all ordinary expenses of the Fund attributable to such class, including administration fees, transfer agent fees, organization and offering expenses, fees paid to the Fund’s trustees, administrative services expenses, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) investment advisory fees, (b) portfolio transaction and other investment-related costs (including brokerage commissions, dealer and underwriter spreads, commitment fees on leverage facilities, prime broker fees and expenses, and dividend expenses related to short sales), (c) interest expense and other financing costs, (d) taxes, (e) distribution or shareholder servicing fees and (f) extraordinary expenses.

On April 6, 2018, FS Credit Income Advisor and the Fund amended and restated the 2017 Expense Limitation Agreement (as so amended and restated, the “New Expense Limitation Agreement”) under which FS Credit Income Advisor agreed to pay or waive, on a quarterly basis, the “ordinary operating expenses” (as defined below) of the Fund to the extent that such expenses exceed 0.25% per annum of the Fund’s average daily net assets attributable to the applicable class of Shares (the “Expense Limitation”). The Expense Limitation may be adjusted for other classes of shares to account for class-specific expenses. In consideration of FS Credit Income Advisor’s agreement to limit the Fund’s expenses, the Fund has agreed to repay FS Credit Income Advisor in the amount of any Fund expenses paid or waived, subject to the limitations that: (1) the reimbursement for expenses will be made only if payable not more than three years following the time such payment or waiver was made; and (2) the reimbursement may not be made if it would cause the Fund’s then-current expense limitation, if any, and the expense limitation that was in effect at the time when FS Credit Income Advisor waived or reimbursed the ordinary operating expenses that are the subject of the repayment, to be exceeded. The New Expense Limitation Agreement will continue indefinitely until terminated by the Board on written notice to FS Credit Income Advisor. The New Expense Limitation Agreement may not be terminated by FS Credit Income Advisor. For the purposes of the New Expense Limitation Agreement, “ordinary operating expenses” for a class of shares shall consist of all ordinary expenses of the Fund attributable to such class, including administration fees, transfer agent fees, fees paid to the Fund’s trustees, legal expenses relating to the Fund’s registration statements (and any amendments or supplements thereto) and other filings with the SEC (whether incurred by counsel to the Fund, FS Credit Income Advisor or the GoldenTree Sub-Advisor), administrative services expenses, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) investment advisory fees, (b) portfolio transaction and other investment-related costs (including brokerage commissions, dealer and underwriter spreads, commitment fees on leverage facilities, prime broker fees and expenses and dividend expenses related to short sales); (c) interest expense and other financing costs, (d) taxes, (e) distribution or shareholder servicing fees and (f) extraordinary expenses.

The specific amount of expenses waivable and/or payable by FS Credit Income Advisor pursuant to the New Expense Limitation Agreement, if any, is determined at the end of each fiscal quarter. The conditional obligation of the Fund to reimburse FS Credit Income Advisor pursuant to the terms of the New Expense Limitation Agreement shall survive the termination of such agreement for any reason.

During the year ended October 31, 2018, the Fund accrued $698 of expense reimbursements from the adviser that FS Investments has agreed to pay, $230 of which pertained to the New Expense Limitation Agreement and $468 of which pertained to the 2017 Expense Limitation Agreement. Such amounts may be subject to conditional reimbursement as described above.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 5. Distributions

During the year ended October 31, 2018, the Fund declared and paid gross distributions in the amount of $0.5625 (as adjusted for the applicable share class expenses) per share in the total amount of $3,105. The timing and amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion of the Board.

Shareholders automatically participate in the Fund’s DRP, unless and until an election is made to withdraw from the plan on behalf of such participating shareholder. Under the DRP, the Fund’s cash distributions to shareholders are reinvested in full and fractional shares of the same class of shares of the Fund. To the extent that shareholders reinvest their cash distributions, the Fund will use the proceeds to purchase additional common shares of the Fund. As such, a portion of the cash distributions paid by the Fund may be reinvested in additional common shares of the Fund.

The following table reflects the sources of the cash distributions on a tax basis that the Fund paid on its common shares during the year ended October 31, 2018:

Source of Distribution	Distribution Amount			Percentage
Net investment income(1)		$	2,793		100%
Short-term capital gains proceeds from the sale of assets			312		—
Return of capital			—		—
Total		$	3,105		100%

(1)

The Fund’s net investment income on a tax basis for the year ended October 31, 2018 was $2,793. The determination of the tax attributes of the Fund’s distributions is made annually as of the end of the calendar year and based upon the Fund’s taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of the Fund’s distributions for a full year. The actual tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV.

The Fund may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences. During the year ended October 31, 2018, the Fund increased accumulated earnings (deficit) by $4 and decreased capital in excess of par value by $4. This reclassification has no impact on the net assets of the Fund.

As of October 31, 2018, the components of accumulated earnings (loss) on a tax basis were as follows:

Distributable ordinary income	$	(306)
Distributable long-term capital gains		20
Net unrealized appreciation (depreciation) of investments and derivatives		(177)
Total	$	149

The aggregate cost of the Fund’s investments for U.S. federal income tax purposes totaled $121,009 as of October 31, 2018. Aggregate net unrealized appreciation (depreciation), on a tax basis was $(205), which was comprised of gross unrealized appreciation of $2,606 and gross unrealized depreciation of $2,811, as of October 31, 2018.

Note 6. Financial Instruments

The Fund may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include forward foreign currency exchange contracts, futures contracts, swap contracts and written options, among others, and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered.

The Fund is subject to foreign currency exchange rate risk and interest rate risk in the normal course of pursuing its investment objectives. The Fund may enter into cross-currency swaps and forward foreign currency exchange contracts to gain or reduce exposure to foreign currencies and interest rate futures and/or swaps to gain or reduce exposure to fluctuations in interest rates.

Cross-currency swaps are contracts in which interest cash flows are exchanged between two parties based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the inception of the trade. Cross-currency swaps involve an agreement to exchange notional amounts at a later date at either the same exchange rate, a specified rate or the then-current spot rate. Periodic payments are made between the parties based on benchmark rates plus a spread, if applicable, in the two currencies.

Each cross-currency swap is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the statement of assets and liabilities. When a swap is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of cross-currency swaps contains the risk that the value of a cross-currency swap changes unfavorably due to movements in the value of the referenced foreign currencies, as well as the risk that the counterparty to the swap will default on its contractual delivery obligations.

An interest rate swap contract is an exchange of interest rates between counterparties. An interest rate swap generally involves one party making payments based on a fixed interest rate in return for payments from a counterparty based on a variable or floating interest rate. The Fund may enter into either side of such a swap contract. Interest rate swaps may be used to adjust the Fund’s sensitivity to interest rates or to hedge against changes in interest rates.

Each interest rate swap is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the statement of assets and liabilities. When a swap is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of interest rate swaps contains the risk that the value of an interest rate swap changes unfavorably due to movements in interest rates, as well as the risk that the counterparty to the swap will default on its contractual delivery obligations. Counterparty risk is mitigated for cleared swaps by trading these instruments through a central counterparty.

Total return swaps are entered into to obtain exposure to a security or market without owning such security or investing directly in such market or to exchange the risk/return of one market with another market. Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (distributions plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. If the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting fixed or floating interest rate obligation, the Fund receives payment from or makes a payment to the counterparty.

Each total return swap is marked semi-monthly and the change in market value is recorded as unrealized appreciation (depreciation) in the statement of assets and liabilities. When a swap is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of total return swaps contains the risk that the underlying security defaults (credit risk).

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

An interest rate futures contract is an agreement between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. The Fund may invest in interest rate futures contracts to hedge the Fund’s existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions; as a cash management tool; to hedge interest rate risks associated with the Fund’s investments; to facilitate investments in portfolio securities; and to reduce cost. In addition, the Fund may take long or short positions in futures to seek to stabilize overall portfolio volatility and to hedge overall market risk.

Upon entering into an interest rate futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Cash deposited as initial margin receivable is shown as collateral held at broker in the statement of assets and liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as receivable (or payable) for variation margin on open futures in the statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Risks of entering into interest rate futures contracts include interest rate risk and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is reduced counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default.

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. These contracts help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated and, in some cases, may be used to obtain exposure to a particular market.

Each forward foreign currency exchange contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the statement of assets and liabilities. When a contract is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts contains the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies, and the risk that counterparties are unable to fulfill their obligations under the contracts. The fund mitigates its counterparty risk by entering into forward currency contracts only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its counterparties, and requiring its counterparties to transfer collateral as security for their performance.

The fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into credit default swap contracts to manage its credit risk, to gain exposure to a credit in which it may otherwise invest or to enhance its returns. The Fund may also purchase and write call and put contracts in an effort to manage risk and/or generate gains from options premiums.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

The fair value of open derivative instruments (which are not considered to be hedging instruments for accounting disclosure purposes) by risk exposure as of October 31, 2018 is as follows:

	Fair Value
	Asset Derivative			Liability Derivative
Foreign Currency Risk
Forward foreign currency exchange contracts		$	665(1)		$	395(2)
Cross-currency swaps		$	447(3)			—
Interest Rate Risk
Interest rate futures		$	62(4)			—
Interest rate swaps		$	97(3)		$	10(5)
Credit Risk
Total return debt swaps		$	9(3)		$	25(5)

The Fund’s derivative assets and liabilities at fair value by risk, presented in the table above, are reported on a gross basis on the Fund’s statement of assets and liabilities and located as follows:

(1)

Unrealized appreciation on forward foreign currency exchange contracts.

(2)

Unrealized depreciation on forward foreign currency exchange contracts.

(3)

Unrealized appreciation on swap contracts.

(4)

Receivable for variation margin on open futures.

(5)

Unrealized depreciation on swap contracts.

The following tables present the Fund’s derivative assets and liabilities by counterparty, net of amounts available for offset under a master netting agreement and net of the related collateral received by the Fund for assets or pledged by the Fund for liabilities as of October 31, 2018:

Counterparty	Derivative Assets Subject to Master Netting Agreement			Derivatives Available for Offset			Non-cash Collateral Received(1)		Cash Collateral Received(1)		Net Amount of Derivative Assets(2)
Bank of America, N.A.		$	9		$	9		—		—			—
BNP Paribas Securities Co.		$	28			—		—		—		$	28
JPMorgan Chase Bank, N.A.		$	944		$	404		—		—		$	540
State Street Bank and Trust Company		$	237		$	1		—		—		$	236

Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset			Non-cash Collateral Pledged(1)		Cash Collateral Pledged(1)			Net Amount of Derivative Liabilities(3)
Bank of America, N.A.		$	25		$	9		—		$	16		—
BNP Paribas Securities Co.			—			—		—			—		—
JPMorgan Chase Bank, N.A.		$	404		$	404		—			—		—
State Street Bank and Trust Company		$	1		$	1		—			—		—

(1)

In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.

(2)

Net amount of derivative assets represents the net amount due from the counterparty to the Fund in the event of default.

(3)

Net amount of derivative liabilities represents the net amount due from the Fund to the counterparty in the event of default.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

The effect of derivative instruments (which are not considered to be hedging instruments for accounting disclosure purposes) on the Fund’s statement of operations by risk exposure for the year ended October 31, 2018 was as follows:

	Realized Gain (Loss) on Derivatives Recognized in Income			Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income
Foreign Currency Risk
Forward foreign currency exchange contracts		$	(12)(1)		$	270(2)
Cross-currency swaps		$	138(3)		$	447(4)
Interest Rate Risk
Interest rate futures		$	(47)(5)		$	62(6)
Interest rate swaps		$	(2)(3)		$	87(4)
Credit Risk
Total return debt swaps		$	76(3)		$	(16)(4)

The Fund’s derivative instruments at fair value by risk, presented in the table above, are reported on the Fund’s statement of operations and located as follows:

(1)

Net realized gain (loss) on forward foreign currency exchange contracts.

(2)

Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts.

(3)

Net realized gain (loss) on swap contracts.

(4)

Net change in unrealized appreciation (depreciation) on swap contracts.

(5)

Net realized gain (loss) on futures contracts.

(6)

Net change in unrealized appreciation (depreciation) on futures contracts.

The average notional amounts of forward foreign currency exchange contracts, futures contracts, cross-currency swaps, interest rate swaps and total return debt swaps outstanding during the year ended October 31, 2018, which are indicative of the volumes of these derivative types, were $14,717, $1,584, $4,865, $2,126 and $2,580, respectively.

Note 7. Investment Portfolio

The following table summarizes the composition of the Fund’s investment portfolio at cost and fair value as of October 31, 2018:

	Amortized Cost(1)			Fair Value			Percentage of Portfolio
Senior Secured Loans—First Lien		$	14,686		$	14,615		12%
Senior Secured Loans—Second Lien			4,624			4,635		4%
Senior Secured Bonds			23,194			22,876		19%
Unsecured Bonds			47,593			48,056		40%
CLO/Structured Credit			27,020			26,750		22%
Emerging Markets Debt			3,310			2,775		3%
Preferred Stock			194			195		0%
Common Stock			380			340		0%
Total Investments		$	121,001		$	120,242		100%
Investments Sold Short		$	(1,047)		$	(1,019)

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 7. Investment Portfolio (continued)

(1)

Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

In general, under the 1940 Act, the Fund would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of its voting securities.

As of October 31, 2018, the Fund did not “control” any of its portfolio companies and was not an “affiliated person” of any of its portfolio companies, each as defined in the 1940 Act.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of October 31, 2018:

Industry Classification	Fair Value			Percentage of Portfolio
USD CLO		$	13,298		11%
EUR CLO			12,664		11%
Municipal			9,475		8%
Media Entertainment			7,938		7%
Oil & Gas			7,348		6%
Chemicals			5,808		5%
Telecommunications			4,909		4%
Commercial Banks			4,525		4%
Oil & Gas Services			4,508		4%
Pharmaceuticals			3,682		3%
Internet			2,984		2%
Independent Oil & Gas			2,817		2%
Healthcare			2,685		2%
Other Financial			2,594		2%
Mining			2,348		2%
Healthcare-Services			2,126		2%
Transportation			2,120		2%
Retailers			1,807		2%
Healthcare-Products			1,510		1%
Technology			1,488		1%
Commercial Services			1,473		1%
Aerospace/Defense			1,463		1%
Pipelines			1,433		1%
Coal			1,394		1%
Retail			1,187		1%
Consumer Cyclical Services			1,137		1%
Leisure			1,126		1%
Software			1,112		1%
Home Builders			1,052		1%
Insurance			1,012		1%
Wirelines			971		1%
Metals and Mining			932		1%

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 7. Investment Portfolio (continued)

Industry Classification	Fair Value			Percentage of Portfolio
Household Products			816		1%
USD CDO			788		1%
Oil Field Services			777		1%
Property & Casualty Insurance			775		1%
Auto Manufacturers			714		1%
Provincial			673		1%
IT Services			598		1%
Food			482		0%
Energy-Alternate Sources			368		0%
Distribution/Wholesale			342		0%
Other Industrial			292		0%
Investment Company Security			277		0%
Lodging			277		0%
Electrical Compo & Equipment			276		0%
Hand/Machine Tools			276		0%
Diversified Financial Services			238		0%
Electric			235		0%
Holding Companies-Diversified			209		0%
Packaging & Containers			202		0%
Healthcare-Software			195		0%
Life Insurance			193		0%
Machinery-Diversified			193		0%
Engineering & Construction			120		0%
		$	120,242		100%

Purchases and sales of securities during the year ended October 31, 2018, other than short-term securities and U.S. government obligations, were $186,902 and $66,560, respectively.

Note 8. Fair Value of Financial Instruments

Under existing accounting guidance, fair value is defined as the price that the Fund would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Fund. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Fund classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs that are quoted prices for similar assets or liabilities in active markets.

Level 3: Inputs that are unobservable for an asset or liability.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of October 31, 2018, the Fund’s investments and derivatives were categorized as follows in the fair value hierarchy:

Asset Description	Level 1			Level 2			Level 3			Total
Senior Secured Loans—First Lien		$	—		$	14,615		$	—		$	14,615
Senior Secured Loans—Second Lien			—			2,754			1,881			4,635
Senior Secured Bonds			—			22,876			—			22,876
Unsecured Bonds			—			47,193			863			48,056
CLO/Structured Credit			—			26,240			510			26,750
Emerging Markets Debt			—			2,775			—			2,775
Preferred Stock			—			—			195			195
Common Stock			340			—			—			340
Total Investments			340			116,453			3,449			120,242
Forward Foreign Currency Exchange Contracts			—			665			—			665
Interest Rate Futures			62			—			—			62
Cross-Currency Swaps			—			447			—			447
Interest Rate Swaps			—			97			—			97
Total Return Debt Swaps			—			—			9			9
Total		$	402		$	117,662		$	3,458		$	121,522

Liability Description	Level 1		Level 2			Level 3			Total
Investments Sold Short		—		$	(1,019)		$	—		$	(1,019)
Forward Foreign Currency Exchange Contracts		—			(395)			—			(395)
Cross-Currency Swaps		—			—			—			—
Interest Rate Swaps		—			(10)			—			(10)
Total Return Debt Swaps		—			—			(25)			(25)
Total		—		$	(1,424)		$	(25)		$	(1,449)

The Fund’s investments consist primarily of debt securities that are traded on a private over-the-counter market for institutional investors. Except as described below, the Fund values its investments daily by using the midpoint of the prevailing bid and ask prices from dealers, which are provided by an independent third-party pricing service approved by the Board and screened for validity by such service. Investments and futures that are traded on an active public market are valued daily at their closing price. Forward foreign currency exchange contracts and swaps are valued at their quoted daily prices obtained from an independent third party. Debt investments where prices from dealers are not available are valued using broker quotes. Debt investments for which broker quotes are not available would be valued by an independent third-party valuation firm approved by the Board, which determines the fair value of such investments by considering, among other factors, the borrower’s ability to adequately service its debt, prevailing interest rates for like investments, expected cash flows, call features, anticipated prepayments and other relevant terms of the investments. Except as described above, the Fund’s preferred stock investment is also valued by the same independent valuation firm, which determines the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value.

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

The Fund periodically benchmarks the bid and ask prices it receives from the independent third-party pricing service and/or dealers, as applicable, against the actual prices at which it purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Fund’s management in purchasing and selling these investments in other investment funds managed by the sponsor, the Fund believes that these prices are reliable indicators of fair value. The Fund may also use other methods, including the use of an independent third-party valuation service approved by the Board, to determine fair value for securities for which it cannot obtain prevailing bid and ask prices through independent third-party pricing services or independent dealers, or where the Board otherwise determines that the use of such other methods is appropriate. The Fund will periodically benchmark the valuations provided by the independent third-party valuation service against the actual prices at which the Fund purchases and sells its investments. The Fund’s audit committee and Board reviewed the valuation determinations made with respect to these investments and determined that they were made in a manner consistent with the Fund’s valuation policy.

The following is a reconciliation for the year ended October 31, 2018 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

	Senior Secured Loans— Second Lien			Unsecured Bonds			Collateralized Loan Obligation (CLO)/ Structured Credit			Preferred Stock			Total
Fair value at beginning of period		$	—		$	—		$	—		$	—		$	—
Accretion of discount (amortization of premium)			4			—			—			—			4
Realized gain (loss)			—			—			—			—			—
Net change in unrealized appreciation (depreciation)			(4)			62			2			1			61
Purchases			1,881			801			508			194			3,384
Sales			—			—			—			—			—
Net transfers in or out of Level 3			—			—			—			—			—
Fair value at end of period		$	1,881		$	863		$	510		$	195		$	3,449
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date		$	(4)		$	62		$	2		$	1		$	61

The following is a reconciliation for the year ended October 31, 2018 of the total return debt swaps for for which significant unobservable inputs (Level 3) were used in determining the fair value:

Fair value at beginning of period	$	—
Accretion of discount (amortization of premium)		—
Net realized gain (loss)		76
Net change in unrealized appreciation (depreciation)		(16)
Sales and repayments		(76)
Net transfers in or out of Level 3		—
Fair value at end of period	$	(16)
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to the total return debt swaps still held at the reporting date	$	(16)

TABLE OF CONTENTS

FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of October 31, 2018 are as follows:

Type of Investment

Fair Value at
October 31, 2018

Valuation
Technique(1)

Unobservable
Input

Range

Weighted
Average

Senior Secured Loans—Second Lien

1,881

Market Quotes

Indicative Dealer Quotes

99.0% – 99.0%

99.0%

Unsecured Bonds

863

Market Quotes

Indicative Dealer Quotes

105.8% – 106.5%

106.1%

CLO/Structured Credit

510

Market Quotes

Indicative Dealer Quotes

100.0% – 100.0%

100.0%

Preferred Stock

195

Market Comparables

EBITDA Multiples (x)

Market Yield (%)

10.5x–12.5x

12.8%–13.2%

11.5x

13.0%

Total

3,449

Total Return Debt Swaps

(16)

Market Comparables

Market Yield (%)

4.1%–5.2%

4.6%

(1)

Investments using a market quotes valuation technique were valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service. For investments using a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement.

Note 9. Financing Arrangement

The following table presents summary information with respect to the Fund’s outstanding financing arrangement as of October 31, 2018:

Arrangement

Type of Arrangement

Rate

Amount
Outstanding

Amount
Available

Maturity Date

BNP Facility

Revolving Prime Brokerage

L+1.00%

10,175

32,407

April 28, 2019(1)

(1)

As described below, the BNP Facility generally is terminable upon 179 days’ notice by either party. As of October 31, 2018, neither the Fund nor BNP Paribas had provided notice of its intent to terminate the facility.

BNP Facility

On October 25, 2017, and effective November 1, 2017, the Fund entered into a committed facility arrangement (the “BNP Facility”) with BNP Paribas Prime Brokerage International, Ltd. (together with its affiliates “BNP Paribas”). The BNP Facility provides for borrowings on a committed basis up to a maximum amount equal to the average outstanding balance over the past ten business days or, if fewer, the number of business days since closing. The Fund may also borrow additional amounts on an uncommitted basis, at the discretion of BNP Paribas, to the extent the pledged collateral provides sufficient coverage for such additional borrowings. Borrowings are available in U.S. Dollars (“USD”), Canadian Dollars (“CAD”), Euro (“EUR”), British Pounds (“GBP”), Swiss Francs (“CHF”), Australian Dollars (“AUD”), Japanese Yen (“JPY”), Swedish Kronor (“SEK”), and Danish Kroner (“DKK”). Borrowings under the BNP Facility accrue interest at a rate equal to the London Interbank Offered Rate (“LIBOR”) for a one-month interest period plus 1.00% per annum on USD borrowings, the Canadian Dollar Offered Rate (“CDOR”) for a one-month interest period plus 1.00% per annum on CAD borrowings, the British Pound Sterling London Interbank Offered Rate (“GBP LIBOR”) for a one-month interest period plus 1.00% per annum on GBP borrowings, the Swiss Franc London Interbank Offered Rate (“CHF LIBOR”) for a one-month interest period plus 1.00% per annum on CHF borrowings, the Bank Bill Swap Reference Rate (“BBSW”) for a one-month interest period plus 1.00% per annum on AUD borrowings, the Japanese Yen

TABLE OF CONTENTS

FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 9. Financing Arrangement (continued)

London Interbank Offered Rate (“JPY LIBOR”) for a one-month interest period plus 1.00% per annum on JPY borrowings, the Stockholm Interbank Offered Rate (“STIBOR”) for a one-month interest period plus 1.00% per annum on SEK borrowings, or the Copenhagen Interbank Offered Rate (“CIBOR”) for a one-month interest period plus 1.00% per annum on DKK borrowings. Interest is payable monthly in arrears. The Fund may terminate the facility at any time. Absent a default or facility termination event (or the ratings decline described in the following sentence), BNP Paribas is required to provide the Fund with 179 days’ notice prior to terminating or materially amending the BNP Facility. BNP Paribas has a cancellation right if BNP Paribas’ long-term credit rating declines three or more notches below its highest rating by any of Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services or Fitch IBCA, Inc. during the term of the BNP Facility. Upon any such termination, BNP Paribas is required to pay the Fund a fee equal to 1.00% of the maximum amount of financing available on the termination date.

In connection with the BNP Facility, the Fund has made certain representations and warranties and is required to comply with various covenants and reporting requirements customary for facilities of this type. The BNP Facility agreements contain the following events of default and termination events, among others: (a) the occurrence of a default or similar condition under certain third-party contracts of the Fund; (b) any change in BNP Paribas’ interpretation of applicable law that, in the reasonable opinion of counsel to BNP Paribas, has the effect of impeding or prohibiting the BNP Facility; (c) certain events of insolvency or bankruptcy by the Fund; (d) specified material reductions in the Fund’s NAV; (e) any change in the Fund’s fundamental or material investment policies; and (f) the termination of the Investment Advisory Agreement or if FS Credit Income Advisor otherwise ceases to act as the Fund’s investment adviser and is not immediately replaced by an affiliate or other investment adviser acceptable to BNP Paribas.

The carrying amount outstanding under the BNP Facility approximates its fair value. For the year ended October 31, 2018, the total interest expense for the BNP Facility was $101.

For the year ended October 31, 2018, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the BNP Facility were as follows:

Cash paid for interest expense(1)	$	101
Average borrowings(2)	$	3,551
Effective interest rate on borrowings		3.31%
Weighted average interest rate		3.14%

(1)

Interest under the BNP Facility is payable quarterly in arrears.

(2)

Average borrowings are calculated for the period since the Fund commenced borrowings thereunder to October 31, 2018.

Under the terms of the BNP Facility, BNP Paribas has the ability to borrow a portion of the pledged collateral (collectively, “the rehypothecated securities”), subject to certain limits, in exchange for paying to the Fund a fee equal to 70% of the difference between the fair market rate (as determined by BNP Paribas) and the overnight Fed Funds rate. The Fund may, in its sole discretion for any valid business reason, designate any security within the pledged collateral as ineligible to be a rehypothecated security, provided there remain securities eligible to be rehypothecated within the segregated custody account in an amount equal to the outstanding borrowings owed by the Fund to BNP Paribas. The Fund may recall any rehypothecated security at any time and BNP Paribas must return such security or an equivalent security within a commercially reasonable period. In the event BNP Paribas does not return the security, the Fund will have the right to, among other things, apply and set off an amount equal to 100% of the then-current fair market value of such rehypothecated securities against any outstanding borrowings owed to BNP Paribas under the facility. Rehypothecated securities are marked-to-market daily and if the value of all rehypothecated securities exceeds 100% of the outstanding borrowings owed by the Fund under the BNP

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 9. Financing Arrangement (continued)

Facility, BNP Paribas may either reduce the amount of rehypothecated securities to eliminate such excess or deposit into the segregated custody account an amount of cash equal to such excess. The Fund will continue to receive interest and the scheduled repayment of principal balances on rehypothecated securities. For the year ended October 31, 2018, the Fund did not receive any fees from BNP Paribas for securities that had been rehypothecated pursuant to the BNP Facility. As of October 31, 2018, there were no securities rehypothecated by BNP Paribas.

Note 10. Concentration of Risk

Investing in the Fund involves risks, including, but not limited to, those set forth below. The risks described below are not, and are not intended to be, a complete enumeration or explanation of the risks involved in an investment in the Fund. For a more complete discussion of the risks of investing in the Fund, see the section entitled “Types of Investments and Related Risks” in the Fund’s prospectus and the Fund’s other filings with the SEC.

Credit Risk: The Fund’s debt investments are subject to the risk of non-payment of scheduled interest or principal by the borrowers with respect to such investments. Such non-payment would likely result in a reduction of income to the Fund and a reduction in the value of the debt investments experiencing non-payment.

Although the Fund may invest in investments that FS Credit Income Advisor and GoldenTree believe are secured by specific collateral, the value of which may exceed the principal amount of the investments at the time of initial investment, there can be no assurance that the liquidation of any such collateral would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal payments with respect to such investment, or that such collateral could be readily liquidated. In addition, in the event of bankruptcy of a borrower, the Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing an investment. Under certain circumstances, collateral securing an investment may be released without the consent of the Fund. Moreover, the Fund’s investments in secured debt may be unperfected for a variety of reasons, including the failure to make required filings by lenders, trustees or other responsible parties and, as a result, the Fund may not have priority over other creditors as anticipated. The Fund’s right to payment and its security interest, if any, may be subordinated to the payment rights and security interests of more senior creditors. Certain of these investments may have an interest-only payment schedule, with the principal amount remaining outstanding and at risk until the maturity of the investment. In this case, a portfolio company’s ability to repay the principal of an investment may be dependent upon a liquidity event or the long-term success of the company, the occurrence of which is uncertain.

Companies in which the Fund invests could deteriorate as a result of, among other factors, an adverse development in their business, a change in the competitive environment or an economic downturn. As a result, companies that the Fund expected to be stable may operate, or expect to operate, at a loss or have significant variations in operating results, may require substantial additional capital to support their operations or maintain their competitive position, or may otherwise have a weak financial condition or be experiencing financial distress.

Non-U.S. Securities Risk: Investments in certain securities and other instruments of non-U.S. issuers or borrowers (“non-U.S. securities”), involve factors not typically associated with investing in the United States or other developed countries, including, but not limited to, risks relating to: (i) differences between U.S. and non-U.S. securities markets, including potential price volatility in and relative illiquidity of some non-U.S. securities markets; the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements; and less government supervision and regulation; (ii) other differences in law and regulation, including fewer investor protections, less stringent fiduciary duties, less developed

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FS Credit Income Fund

Notes to Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 10. Concentration of Risk (continued)

bankruptcy laws and difficulty in enforcing contractual obligations; (iii) certain economic and political risks, including potential economic, political or social instability; exchange control regulations; restrictions on foreign investment and repatriation of capital, possibly requiring government approval; expropriation or confiscatory taxation; other government restrictions by the United States or other governments; higher rates of inflation; higher transaction costs; and reliance on a more limited number of commodity inputs, service providers and/or distribution mechanisms; and (iv) the possible imposition of local taxes on income and gains recognized with respect to securities and assets. Certain non-U.S. markets may rely heavily on particular industries or non-U.S. capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against non-U.S. countries, organizations, entities and/or individuals may adversely affect the Fund’s non-U.S. holdings or exposures. Certain non-U.S. investments may become less liquid in response to social, political or market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain non-U.S. investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value, especially in changing markets. The risks of investments in emerging markets, including the risks described above, are usually greater than the risks involved in investing in more developed markets. Because non-U.S. securities may trade on days when the Fund’s common shares are not priced, NAV may change at times when common shares cannot be sold.

Foreign Currency Risk: Investments made by the Fund, and the income received by the Fund with respect to such investments, may be denominated in various non-U.S. currencies. However, the books of the Fund are maintained in U.S. dollars. Accordingly, changes in currency values may adversely affect the U.S. dollar value of portfolio investments, interest and other revenue streams received by the Fund, gains and losses realized on the sale of portfolio investments and the amount of distributions, if any, made by the Fund. In addition, the Fund may incur substantial costs in converting investment proceeds from one currency to another. The Fund may enter into derivative transactions designed to reduce such currency risks. Furthermore, the portfolio companies in which the Fund invests may be subject to risks relating to changes in currency values. If a portfolio company suffers adverse consequences as a result of such changes, the Fund may also be adversely affected as a result.

Note 11. Commitments and Contingencies

The Fund enters into contracts that contain a variety of indemnification provisions. The Fund’s maximum exposure under these arrangements is unknown; however, the Fund has not had prior claims or losses pursuant to these contracts. Management of FS Credit Income Advisor has reviewed the Fund’s existing contracts and expects the risk of loss to the Fund to be remote.

The Fund is not currently subject to any material legal proceedings and, to the Fund’s knowledge, no material legal proceedings are threatened against the Fund. From time to time, the Fund may be a party to certain legal proceedings in the ordinary course of business, including proceedings related to the enforcement of the Fund’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, to the extent the Fund becomes party to such proceedings, the Fund would assess whether any such proceedings will have a material adverse effect upon its financial condition or results of operations.

See Note 4 for a discussion of the Fund’s commitments to FS Credit Income Advisor, GoldenTree and their respective affiliates (including FS Investments).

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Supplemental Information (Unaudited)

Changes in Accountants and Disagreements with Accountants on Accounting and Financial Disclosure

The Fund has not had any changes in its independent registered public accounting firm or disagreements with its independent registered public accounting firm on accounting or financial disclosure matters since its inception.

Board of Trustees

Information regarding the members of the Board is set forth below. The trustees have been divided into two groups—interested trustees and independent trustees. The address for each trustee is c/o FS Credit Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112. As set forth in the Fund’s amended and restated declaration of trust, each trustee’s term of office shall continue until his or her death, resignation or removal.

Name

Age

Trustee Since

Title

Principal
Occupation(s)
During the Past
Five Years

Number of
Registered
Investment
Companies
in Fund
Complex*
Overseen
byTrustee

Other Directorships
Held by Trustee

Interested Trustees

Michael C. Forman(1)

October 2016

Chairman

Chairman and Chief Executive Officer of FS Investments

FS Series Trust (since 2016); FS Energy Total Return Fund (since 2016); FS Credit Real Estate Income Trust, Inc. (since 2016); FS Investment Corporation IV (since 2015); FS Global Credit Opportunities Fund (since 2013 and including its affiliated feeder funds); FS Investment Corporation III (since 2013); FS Investment Corporation II (since 2011); FS Energy and Power Fund (since 2010); and FS KKR Capital Corp. (formerly FS Investment Corporation) (since 2007)

Steven Shapiro(2)

September 2017

Trustee

Partner and Executive Committee Member of GoldenTree Asset Management

None

Independent Trustees

Holly E. Flanagan

September 2017

Trustee

Managing Director of Gabriel Investments (since 2013)

FS Multi-Alternative Income Fund (since 2018); FS Energy Total Return Fund (since 2017)

Brian R. Ford

September 2017

Trustee

Partner of Ernst & Young LLP (1971–2008)

FS KKR Capital Corp. (since 2018); FS Investment Corporation II (since 2018); FS Investment Corporation IV (since 2018); FS Multi-Alternative Income Fund (since 2018); FS Energy Total Return Fund (since 2016); FS Investment

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Name

Age

Trustee Since

Title

Principal
Occupation(s)
During the Past
Five Years

Number of
Registered
Investment
Companies
in Fund
Complex*
Overseen
byTrustee

Other Directorships
Held by Trustee

Corporation III (since 2013); Clearway Energy Inc. (formerly NRG Yield, Inc.) (since 2013); and AmeriGas Propane, Inc. (since 2013)

Joseph P. Ujobai

September 2017

Trustee

Executive Vice President of SEI Investments Company (since 2003); Chief Executive Officer and Managing Director of SEI Investments (Europe) Limited (since 2000)

FS Multi-Alternative Income Fund (since 2018); FS Energy Total Return Fund (since 2016); FS KKR Capital Corp. (formerly FS Investment Corporation) (since 2015)

The “Fund Complex” consists of the Fund, FS Series Trust, FS Energy Total Return Fund, FS Multi-Alternative Income Fund and FS Global Credit Opportunities Fund (and its affiliated feeder funds).

(1)

Mr. Forman is deemed to be an “interested person” of the Fund, as defined in Section 2(a)(19) of the 1940 Act, due to his role as a controlling person of FS Credit Income Advisor.

(2)

Mr. Shapiro is deemed to be an “interested person” of the Fund, as defined in Section 2(a)(19) of the 1940 Act, due to his role as a partner and executive committee member of the parent company to GoldenTree Asset Management Credit Advisor LLC, the investment sub-adviser to the Fund.

Executive Officers

Information regarding the executive officers of the Fund is set forth below. The address for each executive officer is c/o FS Credit Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112.

Name

Age

Position Held with Registrant

Length of
Time Served

Principal Occupation(s)
During the Past Five Years

Michael C. Forman

Chief Executive Officer & President

Since 2016

Chairman and Chief Executive Officer, FS Investments

Edward T. Gallivan, Jr.

Chief Financial Officer

Since 2017

Chief Financial Officer, FS Energy and Power Fund, FS Multi-Alternative Income Fund, FS Energy Total Return Fund, FS Global Credit Opportunities Fund and its affiliated feeder funds, FS Credit Real Estate Income Trust, Inc.

Stephen S. Sypherd

Vice President, Treasurer & Secretary

Since 2016

General Counsel, FS Investments

James F. Volk

Chief Compliance Officer

Since 2016

Senior Vice President of Fund Compliance, FS Investments; and Chief Compliance Officer, Chief Accounting Officer and Head of Traditional Fund Operations at SEI’s Investment Manager Services market unit (1996–2014)

Statement of Additional Information

The Fund’s statement of additional information contains additional information regarding the Fund’s trustees and executive officers and is available upon request and without charge by calling the Fund collect at 215-495-1150 or by accessing the Fund’s “SEC Filings” page on FS Investments’ website at www.fsinvestments.com.

Form N-Q Filings

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the SEC’s website at

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http://www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room located at 100 F Street, NE, Washington, DC 20549. Shareholders may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330.

Proxy Voting Policies and Procedures

The Fund has delegated its proxy voting responsibility to FS Credit Income Advisor, the Fund’s investment adviser. In addition, FS Credit Income Advisor has delegated the responsibilities of voting and administering proxies received by the Fund to GoldenTree Asset Management Credit Advisor LLC (the “GoldenTree Sub-Adviser”), the investment sub-adviser to the Fund. Shareholders may obtain a copy of the proxy voting policies and procedures of FS Credit Income Advisor and the GoldenTree Sub-Adviser upon request and without charge by calling the Fund collect at 215-495-1150 or on the SEC’s website at http://www.sec.gov.

Proxy Voting Record

Information regarding how the GoldenTree Sub-Adviser voted proxies relating to the Fund’s portfolio securities during the most recent twelve-month period ended June 30 is available upon request and without charge by making a written request to the Fund’s Chief Compliance Officer at FS Credit Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112, Attn: Chief Compliance Officer, by calling the Fund collect at 215-495-1150 or on the SEC’s website at http://www.sec.gov.

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Item 2. Code of Ethics.

(a)

On September 17, 2018, the Fund’s board of trustees (the “Board”) adopted an amended Code of Business Conduct and Ethics (as amended, the “Code of Ethics”) that applies to all officers, trustees, directors and employees of the Fund and FS Credit Income Advisor, LLC (“FS Credit Income Advisor”), the investment adviser to the Fund, including the Fund’s principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions.

(b)

Not applicable.

(c)

On September 17, 2018, the Board approved the Code of Ethics, which was amended to clarify language and guidance related to the receipt or giving of gifts, the receipt or provision of business entertainment and certain pre-approval requirements in connection with the solicitation or giving of political contributions. A copy of the Code of Ethics is included herein as exhibit (a)(1) and also is available on the Fund’s “Corporate Governance” page of FS Investments’ website at www.fsinvestments.com.

(d)

During the period covered by the Annual Report included in Item 1 of this Form N-CSR, the Fund did not grant any waivers, explicit or implicit, from a provision of the Code of Ethics to its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The amendments reflected in the Code of Ethics and discussed above did not relate to or result in any waiver, explicit or implicit, of any provision of the Fund’s previous Code of Business Conduct and Ethics.

(e)

Not applicable.

(f)

A copy of the Code of Ethics is included herein as Exhibit (a)(1) and also is available on the Fund’s “Corporate Governance” page on FS Investments’ website at www.fsinvestments.com.

Item 3. Audit Committee Financial Expert.

(a)(1)

The Board has determined that the Fund has at least one “audit committee financial expert” serving on the audit committee of the Board (the “Audit Committee”), as such term is defined for purposes of Item 3 of Form N-CSR.

(a)(2)

The Board has determined that Brian R. Ford is an “audit committee financial expert” and is “independent,” as such terms are defined for purposes of Item 3 of Form N-CSR.

(a)(3)

Not applicable.

Item 4. Principal Accountant Fees and Services.

(a)

Audit Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2018 and 2017 for professional services rendered by Ernst & Young LLP, the Fund’s independent registered public accounting firm (“Ernst & Young”), for the audit of the Fund’s annual financial statements and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements were $75,000 and $32,500, respectively.

(b)

Audit-Related Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2018 and 2017 for assurance and related services by Ernst & Young that were reasonably related to the performance of the audit of the Fund’s financial statements and not reported in Item 4(a) above were $2,500 and $4,500, respectively. Audit-related fees for the fiscal years ended October 31, 2018 and 2017 represent fees billed for services provided in connection with consent letter procedures performed.

(c)

Tax Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2018 and 2017 for professional services rendered by Ernst & Young for tax compliance, tax advice and tax planning were $17,500 and $3,481, respectively. Tax fees for the fiscal years ended October 31, 2018 and 2017 represent fees billed for tax compliance services provided in connection with the review of the Fund’s tax returns.

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(d)

All Other Fees. No fees were billed to the Fund for the fiscal years ended October 31, 2018 and 2017 for products and services provided by Ernst & Young, other than the services reported in Items 4(a) through (c) above.

(e)

Audit Committee Pre-Approval Policies and Procedures.

(1)

The Audit Committee has adopted, and the Board has approved, a Policy on Pre-Approval of Audit and Non-Audit Services (the “Policy”), which is intended to comply with Rule 2-01 of Regulation S-X and sets forth guidelines and procedures to be followed by the Fund when retaining an auditor to perform audit, audit-related, tax and other services for the Fund. The Policy permits such services to be pre-approved by the Audit Committee pursuant to either a general pre-approval or specific pre-approval. Unless a type of service provided by the auditor has received general pre-approval, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee.

(2)

All services described in paragraphs (b) and (c) of this Item 4 were pre-approved before the engagement by the Audit Committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f)

Not applicable.

(g)

The aggregate non-audit fees billed by Ernst & Young for services rendered to the Fund, FS Credit Income Advisor and any entity controlling, controlled by or under common control with FS Credit Income Advisor that provides ongoing services to the Fund for the fiscal years ended October 31, 2018 and 2017 were $20,000 and $7,981, respectively.

(h)

Not applicable.

Item 5. Audit Committee of Listed Registrants.

(a)

Not applicable. The Fund is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b)

Not applicable. The Fund is not a listed issuer as defined in Rule 10A-3 under the Exchange Act.

Item 6. Investments.

(a)

The Fund’s schedule of investments as of October 31, 2018 is included as part of the Annual Report included in Item 1 of this Form N-CSR.

(b)

Not applicable.

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The Fund has delegated its proxy voting responsibility to FS Credit Income Advisor, pursuant to the proxy voting policies and procedures of FS Credit Income Advisor. In addition, FS Credit Income Advisor has delegated the responsibilities of voting and administering proxies received by the Fund to GoldenTree Asset Management Credit Advisor LLC (the “GoldenTree Sub-Adviser”), the investment sub-adviser to the Fund. FS Credit Income Advisor’s proxy voting policies and procedures are included herein as Exhibit (a)(5). The proxy voting policies and procedures of the GoldenTree Sub-Adviser are described below.

Proxy Policies of the GoldenTree Sub-Adviser

As an investment adviser registered under the Investment Advisers Act of 1940, as amended (the
Advisers Act”), the GoldenTree Sub-Adviser has a fiduciary duty to act in the best interests of its clients. These policies and procedures for voting proxies for the investment advisory clients of the GoldenTree Sub-Adviser are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

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The GoldenTree Sub-Adviser will vote proxies relating to the Fund’s assets that it manages in a manner that it believes to be in the best interest of the Fund’s shareholders.

The GoldenTree Sub-Adviser has engaged Institutional Shareholder Services, Inc. (“ISS”) to provide the GoldenTree Sub-Adviser with its independent analysis and recommendation with respect to proxy proposals voted on behalf of its clients. The GoldenTree Sub-Adviser utilizes ISS to assist with its proxy voting, however, the GoldenTree Sub-Adviser retains voting discretion with respect to its clients and may depart from an ISS recommendation in order to avoid voting decisions believed to be contrary to the best interests of its clients. In exercising voting discretion on behalf of its clients and in instances where the GoldenTree Sub-Adviser departs from an ISS recommendation, the GoldenTree Sub-Adviser will seek to avoid any direct or indirect conflict of interest.

Shareholders may obtain information regarding how the GoldenTree Sub-Adviser votes proxies with respect to the Fund’s portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, c/o FS Credit Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

(a)(1)

Information regarding the portfolio managers primarily responsible for the day-to-day management of the Fund’s portfolio as of the date hereof is set forth below.

Michael Kelly has served as president of FS Investments since July 2017. Mr. Kelly has also served as chief investment officer of FS Investments since January 2015. Among other things, Mr. Kelly oversees the investment management function at FS Investments. Before joining FS Investments, Mr. Kelly was the chief executive officer of ORIX USA Asset Management (“ORIX”), where he led the company’s acquisition of Robeco, a $250 billion global asset management company and the largest acquisition in ORIX’s 50-year history. Mr. Kelly started his career on Wall Street at Salomon Brothers and went on to join hedge fund pioneers Omega Advisors and Tiger Management. Mr. Kelly then helped build and lead the hedge fund firm, FrontPoint Partners, where he first served as chief investment officer and eventually co-chief executive officer. Mr. Kelly is a graduate of Cornell University and earned his M.B.A. at Stanford University. Mr. Kelly is a co-founder and board member of the Spotlight Foundation, and serves as a trustee of the Tiger Foundation and the Stanford Business School Trust.

Daniel Picard currently serves as head of product development and has been with FS Investments since June 2012. He is responsible for researching, designing and launching new alternative investment and real estate offerings. Before joining the Product Development team, Mr. Picard worked in the firm’s Product Strategy group, where he produced education, research and marketing content for financial advisors. Prior to FS Investments, Mr. Picard was a Vice President at Barclays Capital, where he worked for five years as a trader of leveraged loans and loan credit derivatives. Prior to Barclays, he spent three years at Citigroup, working first as a corporate banking analyst in Citi’s energy group in Houston and then as a fixed income analyst in Citi’s project finance group in New York. Mr. Picard graduated with honors from Trinity College where he received his BA in Economics.

Kenneth G. Miller has served in various capacities for FS Investments and its affiliated investment advisers since February 2009, including as senior vice president of portfolio management since December 2017. He currently serves as head of finance, primarily responsible for the finance function at FS Investments and is actively in the financial planning and analysis function. Prior to joining FS Investments, Mr. Miller was an analyst in the mergers and acquisitions group within Citigroup’s investment banking division. He earned a B.S. in Finance from Rutgers University and holds the CFA Institute’s Chartered Financial Analyst designation.

Grace Hutchinson is a director in investment management at FS Investments, with over seven years of middle market credit experience. Previously, she was an analyst in First Niagara Bank’s Capital Markets Group, where she executed middle market loan syndications and provided investment recommendations. Prior to that, she was an analyst at PNC Erieview Capital, a middle market sponsor-focused mezzanine firm, where she underwrote debt deals. Ms. Hutchinson earned a Bachelor of Science in Management with a concentration in Finance with minors in Accounting and Economics from Case Western Reserve University.

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(a)(2) The portfolio managers primarily responsible for the day-to-day management of the Fund also manage other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following table identifies, as of October 31, 2018: (i) the number of other registered investment companies, other pooled investment vehicles and other accounts managed by each portfolio manager; (ii) the total assets of such companies, vehicles and accounts; and (iii) the number and total assets of such companies, vehicles and accounts that are subject to an advisory fee based on performance, unless otherwise noted:

	Number of Accounts		Assets of Accounts (in thousands)			Number of Accounts Subject to a Performance Fee		Assets Subject to a Performance Fee (in thousands)
Michael Kelly
Registered Investment Companies		3		$	192,098(1)		—			—
Other Pooled Investment Vehicles		8		$	20,842,249		8		$	20,842,249
Other Accounts		—			—		—			—
Daniel Picard
Registered Investment Companies		1		$	40,664		—			—
Other Pooled Investment Vehicles		—			—		—			—
Other Accounts		—			—		—			—
Kenneth G. Miller
Registered Investment Companies		—			—		—			—
Other Pooled Investment Vehicles		—			—		—			—
Other Accounts		—			—		—			—
Grace Hutchinson
Registered Investment Companies		—			—		—			—
Other Pooled Investment Vehicles		—			—		—			—
Other Accounts		—			—		—			—

(1)

The assets for one of the accounts, FS Multi-Strategy Alternatives Fund, represents net assets as of September 30, 2018.

Potential Conflicts of Interest

FS Credit Income Advisor, GoldenTree Asset Management LP (“GoldenTree”) and certain of their affiliates may experience conflicts of interest in connection with the management of the Fund, including, but not limited to, the following:

•

The managers, officers and other personnel of FS Credit Income Advisor allocate their time, as they deem appropriate, between advising the Fund and managing and operating other investment activities and business activities in which they may be involved;

•

The personnel of GoldenTree allocate their time, as they deem appropriate, between assisting FS Credit Income Advisor in identifying investment opportunities and making investment decisions and performing similar functions for other business activities in which they may be involved;

•

The principals of FS Credit Income Advisor or the GoldenTree Sub-Adviser may serve as officers, paid advisors, directors or in comparable management functions for portfolio companies in which the Fund invests, and may receive compensation in connection therewith.

•

The Fund may now, or in the future, compete with certain affiliates for investments, subjecting FS Credit Income Advisor and its affiliates to certain conflicts of interest in evaluating the suitability of investment opportunities and making or recommending investments on the Fund’s behalf;

•

The Fund may now, or in the future, compete with other funds or clients managed or advised by GoldenTree or affiliates of GoldenTree for investment opportunities, subjecting GoldenTree and its affiliates to certain conflicts of interest in evaluating the suitability of investment opportunities;

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•

FS Credit Income Advisor or GoldenTree could be subject to a conflict of interest because of the varying compensation arrangements among their respective clients. For example, the Fund is not subject to incentive compensation while certain other funds of FS Credit Income Advisor or GoldenTree are, which could incentivize FS Credit Income Advisor or GoldenTree to favor such funds over the Fund when allocating investments;

•

GoldenTree also has an interest in an entity that it has retained to provide various services for its structured products group, including the Fund. Specifically, GoldenTree, through an affiliated entity, has acquired a 20% membership interest in Clarity Solutions Group LLC, the remaining 80% of which is controlled by a former employee of GoldenTree;

•

GoldenTree and its affiliates now, or in the future, may acquire securities in which the Fund invests;

•

Regardless of the quality of the assets acquired by the Fund, the services provided to the Fund or whether the Fund makes distributions to Shareholders, FS Credit Income Advisor and the GoldenTree Sub-Adviser will receive the management fee in connection with the management of the Fund’s portfolio;

•

From time to time, to the extent consistent with the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations promulgated thereunder, the Fund and other clients for which FS Credit Income Advisor or GoldenTree provides investment management services or carry on investment activities may make investments at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities, as may be permitted by law and subject to compliance with appropriate procedures. These investments may give rise to inherent conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be held by the Fund and such other clients and may make certain investment opportunities, which might otherwise be desirable, unavailable or impractical even if appropriate procedures are in place. Additionally, investment at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities by the Fund and other clients of FS Credit Income Advisor or GoldenTree may result in FS Credit Income Advisor or GoldenTree coming into possession of confidential or material, non-public information that would limit the ability of the Fund to acquire or dispose of investments (or of GoldenTree to recommend to FS Credit Income Advisor the acquisition or disposition of an investment), even if such acquisition or disposition would otherwise be desirable. This could constrain the Fund’s investment flexibility and result in the Fund being unable or restricted from initiating transactions in certain securities or liquidating or selling certain investments at a time when FS Credit Income Advisor or GoldenTree would otherwise take an action;

•

FS Credit Income Advisor, GoldenTree and their respective affiliates may give advice and recommend securities to other clients, family or friends, in accordance with the investment objectives and strategies of such other clients, family or friends, which may differ from advice given to, or the timing or nature of the action taken with respect to, the Fund so long as it is their policy, to the extent practicable, to recommend for allocation and/or allocate investment opportunities to the Fund on a fair and equitable basis relative to their other clients, family and friends, even though their investment objectives may overlap with those of the Fund;

•

GoldenTree and its affiliates may have existing business relationships or access to material non-public information that would prevent GoldenTree from consummating certain investment opportunities (including a disposition of an existing investment) that would otherwise fit within the Fund’s investment objective and strategies. Similarly, FS Credit Income Advisor and its affiliates may have existing business relationships or access to material non-public information that would prevent it from considering, approving or consummating an investment opportunity (including a disposition of an existing investment) that would otherwise fit within the Fund’s investment objective and strategies. This could constrain the Fund’s investment flexibility and result in the Fund being unable or restricted from initiating transactions in certain securities or liquidating or selling certain investments at a time when FS Credit Income Advisor or GoldenTree would otherwise take such an action;

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To the extent permitted by the 1940 Act and interpretations of the staff of the U.S. Securities and Exchange Commission (“SEC”), and subject to the allocation policies of FS Credit Income Advisor, GoldenTree and any of their respective affiliates, as applicable, FS Credit Income Advisor, GoldenTree and any of their respective affiliates may deem it appropriate for the Fund and one or more other investment accounts managed by FS Credit Income Advisor, GoldenTree or any of their respective affiliates to participate in an investment opportunity. The Fund has filed an application seeking exemptive relief from the SEC to engage in privately negotiated co-investment transactions with certain affiliates of FS Credit Income Advisor and GoldenTree. However, there can be no assurance that the Fund will obtain such exemptive relief. Any of these co-investment opportunities may give rise to conflicts of interest or perceived conflicts of interest among the Fund and the other participating accounts. To mitigate these conflicts, FS Credit Income Advisor and/or GoldenTree, as applicable, will seek to execute such transactions for all of the participating investment accounts, including the Fund, on a fair and equitable basis and in accordance with their respective allocation policies, taking into account such factors as the relative amounts of capital available for new investments and the investment programs and portfolio positions of the Fund, the clients for which participation is appropriate and any other factors deemed appropriate; and

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The 1940 Act prohibits certain “joint” transactions with certain of the Fund’s affiliates, which in certain circumstances could include investments in the same portfolio company (whether at the same or different times), without the prior approval of the SEC. If a person, directly or indirectly, acquires more than 5% of the voting securities of the Fund, FS Credit Income Advisor or GoldenTree (or either of their respective controlling entities), the Fund will be prohibited from buying any securities or other property from or selling any securities or other property to such person or certain of that person’s affiliates, or entering into joint transactions with such persons, absent the availability of an exemption or prior approval of the SEC. Similar restrictions limit the Fund’s ability to transact business with its officers or trustees or their affiliates. The SEC has interpreted the 1940 Act rules governing transactions with affiliates to prohibit certain “joint transactions” involving entities that share a common investment adviser. As a result of these restrictions, the scope of investment opportunities that would otherwise be available to the Fund may be limited.

(a)(3) FS Credit Income Advisor’s investment personnel are not employed by the Fund and receive no direct compensation from the Fund in connection with their investment management activities.

Consistent with FS Investments’ integrated culture, FS Investments has one firm-wide compensation and incentive structure, which covers investment personnel who render services to the Fund on behalf of FS Credit Income Advisor. FS Investments’ compensation structure is designed to align the interests of the investment personnel serving the Fund with those of shareholders and to give everyone a direct financial incentive to ensure that all of FS Investments’ resources, knowledge and relationships are utilized to maximize risk-adjusted returns for each strategy.

Each of FS Investments’ senior executives, including each of the investment personnel who render services to the Fund on behalf of FS Credit Income Advisor (other than Michael C. Forman, who is compensated through his ownership interests in FS Credit Income Advisor and FS Investments’ other investment adviser entities), receives a base salary and is eligible for a discretionary bonus.

All final compensation decisions are made by the management committee of FS Investments based on input from managers. Compensation and other incentives are not formulaic, but rather are judgment and merit driven, and are determined based on a combination of overall firm performance, individual contribution and performance and relevant market and competitive compensation practices for other businesses.

(a)(4) The following table shows the dollar range of equity securities in the Fund beneficially owned by each member of FS Credit Income Advisor’s investment committee as of October 31, 2018, based on the net asset value per Class I common share of the Fund of $12.89 on October 31, 2018.

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Name of Investment Committee Member			Dollar Range of Equity Securities in the Fund(1)
Michael Kelly			Over $1,000,000
Daniel Picard			None
Kenneth G. Miller			$100,001 – $500,000
Grace Hutchinson			None

(1)

Dollar ranges are as follows: None, $1–$10,000, $10,001–$50,000, $50,001–$100,000, $100,001–$500,000, $500,001–$1,000,000 or Over $1,000,000.

(b)

Not applicable.

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

No such purchases were made by or on behalf of the Fund during the period covered by the annual report included in Item 1 of this on Form N-CSR.

Item 10. Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which the Fund’s shareholders may recommend nominees to the Board during the period covered by the annual report included in Item 1 of this Form N-CSR.

Item 11. Controls and Procedures.

(a)

The Fund’s principal executive officer and principal financial officer have evaluated the Fund’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act) as of a date within 90 days of the filing date of this Form N-CSR and have concluded that the Fund’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported timely.

(b)

There was no change in the Fund’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the last fiscal quarter of the period covered by this Form N-CSR that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies

(a)

Not applicable.

(b)

Not applicable.

Item 13. Exhibits.

	(a)(1)			The Fund’s Code of Business Conduct and Ethics is included herein in response to Item 2(f).
	(a)(2)			The certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Rule 30a-2(a) under the 1940 Act are attached hereto.
	(a)(3)			Not applicable.
	(a)(4)			Not applicable.
	(a)(5)			The Proxy Voting Policies and Procedures of FS Credit Income Advisor are included herein in response to Item 7.
	(b)			The certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Rule 30a-2(b) under the 1940 Act are attached hereto.

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SIGNATURES

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

				FS Credit Income Fund
				By: /s/ Michael C. Forman Michael C. Forman President and Chief Executive Officer Date: January 4, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

				By: /s/ Michael C. Forman Michael C. Forman President and Chief Executive Officer (Principal Executive Officer) Date: January 4, 2019
				By: /s/ Edward T. Gallivan, Jr. Edward T. Gallivan, Jr. Chief Financial Officer (Principal Financial Officer) Date: January 4, 2019

FS Credit Income Fund (FCREX) N-CSRCertified annual shareholder report (management investment company)