What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-02-25 compared with 2020-02-27 · 828 added, 626 removed, 1697 unchanged (46% of the section changed)

Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and Qualitative Disclosures

About Market Risk.

We are subject to financial market risks, including changes in interest rates.

Changes in interest rates affect both our cost of funding and

the valuation of our investment portfolio.

Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable

administrative and information systems and other policies and programs.

In the future, our investment income may also be affected by changes in various interest rates, including LIBOR and prime rates, to the extent of any debt investments that

include floating interest rates.

As of December 31, 2019 and 2018, 17 and seven portfolio companies debt investments, respectively, bore interest at a variable rate, which represented $181.3 million and $75.9 million of our

portfolio on a fair value basis, respectively, and the remainder of our debt portfolio was comprised entirely of fixed rate investments.

Changes in interest rates affect

both our cost of funding and the valuation of our investment portfolio.

Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks and

limits by means of reliable administrative and information systems and other policies and programs.

In addition, U.S.

and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets and a general decline in value of the securities held by us.

In the future, our investment income may also be affected by changes in various interest rates, including LIBOR and prime rates, to the extent

of any debt investments that include floating interest rates.

In connection with the COVID-19 pandemic, the U.S.

Federal Reserve and other central banks have reduced certain interest rates and LIBOR has

A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR

that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.

December 31, 2020 and 2019, 22 and 17 portfolio companies debt investments, respectively, bore interest at a variable rate, which represented $230.9 million and $181.3 million of our portfolio on a fair value basis,

respectively, and the remainder of our debt portfolio was comprised entirely of fixed rate investments.

Our pooled SBA debentures and our Public Notes bear interest at fixed rates.

Our Credit Facility bears interest,

at our election, at a rate per annum equal to (a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible

portfolio investments that are performing first lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out

loans, or performing second lien loans is greater than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate,

(B) the Federal Funds rate plus 0.5%, (C) three month LIBOR plus 1.0%, and (D) zero.

Because we currently borrow, and plan

to borrow in the future, money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed.

Accordingly, there can be no assurance that

a significant change in market interest rates will not have a material adverse effect on our net investment income.

In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a

corresponding increase in interest income generated by our investment portfolio.

The following table shows the approximate annualized

increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of December 31, 2019 (dollars in millions):

Our Credit Facility bears interest, at our election, at a rate per

annum equal to (a) 3.00% (or 2.75% if certain conditions are satisfied, including if (x) no equity interests are included in the borrowing base, (y) the contribution to the borrowing base of eligible portfolio investments that are

performing first lien bank loans is greater than or equal to 35%, and (z) the contribution to the borrowing base of eligible portfolio investments that are performing first lien bank loans, performing last out loans, or performing second lien

loans is greater than or equal to 60%) plus the one, two, three or six month LIBOR rate, as applicable, or (b) 2.00% (or 1.75% if the above conditions are satisfied) plus the highest of (A) a prime rate, (B) the Federal Funds rate

plus 0.5%, (C) three month LIBOR plus 1.0%, and (D) zero.

Because we currently borrow, and plan to borrow in the future, money

to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed.

Accordingly, there can be no assurance that a significant change in market

interest rates will not have a material adverse effect on our net investment income.

In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in

interest income generated by our investment portfolio.

The following table shows the approximate annualized increase or decrease in the components

of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of December 31, 2020 (dollars in millions):

Basis Point Increase (Decrease)

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Interest Expense

(Decrease) (4)

Net Investment

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decreases in interest rates .

Includes the impact of income incentive fee at 20.0% on net increase (decrease) in net

Consolidated Financial Statements and Supplementary Data.

Interest income calculated assuming three-month LIBOR rate as of December 31, 2020.

Includes the impact of income incentive fee at 20.0% on net increase (decrease) in net interest.

As of December 31, 2020, we did not have any borrowings outstanding under our Credit Facility, and our

remaining debt obligations all carry fixed interest rates.

Consolidated Financial Statements

and Supplementary Data.

Index to Consolidated Financial Statements

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31, 2020, 2019 and 2018

Consolidated Schedules of Investments as of December

31, 2019 and 2018

Consolidated Schedules of Investments as of December 31, 2020 and

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Investment Corporation and Subsidiaries

To the Stockholders and the Board of Directors of Fidus Investment Corporation and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Fidus Investment

Corporation and Subsidiaries (collectively, the Company) as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended

December 31, 2019, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of Fidus

Investment Corporation and Subsidiaries as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles

generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight

Board (United States) (PCAOB) the Companys internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission in 2013, and our report dated February 27, 2020, expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

We have audited the

accompanying consolidated statements of assets and liabilities of Fidus Investment Corporation and subsidiaries (collectively, the Company), including the consolidated schedules of investments, as of December 31, 2020 and 2019, the related

consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes, which include the senior securities table, to the consolidated financial

statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations,

changes in net assets, and cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Companys internal

control over financial reporting as of December 31, 2020, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our

report dated February 25, 2021, expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

Basis for Opinion

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assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits 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 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.

Our procedures included confirmation of investments owned as of December 31, 2019 and 2018, by

correspondence with custodians, portfolio companies or agents or by other appropriate procedures where replies from custodians, portfolio companies or agents were not received.

Our audits 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 December 31, 2020 and 2019, by correspondence with the custodians, portfolio companies or agents or by other appropriate

procedures where replies from custodians, portfolio companies or agents 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 audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Valuation of level 3 investments

As discussed in Notes 2 and 4 to the consolidated financial statements, the Company measures substantially all of its investments at fair value using

unobservable inputs and assumptions as there is no readily available market value.

Due to the use of unobservable inputs in determining fair value, these investments are classified as level 3 within the fair value hierarchy and total

$742,869 thousand as of December 31, 2020.

We identified the valuation of certain level 3 investments as a critical audit matter because of

certain significant assumptions management makes in determining the estimate, including the selected valuation techniques, revenue or EBITDA multiples, and discount rates.

Auditing managements valuation techniques and assumptions of revenue

and EBITDA multiples and the discount rate involved a high degree of auditor judgment and increased audit effort, including the use of valuation specialists, as changes in these assumptions could have a significant impact on the fair value of the

level 3 investments.

Our audit procedures related to the Companys valuation of level 3 investments included the following,

among others:

We obtained an understanding of the relevant controls related to the Companys process to determine fair

value of its level 3 investments, including controls over the Companys methods and selection of significant unobservable inputs, and tested such controls for operating effectiveness.

We evaluated the appropriateness of managements valuation techniques, such as the discounted cash flow or

enterprise value, and managements asset coverage analysis.

We also evaluated whether assumptions used by management, including revenue or EBITDA multiples and discount rates, were reasonable by comparing these inputs to market information

obtained from external sources.

For a selection of investments, we utilized valuation specialists to perform this evaluation.

For a select number of investments, we utilized the valuation specialists to develop an independent fair value

estimate which was compared to managements estimate.

We evaluated the Companys historical ability to estimate fair value by comparing the fair value as

estimated by management against sale transactions, where applicable.

Transfers of Financial Assets

As discussed in Note 2 to the consolidated financial statements, the Company follows the appropriate accounting principles when determining if there has been a

sale or disposition of a portfolio investment.

The fair value of the Companys level 3 investments was $742,869 thousand as of December 31, 2020 and net loss on investments was $8,123 thousand for the year ended December 31,

We identified the transfer of financial assets as a critical audit matter as managements assessment of the accounting principles that

determine if a financial transfer occurred is complex and requires that management make significant judgments, including determining (1) if assets are legally isolated from the Company, (2) if there is continuing involvement of the Company

and (3) if third party constraints provide a more than trivial benefit to the Company.

Auditing managements determination of whether the transfer should be accounted for as a sale or secured borrowing involved a high degree of auditor

judgment and increased audit effort, including the use of subject matter experts, as changes in managements judgments could change the conclusion reached.

Our audit procedures related to the Companys transfer of financial assets analysis included the following, among others:

We obtained an understanding of the relevant controls related to the Companys process to determine if a

transfer of financial assets occurred and tested such controls for operating effectiveness.

We evaluated the Companys determination of sale or secured borrowing by evaluating the following factors:

(1) if the transferred assets were isolated from the Company, (2) if there is continuing involvement of the Company, and (3) if third party constraints provide a more than trivial benefit to the Company.

We inspected legal documents and correspondence with custodians, portfolio companies or agents in order to

evaluate whether the criteria for sale treatment under the accounting principles was met.

For selected transactions, we involved a subject matter expert to assist with this evaluation.

/s/ RSM US LLP

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Investment Corporation and Subsidiaries

To the Stockholders and the Board of Directors of Fidus Investment Corporation and Subsidiaries

Opinion on the Internal Control Over Financial Reporting

We have audited Fidus Investment Corporation and Subsidiaries (collectively, the Company) internal control over financial reporting as of

December 31, 2019, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all

material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated statements of assets and liabilities, including the consolidated schedules of investments, of the Company as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in net assets

and cash flows for each of the three years in the period ended December 31, 2019 and the related notes to the financial statements of the Company and our report dated February 27, 2020 expressed an unqualified opinion.

We have audited Fidus Investment Corporation and Subsidiaries (the Company) internal control over financial reporting as of December 31, 2020, based

on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective

internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements

of assets and liabilities of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations for each of the three years in the period ended December 31, 2020, and the related notes to the consolidated

financial statements and our report dated February 25, 2021 expressed an unqualified opinion.

Basis for Opinion

The Companys management is

responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Managements Annual Report on Internal Control Over

Financial Reporting.

Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with

respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of

internal control over financial reporting in the accompanying Managements Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Companys internal control over financial reporting

based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with 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 effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as

necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors

of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effect on the financial statements.

Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting,

assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary

in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over

Financial Reporting

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal control over financial reporting includes those policies and

procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are

recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management

and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effect on the financial

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

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SBA debentures, net of deferred financing costs (Note 6)

Public Notes, net of deferred financing costs (Note 6)

Notes, net of deferred financing costs (Note 6)

Borrowings under Credit Facility, net of deferred financing costs (Note 6)

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Commitments and contingencies (Note 7)

Common stock, $0.001 par value (100,000,000 shares authorized, 24,463,119 shares issued

outstanding at December 31, 2019 and December 31, 2018, respectively)

Common stock, $0.001 par value (100,000,000 shares authorized, 24,437,400 and 24,463,119 shares

issued and outstanding at December 31, 2020 and December 31, 2019, respectively)

Additional paid-in capital

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Incentive fee - income

Incentive fee - capital gains

Incentive fee (reversal) - capital gains

Administrative service expenses

1 unchanged sentence

Other general and administrative expenses

Total expenses

Total expenses before income incentive fee waiver

Incentive fee waiver - income

Total expenses, net of income incentive fee waiver

Net investment income before income taxes

27 unchanged sentences

Balances at December 31, 2017

Public offerings of common stock, net of expenses (Note 8)

Shares issued under dividend reinvestment plan

Repurchases of common stock under Stock Repurchase Program (Note 8)

Net investment income

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Balances at December 31, 2018

Repurchases of common stock under Stock Repurchase Program (Note 8)

Net investment income

5 unchanged sentences

Balances at December 31, 2019

Repurchases of common stock under Stock Repurchase Program (Note 8)

Net investment income

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Balances at December 31, 2020

amount is greater than zero but less than one

See Notes to Consolidated Financial Statements.

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Net increase in net assets resulting from operations

Adjustments to reconcile net increase in net assets resulting from operations to net

provided by (used for) operating activities:

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided

by (used for) operating activities:

Net change in unrealized (appreciation) depreciation on investments

14 unchanged sentences

Income incentive fee payable due to affiliate

Capital gains incentive fee payable due to affiliate

Capital gains incentive fee (reversal) due to (from) affiliate

Administration fee payable and other due to affiliate

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Cash Flows from Financing Activities:

Proceeds from stock offerings, net of expenses

Proceeds received from SBA debentures

Repayments of SBA debentures

Proceeds received from issuance of Public Notes

Proceeds received from issuance of Notes

Proceeds received from (repayments of) borrowings under Credit Facility, net

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Cash payments for taxes, net of tax refunds received

Non-cash financing activities:

Shares issued under dividend reinvestment plan

Proceeds receivable from stock offering

See Notes to Consolidated Financial Statements.

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Second Lien Debt

Revolving Loan ($30 commitment)

Revolving Loan ($30 unfunded commitment)

Common Equity (7,478 shares) (j)

2 unchanged sentences

Building Products Manufacturing

Second Lien Debt (k)

Second Lien Debt (j)

Common Equity (2,522 units) (h)(j)

Common Equity (425,508 units) (j)

Common Equity (1,022,813 units) (h)(j)

Total Control Investments

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Healthcare Services

Second Lien Debt

Preferred Equity (126,662 units) (h)

Warrant (505,176 units) (h)(m)

Microbiology Research Associates, Inc.

Healthcare Services

Subordinated Debt

Common Equity (1,625,731 units) (j)

Second Lien Debt (j)

Preferred Equity (63,331 units) (h)(j)

Warrant (252,588 units) (h)(j)(m)

Mirage Trailers LLC

5 unchanged sentences

Healthcare Products

Subordinated Debt

Common Equity (4,250 units) (j)

1 unchanged sentence

Oil & Gas Services

Common Equity - Class A-2

(42,500 units) (k)

Common Equity - Class B (1,000 units) (k)

Steward Holding LLC (dba Steward Advanced Materials)

Common EquityClass A-2 (42,500 units)

Steward Holding LLC (dba Steward Advanced

Aerospace & Defense Manufacturing

11 unchanged sentences

Non-control/Non-affiliate

Accent Food Services, LLC

Frontline Food Services, LLC

(f/k/a Accent Food Services, LLC)

Vending Equipment Manufacturing

Second Lien Debt (k)(p)

Subordinated Debt (j)(p)

Common Equity (7,885 units) (h)(j)

Preferred Equity (Class A Units) (46 units) (j)

Common Equity (Class B Units) (124 units) (j)

Preferred Equity (Class C Units) (100 units) (j)

Allied 100 Group, Inc.

2 unchanged sentences

Common Equity (625,000 units) (j)

Allredi, LLC (fka Marco Group International OpCo, LLC)

Industrial Cleaning & Coatings

Second Lien Debt

Common Equity (570,636 units) (h)(j)

Alzheimers Research and Treatment Center, LLC

9 unchanged sentences

Preferred Equity (207 units) (h)(j)

Preferred Equity (141 units) (h)(j)

Applied Data Corporation

Information Technology Services

First Lien Debt (v)

(L + 6.25%) / (1.50%)

Common Equity (22 units)

Preferred Equity (1,070,614 units)

Argo Turboserve Corporation

14 unchanged sentences

Common Equity (545,810 units) (j)

BCC Group Holdings, Inc.

Information Technology Services

Subordinated Debt

Common Equity (451 shares)

Preferred Equity (14 shares)

BCM One Group Holdings, Inc.

11 unchanged sentences

Preferred Equity (1,043,133 units) (j)

ControlScan, Inc.

Information Technology Services

Subordinated Debt (j)

Common Equity (3,704 shares) (j)

Preferred Equity (100 shares) (j)

Combined Systems, Inc.

Aerospace & Defense Manufacturing

First Lien Debt

(L + 10.00%) / (2.00%)

Revolving Loan ($1,050 unfunded commitment) (j)(ac)

(L + 9.00%) / (2.00%)

Comply365, LLC

Aerospace & Defense Manufacturing

First Lien Debt (ad)

(L + 8.00%) / (1.00%)

Common Equity (1,000,000 units)

CRS Solutions Holdings, LLC (dba CRS Texas)

2 unchanged sentences

Common Equity (450,382 units) (h)(j)

Dataguise, Inc.

Information Technology Services

First Lien Debt (j)

Common Equity (909 shares) (j)

Diversified Search LLC

4 unchanged sentences

EBL, LLC (EbLens)

Second Lien Debt (j)

Second Lien Debt (j)(p)

Common Equity (75,000 units) (j)

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Spread / Floor (d)

ECM Industries, LLC

Component Manufacturing

Subordinated Debt (j)

Common Equity (1,000,000 units) (h)(j)

Elements Brands, LLC

Consumer Products

First Lien Debt

Revolving Loan ($838 unfunded commitment) (i)(j)

French Transit, LLC

2 unchanged sentences

(L + 10.00%) / (2.25%)

Revolving Loan ($1,000 commitment) (j)(u)

(L + 9.00%) / (2.25%)

Global Plasma Solutions, Inc.

Component Manufacturing

First Lien Debt (j)(v)

(L + 5.00%) / (2.00%)

Preferred Equity (947 shares) (j)

Common Equity (947 shares) (j)

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(L + 8.25%) / (2.00%)

Common Equity (549 units) (h)(j)

Hallmark Health Care Solutions, Inc.

Healthcare Services

First Lien Debt (j)(ae)

(L + 7.25%) / (1.50%)

Common Equity (750,000 units) (j)

Healthfuse, LLC

Healthcare Services

First Lien Debt (af)

(L + 7.25%) / (1.00%)

Preferred Equity (197,980 units)

Hilco Plastics Holdings, LLC (dba Hilco Technologies)

Component Manufacturing

Second Lien Debt

Second Lien Debt (j)

Revolving Loan (j)

2 unchanged sentences

(L + 6.95%) / (0.00%)

First Lien Debt (j)

(L + 6.95%) / (0.00%)

Preferred Equity (1,000,000 units) (h)(j)

Common Equity (72,507 units) (h)(j)

Information Technology Services

First Lien Debt

(L + 9.25%) / (2.25%)

Preferred Equity (610 units) (h)(j)

Hub Acquisition Sub, LLC (dba Hub Pen)

2 unchanged sentences

Common Equity (3,750 units)

Hunter Defense Technologies, Inc.

Aerospace & Defense Manufacturing

First Lien Debt (j)

(L + 7.00%) / (1.00%)

Preferred Equity (868 units) (j)

IBH Holdings, LLC (fka Inflexxion, Inc.)

1 unchanged sentence

Common Equity (150,000 units)

Ipro Tech, LLC

Information Technology Services

First Lien Debt (j)(u)

(L + 8.50%) / (2.00%)

K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)

Industrial Cleaning & Coatings

Second Lien Debt

Second Lien Debt (j)

The Kyjen Company, LLC (dba Outward Hound)

6 unchanged sentences

Common Equity (500 units)

Marco Group International OpCo, LLC

Industrial Cleaning & Coatings

Second Lien Debt

Common Equity (960,482 units) (h)(j)

Mesa Line Services, LLC

22 unchanged sentences

Information Technology Services

Subordinated Debt (j)

Common Equity (50 shares) (j)

Palmetto Moon, LLC

First Lien Debt

First Lien Debt (j)

Common Equity (499 units) (j)

Pool & Electrical Products, LLC

Specialty Distribution

Second Lien Debt (j)

Common Equity (15,000 units) (h)(j)

Power Grid Components, Inc.

9 unchanged sentences

Preferred Equity (500,000 shares) (j)

Pugh Lubricants, LLC

Specialty Distribution

Second Lien Debt (k)

Common Equity (6,125 units) (h)(j)

Revenue Management Solutions, LLC

4 unchanged sentences

Second Lien Debt (k)

Delayed Draw Commitment ($875 commitment) (i)(j)

Preferred Equity (8,864 units) (h)(j)

Delayed Draw Commitment ($875 unfunded commitment) (i)(j)

Common Equity (Class A Units) (8,864 units)

Preferred Equity (Units N/A) (h)(j)

Common Equity (Class F Units) (355 units) (h)(j)

Road Safety Services, Inc.

4 unchanged sentences

Subordinated Debt (j)

Common Equity (400 shares)

Common Equity (400 shares) (j)

Routeware, Inc.

Information Technology Services

First Lien Debt (k)(aa)

(L + 7.00%) / (1.75%)

SES Investors, LLC (dba SES Foam)

13 unchanged sentences

Business Services

Second Lien Debt (k)

Common Equity (1,000,000 units)

Component Manufacturing

Common Equity (1,000 units)

Common Equity (500 units) (j)

The Tranzonic Companies

9 unchanged sentences

Preferred Equity (98,377 units) (h)(j)

Warrant (57,469 units) (m)

Vanguard Dealer Services, L.L.C.

Business Services

Common Equity (6,000 units)

Warrant (57,469 units) (j)(m)

Virginia Tile Company, LLC

Specialty Distribution

Second Lien Debt (j)

Common Equity (17 units) (j)

Westerns Smokehouse, LLC

Consumer Products

First Lien Debt (j)(ab)

(L + 6.50%) / (1.25%)

FIDUS INVESTMENT CORPORATION

6 unchanged sentences

Spread / Floor (d)

Virginia Tile Company, LLC

Specialty Distribution

Second Lien Debt (k)

Common Equity (17 units)

Wheel Pros, Inc.

8 unchanged sentences

Common Equity (2,000 units) (h)(j)

Non-control/Non-affiliate Investments

Total Non-control/Non-affiliate

Total Investments

32 unchanged sentences

Maturity date, if any, represents mandatory redemption date.

Investment was on non-accrual status as of December 31, 2019,

meaning the Company has ceased recognizing interest income on the investment.

Investment was on PIK-only

non-accrual status as of December 31, 2020, meaning the Company has ceased recognizing PIK interest income on the investment.

Warrant entitles the Company to purchase 4.79% of the outstanding principal of Junior Subordinated Notes prior

10 unchanged sentences

which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are detailed in Note 3 to the consolidated financial statements.

The disclosed commitment represents the unfunded amount as of December 31, 2019.

The Company is earning

0.75% interest on the unfunded balance of the commitment.

The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

13 unchanged sentences

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 4.21% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 2.84% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 2.95% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

The disclosed commitment represents the unfunded amount as of December 31, 2020.

The Company is earning

1.00% interest on the unfunded balance of the commitment.

The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 3.33% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 3.31% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 4.03% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

See Notes to Consolidated Financial Statements.

7 unchanged sentences

Spread / Floor (d)

Control Investments (s)

Control Investments (t)

FDS Avionics Corp.

2 unchanged sentences

Second Lien Debt

Revolving Loan ($50 commitment)

Revolving Loan ($30 unfunded commitment)

Common Equity (7,478 shares) (j)

K2 Industrial Services, Inc.

Industrial Cleaning & Coatings

Second Lien Debt (p)

Common Equity (1,673 shares)

Preferred Equity (2,550 shares)

US Green Fiber, LLC

Building Products Manufacturing

Second Lien Debt (k)

Common Equity (2,522 units) (h)(j)

Common Equity (425,508 units) (j)

Total Control Investments

Affiliate Investments (l)

Affiliate Investments (I)

FAR Research Inc.

3 unchanged sentences

Aerospace & Defense Manufacturing

Second Lien Debt

Common Equity (10 units)

19 unchanged sentences

Oil & Gas Services

Second Lien Debt (k)

Common Equity - Class A-2 (42,500 units)

4 unchanged sentences

Common Equity (1,000,000 units)

Trantech Radiator Products, Inc.

Utility Equipment Manufacturing

Second Lien Debt (j)

Common Equity (6,875 shares) (j)

Total Affiliate Investments

10 unchanged sentences

Vending Equipment Manufacturing

Second Lien Debt (k)

Second Lien Debt (k)(p)

Subordinated Debt (j)(p)

Common Equity (7,885 units) (h)(j)

1 unchanged sentence

Healthcare Products

Subordinated Debt (k)

Common Equity (1,250,000 units) (j)

Alzheimers Research and Treatment Center

Alzheimers Research and Treatment Center, LLC

Healthcare Services

First Lien Debt (j)(v)

First Lien Debt (j)(w)

(L + 5.75%) / (2.00%)

3 unchanged sentences

Second Lien Debt (j)

Delayed Draw Commitment ($2,276 commitment) (i)(j)

Preferred Equity (500 units) (j)

(L + 11.00%) / (2.00%)

Preferred Equity (500 units) (h)(j)

Preferred Equity (207 units) (h)(j)

Argo Turboserve Corporation

9 unchanged sentences

Second Lien Debt

Common Equity (50,000 units) ($133 commitment) (h)(j)

Common Equity (50,000 units) (h)(j)

Bandon Fitness (Texas), Inc.

First Lien Debt (j)(z)

(L + 6.00%) / (2.25%)

Common Equity (497,549 units) (j)

BCC Group Holdings, Inc.

Information Technology Services

Subordinated Debt

Common Equity (451 shares)

Preferred Equity (14 shares)

BCM One Group Holdings, Inc.

Information Technology Services

Subordinated Debt (k)

Common Equity (2,286 shares)

Preferred Equity (133 shares)

Bedford Precision Parts LLC

Specialty Distribution

First Lien Debt (j)(s)

(L + 6.25%) / (2.00%)

Common Equity (500,000 units) (h)(j)

Cardboard Box LLC (dba Anthonys Coal Fired Pizza)

Common Equity (521,021 units) (j)

Consolidated Infrastructure Group Holdings, LP

Business Services

Common Equity (298 units)

Preferred Equity (99,889 units) (j)

ControlScan, Inc.

6 unchanged sentences

Second Lien Debt

Common Equity (750,000 units) (j)

Common Equity (750,000 units) (h)(j)

Diversified Search LLC

Business Services

First Lien Debt (k)(r)

(L + 5.75%) / (1.75%)

Common Equity (573 units) (h)(j)

EBL, LLC (EbLens)

1 unchanged sentence

Common Equity (75,000 units) (j)

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments

December 31, 2019

(in thousands, except shares)

Portfolio Company (a)(b)

Investment Type (c)

Variable Index

Spread / Floor (d)

French Transit, LLC

Consumer Products

First Lien Debt (j)

(L + 9.00%) / (2.25%)

Revolving Loan ($1,000 unfunded commitment) (j)(u)

(L + 9.00%) / (2.25%)

Global Plasma Solutions, Inc.

Component Manufacturing

First Lien Debt (j)(u)

First Lien Debt (j)(v)

(L + 5.00%) / (2.00%)

3 unchanged sentences

Information Technology Services

Subordinated Debt (k)

Common Equity (5 shares)

Hil co Plastics Holdings, LLC (dba Hilco Technologies)

Haematologic Technologies, Inc.

Healthcare Services

First Lien Debt (x)

(L + 7.25%) / (2.00%)

Common Equity (500 units) (j)

Hilco Plastics Holdings, LLC (dba Hilco Technologies)

Component Manufacturing

Second Lien Debt

Revolving Loan (j)

(L + 6.50%) / (0.00%)

First Lien Debt (j)

(L + 6.95%) / (0.00%)

First Lien Debt (j)

(L + 6.95%) / (0.00%)

Preferred Equity (1,000,000 units) (h)(j)

Common Equity (72,507 units) (h)(j)

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments

December 31, 2018

(in thousands, except shares)

Portfolio Company (a)(b)

Investment Type (c)

Variable Index

Spread / Floor (d)

Information Technology Services

First Lien Debt

(L + 9.25%) / (2.25%)

Preferred Equity (610 units) (h)(j)

Hub Acquisition Sub, LLC (dba Hub Pen)

9 unchanged sentences

Common Equity (150,000 units)

inthinc Technology Solutions, Inc.

Information Technology Services

Royalty Rights

K2 Merger Agreement Agent, LLC (fka K2 Industrial Services, Inc.) (n)

Industrial Cleaning & Coatings

Second Lien Debt

The Kyjen Company, LLC (dba Outward Hound)

12 unchanged sentences

Second Lien Debt (j)

Delayed Draw Commitment ($3,160 commitment) (i)(j)

Common Equity (981 shares) (j)

3 unchanged sentences

Warrant (9.59% of Junior Subordinated Notes) (j)(q)

New Era Technology, Inc.

Information Technology Services

Common Equity (197,369 shares) (j)

NGT Acquisition Holdings, LLC (dba Techniks Industries)

Component Manufacturing

Subordinated Debt

Common Equity (378 units) (j)

Oaktree Medical Centre, P.C.

(dba Pain Management Associates)

Healthcare Services

First Lien Debt (j)(t)

10.00%/12.00%

Revolving Loan (j)(t)

OMC Investors, LLC (dba Ohio Medical Corporation)

2 unchanged sentences

Common Equity (5,000 units)

P alisade Company, LLC

Information Technology Services

Subordinated Debt (j)

Common Equity (100 shares) (j)

Palmetto Moon, LLC

First Lien Debt

Common Equity (499 units) (j)

FIDUS INVESTMENT CORPORATION

6 unchanged sentences

Spread / Floor (d)

Palisade Company, LLC

Information Technology Services

Subordinated Debt (j)

Common Equity (100 shares) (j)

Palmetto Moon, LLC

First Lien Debt

Common Equity (499 units) (j)

Power Grid Components, Inc.

2 unchanged sentences

Preferred Equity (392 shares) (j)

Preferred Equity (48 shares) (j)

Common Equity (10,622 shares) (j)

Prime AE Group, Inc.

Business Services

First Lien Debt (j)

(L + 6.25%) / (2.00%)

Preferred Equity (500,000 shares) (j)

Pugh Lubricants, LLC

8 unchanged sentences

Second Lien Debt (k)

Delayed Draw Commitment ($875 commitment) (i)(j)

Preferred Equity (8,864 units) (j)(r)

Delayed Draw Commitment ($875 unfunded commitment) (i)(j)

Preferred Equity (8,864 units) (h)(j)

Road Safety Services, Inc.

9 unchanged sentences

Common Equity (6,000 units) (h)(j)

Simplex Manufacturing Co.

Aerospace & Defense Manufacturing

Subordinated Debt

Warrant (29 shares) (m)

Software Technology, LLC

2 unchanged sentences

Common Equity (12 shares)

Specialized Elevator Services Holdings, LLC

Business Services

First Lien Debt (j)(y)

(L + 5.25%) / (2.00%)

Common Equity (500 units) (j)

SpendMend LLC

2 unchanged sentences

Common Equity (1,000,000 units)

The Wolf Organization, LLC

Building Products Manufacturing

Common Equity (175 shares)

Thermoforming Technology Group LLC (dba Brown Machine Group) (n)

Capital Equipment Manufacturing

Common Equity (3,760 units) (h)(j)

Tile Redi, LLC

Building Products Manufacturing

First Lien Debt (j)

(L + 10.00%) / (1.00%)

Component Manufacturing

Second Lien Debt

Common Equity (1,000 units)

6 unchanged sentences

Subordinated Debt (j)

Delayed Draw Commitment ($1,500 commitment) (j)(i)(w)

Common Equity (705,000 units) (j)

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments

December 31, 2018

(in thousands, except shares)

Portfolio Company (a)(b)

Investment Type (c)

Variable Index

Spread / Floor (d)

Common Equity (705,000 units) (h)(j)

United Biologics, LLC

2 unchanged sentences

Warrant (57,469 units) (m)

US GreenFiber, LLC

Building Products Manufacturing

Second Lien Debt (k)(p)

Second Lien Debt (p)

Common Equity (2,522 units) (h)(j)

US Pack Logistics LLC

Transportation services

Second Lien Debt (k)

Common Equity (5,833 units) (h)(j)

Preferred Equity (9,458 units) (h)(j)

Vanguard Dealer Services, L.L.C.

2 unchanged sentences

Common Equity (2,380 units) (j)

FIDUS INVESTMENT CORPORATION

Consolidated Schedule of Investments

December 31, 2019

(in thousands, except shares)

Portfolio Company (a)(b)

Investment Type

Variable Index

Spread/Floor (d)

Virginia Tile Company, LLC

2 unchanged sentences

Common Equity (17 units)

Wheel Pros, Inc.

Specialty Distribution

Second Lien Debt (j)

(L + 8.50%) / (0.00%)

Preferred Equity (694,444 units) (j)

Worldwide Express Operations, LLC

42 unchanged sentences

to exercise, and is non-income producing.

A portion of the investment is held by a wholly-owned subsidiary of the Company, other than the Funds.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 4.70% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 3.95% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

As defined in the 1940 Act, the Company is deemed to be both an Affiliated Person of and

2 unchanged sentences

which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control are detailed in Note 3 to the consolidated financial statements.

The debt investment continues to pay interest, including the default rate, while the portfolio company pursues

refinancing options.

The disclosed commitment represents the unfunded amount as of December 31, 2019.

The Company is earning

0.75% interest on the unfunded balance of the commitment.

The interest rate disclosed represents the rate earned on the outstanding, funded balance of the commitment.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

4 unchanged sentences

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

The maturity date presented represents the final termination date of the commitment.

$707 of the commitment

expires on May 7, 2019.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 2.73% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 3.68% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled

to receive an additional interest amount of 4.41% on its last out tranche of the portfolio companys senior term debt, which was previously syndicated into first out and last out tranches, whereby the

first out tranche will have priority as to the last out tranche with respect to payments of principal, interest and any other amounts due thereunder.

See Notes to Consolidated Financial Statements.

9 unchanged sentences

The Company provides customized debt and equity financing solutions to lower

middle-market companies, and may make investments directly or through its three wholly-owned investment company subsidiaries, Fidus Mezzanine Capital, L.P.

(Fund I), Fidus Mezzanine Capital II, L.P.

(Fund II) and Fidus

Mezzanine Capital III, L.P.

(Fund III) (collectively Fund I, Fund II and Fund III are referred to as the Funds).

The Funds are licensed by the U.S.

Small Business Administration (the SBA) as small business

investment companies (SBIC).

The SBIC licenses allow the Funds to obtain leverage by issuing SBA-guaranteed debentures (SBA debentures), subject to the issuance of leverage commitments

by the SBA and other customary procedures.

As SBICs, the Funds are subject to a variety of regulations and oversight by the SBA under the Small Business Investment Act of 1958, as amended (the SBIC Act), concerning, among other things,

the size and nature of the companies in which they may invest and the structure of those investments.

As of September 9, 2019, Fund I completed a wind-down plan, relinquished its SBIC license, and can no longer issue additional SBA debentures.

middle-market companies, and may make investments directly or through its two wholly-owned investment company subsidiaries, Fidus Mezzanine Capital II, L.P.

(Fund II) and Fidus Mezzanine Capital III, L.P.

(Fund III).

Funds are licensed by the U.S.

Small Business Administration (the SBA) as small business investment companies (SBIC).

The SBIC licenses allow the Funds to obtain leverage by issuing

SBA-guaranteed debentures (SBA debentures), subject to the issuance of leverage commitments by the SBA and other customary procedures.

As SBICs, the Funds are subject to a variety of regulations

and oversight by the SBA under the Small Business Investment Act of 1958, as amended (the SBIC Act), concerning, among other things, the size and nature of the companies in which they may invest and the structure of those investments.

We believe that utilizing both FIC and the Funds as investment vehicles provides us with access to a broader array of investment

1 unchanged sentence

Given our access to lower cost capital through the SBAs SBIC debenture program, we expect that we will continue to make investments through the Funds until the Funds reach their borrowing limit under the program.

more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350,000.

Fund I has also elected to be

regulated as a BDC under the 1940 Act.

Fund II and Fund III are not registered under the 1940 Act and rely on the exclusion from the definition of investment company contained in Section 3(c)(7) of the 1940 Act.

The Company pays a quarterly base management fee and an incentive fee to Fidus Investment Advisors, LLC (the Investment Advisor)

under an investment advisory agreement (the Investment Advisory Agreement).

For two or more

SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350,000.

Fund II and Fund III are not

registered under the 1940 Act and rely on the exclusion from the definition of investment company contained in Section 3(c)(7) of the 1940 Act.

The Company pays a quarterly base management fee and an incentive fee to Fidus Investment Advisors, LLC, our investment advisor (the

Investment Advisor or Fidus Investment Advisors) under an investment advisory agreement (the Investment Advisory Agreement).

Significant Accounting Policies

71 unchanged sentences

Deferred financing costs

consist of fees and expenses paid in connection with the Credit Facility (as defined in Note 6), Public Notes (as defined in Note 6), and SBA debentures.

Deferred financing costs are capitalized and amortized to interest and financing expenses over

the term of the debt agreement using the effective interest method.

consist of fees and expenses paid in connection with the Credit Facility (as defined in Note 6), Notes (as defined in Note 6), and SBA debentures.

Deferred financing costs are capitalized and amortized to interest and financing expenses over the

term of the debt agreement using the effective interest method.

Unamortized deferred financing costs are presented as an offset to the corresponding debt liabilities on the consolidated statements of assets and liabilities.

51 unchanged sentences

dividends will be collected.

Interest and dividend payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on

managements judgment.

Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain

Any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on full non-accrual status.

Interest and dividend

payments received on non-accrual investments may be recognized as interest or dividend income or may be applied to the investment principal balance based on managements judgment.

Non-accrual investments are restored to accrual status when past due principal, interest or dividends are paid and, in managements judgment, payments are likely to remain current.

Origination and closing fees:

The Company also typically receives debt investment origination or closing fees in

connection with such investments.

Such debt investment origination and closing fees are capitalized as unearned income and offset against investment cost basis on the consolidated statements of assets and liabilities and accreted into interest

income over the life of the investment.

The Company also typically receives debt investment origination or closing fees in connection with such

the investment.

Upon the prepayment of a debt investment, any unaccreted debt investment origination and closing fees are accelerated into interest income.

10 unchanged sentences

Upon the prepayment of a debt investment, any prepayment penalties are recorded as fee income when earned.

Partial loan sales:

The Company follows the guidance in ASC 860, Transfers and Servicing, when accounting for loan (debt

investment) participations and other partial loan sales.

Such guidance requires a participation or other partial loan sale to meet the definition of a participating interest, as defined in the guidance, in order for sale treatment to be

Participations or other partial loan sales which do not meet the definition of a participating interest should remain on the Companys consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing

until the definition is met.

Management has determined that all participations and other partial loan sale transactions entered into by the Company have met the definition of a participating interest.

Accordingly, the Company uses sale treatment in

accounting for such transactions.

In 2020, the Company elected to change the manner in which

it presents the recognition of management services fees income.

Previously, the Company classified management services fees as a component of interest on idle funds and other income on the Consolidated Statement of Operations.

Comparative prior

periods presented have been reclassified retrospectively to conform to the revised presentation.

There is no change in historical net increase in net assets resulting from operations due to this change in presentation.

FIDUS INVESTMENT CORPORATION

1 unchanged sentence

(in thousands, except shares and per share data)

Partial loan and equity sales:

The Company follows the guidance in ASC 860,

Transfers and Servicing, when accounting for loan (debt investment) participations, equity assignments and other partial loan sales.

Such guidance requires a participation, assignment or other partial loan or equity sale to meet the

definition of a participating interest, as defined in the guidance, in order for sale treatment to be allowed.

Participations, assignments or other partial loan or equity sales which do not meet the definition of a participating interest

should remain on the Companys consolidated statements of assets and liabilities and the proceeds recorded as a secured borrowing until the definition is met.

Management has determined that all participations, assignments and other partial loan

or equity sale transactions entered into by the Company have met the definition of a participating interest.

Accordingly, the Company uses sale treatment in accounting for such transactions.

Income taxes:

The Company has elected to be treated as a RIC under Subchapter M of the

Code, which will generally relieve the Company from U.S.

The Company has elected to be treated as a RIC under Subchapter M of the Code, which will generally relieve the Company

federal income taxes with respect to all income distributed to stockholders.

To maintain the tax treatment of a RIC, the Company is required to timely distribute to its stockholders at least

90.0% of investment company taxable income, as defined by Subchapter M of the Code, each year.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current

year distributions into the next tax year;

To maintain the tax treatment of a RIC, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable

income, as defined by Subchapter M of the Code, each year.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year;

however, the Company will pay a 4.0% excise tax if it does not distribute at least 98.0% of the current years ordinary taxable income.

Any such carryover taxable income must be distributed through a

dividend declared prior to the later of the date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15 th day of the 10 th month following the close of such taxable year.

In addition, the Company will be subject to federal excise tax if it does not distribute at least 98.2% of its net capital gains realized, computed

for any one year period ending October 31.

In the future, the Funds may be limited by provisions of the SBIC Act and SBA regulations

governing SBICs from making certain distributions to FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC.

The Company has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of

the Companys portfolio investments listed on the consolidated schedules of investments.

The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the

Companys investment in the portfolio company investments owned by the Taxable Subsidiaries.

The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for

federal income tax purposes (such as entities organized as limited liability companies (LLCs) or other forms of pass through entities) while complying with the

source-of-income requirements contained in the RIC tax provisions.

The Taxable Subsidiaries are not consolidated with the Company for U.S.

federal corporate

income tax purposes, and each Taxable Subsidiary will be subject to U.S.

Any such carryover taxable income must be distributed through a dividend declared prior to the later of the

date on which the final tax return related to the year in which the Company generated such taxable income is filed or the 15 th day of the 10 th

month following the close of such taxable year.

In addition, the Company will be subject to federal excise tax if it does not distribute at least 98.2% of its net capital gains realized, computed for any one year period ending October 31.

In the future, the Funds may be limited by provisions of the SBIC Act and SBA regulations governing SBICs from making certain distributions to

FIC that may be necessary to enable FIC to make the minimum distributions required to maintain the tax treatment of a RIC.

has certain wholly-owned taxable subsidiaries (the Taxable Subsidiaries), each of which generally holds one or more of the Companys portfolio investments listed on the consolidated schedules of investments.

The Taxable Subsidiaries

are consolidated for financial reporting purposes, such that the Companys consolidated financial statements reflect the Companys investment in the portfolio company investments owned by the Taxable Subsidiaries.

The purpose of the

Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for U.S.

federal income tax purposes (such as entities organized as limited liability companies (LLCs) or

other forms of pass through entities) while complying with the source-of-income requirements contained in the RIC tax provisions.

The Taxable Subsidiaries

are not consolidated with the Company for U.S.

federal corporate income tax purposes, and each Taxable Subsidiary will be subject to U.S.

federal corporate income tax on its taxable income.

Any such income or expense is reflected in the consolidated statements of operations.

federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax regulations may differ from net

investment income and realized gains recognized under GAAP.

Any such income or expense is reflected in the consolidated

statements of operations.

federal income tax regulations differ from GAAP, and as a result, distributions in accordance with tax

regulations may differ from net investment income and realized gains recognized under GAAP.

Differences may be permanent or temporary.

Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of certain assets and nondeductible

federal income taxes.

Permanent differences may arise as a result of, among other items, a difference in the book and tax basis of

certain assets and nondeductible federal income taxes.

Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

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the Companys distributions generally includes both ordinary income and capital gains but may also include qualified dividends or return of capital.

The Company has adopted a dividend reinvestment plan (DRIP) that provides for the reinvestment of dividends on behalf of its

stockholders, unless a stockholder has elected to receive dividends in cash.

As a result, if the Company declares a cash dividend, the Companys stockholders who have not opted out of the DRIP at least two days prior to the dividend

payment date will have their cash dividend automatically reinvested into additional shares of the Companys common stock.

The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common

stock or through open market purchases of common stock by the DRIP plan administrator.

Newly issued shares are valued based upon the final closing price of the Companys common stock on a date determined by the Board.

Shares purchased in the

open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other costs.

See Note 9 to the consolidated financial

statements regarding dividend declarations and distributions.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

Earnings and net asset value per share:

The earnings per share calculations for the

years ended December 31, 2019, 2018 and 2017, are computed utilizing the weighted average shares outstanding for the period.

Net asset value per share is calculated using the number of shares outstanding as of the end of the period.

The Company has adopted a dividend reinvestment plan (DRIP) that provides for the

reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash.

As a result, if the Company declares a cash dividend, the Companys stockholders who have not opted out of the

DRIP at least two days prior to the dividend payment date will have their cash dividend automatically reinvested into additional shares of the Companys common stock.

The Company has the option to satisfy the share requirements of the DRIP

through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator.

Newly issued shares are valued based upon the final closing price of the Companys common stock on a date

determined by the Board.

Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator before any associated brokerage or other

See Note 9 to the consolidated financial statements regarding dividend declarations and distributions.

Earnings and net asset

value per share:

The earnings per share calculations for the years ended December 31, 2020, 2019 and 2018, are computed utilizing the weighted average shares outstanding for the period.

Net asset value per share is calculated using the

number of shares outstanding as of the end of the period.

Stock Repurchase Program:

The Company has an open market stock repurchase program (the Stock Repurchase Program) under

which the Company may acquire up to $5,000 of its outstanding common stock.

Under the Stock Repurchase Program, the Company may, but is not obligated to, repurchase outstanding common stock in the open market from time to time provided that the

Company complies with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and

timing constraints.

The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability,

applicable legal and regulatory requirements and other corporate considerations.

On October 29, 2019, the Board extended the Stock Repurchase Program through December 31, 2020, or until the approved dollar amount has been used to

repurchase shares.

The Stock Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will be repurchased under the Stock Repurchase Program.

The Stock Repurchase

Program may be suspended, extended, modified or discontinued at any time.

During the year ended December 31, 2018, the Company repurchased 44,821 shares of common stock on the open market for $582.

The Company did not make any repurchases of

common stock during the years ended December 31, 2019 and 2017.

Refer to Note 8 for additional information concerning stock repurchases.

The Company has an open market stock

repurchase program (the Stock Repurchase Program) under which the Company may acquire up to $5,000 of its outstanding common stock.

Under the Stock Repurchase Program, the Company may, but is not obligated to, repurchase outstanding

common stock in the open market from time to time provided that the Company complies with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act

of 1934, as amended, including certain price, market value and timing constraints.

The timing, manner, price and amount of any share repurchases will be determined by the Companys management, in its discretion, based upon the evaluation of

economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate considerations.

On October 26, 2020, the Board extended the Stock Repurchase Program through

December 31, 2021, or until the approved dollar amount has been used to repurchase shares.

The Stock Repurchase Program does not require the Company to repurchase any specific number of shares and the Company cannot assure that any shares will

be repurchased under the Stock Repurchase Program.

The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time.

During the years ended December 31, 2020 and 2018, the Company repurchased 25,719 and 44,821

shares, respectively, of common stock on the open market for $268 and $582, respectively.

The Company did not make any repurchases of common stock during the year ended December 31, 2019.

Refer to Note 8 for additional information concerning

stock repurchases.

Recent accounting pronouncements:

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The guidance is effective for annual and interim reporting periods beginning after December 15, 2019.

We adopted the ASU effective January 1, 2020.

The Company adopted the ASU effective January 1, 2020.

No significant changes to the fair value

disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13.

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by

reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.

The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging

relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging

relationship.

The Company is evaluating the potential impact that the adoption of ASU 2020-04 will have on the Companys consolidated financial statements.

SEC Rule 12b-2 Update:

In March 2020, the SEC adopted a final rule under SEC Release No.

34-88365 (the Final

Rule), amending the accelerated filer and large accelerated filer definitions in Exchange Act Rule 12b-2.

The amendments include a provision under which a BDC will be excluded from the accelerated

filer and large accelerated filer definitions if the BDC has (1) a public float of $75 million or more, but less than $700 million, and (2) has annual investment income of less than $100 million.

addition, BDCs are subject to the same transition provisions for accelerated filer and large accelerated filer status as other issuers, but instead substituting investment income for revenue.

The amendments will reduce the number of issuers required

to comply with the auditor attestation on the internal control over financial reporting requirement provided under Section 404(b) of the Sarbanes-Oxley Act of 2002.

The Final Rule applies to annual report filings due on or after

April 27, 2020.

As a result, the Company is no longer an accelerated filer.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

SEC Rule 1-02(w)(2) Update:

In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the

financial statements of certain of their portfolio companies or certain acquired funds (the Final Rules).

The Final Rules adopted a new definition of significant subsidiary set forth in Rule

1-02(w)(2) of Regulation S-X under the Securities Act.

Rules 3-09 and 4-08(g) of

Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment companys periodic reports for any portfolio company

that meets the definition of significant subsidiary. The Final Rules adopt a new definition of significant subsidiary applicable only to investment companies that (i) modifies the investment test and the income test, and

(ii) eliminates the asset test currently in the definition of significant subsidiary in Rule 1-02(w) of Regulation S-X.

The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an

investment company.

The Final Rules became effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date.

The Company has elected to early adopt this rule change as of December 31, 2020.

SEC Regulation S-K Update:

In November 2020, the SEC issued a final rule that modernized and simplifies Managements Discussion and Analysis of Financial Condition

and Results of Operations and certain financial disclosure requirements in Regulation S-K (the Amendments).

Specifically, the Amendments:

(i) eliminate Item 301 of Regulation S-K (Selected Financial Data);

(ii) simplify Item 302 of Regulation S-K (Supplementary Financial Information);

and (iii) amend certain aspects of Item 303 of Regulation S-K (Managements Discussion and Analysis of Financial Condition and Results of Operations).

The Amendments became effective on February 10, 2021 and compliance will be required for the registrants fiscal

year ending on or after August 9, 2021.

Early adoption of the Amendments is permitted on an item-by-item basis after the effective date;

however, a registrant must

fully comply with each adopted item in its entirety.

The Company is currently evaluating the impact of the Amendments on its consolidated financial statements.

Portfolio Company Investments

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investment origination fees, but excluding investments on non-accrual status, if any.

of debt and equity investments for the years ended December 31, 2020, 2019 and 2018 totaled $189,996, $219,173, and $212,264, respectively.

Proceeds from sales and repayments, including principal, return of capital distributions and realized

gains, of portfolio investments for the years ended December 31, 2020, 2019 and 2018 totaled $210,774, $120,600, and $188,255 respectively.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

Purchases of debt and equity investments for the years ended December 31, 2019, 2018 and

2017, totaled $219,173, $212,264, and $214,681, respectively.

Proceeds from sales and repayments, including principal, return of capital distributions and realized gains, of portfolio investments for the years ended December 31, 2019, 2018, and

2017 totaled $120,600, $188,255, and $163,656, respectively.

Investments by type with corresponding percentage of total portfolio

investments consisted of the following:

Investments by type with corresponding percentage of total portfolio investments consisted of

the following:

Second Lien Debt

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than 10% of the total investment portfolio on a fair value or cost basis.

As of December 31, 2019, the Company had no portfolio company investments that represented more than 5% of our total assets.

As of December 31, 2018, the

Companys investment in Pinnergy, Ltd.

totaled $40,878, or 5.9% of total assets.

As of December 31, 2020 and 2019, the Company had no portfolio company investments that represented more than 5% of our total assets.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

As of December 31, 2019, the Company had debt investments in one portfolio company on non-accrual status.

As of December 31, 2018, the company had two debt investments on non-accrual status:

As of December 31, 2020 and 2019, the Company had debt investments in one portfolio

company on non-accrual status:

December 31, 2020

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Portfolio Company

Accent Food Services, LLC

K2 Industrial Services, Inc.

US GreenFiber, LLC

Frontline Food Services, LLC (f/k/a Accent Food Services, LLC)

EBL, LLC (EbLens)

Portfolio company was no longer held at period end.

Interest earned while on

non-accrual was paid in full at exit.

Portfolio company was on PIK-only on

non-accrual status at period end, meaning the Company has ceased recognizing PIK interest income on the investment.

Portfolio company debt investments were not on non-accrual status at

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The table below represents the fair value of control and affiliate investments as of December 31, 2019 and any additions and reductions

made to such investments during the year ended December 31, 2019, the ending fair value as of December 31, 2019, and the total investment income earned on such investments during the period.

Twelve Months Ended December 31, 2019

made to such investments during the year ended December 31, 2020, including the total investment income earned on such investments during the period.

Year Ended December 31, 2020

Portfolio Company (1)

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(dba Flight Display Systems)

K2 Industrial Services, Inc.

US GreenFiber, LLC

Total Control Investments

Total Contrrol Investments

Affiliate Investments

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Steward Holding LLC (dba Steward Advanced Materials)

Trantech Radiator Products, Inc.

Total Affiliate Investments

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receivables are presented in prepaid expenses and other assets on the consolidated statements of assets and liabilities.

Portfolio company was transferred to Control investments from Non-control/Non-affiliate investments during the twelve months ended December 31, 2019.

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, the Company must determine which of its unconsolidated controlled portfolio companies, if any, are considered significant subsidiaries. In evaluating these unconsolidated controlled

portfolio companies, there are three tests utilized to determine if any of the Companys Control Investments (as defined in Note 2) are considered significant subsidiaries:

the investment test, the asset test and the income test.

income test is measured by dividing the absolute value of the combined total of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from each Control Investment for the period being tested by the absolute

value of the Companys pre-tax income for the same period.

Rule 3-09 of Regulation S-X, as interpreted by the SEC,

requires the Company to include separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which the Company owns greater than 50% of the voting securities) in an annual report if any of the three

tests exceed 20% of the Companys total assets or total income, as applicable.

Rule 4-08(g) of Regulation S-X requires summarized financial information of

a Control Investment in an annual report if any of the three tests exceeds 10% of the Companys annual total amounts and Rule 10-01(b)(1) of

Regulation S-X requires summarized financial information in a quarterly report if any of the three tests exceeds 20% of the Companys

year-to-date total amounts.

As of December 31, 2019

and 2018, the Company had no single investment that represented greater than 10% of its total investment portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets.

After performing the

income test for the year ended December 31, 2019, the Company determined that its income from US GreenFiber, LLC (US GreenFiber) generated more than 10% of its total income, primarily due to the unrealized appreciation that was

recognized on the investments.

As such, US GreenFiber, an unconsolidated portfolio company that was a Control Investment, was considered a significant subsidiary at the 10% level as of December 31, 2019.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

Based on the requirements under Regulation S-X Rule 4-08(g), the summarized unaudited consolidated financial information of US GreenFiber is presented below:

(dollars in thousands)

Balance Sheet Data

Current assets

Noncurrent assets

Current liabilities

Noncurrent iabilities

Total liabilities

Twelve Months Ended December 31,

(dollars in thousands)

Summary of Operations

Total Revenue

Net income (loss)

Portfolio company was transferred to

Non-control/Non-affiliate investments from Affiliate investments during the twelve months ended December 31, 2020.

Fair Value Measurements

The Board has established and

documented processes and methodologies for determining the fair values of portfolio company investments on a recurring basis in accordance with ASC Topic 820 and consistent with the requirements of the 1940 Act.

Fair value is the price, determined

at the measurement date, that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants.

Where available, fair value is based on observable market prices or parameters, or derived

from such prices or parameters.

Where observable prices or inputs are not available or reliable, valuation techniques described below are applied.

Under ASC Topic 820, portfolio investments recorded at fair value in the consolidated financial

statements are classified within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value, as defined below:

Level 1 Inputs are unadjusted, quoted prices in active markets for identical assets as of the measurement

Level 2 Inputs include quoted prices for similar assets in active markets, or that are quoted

prices for identical or similar assets in markets that are not active and inputs that are observable, either directly or indirectly, for substantially the full term, if applicable, of the investment.

Level 3 Inputs include those that are both unobservable and significant to the overall fair value

An investments categorization within the valuation hierarchy is based upon the lowest level of input that is

significant to the fair value measurement.

The Companys investment portfolio is comprised entirely of debt and equity securities of privately held companies for which quoted prices falling within the categories of Level 1 and Level 2

inputs are not available.

The Board has established and documented processes and methodologies for determining the fair values of portfolio company investments on a

recurring basis in accordance with ASC Topic 820 and consistent with the requirements of the 1940 Act.

Fair value is the price, determined at the measurement date, that would be received in the sale of an asset or paid to transfer a liability in an

orderly transaction between market participants.

Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.

Where observable prices or inputs are not available or reliable, valuation

techniques described below are applied.

Under ASC Topic 820, portfolio investments recorded at fair value in the consolidated financial statements are classified within the fair value hierarchy based upon the level of judgment associated with the

inputs used to measure their value, as defined below:

Level 1 Inputs are unadjusted, quoted prices in

active markets for identical assets as of the measurement date.

Level 2 Inputs include quoted prices for

similar assets in active markets, or that are quoted prices for identical or similar assets in markets that are not active and inputs that are observable, either directly or indirectly, for substantially the full term, if applicable, of the

Level 3 Inputs include those that are both unobservable and significant to the overall fair

value measurement.

An investments categorization within

the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Companys investment portfolio is comprised entirely of debt and equity securities of privately held companies for which

quoted prices falling within the categories of Level 1 and Level 2 inputs are not available.

Therefore, the Company values all of its portfolio investments at fair value, as determined in good faith by the Board, using Level 3 inputs.

The degree of judgment exercised by the Board in determining fair value is

greatest for investments classified as Level 3 inputs.

Due to the inherent uncertainty of determining the fair values of investments that do not have readily available market values, the Boards estimate of fair values may differ

significantly from the values that would have been used had a ready market for the securities existed, and those differences may be material.

In addition, changes in the market environment, portfolio company performance and other events that may

occur over the lives of the investments may cause the amounts ultimately realized on these investments to be materially different than the valuations currently assigned.

With respect to investments for which market quotations are not readily available, the Board undertakes a multi-step valuation process each

quarter, as described below:

the quarterly valuation process begins with each portfolio company or investment being initially evaluated and

rated by the investment professionals of the Investment Advisor responsible for the portfolio investment;

The degree of judgment exercised by the Board in determining fair value is greatest for investments classified as Level 3 inputs.

Due to the inherent uncertainty of determining the fair values of investments that do not have readily available

market values, the Boards estimate of fair values may differ significantly from the values that would have been used had a ready market for the securities existed, and those differences may be material.

In addition, changes in the market

environment, portfolio company performance and other events that may occur over the lives of the investments may cause the amounts ultimately realized on these investments to be materially different than the valuations currently assigned.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

With respect to investments for which market quotations are not readily available, the Board

undertakes a multi-step valuation process each quarter, as described below:

the quarterly valuation process begins with each portfolio company or investment being initially evaluated and

rated by the investment professionals of the Investment Advisor responsible for the portfolio investment;

preliminary valuation conclusions are then documented and discussed with the investment committee of the

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life based on the expected repayment date.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

For the Companys equity investments, including equity and warrants, the Company

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portfolio company does business, and comparisons of financial ratios of peer companies that are public.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

The Company may also utilize an income approach when estimating the fair value of its equity

securities, either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the fair value ranges determined by the market approach.

Company typically prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.

The Company considers various factors, including, but not limited to, the portfolio

companys projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does business, and comparisons of financial ratios of peer

companies that are public.

The fair value of the Companys royalty rights are calculated based on projected future cash flows and

the specific provisions contained in the pertinent agreements.

The Company may also utilize an

income approach when estimating the fair value of its equity securities, either as a primary methodology if consistent with industry practice or if the market approach is otherwise not applicable, or as a supporting methodology to corroborate the

fair value ranges determined by the market approach.

The Company typically prepares and analyzes discounted cash flow models based on projections of the future free cash flows (or earnings) of the portfolio company.

The Company considers various

factors, including, but not limited to, the portfolio companys projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the markets in which the portfolio company does

business, and comparisons of financial ratios of peer companies that are public.

The fair value of the Companys royalty rights are

calculated based on projected future cash flows and the specific provisions contained in the pertinent agreements.

The determination of the fair value of such royalty rights is not a significant component of the Companys valuation process.

Changes in valuation techniques may occur on a quarterly or annual basis due to changes in market conditions, new information becoming

available or development of new markets.

The Company assesses changes in valuation techniques on an individual portfolio company basis if it results in a measurement that is equally or more representative of fair value given the circumstances.

The Company reviews the fair value hierarchy classifications on a quarterly basis.

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Balance, December 31, 2020

Net change in unrealized appreciation of $10,995 and $14,498 for the years ended December 31, 2019 and

2018, respectively, was attributable to Level 3 investments held at December 31, 2019 and 2018, respectively.

The following

tables summarize the significant unobservable inputs by valuation technique used to determine the fair value of the Companys Level 3 debt and equity investments as of December 31, 2019 and 2018.

The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Companys determination of fair values.

Net change in unrealized appreciation/(depreciation) of ($6,559) and $10,995 for the years ended

December 31, 2020 and 2019, respectively, was attributable to Level 3 investments held at December 31, 2020 and 2019, respectively.

The following tables summarize the significant unobservable inputs by valuation technique used to determine the fair value of the

Companys Level 3 debt and equity investments as of December 31, 2020 and 2019.

The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant

to the Companys determination of fair values.

FIDUS INVESTMENT CORPORATION

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Enterprise value

Revenue multiples

2.1x - 2.1x (2.1x)

Enterprise value

Asset Coverage

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Enterprise value

Revenue multiples

Asset Coverage

1.8x - 1.8x (1.8x)

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4.5x - 6.5x (6.2x)

Unobservable inputs were weighted by the relative fair value of the instruments.

Fair Value at

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5.3x - 5.3x (5.3x)

Enterprise value

Asset Coverage

1.2x - 1.2x (1.2x)

Subordinated Debt

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8.4% - 14.8% (11.8%)

Enterprise value

Revenue multiples

4.4x - 4.4x (4.4x)

Equity investments:

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Enterprise value

Revenue multiples

1.2x - 4.4x (2.0x)

Enterprise value

EBITDA multiples

4.0x - 7.0x (6.6x)

Royalty Rights

Discounted cash flow

Weighted average cost of capital

The significant unobservable input used in determining the fair value under the discounted cash flow technique

is the weighted average cost of capital of each security.

Unobservable inputs were weighted by the relative fair value of the instruments.

The significant unobservable input used in determining the fair value under the discounted cash flow technique is the weighted average cost of

capital of each security.

Significant increases (or decreases) in this input would likely result in significantly lower (or higher) fair value estimates.

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November 2024 Notes (4)

2026 Notes (5)

Carrying value represents the outstanding principal balance of the debt obligation.

The fair value of SBA debentures is estimated by discounting the remaining payments using current market rates

for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures, which are Level 3 inputs under ASC Topic 820.

The fair value of SBA debentures and 2026 Notes is estimated by discounting the remaining payments using

current market rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures, which are Level 3 inputs under ASC Topic 820.

The fair value of borrowings under the Credit Facility, if valued under ASC Topic 820, are based on a market

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Level 1 input.

The following table summarizes the inputs used to value the Companys debt obligations if

measured at fair value as of December 31, 2019 and 2018.

The 2026 Notes fair value is equal to the offering price entered into on December 16, 2020.

The following table summarizes the inputs used to value the Companys debt obligations if measured at fair value

as of December 31, 2020 and 2019.

Valuation Inputs

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incentive fee and excise taxes on realized gains).

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with

PIK income, preferred stock with PIK dividends and zero-coupon securities), accrued income the Company has not yet received in cash.

The Investment Advisor is not under any obligation to reimburse the Company

for any part of the incentive fee it receives that was based on accrued interest that the Company never collects.

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount, original issue

discount, debt instruments with PIK income, preferred stock with PIK dividends and zero-coupon securities), accrued income the Company has not yet received in cash.

The Investment Advisor is not under any

obligation to reimburse the Company for any part of the incentive fee it receives that was based on accrued interest that the Company never collects.

FIDUS INVESTMENT CORPORATION

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December 31, 2020, 2019 and 2018 totaled $8,952, $7,445, and $9,413, respectively.

The Investment Advisor, in consultation with the Board, agreed to voluntarily waive $423 of the income incentive fee for the year ended December 31, 2020.

There was no income incentive fee waiver for the year ended December 31, 2019 or 2018.

As of December 31, 2020 and 2019, the income incentive fee payable was $2,610 and $1,497, respectively.

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Unless terminated earlier as described below, the Investment Advisory Agreement will continue in effect from year to year if approved annually

by the Board or by the affirmative vote of the holders of a majority of the Companys outstanding voting securities, and, in either case, if also approved by a majority of the Independent Directors.

The Investment Advisory Agreement

automatically terminates in the event of its assignment, as defined in the 1940 Act, by the Investment Advisor and may be terminated by either party without penalty upon not less than 60 days written notice to the other.

The holders of a

majority of the Companys outstanding voting securities may also terminate the Investment Advisory Agreement without penalty.

by the Board or by the affirmative vote of the holders of a majority of the Companys outstanding voting securities,

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

and, in either case, if also approved by a majority of the directors who are not interested persons of the Company, as such term is defined under Section 2(a)(19) of the

1940 Act (the Independent Directors).

Independent Directors.

The Investment Advisory Agreement automatically terminates in the event of its assignment, as defined in the 1940 Act, by the Investment Advisor and may be terminated by either

party without penalty upon not less than 60 days written notice to the other.

The holders of a majority of the Companys outstanding voting securities may also terminate the Investment Advisory Agreement without penalty.

Administration Agreement:

The Company also entered into an administration agreement

(the Administration Agreement) with the Investment Advisor.

The Company also entered into an administration agreement (the Administration Agreement) with the

Investment Advisor.

On June 4, 2020, the Board approved the renewal of the Administration Agreement through June 20, 2021.

Under the Administration Agreement, the Investment Advisor

furnishes the Company with office facilities and equipment, provides clerical, bookkeeping, and record keeping services at such facilities and provides the Company with other administrative services necessary to conduct its day-to-day operations.

Under the Administration Agreement, the Investment Advisor furnishes the Company with office facilities and

equipment, provides clerical, bookkeeping, and record keeping services at such facilities and provides the Company with other administrative services necessary to conduct its

day-to-day operations.

The Company reimburses the Investment Advisor for the allocable portion of overhead expenses incurred in performing its obligations under the

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respectively.

Fidus Equity Fund I, L.P.

On February 25, 2020, the Company entered into a Limited Partnership

Agreement (the Agreement) with Fidus Equity Fund I, L.P.

Pursuant to the Agreement, the Company will serve as the General Partner of FEF I.

Owned by third-party investors, FEF I was formed to purchase 50% of

select equity investments from the Company.

On February 25, 2020, the Company sold 50% of its equity investments in 20 portfolio companies to FEF I and received net proceeds of $35,903, resulting in a realized gain, net of estimated taxes, of

The Company will not receive any fees from FEF I for any services provided in its capacity as the General Partner of FEF I.

Revolving Credit Facility :

On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the Credit

Facility) with ING Capital LLC (ING), as the administrative agent, collateral agent, and lender.

The Credit Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by the Funds are

not collateral for the Credit Facility.

On April 24, 2019, the Company entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the Amended Credit Agreement) among the Company, as borrower, the lenders

party thereto, and ING Capital LLC, as administrative agent.

On June 16, 2014, FIC entered into a senior secured revolving credit agreement (the

Credit Facility) with ING Capital LLC (ING), as the administrative agent, collateral agent, and lender.

The Credit Facility is secured by certain portfolio investments held by the Company, but portfolio investments held by

the Funds are not collateral for the Credit Facility.

On April 24, 2019, the Company entered into an Amended & Restated Senior Secured Revolving Credit Agreement (the Amended Credit Agreement) among the Company, as

borrower, the lenders party thereto, and ING Capital LLC, as administrative agent.

The Amended Credit Agreement amends, restates, and replaces the Credit Facility.

On June 26, 2020, the Company amended the Amended Credit Agreement, however the

material terms were unchanged.

Among other revisions, the amendment to the Amended Credit Agreement modifies certain covenants therein, including to amend the minimum consolidated interest coverage ratio to be 2.25 to 1.00 for the four quarter

period ending on June 30, 2020, 2.00 to 1.00 for the four quarter periods ending on each of September 30, 2020 and December 31, 2020, and 1.75 to 1.00 for each four quarter period ending at the end of each quarter thereafter.

Under the Amended Credit Agreement, (i) revolving commitments by lenders were increased from $90,000 to $100,000, with an accordion

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commitments and the 35% minimum utilization.

The Amended Credit Agreement also modifies certain covenants in the credit facility, including to provide for a minimum asset coverage ratio of 2.00 to 1.

The Credit Facility is secured by a first

priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.

Amounts available to borrow under the

Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by the Company, excluding investments held by the Funds.

The Company is subject to limitations with respect to the

investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may also

affect the borrowing base and therefore amounts available to borrow.

The Company has made customary representations and warranties and is

required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.

These covenants are subject to important limitations and exceptions that are described in the documents governing the

Credit Facility.

As of December 31, 2019 and 2018, the Company was in compliance in all material respect with the terms of the Credit Facility.

SBA debentures:

The Company uses debenture leverage provided through the SBA to fund a portion of its investment purchases.

Under the SBA debenture program, the SBA commits to purchase debentures issued by SBICs;

such debentures have

10-year terms with the entire principal balance due at maturity and are guaranteed by the SBA.

Interest on SBA debentures is payable semi-annually on March 1 and September 1.

As of December 31,

2019 and 2018, approved and unused SBA debenture commitments were $17,500 and zero, respectively.

The SBA may limit the amount that may be drawn each year under these commitments, and each issuance of leverage is conditioned on the Companys

full compliance, as determined by the SBA, with the terms and conditions set forth in the SBIC Act.

The Amended Credit Agreement also modifies certain covenants in the credit facility, including to provide for a minimum asset coverage ratio of 2.00 to 1 (on a regulatory basis).

The Credit Facility is

secured by a first priority security interest in all of our assets, excluding the assets of our SBIC subsidiaries.

Amounts available to

borrow under the Credit Facility are subject to a minimum borrowing/collateral base that applies an advance rate to certain investments held by the Company, excluding investments held by the Funds.

The Company is subject to limitations with respect

to the investments securing the Credit Facility, including, but not limited to, restrictions on sector concentrations, loan size, payment frequency and status and collateral interests, as well as restrictions on portfolio company leverage, which may

also affect the borrowing base and therefore amounts available to borrow.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

As of December 31, 2019 and 2018, the Companys issued and outstanding SBA

debentures mature as follows:

The Company has made customary representations and warranties and is required to comply with

various covenants, reporting requirements and other customary requirements for similar credit facilities.

These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility.

of December 31, 2020 and 2019, the Company was in compliance in all material respect with the terms of the Credit Facility.

The Company uses debenture leverage provided through the SBA to fund a portion of its investment purchases.

Under the SBA

debenture program, the SBA commits to purchase debentures issued by SBICs;

such debentures have 10-year terms with the entire principal balance due at maturity and are guaranteed by the SBA.

Interest on SBA

debentures is payable semi-annually on March 1 and September 1.

As of December 31, 2020 and 2019, approved and unused SBA debenture commitments were $11,500 and $17,500, respectively.

The SBA may limit the amount that may be drawn

each year under these commitments, and each issuance of leverage is conditioned on the Companys full compliance, as determined by the SBA, with the terms and conditions set forth in the SBIC Act.

As of December 31, 2020 and 2019, the Companys issued and outstanding SBA debentures mature as follows:

Pooling Date (1)

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during the reporting periods may not be pooled until the subsequent pooling date.

Public Notes:

February 2, 2018, the Company closed the public offering of approximately $43,478 in aggregate principal amount of its 5.875% notes due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to

purchase an additional $6,522 in aggregate principal of the 2023 Notes.

On February 2,

2018, the Company closed the public offering of approximately $43,478 in aggregate principal amount of its 5.875% notes due 2023, or the 2023 Notes. On February 22, 2018, the underwriters exercised their option to purchase an

additional $6,522 in aggregate principal of the 2023 Notes.

The total net proceeds to the Company from the 2023 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $1,500 and

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February 2024 Notes, including the exercise of the underwriters option, after deducting underwriting discounts of approximately $2,070 and estimated offering expenses of $409, were approximately $66,521.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

The February 2024 Notes mature on February 15, 2024 and bear interest at a rate of

The February 2024 Notes may be redeemed in

whole or in part at any time or from time to time at the Companys option on or after February 15, 2021.

Interest on the February 2024 Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each

year, beginning May 15, 2019.

The February 2024 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after February 15, 2021.

Interest on the February 2024 Notes is payable quarterly on February 15,

May 15, August 15 and November 15 of each year, beginning May 15, 2019.

The February 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSZ.

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offering expenses of $300, were approximately $61,053.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

The November 2024 Notes will mature on November 1, 2024 and bear interest at a rate of

The November 2024 Notes will mature on November 1, 2024 and bear interest at

a rate of 5.375%.

The November 2024 Notes may be redeemed in whole or in part at any time or from time to time at the Companys option on or after November 1, 2021.

Interest on the November 2024 Notes is payable quarterly on February 1,

May 1, August 1 and November 1 of each year, beginning February 1, 2020.

Interest on the November 2024 Notes is payable quarterly on

February 1, May 1, August 1 and November 1 of each year, beginning February 1, 2020.

The November 2024 Notes are listed on the NASDAQ Global Select Market under the trading symbol FDUSG.

The Public Notes are unsecured obligations of the Company and rank pari passu with the Companys future unsecured indebtedness;

effectively subordinated to all of the Companys existing and future secured indebtedness;

and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar

facilities the Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.

On December 23, 2020, the Company closed the offering of approximately $125,000 in aggregate principal amount of its 4.75% notes due

2026, or the 2026 Notes (collectively with the Public Notes, the Notes).

The total net proceeds to the Company from the 2026 Notes after deducting underwriting discounts of approximately $2,500 and estimated offering expenses

of $400, were approximately $122,100.

The 2026 Notes will mature on January 31, 2026 and bear interest at a rate of 4.75%.

Notes may be redeemed in whole or in part at any time or from time to time at our option subject to a make whole provision if redeemed more than three months prior to maturity.

Interest on the 2026 Notes is payable on January 31 and

July 31 of each year, beginning July 31, 2021.

The Company does not intent to list the 2026 Notes on any securities exchange or automated dealer quotation system.

The Notes are unsecured obligations of the Company and rank pari passu with the Companys future unsecured indebtedness;

subordinated to all of the Companys existing and future secured indebtedness;

and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, financing vehicles, or similar facilities the

Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities.

As of December 31, 2020, the aggregate amount outstanding of the senior securities issued by the Company was $307,250, for which our

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Unused commitment fee rate, period end

Reflects the effective rate as of 12/31/2019

Reflects the effective rate as of December 31, 2020

Realized Losses on Extinguishment of Debt

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As a result of the prepayments, the Company recognized realized losses on extinguishment of debt of $299 and $399, respectively, equal to the write-off of the related unamortized deferred financing costs, during the years ended December 31, 2020 and 2019.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

Deferred Financing Costs

financing costs are amortized into interest and financing expenses on the consolidated statements of operations using the effective interest method, over the term of the respective financing instrument.

Deferred financing costs related to the SBA

debentures, Credit Facility, and Public Notes as of December 31, 2019 and 2018 were as follows:

Deferred financing costs are amortized into interest and financing expenses on the consolidated statements of operations using the effective

interest method, over the term of the respective financing instrument.

Deferred financing costs related to the SBA debentures, Credit Facility, and Notes as of December 31, 2020 and 2019 were as follows:

December 31, 20203

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Unamortized deferred financing costs

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

Unamortized deferred financing costs are presented as a direct offset to the SBA debentures,

Credit Facility, and Public Notes liabilities on the consolidated statements of assets and liabilities.

Unamortized deferred financing costs are presented as a direct offset to the SBA debentures, Credit Facility,

and Notes liabilities on the consolidated statements of assets and liabilities.

The following table summarizes the outstanding debt net of unamortized deferred financing costs as of December 31, 2020 and 2019:

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potential for earlier prepayments.

The Companys Credit Facility matures on April 24, 2023.

As of December 31, 2020, there were no

outstanding borrowings under the Credit Facility.

FIDUS INVESTMENT CORPORATION

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The * indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.

Not applicable to SBA debentures and Credit Facility because these senior securities are not registered for

public trading.

The average market value per unit for the Public Notes is based on the average of the closing market price as of each quarter end during the fiscal year and the prior year end, as applicable, and is expressed per $1,000 of

indebtedness.

As the November 2024 Notes were issued in November 2019, the average market value per unit is simply the December 31, 2019 closing price.

Not applicable to SBA debentures, Credit Facility, and 2026 Notes because these senior securities are not

registered for public trading.

$1,000 of indebtedness.

The Public Notes were issued in $25 increments.

We have excluded our SBA-guaranteed debentures from the asset coverage

calculation as of December 31, 2012 pursuant to the exemptive relief granted by the SEC in March 2012 that permits us to exclude such debentures from the definition of senior securities in the 200% asset coverage ratio (or 150% if we satisfy

certain requirements) we are required to maintain under the 1940 Act.

calculation (**) as of December 31, 2012 pursuant to the exemptive relief granted by the SEC in March 2012 that permits us to exclude such debentures from the definition of senior securities in the 200% asset coverage ratio (or 150% if we

satisfy certain requirements) we are required to maintain under the 1940 Act.

FIDUS INVESTMENT CORPORATION

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Portfolio Company - Investment

American AllWaste LLC (dba WasteWater Transport Services) - Delayed Draw Commitment - Term Loan-B

B&B Roadway and Security Solutions, LLC - Common Equity (Units)

Combined Systems, Inc.

- Revolving Loan

Elements Brands, LLC - Revolving Loan

FDS Avionics Corp.

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French Transit, LLC- Revolving Loan

Mesa Line Services, LLC - Delayed Draw Term Loan Commitment

Rhino Assembly Company, LLC - Delayed Draw Commitment

Safety Products Group, LLC - Common Equity (Units)

UBEO, LLC - Delayed Draw Term Loan Commitment

Portfolio company was no longer held at period end.

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All such payments made by Fidus Investment Advisors, LLC are not subject to reimbursement by the Company.

The following table summarizes the cumulative total shares issued, net proceeds received, and weighted average offering price in public

offerings of the Companys common stock during the last three fiscal years ended December 31, 2019.

Total Number of

Total Underwriting Fees and

Commissions and Offering Costs

Weighted Average

Offering Price

Fiscal year ended December 31, 2017

Fiscal year ended December 31, 2018

Fiscal year ended December 31, 2019

No shares have been issued for the last three years ended December 31, 2020, 2019, and 2018.

Common Stock ATM Program

August 21, 2014, the Company entered into an equity distribution agreement with Raymond James & Associates, Inc.

and Robert W.

Incorporated through which the Company could sell, by means of at-the-market offerings from time to time, shares of the Companys common stock having an aggregate offering price of up to $50,000 (the ATM Program).

were no issuances of common stock under the ATM program during years ended December 31, 2020, 2019, and 2018.

FIDUS INVESTMENT CORPORATION

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(in thousands, except shares and per share data)

On August 21, 2014, the Company entered into an equity distribution agreement with

Raymond James & Associates, Inc.

and Robert W.

Incorporated through which the Company could sell, by means of at-the-market offerings from

time to time, shares of the Companys common stock having an aggregate offering price of up to $50,000 (the ATM Program).

There were no issuances of common stock under the ATM program during years ended December 31, 2019, 2018,

Stock Repurchase Program

As described in Note 2, the Company has Stock Repurchase Program under which the Company may acquire up to $5,000 of its outstanding common

During the year ended December 31, 2018, the Company repurchased 44,821 shares of common stock on the open market for $582.

The Company did not make any repurchases of common stock during the years ended December 31, 2019 and 2017.

The Companys NAV per share increased by approximately $0.01 for the year ended December 31, 2018 as a result of the share repurchases.

The following table summarizes the Companys share repurchases under the Stock Repurchase Program

for the years ended December 31, 2019, 2018 and 2017:

As described in Note 2, the Company has a Stock Repurchase Program under which the Company may acquire up to $5,000 of its outstanding common

During the years ended December 31, 2020 and 2018, the Company repurchased 25,719 and 44,821 shares of common stock, respectively, on the open market for $268 and $582, respectively.

The Company did not make any repurchases of common

stock during the year ended December 31, 2019.

The Companys NAV per share increased by approximately $0.01 and $0.01 for the years ended December 31, 2020 and 2018, respectively, as a result of the share repurchases.

The following

table summarizes the Companys share repurchases under the Stock Repurchase Program for the years ended December 31, 2020, 2019 and 2018:

Years Ended December 31,

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Refer to Note 9 for additional information regarding the issuance of shares under the DRIP.

The Company had 24,463,119 shares of common stock outstanding as of December 31, 2019 and 2018.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

The Company had 24,437,400 and 24,463,119 shares of common stock outstanding as of December 31, 2020 and 2019, respectively.

Dividends and Distributions

The Companys dividends and distributions are recorded on the record date.

The following table summarizes the dividends paid during the

last three fiscal years.

Fiscal Year Ended December 31, 2017:

Companys dividends and distributions are recorded on the record date.

The following table summarizes the dividends paid during the last three fiscal years.

Year Ended December 31, 2018:

10/30/2018 (1)

Fiscal Year Ended December 31, 2018:

Year Ended December 31, 2019:

10/29/2019 (1)

Fiscal Year Ended December 31, 2019:

Year Ended December 31, 2020:

10/26/2020 (2)

Special dividend.

During the years ended December 31, 2019 and 2018, the Company directed the DRIP program plan

Supplemental dividend

During the the years ended December 31, 2020, 2019 and 2018, the Company directed the DRIP program plan

administrator to repurchase shares on the open market in order to satisfy the DRIP obligation to deliver shares of common stock in lieu of issuing new shares.

Accordingly, the Company purchased and reissued shares to satisfy the DRIP obligation as

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

Fiscal Year Ended December 31, 2018:

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October 1, 2019 through December 31, 2019

Fiscal Year Ended December 31, 2020:

January 1, 2020 through March 31, 2020

April 1, 2020 through June 30, 2020

July 1, 2020 through September 30, 2020

October 1, 2020 through December 31, 2020

FIDUS INVESTMENT CORPORATION

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The return does not reflect any sales load that may be paid by an investor.

The total expenses to average net assets ratio is calculated using the total expenses caption as presented on

the consolidated statements of operations, which includes incentive fee and excludes the income tax provision.

The total expenses to average net assets ratio is calculated using the total expenses, net of income incentive

fee waiver caption as presented on the consolidated statements of operations, which includes incentive fee and excludes the income tax provision.

The net investment income to average net assets ratio is calculated using the net investment income caption as

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Non-operating changes include any items that affect net asset value per share other than increase from investment operations, such as the effects of share issuances and repurchases and other miscellaneous

The ratio of waived incentive fees to average net assets was (0.11%) and zero for the years ended

December 31, 2020 and 2019 through 2016, respectively.

The following is a schedule of supplemental expense ratios to average net assets:

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Expenses other than incentive fee (4)

Incentive fee (3)

Incentive fee, net of incentive fee waiver (4)(9)

Total expenses (4)

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Operations of the Company.

On December 2017, the Tax Cuts and Jobs Act (TCJA) legislation was enacted.

The TCJA includes significant changes to the U.S.

corporate tax system, including a U.S.

federal corporate income tax rate reduction

from a progressive corporate tax rate structure, with a maximum rate of 35%, to a flat tax rate of 21%.

For the years ended December 31, 2020, 2019 and 2018, the Taxable Subsidiaries were subject to a 21% federal income tax rate.

For the year ended

December 31, 2017, the Taxable Subsidiaries were subject to the progressive federal tax rate structure, with a maximum rate of 35%.

The Company classifies interest and penalties, if any, as a component of income tax provision on the

consolidated statements of operations.

Income tax expense at the Taxable Subsidiaries is included as a component of the income tax provisions, depending on the character of the underlying taxable income (ordinary or capital gains), on the

consolidated statements of operations.

The Company classifies interest and penalties, if any, as a component of income tax

provision on the consolidated statements of operations.

Income tax expense at the Taxable Subsidiaries is included as a component of the income tax provisions, depending on the character of the underlying taxable income (ordinary or capital gains),

on the consolidated statements of operations.

For the years ended December 31, 2020, 2019 and 2018, income tax expense at the Taxable Subsidiaries was $628, $233, and $1,103, respectively.

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Therefore, the Companys actual distributable earnings may be different than this estimate.

In addition, there is net unrealized appreciation (depreciation) of zero and $(504) included in additional paid-in capital as of December 31, 2019 and 2018, respectively, that was recognized prior to the IPO.

For federal income tax purposes, the cost of investments owned at December 31, 2020 and 2019 was approximately $685,825 and $700,264,

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The following permanent book-to-tax differences were reclassified on the consolidated statements of changes in net assets for the years ended December 31, 2020, 2019 and 2018.

Company adopted SEC Final Rule Release No.

33-10532, Disclosure Update and Simplification , pursuant to which certain presentation changes are reflected in the consolidated statements of

assets and liabilities and the consolidated statements of changes in net assets.

Certain amounts from 2017 have been retrospectively reclassified to conform to the current year presentation resulting from the adoption of the amended rule.

Additional paid-in capital (2)

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finalized, and such adjustments are reflected in the consolidated statements of changes in net assets and the consolidated statements of assets and liabilities.

Includes the reversal of unrealized (appreciation) depreciation that was recognized prior to the IPO of $504,

zero and $(501) for the years ended December 31, 2019, 2018 and 2017, respectively.

Includes the reversal of unrealized (appreciation) depreciation that was recognized prior to the IPO of zero,

$504, and zero for the years ended December 31, 2020, 2019 and 2018, respectively.

Subsequent Events

On January 10, 2020, the Company received a distribution on its equity investment in Fiber Materials Inc., resulting in a realized gain of

approximately $9,769.

On January 29, 2020, the Company exited its debt investment in Hunter Defense Technologies, Inc.

received payment in full of $9,242 on its first lien debt.

On January 31, 2020, the Company invested $11,000 in a revolving loan and

first lien debt of Combined Systems, Inc., a leading designer, manufacturer, and marketer of non-lethal security products for the global defense and law enforcement markets.

On February 7, 2020, the Company invested $15,000 in first lien debt of Routeware, Inc., a leading provider of highly integrated fleet

automation software and systems for waste haulers and municipalities.

On February 12, 2020, the Board declared a regular quarterly

dividend of $0.39 per share payable on March 27, 2020 to stockholders of record as of March 13, 2020.

On January 11, 2021, we exited our debt investment in Bandon Fitness (Texas), Inc.

We received payment in full of $15,592 on our first

lien debt, which includes a prepayment fee.

On January 14, 2021, we exited our debt investment in Alzheimers Research and

Treatment Center, LLC.

We received payment in full of $6,585 on our first lien debt, which includes a prepayment fee.

On January 19,

2021, we redeemed $50,000 of the aggregate principal amount on the 2023 Notes, resulting in a realized loss on extinguishment of debt of approximately $794.

On January 22, 2021, we invested $11,000 in first lien debt and $516 in common equity of GP&C Operations, LLC (dba Garlock Printing

and Converting), a converter of plastic film into flexible packaging solutions.

On January 26, 2021, we exited our debt investment

in Ohio Medical, LLC.

We received payment in full of $10,000 on our second lien debt.

We subsequently invested $5,000 in a new second lien debt investment in Ohio Medical, LLC.

On February 9, 2021, the Board declared a regular quarterly dividend of $0.31 per share and a supplemental dividend of $0.07 per share

payable March 26, 2021 to stockholders of record as of March 12, 2021.

On February 10, 2021, we invested $6,500 in first

lien debt and made a commitment up to $2,000 of additional first lien debt of Wonderware Holdings, LLC (dba CORE Business Technologies), a provider of revenue management and payments solutions for government, healthcare and education.

On February 11, 2021, we invested $8,900 in first lien debt and made a commitment up to $400 of additional first lien debt of Xeeva,

Inc., a global provider of intelligent, cloud-based indirect spend management software solutions.

On February 12, 2021, we exited

our debt and equity investments in FDS Avionics Corp.

(dba Flight Display Systems).

Flight Display Systems was acquired and combined with Calculex Inc.

and Argon Corporation under a new holding company, Spectra A&D Holdings

We received payment in full of $5,122 on our second lien and revolving debt.

We sold our preferred and a portion of our common equity investments for a realized gain of approximately $958.

In conjunction with the

transaction, we invested $8,000 in first lien debt and $4,129 in preferred equity, of which $1,997 was rolled over from our original common equity investment in Flight Display Systems.

FIDUS INVESTMENT CORPORATION

Notes to Consolidated Financial Statements

(in thousands, except shares and per share data)

On February 16, 2021, we redeemed $50,000 of the $69,000 aggregate principal amount on

the February 2024 Notes, resulting in a realized loss on extinguishment of debt of approximately $1,081.

On February 19, 2021, we

exited our debt investment in Wheel Pros, Inc.

We received payment in full of $20,400 on our second lien debt, which includes a prepayment fee.

Subsequent to December 31, 2020, the global outbreak of the COVID-19 pandemic has adversely

affected some of the Companys investments and continues to have adverse consequences on the U.S.

and global economies.

The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual

portfolio companies, remains uncertain.

At the time of this filing, there is no indication of a reportable subsequent event impacting the Companys financial statements for the year ended December 31, 2020.

The Company cannot predict the

extent to which its financial condition and results of operations will be adversely affected at this time.

The potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the

duration and severity of COVID-19.

The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its

Changes in and Disagreements with Accountants on Accounting and

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk