Oaktree Specialty Lending Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates. Valuation Risk Our investments may not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors, with the assistance of the Audit Committee and Oaktree. There is no single standard for determining fair value in good faith and valuation methodologies involve a significant degree of management judgment. In addition, our valuation methodology utilizes discount rates in part in valuing our investments, and changes in those discount rates may have an impact on the valuation of our investments. Accordingly, valuations by us do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the financial statements. Interest Rate Risk We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments, cash and cash equivalents and idle fund investments. 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. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent our debt investments include floating interest rates. As of September 30, 2020, 88.3% of our debt investment portfolio (at fair value) and 88.8% of our debt investment portfolio (at cost) bore interest at floating rates. The composition of our floating rate debt investments by interest rate floor as of September 30, 2020 and September 30, 2019 was as follows: September 30, 2020 September 30, 2019 ($ in thousands) Fair Value % of Floating Rate Portfolio Fair Value % of Floating Rate Portfolio 0% $ 553,829 42.2 % $ 489,464 41.6 % >0% and <1% 39,789 3.0 % — — % 1% 672,529 51.3 % 685,995 58.4 % >1% 45,362 3.5 % — — % Total Floating Rate Investments $ 1,311,509 100.0 % $ 1,175,459 100.0 % Based on our Consolidated Statement of Assets and Liabilities as of September 30, 2020, the following table shows the approximate annualized net increase (decrease) in net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in our investment and capital structure. However, there can be no assurances our portfolio companies will be able to meet their contractual obligations at any or all levels on increases in interest rates. ($ in thousands) Basis point increase Increase in Interest Income (Increase) in Interest Expense Net increase (decrease) in net assets resulting from operations 250 $ 27,608 $ (10,371) $ 17,237 200 20,845 (8,297) 12,548 150 14,082 (6,222) 7,860 100 7,417 (4,148) 3,269 50 2,896 (2,074) 822 The net effect of any decrease in interest rates is limited and would not be of significance due to interest rate floors on investments and borrowings outstanding. 80 We regularly measure exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on this review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. The following table shows a comparison of the interest rate base for our interest-bearing cash and outstanding investments, at principal, and our outstanding borrowings as of September 30, 2020 and September 30, 2019: September 30, 2020 September 30, 2019 ($ in thousands) Interest Bearing Cash and Investments Borrowings Interest Bearing Cash and Investments Borrowings Money market rate $ 35,248 $ — $ 9,611 $ — Prime rate 305 — 48,036 14,000 LIBOR 30 day 717,576 414,825 686,880 300,825 60 day 6,861 — 9,000 — 90 day 362,141 — 402,603 — 180 day 201,699 — 20,967 — 360 day 23,351 — — — EURIBOR 30 day 29,126 — 19,078 — 180 day 1,689 — — — UK LIBOR 30 day 23,270 — 22,181 — 180 day 14,612 — — — Fixed rate 171,976 300,000 185,809 161,250 Total $ 1,587,854 $ 714,825 $ 1,404,165 $ 476,075 81 Item 8. Consolidated Financial Statements. Index to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm 83 Consolidated Statements of Assets and Liabilities as of September 30, 2020 and 2019 85 Consolidated Statements of Operations for the Years Ended September 30, 2020, 2019 and 2018 86 Consolidated Statements of Changes in Net Assets for the Years Ended September 30, 2020, 2019 and 2018 87 Consolidated Statements of Cash Flows for the Years Ended September 30, 2020, 2019 and 2018 88 Consolidated Schedule of Investments as of September 30, 2020 89 Consolidated Schedule of Investments as of September 30, 2019 101 Notes to Consolidated Financial Statements 112 82 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Oaktree Specialty Lending Corporation Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities of Oaktree Specialty Lending Corporation (the Company), including the consolidated schedules of investments, as of September 30, 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 September 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2020 and 2019, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended September 30, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 18, 2020 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 investments owned as of September 30, 2020 and 2019 by correspondence with the custodians, syndication agents and underlying investee companies, and by other appropriate auditing procedures where confirmation was 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. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Los Angeles, CA November 18, 2020 83 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Oaktree Specialty Lending Corporation Opinion on Internal Control over Financial Reporting We have audited Oaktree Specialty Lending Corporation’s internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Oaktree Specialty Lending Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2020, based on the COSO criteria. We also have 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, including the consolidated schedules of investments, as of September 30, 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 September 30, 2020, and the related notes and our report dated November 18, 2020 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether 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, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and 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 company’s 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 company’s 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 company’s assets that could have a material effect on the financial statements. 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. /s/ Ernst & Young LLP Los Angeles, California November 18, 2020 84 Oaktree Specialty Lending Corporation Consolidated Statements of Assets and Liabilities (in thousands, except per share amounts) September 30, 2020 September 30, 2019 ASSETS Investments at fair value: Control investments (cost September 30, 2020: $245,950; cost September 30, 2019: $224,255) $ 201,385 $ 209,178 Affiliate investments (cost September 30, 2020: $7,551; cost September 30, 2019: $8,449) 6,509 9,170 Non-control/Non-affiliate investments (cost September 30, 2020: $1,415,669; cost September 30, 2019: $1,280,310) 1,365,957 1,219,694 Total investments at fair value (cost September 30, 2020: $1,669,170; cost September 30, 2019: $1,513,014) 1,573,851 1,438,042 Cash and cash equivalents 39,096 15,406 Interest, dividends and fees receivable 6,935 11,167 Due from portfolio companies 2,725 2,616 Receivables from unsettled transactions 9,123 4,586 Deferred financing costs 5,947 6,396 Deferred offering costs 67 — Deferred tax asset, net 847 — Derivative assets at fair value 223 490 Other assets 1,898 2,335 Total assets $ 1,640,712 $ 1,481,038 LIABILITIES AND NET ASSETS Liabilities: Accounts payable, accrued expenses and other liabilities $ 1,072 $ 1,589 Base management fee and incentive fee payable 11,212 10,167 Due to affiliate 2,130 2,689 Interest payable 1,626 2,296 Payables from unsettled transactions 478 59,596 Deferred tax liability — 704 Credit facility payable 414,825 314,825 Unsecured notes payable (net of $3,272 and $2,708 of unamortized financing costs as of September 30, 2020 and September 30, 2019, respectively) 294,490 158,542 Total liabilities 725,833 550,408 Commitments and contingencies (Note 14) Net assets: Common stock, $0.01 par value per share, 250,000 shares authorized; 140,961 shares issued and outstanding as of September 30, 2020 and September 30, 2019 1,409 1,409 Additional paid-in-capital 1,487,774 1,487,774 Accumulated overdistributed earnings (574,304) (558,553) Total net assets (equivalent to $6.49 and $6.60 per common share as of September 30, 2020 and September 30, 2019, respectively) (Note 12) 914,879 930,630 Total liabilities and net assets $ 1,640,712 $ 1,481,038 See notes to Consolidated Financial Statements. 85 Oaktree Specialty Lending Corporation Consolidated Statements of Operations (in thousands, except per share amounts) Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Interest income: Control investments $ 9,832 $ 11,886 $ 12,698 Affiliate investments 467 206 2,027 Non-control/Non-affiliate investments 114,947 120,888 103,223 Interest on cash and cash equivalents 322 690 563 Total interest income 125,568 133,670 118,511 PIK interest income: Control investments — 67 3,446 Affiliate investments — — 416 Non-control/Non-affiliate investments 7,863 5,430 1,907 Total PIK interest income 7,863 5,497 5,769 Fee income: Control investments 42 25 951 Affiliate investments 20 19 48 Non-control/Non-affiliate investments 8,457 6,666 8,433 Total fee income 8,519 6,710 9,432 Dividend income: Control investments 1,180 1,825 5,010 Non-control/Non-affiliate investments 3 — — Total dividend income 1,183 1,825 5,010 Total investment income 143,133 147,702 138,722 Expenses: Base management fee 22,895 22,343 22,652 Part I incentive fee 15,194 14,873 10,485 Part II incentive fee (5,557) 10,194 — Professional fees 2,532 2,906 5,696 Directors fees 570 570 650 Interest expense 26,289 32,426 35,728 Administrator expense 1,524 1,941 1,687 General and administrative expenses 2,494 2,530 3,120 Total expenses 65,941 87,783 80,018 Reversal of fees waived / (fees waived) 5,200 (7,990) (1,342) Net expenses 71,141 79,793 78,676 Net investment income 71,992 67,909 60,046 Unrealized appreciation (depreciation): Control investments (29,488) 1,519 115,906 Affiliate investments (1,763) (360) (2,159) Non-control/Non-affiliate investments 10,904 39,689 (13,657) Secured borrowings — (2,719) 2,353 Foreign currency forward contracts (267) 328 162 Net unrealized appreciation (depreciation) (20,614) 38,457 102,605 Realized gains (losses): Control investments (4,155) — (122,801) Affiliate investments — — 2,048 Non-control/Non-affiliate investments (4,615) 15,300 6,042 Extinguishment of unsecured notes payable (2,541) — (120) Secured borrowings — 2,625 — Foreign currency forward contracts (2,613) 2,880 (436) Net realized gains (losses) (13,924) 20,805 (115,267) Provision for income tax (expense) benefit 1,770 (1,011) (622) Net realized and unrealized gains (losses), net of taxes (32,768) 58,251 (13,284) Net increase (decrease) in net assets resulting from operations $ 39,224 $ 126,160 $ 46,762 Net investment income per common share — basic and diluted $ 0.51 $ 0.48 $ 0.43 Earnings (loss) per common share — basic and diluted (Note 5) $ 0.28 $ 0.89 $ 0.33 Weighted average common shares outstanding — basic and diluted 140,961 140,961 140,961 See notes to Consolidated Financial Statements. 86 Oaktree Specialty Lending Corporation Consolidated Statements of Changes in Net Assets (in thousands, except per share amounts) Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Operations: Net investment income $ 71,992 $ 67,909 $ 60,046 Net unrealized appreciation (depreciation) (20,614) 38,457 102,605 Net realized gains (losses) (13,924) 20,805 (115,267) Provision for income tax (expense) benefit 1,770 (1,011) (622) Net increase (decrease) in net assets resulting from operations 39,224 126,160 46,762 Stockholder transactions: Distributions to stockholders (54,975) (53,565) (38,699) Tax return of capital — — (17,685) Net increase (decrease) in net assets from stockholder transactions (54,975) (53,565) (56,384) Capital share transactions: Issuance of common stock under dividend reinvestment plan 1,878 1,344 1,411 Repurchases of common stock under dividend reinvestment plan (1,878) (1,344) (1,411) Net increase (decrease) in net assets from capital share transactions — — — Total increase (decrease) in net assets (15,751) 72,595 (9,622) Net assets at beginning of period 930,630 858,035 867,657 Net assets at end of period $ 914,879 $ 930,630 $ 858,035 Net asset value per common share $ 6.49 $ 6.60 $ 6.09 Common shares outstanding at end of period 140,961 140,961 140,961 See notes to Consolidated Financial Statements. 87 Oaktree Specialty Lending Corporation Consolidated Statements of Cash Flows (in thousands) Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Operating activities: Net increase (decrease) in net assets resulting from operations $ 39,224 $ 126,160 $ 46,762 Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Net unrealized (appreciation) depreciation 20,614 (38,457) (102,605) Net realized (gains) losses 13,924 (20,805) 115,147 Redemption premium on unsecured notes payable — — 120 PIK interest income (7,863) (5,497) (4,380) Accretion of original issue discount on investments (12,305) (17,982) (7,331) Accretion of original issue discount on unsecured notes payable 302 107 266 Amortization of deferred financing costs 2,187 2,471 3,443 Deferred taxes (1,551) 282 422 Purchases of investments (727,161) (477,967) (1,059,603) Proceeds from the sales and repayments of investments 579,550 606,270 1,106,826 Changes in operating assets and liabilities: (Increase) decrease in interest, dividends and fees receivable 4,232 (895) (3,380) (Increase) decrease in due from portfolio companies (109) (1,259) 4,313 (Increase) decrease in receivables from unsettled transactions (4,537) 22,174 (26,760) (Increase) decrease in other assets 437 673 (2,494) Increase (decrease) in accounts payable, accrued expenses and other liabilities (517) (1,992) 1,164 Increase (decrease) in base management fee and incentive fee payable 1,045 1,944 1,473 Increase (decrease) in due to affiliate (559) (585) 1,459 Increase (decrease) in interest payable (670) (1,069) 198 Increase (decrease) in payables from unsettled transactions (59,118) 22,360 (21,455) Increase (decrease) in director fees payable — — (184) Increase (decrease) in amounts payable to syndication partners — (109) 108 Net cash provided by (used in) operating activities (152,875) 215,824 53,509 Financing activities: Distributions paid in cash (53,097) (52,221) (54,973) Borrowings under credit facilities 286,000 298,825 434,000 Repayments of borrowings under credit facilities (186,000) (225,000) (448,995) Repayments of unsecured notes (161,250) (228,825) — Issuance of unsecured notes 297,459 — — Repurchase of unsecured notes — — (21,188) Repayments of secured borrowings — (2,659) (1,191) Repurchases of common stock under dividend reinvestment plan (1,878) (1,344) (1,411) Deferred financing costs paid (4,835) (2,883) (6,175) Deferred offering costs paid (67) — — Net cash provided by (used in) financing activities 176,332 (214,107) (99,933) Effect of exchange rate changes on foreign currency 233 200 — Net increase (decrease) in cash and cash equivalents 23,690 1,917 (46,424) Cash and cash equivalents, beginning of period 15,406 13,489 59,913 Cash and cash equivalents, end of period $ 39,096 $ 15,406 $ 13,489 Supplemental information: Cash paid for interest $ 24,470 $ 31,025 $ 31,821 Non-cash financing activities: Issuance of shares of common stock under dividend reinvestment plan $ 1,878 $ 1,344 $ 1,411 Extinguishment of secured borrowings — (7,163) — Reconciliation to the Consolidated Statements of Assets and Liabilities September 30, 2020 September 30, 2019 September 30, 2018 Cash and cash equivalents $ 39,096 $ 15,406 $ 13,380 Restricted cash — — 109 Total cash and cash equivalents and restricted cash $ 39,096 $ 15,406 $ 13,489 See notes to Consolidated Financial Statements. 88 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Control Investments (8)(9) C5 Technology Holdings, LLC Data Processing & Outsourced Services 829 Common Units $ — $ — (20) 34,984,460.37 Preferred Units 34,984 27,638 (20) 34,984 27,638 Dominion Diagnostics, LLC Health Care Services First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024 6.00 % $ 27,660 27,660 27,660 (6)(20) First Lien Revolver, LIBOR+5.00% cash due 2/28/2024 6.00 % 5,260 5,260 5,260 (6)(19)(20) 30,030.8 Common Units in DD Healthcare Services Holdings, LLC 18,626 7,667 (20) 51,546 40,587 First Star Speir Aviation Limited Airlines (10) First Lien Term Loan, 9.00% cash due 12/15/2020 11,510 2,035 11,510 (11)(20) 100% equity interest 8,500 1,622 (11)(12)(20) 10,535 13,132 New IPT, Inc. Oil & Gas Equipment & Services First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 6.00 % 2,304 2,304 1,800 (6)(20) First Lien Revolver, LIBOR+5.00% cash due 3/17/2021 6.00 % 1,009 1,009 788 (6)(19)(20) 50.087 Class A Common Units in New IPT Holdings, LLC — — (20) 3,313 2,588 Senior Loan Fund JV I, LLC Multi-Sector Holdings (14) Subordinated Debt, LIBOR+7.00% cash due 12/29/2028 7.17 % 96,250 96,250 96,250 (6)(11)(20) 87.5% LLC equity interest 49,322 21,190 (11)(16)(19) 145,572 117,440 Total Control Investments (22.0% of net assets) $ 245,950 $ 201,385 Affiliate Investments (17) Assembled Brands Capital LLC Specialized Finance First Lien Revolver, LIBOR+6.00% cash due 10/17/2023 7.00 % $ 4,688 $ 4,688 $ 4,194 (6)(19)(20) 1,609,201 Class A Units 764 483 (20) 1,019,168.80 Preferred Units, 6% 1,019 1,091 (20) 70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029 — — (20) 6,471 5,768 Caregiver Services, Inc. Health Care Services 1,080,399 shares of Series A Preferred Stock, 10% 1,080 741 (20) 1,080 741 Total Affiliate Investments (0.7% of net assets) $ 7,551 $ 6,509 Non-Control/Non-Affiliate Investments (18) 4 Over International, LLC Commercial Printing First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022 7.00 % $ 5,676 $ 5,654 $ 5,264 (6)(20) First Lien Revolver, LIBOR+6.00% cash due 6/7/2021 7.00 % 2,232 2,214 2,070 (6)(20) 7,868 7,334 99 Cents Only Stores LLC General Merchandise Stores First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022 6.00 % 19,431 19,220 17,877 (6) 19,220 17,877 A.T. Holdings II SÀRL Biotechnology First Lien Term Loan, 12.00% cash due 4/27/2023 22,619 22,619 26,464 (11)(20) First Lien Delayed Draw Term Loan, 12.00% cash due 4/27/2023 1,508 1,508 1,780 (11)(19)(20) 24,127 28,244 89 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Access CIG, LLC Diversified Support Services Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026 7.91 % $ 15,000 $ 14,909 $ 14,250 (6) 14,909 14,250 Accupac, Inc. Personal Products First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026 7.00 % 12,487 12,294 12,487 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026 — (36) — (6)(19)(20) First Lien Revolver, LIBOR+6.00% cash due 1/17/2026 7.00 % 1,564 1,540 1,564 (6)(20) 13,798 14,051 Acquia Inc. Application Software First Lien Term Loan, LIBOR+7.00% cash due 10/31/2025 8.00 % 20,950 20,594 20,499 (6)(20) First Lien Revolver, LIBOR+7.00% cash due 10/31/2025 — (39) (48) (6)(19)(20) 20,555 20,451 Aden & Anais Merger Sub, Inc. Apparel, Accessories & Luxury Goods 51,645 Common Units in Aden & Anais Holdings, Inc. 5,165 — (20) 5,165 — AdVenture Interactive, Corp. Advertising 9,073 shares of common stock 13,611 13,440 (20) 13,611 13,440 AI Ladder (Luxembourg) Subco S.a.r.l. Electrical Components & Equipment First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 4.65 % 21,374 20,934 20,465 (6)(11) 20,934 20,465 AI Sirona (Luxembourg) Acquisition S.a.r.l. Pharmaceuticals Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/2026 7.25 % € 24,838 27,668 28,435 (6)(11)(20) 27,668 28,435 Airbnb, Inc. Hotels, Resorts & Cruise Lines First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025 8.50 % $ 15,743 15,378 17,081 (6) 15,378 17,081 AirStrip Technologies, Inc. Application Software 5,715 Common Stock Warrants (exercise price $139.99) expiration date 5/11/2025 90 — (20) 90 — Aldevron, L.L.C. Biotechnology First Lien Term Loan, LIBOR+4.25% cash due 10/12/2026 5.25 % 7,960 7,880 7,977 (6) 7,880 7,977 Algeco Scotsman Global Finance Plc Construction & Engineering Fixed Rate Bond, 8.00% cash due 2/15/2023 13,524 13,277 13,465 (11) 13,277 13,465 Alvotech Holdings S.A. Biotechnology (13) Fixed Rate Bond 15% PIK Note A due 12/13/2023 14,800 18,849 19,968 (11)(20) Fixed Rate Bond 15% PIK Note B due 12/13/2023 14,800 18,849 19,196 (11)(20) 37,698 39,164 Amplify Finco Pty Ltd. Movies & Entertainment First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026 4.75 % 995 909 856 (6)(11)(20) Second Lien Term Loan, LIBOR+8.00% cash due 11/26/2027 8.75 % 12,500 12,188 9,438 (6)(11)(20) 13,097 10,294 90 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Ancile Solutions, Inc. Application Software First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 8.00 % $ 8,181 $ 8,150 $ 8,124 (6)(20) 8,150 8,124 Apptio, Inc. Application Software First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 8.25 % 23,764 23,420 23,297 (6)(20) First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 — (22) (30) (6)(19)(20) 23,398 23,267 Ardonagh Midco 3 PLC Insurance Brokers First Lien Term Loan, EURIBOR+7.50% cash due 7/14/2026 8.50 % € 1,440 1,594 1,640 (6)(11)(20) First Lien Term Loan, UK LIBOR+7.50% cash due 7/14/2026 8.25 % £ 11,303 13,752 14,188 (6)(11)(20) First Lien Delayed Draw Term Loan, UK LIBOR+7.50% cash due 7/14/2026 £ — — — (6)(11)(19)(20) Fixed Rate Bond, 11.50% cash due 1/15/2027 $ 2,222 2,200 2,255 (11) 17,546 18,083 Associated Asphalt Partners, LLC Construction Materials First Lien Term Loan, LIBOR+5.25% cash due 4/5/2024 6.25 % $ 2,554 2,150 2,073 (6) 2,150 2,073 Asurion, LLC Property & Casualty Insurance Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025 6.65 % 19,985 19,950 20,058 (6) 19,950 20,058 Athenex, Inc. Pharmaceuticals First Lien Term Loan, 11.00% cash due 6/19/2026 28,475 27,252 28,261 (11)(20) First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026 — (321) (171) (11)(19)(20) 266,052 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027 915 785 (11)(20) 27,846 28,875 Aurora Lux Finco S.À.R.L. Airport Services First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026 7.00 % 22,885 22,376 21,283 (6)(11)(20) 22,376 21,283 Blackhawk Network Holdings, Inc. Data Processing & Outsourced Services Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026 7.19 % 26,250 26,049 24,150 (6) 26,049 24,150 Boxer Parent Company Inc. Systems Software First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 4.40 % 13,775 13,666 13,407 (6) 13,666 13,407 BX Commercial Mortgage Trust 2020-VIVA Diversified Real Estate Activities Class D Variable Notes due 3/9/2044 3.67 % 12,556 10,482 11,451 (6)(11)(20) Class E Variable Notes due 3/9/2044 3.67 % 6,221 4,806 5,395 (6)(11)(20) 15,288 16,846 California Pizza Kitchen, Inc. Restaurants First Lien Term Loan, LIBOR+8.00% cash due 8/23/2022 3,222 3,081 983 (6)(21) 3,081 983 Chief Power Finance II, LLC Independent Power Producers & Energy Traders First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022 7.50 % 21,850 21,462 20,812 (6)(20) 21,462 20,812 CITGO Holding, Inc. Oil & Gas Refining & Marketing First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023 8.00 % 11,753 11,570 11,081 (6) Fixed Rate Bond, 9.25% cash due 8/1/2024 10,672 10,672 10,192 22,242 21,273 91 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes CITGO Petroleum Corp. Oil & Gas Refining & Marketing First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 6.00 % $ 8,979 $ 8,890 $ 8,553 (6) 8,890 8,553 Continental Intermodal Group LP Oil & Gas Storage & Transportation First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025 24,741 24,741 21,753 (6)(20) Common Stock Warrants expiration date 7/28/2025 — 1,672 (20) 24,741 23,425 Convergeone Holdings, Inc. IT Consulting & Other Services First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026 5.15 % 14,621 14,169 13,465 (6) 14,169 13,465 Conviva Inc. Application Software 417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021 105 395 (20) 105 395 Corrona, LLC Health Care Services First Lien Term Loan, LIBOR+5.50% cash due 12/13/2025 6.50 % 10,300 10,144 10,152 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/2025 — (32) (52) (6)(19)(20) First Lien Revolver, PRIME+4.50% cash due 12/13/2025 7.75 % 305 277 279 (6)(19)(20) 1,099 Class A2 Common Units in Corrona Group Holdings, L.P. 1,038 1,038 (20) 11,427 11,417 Coyote Buyer, LLC Specialty Chemicals First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026 7.00 % 13,123 12,992 12,992 (6)(20) First Lien Revolver, LIBOR+6.00% cash due 2/6/2025 — (9) (9) (6)(19)(20) 12,983 12,983 CTOS, LLC Trading Companies & Distributors First Lien Term Loan, LIBOR+4.25% cash due 4/18/2025 4.40 % 10,139 10,228 10,069 (6) 10,228 10,069 Eagleview Technology Corporation Application Software Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026 8.50 % 12,000 11,880 10,440 (6)(20) 11,880 10,440 EHR Canada, LLC Food Retail First Lien Term Loan, LIBOR+8.00% cash due 12/4/2020 9.00 % 6,861 6,851 6,998 (6)(20) 6,851 6,998 EOS Fitness Opco Holdings, LLC Leisure Facilities 487.5 Class A Preferred Units, 12% 488 49 (20) 12,500 Class B Common Units — — (20) 488 49 ExamSoft Worldwide, Inc. Application Software 180,707 Class C Units in ExamSoft Investor LLC 181 500 (20) 181 500 Fortress Biotech, Inc. Biotechnology First Lien Term Loan, 11.00% cash due 8/27/2025 8,346 7,842 7,908 (11)(20) 243,348 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030 258 419 (11)(20) 8,100 8,327 GI Chill Acquisition LLC Managed Health Care First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025 4.22 % 17,640 17,552 17,331 (6)(20) Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026 7.72 % 10,000 9,927 9,350 (6)(20) 27,479 26,681 92 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes GKD Index Partners, LLC Specialized Finance First Lien Term Loan, LIBOR+7.00% cash due 6/29/2023 8.00 % $ 20,933 $ 20,818 $ 20,577 (6)(20) First Lien Revolver, LIBOR+7.00% cash due 6/29/2023 8.00 % 924 915 904 (6)(19)(20) 21,733 21,481 Global Medical Response Health Care Services First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025 5.25 % 6,256 6,152 6,084 (6) 6,152 6,084 Guidehouse LLP Research & Consulting Services First Lien Term Loan, LIBOR+4.50% cash due 5/1/2025 4.65 % 4,949 4,907 4,912 (6) Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026 8.15 % 20,000 19,930 19,300 (6)(20) 24,837 24,212 Gulf Operating, LLC Oil & Gas Storage & Transportation First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023 6.25 % 3,275 1,874 2,324 (6) 1,874 2,324 Houghton Mifflin Harcourt Publishers Inc. Education Services First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024 7.25 % 6,738 6,508 6,300 (6)(11) 6,508 6,300 I Drive Safely, LLC Education Services 125,079 Class A Common Units of IDS Investments, LLC 1,000 200 (20) 1,000 200 IBG Borrower LLC Apparel, Accessories & Luxury Goods First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022 7.25 % 9,056 8,569 7,856 (6)(20) 8,569 7,856 iCIMs, Inc. Application Software First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024 7.50 % 16,718 16,493 16,584 (6)(20) First Lien Revolver, LIBOR+6.50% cash due 9/12/2024 — (15) (7) (6)(19)(20) 16,478 16,577 Immucor, Inc. Health Care Supplies First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025 6.75 % 6,477 6,354 6,347 (6)(20) First Lien Revolver, LIBOR+5.75% cash due 7/2/2025 — (10) (11) (6)(19)(20) Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025 9.00 % 15,611 15,316 15,298 (6)(20) 21,660 21,634 Integral Development Corporation Other Diversified Financial Services 1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024 113 — (20) 113 — L Squared Capital Partners LLC Multi-Sector Holdings 2.00% limited partnership interest 887 2,192 (11)(16) 887 2,192 Lanai Holdings III, Inc. Health Care Distributors First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022 5.75 % 12,948 12,810 12,260 (6) 12,810 12,260 Lannett Company, Inc. Pharmaceuticals First Lien Term Loan, LIBOR+5.00% cash due 11/25/2020 6.00 % 460 460 456 (6)(11) 460 456 93 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Lift Brands Holdings, Inc. Leisure Facilities 2,000,000 Class A Common Units in Snap Investments, LLC $ 1,399 $ — (20) 1,399 — Lightbox Intermediate, L.P. Real Estate Services First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026 5.15 % $ 39,500 39,023 37,723 (6)(20) 39,023 37,723 LogMeIn, Inc. Application Software Second Lien Term Loan, LIBOR+9.00% cash due 8/31/2028 9.16 % 9,293 8,831 9,247 (6) 8,831 9,247 LTI Holdings, Inc. Electronic Components First Lien Term Loan, LIBOR+4.75% cash due 7/24/2026 4.90 % 1,794 1,513 1,685 (6) First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025 3.65 % 18,082 15,087 16,884 (6) Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026 6.90 % 9,000 9,000 7,983 (6) 25,600 26,552 Maravai Intermediate Holdings, LLC Biotechnology First Lien Term Loan, LIBOR+4.25% cash due 8/1/2025 5.25 % 11,760 11,642 11,789 (6)(20) 11,642 11,789 Mauser Packaging Solutions Holding Company Metal & Glass Containers Fixed Rate Bond, 8.50% cash due 4/15/2024 11,378 11,273 11,833 11,273 11,833 Mayfield Agency Borrower Inc. Property & Casualty Insurance First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025 4.65 % 28,823 28,045 26,679 (6) 28,045 26,679 McAfee, LLC Systems Software Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2025 9.50 % 7,000 7,028 7,074 (6) 7,028 7,074 MHE Intermediate Holdings, LLC Diversified Support Services First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 6.00 % 2,910 2,888 2,832 (6)(20) 2,888 2,832 Mindbody, Inc. Internet Services & Infrastructure First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025 8.00 % 29,097 28,675 26,828 (6)(20) First Lien Revolver, LIBOR+8.00% cash due 2/14/2025 — (44) (241) (6)(19)(20) 28,631 26,587 Ministry Brands, LLC Application Software First Lien Revolver, LIBOR+5.00% cash due 12/2/2022 6.00 % 575 566 566 (6)(19)(20) Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023 10.25 % 9,000 8,934 8,923 (6)(20) 9,500 9,489 MRI Software LLC Application Software First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026 6.50 % 14,369 14,242 14,022 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026 — (59) (144) (6)(19)(20) First Lien Revolver, LIBOR+5.50% cash due 2/10/2026 — (13) (31) (6)(19)(20) 14,170 13,847 94 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes NeuAG, LLC Fertilizers & Agricultural Chemicals First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024 7.00 % $ 35,306 $ 33,918 $ 33,894 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024 — (175) (175) (6)(19)(20) 33,743 33,719 NuStar Logistics, L.P. Oil & Gas Refining & Marketing Unsecured Delayed Draw Term Loan, 12.00% cash due 4/19/2023 — — — (19)(20) — — Olaplex, Inc. Personal Products First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026 7.50 % 35,056 34,441 35,056 (6)(20) First Lien Revolver, LIBOR+6.50% cash due 1/8/2025 7.50 % 1,917 1,852 1,917 (6)(19)(20) 36,293 36,973 OmniSYS Acquisition Corporation Diversified Support Services 100,000 Common Units in OSYS Holdings, LLC 1,000 607 (20) 1,000 607 Onvoy, LLC Integrated Telecommunication Services Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025 11.50 % 16,750 16,750 15,142 (6)(20) 19,666.67 Class A Units in GTCR Onvoy Holdings, LLC 1,967 268 (20) 13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC — — (20) 18,717 15,410 OZLM Funding III, Ltd. Multi-Sector Holdings Class DR Notes, LIBOR+7.77% cash due 1/22/2029 8.03 % 2,312 1,657 2,119 (6)(11) 1,657 2,119 PaySimple, Inc. Data Processing & Outsourced Services First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025 5.65 % 49,535 48,711 47,801 (6)(20) 48,711 47,801 Pingora MSR Opportunity Fund I-A, LP Thrifts & Mortgage Finance 1.86% limited partnership interest 938 353 (11)(16)(19) 938 353 PLATO Learning Inc. Education Services Unsecured Senior PIK Note, 8.50% PIK due 12/9/2021 3,099 2,434 — (15)(20) Unsecured Junior PIK Note, 10.00% PIK due 12/9/2021 15,010 10,227 — (15)(20) Unsecured Revolver, 5.00% cash due 12/9/2021 2,938 2,631 588 (20)(21) 126,127.80 Class A Common Units of Edmentum 126 — (20) 15,418 588 ProFrac Services, LLC Industrial Machinery First Lien Term Loan, LIBOR+7.50% cash due 9/15/2023 8.75 % 15,170 15,081 11,643 (6)(20) 15,081 11,643 Project Boost Purchaser, LLC Application Software Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027 8.15 % 3,750 3,750 3,375 (6)(20) 3,750 3,375 95 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Pug LLC Internet & Direct Marketing Retail First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027 8.75 % $ 15,740 $ 14,802 $ 15,307 (6) 14,802 15,307 QuorumLabs, Inc. Application Software 64,887,669 Junior-2 Preferred Stock 375 — (20) 375 — Refac Optical Group Specialty Stores 1,550.9435 Shares of Common Stock in Refac Holdings, Inc. 1 — (20) 550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10% 305 — (20) 1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10% 999 — (20) 1,305 — Salient CRGT, Inc. Aerospace & Defense First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022 7.50 % 2,955 2,938 2,748 (6)(20) 2,938 2,748 Scilex Pharmaceuticals Inc. Pharmaceuticals Fixed Rate Zero Coupon Bond due 8/15/2026 15,585 12,069 12,468 (20) 12,069 12,468 ShareThis, Inc. Application Software 345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024 367 — (20) 367 — Sorrento Therapeutics, Inc. Biotechnology 125,000 Common Stock Warrants (exercise price $3.94) expiration date 11/3/2029 — 1,123 (11)(20) — 1,123 Supermoose Borrower, LLC Application Software First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025 3.90 % 10,196 8,925 9,193 (6) 8,925 9,193 Surgery Center Holdings, Inc. Health Care Facilities First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024 4.25 % 3,850 3,133 3,640 (6)(11) 3,133 3,640 Swordfish Merger Sub LLC Auto Parts & Equipment Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026 7.75 % 12,500 12,458 10,563 (6)(20) 12,458 10,563 Tacala, LLC Restaurants Second Lien Term Loan, LIBOR+7.50% cash due 2/4/2028 7.65 % 7,276 7,167 6,903 (6) 7,167 6,903 TerSera Therapeutics LLC Pharmaceuticals Second Lien Term Loan, LIBOR+9.50% cash due 3/30/2024 10.50 % 29,663 29,236 29,371 (6)(20) 668,879 Common Units of TerSera Holdings LLC 2,192 3,487 (20) 31,428 32,858 TIBCO Software Inc. Application Software Second Lien Term Loan, LIBOR+7.25% cash due 3/3/2028 7.40 % 15,000 14,925 14,766 (6) 14,925 14,766 TigerConnect, Inc. Application Software 299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024 60 525 (20) 60 525 Transact Holdings Inc. Application Software First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026 4.90 % 6,930 6,826 6,553 (6)(20) 6,826 6,553 96 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Truck Hero, Inc. Auto Parts & Equipment Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025 9.25 % $ 21,500 $ 21,191 $ 20,819 (6)(20) 21,191 20,819 U.S. Renal Care, Inc. Health Care Services First Lien Term Loan, LIBOR+5.00% cash due 6/26/2026 5.15 % 1,122 934 1,096 (6) 934 1,096 Uniti Group Inc. Specialized REITs 21,072 Common Units — 133 222 (11)(12) 133 222 Verscend Holding Corp. Health Care Technology First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 4.65 % 14,525 14,479 14,429 (6) Fixed Rate Bond, 9.75% cash due 8/15/2026 7,000 7,020 7,629 21,499 22,058 Vertex Aerospace Services Corp. Aerospace & Defense First Lien Term Loan, LIBOR+4.50% cash due 6/29/2025 4.65 % 10,168 10,133 10,073 (6) 10,133 10,073 Vitalyst Holdings, Inc. IT Consulting & Other Services 675 Series A Preferred Stock Units 675 440 (20) 7,500 Class A Common Stock Units 75 — (20) 750 440 William Morris Endeavor Entertainment, LLC Movies & Entertainment First Lien Term Loan, LIBOR+8.50% cash due 5/18/2025 9.50 % 33,298 31,594 33,298 (6)(20) 31,594 33,298 Windstream Services II, LLC Integrated Telecommunication Services First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027 7.25 % 25,935 24,900 25,168 (6) 6,129 Shares of Common Stock in Windstream Holdings II, LLC 53 69 (20) 37,215 Warrants in Windstream Holdings II, LLC 913 444 (20) 25,866 25,681 WP CPP Holdings, LLC Aerospace & Defense Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 8.75 % 15,000 14,893 11,700 (6)(20) 14,893 11,700 WPEngine, Inc. Application Software First Lien Term Loan, LIBOR+6.50% cash due 3/27/2026 7.50 % 14,188 13,863 13,949 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+6.50% cash due 3/27/2026 — (602) (443) (6)(19)(20) 13,261 13,506 xMatters, Inc. Application Software 600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025 709 336 (20) 709 336 Zep Inc. Specialty Chemicals First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024 5.00 % 1,955 1,895 1,845 (6) Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025 9.25 % 30,000 29,908 24,180 (6)(20) 31,803 26,025 Zephyr Bidco Limited Specialized Finance Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026 7.55 % £ 18,000 23,705 21,176 (6)(11) 23,705 21,176 Total Non-Control/Non-Affiliate Investments (149.3% of net assets) $ 1,415,669 $ 1,365,957 97 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Total Portfolio Investments (172.0% of net assets) $ 1,669,170 $ 1,573,851 Cash and Cash Equivalents JP Morgan Prime Money Market Fund, Institutional Shares $ 35,248 $ 35,248 Other cash accounts 3,848 3,848 Total Cash and Cash Equivalents (4.3% of net assets) $ 39,096 $ 39,096 Total Portfolio Investments and Cash and Cash Equivalents (176.3% of net assets) $ 1,708,266 $ 1,612,947 Derivative Instrument Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Counterparty Cumulative Unrealized Appreciation /(Depreciation) Foreign currency forward contract $ 35,577 £ 27,494 11/12/2020 JPMorgan Chase Bank, N.A. $ 25 Foreign currency forward contract $ 30,260 € 25,614 11/12/2020 JPMorgan Chase Bank, N.A. 198 $ 223 98 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) (1) All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted. (2) See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region. (3) Equity ownership may be held in shares or units of companies related to the portfolio companies. (4) Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents. (5) Each of the Company's investments is pledged as collateral under the Credit Facility (as defined in Note 6 to the accompanying notes to the Consolidated Financial Statements). (6) The interest rate on the principal balance outstanding for all floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2020, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27%, the 360-day LIBOR at 0.37%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.05%, the 180-day UK LIBOR at 0.22%, the 30-day EURIBOR at (0.57)% and the 180-day EURIBOR at (0.36)%. Most loans include an interest floor, which generally ranges from 0% to 1%. (7) Principal includes accumulated payment in kind ("PIK") interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars. (8) Control Investments generally are defined by the Investment Company Act of 1940, as amended (the "Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (9) As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" these portfolio companies as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the accompanying notes to the Consolidated Financial Statements for transactions during the year ended September 30, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control. (10) First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with Accounting Standards Update ("ASU") 2013-08, the Company has deemed the holding company to be an investment company under accounting principles generally accepted in the United States ("GAAP") and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities. (11) Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2020, qualifying assets represented 75.4% of the Company's total assets and non-qualifying assets represented 24.6% of the Company's total assets. (12) Income producing through payment of dividends or distributions. (13) PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of September 30, 2020, the accumulated PIK interest balance for each of the A notes and the B notes was $4.3 million. The fair value of this investment is inclusive of PIK. (14) See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition. (15) This investment was on PIK non-accrual status as of September 30, 2020. PIK non-accrual status is inclusive of other non-cash income, where applicable. (16) This investment was valued using net asset value as a practical expedient for fair value. Consistent with Financial Accounting Standards Board ("FASB") guidance under Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), these investments are excluded from the hierarchical levels. (17) Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities. (18) Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. (19) Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. 99 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2020 (dollar amounts in thousands) (20) As of September 30, 2020, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820. (21) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. See notes to Consolidated Financial Statements. 100 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Control Investments (8)(9) C5 Technology Holdings, LLC Data processing & outsourced services 829 Common Units $ — $ — (20) 34,984,460.37 Preferred Units 34,984 34,984 (20) 34,984 34,984 First Star Speir Aviation Limited Airlines (10) First Lien Term Loan, 9.00% cash due 12/15/2020 $ 11,510 2,140 11,510 (11)(20) 100% equity interest 8,500 4,630 (11)(12)(20) 10,640 16,140 New IPT, Inc. Oil & gas equipment services First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 7.10 % 3,256 3,256 3,256 (6)(20) First Lien Revolver, LIBOR+5.00% cash due 3/17/2021 7.10 % 1,009 1,009 1,009 (6)(19)(20) 50.087 Class A Common Units in New IPT Holdings, LLC — 2,903 (20) 4,265 7,168 Senior Loan Fund JV I, LLC Multi-sector holdings (14)(15) Subordinated Debt, LIBOR+7.00% cash due 12/29/2028 9.39 % 96,250 96,250 96,250 (6)(11)(20) 87.5% LLC equity interest 49,322 30,052 (11)(16)(19) 145,572 126,302 Thruline Marketing, Inc. Advertising First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022 9.10 % 18,146 18,146 18,146 (6)(20) First Lien Revolver, LIBOR+7.75% cash due 4/3/2022 — — — (6)(19)(20) 9,073 Class A Units in FS AVI Holdco, LLC 10,648 6,438 (20) 28,794 24,584 Total Control Investments (22.5% of net assets) $ 224,255 $ 209,178 Affiliate Investments (17) Assembled Brands Capital LLC Specialized finance First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023 8.10 % $ 5,585 $ 5,585 $ 5,585 (6)(19)(20) 1,609,201 Class A Units 765 782 (20) 1,019,168.80 Preferred Units, 6% 1,019 1,019 (20) 70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029 — — (20) 7,369 7,386 Caregiver Services, Inc. Healthcare services 1,080,399 shares of Series A Preferred Stock, 10% 1,080 1,784 (20) 1,080 1,784 Total Affiliate Investments (1.0% of net assets) $ 8,449 $ 9,170 Non-Control/Non-Affiliate Investments (18) 4 Over International, LLC Commercial printing First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022 8.04 % $ 5,799 $ 5,764 $ 5,688 (6)(20) First Lien Revolver, PRIME+5.00% cash due 6/7/2021 10.00 % 255 238 212 (6)(19)(20) 6,002 5,900 99 Cents Only Stores LLC General merchandise stores First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022 7.10 % 19,326 18,946 16,934 (6) 18,946 16,934 Access CIG, LLC Diversified support services Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026 10.07 % 15,000 14,892 15,000 (6)(20) 14,892 15,000 101 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Aden & Anais Merger Sub, Inc. Apparel, accessories & luxury goods 51,645 Common Units in Aden & Anais Holdings, Inc. $ 5,165 $ — (20) 5,165 — AdVenture Interactive, Corp. Advertising 9,073 shares of common stock 13,611 12,677 (20) 13,611 12,677 AI Ladder (Luxembourg) Subco S.a.r.l. Electrical components & equipment First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 6.60 % $ 21,752 21,210 20,032 (6)(11) 21,210 20,032 AI Sirona (Luxembourg) Acquisition S.a.r.l. Pharmaceuticals Second Lien Term Loan, EURIBOR+7.25% cash due 7/10/2026 7.25 % € 17,500 20,035 18,673 (6)(11) 20,035 18,673 Air Medical Group Holdings, Inc. Healthcare services First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025 6.29 % $ 6,321 6,192 5,936 (6) 6,192 5,936 AirStrip Technologies, Inc. Application software 22,858.71 Series C-1 Preferred Stock Warrants (exercise price $34.99757) expiration date 5/11/2025 90 — (20) 90 — Airxcel, Inc. Household appliances First Lien Term Loan, LIBOR+4.50% cash due 4/28/2025 6.54 % 7,900 7,837 7,614 (6) 7,837 7,614 Aldevron, L.L.C. Biotechnology First Lien Term Loan, LIBOR+4.25% cash due 9/20/2026 6.36 % 8,000 7,920 8,040 (6) 7,920 8,040 Algeco Scotsman Global Finance Plc Construction & engineering Fixed Rate Bond, 8.00% cash due 2/15/2023 23,915 23,443 23,982 (11) 23,443 23,982 Allen Media, LLC Movies & entertainment First Lien Term Loan, LIBOR+6.50% cash due 8/30/2023 8.60 % 19,238 18,858 18,613 (6)(20) 18,858 18,613 Altice France S.A. Integrated telecommunication services Fixed Rate Bond, 8.13% cash due 1/15/2024 3,000 3,045 3,113 (11) Fixed Rate Bond, 7.63% cash due 2/15/2025 2,000 2,012 2,083 (11) 5,057 5,196 Alvotech Holdings S.A. Biotechnology Fixed Rate Bond 15% PIK Note A due 12/13/2023 14,800 16,304 18,089 (11)(13)(20) Fixed Rate Bond 15% PIK Note B due 12/13/2023 14,800 16,304 16,609 (11)(13)(20) 32,608 34,698 Ancile Solutions, Inc. Application software First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021 9.10 % 8,677 8,591 8,504 (6)(20) 8,591 8,504 Apptio, Inc. Application software First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 9.56 % 23,764 23,340 23,325 (6)(20) First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 — (27) (28) (6)(19)(20) 23,313 23,297 Asurion, LLC Property & casualty insurance Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025 8.54 % 22,000 21,954 22,382 (6) 21,954 22,382 102 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Avantor Inc. Healthcare distributors Fixed Rate Bond, 9.00% cash due 10/1/2025 $ 3,000 $ 2,975 $ 3,379 2,975 3,379 Belk Inc. Department stores First Lien Term Loan, LIBOR+4.75% cash due 12/12/2022 6.80 % 653 585 480 (6) 585 480 Blackhawk Network Holdings, Inc. Data processing & outsourced services Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026 9.06 % 26,250 26,013 26,283 (6) 26,013 26,283 Boxer Parent Company Inc. Systems software First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 6.29 % 13,915 13,798 13,416 (6) 13,798 13,416 California Pizza Kitchen, Inc. Restaurants First Lien Term Loan, LIBOR+6.00% cash due 8/23/2022 8.53 % 3,122 3,097 2,800 (6) 3,097 2,800 Cenegenics, LLC Healthcare services (23) First Lien Term Loan, 9.75% cash 2.00% PIK due 9/30/2019 29,781 27,738 — (20)(21) First Lien Revolver, 15.00% cash due 9/30/2019 2,203 2,203 — (20)(21) 452,914.87 Common Units in Cenegenics, LLC 598 — (20) 345,380.141 Preferred Units in Cenegenics, LLC 300 — (20) 30,839 — CITGO Holding, Inc. Oil & gas refining & marketing Fixed Rate Bond, 9.25% cash due 8/1/2024 10,672 10,672 11,366 First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023 10,000 9,855 10,219 (6) 20,527 21,585 CITGO Petroleum Corp. Oil & gas refining & marketing First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 7.10 % 9,950 9,851 10,012 (6) 9,851 10,012 Connect U.S. Finco LLC Alternative carriers First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026 7.10 % 30,000 29,400 29,580 (6)(11) 29,400 29,580 Convergeone Holdings, Inc. IT consulting & other services First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026 7.04 % 14,770 14,225 13,352 (6) 14,225 13,352 Conviva Inc. Application software 417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021 105 411 (20) 105 411 Covia Holdings Corporation Oil & gas equipment services First Lien Term Loan, LIBOR+4.00% cash due 6/1/2025 6.31 % 7,900 7,900 6,484 (6)(11) 7,900 6,484 DigiCert, Inc. Internet services & infrastructure First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024 6.04 % 4,222 4,184 4,221 (6) 4,184 4,221 Dominion Diagnostics, LLC Healthcare services (23) Subordinated Term Loan, 11.00% cash 1.00% PIK due 10/18/2019 20,273 14,281 2,890 (20)(21) First Lien Term Loan, PRIME+4.00% cash due 4/8/2019 9.00 % 45,691 45,691 45,691 (6)(20) First Lien Revolver, PRIME+4.00% cash due 4/8/2019 9.00 % 2,090 2,090 2,090 (6)(20) 62,062 50,671 103 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes The Dun & Bradstreet Corporation Research & consulting services First Lien Term Loan, LIBOR+5.00% cash due 2/6/2026 7.05 % $ 10,000 $ 9,817 $ 10,074 (6) Fixed Rate Bond 6.875% cash due 8/15/2026 5,000 5,000 5,459 14,817 15,533 Eagleview Technology Corporation Application software Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026 9.55 % 12,000 11,880 11,520 (6)(20) 11,880 11,520 EHR Canada, LLC Food retail First Lien Term Loan, LIBOR+8.00% cash due 9/28/2020 10.10 % 14,611 14,473 14,903 (6)(20) 14,473 14,903 EOS Fitness Opco Holdings, LLC Leisure facilities 487.5 Class A Preferred Units, 12% 488 855 (20) 12,500 Class B Common Units — 934 (20) 488 1,789 Equitrans Midstream Corp. Oil & gas storage & transportation First Lien Term Loan, LIBOR+4.50% cash due 1/31/2024 6.55 % 11,910 11,603 11,926 (6)(11) 11,603 11,926 ExamSoft Worldwide, Inc. Application software 180,707 Class C Units in ExamSoft Investor LLC 181 — (20) 181 — GI Chill Acquisition LLC Managed healthcare First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025 6.10 % 17,820 17,731 17,775 (6)(20) Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026 9.60 % 10,000 9,914 10,000 (6)(20) 27,645 27,775 GKD Index Partners, LLC Specialized finance First Lien Term Loan, LIBOR+7.25% cash due 6/29/2023 9.35 % 22,402 22,235 22,108 (6)(20) First Lien Revolver, LIBOR+7.25% cash due 6/29/2023 — (9) (15) (6)(19)(20) 22,226 22,093 GoodRx, Inc. Interactive media & services Second Lien Term Loan, LIBOR+7.50% cash due 10/12/2026 9.54 % 22,222 21,805 22,500 (6)(20) 21,805 22,500 Guidehouse LLP Research & consulting services Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026 9.54 % 20,000 19,917 19,750 (6) 19,917 19,750 HealthEdge Software, Inc. Application software 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918) expiration date 9/30/2023 213 757 (20) 213 757 I Drive Safely, LLC Education services 125,079 Class A Common Units of IDS Investments, LLC 1,000 200 (20) 1,000 200 IBG Borrower LLC Apparel, accessories & luxury goods First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022 9.13 % 14,209 13,027 13,286 (6)(20) 13,027 13,286 iCIMs, Inc. Application software First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024 8.56 % 16,718 16,436 16,438 (6)(20) First Lien Revolver, LIBOR+6.50% cash due 9/12/2024 — (15) (15) (6)(19)(20) 16,421 16,423 104 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Integral Development Corporation Other diversified financial services 1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024 $ 113 $ — (20) 113 — Kellermeyer Bergensons Services, LLC Environmental & facilities services Second Lien Term Loan, LIBOR+8.50% cash due 4/29/2022 10.77 % $ 6,105 5,940 5,937 (6)(20) 5,940 5,937 L Squared Capital Partners LLC Multi-sector holdings 2.00% limited partnership interest 864 2,237 (11)(16) 864 2,237 Lanai Holdings III, Inc. Healthcare distributors First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022 7.01 % 19,892 19,586 18,583 (6) 19,586 18,583 Lannett Company, Inc. Pharmaceuticals First Lien Term Loan, LIBOR+5.00% cash due 11/25/2020 7.04 % 762 762 759 (6)(11) 762 759 Lift Brands Holdings, Inc. Leisure facilities 2,000,000 Class A Common Units in Snap Investments, LLC 1,399 3,020 (20) 1,399 3,020 Lightbox Intermediate, L.P. Real estate services First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026 7.05 % 39,900 39,332 39,501 (6)(20) 39,332 39,501 Long's Drugs Incorporated Pharmaceuticals 50 Series A Preferred Shares in Long's Drugs Incorporated 385 924 (20) 25 Series B Preferred Shares in Long's Drugs Incorporated 210 572 (20) 595 1,496 LTI Holdings, Inc. Auto parts & equipment Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026 8.79 % 9,000 9,000 8,246 (6) 9,000 8,246 Lytx Holdings, LLC Research & consulting services 3,500 Class B Units — 2,053 (20) — 2,053 Maravai Intermediate Holdings, LLC Biotechnology First Lien Term Loan, LIBOR+4.25% cash due 8/2/2025 6.31 % 11,880 11,761 11,813 (6)(20) 11,761 11,813 Mayfield Agency Borrower Inc. Property & casualty insurance First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025 6.54 % 15,892 15,630 15,481 (6) Second Lien Term Loan, LIBOR+8.50% cash due 3/2/2026 10.54 % 35,925 35,492 36,285 (6)(20) 51,122 51,766 McAfee, LLC Systems software First Lien Term Loan, LIBOR+3.75% cash due 9/30/2024 5.79 % 10,957 10,884 10,995 (6) Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2025 10.54 % 7,000 7,034 7,093 (6) 17,918 18,088 105 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes MHE Intermediate Holdings, LLC Diversified support services First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024 7.10 % $ 2,932 $ 2,913 $ 2,874 (6)(20) 2,913 2,874 Mindbody, Inc. Internet services & infrastructure First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025 9.06 % 28,952 28,434 28,402 (6)(20) First Lien Revolver, LIBOR+7.00% cash due 2/15/2025 — (55) (58) (6)(19)(20) 28,379 28,344 Ministry Brands, LLC Application software Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023 11.34 % 7,056 6,997 7,056 (6)(20) Second Lien Delayed Draw Term Loan, LIBOR+9.25% cash due 6/2/2023 11.34 % 1,944 1,927 1,944 (6)(20) First Lien Revolver, LIBOR+5.00% cash due 12/2/2022 7.04 % 200 191 200 (6)(19)(20) 9,115 9,200 Navicure, Inc. Healthcare technology Second Lien Term Loan, LIBOR+7.50% cash due 10/31/2025 9.54 % 14,500 14,389 14,573 (6)(20) 14,389 14,573 Numericable SFR SA Integrated telecommunication services Fixed Rate Bond, 7.38% cash due 5/1/2026 5,000 5,104 5,380 (11) 5,104 5,380 OmniSYS Acquisition Corporation Diversified support services 100,000 Common Units in OSYS Holdings, LLC 1,000 750 (20) 1,000 750 Onvoy, LLC Integrated telecommunication services Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025 12.54 % 16,750 16,750 13,187 (6)(20) 19,666.67 Class A Units in GTCR Onvoy Holdings, LLC 1,967 — (20) 13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC — — (20) 18,717 13,187 P2 Upstream Acquisition Co. Application software First Lien Term Loan, LIBOR+4.00% cash due 10/30/2020 6.19 % 2,976 2,936 2,950 (6) First Lien Revolver, LIBOR+4.00% cash due 2/1/2020 — — (79) (6)(19) 2,936 2,871 PaySimple, Inc. Data processing & outsourced services First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025 7.55 % 37,750 37,004 37,184 (6)(20) First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 8/23/2025 — (242) (184) (6)(19)(20) 36,762 37,000 Pingora MSR Opportunity Fund I-A, LP Thrift & mortgage finance 1.86% limited partnership interest 1,217 691 (11)(16)(19) 1,217 691 PLATO Learning Inc. Education services Unsecured Senior PIK Note, 8.5% PIK due 12/9/2021 2,845 2,434 — (20)(22) Unsecured Junior PIK Note, 10% PIK due 12/9/2021 13,577 10,227 — (20)(22) Unsecured Revolver, 5.00% cash due 12/9/2021 2,064 1,885 (184) (19)(20)(21) 126,127.80 Class A Common Units of Edmentum 126 — (20) 14,672 (184) 106 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Project Boost Purchaser, LLC Application software First Lien Term Loan, LIBOR+3.50% cash due 6/1/2026 5.54 % $ 7,000 $ 6,930 $ 6,964 (6) Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027 10.14 % 3,750 3,750 3,750 (6)(20) 10,680 10,714 ProFrac Services, LLC Industrial machinery First Lien Term Loan, LIBOR+6.25% cash due 9/15/2023 8.66 % 17,192 17,055 16,848 (6)(20) 17,055 16,848 QuorumLabs, Inc. Application software 64,887,669 Junior-2 Preferred Stock 375 — (20) 375 — Refac Optical Group Specialty stores 1,550.9435 Shares of Common Stock in Refac Holdings, Inc. 1 — (20) 550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10% 305 — (20) 1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10% 999 — (20) 1,305 — Salient CRGT, Inc. Aerospace & defense First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022 8.05 % 3,086 3,056 2,932 (6)(20) 3,056 2,932 Scilex Pharmaceuticals Inc. Pharmaceuticals Fixed Rate Zero Coupon Bond due 8/15/2026 15,879 11,146 11,353 (20) 11,146 11,353 ShareThis, Inc. Application software 345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024 367 2 (20) 367 2 Sorrento Therapeutics, Inc. Biotechnology First Lien Term Loan, LIBOR+7.00% cash due 11/7/2023 9.13 % 30,000 28,132 29,250 (6)(11)(20) First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 11/7/2023 (62) (69) (6)(11)(19)(20) Stock Warrants Strike (exercise price $3.28) expiration date 5/7/2029 1,750 1,667 (11)(20) Stock Warrants Strike (exercise price $3.94) expiration date 11/3/2029 — 320 (11)(20) 29,820 31,168 Swordfish Merger Sub LLC Auto parts & equipment Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026 8.79 % 12,500 12,450 12,135 (6)(20) 12,450 12,135 TerSera Therapeutics, LLC Pharmaceuticals Second Lien Term Loan, LIBOR+9.25% cash due 3/30/2024 11.35 % 25,463 25,025 25,192 (6)(20) Second Lien Delayed Draw Term Loan, LIBOR+9.25% cash due 12/31/2020 — (45) (6)(19)(20) 668,879 Common Units of TerSera Holdings LLC 1,731 2,629 (20) 26,756 27,776 TigerText, Inc. Application software 299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024 60 560 (20) 60 560 Transact Holdings Inc. Application software First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026 7.01 % 7,000 6,895 6,965 (6) 6,895 6,965 107 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Tribe Buyer LLC Human resource & employment services First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024 6.54 % $ 830 $ 830 $ 775 (6)(20) 830 775 Truck Hero, Inc. Auto parts & equipment Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025 10.29 % 21,500 21,191 20,103 (6)(20) 21,191 20,103 Uber Technologies, Inc. Application software First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 6.03 % 5,689 5,652 5,667 (6) 5,652 5,667 Uniti Group LP Specialized REITs First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022 7.04 % 8,403 8,264 8,213 (6)(11) 8,264 8,213 UOS, LLC Trading companies & distributors First Lien Term Loan, LIBOR+5.50% cash due 4/18/2023 7.54 % 10,242 10,357 10,370 (6) 10,357 10,370 Veritas US Inc. Application software First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023 6.60 % 34,200 34,468 32,413 (6) 34,468 32,413 Verscend Holding Corp. Healthcare technology First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 6.54 % 24,750 24,633 24,879 (6) Fixed Rate Bond, 9.75% cash due 8/15/2026 12,000 12,022 12,823 36,655 37,702 Vertex Aerospace Services Corp. Aerospace & defense First Lien Term Loan, LIBOR+4.50% cash due 6/29/2025 6.54 % 15,800 15,735 15,869 (6) 15,735 15,869 Vitalyst Holdings, Inc. IT consulting & other services 675 Series A Preferred Stock Units 675 440 (20) 7,500 Class A Common Stock Units 75 — (20) 750 440 Windstream Services, LLC Integrated telecommunication services Fixed Rate Bond, 8.63% cash due 10/31/2025 5,000 4,863 5,113 (11) 4,863 5,113 WP CPP Holdings, LLC Aerospace & defense Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 10.01 % 15,000 14,874 14,937 (6) 14,874 14,937 xMatters, Inc. Application software 600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025 709 273 (20) 709 273 Yeti Holdings, Inc. Leisure products 537,629 Shares Yeti Holdings, Inc. Common Stock — 15,054 — 15,054 Zep Inc. Specialty chemicals Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025 10.35 % 30,000 29,889 21,950 (6)(20) First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024 6.04 % 1,975 1,899 1,564 (6) 31,788 23,514 Zephyr Bidco Limited Specialized finance Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026 8.21 % £ 18,000 23,632 22,006 (6)(11) 23,632 22,006 108 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) Portfolio Company/Type of Investment (1)(2)(3)(4)(5) Cash Interest Rate (6) Industry Principal (7) Cost Fair Value Notes Total Non-Control/Non-Affiliate Investments (131.1% of net assets) $ 1,280,310 $ 1,219,694 Total Portfolio Investments (154.5% of net assets) $ 1,513,014 $ 1,438,042 Cash and Cash Equivalents JP Morgan Prime Money Market Fund, Institutional Shares $ 9,611 $ 9,611 Other cash accounts 5,795 5,795 Total Cash and Cash Equivalents (1.7% of net assets) $ 15,406 $ 15,406 Total Portfolio Investments and Cash and Cash Equivalents (156.2% of net assets) $ 1,528,420 $ 1,453,448 Derivative Instrument Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Counterparty Cumulative Unrealized Appreciation /(Depreciation) Foreign currency forward contract $ 22,161 £ 17,910 10/15/2019 JPMorgan Chase Bank, N.A. $ 76 Foreign currency forward contract $ 19,193 € 17,150 11/29/2019 JPMorgan Chase Bank, N.A. 414 $ 490 109 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) (1) All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted. (2) See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region. (3) Equity ownership may be held in shares or units of companies related to the portfolio companies. (4) Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents. (5) With the exception of investments held by the Company’s wholly-owned subsidiaries that each formerly held a license from the SBA to operate as an SBIC, each of the Company's investments is pledged as collateral under the Credit Facility (as defined in Note 6 to the accompanying notes to the Consolidated Financial Statements). (6) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2019, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06%, the PRIME at 5.00%, the 30-day UK LIBOR at 0.71% and the 30-day EURIBOR at (0.51)%. Most loans include an interest floor, which generally ranges from 0% to 1%. (7) Principal includes accumulated PIK interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars. (8) Control Investments generally are defined by the Investment Company Act, as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (9) As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" this portfolio company as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the accompanying notes to the Consolidated Financial Statements for transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control. (10) First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities. (11) Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2019, qualifying assets represented 75.0% of the Company's total assets and non-qualifying assets represented 25.0% of the Company's total assets. (12) Income producing through payment of dividends or distributions. (13) PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of September 30, 2019, the accumulated PIK interest balance for each of the A notes and the B notes was $1.8 million. The fair value of this investment is inclusive of PIK. (14) See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition. (15) On December 28, 2018, the mezzanine notes issued by SLF Repack Issuer 2016, LLC, a wholly-owned, special purpose issuer subsidiary of Senior Loan Fund JV I, LLC ("SLF JV I"), were redeemed and the Company purchased subordinated notes and LLC equity interests issued by SLF JV I. Prior to December 28, 2018, the mezzanine notes issued by SLF Repack Issuer 2016, LLC consisted of Class A mezzanine secured deferrable floating rate notes and Class B mezzanine secured deferrable fixed rate notes. (16) This investment was valued using net asset value as a practical expedient for fair value. Consistent with ASC 820, these investments are excluded from the hierarchical levels. (17) Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities. (18) Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. (19) Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. (20) As of September 30, 2019, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820. (21) This investment was on cash non-accrual status as of September 30, 2019. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. 110 Oaktree Specialty Lending Corporation Consolidated Schedule of Investments September 30, 2019 (dollar amounts in thousands) (22) This investment was on PIK non-accrual status as of September 30, 2019. PIK non-accrual status is inclusive of other non-cash income, where applicable. (23) Payments on this investment were past due as of September 30, 2019. See notes to Consolidated Financial Statements. 111 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 1. Organization Oaktree Specialty Lending Corporation (together with its consolidated subsidiaries, the "Company") is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company ("BDC") under the Investment Company Act. The Company has qualified and elected to be treated as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"), for tax purposes. The Company's investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. The Company may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions. The Company is externally managed by Oaktree Fund Advisors, LLC (“Oaktree”), a subsidiary of Oaktree Capital Group, LLC (“OCG”), pursuant to an investment advisory agreement between the Company and Oaktree (the “Investment Advisory Agreement”). Oaktree is an affiliate of Oaktree Capital Management, L.P. ("OCM"), the Company's external investment adviser from October 17, 2017 through May 3, 2020 and also a subsidiary of OCG. Oaktree Fund Administration, LLC (“Oaktree Administrator”), a subsidiary of OCM, provides certain administrative and other services necessary for the Company to operate pursuant to an administration agreement between the Company and Oaktree Administrator (the “Administration Agreement”). See Note 11. In 2019, Brookfield Asset Management Inc. ("Brookfield") acquired a majority economic interest in OCG. OCG operates as an independent business within Brookfield, with its own product offerings and investment, marketing and support teams. Note 2. Significant Accounting Policies Basis of Presentation: The Consolidated Financial Statements of the Company have been prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-K and Regulation S-X. All intercompany balances and transactions have been eliminated. The Company is an investment company following the accounting and reporting guidance in ASC Topic 946, Financial Services - Investment Companies ("ASC 946"). Use of Estimates: The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments and revenue recognition. Consolidation: The accompanying Consolidated Financial Statements include the accounts of Oaktree Specialty Lending Corporation and its consolidated subsidiaries. Each consolidated subsidiary is wholly-owned and, as such, consolidated into the Consolidated Financial Statements. Certain subsidiaries that hold investments are treated as pass through entities for tax purposes. The assets of certain of the consolidated subsidiaries are not directly available to satisfy the claims of the creditors of Oaktree Specialty Lending Corporation or any of its other subsidiaries. As an investment company, portfolio investments held by the Company are not consolidated into the Consolidated Financial Statements but rather are included on the Statements of Assets and Liabilities as investments at fair value. Fair Value Measurements: The Company values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity. 112 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: • Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. • Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions. Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of the Company's investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations. The Company seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Company is unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within the Company's set threshold, the Company seeks to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, the Company does not adjust any of the prices received from these sources. If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, the Company values such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value ("EV") of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that the Company is deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company's assets and (vii) offers from third parties to buy the portfolio company. The Company may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and the Company considers the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Company depends on primary market data, including newly funded transactions and industry specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable. 113 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable. The Company estimates the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk free rate. Changes in the subjective input assumptions can materially affect the fair value estimates. The Company's Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company's investments: • The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree's valuation team in conjunction with Oaktree's portfolio management team and investment professionals responsible for each portfolio investment; • Preliminary valuations are then reviewed and discussed with management of Oaktree; • Separately, independent valuation firms engaged by the Board of Directors prepare valuations of the Company's investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to the Company and provide such reports to Oaktree and the Audit Committee of the Board of Directors; • Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee; • The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee; • The Audit Committee makes a recommendation to the full Board of Directors regarding the fair value of the investments in the Company's portfolio; and • The Board of Directors discusses valuations and determines the fair value of each investment in the Company's portfolio. The fair value of the Company's investments as of September 30, 2020 and September 30, 2019 was determined in good faith by the Board of Directors. The Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of the Company's portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. However, the Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to the Company's valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material. With the exception of the line items entitled "deferred financing costs," "deferred offering costs," "other assets," "deferred tax asset, net," "deferred tax liability," "credit facility payable" and "unsecured notes payable," which are reported at amortized cost, all assets and liabilities approximate fair value on the Consolidated Statements of Assets and Liabilities. The carrying value of the line items titled "interest, dividends and fees receivable," "due from portfolio companies," "receivables from unsettled transactions," "accounts payable, accrued expenses and other liabilities," "base management fee and incentive fee payable," "due to affiliate," "interest payable" and "payables from unsettled transactions" approximate fair value due to their short maturities. 114 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Foreign Currency Translation: The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the prevailing foreign exchange rate on the reporting date. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company. Derivative Instruments: The Company does not utilize hedge accounting and as such values its derivative instruments at fair value with the unrealized gains or losses recorded in “net unrealized appreciation (depreciation)” in the Company’s Consolidated Statements of Operations. Investment Income: Interest Income Interest income, adjusted for accretion of original issue discount ("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. In connection with its investment in a portfolio company, the Company sometimes receives nominal cost equity that is valued as part of the negotiation process with the portfolio company. When the Company receives nominal cost equity, the Company allocates its cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan. For the Company's secured borrowings, the interest earned on the entire loan balance is recorded within interest income and the interest earned by the counterparty is recorded within interest expense in the Consolidated Statements of Operations. PIK Interest Income The Company's investments in debt securities may contain PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect the portfolio company to be able to pay all principal and interest due. The Company's decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Company's assessment of the portfolio company's business development success; information obtained by the Company in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. The Company's determination to cease accruing PIK interest is generally made well before the Company's full write-down of a loan or debt security. In addition, if it is subsequently determined that the Company will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Company’s debt investments increases the recorded cost bases of these investments in the Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by the Company to Oaktree. To maintain its status as a RIC, certain income from PIK interest may be required to be distributed to the Company’s stockholders, even though the Company has not yet collected the cash and may never do so. 115 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Fee Income Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, the Company may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by the Company upon the investment closing date. The Company may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered. The Company has also structured exit fees across certain of its portfolio investments to be received upon the future exit of those investments. These fees are typically paid to the Company upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan. Dividend Income The Company generally recognizes dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. Cash and Cash Equivalents: Cash and cash equivalents consist of demand deposits and highly liquid investments with maturities of three months or less when acquired. The Company places its cash and cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit. Cash and cash equivalents are included on the Company's Consolidated Schedule of Investments and cash equivalents are classified as Level 1 assets. Due from Portfolio Companies: Due from portfolio companies consists of amounts payable to the Company from its portfolio companies, including proceeds from the sale of portfolio companies not yet received or being held in escrow, and excluding those amounts attributable to interest, dividends or fees receivable. These amounts are recognized as they become payable to the Company ( e.g. , principal payments on the scheduled amortization payment date). Receivables/Payables from Unsettled Transactions: Receivables/payables from unsettled transactions consist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date. Deferred Financing Costs: Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings. Deferred financing costs in connection with credit facilities are capitalized as an asset when incurred. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability when incurred. Deferred financing costs are amortized using the effective interest method over the term of the respective debt arrangement. This amortization expense is included in interest expense in the Company's Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense. For extinguishments of the Company’s unsecured notes payable, any unamortized deferred financing costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment. Deferred Offering Costs: Legal fees and other costs incurred in connection with the Company’s shelf registration statement are capitalized as deferred offering costs in the Consolidated Statements of Assets and Liabilities. To the extent any such costs relate to equity offerings, these costs are charged as a reduction of capital upon utilization. To the extent any such costs relate to debt offerings, these costs are treated as deferred financing costs and are amortized over the term of the respective debt arrangement. Any 116 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) deferred offering costs that remain at the expiration of the shelf registration statement or when it becomes probable that an offering will not be completed are expensed. Income Taxes: The Company has elected to be subject to tax as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each taxable year. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to stockholders as a dividend. Depending on the level of taxable income earned during a taxable year, the Company may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next taxable year. The Company would then incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. The Company anticipates timely distribution of its taxable income within the tax rules under Subchapter M of the Code. The Company did not incur a U.S. federal excise tax for calendar years 2018 and 2019 and does not expect to incur a U.S. federal excise tax for calendar year 2020. The Company holds certain portfolio investments through taxable subsidiaries, including Fund of Funds and Holdings. The purpose of the Company's taxable subsidiaries is to permit the Company to hold equity investments in portfolio companies which are "pass through" entities for U.S. federal income tax purposes in order to comply with the RIC tax requirements. The taxable subsidiaries are consolidated for financial reporting purposes, and portfolio investments held by them are included in the Company’s Consolidated Financial Statements as portfolio investments and recorded at fair value. The taxable subsidiaries are not consolidated with the Company for U.S. federal income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. This income tax expense, if any, would be reflected in the Company's Consolidated Statements of Operations. The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net operating loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences. FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes ("ASC 740"), provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the Company's Consolidated Financial Statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management's determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including an ongoing analysis of tax laws, regulations and interpretations thereof. The Company recognizes the tax benefits of uncertain tax positions only where the position is "more-likely-than-not" to be sustained assuming examination by tax authorities. Management has analyzed the Company's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years 2017, 2018 or 2019. The Company identifies its major tax jurisdictions as U.S. Federal and California, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. Recent Accounting Pronouncements: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met. The guidance is effective from March 12, 2020 through December 31, 2022. As of September 30, 2020, the guidance did not have a material impact on the Consolidated Financial Statements. The SEC issued final rules that, among other things, amended the financial disclosure requirements of Regulation S-X for acquired and disposed businesses and the significance tests for a “significant subsidiary” as applicable to BDCs, and amended certain forms used by BDCs. The amendments are intended to assist BDCs in making more meaningful determinations as to whether a subsidiary or an acquired or disposed entity is significant and improve the financial disclosure requirements 117 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) applicable to acquisitions and dispositions of investment companies and BDCs. The Company early adopted the updated rules for the year ended September 30, 2020 which did not result in any new significant subsidiaries being identified. Note 3. Portfolio Investments As of September 30, 2020, 172.0% of net assets at fair value, or $1.6 billion, was invested in 113 portfolio companies, including $117.4 million in subordinated notes and limited liability company ("LLC") equity interests of SLF JV I, a joint venture through which the Company and Trinity Universal Insurance Company, a subsidiary of Kemper Corporation ("Kemper"), co-invest in senior secured loans of middle-market companies and other corporate debt securities. As of September 30, 2020, 4.3% of net assets at fair value, or $39.1 million, was invested in cash and cash equivalents. In comparison, as of September 30, 2019, 154.5% of net assets at fair value, or $1.4 billion, was invested in 104 portfolio investments, including $126.3 million in subordinated notes and LLC equity interests of SLF JV I, and 1.7% of net assets at fair value, or $15.4 million, was invested in cash and cash equivalents. As of September 30, 2020, 84.1% of the Company's portfolio at fair value consisted of senior secured debt investments and 10.3% consisted of subordinated debt investments, including the debt investment in SLF JV I. As of September 30, 2019, 78.6% of the Company's portfolio at fair value consisted of senior secured debt investments and 12.3% consisted of subordinated debt investments, including the debt investment in SLF JV I. The Company also held equity investments in certain of its portfolio companies consisting of common stock, preferred stock, warrants, limited partnership interests or LLC equity interests. These instruments generally do not produce a current return but are held for potential investment appreciation and capital gain. During the years ended September 30, 2020, 2019 and 2018, the Company recorded net realized gains (losses) of $(13.9) million, $20.8 million and $(115.3) million, respectively. During the years ended September 30, 2020, 2019 and 2018, the Company recorded net unrealized appreciation (depreciation) of $(20.6) million, $38.5 million and $102.6 million, respectively. The composition of the Company's investments as of September 30, 2020 and September 30, 2019 at cost and fair value was as follows: September 30, 2020 September 30, 2019 Cost Fair Value Cost Fair Value Investments in debt securities $ 1,422,487 $ 1,388,605 $ 1,274,367 $ 1,212,174 Investments in equity securities 101,111 67,806 93,075 99,566 Debt investment in SLF JV I 96,250 96,250 96,250 96,250 Equity investment in SLF JV I 49,322 21,190 49,322 30,052 Total $ 1,669,170 $ 1,573,851 $ 1,513,014 $ 1,438,042 The following table presents the composition of the Company's debt investments as of September 30, 2020 and September 30, 2019 at fixed rates and floating rates: September 30, 2020 September 30, 2019 Fair Value % of Debt Portfolio Fair Value % of Debt Portfolio Fixed rate debt securities $ 173,346 11.67 % $ 132,965 10.16 % Floating rate debt securities, including the debt investment in SLF JV I 1,311,509 88.33 1,175,459 89.84 Total $ 1,484,855 100.00 % $ 1,308,424 100.00 % 118 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The following table presents the financial instruments carried at fair value as of September 30, 2020 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820: Level 1 Level 2 Level 3 Measured at Net Asset Value (a) Total Investments in debt securities (senior secured) $ — $ 418,806 $ 904,237 $ — $ 1,323,043 Investments in debt securities (subordinated, including the debt investment in SLF JV I) — 35,660 126,152 — 161,812 Investments in equity securities (preferred) — — 29,959 — 29,959 Investments in equity securities (common and warrants, including LLC equity interests of SLF JV I) 222 — 35,080 23,735 59,037 Total investments at fair value 222 454,466 1,095,428 23,735 1,573,851 Cash equivalents 35,248 — — — 35,248 Derivative assets — 223 — — 223 Total assets at fair value $ 35,470 $ 454,689 $ 1,095,428 $ 23,735 $ 1,609,322 __________ (a) In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. The following table presents the financial instruments carried at fair value as of September 30, 2019 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820: Level 1 Level 2 Level 3 Measured at Net Asset Value (a) Total Investments in debt securities (senior secured) $ — $ 477,542 $ 653,334 $ — $ 1,130,876 Investments in debt securities (subordinated, including the debt investment in SLF JV I) — 67,239 110,309 — 177,548 Investments in equity securities (preferred) — — 40,578 — 40,578 Investments in equity securities (common and warrants, including LLC equity interests of SLF JV I) 15,054 — 41,006 32,980 89,040 Total investments at fair value 15,054 544,781 845,227 32,980 1,438,042 Cash equivalents 9,611 — — — 9,611 Derivative assets — 490 — — 490 Total assets at fair value $ 24,665 $ 545,271 $ 845,227 $ 32,980 $ 1,448,143 __________ (a) In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are significant to the overall fair value measurement. However, Level 3 financial instruments typically have both unobservable or Level 3 components and observable components (i.e. components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology. Transfers between levels are recognized at the beginning of the reporting period. 119 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The following table provides a roll-forward in the changes in fair value from September 30, 2019 to September 30, 2020 for all investments for which the Company determined fair value using unobservable (Level 3) factors: Investments Senior Secured Debt Subordinated Debt (including debt investment in SLF JV I) Preferred Equity Common Equity and Warrants Total Fair value as of September 30, 2019 $ 653,334 $ 110,309 $ 40,578 $ 41,006 $ 845,227 Purchases 423,545 50,534 — 1,485 475,564 Sales and repayments (207,898) (40,630) (1,388) (13,838) (263,754) Transfers in (a)(b) 67,939 5,113 — 19,229 92,281 Transfers out (a)(b) (33,625) (605) — — (34,230) PIK interest income 7,568 — — — 7,568 Accretion of OID 6,042 2,856 — — 8,898 Net unrealized appreciation (depreciation) 15,944 12,917 (9,726) (14,981) 4,154 Net realized gains (losses) (28,612) (14,342) 495 2,179 (40,280) Fair value as of September 30, 2020 $ 904,237 $ 126,152 $ 29,959 $ 35,080 $ 1,095,428 Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of September 30, 2020 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the year ended September 30, 2020 $ (11,757) $ 1,777 $ (9,125) $ (17,277) $ (36,382) __________ (a) There were transfers into/out of Level 3 from/to Level 2 for certain investments during the year ended September 30, 2020 as a result of a change in the number of market quotes available and/or a change in market liquidity. (b) There was a transfer from senior secured debt to common equity and warrants during the year ended September 30, 2020 as a result of an investment restructuring, in which $46.5 million of senior secured debt was exchanged for new senior secured debt of $27.9 million and common equity of $18.6 million. There was also a transfer from subordinated debt to common equity and warrants during the year ended September 30, 2020 as a result of an investment restructuring, in which $0.6 million subordinated debt was exchanged for common equity and warrants. The following table provides a roll-forward in the changes in fair value from September 30, 2018 to September 30, 2019 for all investments and secured borrowings for which the Company determined fair value using unobservable (Level 3) factors: Investments Liabilities Senior Secured Debt Subordinated Debt (including debt investment in SLF JV I) Preferred Equity Common Equity and Warrants Total Secured Borrowings Fair value as of September 30, 2018 $ 638,971 $ 158,859 $ 4,918 $ 61,134 $ 863,882 $ 9,728 New investments 257,378 2,664 7,019 2,514 269,575 — Sales and repayments (309,263) (23,365) (498) (31,990) (365,116) (9,822) Transfers in (a)(c) 32,293 — 28,984 — 61,277 — Transfers out (b)(c) (28,984) (33,150) — (12,073) (74,207) — PIK interest income 5,037 149 — — 5,186 — Accretion of OID 16,601 1,268 — — 17,869 — Net unrealized appreciation (depreciation) 51,043 3,884 650 (451) 55,126 2,719 Net realized gains (losses) (9,742) — (495) 21,872 11,635 (2,625) Fair value as of September 30, 2019 $ 653,334 $ 110,309 $ 40,578 $ 41,006 $ 845,227 $ — Net unrealized appreciation (depreciation) relating to Level 3 assets & liabilities still held as of September 30, 2019 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the year ended September 30, 2019 $ (19,729) $ 3,378 $ (94) $ 10,617 $ (5,828) $ — __________ (a) There were transfers into Level 3 from Level 2 for certain investments during the year ended September 30, 2019 as a result of a decreased number of market quotes available and/or decreased market liquidity. (b) There was one transfer from Level 3 to Level 1 during the year ended September 30, 2019 as a result of an initial public offering of a portfolio company. There was also one transfer out of Level 3 during the year ended September 30, 2019 as a 120 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) result of an investment restructuring in which debt investments were exchanged for equity investments that are valued using net asset value as a practical expedient. (c) There was one transfer out of senior secured debt into preferred equity during the year ended September 30, 2019 as a result of an investment restructuring in which debt investments were exchanged for equity investments. Significant Unobservable Inputs for Level 3 Investments The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of September 30, 2020: Asset Fair Value Valuation Technique Unobservable Input Range Weighted Average (a) Senior Secured Debt $ 542,354 Market Yield Market Yield (b) 6.6% - 30.0% 12.5% 35,508 Enterprise Value EBITDA Multiple (c) 0.6x - 6.3x 5.9x 11,510 Enterprise Value Asset Multiple (c) 0.9x - 1.1x 1.0x 314,865 Broker Quotations Broker Quoted Price (e) N/A - N/A N/A Subordinated Debt 29,314 Market Yield Market Yield (b) 4.8% - 15.0% 9.3% 588 Enterprise Value EBITDA Multiple (c) 7.6x - 8.6x 8.1x SLF JV I Debt Investment 96,250 Enterprise Value N/A (f) N/A - N/A N/A Preferred & Common Equity 16,470 Enterprise Value Revenue Multiple (c) 0.9x - 7.0x 3.1x 45,934 Enterprise Value EBITDA Multiple (c) 0.6x - 15.0x 7.6x 1,622 Enterprise Value Asset Multiple (c) 0.9x - 1.1x 1.0x 1,013 Transactions Precedent Transaction Price (d) N/A - N/A N/A Total $ 1,095,428 __________ (a) Weighted averages are calculated based on fair value of investments. (b) Used when market participants would take into account market yield when pricing the investment. (c) Used when market participants would use such multiples when pricing the investment. (d) Used when there is an observable transaction or pending event for the investment. (e) The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree. (f) The Company determined the value of its subordinated notes of SLF JV I based on the total assets less the total liabilities senior to the subordinated notes held at SLF JV I in an amount not exceeding par under the EV technique. The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of September 30, 2019: Asset Fair Value Valuation Technique Unobservable Input Range Weighted Average (a) Senior Secured Debt $ 314,026 Market Yield Market Yield (b) 6.7% - 18.0% 11.2% 17,452 Enterprise Value EBITDA Multiple (c) 1.8x - 6.0x 5.0x 11,510 Enterprise Value Asset Multiple (c) 0.9x 1.1x 1.0x 3,750 Transactions Precedent Transaction Price (d) N/A - N/A N/A 306,596 Broker Quotations Broker Quoted Price (e) N/A - N/A N/A Subordinated Debt 11,353 Market Yield Market Yield (b) 13.0% - 15.0% 14.0% 2,706 Enterprise Value EBITDA Multiple (c) 6.5x - 8.5x 7.5x SLF JV I Debt Investment 96,250 Enterprise Value N/A (f) N/A - N/A N/A Preferred & Common Equity 4,004 Enterprise Value Revenue Multiple (c) 0.8x - 8.9x 3.3x 72,950 Enterprise Value EBITDA Multiple (c) 1.8x - 17.0x 6.9x 4,630 Enterprise Value Asset Multiple (c) 0.9x - 1.1x 1.0x Total $ 845,227 __________ (a) Weighted averages are calculated based on fair value of investments. (b) Used when market participants would take into account market yield when pricing the investment. (c) Used when market participants would use such multiples when pricing the investment. (d) Used when there is an observable transaction or pending event for the investment. 121 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) (e) The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree. (f) The Company determined the value of its subordinated notes of SLF JV I based on the total assets less the total liabilities senior to the subordinated notes held at SLF JV I in an amount not exceeding par under the EV technique. Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield. Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively. Under the EV technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt or equity securities is the earnings before interest, taxes, depreciation and amortization ("EBITDA"), revenue or asset multiple, as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively. Financial Instruments Disclosed, But Not Carried, At Fair Value The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2020 and the level of each financial liability within the fair value hierarchy: Carrying Value Fair Value Level 1 Level 2 Level 3 Credit facility payable $ 414,825 $ 414,825 $ — $ — $ 414,825 Unsecured notes payable (net of unamortized financing costs and unaccreted discount) 294,490 301,431 — 301,431 — Total $ 709,315 $ 716,256 $ — $ 301,431 $ 414,825 The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2019 and the level of each financial liability within the fair value hierarchy: Carrying Value Fair Value Level 1 Level 2 Level 3 Credit facility payable $ 314,825 $ 314,825 $ — $ — $ 314,825 Unsecured notes payable (net of unamortized financing costs) 158,542 164,966 — 164,966 — Total $ 473,367 $ 479,791 $ — $ 164,966 $ 314,825 The principal value of the credit facility payable approximates fair value due to its variable interest rate and is included in Level 3 of the hierarchy. As of September 30, 2020, unsecured notes payable consisted of the 3.500% unsecured notes due 2025 ("2025 Notes"). The Company used market quotes as of the valuation date to estimate the fair value of the 2025 Notes, which are included in Level 2 of the hierarchy. As of September 30, 2019, unsecured notes payable consisted of the 5.875% unsecured notes due 2024 ("2024 Notes") and the 6.125% unsecured notes due 2028 ("2028 Notes"). The Company used the unadjusted quoted price as of the valuation date to calculate the fair value of the 2024 Notes and the 2028 Notes. Although the 2024 Notes and the 2028 Notes were publicly traded as of September 30, 2019, the market was relatively inactive, and accordingly, these securities were included in Level 2 of the hierarchy. 122 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Portfolio Composition Summaries of the composition of the Company's portfolio at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets are shown in the following tables: September 30, 2020 September 30, 2019 Cost: % of Total Investments % of Total Investments Senior secured debt $ 1,345,012 80.58 % $ 1,170,258 77.35 % Debt investment in SLF JV I 96,250 5.77 % 96,250 6.36 % Subordinated debt 77,475 4.64 % 104,109 6.88 % Common equity and warrants 61,561 3.69 % 52,630 3.48 % LLC equity interests of SLF JV I 49,322 2.95 % 49,322 3.26 % Preferred equity 39,550 2.37 % 40,445 2.67 % Total $ 1,669,170 100.00 % $ 1,513,014 100.00 % September 30, 2020 September 30, 2019 Fair Value: % of Total Investments % of Net Assets % of Total Investments % of Net Assets Senior secured debt $ 1,323,043 84.06 % 144.61 % $ 1,130,876 78.64 % 121.51 % Debt investment in SLF JV I 96,250 6.12 % 10.52 % 96,250 6.69 % 10.34 % Subordinated debt 65,562 4.17 % 7.17 % 81,298 5.65 % 8.74 % Common equity and warrants 37,847 2.40 % 4.14 % 58,988 4.10 % 6.34 % Preferred equity 29,959 1.90 % 3.27 % 40,578 2.82 % 4.36 % LLC equity interests of SLF JV I 21,190 1.35 % 2.32 % 30,052 2.10 % 3.23 % Total $ 1,573,851 100.00 % 172.03 % $ 1,438,042 100.00 % 154.52 % The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business. The following tables show the composition of the Company's portfolio by geographic region at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets: September 30, 2020 September 30, 2019 Cost: % of Total Investments % of Total Investments Northeast $ 495,440 29.69 % $ 394,130 26.05 % West 330,468 19.80 % 377,810 24.97 % Midwest 285,674 17.11 % 322,651 21.33 % International 210,963 12.64 % 171,129 11.31 % Southeast 171,330 10.26 % 131,522 8.69 % South 72,150 4.32 % 13,798 0.91 % Southwest 67,867 4.07 % 66,781 4.41 % Northwest 35,278 2.11 % 35,193 2.33 % Total $ 1,669,170 100.00 % $ 1,513,014 100.00 % September 30, 2020 September 30, 2019 Fair Value: % of Total Investments % of Net Assets % of Total Investments % of Net Assets Northeast $ 446,499 28.38 % 48.81 % $ 358,328 24.93 % 38.50 % West 325,708 20.69 % 35.60 % 350,660 24.38 % 37.68 % Midwest 252,482 16.04 % 27.60 % 297,433 20.68 % 31.97 % International 213,741 13.58 % 23.36 % 175,687 12.22 % 18.88 % Southeast 165,516 10.52 % 18.09 % 125,306 8.71 % 13.46 % South 70,551 4.48 % 7.71 % 13,416 0.93 % 1.44 % Southwest 65,647 4.17 % 7.18 % 82,395 5.73 % 8.85 % Northwest 33,707 2.14 % 3.68 % 34,817 2.42 % 3.74 % Total $ 1,573,851 100.00 % 172.03 % $ 1,438,042 100.00 % 154.52 % 123 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The following tables show the composition of the Company's portfolio by industry at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets as of September 30, 2020 and September 30, 2019: September 30, 2020 September 30, 2019 Cost: % of Total Investments % of Total Investments Application Software $ 162,536 9.71 % $ 132,051 8.73 % Multi-Sector Holdings (1) 148,116 8.87 146,436 9.67 Data Processing & Outsourced Services 109,744 6.57 97,759 6.46 Pharmaceuticals 99,471 5.96 59,294 3.92 Biotechnology 89,447 5.36 82,109 5.43 Health Care Services 71,139 4.26 100,173 6.62 Specialized Finance 51,909 3.11 53,227 3.52 Personal Products 50,091 3.00 — — Property & Casualty Insurance 47,995 2.88 73,076 4.83 Specialty Chemicals 44,786 2.68 31,788 2.10 Movies & Entertainment 44,691 2.68 18,858 1.25 Integrated Telecommunication Services 44,583 2.67 33,741 2.23 Real Estate Services 39,023 2.34 39,332 2.60 Fertilizers & Agricultural Chemicals 33,743 2.02 — — Auto Parts & Equipment 33,649 2.02 42,641 2.82 Oil & Gas Refining & Marketing 31,132 1.87 30,378 2.01 Internet Services & Infrastructure 28,631 1.72 32,563 2.15 Aerospace & Defense 27,964 1.68 33,665 2.23 Managed Health Care 27,479 1.65 27,645 1.83 Oil & Gas Storage & Transportation 26,615 1.59 11,603 0.77 Electronic Components 25,600 1.53 — — Research & Consulting Services 24,837 1.49 34,734 2.30 Education Services 22,926 1.37 15,672 1.04 Airport Services 22,376 1.34 — — Health Care Supplies 21,660 1.30 — — Health Care Technology 21,499 1.29 51,044 3.37 Independent Power Producers & Energy Traders 21,462 1.29 — — Electrical Components & Equipment 20,934 1.25 21,210 1.40 Systems Software 20,694 1.24 31,716 2.10 General Merchandise Stores 19,220 1.15 18,946 1.25 Diversified Support Services 18,797 1.13 18,805 1.24 Insurance Brokers 17,546 1.05 — — Hotels, Resorts & Cruise Lines 15,378 0.92 — — Diversified Real Estate Activities 15,288 0.92 — — Industrial Machinery 15,081 0.90 17,055 1.13 IT Consulting & Other Services 14,919 0.89 14,975 0.99 Internet & Direct Marketing Retail 14,802 0.89 — — Apparel, Accessories & Luxury Goods 13,734 0.82 18,192 1.20 Advertising 13,611 0.82 42,405 2.80 Construction & Engineering 13,277 0.80 23,443 1.55 Health Care Distributors 12,810 0.77 22,561 1.49 Metal & Glass Containers 11,273 0.68 — — Airlines 10,535 0.63 10,640 0.70 Restaurants 10,248 0.61 3,097 0.20 Trading Companies & Distributors 10,228 0.61 10,357 0.68 Commercial Printing 7,868 0.47 6,002 0.40 Food Retail 6,851 0.41 14,473 0.96 Oil & Gas Equipment & Services 3,313 0.20 12,165 0.80 Health Care Facilities 3,133 0.19 — — Construction Materials 2,150 0.13 — — Leisure Facilities 1,887 0.11 1,887 0.12 Specialty Stores 1,305 0.08 1,305 0.09 Thrifts & Mortgage Finance 938 0.06 1,217 0.08 Specialized REITs 133 0.01 8,264 0.55 Other Diversified Financial Services 113 0.01 113 0.01 Alternative Carriers — — 29,400 1.94 Interactive Media & Services — — 21,805 1.44 Household Appliances — — 7,837 0.52 Environmental & Facilities Services — — 5,940 0.39 Human Resource & Employment Services — — 830 0.05 Department Stores — — 585 0.04 Total $ 1,669,170 100.00 % $ 1,513,014 100.00 % 124 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) September 30, 2020 September 30, 2019 Fair Value: % of Total Investments % of Net Assets % of Total Investments % of Net Assets Application Software $ 160,591 10.21 % 17.57 % $ 129,577 9.00 % 13.94 % Multi-Sector Holdings (1) 121,751 7.74 13.31 128,539 8.94 13.81 Pharmaceuticals 103,092 6.55 11.27 60,057 4.18 6.45 Data Processing & Outsourced Services 99,589 6.33 10.89 98,267 6.83 10.56 Biotechnology 96,624 6.14 10.56 85,719 5.96 9.21 Health Care Services 59,925 3.81 6.55 58,391 4.06 6.27 Personal Products 51,024 3.24 5.58 — — — Specialized Finance 48,425 3.08 5.29 51,485 3.58 5.53 Property & Casualty Insurance 46,737 2.97 5.11 74,148 5.16 7.97 Movies & Entertainment 43,592 2.77 4.76 18,613 1.29 2.00 Integrated Telecommunication Services 41,091 2.61 4.49 28,876 2.01 3.10 Specialty Chemicals 39,008 2.48 4.26 23,514 1.64 2.53 Real Estate Services 37,723 2.40 4.12 39,501 2.75 4.24 Fertilizers & Agricultural Chemicals 33,719 2.14 3.69 — — — Auto Parts & Equipment 31,382 1.99 3.43 40,484 2.82 4.35 Oil & Gas Refining & Marketing 29,826 1.90 3.26 31,597 2.20 3.40 Managed Health Care 26,681 1.70 2.92 27,775 1.93 2.98 Internet Services & Infrastructure 26,587 1.69 2.91 32,565 2.26 3.50 Electronic Components 26,552 1.69 2.90 — — — Oil & Gas Storage & Transportation 25,749 1.64 2.81 11,926 0.83 1.28 Aerospace & Defense 24,521 1.56 2.68 33,738 2.35 3.63 Research & Consulting Services 24,212 1.54 2.65 37,336 2.60 4.01 Health Care Technology 22,058 1.40 2.41 52,275 3.64 5.62 Health Care Supplies 21,634 1.37 2.36 — — — Airport Services 21,283 1.35 2.33 — — — Independent Power Producers & Energy Traders 20,812 1.32 2.27 — — — Systems Software 20,481 1.30 2.24 31,504 2.19 3.39 Electrical Components & Equipment 20,465 1.30 2.24 20,032 1.39 2.15 Insurance Brokers 18,083 1.15 1.98 — — — General Merchandise Stores 17,877 1.14 1.95 16,934 1.18 1.82 Diversified Support Services 17,689 1.12 1.93 18,624 1.30 2.00 Hotels, Resorts & Cruise Lines 17,081 1.09 1.87 — — — Diversified Real Estate Activities 16,846 1.07 1.84 — — — Internet & Direct Marketing Retail 15,307 0.97 1.67 — — — IT Consulting & Other Services 13,905 0.88 1.52 13,792 0.96 1.48 Construction & Engineering 13,465 0.86 1.47 23,982 1.67 2.58 Advertising 13,440 0.85 1.47 37,261 2.59 4.00 Airlines 13,132 0.83 1.44 16,140 1.12 1.73 Health Care Distributors 12,260 0.78 1.34 21,962 1.53 2.36 Metal & Glass Containers 11,833 0.75 1.29 — — — Industrial Machinery 11,643 0.74 1.27 16,848 1.17 1.81 Trading Companies & Distributors 10,069 0.64 1.10 10,370 0.72 1.11 Restaurants 7,886 0.50 0.86 2,800 0.19 0.30 Apparel, Accessories & Luxury Goods 7,856 0.50 0.86 13,286 0.92 1.43 Commercial Printing 7,334 0.47 0.80 5,900 0.41 0.63 Education Services 7,088 0.45 0.77 16 — — Food Retail 6,998 0.44 0.76 14,903 1.04 1.60 Health Care Facilities 3,640 0.23 0.40 — — — Oil & Gas Equipment & Services 2,588 0.16 0.28 13,652 0.95 1.47 Construction Materials 2,073 0.13 0.23 — — — Thrifts & Mortgage Finance 353 0.02 0.04 691 0.05 0.07 Specialized REITs 222 0.01 0.02 8,213 0.57 0.88 Leisure Products 49 — 0.01 15,054 1.05 1.62 Alternative Carriers — — — 29,580 2.06 3.18 Interactive Media & Services — — — 22,500 1.56 2.42 Household Appliances — — — 7,614 0.53 0.82 Environmental & Facilities Services — — — 5,937 0.41 0.64 Leisure Facilities — — — 4,809 0.33 0.52 Human Resource & Employment Services — — — 775 0.05 0.08 Department stores — — — 480 0.03 0.05 Total $ 1,573,851 100.00 % 172.03 % $ 1,438,042 100.00 % 154.52 % ___________________ (1) This industry includes the Company's investments in SLF JV I, collateralized loan obligations and certain limited partnership interests. 125 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) As of September 30, 2020 and September 30, 2019, the Company had no single investment that represented greater than 10% of the total investment portfolio at fair value. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses, may fluctuate and in any given period can be highly concentrated among several investments. Senior Loan Fund JV I, LLC In May 2014, the Company entered into an LLC agreement with Kemper to form SLF JV I. The Company co-invests in senior secured loans of middle-market companies and other corporate debt securities with Kemper through its investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by the Company and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by the Company and one representative selected by Kemper (with approval from a representative of each required). Since the Company does not have a controlling financial interest in SLF JV I, the Company does not consolidate SLF JV I. SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to the Company and Kemper by SLF JV I. On December 28, 2018, the Company and Kemper directed the redemption of their holdings of mezzanine notes issued by SLF Repack Issuer 2016, LLC, a wholly-owned, special purpose issuer subsidiary of SLF JV I. Upon such redemption, the assets collateralizing the mezzanine notes, which consisted of equity interests of SLF JV I Funding LLC (the "Equity Interests"), were distributed in-kind to each of the Company and Kemper, based upon their respective holdings of mezzanine notes. Upon such distribution, the Company and Kemper each then directed that a portion of their respective Equity Interests holdings be contributed to SLF JV I in exchange for LLC equity interests of SLF JV I and the remainder be applied as payment for the subordinated notes of SLF JV I. SLF Repack Issuer 2016, LLC was dissolved following the foregoing redemption and liquidation. The subordinated notes issued by SLF JV I (the "SLF JV 1 Subordinated Notes") and the mezzanine notes issued by SLF Repack Issuer 2016, LLC (the "SLF Repack Notes") collectively are referred to as the SLF JV I Notes. Prior to the redemption on December 28, 2018, the SLF Repack Notes consisted of Class A mezzanine secured deferrable floating rate notes and Class B mezzanine secured deferrable fixed rate notes. The SLF JV I Subordinated Notes are (and the SLF Repack Notes were, prior to their redemption) senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt. As of September 30, 2020 and September 30, 2019, the Company and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Subordinated Notes. SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch (as amended, the "Deutsche Bank I Facility"), which permitted up to $250.0 million of borrowings (subject to borrowing base and other limitations) as of September 30, 2020 and September 30, 2019. Borrowings under the Deutsche Bank I Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I. As of September 30, 2020, the reinvestment period of the Deutsche Bank I Facility was scheduled to expire June 28, 2021 and the maturity date for the Deutsche Bank I Facility was June 29, 2026. As of September 30, 2020, borrowings under the Deutsche Bank I Facility accrued interest at a rate equal to 3-month LIBOR plus 1.85% per annum during the reinvestment period and 3-month LIBOR plus 2.00% per annum during the amortization period. Under the Deutsche Bank I Facility, $167.9 million and $170.2 million of borrowings were outstanding as of September 30, 2020 and September 30, 2019, respectively. As of September 30, 2020, the Deutsche Bank I Facility includes a waiver period (which extends through January 3, 2021) during which the facility agent is restricted from revaluing certain collateral obligations where the change in valuation is caused by or results from a business disruption due primarily to the COVID-19 pandemic (subject to SLF JV I’s ability to earlier terminate such period in certain circumstances). As of September 30, 2020 and September 30, 2019, SLF JV I had total assets of $313.5 million and $360.9 million, respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 56 and 51 portfolio companies as of September 30, 2020 and September 30, 2019, respectively. The portfolio companies in SLF JV I are in industries similar to those in which the Company may invest directly. As of September 30, 2020, the Company's investment in SLF JV I consisted of LLC equity interests and Subordinated Notes of $117.4 million, at fair value. As of September 30, 2019, the Company's investment in SLF JV I consisted of LLC equity interests and Subordinated Notes of $126.3 million, at fair value. As of each of September 30, 2020 and September 30, 2019, the Company and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from the Company. As of September 30, 2020 and September 30, 2019, the Company and Kemper had the option to fund additional SLF JV I Notes, subject to additional equity funding to SLF JV I. As of each of September 30, 2020 and September 30, 2019, the Company had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded. 126 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of September 30, 2020 and September 30, 2019: September 30, 2020 September 30, 2019 Senior secured loans (1) $307,579 $340,960 Weighted average interest rate on senior secured loans (2) 5.44% 6.57% Number of borrowers in SLF JV I 56 51 Largest exposure to a single borrower (1) $10,487 $10,835 Total of five largest loan exposures to borrowers (1) $49,097 $50,510 __________ (1) At principal amount. (2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value. 127 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) SLF JV I Portfolio as of September 30, 2020 Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes Access CIG, LLC First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 3.91 % Diversified Support Services $ 9,206 $ 9,170 $ 9,029 AdVenture Interactive, Corp. 927 shares of common stock Advertising 1,390 1,373 (4) AI Ladder (Luxembourg) Subco S.a.r.l. First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 4.65 % Electrical Components & Equipment 6,038 5,914 5,781 (4) Airbnb, Inc. First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025 8.50 % Hotels, Resorts & Cruise Lines 3,051 2,981 3,311 (4) Altice France S.A. First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026 4.15 % Integrated Telecommunication Services 4,643 4,450 4,527 Alvogen Pharma US, Inc. First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023 6.25 % Pharmaceuticals 9,879 9,623 9,566 Amplify Finco Pty Ltd. First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026 4.75 % Movies & Entertainment 7,960 7,880 6,846 (4) Anastasia Parent, LLC First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025 Personal Products 2,828 2,282 1,248 (6) Apptio, Inc. First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 8.25 % Application Software 4,615 4,550 4,526 (4) First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 Application Software — (5) (8) (4)(5) Total Apptio, Inc. 4,545 4,518 Aurora Lux Finco S.À.R.L. First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026 7.00 % Airport Services 6,468 6,324 6,015 (4) Blackhawk Network Holdings, Inc. First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025 3.15 % Data Processing & Outsourced Services 9,775 9,758 9,251 Boxer Parent Company Inc. First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 4.40 % Systems Software 7,532 7,448 7,331 (4) Brazos Delaware II, LLC First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 4.16 % Oil & Gas Equipment & Services 7,331 7,306 5,600 C5 Technology Holdings, LLC 171 Common Units Data Processing & Outsourced Services — — (4) 7,193,539.63 Preferred Units Data Processing & Outsourced Services 7,194 5,683 (4) Total C5 Technology Holdings, LLC 7,194 5,683 Carrols Restaurant Group, Inc. First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026 7.25 % Restaurants 3,990 3,792 3,960 CITGO Petroleum Corp. First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 6.00 % Oil & Gas Refining & Marketing 7,184 7,112 6,842 (4) Clear Channel Outdoor Holdings, Inc. First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026 3.76 % Advertising 331 290 302 Connect U.S. Finco LLC First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026 5.50 % Alternative Carriers 7,437 7,262 7,228 Curium Bidco S.à.r.l. First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026 3.97 % Biotechnology 5,940 5,895 5,895 Dcert Buyer, Inc. First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026 4.15 % Internet Services & Infrastructure 7,960 7,940 7,879 Dealer Tire, LLC First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025 4.40 % Distributors 943 902 924 eResearch Technology, Inc. First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027 5.50 % Application Software 7,481 7,406 7,461 Frontier Communications Corporation First Lien Term Loan, PRIME+2.75% cash due 6/15/2024 6.00 % Integrated Telecommunication Services 3,939 3,901 3,887 Gigamon, Inc. First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 5.25 % Systems Software 7,781 7,734 7,684 Global Medical Response, Inc. First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025 5.75 % Health Care Services 2,231 2,187 2,185 Guidehouse LLP Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026 8.15 % Research & Consulting Services 6,000 5,979 5,790 (4) 128 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes Helios Software Holdings, Inc. First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025 4.52 % Systems Software $ 3,970 $ 3,930 $ 3,923 Intelsat Jackson Holdings S.A. First Lien Term Loan, PRIME+4.75% cash due 11/27/2023 8.00 % Alternative Carriers 3,568 3,541 3,598 First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022 6.50 % Alternative Carriers 971 801 1,011 (5) Total Intelsat Jackson Holdings S.A. 4,342 4,609 KIK Custom Products Inc. First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 5.00 % Household Products 5,322 5,308 5,302 LogMeIn, Inc. First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027 4.91 % Application Software 5,000 4,876 4,842 Mindbody, Inc. First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025 8.00 % Internet Services & Infrastructure 4,546 4,481 4,192 (4) First Lien Revolver, LIBOR+8.00% cash due 2/14/2025 Internet Services & Infrastructure — (7) (38) (4)(5) Total Mindbody, Inc. 4,474 4,154 MRI Software LLC First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026 6.50 % Application Software 3,830 3,795 3,737 (4) First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026 Application Software — (1) (4) (4)(5) First Lien Revolver, LIBOR+5.50% cash due 2/10/2026 Application Software — (3) (8) (4)(5) Total MRI Software LLC 3,791 3,725 Navicure, Inc. First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026 4.15 % Health Care Technology 5,970 5,940 5,849 New IPT, Inc. First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 6.00 % Oil & Gas Equipment & Services 1,006 1,006 786 (4) 21.876 Class A Common Units in New IPT Holdings, LLC Oil & Gas Equipment & Services — — (4) Total New IPT, Inc. 1,006 786 Northern Star Industries Inc. First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025 5.75 % Electrical Components & Equipment 6,825 6,803 6,518 Northwest Fiber, LLC First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027 5.66 % Integrated Telecommunication Services 2,400 2,314 2,403 Novetta Solutions, LLC First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 6.00 % Application Software 5,931 5,909 5,827 OEConnection LLC First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026 4.15 % Application Software 7,455 7,418 7,371 First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026 Application Software — (2) (5) (5) Total OEConnection LLC 7,416 7,366 Olaplex, Inc. First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026 7.50 % Personal Products 4,938 4,851 4,938 (4) First Lien Revolver, LIBOR+6.50% cash due 1/8/2025 7.50 % Personal Products 270 261 270 (4)(5) Total Olaplex, Inc. 5,112 5,208 PetVet Care Centers, LLC First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025 5.25 % Specialized Consumer Services 2,743 2,736 2,747 PG&E Corporation First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025 5.50 % Electric Utilities 5,985 5,899 5,875 Recorded Books, Inc. First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025 4.75 % Publishing 6,000 5,940 5,940 Sabert Corporation First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026 5.50 % Metal & Glass Containers 2,828 2,800 2,791 Salient CRGT, Inc. First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022 7.50 % Aerospace & Defense 2,111 2,099 1,963 (4) SHO Holding I Corporation First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024 4.00 % Footwear 8,396 8,380 5,898 Signify Health, LLC First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 5.50 % Health Care Services 9,750 9,690 9,409 Sirva Worldwide, Inc. First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 5.65 % Diversified Support Services 4,781 4,709 3,992 129 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes Star US Bidco LLC First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027 5.25 % Industrial Machinery $ 3,718 $ 3,532 $ 3,551 Sunshine Luxembourg VII SARL First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026 5.25 % Personal Products 7,940 7,900 7,911 Supermoose Borrower, LLC First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025 3.90 % Application Software 4,888 4,575 4,407 (4) Surgery Center Holdings, Inc. First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024 4.25 % Health Care Facilities 4,962 4,943 4,691 (4) Uber Technologies, Inc. First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 5.00 % Application Software 2,997 2,959 2,980 UFC Holdings, LLC First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 4.25 % Movies & Entertainment 2,856 2,816 2,814 Veritas US Inc. First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025 6.50 % Application Software 6,500 6,371 6,375 Verscend Holding Corp. First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025 4.65 % Health Care Technology 4,112 4,080 4,084 (4) VM Consolidated, Inc. First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025 3.40 % Data Processing & Outsourced Services 10,487 10,495 10,291 Windstream Services II, LLC First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027 7.25 % Integrated Telecommunication Services 7,980 7,662 7,744 (4) WP CPP Holdings, LLC Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 8.75 % Aerospace & Defense 6,000 5,956 4,680 (4) $ 307,579 $ 311,428 $ 298,771 __________ (1) Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted. (2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%. (3) Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein. (4) This investment was held by both the Company and SLF JV I as of September 30, 2020. (5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. (6) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. 130 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) SLF JV I Portfolio as of September 30, 2019 Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes Access CIG, LLC First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 6.07 % Diversified support services $ 9,300 $ 9,256 $ 9,201 AdVenture Interactive, Corp. 927 shares of common stock Advertising 1,390 1,295 (4) AI Ladder (Luxembourg) Subco S.a.r.l. First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025 6.60 % Electrical components & equipment 6,145 5,992 5,659 (4) Air Newco LP First Lien Term Loan, LIBOR+4.75% cash due 5/31/2024 6.79 % IT consulting & other services 9,900 9,875 9,916 AL Midcoast Holdings LLC First Lien Term Loan, LIBOR+5.50% cash due 8/1/2025 7.60 % Oil & gas storage & transportation 9,900 9,801 9,764 Altice France S.A. First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026 6.03 % Integrated telecommunication services 7,444 7,282 7,439 Alvogen Pharma US, Inc. First Lien Term Loan, LIBOR+4.75% cash due 4/1/2022 6.79 % Pharmaceuticals 7,656 7,656 6,963 Apptio, Inc. First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025 9.56 % Application software 4,615 4,534 4,530 (4) First Lien Revolver, LIBOR+7.25% cash due 1/10/2025 Application software — (7) (7) (4)(5) Total Apptio, Inc. 4,527 4,523 Blackhawk Network Holdings, Inc. First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025 5.04 % Data processing & outsourced services 9,875 9,855 9,858 Boxer Parent Company Inc. First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025 6.29 % Systems software 7,609 7,518 7,336 (4) Brazos Delaware II, LLC First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025 6.05 % Oil & gas equipment & services 7,406 7,376 6,855 C5 Technology Holdings, LLC 171 Common Units Data Processing & Outsourced Services — — (4) 7,193,539.63 Preferred Units Data Processing & Outsourced Services 7,194 7,194 (4) Total C5 Technology Holdings, LLC 7,194 7,194 Cast & Crew Payroll, LLC First Lien Term Loan, LIBOR+4.00% cash due 2/9/2026 6.05 % Application software 4,975 4,925 5,018 CITGO Petroleum Corp. First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024 7.10 % Oil & gas refining & marketing 7,960 7,880 8,010 (4) Connect U.S. Finco LLC First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026 7.10 % Alternative Carriers 8,000 7,840 7,888 (4) Curium Bidco S.à r.l. First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026 6.10 % Biotechnology 6,000 5,955 6,030 Dcert Buyer, Inc. First Lien Term Loan, LIBOR+4.00% cash due 8/8/2026 6.26 % Internet services & infrastructure 8,000 7,980 7,985 DigiCert, Inc. First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024 6.04 % Internet services & infrastructure 8,250 8,148 8,249 (4) Ellie Mae, Inc. First Lien Term Loan, LIBOR+4.00% cash due 4/17/2026 6.04 % Application software 5,000 4,975 5,015 Everi Payments Inc. First Lien Term Loan, LIBOR+3.00% cash due 5/9/2024 5.04 % Casinos & gaming 4,764 4,742 4,776 Falmouth Group Holdings Corp. First Lien Term Loan, LIBOR+6.75% cash due 12/14/2021 8.95 % Specialty chemicals 4,938 4,909 4,910 Frontier Communications Corporation First Lien Term Loan, LIBOR+3.75% cash due 6/15/2024 5.80 % Integrated telecommunication services 6,473 6,400 6,471 Gentiva Health Services, Inc. First Lien Term Loan, LIBOR+3.75% cash due 7/2/2025 5.81 % Healthcare services 7,920 7,801 7,974 Gigamon, Inc. First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024 6.29 % Systems software 7,860 7,801 7,644 GoodRx, Inc. First Lien Term Loan, LIBOR+2.75% cash due 10/10/2025 4.81 % Interactive media & services 7,852 7,835 7,862 Guidehouse LLP Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026 9.54 % Research & consulting services 6,000 5,975 5,925 (4) 131 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Portfolio Company Investment Type Cash Interest Rate (1)(2) Industry Principal Cost Fair Value (3) Notes Indivior Finance S.a.r.l. First Lien Term Loan, LIBOR+4.50% cash due 12/19/2022 6.76 % Pharmaceuticals $ 7,898 $ 7,797 $ 7,272 Intelsat Jackson Holdings S.A. First Lien Term Loan, LIBOR+3.75% cash due 11/27/2023 5.80 % Alternative Carriers 10,000 9,891 10,042 KIK Custom Products Inc. First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023 6.26 % Household products 8,000 7,972 7,610 McDermott Technology (Americas), Inc. First Lien Term Loan, LIBOR+5.00% cash due 5/9/2025 7.10 % Oil & gas equipment & services 4,187 4,119 2,676 Mindbody, Inc. First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025 9.06 % Internet services & infrastructure 4,524 4,443 4,438 (4) First Lien Revolver, LIBOR+7.00% cash due 2/15/2025 Internet services & infrastructure — (9) (9) (4)(5) Total Mindbody, Inc. 4,434 4,429 Navicure, Inc. First Lien Term Loan, LIBOR+3.75% cash due 9/18/2026 6.13 % Healthcare technology 6,000 5,970 6,008 New IPT, Inc. First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 7.10 % Oil & gas equipment & services 1,422 1,422 1,422 (4) 21.876 Class A Common Units in New IPT Holdings, LLC Oil & gas equipment & services — 1,268 (4) Total New IPT, Inc. 1,422 2,690 Northern Star Industries Inc. First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025 6.56 % Electrical components & equipment 6,895 6,868 6,792 Novetta Solutions, LLC First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022 7.05 % Application software 5,993 5,961 5,882 OCI Beaumont LLC First Lien Term Loan, LIBOR+4.00% cash due 3/13/2025 6.10 % Commodity chemicals 7,880 7,872 7,890 OEConnection LLC First Lien Term Loan, LIBOR+4.00% cash due 9/24/2026 6.13 % Application software 7,312 7,275 7,298 First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/24/2026 Application software — (3) (1) (5) Total OEConnection LLC 7,272 7,297 Red Ventures, LLC First Lien Term Loan, LIBOR+3.00% cash due 11/8/2024 5.04 % Interactive media & services 3,990 3,971 4,011 Salient CRGT, Inc. First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022 8.05 % Aerospace & defense 2,205 2,183 2,094 (4) Scientific Games International, Inc. First Lien Term Loan, LIBOR+2.75% cash due 8/14/2024 4.79 % Casinos & gaming 6,516 6,491 6,470 SHO Holding I Corporation First Lien Term Loan, LIBOR+5.00% cash due 10/27/2022 7.26 % Footwear 8,420 8,403 7,999 Signify Health, LLC First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024 6.60 % Healthcare services 9,850 9,775 9,838 Sirva Worldwide, Inc. First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025 7.54 % Diversified support services 4,906 4,833 4,759 Sunshine Luxembourg VII SARL First Lien Term Loan, LIBOR+4.25% cash due 9/25/2026 6.59 % Personal products 8,000 7,960 8,048 Thruline Marketing, Inc. First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022 9.10 % Advertising 1,854 1,851 1,854 (4) 927 Class A Units in FS AVI Holdco, LLC Advertising 1,088 658 (4) Total Thruline Marketing, Inc. 2,939 2,512 Triple Royalty Sub LLC Fixed Rate Bond 144A 9.0% Toggle PIK cash due 4/15/2033 Pharmaceuticals 5,000 5,000 5,175 Uber Technologies, Inc. First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025 6.03 % Application software 9,875 9,836 9,836 (4) UFC Holdings, LLC First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026 5.30 % Movies & entertainment 4,489 4,489 4,506 Uniti Group LP First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022 7.04 % Specialized REITs 6,401 6,221 6,256 (4) Valeant Pharmaceuticals International Inc. First Lien Term Loan, LIBOR+2.75% cash due 11/27/2025 4.79 % Pharmaceuticals 1,772 1,764 1,778 Veritas US Inc. First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023 6.60 % Application software 6,894 6,856 6,534 (4) Verra Mobility, Corp. First Lien Term Loan, LIBOR+3.75% cash due 2/28/2025 5.79 % Data processing & outsourced services 10,835 10,849 10,894 WP CPP Holdings, LLC Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026 10.01 % Aerospace & defense 6,000 5,949 5,974 (4) $ 340,960 $ 347,985 $ 345,032 132 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) __________ (1) Represents the interest rate as of September 30, 2019. All interest rates are payable in cash, unless otherwise noted. (2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2019, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06%, and the PRIME at 5.00%. Most loans include an interest floor, which generally ranges from 0% to 1%. (3) Represents the current determination of fair value as of September 30, 2019 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein. (4) This investment was held by both the Company and SLF JV I as of September 30, 2019. (5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par. Both the cost and fair value of the Company's debt investment in SLF JV I were $96.3 million as of each of September 30, 2020 and September 30, 2019. The Company earned interest income of $8.1 million, $9.8 million and $11.2 million (including $3.1 million of PIK interest) on its debt investment in the SLF JV I for the years ended September 30, 2020, 2019 and 2018, respectively. The Company's debt investment in SLF JV I bears interest at a rate of one-month LIBOR plus 7.0% per annum and matures on December 29, 2028. The cost and fair value of the LLC equity interests in SLF JV I held by the Company were $49.3 million and $21.2 million, respectively, as of September 30, 2020, and $49.3 million and $30.1 million, respectively, as of September 30, 2019. The Company did not earn dividend income for the years ended September 30, 2020 and 2019, with respect to its investment in the LLC equity interests of SLF JV I. The Company earned dividend income of $1.6 million for the year ended September 30, 2018 with respect to its LLC equity interests of SLF JV I. The LLC equity interests of SLF JV I are generally dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis. Below is certain summarized financial information for SLF JV I as of September 30, 2020 and September 30, 2019 and for the years ended September 30, 2020, 2019 and 2018: September 30, 2020 September 30, 2019 Selected Balance Sheet Information: Investments at fair value (cost September 30, 2020: $311,428; cost September 30, 2019: $347,985) $ 298,771 $ 345,032 Cash and cash equivalents 5,389 3,674 Restricted cash 4,211 5,242 Other assets 5,093 6,912 Total assets $ 313,464 $ 360,860 Senior credit facility payable $ 167,910 $ 170,210 Debt securities payable at fair value (proceeds September 30, 2020: $110,000; proceeds September 30, 2019: $110,000) 110,000 110,000 Other liabilities 11,336 46,303 Total liabilities $ 289,246 $ 326,513 Members' equity 24,218 34,347 Total liabilities and members' equity $ 313,464 $ 360,860 Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Selected Statements of Operations Information: Interest income $ 19,808 $ 22,727 $ 20,574 Other income 338 153 65 Total investment income 20,146 22,880 20,639 Interest expense 16,637 19,858 20,713 Other expenses 244 358 473 Total expenses (1) 16,881 20,216 21,186 Net unrealized appreciation (depreciation) (9,704) 2,257 12,386 Net realized gains (losses) (3,691) (8,507) (16,311) Net income (loss) $ (10,130) $ (3,586) $ (4,472) __________ (1) There are no management fees or incentive fees charged at SLF JV I. 133 SLF JV I has elected to fair value the debt securities issued to the Company and Kemper under FASB ASC Topic 825, Financial Instruments - Fair Value Option . The debt securities are valued based on the total assets less the total liabilities senior to the subordinated notes of SLF JV I in an amount not exceeding par under the EV technique. During the year ended September 30, 2020, the Company did not sell any debt investments to SLF JV I. During the year ended September 30, 2019, the Company sold $8.4 million of senior secured debt investments to SLF JV I at fair value in exchange for $8.3 million cash consideration. A loss of $0.1 million was recognized by the Company on these transactions. During the year ended September 30, 2018, the Company sold $8.0 million of senior secured debt investments to SLF JV I at fair value in exchange for $8.0 million cash consideration. No gain or loss was recognized by the Company on these transactions. Note 4. Fee Income For the years ended September 30, 2020, 2019 and 2018, the Company recorded total fee income of $8.5 million, $6.7 million and $9.4 million, respectively, of which $0.7 million, $0.6 million and $1.2 million, respectively, was recurring in nature. Note 5. Share Data and Net Assets Earnings per Share The following table sets forth the computation of basic and diluted earnings per share, pursuant to ASC Topic 260-10, Earnings per Share , for the years ended September 30, 2020, 2019 and 2018: (Share amounts in thousands) Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Earnings (loss) per common share — basic and diluted: Net increase (decrease) in net assets resulting from operations $ 39,224 $ 126,160 $ 46,762 Weighted average common shares outstanding — basic and diluted 140,961 140,961 140,961 Earnings (loss) per common share — basic and diluted $ 0.28 $ 0.89 $ 0.33 134 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Changes in Net Assets The following table presents the changes in net assets for the years ended September 30, 2020, 2019 and 2018: Common Stock Shares Par Value Additional paid-in-capital Accumulated Overdistributed Earnings Total Net Assets Balance at September 30, 2017 140,961 $ 1,409 $ 1,579,278 $ (713,030) $ 867,657 Net investment income — — — 60,046 60,046 Net unrealized appreciation (depreciation) — — — 102,605 102,605 Net realized gains (losses) — — — (115,267) (115,267) Provision for income tax (expense) benefit — — — (622) (622) Distributions to stockholders — — — (38,699) (38,699) Tax return of capital — — (17,685) — (17,685) Reclassification of additional paid-in capital — — (68,854) 68,854 — Issuance of common stock under dividend reinvestment plan 303 3 1,408 — 1,411 Repurchases of common stock under dividend reinvestment plan (303) (3) (1,408) — (1,411) Balance at September 30, 2018 140,961 $ 1,409 $ 1,492,739 $ (636,113) $ 858,035 Net investment income — $ — $ — $ 67,909 $ 67,909 Net unrealized appreciation (depreciation) — — — 38,457 38,457 Net realized gains (losses) — — — 20,805 20,805 Provision for income tax (expense) benefit — — — (1,011) (1,011) Distributions to stockholders — — — (53,565) (53,565) Reclassification of additional paid-in capital — — (4,965) 4,965 — Issuance of common stock under dividend reinvestment plan 269 3 1,341 — 1,344 Repurchases of common stock under dividend reinvestment plan (269) (3) (1,341) — (1,344) Balance at September 30, 2019 140,961 $ 1,409 $ 1,487,774 $ (558,553) $ 930,630 Net investment income — $ — $ — $ 71,992 $ 71,992 Net unrealized appreciation (depreciation) — — — (20,614) (20,614) Net realized gains (losses) — — — (13,924) (13,924) Provision for income tax (expense) benefit — — — 1,770 1,770 Distributions to stockholders — — — (54,975) (54,975) Issuance of common stock under dividend reinvestment plan 435 4 1,874 — 1,878 Repurchases of common stock under dividend reinvestment plan (435) (4) (1,874) — (1,878) Balance at September 30, 2020 140,961 $ 1,409 $ 1,487,774 $ (574,304) $ 914,879 135 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Distributions Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Board of Directors and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, may be distributed to stockholders or retained for reinvestment. The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s Board of Directors declares a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. If the Company’s shares are trading at a premium to net asset value, the Company typically issues new shares to implement the DRIP with such shares issued at the greater of the most recently computed net asset value per share of common stock or 95% of the current market price per share of common stock on the payment date for such distribution. If the Company’s shares are trading at a discount to net asset value, the Company typically purchases shares in the open market in connection with the Company’s obligations under the DRIP. For income tax purposes, the Company estimates that its distributions for the 2020 calendar year will be composed primarily of ordinary income. The character of such distributions will be appropriately reported to the Internal Revenue Service and stockholders for the 2020 calendar year. To the extent the Company’s taxable earnings for a fiscal and taxable year fall below the amount of distributions paid for the fiscal and taxable year, a portion of the total amount of the Company’s distributions for the fiscal and taxable year is deemed a return of capital for tax purposes to the Company’s stockholders. For the year ended September 30, 2020, no portion of the distributions were deemed a return of capital for tax purposes. The following table reflects the distributions per share that the Company has paid, including shares issued under the DRIP, on its common stock during the years ended September 30, 2020, 2019 and 2018: Date Declared Record Date Payment Date Amount per Share Cash Distribution DRIP Shares Issued (1) DRIP Shares Value November 12, 2019 December 13, 2019 December 31, 2019 $ 0.095 $ 12.9 million 87,747 $ 0.5 million January 31, 2020 March 13, 2020 March 31, 2020 0.095 12.9 million 157,523 0.5 million April 30, 2020 June 15, 2020 June 30, 2020 0.095 13.0 million 87,351 0.4 million July 31, 2020 September 15, 2020 September 30, 2020 0.105 14.3 million 102,404 0.5 million Total for the year ended September 30, 2020 $ 0.39 $ 53.1 million 435,025 $ 1.9 million Date Declared Record Date Payment Date Amount per Share Cash Distribution (2) DRIP Shares Issued (1) DRIP Shares Value November 19, 2018 December 17, 2018 December 28, 2018 $ 0.095 $ 13.0 million 87,429 $ 0.4 million February 1, 2019 March 15, 2019 March 29, 2019 0.095 13.1 million 59,603 0.3 million May 3, 2019 June 14, 2019 June 28, 2019 0.095 13.1 million 61,093 0.3 million August 2, 2019 September 13, 2019 September 30, 2019 0.095 13.1 million 61,205 0.3 million Total for the year ended September 30, 2019 $ 0.38 $ 52.2 million 269,330 $ 1.3 million Date Declared Record Date Payment Date Amount per Share Cash Distribution DRIP Shares Issued (1) DRIP Shares Value August 7, 2017 December 15, 2017 December 29, 2017 $ 0.125 $ 17.3 million 58,456 $ 0.3 million February 5, 2018 March 15, 2018 March 30, 2018 0.085 11.5 million 122,884 0.5 million May 3, 2018 June 15, 2018 June 29, 2018 0.095 13.0 million 87,283 0.4 million August 1, 2018 September 15, 2018 September 28, 2018 0.095 13.2 million 34,575 0.2 million Total for the year ended September 30, 2018 $ 0.40 $ 55.0 million 303,198 $ 1.4 million __________ (1) Shares were purchased on the open market and distributed. (2) Amounts may not sum due to rounding. Common Stock Offering There were no common stock offerings during the years ended September 30, 2020, 2019 and 2018. 136 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 6. Borrowings Credit Facility On November 30, 2017, the Company entered into a senior secured revolving credit facility (as amended and restated, the “Credit Facility”) pursuant to a Senior Secured Revolving Credit Agreement with the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents. The Credit Facility provides that the Company may use the proceeds of the loans and issuances of letters of credit under the Credit Facility for general corporate purposes, including acquiring and funding leveraged loans, mezzanine loans, high-yield securities, convertible securities, preferred stock, common stock and other investments. The Credit Facility further allows the Company to request letters of credit from ING Capital LLC, as the issuing bank. As of September 30, 2020, (i) the size of the Credit Facility was $700 million (with an “accordion” feature that permits the Company, under certain circumstances, to increase the size of the facility to up to the greater of $800 million and the Company’s net worth (as defined in the Credit Facility) on the date of such increase), (ii) the period during which the Company may make drawings will expire on February 25, 2023 and the maturity date is February 25, 2024 and (iii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at the Company’s option) was 2.00% (which can be increased up to 2.25%) and (b) alternate base rate loans was 1.00% (which can be increased up to 1.25%); provided that the interest margin will increase to 2.75% and 1.75% for LIBOR loans and alternative base rate loans, respectively, if the Company’s stockholders’ equity is below $700 million, each depending on the Company’s senior debt coverage ratio. The Credit Facility is secured by substantially all of the Company’s assets (excluding, among other things, investments held in and by certain subsidiaries of the Company or investments in certain portfolio companies of the Company) and guaranteed by certain subsidiaries of the Company. As of September 30, 2020, except for assets that were held by certain immaterial subsidiaries, substantially all of the Company's assets are pledged as collateral under the Credit Facility. The Credit Facility requires the Company to, among other things, (i) make representations and warranties regarding the collateral as well as each of the Company’s portfolio companies’ businesses, (ii) agree to certain indemnification obligations, and (iii) comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including covenants related to: (A) limitations on the incurrence of additional indebtedness and liens, (B) limitations on certain investments, (C) limitations on certain asset transfers and restricted payments, (D) maintaining a certain minimum stockholders’ equity, (E) maintaining a ratio of total assets (less total liabilities) to total indebtedness, of the Company and its subsidiaries (subject to certain exceptions), of not less than 1.50 to 1.00, (F) maintaining a ratio of consolidated EBITDA to consolidated interest expense, of the Company and its subsidiaries (subject to certain exceptions), of not less than 2.25 to 1.00, (G) maintaining a minimum liquidity and net worth, and (H) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. The Credit Facility also includes usual and customary default provisions such as the failure to make timely payments under the facility, the occurrence of a change in control, and the failure by the Company to materially perform under the agreements governing the facility, which, if not complied with, could accelerate repayment under the facility. As of September 30, 2020, the Company was in compliance with all financial covenants under the Credit Facility. In addition to the asset coverage ratio described above, borrowings under the Credit Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that will apply different advance rates to different types of assets in the Company’s portfolio. Each loan or letter of credit originated or assumed under the Credit Facility is subject to the satisfaction of certain conditions. As of September 30, 2020 and September 30, 2019, the Company had $414.8 million and $314.8 million of borrowings outstanding under the Credit Facility, respectively, which had a fair value of $414.8 million and $314.8 million, respectively. The Company's borrowings under the Credit Facility bore interest at a weighted average interest rate of 3.028% and 4.550% for the years ended September 30, 2020 and 2019, respectively. The Company's borrowings under the Credit Facility bore interest at a weighted average interest rate of 4.254% for the period from November 30, 2017 to September 30, 2018. The Company’s borrowings under the Prior ING Facility (as defined below) bore interest at a weighted average interest rate of 3.705% for the period from October 1, 2017 to November 30, 2017. For the years ended September 30, 2020, 2019 and 2018, the Company recorded interest expense (inclusive of fees) of $14.9 million, $17.1 million and $11.6 million, respectively, related to the Credit Facility. From May 27, 2010 through November 30, 2017, the Company was party to a secured syndicated revolving credit facility with certain lenders party thereto from time to time and ING Capital LLC, as administrative agent (as amended, the “Prior ING Facility”). In connection with the entry into the Credit Facility, the Company repaid all outstanding borrowings under the Prior ING Facility following which the Prior ING Facility was terminated. Obligations under the Prior ING Facility would have 137 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) otherwise matured on August 6, 2018. During the year ended September 30, 2018, the Company expensed $0.2 million of unamortized deferred financing costs related to the Prior ING Facility. 2025 Notes On February 25, 2020, the Company issued $300.0 million in aggregate principal amount of the 2025 Notes for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million. The OID on the 2025 Notes is amortized based on the effective interest method over the term of the 2025 Notes. The 2025 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the fifth supplemental indenture, dated February 25, 2020 (collectively, the "2025 Notes Indenture"), between the Company and Deutsche Bank Trust Company Americas (the "Trustee"). The 2025 Notes are the Company's general unsecured obligations that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2025 Notes. The 2025 Notes rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated. The 2025 Notes effectively rank junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness. The 2025 Notes rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities. Interest on the 2025 Notes is paid semi-annually on February 25 and August 25 at a rate of 3.500% per annum. The 2025 Notes mature on February 25, 2025 and may be redeemed in whole or in part at any time or from time to time at the Company's option prior to maturity at par plus a “make-whole” premium, if applicable. In addition, holders of the 2025 Notes can require the Company to repurchase the 2025 Notes at 100% of their principal amount upon the occurrence of certain change of control events as described in the 2025 Notes Indenture. The 2025 Notes were issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. From issuance through September 30, 2020, the Company did not repurchase any of the 2025 Notes in the open market. The 2025 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions (but giving effect to any exemptive relief granted to the Company by the U.S. Securities and Exchange Commission ("SEC")), as well as covenants requiring the Company to provide financial information to the holders of the 2025 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. These covenants are subject to limitations and exceptions that are described in the 2025 Notes Indenture. For the year ended September 30, 2020, the Company recorded interest expense (inclusive of fees) of $7.0 million related to the 2025 Notes. As of September 30, 2020, there were $300.0 million of 2025 Notes outstanding, which had a carrying value and fair value of $294.5 million and $301.4 million, respectively. The carrying value represents the aggregate principal amount outstanding less unamortized deferred financing costs and the unaccreted discount recorded upon the issuance of the 2025 Notes. As of September 30, 2020, the total unamortized deferred financing costs and the net unaccreted discount were $3.3 million and $2.2 million, respectively. 2019 Notes On February 26, 2014, the Company issued $250.0 million in aggregate principal amount of its 4.875% unsecured notes due 2019 (the "2019 Notes") for net proceeds of $244.4 million after deducting OID of $1.4 million, underwriting commissions and discounts of $3.7 million and offering costs of $0.5 million. The OID on the 2019 Notes was amortized based on the effective interest method over the term of the notes. The 2019 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the third supplemental indenture, dated February 26, 2014, between the Company and the Trustee. Interest on the 2019 Notes was paid semi-annually on March 1 and September 1 at a rate of 4.875% per annum. As of each of September 30, 2020 and September 30, 2019, there were no 2019 Notes outstanding. During the year ended September 30, 2018, the Company repurchased and subsequently canceled $21.2 million of the 2019 Notes. The Company recognized a loss of $0.1 million in connection with such transaction. The 2019 Notes matured on March 1, 2019 and were fully repaid. For the years ended September 30, 2019 and 2018, the Company recorded interest expense of $5.1 million and $12.6 million (inclusive of fees), respectively, related to the 2019 Notes. 138 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) 2024 Notes On October 18, 2012, the Company issued $75.0 million in aggregate principal amount of the 2024 Notes for net proceeds of $72.5 million after deducting underwriting commissions of $2.2 million and offering costs of $0.3 million. The 2024 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the first supplemental indenture, dated October 18, 2012, between the Company and the Trustee. Interest on the 2024 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 5.875% per annum. On March 2, 2020, the Company redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes, following which they were delisted from the New York Stock Exchange. The redemption price per 2024 Note was $25 plus accrued and unpaid interest. The Company recognized a loss of $1.0 million in connection with the redemption of the 2024 Notes during the year ended September 30, 2020. For the year ended September 30, 2020, the Company recorded interest expense of $1.9 million (inclusive of fees) related to the 2024 Notes. For each of the years ended September 30, 2019 and 2018, the Company recorded interest expense of $4.6 million (inclusive of fees) related to the 2024 Notes. As of September 30, 2020, there were no 2024 Notes outstanding. As of September 30, 2019, there were $75.0 million of 2024 Notes outstanding, which had a carrying value and fair value of $73.9 million and $77.4 million, respectively. 2028 Notes In April and May 2013, the Company issued $86.3 million in aggregate principal amount of the 2028 Notes for net proceeds of $83.4 million after deducting underwriting commissions of $2.6 million and offering costs of $0.3 million. The 2028 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the second supplemental indenture, dated April 4, 2013, between the Company and the Trustee. Interest on the 2028 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 6.125% per annum. On March 13, 2020, the Company redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market. The redemption price per 2028 Note was $25 plus accrued and unpaid interest. The Company recognized a loss of $1.5 million in connection with the redemption of the 2028 Notes during the year ended September 30, 2020. For the year ended September 30, 2020, the Company recorded interest expense of $2.5 million (inclusive of fees) related to the 2028 Notes. For each of the years ended September 30, 2019 and 2018, the Company recorded interest expense of $5.5 million (inclusive of fees) related to the 2028 Notes. As of September 30, 2020, there were no 2028 Notes outstanding. As of September 30, 2019, there were $86.3 million of 2028 Notes outstanding, which had a carrying value and fair value of $84.6 million and $87.6 million, respectively. Secured Borrowings As of September 30, 2020 and 2019, there were no secured borrowings outstanding. During the year ended September 30, 2019, $7.2 million of secured borrowings were extinguished in exchange for $7.2 million of preferred stock in C5 Technology Holdings, LLC, which was restructured during the year. For the years ended September 30, 2019 and 2018, the Company recorded interest expense of $0.1 million and $0.7 million, respectively, related to the secured borrowings. For the years ended September 30, 2019 and 2018, the Company recorded unrealized appreciation (depreciation) on secured borrowings of $(2.7) million, $2.4 million respectively. For the year ended September 30, 2019, the Company recorded a realized gain of $2.6 million as a result of the extinguishment of secured borrowings in connection with the C5 Technology Holdings, LLC restructuring. 139 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Principal Payments Scheduled principal payments for debt obligations as of September 30, 2020 are as follows: Payments due during fiscal years ended September 30, Total 2021 2022 2023 2024 2025 and Thereafter Credit Facility $ 414,825 $ — $ — $ — $ 414,825 $ — 2025 Notes 300,000 — — — — 300,000 Total $ 714,825 $ — $ — $ — $ 414,825 $ 300,000 Note 7. Interest and Dividend Income As of September 30, 2020 and September 30, 2019, there were two and three investments, respectively, on which the Company had stopped accruing cash and/or PIK interest or OID income. The percentages of the Company's debt investments at cost and fair value by accrual status as of September 30, 2020 and September 30, 2019 were as follows: September 30, 2020 September 30, 2019 Cost % of Debt Portfolio Fair Value % of Debt Portfolio Cost % of Debt Portfolio Fair Value % of Debt Portfolio Accrual $ 1,500,364 98.79 % $ 1,483,284 99.89 % $ 1,311,849 95.72 % $ 1,305,718 99.79 % PIK non-accrual (1) 12,661 0.83 — — 12,661 0.92 — — Cash non-accrual (2) 5,712 0.38 1,571 0.11 46,107 3.36 2,706 0.21 Total $ 1,518,737 100.00 % $ 1,484,855 100.00 % $ 1,370,617 100.00 % $ 1,308,424 100.00 % ___________________ (1) PIK non-accrual status is inclusive of other non-cash income, where applicable. (2) Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable. Note 8. Taxable/Distributable Income and Dividend Distributions Taxable income differs from net increase (decrease) in net assets resulting from operations primarily due to: (1) unrealized appreciation (depreciation) on investments, secured borrowings and foreign currency, as gains and losses are not included in taxable income until they are realized; (2) origination and exit fees received in connection with investments in portfolio companies; (3) organizational costs; (4) income or loss recognition on exited investments; (5) recognition of interest income on certain loans; and (6) investments in controlled foreign corporations. As of September 30, 2020, the Company had net capital loss carryforwards of $515.3 million to offset net capital gains that will not expire, to the extent available and permitted by U.S. federal income tax law, of which $84.3 million are available to offset future short-term capital gains and $431.0 million are available to offset future long-term capital gains. Listed below is a reconciliation of "net increase (decrease) in net assets resulting from operations" to taxable income for the years ended September 30, 2020, 2019 and 2018. Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 Net increase (decrease) in net assets resulting from operations $ 39,224 $ 126,160 $ 46,762 Net unrealized (appreciation) depreciation 20,614 (38,457) (102,605) Book/tax difference due to organizational costs (87) (87) (87) Book/tax difference due to interest income on certain loans 1,214 3,330 1,348 Book/tax difference due to capital losses not recognized / (recognized) (545) (18,571) 99,431 Other book/tax differences (6,058) (8,111) (6,147) Taxable/Distributable Income (1) $ 54,362 $ 64,264 $ 38,702 __________ (1) The Company's taxable income for the year ended September 30, 2020 is an estimate and will not be finally determined until the Company files its tax return for the fiscal year ended September 30, 2020. Therefore, the final taxable income may be different than the estimate. 140 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences. When assessing the realizability of deferred tax assets, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred tax assets are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income, and tax liabilities for the tax jurisdiction in which the tax asset is located. The deferred tax asset recognized by the Company, as it relates to the higher tax basis in the carrying value of certain assets compared to the book basis of those assets, will be recognized in future years by these taxable entities. Deferred tax assets are based on the amount of the tax benefit that the Company’s management has determined is more likely than not to be realized in future periods. In determining the realizability of this tax benefit, management considered numerous factors that will give rise to pre-tax income in future periods. Among these are the historical and expected future book and tax basis pre-tax income of the Company and unrealized gains in the Company’s assets at the determination date. Based on these and other factors, the Company determined that, as of September 30, 2020, $3.0 million of $3.8 million net deferred tax assets would not more likely than not be realized in future periods. As of September 30, 2020, the Company recorded a deferred tax asset of $0.8 million on the Consolidated Statements of Assets and Liabilities. For the year ended September 30, 2020, the Company recognized a total provision for income tax benefit of $1.8 million, which was comprised of (i) a current income tax benefit of approximately $0.2 million, and (ii) a deferred income tax benefit of approximately $1.6 million, which resulted from unrealized depreciation on investments held by the Company’s wholly-owned taxable subsidiaries. For the year ended September 30, 2019, the Company recognized a total provision for income taxes of $1.0 million, which was comprised of (i) current income tax expense of approximately $0.7 million, primarily as a result of realized gains on investments held by the Company's wholly-owned taxable subsidiaries, net of return to provision adjustments, and (ii) deferred income tax expense of approximately $0.3 million, which resulted from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries. For the year ended September 30, 2018, the Company recognized a total provision for income taxes of $0.6 million and was comprised of (i) current income taxes of approximately $0.2 million, which resulted from realized gains on investments held by the Company's wholly-owned taxable subsidiaries, and (ii) deferred income taxes of approximately $0.4 million, which was the net effect of a deferred tax liability of $0.7 million resulting from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries and a deferred tax asset of $0.3 million resulting from unrealized depreciation on investments and capital losses of the Company’s wholly-owned taxable subsidiaries. For the year ended September 30, 2019, the Company reclassified $5.0 million of additional paid-in-capital to accumulated overdistributed earnings on the Consolidated Statement of Assets and Liabilities to reflect expired capital loss carryforwards and distributions that occurred prior to September 30, 2018 that were not deemed to be a return of capital for income tax purposes. These reclassification entries did not impact total net assets. As of September 30, 2020, the Company's last tax year end, the components of accumulated overdistributed earnings on a tax basis were as follows: Undistributed ordinary income, net $ 9,392 Net realized capital losses 515,255 Unrealized losses, net 68,439 The aggregate cost of investments for income tax purposes was $1.6 billion as of September 30, 2020. As of September 30, 2020, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over cost for income tax purposes was $300.3 million. As of September 30, 2020, the aggregate gross unrealized depreciation for all investments in which there was an excess of cost for income tax purposes over value was $368.7 million. Net unrealized depreciation based on the aggregate cost of investments for income tax purposes was $68.4 million. 141 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation Realized Gains or Losses Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption and the cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized, and include investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with the Company's determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules. During the year ended September 30, 2020, the Company recorded an aggregate net realized loss of $13.9 million, which consisted of the following: ($ in millions) Portfolio Company Net Realized Gain (Loss) Cenegenics, LLC $ (29.2) Dominion Diagnostics, LLC (15.6) Thruline Marketing Inc. (4.9) Covia Holdings Corporation (3.3) YETI Holdings, Inc. 17.6 Sorrento Therapeutics, Inc. 11.5 Lytx Holdings, LLC 5.2 Goodrx Holdings Inc. 2.1 HealthEdge Software, Inc. 1.8 Other, net 0.9 Total, net $ (13.9) During the year ended September 30, 2019, the Company recorded an aggregate net realized gain of $20.8 million, which consisted of the following: ($ in millions) Portfolio Company Net Realized Gain (Loss) Maverick Healthcare Group, LLC $ 17.5 BeyondTrust Holdings LLC 12.4 Comprehensive Pharmacy Services LLC 7.6 Refac Optical Group 7.5 YETI Holdings, Inc. 5.3 InMotion Entertainment Group, LLC 3.0 Advanced Pain Management (22.5) Thing5, LLC (net of secured borrowings) (11.1) Weatherford International (3.3) Other, net 4.4 Total, net $ 20.8 142 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) During the year ended September 30, 2018, the Company recorded an aggregate net realized loss of $115.3 million, which consisted of the following: ($ in millions) Portfolio Company Net Realized Gain (Loss) Ameritox Ltd. $ (74.8) TransTrade Operators, Inc. (32.5) Traffic Solutions Holdings, Inc. (15.8) Metamorph US 3, LLC (6.7) Lytx, Inc. 4.4 Other, net 10.1 Total, net $ (115.3) Net Unrealized Appreciation or Depreciation Net unrealized appreciation or depreciation reflects the net change in the valuation of the portfolio pursuant to the Company's valuation guidelines and the reclassification of any prior period unrealized appreciation or depreciation. During the years ended September 30, 2020, 2019 and 2018, the Company recorded net unrealized appreciation (depreciation) of $(20.6) million, $38.5 million and $102.6 million, respectively. For the year ended September 30, 2020, this consisted of $35.3 million of net unrealized depreciation on equity investments, $12.0 million of net unrealized depreciation on debt investments and $0.3 million of net unrealized depreciation of foreign currency forward contracts, partially offset by $26.9 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses). For the year ended September 30, 2019, this consisted of $57.0 million of net unrealized appreciation related to exited investments (a portion of which results in a reclassification to realized losses), $10.6 million of net unrealized appreciation on equity investments and $0.3 million net unrealized appreciation of foreign currency forward contracts, partially offset by $26.8 million of net unrealized depreciation on debt investments and $2.7 million of net unrealized depreciation of secured borrowings (which results in a reclassification to realized gains). For the year ended September 30, 2018, this consisted of $127.4 million of net unrealized appreciation related to exited investments (a portion of which results in a reclassification to realized losses), $2.4 million of net unrealized appreciation on secured borrowings and $2.2 million of net unrealized appreciation on equity investments, offset by $29.4 million of net unrealized depreciation on debt investments. Note 10. Concentration of Credit Risks The Company deposits its cash with financial institutions and at times such balances may be in excess of the FDIC insurance limit. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions and monitoring their financial stability. Note 11. Related Party Transactions As of September 30, 2020 and September 30, 2019, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amount of $11.2 million and $10.2 million, respectively, reflecting the unpaid portion of the base management fees and incentive fees payable to Oaktree and OCM, as applicable. Investment Advisory Agreement The Company is party to the Investment Advisory Agreement. Under the Investment Advisory Agreement, the Company pays Oaktree a fee for its services under the Investment Advisory Agreement consisting of two components: a base management fee and an incentive fee. The cost of both the base management fee payable to Oaktree and any incentive fees earned by Oaktree is ultimately borne by common stockholders of the Company. From October 17, 2017 through May 3, 2020, the Company was externally managed by OCM pursuant to an investment advisory agreement. On May 4, 2020, OCM effected the novation of such investment advisory agreement to Oaktree. Immediately following such novation, the Company and Oaktree entered into a new investment advisory agreement with the same terms, including fee structure, as the investment advisory agreement with OCM. The term “Investment Advisory Agreement” refers collectively to the agreements with Oaktree and, prior to its novation, with OCM. Prior to October 17, 2017, the Company was externally managed by Fifth Street Management LLC (the "Former Adviser”), 143 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) an indirect, partially-owned subsidiary of Fifth Street Asset Management Inc., pursuant to an investment advisory agreement between the Company and the Former Adviser (the "Former Investment Advisory Agreement"), which was terminated on October 17, 2017. Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until September 30, 2021 and thereafter from year-to-year if approved annually by the Board of Directors of the Company or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the directors of the Company who are not interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment. The Investment Advisory Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of the outstanding voting securities of the Company. Base Management Fee Under the Investment Advisory Agreement, the base management fee is calculated at an annual rate of 1.50% of total gross assets, including any investment made with borrowings, but excluding cash and cash equivalents. The base management fee is payable quarterly in arrears and the fee for any partial month or quarter is appropriately prorated. Effective May 3, 2019, the base management fee on the Company’s gross assets, including any investments made with borrowings, but excluding any cash and cash equivalents, that exceed the product of (A) 200% and (B) the Company’s net asset value will be 1.00%. For the avoidance of doubt, the 200% will be calculated in accordance with the Investment Company Act and will give effect to exemptive relief the Company received from the SEC with respect to debentures issued by a small business investment company subsidiary. For the years ended September 30, 2020 and 2019, the base management fee (net of waivers) incurred under the Investment Advisory Agreement was $22.9 million and $22.2 million, respectively, which was payable to Oaktree or OCM, as applicable. For the period from October 17, 2017 to September 30, 2018, the base management fee (net of waivers) incurred under the Investment Advisory Agreement was $21.4 million, which was payable to OCM. For the period from October 1, 2017 to October 17, 2017, the base management fee (net of waivers) incurred under the Former Investment Advisory Agreement with the Former Adviser was $1.1 million, which was payable to the Former Adviser. Incentive Fee The incentive fee consists of two parts. Under the Investment Advisory Agreement, the first part of the incentive fee (the “incentive fee on income” or "Part I incentive fee") is calculated and payable quarterly in arrears based upon the “pre-incentive fee net investment income” of the Company for the immediately preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter (i.e., a “hurdle rate”), expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed quarter, of 1.50%, subject to a “catch up” feature. For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID debt, instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Under the Investment Advisory Agreement, the calculation of the incentive fee on income for each quarter is as follows: • No incentive fee is payable to Oaktree in any quarter in which the Company’s pre-incentive fee net investment income does not exceed the preferred return rate of 1.50% (the “preferred return”) on net assets; • 100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the preferred return but is less than or equal to 1.8182% in any fiscal quarter is payable to Oaktree. This portion of the incentive fee on income is referred to as the “catch-up” provision, and it is intended to provide Oaktree with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets in any fiscal quarter; and 144 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) • For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets, the incentive fee on income is equal to 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the preferred return and catch-up will have been achieved. There is no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle. For the years ended September 30, 2020 and 2019, the first part of the incentive fee (incentive fee on income) incurred under the Investment Advisory Agreement was $15.2 million and $14.9 million, respectively. For the period from October 17, 2017 to September 30, 2018, the first part of the incentive fee (incentive fee on income) incurred under the Investment Advisory Agreement was $10.5 million (prior to accrued waivers). Under the Investment Advisory Agreement, the second part of the incentive fee (the "capital gains incentive fee") is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date) commencing with the fiscal year ended September 30, 2019 and equals 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each subsequent fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees under the Investment Advisory Agreement. Any realized capital gains, realized capital losses, unrealized capital appreciation and unrealized capital depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the calculations of the second part of the incentive fee. For the year ended September 30, 2020, the Company did not incur any capital gains incentive fees under the Investment Advisory Agreement. For the year ended September 30, 2019, the Company incurred $4.6 million of capital gains incentive fees under the Investment Advisory Agreement (prior to waivers). GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a theoretical "liquidation basis." A fee so calculated and accrued would not be payable under applicable law and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts ultimately paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation. Any realized capital gains and losses and cumulative unrealized capital appreciation and depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the GAAP accrual. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 17.5% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees payable or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or any accrued capital gains incentive fee will become payable under the Investment Advisory Agreement. For the year ended September 30, 2020, the Company reversed $5.6 million of previously accrued capital gains incentive fees. For the year ended September 30, 2019, the Company recorded $10.2 million of accrued capital gains incentive fees (prior to waivers). The Company did not have any cumulative accrued capital gains incentive fees payable as of September 30, 2020. To ensure compliance with Section 15(f) of the Investment Company Act, OCM entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which OCM waived any management or incentive fees payable under the Investment Advisory Agreement that exceeded what would have been paid to the Former Adviser in the aggregate under the Former Investment Advisory Agreement. The contractual amount of fees permanently waived at the end of the two-year period was $3.9 million. Prior to the end of the two-year period, amounts potentially subject to waiver under the two-year contractual fee waiver were accrued quarterly based on a theoretical “liquidation basis.” As of September 30, 2019, the Company had accrued cumulative fee waivers of $9.1 million. During the year ended September 30, 2020, the Company reversed $5.2 million of previously accrued fee waivers since the two-year fee waiver period has ended. 145 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The following table provides a roll-forward of the accrued waiver balance and illustrates the impact of the end of the two-year contractual fee waiver period: ($ in millions) Accrued fee waivers as of September 30, 2019 (1) $ 9.1 Reversal of previously accrued fee waivers (2) (5.2) Contractual fees waived under the Investment Advisory Agreement (3) (3.9) Accrued fee waivers as of September 30, 2020 $ — (1) Calculated in accordance with GAAP as of September 30, 2019 and is based on a hypothetical liquidation basis. (2) Reflects the reversal of fee waivers that were previously accrued based on a hypothetical liquidation basis when the two-year contractual fee waiver was in effect. This reversal was recognized in connection with the expiration of the two-year contractual fee waiver, which ended on October 17, 2019, and is reflected in reversal of fees waived in the Consolidated Statement of Operations for the year ended September 30, 2020. (3) Reflects the amount of fees permanently waived pursuant to the two-year contractual fee waiver. As of September 30, 2019, the capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers) was $0.8 million as shown below: ($ in millions) September 30, 2019 (1) Capital gains incentive fee payable under the Investment Advisory Agreement (prior to waivers) $ 4.6 Contractual fees waived (3.9) Capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers) $ 0.8 (1) Amounts may not sum due to rounding. Indemnification The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of Oaktree's services under the Investment Advisory Agreement or otherwise as investment adviser. Administrative Services The Company is party to the Administration Agreement with Oaktree Administrator. Pursuant to the Administration Agreement, Oaktree Administrator provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the Administration Agreement. Oaktree Administrator may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Oaktree Administrator makes reports to the Company’s Board of Directors of its performance of obligations under the Administration Agreement and furnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, in each case, as it shall determine to be desirable or as reasonably required by the Company’s Board of Directors; provided that Oaktree Administrator shall not provide any investment advice or recommendation. Oaktree Administrator also provides portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s stockholders and all other materials filed with the SEC. In addition, Oaktree Administrator assists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies. 146 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) For providing these services, facilities and personnel, the Company reimburses Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and the Company’s allocable portion of the costs of compensation and related expenses of its Chief Financial Officer, Chief Compliance Officer, their staffs and other non-investment professionals at Oaktree that perform duties for the Company. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Administration Agreement may also be terminated, without penalty, upon the vote of a majority of the Company’s outstanding voting securities. For the years ended September 30, 2020, 2019 and 2018, the Company accrued administrative expenses of $1.8 million, $2.3 million and $2.1 million, respectively, including $0.3 million, $0.3 million and $0.4 million of general and administrative expenses, respectively. Of the accrued administrative expenses of $2.1 million for the year ended September 30, 2018, $0.2 million was due to the Former Administrator for administrative expenses incurred prior to October 17, 2017 and $1.9 million was due to Oaktree Administrator. As of September 30, 2020 and September 30, 2019, $2.1 million and $2.7 million, respectively, was included in “Due to affiliate” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to Oaktree Administrator. 147 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 12. Financial Highlights (Share amounts in thousands) Year ended September 30, 2020 Year ended September 30, 2019 Year ended September 30, 2018 (1) Year ended September 30, 2017 Year ended September 30, 2016 Net asset value per share at beginning of period $6.60 $6.09 $6.16 $7.97 $9.00 Net investment income (2) 0.51 0.48 0.43 0.51 0.72 Net unrealized appreciation (depreciation) (2) (0.14) 0.27 0.73 (0.69) (0.33) Net realized gains (losses) (2) (0.10) 0.14 (0.83) (1.21) (0.84) Provision for income tax (expense) benefit (2) 0.01 — — — — Distributions of net investment income to stockholders (0.39) (0.38) (0.27) (0.47) (0.67) Tax return of capital — — (0.13) — (0.05) Net issuance/repurchases of common stock — — — 0.05 0.14 Net asset value per share at end of period $6.49 $6.60 $6.09 $6.16 $7.97 Per share market value at beginning of period $5.18 $4.96 $5.47 $5.81 $6.17 Per share market value at end of period $4.84 $5.18 $4.96 $5.47 $5.81 Total return (3) 2.10% 12.56% (1.49)% 2.84% 7.02% Common shares outstanding at beginning of period 140,961 140,961 140,961 143,259 150,263 Common shares outstanding at end of period 140,961 140,961 140,961 140,961 143,259 Net assets at beginning of period $930,630 $858,035 $867,657 $1,142,288 $1,353,094 Net assets at end of period $914,879 $930,630 $858,035 $867,657 $1,142,288 Average net assets (4) $871,305 $909,264 $841,583 $1,018,498 $1,229,639 Ratio of net investment income to average net assets 8.26% 7.47% 7.13% 7.13% 8.68% Ratio of total expenses to average net assets 7.57% 9.65% 9.51% 10.49% 13.09% Ratio of net expenses to average net assets 8.16% 8.78% 9.35% 10.35% 11.48% Ratio of portfolio turnover to average investments at fair value 38.99% 32.50% 67.66% 39.06% 23.39% Weighted average outstanding debt (5) $647,080 $573,891 $608,553 $982,372 $1,190,105 Average debt per share (2) $4.59 $4.07 $4.32 $6.95 $8.07 Asset coverage ratio at end of period (6) 227.22% 294.91% 232.98% 227.40% 220.84% __________ (1) Beginning on October 17, 2017, the Company is externally managed by Oaktree or its affiliates. Prior to October 17, 2017, the Company was externally managed by the Former Adviser. (2) Calculated based upon weighted average shares outstanding for the period. (3) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP. Total return does not include sales load. (4) Calculated based upon the weighted average net assets for the period. (5) Calculated based upon the weighted average of debt outstanding for the period. (6) Based on outstanding senior securities of $714.8 million, $476.1 million, $643.4 million, $680.7 million and $946.5 million as of September 30, 2020, 2019, 2018, 2017 and 2016, respectively. 148 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Senior Securities Information about our senior securities (including debt securities and other indebtedness) is shown in the following table as of the fiscal years ended September 30 for the years indicated below. We had no senior securities outstanding as of September 30 of any prior fiscal years prior to those indicated below. Class and Year(1) Total Amount Outstanding Exclusive of Treasury Securities (2) Asset Coverage Per Unit(3) Involuntary Liquidating Preference Per Unit(4) Average Market Value Per Unit(5) Credit Facility and Prior ING Facility Fiscal 2011 $ 133,500 3,328 — N/A Fiscal 2012 141,000 3,857 — N/A Fiscal 2013 168,000 3,949 — N/A Fiscal 2014 267,395 2,595 — N/A Fiscal 2015 383,495 2,389 — N/A Fiscal 2016 472,495 2,208 — N/A Fiscal 2017 226,495 2,274 — N/A Fiscal 2018 241,000 2,330 — N/A Fiscal 2019 314,825 2,949 — N/A Fiscal 2020 414,825 2,272 — N/A Wells Fargo Facility Fiscal 2011 $ 39,524 3,328 — N/A Fiscal 2012 60,251 3,857 — N/A Fiscal 2013 20,000 3,949 — N/A Sumitomo Facility Fiscal 2011 $ 5,000 3,328 — N/A Fiscal 2012 — 3,857 — N/A Fiscal 2013 — 3,949 — N/A Fiscal 2014 50,000 2,595 — N/A Fiscal 2015 43,800 2,389 — N/A Fiscal 2016 43,800 2,208 — N/A Fiscal 2017 29,500 2,274 — N/A Convertible Notes Fiscal 2011 $ 135,000 3,328 — N/A Fiscal 2012 115,000 3,857 — N/A Fiscal 2013 115,000 3,949 — N/A Fiscal 2014 115,000 2,595 — N/A Fiscal 2015 115,000 2,389 — N/A Secured Borrowings Fiscal 2014 $ 84,750 2,595 — N/A Fiscal 2015 21,787 2,389 — N/A Fiscal 2016 18,929 2,208 — N/A Fiscal 2017 13,489 2,274 — N/A Fiscal 2018 12,314 2,330 — N/A 149 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Class and Year(1) Total Amount Outstanding Exclusive of Treasury Securities (in thousands)(2) Asset Coverage Per Unit(3) Involuntary Liquidating Preference Per Unit(4) Average Market Value Per Unit(5) 2019 Notes Fiscal 2014 $ 250,000 2,595 — N/A Fiscal 2015 250,000 2,389 — N/A Fiscal 2016 250,000 2,208 — N/A Fiscal 2017 250,000 2,274 — N/A Fiscal 2018 228,825 2,330 — N/A 2024 Notes Fiscal 2013 $ 75,000 3,949 — 979.45 Fiscal 2014 75,000 2,595 — 966.96 Fiscal 2015 75,000 2,389 — 991.94 Fiscal 2016 75,000 2,208 — 993.70 Fiscal 2017 75,000 2,274 — 1,006.74 Fiscal 2018 75,000 2,330 — 1,010.72 Fiscal 2019 75,000 2,949 — 1,012.76 2025 Notes Fiscal 2020 $ 300,000 2,272 — N/A 2028 Notes Fiscal 2013 $ 86,250 3,949 — 957.21 Fiscal 2014 86,250 2,595 — 943.73 Fiscal 2015 86,250 2,389 — 988.06 Fiscal 2016 86,250 2,208 — 999.29 Fiscal 2017 86,250 2,274 — 1,007.51 Fiscal 2018 86,250 2,330 — 994.82 Fiscal 2019 86,250 2,949 — 993.33 Total Senior Securities Fiscal 2011 $ 313,024 3,328 — Fiscal 2012 316,251 3,857 — Fiscal 2013 464,250 3,949 — Fiscal 2014 928,395 2,595 — Fiscal 2015 975,332 2,389 — Fiscal 2016 946,474 2,208 — Fiscal 2017 680,734 2,274 — Fiscal 2018 643,389 2,330 — Fiscal 2019 476,075 2,949 — Fiscal 2020 714,825 2,272 — __________ (1) This table excludes any SBA-guaranteed debentures outstanding during the relevant periods because the SEC has granted the Company exemptive relief that permits us to exclude such debentures from the definition of senior securities in the asset coverage ratio the Company is required to maintain under the Investment Company Act. (2) Total amount of each class of senior securities outstanding at the end of the period, presented in thousands. (3) The asset coverage ratio for a class of senior securities representing indebtedness is calculated as the Company's consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior 150 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the “Asset Coverage Per Unit.” (4) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “-” indicates information that the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities. (5) Calculated on a daily average basis. 151 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 13. Derivative Instruments The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement ("ISDA Master Agreement") with its derivative counterparty, JPMorgan Chase Bank, N.A. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. As of September 30, 2020, no cash collateral has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to the Company's forward currency contracts. Net unrealized gains or losses on foreign currency contracts are included in “net unrealized appreciation (depreciation)” and net realized gains or losses on forward currency contracts are included in “net realized gains (losses)” in the accompanying Consolidated Statements of Operations. Forward currency contracts are considered undesignated derivative instruments. Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2020. Description Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet Location of Net Amounts Foreign currency forward contract $ 35,577 £ 27,494 11/12/2020 $ 25 $ — Derivative asset Foreign currency forward contract $ 30,260 € 25,614 11/12/2020 $ 198 $ — Derivative asset $ 223 $ — Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2019. Description Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet Location of Net Amounts Foreign currency forward contract $ 22,161 £ 17,910 10/15/2019 $ 76 $ — Derivative asset Foreign currency forward contract $ 19,193 € 17,150 11/29/2019 $ 414 $ — Derivative asset $ 490 $ — Note 14. Commitments and Contingencies Off-Balance Sheet Arrangements The Company may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As of September 30, 2020, the Company's only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. As of September 30, 2019, the Company's only off-balance sheet arrangements consisted of $88.3 million of unfunded commitments, which was comprised of $83.5 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. Such commitments are subject to the portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company's Consolidated Statements of Assets and Liabilities. 152 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, SLF JV I LLC subordinated notes and LLC equity interests and limited partnership interests) as of September 30, 2020 and September 30, 2019 is shown in the table below: September 30, 2020 September 30, 2019 Assembled Brands Capital LLC $ 36,079 $ 35,182 WPEngine, Inc. 26,348 — Athenex, Inc. 22,780 — NuStar Logistics, L.P. 17,911 — A.T. Holdings II SÀRL 7,541 — MRI Software LLC 7,239 — Dominion Diagnostics, LLC 5,887 — Corrona, LLC 5,189 — NeuAG, LLC 4,382 — Pingora MSR Opportunity Fund I-A, LP 3,500 3,500 Mindbody, Inc. 3,048 3,048 Ardonagh Midco 3 PLC 3,007 — Accupac, Inc. 2,346 — Acquia Inc. 2,240 — New IPT, Inc. 2,229 2,229 Olaplex, Inc. 1,917 — Apptio, Inc. 1,538 1,538 Senior Loan Fund JV I, LLC 1,328 1,328 Coyote Buyer, LLC 942 — iCIMs, Inc. 882 882 Immucor, Inc. 541 — Ministry Brands, LLC 425 800 GKD Index Partners, LLC 231 1,156 PaySimple, Inc. — 12,250 P2 Upstream Acquisition Co. — 9,000 Sorrento Therapeutics, Inc. — 7,500 TerSera Therapeutics, LLC — 4,200 Thruline Marketing, Inc. — 3,000 4 Over International, LLC — 1,977 PLATO Learning Inc. (1) — 746 Total $ 157,530 $ 88,336 ___________ (1) This investment was on cash or PIK non-accrual status as of September 30, 2020 and September 30, 2019. 153 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 15. Selected Quarterly Financial Data (unaudited) Selected unaudited quarterly financial data for Oaktree Specialty Lending Corporation for the years ended September 30, 2020 and 2019 are below: As of and for the three months ended (dollars in thousands, except per share amounts) September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 Total investment income $ 43,599 $ 34,403 $ 34,171 $ 30,960 $ 34,513 $ 36,669 $ 38,244 $ 38,276 Net investment income 24,545 16,770 22,841 7,836 16,275 16,608 17,709 17,317 Net realized and unrealized gains (losses), net of taxes 46,072 103,461 (188,308) 6,007 (2,304) 3,378 46,776 10,401 Net increase (decrease) in net assets resulting from operations 70,617 120,231 (165,467) 13,843 13,971 19,986 64,485 27,718 Net assets 914,879 859,063 752,224 931,082 930,630 930,050 923,456 872,362 Total investment income per common share (1) $ 0.31 $ 0.24 $ 0.24 $ 0.22 $ 0.24 $ 0.26 $ 0.27 $ 0.27 Net investment income per common share (1) 0.17 0.12 0.16 0.06 0.12 0.12 0.13 0.12 Earnings (losses) per common share (1) 0.50 0.85 (1.17) 0.10 0.10 0.14 0.46 0.20 Net asset value per common share at period end 6.49 6.09 5.34 6.61 6.60 6.60 6.55 6.19 __________ (1) The sum of quarterly per share amounts may not equal annual amounts due to rounding. 154 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) Note 16. Subsequent Events The Company’s management evaluated subsequent events through the date of issuance of the Consolidated Financial Statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended September 30, 2020, except as discussed below: Distribution Declaration On November 13, 2020, the Company’s Board of Directors declared a quarterly distribution of $0.11 per share, payable in cash on December 31, 2020 to stockholders of record on December 15, 2020. Upsize of Credit Facility On October 28, 2020, the Company entered into an incremental commitment and assumption agreement in connection with the Company’s exercise of $75 million of the accordion feature under the Credit Facility, increasing the size of the Credit Facility to $775 million. Merger Agreement On October 28, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oaktree Strategic Income Corporation, a Delaware corporation (“OCSI”), Lion Merger Sub, Inc., a Delaware corporation and the Company’s wholly-owned subsidiary (“Merger Sub”), and, solely for the limited purposes set forth therein, Oaktree. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OCSI, with OCSI continuing as the surviving company and as the Company’s wholly-owned subsidiary (the “Merger”), and, immediately thereafter, OCSI will merge with and into the Company, with the Company continuing as the surviving company (together with the Merger, the “Mergers”). Both the Company’s Board of Directors and the Board of Directors of OCSI, including all of the respective independent directors, in each case, on the recommendation of a special committee comprised solely of certain independent directors of the Company or OCSI, as applicable, have approved the Merger Agreement and the transactions contemplated thereby. At the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of OCSI (the “OCSI Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares owned by the Company or any of its consolidated subsidiaries (the “Cancelled Shares”)) will be converted into the right to receive a number of shares of the Company’s common stock equal to the Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares. As of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the Effective Time (such date, the “Determination Date”), each of the Company and OCSI will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to OCSI, the “Closing OCSI Net Asset Value” and such calculation with respect to the Company, the “Closing OCSL Net Asset Value”), in each case using a pre-agreed set of assumptions, methodologies and adjustments. Based on such calculations, the parties will calculate the “OCSI Per Share NAV”, which will be equal to (i) the Closing OCSI Net Asset Value divided by (ii) the number of shares of OCSI Common Stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares), and the “OCSL Per Share NAV”, which will be equal to (A) the Closing OCSL Net Asset Value divided by (B) the number of shares of the Company’s common stock issued and outstanding as of the Determination Date. The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the OCSI Per Share NAV divided by (ii) the OCSL Per Share NAV. The Company and OCSI will update and redeliver the Closing OCSL Net Asset Value or the Closing OCSI Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the closing of the Mergers and if needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the Effective Time. 155 OAKTREE SPECIALTY LENDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts, percentages and as otherwise indicated) The Merger Agreement contains customary representations and warranties by each of the Company, OCSI and Oaktree. The Merger Agreement also contains customary covenants, including, among others, covenants relating to the operation of each of the Company’s and OCSI’s businesses during the period prior to the closing of the Mergers. Consummation of the Mergers, which is currently anticipated to occur during the first half of calendar year 2021, is subject to certain closing conditions, including requisite approvals of the Company’s and OCSI’s stockholders and certain other closing conditions. The Merger Agreement also contains certain termination rights in favor of the Company and OCSI, including if the Mergers are not completed on or before July 28, 2021 or if the requisite approvals of the Company’s or OCSI’s stockholders are not obtained. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring OCSI may be required to pay the Company a termination fee of approximately $5.7 million. The Merger Agreement provides that, upon the termination of the Merger Agreement under certain circumstances, a third party acquiring the Company may be required to pay OCSI a termination fee of approximately $20.0 million. Management Fee Waiver In connection with entry into the Merger Agreement, Oaktree has agreed to waive $750,000 of base management fees payable to it under the Investment Advisory Agreement in each of the eight quarters immediately following the closing of the Mergers (for an aggregate waiver of $6.0 million of base management fees). 156 Schedule 12-14 Oaktree Specialty Lending Corporation Schedule of Investments in and Advances to Affiliates (in thousands, except share and per share amounts, percentages and as otherwise indicated) Year ended September 30, 2020 Portfolio Company/Type of Investment (1) Cash Interest Rate Industry Principal Net Realized Gain (Loss) Amount of Interest, Fees or Dividends Credited in Income (2) Fair Value at October 1, 2019 Gross Additions (3) Gross Reductions (4) Fair Value at September 30, 2020 % of Total Net Assets Control Investments C5 Technology Holdings, LLC Data Processing & Outsourced Services 829 Common Units $ — $ — $ — $ — $ — $ — — % 34,984,460.37 Preferred Units — — 34,984 — (7,346) 27,638 3.0 % Dominion Diagnostics, LLC Health Care Services First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024 6.00 % $ 27,660 — 1,076 — 27,869 (209) 27,660 3.0 % First Lien Revolver, LIBOR+5.00% cash due 2/28/2024 6.00 % 5,260 — 216 — 5,260 — 5,260 0.6 % 30,030.8 Common Units in DD Healthcare Services Holdings, LLC — — — 18,627 (10,960) 7,667 0.8 % First Star Speir Aviation Limited (5) Airlines First Lien Term Loan, 9.00% cash due 12/15/2020 11,510 — 1,180 11,510 106 (106) 11,510 1.3 % 100% equity interest — — 4,630 — (3,008) 1,622 0.2 % New IPT, Inc. Oil & Gas Equipment & Services First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 6.00 % 2,304 — 193 3,256 — (1,456) 1,800 0.2 % First Lien Revolver, LIBOR+5.00% cash due 3/17/2021 6.00 % 1,009 — 76 1,009 — (221) 788 0.1 % 50.087 Class A Common Units in New IPT Holdings, LLC — — 2,903 — (2,903) — — % Senior Loan Fund JV I, LLC (6) Multi-Sector Holdings Subordinated Debt, LIBOR+7.00% cash due 12/29/2028 7.17 % 96,250 — 8,055 96,250 — — 96,250 10.5 % 87.5% LLC equity interest — — 30,052 — (8,862) 21,190 2.3 % Thruline Marketing, Inc. Advertising First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022 — — 257 18,146 — (18,146) — — % First Lien Revolver, LIBOR+7.75% cash due 4/3/2022 — — 1 — — — — — % 9,073 Class A Units in FS AVI Holdco, LLC (4,932) — 6,438 4,210 (10,648) — — % Total Control Investments $ 143,993 $ (4,932) $ 11,054 $ 209,178 $ 56,072 $ (63,865) $ 201,385 22.0 % Affiliate Investments Assembled Brands Capital LLC Specialized Finance First Lien Revolver, LIBOR+6.00% cash due 10/17/2023 7.00 % $ 4,688 $ — $ 487 $ 5,585 $ 2,036 $ (3,427) $ 4,194 0.5 % 1,609,201 Class A Units — — 782 — (299) 483 0.1 % 1,019,168.80 Preferred Units, 6% — — 1,019 72 — 1,091 0.1 % 70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029 — — — — — — — % Caregiver Services, Inc. Health Care Services 1,080,399 shares of Series A Preferred Stock, 10% — — — 1,784 — (1,043) 741 0.1 % Total Affiliate Investments $ 4,688 $ — $ 487 $ 9,170 $ 2,108 $ (4,769) $ 6,509 0.7 % Total Control & Affiliate Investments $ 148,681 $ (4,932) $ 11,541 $ 218,348 $ 58,180 $ (68,634) $ 207,894 22.7 % 157 This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements. ______________________ (1) The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments. (2) Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories. (3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category. (4) Gross reductions include decreases in the cost basis of investments resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. (5) First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities. (6) Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required). 158 Schedule 12-14 Oaktree Specialty Lending Corporation Schedule of Investments in and Advances to Affiliates (in thousands, except share and per share amounts, percentages and as otherwise indicated) Year ended September 30, 2019 Portfolio Company/Type of Investment (1) Cash Interest Rate Industry Principal Net Realized Gain (Loss) Amount of Interest, Fees or Dividends Credited in Income (2) Fair Value at October 1, 2018 Gross Additions (3) Gross Reductions (4) Fair Value at September 30, 2019 % of Total Net Assets Control Investments C5 Technology Holdings, LLC Data Processing & Outsourced Services 829 Common Units $ — $ — $ — $ — $ — $ — — % 34,984,460.37 Preferred Units — — — 34.984 — 34,984 3.8 % First Star Speir Aviation Limited (5) Airlines First Lien Term Loan, 9.00% cash due 12/15/2020 $ 11,510 — 1,825 32,510 962 (21,962) 11,510 1.2 % 100% equity interest — — — — 4,730 (100) 4,630 0.5 % New IPT, Inc. Oil & gas equipment services First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021 (6) 7.10 % 3,256 — 331 4,107 25 (876) 3,256 0.3 % Second Lien Term Loan, LIBOR+5.10% cash due 9/17/2021 (6) — — 45 1,453 — (1,453) — — % First Lien Revolver, LIBOR+5.00% cash due 3/17/2021 (6) 7.10 % 1,009 — 85 1,009 — — 1,009 0.1 % 50.087 Class A Common Units in New IPT Holdings, LLC — — 2,291 612 — 2,903 0.3 % Senior Loan Fund JV I, LLC (6) Multi-sector holdings Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC — — 2,036 99,813 — (99,813) — — % Class B Mezzanine Secured Deferrable Fixed Rate Notes, 10% cash due 2036 in SLF Repack Issuer 2016 LLC — — 707 29,520 67 (29,587) — — % Subordinated Debt, LIBOR+7.00% cash due 12/29/2028 9.39 % 96,250 — 7,007 — 96,250 — 96,250 10.3 % 87.5% LLC equity interest — — 41 37,735 (7,724) 30,052 3.2 % Thruline Marketing, Inc. Advertising First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022 (6) 9.10 % 18,146 — 1,752 18,146 — — 18,146 1.9 % First Lien Revolver, LIBOR+7.75% cash due 4/3/2022 (6) — — 15 — — — — — % 9,073 Class A Units in FS AVI Holdco, LLC — — 7,984 — (1,546) 6,438 0.7 % Total Control Investments $ 130,171 $ — $ 13,803 $ 196,874 $ 175,365 $ (163,061) $ 209,178 22.5 % Affiliate Investments Assembled Brands Capital LLC Specialized finance First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023 8.10 % $ 5,585 $ — $ 225 $ — $ 5,605 $ (20) $ 5,585 0.6 % 1,609,201 Class A Units — — — 782 — 782 0.1 % 1,019,168.80 Preferred Units, 6% — — — 1,019 — 1,019 0.1 % 70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029 — — — — — — — % Caregiver Services, Inc. Healthcare services 1,080,399 shares of Series A Preferred Stock, 10% — — — 2,161 — (377) 1,784 0.2 % Total Affiliate Investments $ 5,585 $ — $ 225 $ 2,161 $ 7,406 $ (397) $ 9,170 1.0 % Total Control & Affiliate Investments $ 135,756 $ — $ 14,028 $ 199,035 $ 182,771 $ (163,458) $ 218,348 23.5 % 159 This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements. ______________________ (1) The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments. (2) Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories. (3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category. (4) Gross reductions include decreases in the cost basis of investment resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. (5) First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the holding company is disregarded for accounting purposes since the economic substance of this instrument is an equity investment in the operating entity. (6) Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required). 160 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.