TriLinc Global Impact Fund LLC Annual Report: A Year in Review

I’ve put together this guide to help you understand how TriLinc Global Impact Fund performed this year. My goal is to translate complex financial filings into plain English so you can decide if this investment fits your goals.

1. What does this company do?

TriLinc is an "impact investing" fund. Instead of buying stocks, they provide loans to small and medium-sized businesses in developing countries. They support companies that create positive change—like sustainable packaging in Ecuador or cocoa processors in Indonesia. They aim for annual profits of 6% to 8% for investors. The fund currently manages between $250 million and $300 million in private loans.

2. Financial Performance & Health

The fund is currently in a difficult "cleanup" phase, which has caused a significant drop in the value of your shares.

• The "Watch List": About 35% to 40% of the loans are struggling or failing. We are seeing many defaults and bankruptcies across countries like Argentina, Brazil, Chile, and Kenya.
• Portfolio Stress: The fund is managing over $80 million in troubled assets. This includes bankruptcy claims in the electric, cotton, and beef industries. They are also navigating complex, multi-year legal battles in places like Brazil, where local courts often favor domestic companies over foreign lenders.
• Valuation: When a borrower defaults, TriLinc must lower the recorded value of that loan. This often results in a 50% to 80% loss of the original loan amount. Because valuing things like aging inventory or old machinery is difficult, the value of your shares may continue to fluctuate or drop.

3. Major Wins and Challenges

• Challenges: The biggest issue is that many borrowers have stopped paying interest. This hurts the fund’s ability to pay you dividends. Consequently, the fund has reduced or suspended dividend payments to save cash.
• Wins: The team is fighting to get money back. They are currently handling over 15 active legal cases. By negotiating settlements, they have recovered $10 million to $15 million in the last two years. This money is being put back into the fund.

4. Key Risks

If you are considering this investment, keep these risks in mind:

• International Complexity: Dealing with foreign bankruptcy laws is difficult and expensive. Legal fees can eat up more than 5% of the money recovered, which reduces your returns.
• Liquidity: You cannot easily sell these private loans. The fund limits how much you can withdraw to 5% of the total fund value per quarter. These withdrawals can be suspended entirely during stressful times.
• Concentration: Over 40% of the fund is tied to agriculture and commodities. If a local economy crashes or commodity prices drop, many of these loans could fail at the same time.

5. Future Outlook

The fund is now in a "recovery" phase. Management has stopped making many new loans and is focused on collecting money from existing ones. For you, this means the focus is not on growth, but on how much cash they can claw back. Over the next 12 to 18 months, the goal is to stabilize the share value and return capital to shareholders, though the timeline remains uncertain.

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Final Thought for Investors: Given the current focus on debt collection rather than new growth, this investment is currently centered on capital preservation. If you are looking for steady, predictable income, the current suspension of dividends and the high volume of troubled loans suggest this may be a challenging time to hold this position. Please weigh these recovery efforts against your own timeline for needing access to your capital.