Mortgage Loan Portfolio Plans Justified Move to Larger Headquarters

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Bucking Home Equity Loss Trend, Vertical Capital’s Bayard Closser Expands Firm’s Capabilities

“As servicing agent, we know a great deal about every single mortgage in our portfolios,” Mr. Closser continued. “This also gives us the background we need to work with committed homeowners who want to restructure the principal and interest on their loans

Calling 2011 “an extraordinary year for new product introductions and growth,” Group President, Bayard Closser, recently justified moving the Vertical Capital Markets Group’s headquarters to more spacious accommodations at 20 Pacifica in Irvine, California.

While depressed property values continue to bedevil the financial markets, Mr. Closser said his firm is looking to attract new investment dollars into mortgage loan portfolios that, through Vertical Recovery Management’s servicing capabilities, may have informational advantages over other property-backed investments – such as Residential Mortgage-Backed Securities (RMBS).

“As servicing agent, we know a great deal about every single mortgage in our portfolios,” Mr. Closser continued. “This also gives us the background we need to work with committed homeowners who want to restructure the principal and interest on their loans in an attempt to keep a roof over their heads.”

By packaging together whole mortgage loans that banks have been selling off to raise liquidity, Mr. Closser said he hopes to attract investors seeking higher income potential than available through conventional sources. To bolster that strategy, last month Vertical Capital Asset Management (the “Adviser”) announced the launch of the Vertical Capital Income Fund, a closed-end interval fund, which invests primarily in residential loans that are secured by first mortgages or deeds of trust.

However, these notes are typically sold in groups which are difficult to value. Up to 10% of the loans in the group or package may be delinquent or in default. The Fund will not purchase loans that currently are in foreclosure; however, loans acquired by the Fund may go into foreclosure subsequent to acquisition by the Fund. The Fund will acquire loans of borrowers with varying credit histories and may invest up to approximately 10% of its assets in loans that were classified as "sub-prime" at the time of origination.

Mutual Funds involve risk including the possible loss of principal. There is a risk that issuers and counterparties will not make payments on securities and other investments held by the Fund, resulting in losses to the Fund. In general, the price of a fixed income security falls when interest rates rise. A specific security can perform differently from the market as a whole for reasons related to the issuer, such as an individual's economic situation, the Fund's net asset value may be more volatile because it invests in notes of individuals. The Fund is a closed-end investment company with no history of operations. Securities may be subject to prepayment risk because issuers are typically able to prepay principal. The Fund will not invest in real estate directly, but, because the Fund will invest the majority of its assets in securities secured by real estate, its portfolio will be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio. Quarterly repurchases by the Fund of its shares typically will be funded from available cash or sales of portfolio securities. The sale of securities to fund repurchases could reduce the market price of those securities, which in turn would reduce the Fund's net asset value.

Investors should carefully consider the investment objectives, risks, charges and expenses of the Vertical Capital Income Fund. This and other important information about the Fund is contained in the Prospectus, which can be obtained by calling 1-866-277-VCIF (866-277-8243). The prospectus should be read carefully before investing. The Vertical Capital Income Fund is distributed by Northern Lights Distributors, LLC member FINRA. Vertical Capital Markets Group, LLC and Vertical Capital Asset Management, LLC are not affiliated with Northern Lights Distributors, LLC.

Interval funds are classified as closed-end funds, but they are very different from traditional closed-end funds in that: 1) Their shares typically do not trade on the secondary market. Instead, their shares are subject to periodic repurchase offers by the fund at a price based on net asset value (NAV). 2) They are permitted to (and VCIF does) continuously offer their shares at a price based on the fund’s net asset value. 3) An interval fund will make periodic repurchase offers to its shareholders, generally every three, six, or twelve months, as disclosed in the fund’s prospectus and annual report.                                                                                             0147-NLD-1/24/2012


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