MSDL 10-Q Quarterly Report Sept. 30, 2022 | Alphaminr
Morgan Stanley Direct Lending Fund
ALPHAMINR

MSDL 10-Q Quarter ended Sept. 30, 2022

Balance Sheet
Cash Flow
Income Statement
Debt
10-Q 1 msdlf10-q09302022.htm 10-Q Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________________________________________________________________________________
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 814-01332
Morgan Stanley Direct Lending Fund
(Exact name of registrant as specified in its charter)
Delaware
84-2009506
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1585 Broadway 10036
New York, NY (Zip Code)
(Address of principal executive offices)
1 (212) 761-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
None None None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☐
Accelerated filer ☐
Non-accelerated filer  ☒
Smaller reporting company ☐
Emerging growth company ☒



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No ☒
As of November 8, 2022, there was no established public market for the registrant’s common stock.
As of November 8, 2022, the Registrant had 65,760,957 shares of common stock, $0.001 par value, outstanding.




MORGAN STANLEY DIRECT LENDING FUND
TABLE OF CONTENTS
Part I. Financial Information
Item 1.
Consolidated Statements of Assets and Liabilities as of September 30, 2022 (unaudited) and December 31, 2021
Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and September 30, 2021 (unaudited)
Consolidated Statements of Cash Flows for the nine months period ended September 30, 2022 and September 30, 2021 (unaudited)
Consolidated Schedule of Investments as of September 30, 2022 (unaudited) and December 31, 2021
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

SIGNATURES




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Morgan Stanley Direct Lending Fund
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated statements of assets and liabilities of Morgan Stanley Direct Lending Fund and subsidiaries (the "Company"), including the consolidated schedule of investments as of September 30, 2022, and the related consolidated statements of operations, changes in net assets for the three-month and nine-month periods ended September 30, 2022, and 2021, and cash flows for the nine-month periods ended September 30, 2022 and 2021, and the related notes (collectively referred to as the “interim financial information”) . Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously 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 schedule of investments as of December 31, 2021, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated March 18, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statements of assets and liabilities as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statements of assets and liabilities from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. 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 reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP
New York, NY
November 8, 2022


4
Morgan Stanley Direct Lending Fund
Consolidated Statements of Assets and Liabilities
(In thousands, except share and per share amounts)

September 30, 2022
(Unaudited) 		December 31, 2021
(Audited)
Assets
Non-controlled/non-affiliated Investments, at fair value (amortized cost of $2,795,033 and $2,373,435 at September 30, 2022 and December 31, 2021, respectively) $ 2,747,090 $ 2,387,374
Cash 59,902 74,153
Deferred financing costs 8,467 11,587
Interest and dividend receivable from non-controlled/non-affiliated investments 18,771 11,740
Subscription receivable — 7,850
Receivable for investments sold/repaid 44,479 301
Prepaid expenses and other assets 45 268
Total assets 2,878,754 2,493,273
Liabilities
Debt (net of unamortized debt issuance costs of $8,341 and $0 at September 30, 2022 and December 31, 2021, respectively) 1,515,307 1,249,850
Payable to affiliates (Note 3) 2,456 4,431
Financing costs payable 1,650 4,234
Dividends payable 30,714 29,691
Management fees payable 1,716 1,306
Income based incentive fees payable 7,173 5,886
Capital gains based incentive fees payable — 2,773
Interest payable 8,480 3,281
Accrued expenses and other liabilities 4,108 3,234
Total liabilities 1,571,604 1,304,686
Commitments and Contingencies (Note 7)
Net Assets
Common stock, par value $0.001 (100,000,000 shares authorized and 65,352,831 and 56,838,027 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively) 65 57
Paid-in capital in excess of par value 1,349,545 1,172,748
Net distributable earnings (accumulated losses) (42,460) 15,782
Total net assets $ 1,307,150 $ 1,188,587
Total liabilities and net assets $ 2,878,754 $ 2,493,273
Net asset value per share $ 20.00 $ 20.91








The accompanying notes are an integral part of these unaudited consolidated financial statements
5
Morgan Stanley Direct Lending Fund
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share amounts)
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Investment Income:
From non-controlled/non-affiliated investments:
Interest income $ 60,798 $ 30,663 $ 151,976 $ 68,403
Payment-in-kind interest income 506 302 1,055 680
Dividend income 439 138 980 260
Other income 976 626 3,006 6,145
Total investment income 62,719 31,729 157,017 75,488
Expenses:
Interest expense and other financing expenses 18,601 6,273 42,731 13,249
Management fees 6,865 3,864 19,583 8,635
Income based incentive fees 7,173 4,119 18,517 9,965
Capital gains incentive fees — 598 (2,441) 2,090
Professional fees 923 554 2,323 1,595
Organization and offering costs — — — 42
Directors’ fees 87 84 262 249
Administrative service fees 54 54 124 158
General and other expenses 351 260 828 987
Total expenses 34,054 15,806 81,927 36,970
Expense support (Note 3) — 1 39 98
Management fees waiver (Note 3) (5,149) (2,898) (14,687) (6,476)
Net expenses 28,905 12,909 67,279 30,592
Net investment income (loss) before taxes 33,814 18,820 89,738 44,896
Excise tax expense — — — 5
Net investment income/(loss) after taxes 33,814 18,820 89,738 44,891
Realized and unrealized gain (loss) on investment transactions:
Realized gain (loss) on non-controlled/non-affiliated investments 18 126 556 120
Net unrealized appreciation (depreciation) (24,390) 3,290 (61,869) 11,824
Net realized and unrealized gain (loss) (24,372) 3,416 (61,313) 11,944
Net increase (decrease) in net assets resulting from operations $ 9,442 $ 22,236 $ 28,425 $ 56,835
Per share information—basic and diluted
Net investment income (loss) per share: $ 0.53 $ 0.54 $ 1.49 $ 1.74
Earnings per share: $ 0.15 $ 0.64 $ 0.47 $ 2.21
Weighted average shares outstanding (Note 9): 64,102,092 34,649,255 60,169,337 25,736,110















The accompanying notes are an integral part of these unaudited consolidated financial statements
6
Morgan Stanley Direct Lending Fund
Consolidated Statements of Changes in Net Assets (Unaudited)
(In thousands)
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Net assets at beginning of period $ 1,240,884 $ 593,383 $ 1,188,587 $ 301,620
Increase (decrease) in net assets resulting from operations:
Net investment income (loss) 33,814 18,820 89,738 44,891
Net realized gain (loss) 18 126 556 120
Net change in unrealized appreciation (depreciation) (24,390) 3,290 (61,869) 11,824
Net increase (decrease) in net assets resulting from operations 9,442 22,236 28,425 56,835
Capital transactions:
Issuance of common stock 79,821 149,881 154,687 424,851
Reinvestment of dividends 7,614 3,733 22,118 8,471
Dividends declared (30,611) (20,080) (86,667) (42,624)
Net increase (decrease) in net assets resulting from capital transactions 56,824 133,534 90,138 390,698
Total increase (decrease) in net assets 66,266 155,770 118,563 447,533
Net assets at end of period $ 1,307,150 $ 749,153 $ 1,307,150 $ 749,153
















The accompanying notes are an integral part of these unaudited consolidated financial statements
7
Morgan Stanley Direct Lending Fund
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
For the Nine Months Ended
September 30, 2022 September 30, 2021
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations $ 28,425 $ 56,835
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 on investments 61,869 (11,824)
Net realized (gain) loss on investments (556) (120)
Net accretion of discount and amortization of premium on investments (8,904) (6,515)
Payment-in-kind interest and dividend capitalized
(1,451) (578)
Amortization of deferred financing costs 2,885 2,013
Amortization of debt issuance costs and original issue discount on Unsecured Notes 898 —
Amortization of deferred offering costs — 24
Purchases of investments and change in payable for investments purchased (750,690) (1,338,772)
Proceeds from sale of investments and principal repayments and change in receivable for investments sold/repaid 295,824 225,139
Changes in operating assets and liabilities:
(Increase) decrease in interest and dividend receivable from non-controlled/non-affiliated investments
(7,031) (9,080)
(Increase) decrease in prepaid expenses and other assets 223 139
(Decrease) increase in payable to affiliates (1,975) 1,507
(Decrease) increase in management fees payable 410 671
(Decrease) increase in incentive fees payable (1,486) 4,284
(Decrease) increase in interest payable 5,199 1,517
(Decrease) increase in accrued expenses and other liabilities 874 510
Net cash provided by (used in) operating activities (375,486) (1,074,250)
Cash flows from financing activities:
Borrowings on debt 1,291,175 1,068,000
Repayments on debt (1,017,500) (355,000)
Deferred financing costs paid (2,448) (6,890)
Debt issuance costs paid (9,003) —
Dividends paid in cash (63,526) (23,238)
Proceeds from issuance of common stock 162,537 424,844
Offering costs paid — (6)
Net cash provided by (used in) financing activities 361,235 1,107,710
Net increase (decrease) in cash (14,251) 33,460
Cash, beginning of period 74,153 11,263
Cash, end of period $ 59,902 $ 44,723
Supplemental information and non-cash activities:
Excise tax paid $ 57 $ 5
Interest expense paid $ 33,749 $ 9,107
Reinvestment of dividend distributions during the period $ 22,118 $ 8,471
Subscriptions receivable $ — $ 7
Dividend payable $ 30,714 $ 20,080
Accrued but unpaid deferred financing costs $ — $ 1,224
Accrued but unpaid debt issuance costs $ 100 $ —








The accompanying notes are an integral part of these unaudited consolidated financial statements
8
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
First Lien Debt
Aerospace and Defense
Jonathan Acquisition Company (5) (7) L + 5.00% 8.67% 12/22/2026 2,718 $ 2,660 $ 2,668 0.20 %
Mantech International CP (5) (8) S + 5.75% 8.77% 09/14/2029 360 353 353 0.03
Mantech International CP (5) (8) (14) S + 5.75% 8.77% 09/14/2029 — (1) (1) 0.00
Mantech International CP (5) (8) (14) S + 5.75% 8.77% 09/14/2028 8 7 7 0.00
PCX Holding Corp. (5) (6) (7) L + 6.25% 9.92% 04/22/2027 18,278 18,133 17,865 1.37
PCX Holding Corp. (5) (7) (14) L + 6.25% 9.92% 04/22/2027 17,987 17,685 17,570 1.34
PCX Holding Corp. (5) (7) (14) L + 6.25% 9.92% 04/22/2027 555 541 514 0.04
Two Six Labs, LLC (5) (8) S + 5.50% 8.53% 08/20/2027 10,987 10,801 10,664 0.82
Two Six Labs, LLC (5) (8) (14) S + 5.50% 8.53% 08/20/2027 2,123 2,069 1,999 0.15
Two Six Labs, LLC (5) (8) (14) S + 5.50% 8.53% 08/20/2027 — (35) (63) 0.00
52,213 51,576 3.95
Air Freight & Logistics
AGI-CFI Holdings, Inc. (5) (8) S + 5.75% 9.42% 06/11/2027 14,444 14,164 14,164 1.08
Omni Intermediate Holdings, LLC (5) (7) S + 5.00% 8.69% 12/30/2026 12,164 12,050 11,572 0.89
Omni Intermediate Holdings, LLC (5) (7) (14) S + 5.00% 8.69% 12/30/2026 917 897 828 0.06
Omni Intermediate Holdings, LLC (5) (7) (14) S + 5.00% 8.69% 12/30/2025 — (10) (52) 0.00
27,101 26,512 2.03
Auto Components
Continental Battery Company (5) (7) L + 6.75% 10.42% 01/20/2027 6,203 6,093 5,907 0.45
Sonny's Enterprises, LLC (5) (6) (7) S + 6.75% 9.56% 08/05/2026 12,395 12,198 11,819 0.90
Sonny's Enterprises, LLC (5) (7) (14) S + 6.75% 9.56% 08/05/2026 26,252 25,701 24,599 1.88
Spectrum Automotive Holdings Corp. (5) (6) (8) L + 5.75% 9.42% 06/29/2028 23,710 23,407 22,307 1.71
Spectrum Automotive Holdings Corp. (5) (8) (14) L + 5.75% 9.42% 06/29/2028 3,303 3,240 2,913 0.22
Spectrum Automotive Holdings Corp. (5) (8) (14) L + 5.75% 9.42% 06/29/2027 — (11) (52) 0.00
70,628 67,493 5.16
Automobiles
ARI Network Services, Inc. (5) (6) (8) S + 5.50% 8.63% 02/28/2025 20,770 20,484 20,122 1.54
ARI Network Services, Inc. (5) (6) (8) S + 5.50% 8.63% 02/28/2025 3,640 3,590 3,526 0.27
ARI Network Services, Inc. (5) (8) (14) S + 5.50% 8.63% 02/28/2025 909 869 815 0.06
Summit Buyer, LLC (5) (7) L + 5.75% 9.92% 01/14/2026 22,176 21,828 21,967 1.68
Summit Buyer, LLC (5) (7) (14) L + 5.75% 9.92% 01/14/2026 26,391 25,932 26,086 2.00
Summit Buyer, LLC (5) (7) (14) L + 5.75% 9.92% 01/14/2026 — (35) (23) 0.00
Turbo Buyer, Inc. (5) (7) L + 6.00% 8.88% 12/02/2025 38,037 37,476 36,575 2.80
9
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Turbo Buyer, Inc. (5) (7) L + 6.00% 8.88% 12/02/2025 38,220 $ 37,541 $ 36,752 2.81 %
147,685 145,820 11.16
Biotechnology
GraphPad Software, LLC (5) (6) (7) L + 5.50% 8.31% 04/27/2027 12,097 12,000 11,687 0.89
GraphPad Software, LLC (5) (7) L + 5.50% 8.31% 04/27/2027 2,899 2,875 2,801 0.21
GraphPad Software, LLC (5) (7) (14) L + 5.50% 8.31% 04/27/2027 — (13) (59) 0.00
14,862 14,429 1.10
Chemicals
Tank Holding Corp. (6) (8) S + 6.00% 11.00% 03/31/2028 14,165 13,900 13,545 1.04
Tank Holding Corp. (8) (14) S + 6.00% 11.00% 03/31/2028 — (15) (35) 0.00
V Global Holdings, LLC (5) (6) (8) S + 5.75% 8.99% 12/22/2027 4,916 4,823 4,665 0.36
V Global Holdings, LLC (5) (8) (14) S + 5.75% 8.99% 12/22/2025 94 80 59 0.00
18,788 18,234 1.39
Commercial Services & Supplies
365 Retail Markets, LLC (5) (7) L + 4.75% 7.03% 12/23/2026 17,324 17,075 16,922 1.29
365 Retail Markets, LLC (5) (7) L + 4.75% 7.03% 12/23/2026 5,557 5,494 5,428 0.42
365 Retail Markets, LLC (5) (7) (14) L + 4.75% 7.03% 12/23/2026 1,400 1,361 1,335 0.10
Encore Holdings, LLC (5) (8) L + 4.50% 8.17% 11/23/2028 1,854 1,825 1,799 0.14
Encore Holdings, LLC (5) (8) (14) L + 4.50% 8.17% 11/23/2028 1,624 1,583 1,517 0.12
Encore Holdings, LLC (5) (8) (14) L + 4.50% 8.17% 11/23/2027 — (8) (16) 0.00
FLS Holding, Inc. (5) (7) (10) L + 5.25% 8.78% 12/15/2028 20,727 20,350 20,262 1.55
FLS Holding, Inc. (5) (7) (10) L + 5.25% 8.78% 12/15/2028 4,506 4,421 4,405 0.34
FLS Holding, Inc. (5) (7) (10) (14) L + 5.25% 8.78% 12/17/2027 — (31) (40) 0.00
PDFTron Systems, Inc. (5) (6) (7) (10) S + 5.50% 8.56% 07/15/2027 30,492 30,055 29,291 2.24
PDFTron Systems, Inc. (5) (7) (10) S + 5.50% 8.56% 07/15/2027 9,800 9,630 9,414 0.72
PDFTron Systems, Inc. (5) (7) (10) (14) S + 5.50% 8.56% 07/15/2026 3,850 3,733 3,547 0.27
Procure Acquireco, Inc. (Procure Analytics) (5) (8) L + 5.25% 8.00% 12/20/2028 3,938 3,867 3,783 0.29
Procure Acquireco, Inc. (Procure Analytics) (5) (8) (14) L + 5.25% 8.00% 12/01/2028 — (7) (31) 0.00
Procure Acquireco, Inc. (Procure Analytics) (5) (8) (14) L + 5.25% 8.00% 12/01/2026 — (4) (9) 0.00
QW Holding Corporation (5) (6) (7) L + 5.50% 7.96% 08/31/2026 8,931 8,808 8,653 0.66
QW Holding Corporation (5) (7) (14) L + 5.50% 7.96% 08/31/2026 1,021 999 951 0.07
QW Holding Corporation (5) (7) (14) L + 5.50% 7.96% 08/31/2026 — (30) (70) (0.01)
Sherlock Buyer Corp. (5) (8) L + 5.75% 9.42% 12/08/2028 11,089 10,888 10,775 0.82
Sherlock Buyer Corp. (5) (8) (14) L + 5.75% 9.42% 12/08/2028 — (28) (91) (0.01)
Sherlock Buyer Corp. (5) (8) (14) L + 5.75% 9.42% 12/08/2027 — (22) (36) 0.00
Sweep Purchaser, LLC (5) (7) L + 5.75% 9.42% 11/30/2026 8,726 8,598 8,239 0.63
10
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Sweep Purchaser, LLC (5) (7) (14) L + 5.75% 9.42% 11/30/2026 5,845 $ 5,750 $ 5,498 0.42 %
Sweep Purchaser, LLC (5) (7) (14) L + 5.75% 9.42% 11/30/2026 — (20) (79) (0.01)
Tamarack Intermediate, LLC (5) (8) S + 5.50% 9.23% 03/13/2028 5,486 5,384 5,209 0.40
Tamarack Intermediate, LLC (5) (8) (14) S + 5.50% 9.23% 03/13/2028 — (16) (46) 0.00
United Flow Technologies Intermediate Holdco II, LLC (5) (7) L + 5.75% 8.56% 10/29/2027 17,015 16,717 16,397 1.25
United Flow Technologies Intermediate Holdco II, LLC (5) (7) (14) L + 5.75% 8.56% 10/29/2027 8,605 8,344 7,884 0.60
United Flow Technologies Intermediate Holdco II, LLC (5) (7) (14) L + 5.75% 8.56% 10/29/2026 — (49) (109) (0.01)
US Infra Svcs Buyer, LLC (5) (6) (7) L + 6.75% (incl. 0.25% PIK) 8.57% 04/13/2026 16,080 15,873 14,872 1.14
US Infra Svcs Buyer, LLC (5) (7) L + 6.75% (incl. 0.25% PIK) 8.57% 04/13/2026 2,283 2,256 2,112 0.16
US Infra Svcs Buyer, LLC (5) (7) L + 6.75% (incl. 0.25% PIK) 8.57% 04/13/2026 2,250 2,224 2,081 0.16
Valcourt Holdings II, LLC (5) (6) (7) S + 5.25% 8.95% 01/07/2027 35,163 34,631 34,147 2.61
Valcourt Holdings II, LLC (5) (7) (14) S + 5.25% 8.95% 01/07/2027 5,752 5,652 5,554 0.42
VRC Companies, LLC (5) (6) (8) S + 5.75% 8.52% 06/29/2027 48,964 48,356 48,256 3.69
VRC Companies, LLC (5) (8) S + 5.75% 8.52% 06/29/2027 7,558 7,449 7,449 0.57
VRC Companies, LLC (5) (6) (8) S + 5.75% 8.52% 06/29/2027 8,235 8,135 8,116 0.62
VRC Companies, LLC (5) (8) (14) S + 5.75% 8.52% 06/29/2027 1,300 1,169 1,168 0.09
VRC Companies, LLC (5) (8) (14) P + 4.50% 10.75% 06/29/2027 248 228 224 0.02
290,640 284,761 21.78
Construction & Engineering
KPSKY Acquisition, Inc. (5) (8) L + 5.50% 8.58% 10/19/2028 34,297 33,687 34,297 2.62
KPSKY Acquisition, Inc. (5) (8) (14) P + 4.50% 10.75% 10/19/2028 4,426 4,312 4,426 0.34
37,999 38,723 2.96
Containers & Packaging
BP Purchaser, LLC (5) (8) L + 5.50% 8.74% 12/11/2028 17,379 17,064 16,211 1.24
Fortis Solutions Group, LLC (5) (8) L + 5.50% 9.17% 10/13/2028 19,254 18,911 19,254 1.47
Fortis Solutions Group, LLC (5) (8) (14) L + 5.50% 9.17% 10/13/2028 6,967 6,832 6,967 0.53
Fortis Solutions Group, LLC (5) (8) (14) L + 5.50% 9.17% 10/15/2028 — (7) — 0.00
Fortis Solutions Group, LLC (5) (8) (14) L + 5.50% 9.17% 10/15/2027 180 135 180 0.01
42,935 42,612 3.26
Distributors
48Forty Solutions, LLC (5) (6) (7) S + 5.50% 8.46% 11/30/2026 17,336 16,980 16,981 1.30
48Forty Solutions, LLC (5) (7) S + 5.50% 8.46% 11/30/2026 610 599 599 0.05
48Forty Solutions, LLC (5) (7) (14) P + 4.50% 10.75% 11/30/2026 1,900 1,851 1,851 0.14
ABB Concise Optical Group, LLC (5) (8) L + 7.50% 10.46% 02/23/2028 18,023 17,608 17,192 1.32
11
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
ABB Concise Optical Group, LLC (5) (8) (14) P + 6.50% 12.75% 02/23/2028 1,755 $ 1,712 $ 1,668 0.13 %
PT Intermediate Holdings III, LLC (5) (8) L + 5.50% 9.17% 11/01/2028 28,704 28,446 28,704 2.20
PT Intermediate Holdings III, LLC (5) (8) L + 5.50% 9.17% 11/01/2028 15,969 15,823 15,969 1.22
83,019 82,964 6.35
Diversified Consumer Services
Assembly Intermediate, LLC (5) (7) L + 6.50% 9.38% 10/19/2027 20,741 20,379 19,818 1.52
Assembly Intermediate, LLC (5) (7) (14) L + 6.50% 9.38% 10/19/2027 1,867 1,806 1,636 0.13
Assembly Intermediate, LLC (5) (7) (14) L + 6.50% 9.38% 10/19/2027 415 380 323 0.02
FPG Intermediate Holdco, LLC (5) (7) S + 6.50% 9.20% 03/05/2027 498 489 489 0.04
Heartland Home Services (5) (8) (14) L + 5.75% 8.87% 12/15/2026 1,588 1,573 1,510 0.12
Lightspeed Solution, LLC (5) (8) S + 6.00% 9.04% 03/01/2028 7,561 7,422 7,237 0.55
Lightspeed Solution, LLC (5) (8) (14) S + 6.00% 9.04% 03/01/2028 — (22) (105) (0.01)
LUV Car Wash Group, LLC (5) (7) (14) L + 5.50% 8.06% 12/09/2026 723 714 697 0.05
Magnolia Wash Holdings (5) (7) S + 6.50% 9.13% 07/08/2028 3,776 3,703 3,703 0.28
Magnolia Wash Holdings (5) (7) (14) S + 6.50% 9.13% 07/08/2028 343 333 333 0.03
Magnolia Wash Holdings (5) (7) S + 6.50% 9.13% 07/08/2028 159 156 156 0.01
Mammoth Holdings, LLC (5) (6) (7) S + 6.00% 8.34% 10/16/2023 8,053 8,019 8,053 0.62
Mammoth Holdings, LLC (5) (7) S + 6.00% 8.34% 10/16/2023 36,057 35,898 36,057 2.76
Mammoth Holdings, LLC (5) (7) (14) S + 6.00% 8.34% 10/16/2023 — (4) — 0.00
Spotless Brands, LLC (5) (7) S + 6.50% 9.19% 07/25/2028 4,549 4,460 4,460 0.34
Spotless Brands, LLC (5) (7) (14) S + 6.50% 9.19% 07/25/2028 232 221 221 0.02
Spotless Brands, LLC (5) (7) (14) S + 6.50% 9.19% 07/25/2028 105 102 102 0.01
85,629 84,690 6.48
Diversified Financial Services
Applitools, Inc. (5) (8) (10) S + 5.75% 8.78% 05/25/2029 3,042 2,983 2,971 0.23
Applitools, Inc. (5) (8) (10) (14) S + 5.75% 8.78% 05/25/2028 — (8) (10) 0.00
SitusAMC Holdings Corporation (5) (8) L + 5.75% 9.42% 12/22/2027 3,582 3,550 3,458 0.26
Smarsh, Inc. (5) (8) S + 6.50% 10.05% 02/16/2029 4,286 4,206 4,145 0.32
Smarsh, Inc. (5) (8) (14) S + 6.50% 10.05% 02/16/2029 — (10) (35) 0.00
Smarsh, Inc. (5) (8) (14) S + 6.50% 10.05% 02/16/2029 — (5) (9) 0.00
10,716 10,520 0.80
Electrical Equipment, Instruments & Components
Abracon Group Holdings, LLC (5) (8) S + 5.75% 7.86% 07/06/2028 5,548 5,441 5,441 0.42
Abracon Group Holdings, LLC (5) (8) (14) S + 5.75% 7.86% 07/06/2028 — (10) (10) 0.00
Abracon Group Holdings, LLC (5) (8) (14) S + 5.75% 7.86% 07/06/2028 — (8) (8) 0.00
Dwyer Instruments, Inc. (5) (8) L + 5.50% 8.82% 07/21/2027 8,079 7,924 7,924 0.61
12
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Dwyer Instruments, Inc. (5) (8) (14) L + 5.50% 8.82% 07/21/2027 — $ (18) $ (18) 0.00 %
Dwyer Instruments, Inc. (5) (8) (14) L + 5.50% 8.82% 07/21/2027 158 139 139 0.01
13,468 13,468 1.03
Food Products
AMCP Pet Holdings, Inc. (Brightpet) (5) (6) (7) L + 6.25% 9.67% 10/05/2026 33,569 32,832 32,693 2.50
AMCP Pet Holdings, Inc. (Brightpet) (5) (7) (14) L + 6.25% 9.67% 10/05/2026 4,375 4,255 4,223 0.32
Nellson Nutraceutical, Inc. (5) (6) (7) L + 5.25% 8.92% 12/23/2023 23,638 23,447 23,413 1.79
Teasdale Foods, Inc. (Teasdale Latin Foods) (5) (7) L + 7.25% (incl. 1.00% PIK) 10.67% 12/18/2025 10,784 10,638 8,973 0.69
71,172 69,302 5.30
Health Care Equipment & Supplies
Performance Health Holdings, Inc. (5) (6) (7) L + 6.00% 8.88% 07/12/2027 9,398 9,241 9,028 0.69
Health Care Providers & Services
Advarra Holdings, Inc. (5) (9) S + 5.75% 8.56% 08/24/2029 459 451 451 0.03
Advarra Holdings, Inc. (5) (9) (14) S + 5.75% 8.56% 08/24/2029 — — — 0.00
DCA Investment Holdings, LLC (5) (6) (8) S + 6.00% 9.98% 04/03/2028 11,083 10,947 10,609 0.81
DCA Investment Holdings, LLC (5) (8) (14) S + 6.00% 9.98% 04/03/2028 2,302 2,259 2,184 0.17
Gateway US Holdings, Inc. (5) (8) (10) S + 5.50% 8.33% 09/22/2024 752 746 736 0.06
Gateway US Holdings, Inc. (5) (8) (10) (14) S + 5.50% 8.33% 09/22/2024 173 171 168 0.01
Gateway US Holdings, Inc. (5) (8) (10) (14) S + 5.50% 8.33% 09/22/2024 17 16 16 0.00
Heartland Veterinary Partners, (5) (7) S + 4.75% 7.63% 12/10/2026 1,871 1,855 1,816 0.14
Heartland Veterinary Partners, (5) (7) (14) S + 4.75% 7.63% 12/10/2026 1,620 1,584 1,496 0.11
Heartland Veterinary Partners, (5) (7) (14) S + 4.75% 7.63% 12/10/2026 — (3) (11) 0.00
mPulse Mobile, Inc. (5) (8) L + 5.25% 9.32% 12/17/2027 17,500 17,189 16,870 1.29
mPulse Mobile, Inc. (5) (8) (14) L + 5.25% 9.32% 12/17/2027 — (17) (72) (0.01)
mPulse Mobile, Inc. (5) (8) (14) L + 5.25% 9.32% 12/17/2027 151 142 133 0.01
Promptcare Infusion Buyer, Inc. (5) (7) L + 6.00% 8.63% 09/01/2027 9,096 8,941 8,723 0.67
Promptcare Infusion Buyer, Inc. (5) (7) (14) L + 6.00% 8.63% 09/01/2027 884 849 748 0.06
Southern Veterinary Partners, LLC (5) (7) S + 5.50% 8.45% 10/05/2027 902 884 855 0.07
Stepping Stones Healthcare Services, LLC (5) (8) L + 5.75% 9.42% 01/02/2029 4,353 4,293 4,119 0.32
Stepping Stones Healthcare Services, LLC (5) (8) (14) L + 5.75% 9.42% 01/02/2029 125 118 57 0.00
Stepping Stones Healthcare Services, LLC (5) (8) (14) L + 5.75% 9.42% 12/30/2026 25 17 (9) 0.00
Suveto (5) (8) (14) L + 5.00% 8.67% 09/09/2027 11,057 10,949 10,599 0.81
Suveto (5) (8) (14) L + 5.00% 8.67% 09/09/2027 454 435 417 0.03
Tivity Health, Inc. (5) (8) S + 6.00% 9.55% 06/28/2029 3,720 3,666 3,681 0.28
Vardiman Black Holdings, LLC (5) (9) S + 8.00% 10.29% 03/18/2027 3,420 3,389 3,228 0.25
Vardiman Black Holdings, LLC (5) (9) (14) S + 8.00% 10.29% 03/18/2027 3,609 3,571 3,381 0.26
13
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Vermont Aus Pty Ltd (5) (8) (10) S + 5.50% 9.20% 03/23/2028 8,458 $ 8,257 $ 7,936 0.61 %
80,709 78,131 5.98
Health Care Technology
Intelerad Medical Systems Incorporated (5) (7) (10) S + 6.50% 10.22% 08/21/2026 500 485 485 0.04
Lightspeed Buyer, Inc. (5) (6) (7) L + 5.75% 8.87% 02/03/2026 12,701 12,458 12,346 0.94
Lightspeed Buyer, Inc. (5) (7) (14) L + 5.75% 8.87% 02/03/2026 9,258 9,033 8,887 0.68
21,976 21,718 1.66
Industrial Conglomerates
Electrical Source Holdings LLC (5) (6) (7) L + 5.00% 8.67% 11/25/2025 29,325 29,145 28,548 2.18
Electrical Source Holdings LLC (5) (6) (7) L + 5.00% 8.67% 11/25/2025 6,489 6,395 6,317 0.48
Electrical Source Holdings LLC (5) (7) (14) L + 5.00% 8.67% 11/25/2025 — (14) (29) 0.00
Excelitas Technologies Corp. (5) (8) S + 5.75% 8.59% 08/13/2029 1,378 1,351 1,351 0.10
Excelitas Technologies Corp. (5) (8) E + 5.75% 6.08% 08/13/2029 € 242 246 232 0.02
Excelitas Technologies Corp. (5) (8) (14) S + 5.75% 8.59% 08/13/2029 — (3) (3) 0.00
Excelitas Technologies Corp. (5) (8) (14) S + 5.75% 8.59% 08/14/2028 54 51 51 0.00
37,171 36,467 2.79
Insurance Services
Amerilife Holdings, LLC (5) (8) S + 5.75% 8.83% 08/31/2029 2,044 2,004 2,004 0.15
Amerilife Holdings, LLC (5) (8) (14) S + 5.75% 8.83% 08/31/2029 — (9) (9) 0.00
Amerilife Holdings, LLC (5) (8) (14) S + 5.75% 8.83% 08/31/2028 — (9) (9) 0.00
Foundation Risk Partners Corp. (5) (8) L + 5.50% 9.17% 10/29/2028 43,074 42,497 42,376 3.24
Foundation Risk Partners Corp. (5) (8) L + 5.50% 9.17% 10/29/2028 9,368 9,242 9,217 0.71
Foundation Risk Partners Corp. (5) (8) (14) L + 5.50% 9.17% 10/29/2027 242 184 168 0.01
Galway Borrower, LLC (5) (8) L + 5.25% 8.92% 09/29/2028 28,346 27,864 27,116 2.07
Galway Borrower, LLC (5) (8) (14) L + 5.25% 8.92% 09/29/2028 2,013 1,934 1,826 0.14
Galway Borrower, LLC (5) (8) (14) L + 5.25% 8.92% 09/30/2027 677 643 588 0.04
Higginbotham Insurance Agency, Inc (5) (6) (8) L + 5.25% 8.37% 11/25/2026 18,528 18,323 18,015 1.38
High Street Buyer, Inc. (5) (6) (8) L + 6.00% 8.81% 04/14/2028 10,017 9,851 9,725 0.74
High Street Buyer, Inc. (5) (6) (8) L + 6.00% 8.81% 04/14/2028 40,226 39,534 39,051 2.99
High Street Buyer, Inc. (5) (8) (14) L + 6.00% 8.81% 04/16/2027 — (32) (62) 0.00
Integrity Marketing Acquisition, LLC (5) (6) (7) L + 5.50% 9.03% 08/27/2025 61,505 60,905 61,505 4.71
Integrity Marketing Acquisition, LLC (5) (7) L + 5.75% 9.28% 08/27/2025 24,661 24,416 24,661 1.89
Keystone Agency Investors (5) (7) S + 6.00% 9.70% 05/03/2027 3,085 3,043 2,982 0.23
Keystone Agency Investors (5) (7) (14) S + 6.00% 9.70% 05/03/2027 2,894 2,834 2,743 0.21
Majesco (5) (6) (7) L + 7.25% 10.89% 09/21/2027 23,481 22,987 22,480 1.72
Majesco (5) (7) (14) L + 7.25% 10.89% 09/21/2026 — (31) (67) (0.01)
14
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Oakbridge Insurance Agency, LLC (5) (7) S + 5.75% 8.89% 12/31/2026 165 $ 162 $ 158 0.01 %
Oakbridge Insurance Agency, LLC (5) (7) (14) S + 5.75% 8.89% 12/31/2026 138 128 81 0.01
Oakbridge Insurance Agency, LLC (5) (7) (14) S + 5.75% 8.89% 12/31/2026 11 10 9 0.00
Patriot Growth Insurance Services, LLC (5) (6) (8) L + 5.50% 9.67% 10/16/2028 54,180 53,280 53,659 4.11
Patriot Growth Insurance Services, LLC (5) (8) (14) L + 5.50% 9.67% 10/16/2028 3,524 3,345 3,438 0.26
Patriot Growth Insurance Services, LLC (5) (8) (14) L + 5.50% 9.67% 10/16/2028 — (77) (43) 0.00
Peter C. Foy & Associates Insurance Services, LLC (5) (8) L + 6.00% 7.85% 11/01/2028 17,837 17,678 16,963 1.30
Peter C. Foy & Associates Insurance Services, LLC (5) (8) S + 6.00% 9.15% 11/01/2028 912 899 867 0.07
Peter C. Foy & Associates Insurance Services, LLC (5) (8) L + 6.00% 9.12% 11/01/2028 4,967 4,923 4,724 0.36
Peter C. Foy & Associates Insurance Services, LLC (5) (8) (14) S + 6.00% 9.15% 11/01/2028 1,756 1,727 1,645 0.13
Peter C. Foy & Associates Insurance Services, LLC (5) (8) (14) L + 6.00% 9.12% 11/01/2027 — (7) (41) 0.00
RSC Acquisition, Inc. (5) (6) (8) S + 5.50% 8.94% 10/30/2026 24,895 24,516 24,895 1.90
RSC Acquisition, Inc. (5) (8) S + 5.50% 8.94% 10/30/2026 7,961 7,896 7,961 0.61
World Insurance Associates, LLC (5) (6) (7) S + 5.75% 9.30% 04/01/2026 33,417 32,527 32,311 2.47
World Insurance Associates, LLC (5) (6) (7) S + 5.75% 9.30% 04/01/2026 31,249 30,563 30,215 2.31
World Insurance Associates, LLC (5) (7) (14) S + 5.75% 9.30% 04/01/2026 349 331 307 0.02
444,081 441,459 33.77
Interactive Media & Services
FMG Suite Holdings, LLC (5) (7) S + 5.50% 7.84% 10/30/2026 24,069 23,653 23,143 1.77
FMG Suite Holdings, LLC (5) (7) S + 5.50% 7.84% 10/30/2026 5,250 5,172 5,048 0.39
FMG Suite Holdings, LLC (5) (7) (14) S + 5.50% 7.84% 10/30/2026 — (39) (101) (0.01)
Spectrio, LLC (5) (6) (7) L + 6.00% 9.13% 12/09/2026 31,650 31,238 30,868 2.36
Spectrio, LLC (5) (7) (14) L + 6.00% 9.13% 12/09/2026 12,775 12,510 11,881 0.91
Spectrio, LLC (5) (7) (14) L + 6.00% 9.13% 12/09/2026 1,490 1,435 1,393 0.11
Triple Lift, Inc. (5) (6) (8) S + 5.50% 9.30% 05/08/2028 27,650 27,188 26,483 2.03
Triple Lift, Inc. (5) (8) (14) S + 5.50% 9.30% 05/08/2028 1,533 1,469 1,364 0.10
102,626 100,079 7.66
IT Services
Atlas Purchaser, Inc. (6) (8) L + 5.25% 8.12% 05/08/2028 8,945 8,795 6,932 0.53
Donuts, Inc. (5) (6) (7) S + 6.00% 8.91% 12/29/2026 18,422 18,140 18,000 1.38
Donuts, Inc. (5) (7) S + 6.00% 8.91% 12/29/2027 6,752 6,752 6,598 0.50
Donuts, Inc. (5) (7) (14) S + 6.00% 8.91% 12/29/2027 — — (73) (0.01)
Govbrands Intermediate, Inc. (5) (6) (8) L + 5.50% 9.17% 08/04/2027 39,860 39,026 37,991 2.91
Govbrands Intermediate, Inc. (5) (8) (14) L + 5.50% 9.17% 08/04/2027 8,969 8,739 8,352 0.64
Govbrands Intermediate, Inc. (5) (8) (14) L + 5.50% 9.17% 08/04/2027 1,177 1,092 978 0.07
Long Term Care Group, Inc. (5) (8) L + 6.00% 8.82% 09/08/2027 4,975 4,883 4,775 0.37
15
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Recovery Point Systems, Inc. (5) (6) (7) L + 6.50% 9.41% 08/12/2026 41,160 $ 40,587 $ 40,946 3.13 %
Recovery Point Systems, Inc. (5) (7) (14) L + 6.50% 9.41% 08/12/2026 — (52) (21) 0.00
Redwood Services Group, LLC (5) (8) S + 6.00% 9.31% 06/15/2029 10,966 10,753 10,489 0.80
Redwood Services Group, LLC (5) (8) (14) S + 6.00% 9.31% 06/15/2029 — (25) (113) (0.01)
Syntax Systems Ltd (5) (8) (10) L + 5.50% 8.02% 10/29/2028 35,542 35,225 33,200 2.54
Syntax Systems Ltd (5) (8) (10) (14) L + 5.50% 8.02% 10/29/2028 — (81) (617) (0.05)
Syntax Systems Ltd (5) (8) (10) (14) L + 5.50% 8.02% 10/29/2026 2,495 2,464 2,248 0.17
Thrive Buyer, Inc. (Thrive Networks) (5) (6) (7) L + 6.00% 9.67% 01/22/2027 20,613 20,294 20,096 1.54
Thrive Buyer, Inc. (Thrive Networks) (5) (7) (14) L + 6.00% 9.67% 01/22/2027 16,024 15,746 15,594 1.19
Thrive Buyer, Inc. (Thrive Networks) (5) (7) (14) P + 6.25% 11.25% 01/22/2027 264 234 214 0.02
UpStack, Inc. (5) (7) L + 5.50% 8.60% 08/20/2027 9,761 9,555 9,693 0.74
UpStack, Inc. (5) (7) (14) L + 5.50% 8.60% 08/20/2027 3,300 3,210 3,270 0.25
UpStack, Inc. (5) (7) (14) L + 5.50% 8.60% 08/20/2027 — (20) (6) 0.00
225,317 218,546 16.72
Leisure Products
GSM Acquisition Corp. (GSM Outdoors) (5) (6) (7) S + 5.00% 8.81% 11/16/2026 17,491 17,356 17,248 1.32
GSM Acquisition Corp. (GSM Outdoors) (5) (7) S + 5.00% 8.81% 11/16/2026 4,502 4,456 4,439 0.34
GSM Acquisition Corp. (GSM Outdoors) (5) (7) (14) S + 5.00% 8.81% 11/16/2026 2,568 2,526 2,509 0.19
24,338 24,196 1.85
Machinery
Answer Acquisition, LLC (5) (7) L + 5.75% 9.42% 12/30/2026 10,746 10,559 10,313 0.79
Answer Acquisition, LLC (5) (7) (14) L + 5.75% 9.42% 12/30/2026 — (14) (34) 0.00
Komline Sanderson Engineering Corp. (5) (6) (9) L + 6.00% 8.75% 03/17/2026 20,925 20,755 20,445 1.56
Komline Sanderson Engineering Corp. (5) (9) (14) L + 6.00% 8.75% 03/17/2026 19,118 18,897 18,483 1.41
Komline Sanderson Engineering Corp. (5) (9) (14) L + 6.00% 8.75% 03/17/2026 2,373 2,340 2,264 0.17
MHE Intermediate Holdings, LLC (5) (6) (7) S + 6.25% 9.50% 07/21/2027 28,584 28,105 27,738 2.12
MHE Intermediate Holdings, LLC (5) (7) S + 6.25% 9.50% 07/21/2027 3,720 3,657 3,610 0.28
MHE Intermediate Holdings, LLC (5) (7) (14) S + 6.25% 9.50% 07/21/2027 — (40) (74) (0.01)
84,259 82,745 6.33
Multi-Utilities
AWP Group Holdings, Inc. (5) (6) (7) L + 4.75% 7.56% 12/22/2027 892 882 864 0.07
AWP Group Holdings, Inc. (5) (7) (14) L + 4.75% 7.56% 12/22/2027 131 129 123 0.01
AWP Group Holdings, Inc. (5) (7) (14) L + 4.75% 7.56% 12/22/2026 54 52 49 0.00
Ground Penetrating Radar Systems, LLC (5) (6) (7) S + 4.75% 8.03% 06/26/2026 10,332 10,183 10,033 0.77
Ground Penetrating Radar Systems, LLC (5) (7) (14) S + 4.75% 8.03% 06/26/2025 722 701 674 0.05
Vessco Midco Holdings, LLC (5) (6) (7) L + 4.50% 7.62% 11/02/2026 2,715 2,695 2,669 0.20
16
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Vessco Midco Holdings, LLC (5) (7) L + 4.50% 7.62% 11/02/2026 1,769 $ 1,756 $ 1,739 0.13 %
Vessco Midco Holdings, LLC (5) (7) (14) P + 3.50% 9.75% 10/18/2026 60 57 52 0.00
16,455 16,203 1.24
Oil, Gas & Consumable Fuels
Energy Labs Holdings Corp. (5) (7) S + 5.25% 7.46% 04/07/2028 389 383 381 0.03
Energy Labs Holdings Corp. (5) (7) (14) S + 5.25% 7.46% 04/07/2028 — — (1) 0.00
Energy Labs Holdings Corp. (5) (7) (14) S + 5.25% 7.46% 04/07/2028 18 17 16 0.00
400 396 0.03
Professional Services
Abacus Data Holdings, Inc. (AbacusNext) (5) (6) (7) L + 6.25% 8.54% 03/10/2027 18,664 18,334 18,432 1.41
Abacus Data Holdings, Inc. (AbacusNext) (5) (7) L + 6.25% 8.54% 03/10/2027 1,955 1,939 1,931 0.15
Abacus Data Holdings, Inc. (AbacusNext) (5) (7) (14) L + 6.25% 8.54% 03/10/2027 — (25) (17) 0.00
Bullhorn, Inc. (5) (6) (7) L + 5.75% 9.42% 09/30/2026 12,980 12,874 12,980 0.99
Bullhorn, Inc. (5) (7) L + 5.75% 9.42% 09/30/2026 2,729 2,718 2,729 0.21
Bullhorn, Inc. (5) (7) (14) L + 5.75% 9.42% 09/30/2026 273 267 273 0.02
Citrin Cooperman Advisors, LLC (5) (8) L + 5.00% 6.47% 10/01/2027 20,076 19,731 20,076 1.54
Citrin Cooperman Advisors, LLC (5) (8) L + 5.00% 6.47% 10/01/2027 8,604 8,452 8,604 0.66
KWOR Acquisition, Inc. (5) (8) L + 5.25% 8.91% 12/22/2028 5,387 5,288 5,105 0.39
KWOR Acquisition, Inc. (5) (8) (14) L + 5.25% 8.91% 12/22/2028 — (46) (250) (0.02)
KWOR Acquisition, Inc. (5) (8) (14) P + 4.25% 10.50% 12/22/2027 35 34 29 0.00
Project Boost Purchaser, LLC (5) (8) S + 5.50% 8.41% 05/02/2029 5,428 5,376 5,381 0.41
Project Boost Purchaser, LLC (5) (8) (14) S + 5.50% 8.41% 05/02/2029 — (5) (10) 0.00
Project Boost Purchaser, LLC (5) (8) (14) S + 5.50% 8.41% 05/02/2028 — (4) (4) 0.00
74,933 75,259 5.76
Real Estate Management & Development
Associations, Inc. (5) (6) (7) S + 6.50% (incl. 2.50% PIK) 8.88% 07/02/2027 16,156 16,027 15,403 1.18
Associations, Inc. (5) (7) S + 6.50% (incl. 2.50% PIK) 8.88% 07/02/2027 14,612 14,431 13,614 1.04
Associations, Inc. (5) (7) (14) S + 6.50% (incl. 2.50% PIK) 8.88% 07/02/2027 — (15) (87) (0.01)
MRI Software, LLC (5) (6) (7) L + 5.50% 9.17% 02/10/2026 59,638 59,197 58,362 4.46
MRI Software, LLC (5) (7) (14) L + 5.50% 9.17% 02/10/2026 — (12) (47) 0.00
Pritchard Industries, LLC (5) (8) L + 5.50% 9.17% 10/13/2027 25,596 25,153 24,137 1.85
Pritchard Industries, LLC (5) (8) (14) L + 5.50% 9.17% 10/13/2027 4,893 4,795 4,544 0.35
Zarya Intermediate, LLC (5) (7) (10) S + 6.50% 10.02% 07/01/2027 35,408 35,408 35,408 2.71
17
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Zarya Intermediate, LLC (5) (7) (10) (14) S + 6.50% 10.02% 07/01/2027 — $ — $ — 0.00 %
154,984 151,334 11.58
Software
Alert Media, Inc. (5) (6) (7) S + 5.00% 7.74% 04/12/2027 14,000 13,834 14,000 1.07
Alert Media, Inc. (5) (7) (14) S + 5.00% 7.74% 04/10/2026 — (19) — 0.00
Anaplan, Inc. (5) (8) S + 6.50% 9.53% 06/21/2029 24,000 23,533 23,479 1.80
Appfire Technologies, LLC (5) (7) S + 5.50% 8.63% 03/09/2027 9,483 9,447 9,112 0.70
Appfire Technologies, LLC (5) (7) (14) S + 5.50% 8.63% 03/09/2027 3,583 3,509 3,172 0.24
Appfire Technologies, LLC (5) (7) (14) S + 5.50% 8.63% 03/09/2027 13 11 7 0.00
Bottomline Technologies, Inc. (5) (8) S + 5.50% 8.35% 05/14/2029 3,200 3,139 3,078 0.24
Bottomline Technologies, Inc. (5) (8) (14) S + 5.50% 8.35% 05/15/2028 — (5) (10) 0.00
CLEO Communications Holding, LLC (5) (6) (7) L + 6.50% 9.69% 06/09/2027 39,998 39,670 38,334 2.93
CLEO Communications Holding, LLC (5) (7) (14) L + 6.50% 9.69% 06/09/2027 — (98) (520) (0.04)
Diligent Corporation (5) (6) (7) L + 5.75% 8.63% 08/04/2025 27,580 27,391 26,930 2.06
Diligent Corporation (5) (6) (7) (14) L + 5.75% 8.63% 08/04/2025 2,206 2,180 2,112 0.16
Diligent Corporation (5) (7) (14) L + 5.75% 8.63% 08/04/2025 2,250 2,220 2,144 0.16
GS AcquisitionCo, Inc. (5) (6) (7) L + 5.75% 9.85% 05/22/2026 75,334 74,812 73,503 5.62
GS AcquisitionCo, Inc. (5) (7) (14) L + 5.75% 9.85% 05/22/2026 — (21) (113) (0.01)
GS AcquisitionCo, Inc. (5) (7) (14) L + 5.75% 9.85% 05/22/2026 1,694 1,673 1,635 0.13
Gurobi Optimization, LLC (5) (6) (7) L + 5.00% 8.12% 12/19/2023 13,125 13,071 13,125 1.00
Gurobi Optimization, LLC (5) (7) (14) L + 5.00% 8.12% 12/19/2023 — (6) — 0.00
Kaseya, Inc. (5) (8) S + 5.75% 8.29% 06/25/2029 14,099 13,894 13,485 1.03
Kaseya, Inc. (5) (8) (14) S + 5.75% 8.29% 06/25/2029 — (6) (37) 0.00
Kaseya, Inc. (5) (8) (14) S + 5.75% 8.29% 06/25/2029 — (12) (37) 0.00
LegitScript (5) (8) S + 5.75% 8.73% 06/24/2029 21,667 21,246 20,791 1.59
LegitScript (5) (8) (14) S + 5.75% 8.73% 06/24/2029 — (131) (572) (0.04)
LegitScript (5) (8) (14) S + 5.75% 8.73% 06/24/2028 333 254 165 0.01
Montana Buyer, Inc. (5) (8) S + 5.75% 8.69% 07/22/2029 4,131 4,049 3,964 0.30
Montana Buyer, Inc. (5) (8) (14) S + 5.75% 8.69% 07/22/2028 — (9) (19) 0.00
Netwrix Corporation And Concept Searching, Inc. (5) (8) S + 5.00% 7.90% 06/11/2029 4,605 4,561 4,358 0.33
Netwrix Corporation And Concept Searching, Inc. (5) (8) (14) S + 5.00% 7.90% 06/11/2029 168 157 35 0.00
Netwrix Corporation And Concept Searching, Inc. (5) (8) (14) S + 5.00% 7.90% 06/11/2029 — (4) (23) 0.00
Oak Purchaser, Inc. (5) (8) S + 5.50% 9.48% 04/28/2028 2,792 2,765 2,736 0.21
Oak Purchaser, Inc. (5) (8) (14) S + 5.50% 9.48% 04/28/2028 625 608 588 0.04
Oak Purchaser, Inc. (5) (8) (14) S + 5.50% 9.48% 04/28/2028 — (3) (8) 0.00
Pound Bidco, Inc. (5) (6) (7) (10) L + 6.50% 9.31% 01/30/2026 9,012 8,879 8,988 0.69
18
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Pound Bidco, Inc. (5) (6) (7) (10) (14) L + 6.50% 9.31% 01/30/2026 — $ (15) $ (3) 0.00 %
Project Leopard Holdings, Inc. (9) (10) S + 5.25% 7.83% 07/20/2029 6,280 5,851 5,608 0.43
Revalize, Inc. (5) (7) (14) L + 5.75% 9.42% 04/15/2027 19,595 19,476 18,618 1.42
Revalize, Inc. (5) (7) L + 5.75% 9.42% 04/15/2027 71 70 67 0.01
Riskonnect Parent, LLC (5) (8) S + 5.50% 9.73% 12/07/2028 445 437 437 0.03
Riskonnect Parent, LLC (5) (8) (14) S + 5.50% 9.73% 12/07/2028 — (6) (6) 0.00
Securonix, Inc. (5) (8) S + 6.50% 8.62% 04/05/2028 21,010 20,666 20,119 1.54
Securonix, Inc. (5) (8) (14) S + 6.50% 8.62% 04/05/2028 — (61) (160) (0.01)
Skykick, Inc. (5) (7) L + 7.25% 9.54% 09/01/2027 6,300 6,165 6,243 0.48
Skykick, Inc. (5) (7) (14) L + 7.25% 9.54% 09/01/2027 — (27) (24) 0.00
Trunk Acquisition, Inc. (5) (7) L + 5.75% 9.42% 02/19/2027 9,074 8,995 8,568 0.66
Trunk Acquisition, Inc. (5) (7) (14) L + 5.75% 9.42% 02/19/2026 — (7) (48) 0.00
User Zoom Technologies, Inc. (5) (8) S + 5.75% 7.87% 04/01/2029 38,689 37,953 38,480 2.94
370,086 362,301 27.72
Total First Lien Debt $ 2,613,431 $ 2,568,966 196.53 %
Second Lien Debt
Air Freight & Logistics
Omni Intermediate Holdings, LLC (5) (7) S + 9.00% 12.69% 12/30/2027 4,500 $ 4,370 $ 4,316 0.33 %
Auto Components
PAI Holdco, Inc. (5) (7) L + 7.50% (incl. 2.00% PIK) 10.31% 10/28/2028 25,898 25,290 23,961 1.83
Electronic Equipment, Instruments & Components
Infinite Bidco, LLC (5) (9) L + 7.00% 10.67% 03/02/2029 17,000 16,937 16,703 1.28
Infinite Bidco, LLC (5) (9) (14) L + 7.00% 10.67% 03/02/2029 — — (149) (0.01)
16,937 16,554 1.27
Energy Equipment & Services
QBS Parent, Inc. (5) L + 8.50% 12.17% 09/21/2026 15,000 14,799 13,788 1.05
Health Care Providers & Services
Heartland Veterinary Partners, LLC (5) (7) S + 8.00% 10.94% 12/10/2027 3,960 3,890 3,662 0.28
Heartland Veterinary Partners, LLC (5) (7) (14) S + 8.00% 10.94% 12/10/2027 1,452 1,425 1,336 0.10
5,315 4,998 0.38
Industrial Conglomerates
Aptean, Inc. (5) (8) L + 7.00% 10.07% 04/23/2027 5,950 5,950 5,804 0.44
IT Services
Help/Systems Holdings, Inc. (8) S + 6.75% 9.88% 11/19/2027 17,500 17,500 16,756 1.28
19
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Idera, Inc. (5) (8) L + 6.75% 9.32% 03/02/2029 3,887 $ 3,862 $ 3,692 0.28 %
Red Dawn SEI Buyer, Inc. (5) (7) L + 8.50% 12.67% 11/20/2026 19,000 18,635 18,040 1.38
39,997 38,488 2.94
Software
Flexera Software, LLC (5) (7) L + 7.00% 9.64% 03/03/2029 13,500 13,270 12,752 0.98
Matrix Parent, Inc. (5) (8) S + 8.00% 11.10% 03/01/2030 10,667 10,489 9,897 0.76
23,759 22,649 1.73
Total Second Lien Debt $ 136,417 $ 130,558 9.99 %

20
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread Acquisition Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Other Securities
Unsecured Debt
Familia Intermediate Holdings I Corp. (Teasdale Latin Foods) (5) (11) (12) 16.25% 12/18/2020 1,800 $ 1,777 $ 498 0.04 %
Total Unsecured Debt 1,777 498 0.04
Preferred Equity
Diligent Corporation (5) (13) 10.50% 04/05/2021 5,000 5,399 4,879 0.37
FORTIS Solutions Group, LLC (5) (13) 12.25% 06/24/2022 1,000,000 975 1,013 0.08
Integrity Marketing Acquisition, LLC (5) (13) 10.50% 12/21/2021 3,250,000 3,279 3,478 0.27
Knockout Intermediate Holdings I, Inc. (5) (13) 11.75% 06/25/2022 2,790 2,720 2,938 0.22
Revalize, Inc. (5) (13) 11.75% 12/14/2021 1,500 1,518 1,573 0.12
Riskonnect Parent, LLC (5) (13) S + 10.50% 07/07/2022 1,012,200 992 992 0.08
Skykick, Inc. (5) (13) 08/31/2021 134,101 1,275 1,020 0.08
Total Preferred Equity 16,158 15,893 1.22
Common Equity
Abacus Data Holdings, Inc. (AbacusNext) (5) (13) 03/09/2021 29,441 2,944 2,291 0.18
Amerilife Holdings, LLC (5) (13) 09/01/2022 873 24 24 0.00
BP Purchaser, LLC (5) (13) 12/10/2021 1,233,333 1,234 1,517 0.12
CSC Thrive Holdings, LP (Thrive Networks) (5) (13) 03/01/2021 160,016 411 563 0.04
Encore Holdings, LLC (5) (13) 11/23/2021 2,391 275 390 0.03
GSM Equity Investors, LP (GSM Outdoors) (5) (13) 11/16/2020 4,500 450 917 0.07
Help HP SCF Investor, LP (10) (13) 05/12/2021 12,460 15,221 1.16
LUV Car Wash (5) (13) 04/06/2022 97 97 97 0.01
mPulse Mobile, Inc. (5) (13) 12/17/2021 165,761 1,220 1,220 0.09
PCX Holding Corp. (5) (13) 04/22/2021 6,538 654 811 0.06
Pet Holdings, Inc. (Brightpet) (5) (13) 10/06/2020 12,313 1,231 1,009 0.08
Pritchard Industries, Inc. (5) (13) 10/13/2021 1,700,000 1,700 2,142 0.16
Procure Acquiom Financial, LLC (Procure Analytics) (5) (13) 12/20/2021 1,000,000 1,000 1,160 0.09
RPS Group Holdings (Recovery Point Systems, Inc.) (5) (13) 03/05/2021 1,000,000 1,000 680 0.05
Shelby Co-invest, LP. (Spectrum Automotive) (5) (13) 06/29/2021 8,500 850 1,077 0.08
Suveto Buyer, LLC (5) (10) (13) 11/19/2021 17,000 1,700 2,056 0.16
Total Common Equity 27,250 31,175 2.38
Total Other Securities $ 45,185 $ 47,566 3.64 %
Total Portfolio Investments $ 2,795,033 $ 2,747,090 210.16 %
21
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
(1)
Unless otherwise indicated, issuers of debt and equity investments held by the Company (where such term “Company” shall include the Company’s consolidated subsidiaries for purposes of this Consolidated Schedule of Investments) are denominated in dollars. All debt investments are income producing unless otherwise indicated. All equity investments are non-income producing unless otherwise noted. Certain portfolio company investments are subject to contractual restrictions on sales. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of September 30, 2022, the Company does not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of September 30, 2022, the Company is not an “affiliated person” of any of its portfolio companies.
(2)
Unless otherwise indicated, the Company’s investments are pledged as collateral supporting the amounts outstanding under the Truist Credit Facility (as defined below). See Note 6 “Debt”.
(3)
Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either EURIBOR ("E"), LIBOR ("L") or SOFR ("S") or an alternate base rate (commonly based on the Federal Funds Rate ("F") or the U.S. Prime Rate ("P")), each of which generally resets periodically. For each loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of September 30, 2022. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at September 30, 2022. As of September 30, 2022, the reference rates for our LIBOR-based loans were the 3-month E at 1.17%, the 30-day L at 3.14%, the 90-day L at 3.75%, the 180-day L at 4.23%; the reference rates for our SOFR-based loans were the 30-day S at 2.47%, the 90-day S at 2.13%, the 180-day S at 1.43%; and the reference rate for our Prime rate-based loans were at 6.25%.
(4) The cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(5) These investments were valued using unobservable inputs and are considered Level 3 investments. Fair value was determined in good faith by or under the direction of the Company's Board of Directors (the "Board of Directors" or the "Board") (see Note 2 and Note 5), pursuant to the Company’s valuation policy.
(6) Assets or a portion thereof are pledged as collateral for the BNP Funding Facility (as defined below). See Note 6 “Debt”.
(7) Loan includes interest rate floor of 1.00%.
(8) Loan includes interest rate floor of 0.75%.
(9) Loan includes interest rate floor of 0.50%.
(10)
The investment is not a qualifying asset under Section 55(a) of the 1940 Act. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2022, non-qualifying assets represented 6.3% of total assets as calculated in accordance with regulatory requirements.
(11)
Represents a senior unsecured note, which is subordinated to senior secured term loans of the portfolio company.
(12)
Investment was on non-accrual status as of September 30, 2022.
(13)
Securities exempt from registration under the Securities Act of 1933, and may be deemed to be “restricted securities”. As of September 30, 2022, the aggregate fair value of these securities is $47,068 or 3.6% of the Company’s net assets. The initial acquisition dates have been included for such securities.
(14)
Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of September 30, 2022:
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
First Lien Debt
365 Retail Markets, LLC 0.50% Revolver 12/23/2026 $ 1,400 $ (32)
48Forty Solutions, LLC 0.50% Revolver 11/30/2026 814 (15)
ABB Concise Optical Group, LLC 0.50% Revolver 02/23/2028 132 (6)
AMCP Pet Holdings, Inc. (Brightpet) 0.50% Revolver 10/05/2026 1,458 (38)
ARI Network Services, Inc. 0.50% Revolver 02/28/2025 2,121 (66)
AWP Group Holdings, Inc. 1.00% Delayed Draw Term Loan 12/22/2022 132 (4)
AWP Group Holdings, Inc. 0.50% Revolver 12/22/2026 104 (3)
Abacus Data Holdings, Inc. (AbacusNext) 0.50% Revolver 03/10/2027 1,400 (17)
Abracon Group Holdings, LLC 1.00% Delayed Draw Term Loan 07/06/2024 1,003 (10)
Abracon Group Holdings, LLC 0.50% Revolver 07/06/2028 401 (8)
Advarra Holdings, Inc. 1.00% Delayed Draw Term Loan 08/26/2024 41 —
Alert Media, Inc. 0.50% Revolver 04/10/2026 1,750 —
22
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Amerilife Holdings, LLC 1.00% Delayed Draw Term Loan 08/31/2024 $ 875 $ (9)
Amerilife Holdings, LLC 0.50% Revolver 08/31/2028 437 (9)
Answer Acquisition, LLC 0.50% Revolver 12/30/2026 833 (34)
Appfire Technologies, LLC 1.00% Delayed Draw Term Loan 01/05/2023 5,051 (197)
Appfire Technologies, LLC 0.50% Delayed Draw Term Loan 06/13/2024 1,878 (73)
Appfire Technologies, LLC 0.50% Revolver 03/09/2027 153 (6)
Applitools, Inc. 0.50% Revolver 05/25/2028 433 (10)
Assembly Intermediate, LLC 0.50% Delayed Draw Term Loan 10/19/2023 3,319 (148)
Assembly Intermediate, LLC 0.50% Revolver 10/19/2027 1,659 (74)
Associations, Inc. 1.00% Delayed Draw Term Loan 06/10/2024 6,813 (317)
Associations, Inc. 0.50% Revolver 07/02/2027 1,860 (87)
Bottomline Technologies, Inc. 0.50% Revolver 05/15/2028 267 (10)
Bullhorn, Inc. 0.50% Revolver 09/30/2026 21 —
Bullhorn, Inc. 0.50% Revolver 09/30/2026 299 —
CLEO Communications Holding, LLC 0.50% Revolver 06/09/2027 12,502 (520)
DCA Investment Holdings, LLC 1.00% Delayed Draw Term Loan 03/02/2023 457 (20)
Diligent Corporation 1.00% Delayed Draw Term Loan 10/05/2022 1,776 (42)
Diligent Corporation 0.50% Revolver 08/04/2025 2,250 (53)
Donuts, Inc. 0.25% Delayed Draw Term Loan 08/14/2023 3,166 (73)
Dwyer Instruments, Inc. 1.00% Delayed Draw Term Loan 07/01/2024 2,028 (18)
Dwyer Instruments, Inc. 0.50% Revolver 07/21/2027 855 (16)
Electrical Source Holdings LLC 0.50% Revolver 11/25/2025 1,093 (29)
Encore Holdings, LLC 0.75% Delayed Draw Term Loan 01/23/2024 1,963 (59)
Encore Holdings, LLC 0.50% Revolver 11/23/2027 539 (16)
Energy Labs Holdings Corp. 1.00% Delayed Draw Term Loan 04/13/2023 47 (1)
Energy Labs Holdings Corp. 0.50% Revolver 04/07/2028 45 (1)
Excelitas Technologies Corp. 1.00% Delayed Draw Term Loan 08/11/2024 262 (3)
Excelitas Technologies Corp. 0.50% Revolver 08/14/2028 77 (1)
FLS Holding, Inc. 0.50% Revolver 12/17/2027 1,802 (40)
FMG Suite Holdings, LLC 0.50% Revolver 10/30/2026 2,625 (101)
Fortis Solutions Group, LLC 0.50% Delayed Draw Term Loan 10/15/2023 904 —
Fortis Solutions Group, LLC 0.50% Delayed Draw Term Loan 06/24/2024 1,000 —
Fortis Solutions Group, LLC 0.50% Revolver 10/15/2027 2,519 —
Foundation Risk Partners Corp. 0.50% Revolver 10/29/2027 4,329 (70)
GS AcquisitionCo, Inc. 0.50% Delayed Draw Term Loan 11/03/2022 4,648 (113)
GS AcquisitionCo, Inc. 0.50% Revolver 05/22/2026 726 (18)
GSM Acquisition Corp. (GSM Outdoors) 0.50% Revolver 11/16/2026 1,712 (24)
Galway Borrower, LLC 0.50% Delayed Draw Term Loan 09/30/2023 2,294 (100)
23
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Galway Borrower, LLC 0.50% Revolver 09/30/2027 $ 1,375 $ (60)
Gateway US Holdings, Inc. 1.00% Delayed Draw Term Loan 04/15/2024 39 (1)
Gateway US Holdings, Inc. 0.50% Revolver 09/22/2024 14 —
Govbrands Intermediate, Inc. 1.00% Delayed Draw Term Loan 08/04/2023 4,185 (196)
Govbrands Intermediate, Inc. 0.50% Revolver 08/04/2027 3,060 (144)
GraphPad Software, LLC 0.50% Revolver 04/27/2027 1,750 (59)
Ground Penetrating Radar Systems, LLC 0.50% Revolver 06/26/2025 919 (27)
Gurobi Optimization, LLC 0.50% Revolver 12/19/2023 1,607 —
Heartland Home Services 0.75% Delayed Draw Term Loan 08/10/2023 906 (28)
Heartland Veterinary Partners, LLC 0.50% Delayed Draw Term Loan 01/17/2023 2,612 (77)
Heartland Veterinary Partners, LLC 0.50% Revolver 12/10/2026 375 (11)
High Street Buyer, Inc. 0.50% Revolver 04/16/2027 2,136 (62)
KPSKY Acquisition, Inc. 1.00% Delayed Draw Term Loan 06/17/2024 3,413 —
KWOR Acquisition, Inc. 1.00% Delayed Draw Term Loan 06/22/2024 4,777 (250)
KWOR Acquisition, Inc. 0.50% Revolver 12/22/2027 87 (5)
Kaseya, Inc. 0.50% Delayed Draw Term Loan 06/22/2024 856 (37)
Kaseya, Inc. 0.50% Revolver 06/25/2029 856 (37)
Keystone Agency Investors 1.00% Delayed Draw Term Loan 06/03/2024 1,603 (54)
Komline Sanderson Engineering Corp. 0.50% Delayed Draw Term Loan 05/27/2024 8,529 (196)
Komline Sanderson Engineering Corp. 0.50% Revolver 03/17/2026 2,373 (55)
LUV Car Wash Group, LLC 1.00% Delayed Draw Term Loan 03/14/2024 257 (7)
LegitScript 1.00% Delayed Draw Term Loan 06/24/2024 14,167 (572)
LegitScript 0.50% Revolver 06/24/2028 3,833 (155)
Lightspeed Buyer, Inc. 1.00% Delayed Draw Term Loan 02/28/2023 4,050 (113)
Lightspeed Solution, LLC 0.50% Delayed Draw Term Loan 03/01/2024 2,439 (105)
MHE Intermediate Holdings, LLC 0.50% Revolver 07/21/2027 2,500 (74)
MRI Software, LLC 0.50% Revolver 02/10/2026 2,215 (47)
Magnolia Wash Holdings 0.50% Delayed Draw Term Loan 01/14/2024 363 (5)
Majesco 0.50% Revolver 09/21/2026 1,575 (67)
Mammoth Holdings, LLC 0.50% Revolver 10/16/2023 953 —
Mantech International CP 0.50% Delayed Draw Term Loan 09/14/2024 87 (1)
Mantech International CP 0.50% Revolver 09/14/2028 45 (1)
Montana Buyer, Inc. 0.50% Revolver 07/22/2028 466 (19)
mPulse Mobile, Inc. 1.00% Delayed Draw Term Loan 02/17/2023 1,996 (72)
mPulse Mobile, Inc. 0.50% Revolver 12/17/2027 353 (13)
Netwrix Corporation And Concept Searching, Inc. 0.50% Delayed Draw Term Loan 06/09/2024 2,296 (124)
Netwrix Corporation And Concept Searching, Inc. 0.50% Revolver 06/11/2029 431 (23)
Oak Purchaser, Inc. 0.50% Delayed Draw Term Loan 04/28/2024 1,236 (25)
24
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Oak Purchaser, Inc. 0.50% Revolver 04/30/2029 $ 372 $ (7)
Oakbridge Insurance Agency, LLC 1.00% Delayed Draw Term Loan 03/31/2024 1,237 (52)
Oakbridge Insurance Agency, LLC 0.50% Revolver 12/31/2026 44 (2)
Omni Intermediate Holdings, LLC 1.00% Delayed Draw Term Loan 12/01/2023 732 (36)
Omni Intermediate Holdings, LLC 1.00% Delayed Draw Term Loan 06/24/2024 173 (8)
Omni Intermediate Holdings, LLC 0.50% Revolver 12/30/2025 1,065 (52)
PCX Holding Corp. 1.00% Delayed Draw Term Loan 04/07/2024 416 (9)
PCX Holding Corp. 0.50% Revolver 04/22/2027 1,296 (29)
PDFTron Systems, Inc. 0.50% Revolver 07/15/2026 3,850 (152)
Patriot Growth Insurance Services, LLC 0.75% Delayed Draw Term Loan 10/14/2023 5,446 (52)
Patriot Growth Insurance Services, LLC 0.50% Revolver 10/16/2028 4,485 (43)
Peter C. Foy & Associates Insurance Services, LLC 1.00% Delayed Draw Term Loan 12/14/2023 525 (26)
Peter C. Foy & Associates Insurance Services, LLC 0.50% Revolver 11/01/2027 832 (41)
Pound Bidco, Inc. 0.50% Revolver 01/30/2026 1,163 (3)
Pritchard Industries, LLC 1.00% Delayed Draw Term Loan 10/13/2023 1,225 (70)
Procure Acquireco, Inc. (Procure Analytics) 0.50% Delayed Draw Term Loan 02/20/2023 794 (31)
Procure Acquireco, Inc. (Procure Analytics) 0.50% Revolver 12/01/2026 238 (9)
Project Boost Purchaser, LLC 1.00% Delayed Draw Term Loan 05/02/2024 1,123 (10)
Project Boost Purchaser, LLC 0.50% Revolver 05/02/2028 449 (4)
Promptcare Infusion Buyer, Inc. 1.00% Delayed Draw Term Loan 09/01/2023 2,431 (100)
QW Holding Corporation 1.00% Delayed Draw Term Loan 05/02/2024 1,226 (38)
QW Holding Corporation 0.50% Revolver 08/31/2026 2,250 (70)
Recovery Point Systems, Inc. 0.50% Revolver 08/12/2026 4,000 (21)
Redwood Services Group, LLC —% Delayed Draw Term Loan 12/22/2023 2,609 (113)
Revalize, Inc. 0.50% Delayed Draw Term Loan 06/13/2023 693 (33)
Riskonnect Parent, LLC 0.50% Delayed Draw Term Loan 07/07/2024 638 (6)
Securonix, Inc. 0.50% Revolver 04/05/2028 3,782 (160)
Sherlock Buyer Corp. 1.00% Delayed Draw Term Loan 02/08/2023 3,215 (91)
Sherlock Buyer Corp. 0.50% Revolver 12/08/2027 1,286 (36)
Skykick, Inc. 1.00% Delayed Draw Term Loan 03/01/2023 2,625 (24)
Smarsh, Inc. 1.00% Delayed Draw Term Loan 02/18/2024 1,071 (35)
Smarsh, Inc. 0.50% Revolver 02/16/2029 268 (9)
Sonny's Enterprises, LLC 1.00% Delayed Draw Term Loan 11/30/2022 9,311 (433)
Spectrio, LLC 1.00% Delayed Draw Term Loan 01/30/2023 23,439 (579)
Spectrio, LLC 0.50% Revolver 12/09/2026 2,457 (61)
Spectrum Automotive Holdings Corp. 1.00% Delayed Draw Term Loan 06/29/2023 1,247 (74)
Spectrum Automotive Holdings Corp. 1.00% Delayed Draw Term Loan 06/29/2023 2,031 (120)
Spectrum Automotive Holdings Corp. 0.50% Revolver 06/29/2027 881 (52)
25
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Spotless Brands, LLC 1.00% Delayed Draw Term Loan 07/25/2023 $ 261 $ (4)
Spotless Brands, LLC 1.00% Delayed Draw Term Loan 07/25/2023 366 (4)
Spotless Brands, LLC 0.50% Revolver 07/25/2028 40 (1)
Stepping Stones Healthcare Services, LLC 1.00% Delayed Draw Term Loan 01/14/2024 1,125 (60)
Stepping Stones Healthcare Services, LLC 0.50% Revolver 12/30/2026 600 (32)
Summit Buyer, LLC 1.00% Delayed Draw Term Loan 06/23/2023 5,985 (56)
Summit Buyer, LLC 0.50% Revolver 01/14/2026 2,420 (23)
Suveto 1.00% Delayed Draw Term Loan 09/09/2023 5,081 (144)
Suveto 0.50% Revolver 09/09/2027 843 (24)
Sweep Purchaser, LLC 1.00% Delayed Draw Term Loan 05/05/2024 377 (21)
Sweep Purchaser, LLC 0.50% Revolver 11/30/2026 1,406 (78)
Syntax Systems Ltd 1.00% Delayed Draw Term Loan 10/29/2023 9,356 (617)
Syntax Systems Ltd 0.50% Revolver 10/29/2026 1,247 (82)
Tamarack Intermediate, LLC 1.00% Revolver 03/13/2028 900 (45)
Tank Holding Corp. 0.50% Revolver 03/31/2028 800 (35)
Thrive Buyer, Inc. (Thrive Networks) 1.00% Delayed Draw Term Loan 02/30/2023 1,101 (28)
Thrive Buyer, Inc. (Thrive Networks) 0.50% Revolver 01/22/2027 1,717 (43)
Triple Lift, Inc. 0.50% Revolver 05/08/2028 2,467 (104)
Trunk Acquisition, Inc. 0.50% Revolver 02/19/2026 857 (48)
Two Six Labs, LLC 0.50% Delayed Draw Term Loan 08/20/2023 2,134 (63)
Two Six Labs, LLC 0.50% Revolver 08/20/2027 2,134 (63)
United Flow Technologies Intermediate Holdco II, LLC 1.00% Delayed Draw Term Loan 10/29/2023 1,252 (45)
United Flow Technologies Intermediate Holdco II, LLC —% Delayed Draw Term Loan 10/29/2023 10,000 (363)
United Flow Technologies Intermediate Holdco II, LLC 0.50% Revolver 10/29/2026 3,000 (109)
UpStack, Inc. 1.00% Delayed Draw Term Loan 08/26/2023 1,050 (7)
UpStack, Inc. 0.50% Revolver 08/20/2027 875 (6)
V Global Holdings, LLC 0.50% Revolver 12/22/2025 578 (29)
VRC Companies, LLC 1.00% Delayed Draw Term Loan 01/06/2024 7,837 (113)
VRC Companies, LLC 0.50% Revolver 06/29/2027 1,405 (20)
Valcourt Holdings II, LLC 1.00% Delayed Draw Term Loan 01/07/2023 1,121 (32)
Vardiman Black Holdings, LLC 0.50% Delayed Draw Term Loan 03/18/2024 449 (25)
Vessco Midco Holdings, LLC 0.50% Revolver 10/18/2026 388 (7)
World Insurance Associates, LLC 0.50% Revolver 04/01/2026 920 (31)
Zarya Intermediate, LLC 0.50% Revolver 07/01/2027 3,649 —
Total First Lien Debt Unfunded Commitments $ 329,673 $ (10,266)
Second Lien Debt
Heartland Veterinary Partners, LLC 0.50% Delayed Draw Term Loan 01/17/2023 $ 88 $ (7)
26
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Unaudited)
September 30, 2022
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Infinite Bidco, LLC 1.00% Delayed Draw Term Loan 03/14/2023 $ 8,500 $ (149)
Total Second Lien Debt Unfunded Commitments $ 8,588 $ (156)
Total Unfunded Commitments $ 338,261 $ (10,422)
27
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (Audited)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
First Lien Debt
Aerospace and Defense
Jonathan Acquisition Company (5) (7) L + 5.00% 6.00% 12/22/2026 2,739 $ 2,671 $ 2,671 0.22 %
PCX Holding Corp. (5) (6) (7) L + 6.25% 7.25% 04/22/2027 18,417 18,250 18,417 1.55
PCX Holding Corp. (5) (7) (13) L + 6.25% 7.25% 04/22/2027 7,386 7,309 7,386 0.62
PCX Holding Corp. (5) (7) (13) L + 6.25% 7.25% 04/22/2027 — (16) — 0.00
Two Six Labs, LLC (5) (8) L + 5.50% 6.25% 08/20/2027 11,070 10,859 10,960 0.92
Two Six Labs, LLC (5) (8) (13) L + 5.50% 6.25% 08/20/2027 — (40) (43) 0.00
Two Six Labs, LLC (5) (8) (13) L + 5.50% 6.25% 08/20/2027 — (40) (21) 0.00
38,993 39,370 3.31
Air Freight & Logistics
Omni Intermediate Holdings, LLC (5) (7) L + 5.00% 6.00% 12/30/2026 10,621 10,516 10,516 0.88
Omni Intermediate Holdings, LLC (5) (7) (13) L + 5.00% 6.00% 12/30/2026 1,195 1,176 1,176 0.10
Omni Intermediate Holdings, LLC (5) (7) (13) L + 5.00% 6.00% 12/30/2025 266 256 256 0.02
11,948 11,948 1.01
Auto Components
CC SAG Holdings Corp. (Spectrum Automotive) (5) (6) (8) L + 5.75% 6.50% 06/29/2028 23,890 23,553 23,613 1.99
CC SAG Holdings Corp. (Spectrum Automotive) (5) (8) (13) L + 5.75% 6.50% 06/29/2028 2,167 2,105 2,091 0.18
CC SAG Holdings Corp. (Spectrum Automotive) (5) (8) (13) L + 5.75% 6.50% 06/29/2027 — (12) (10) 0.00
Sonny’s Enterprises, Inc. (5) (7) L + 5.50% 6.50% 08/05/2026 7,075 6,938 6,938 0.58
Sonny’s Enterprises, Inc. (5) (6) (7) L + 6.75% 7.75% 08/05/2026 5,414 5,321 5,321 0.45
Sonny’s Enterprises, Inc. (5) (7) (13) L + 6.75% 7.75% 08/05/2026 14,447 14,203 14,203 1.19
Sonny’s Enterprises, Inc. (5) (7) (13) L + 5.50% 6.50% 08/05/2026 — (410) (410) (0.03)
51,698 51,746 4.35
Automobiles
ARI Network Services, Inc. (5) (6) (7) L + 6.50% 7.50% 02/28/2025 20,931 20,563 20,767 1.75
ARI Network Services, Inc. (5) (6) (7) (13) L + 6.50% 7.50% 02/28/2025 3,667 3,603 3,639 0.31
ARI Network Services, Inc. (5) (7) (13) L + 6.50% 7.50% 02/28/2025 1,333 1,281 1,310 0.11
Summit Buyer, LLC (5) (7) L + 5.00% 6.00% 01/14/2026 22,344 21,923 22,167 1.86
Summit Buyer, LLC (5) (7) (13) L + 5.00% 6.00% 01/14/2026 18,887 18,416 18,630 1.57
Summit Buyer, LLC (5) (7) (13) L + 5.00% 6.00% 01/14/2026 — (43) (19) 0.00
Turbo Buyer, Inc. (5) (7) L + 6.00% 7.00% 12/02/2025 38,325 37,645 37,580 3.16
Turbo Buyer, Inc. (5) (7) (13) L + 6.00% 7.00% 12/02/2025 36,890 36,086 36,142 3.04
Vehlo Purchaser, LLC (5) (8) L + 5.00% 5.75% 08/27/2027 27,154 26,638 26,725 2.25
Vehlo Purchaser, LLC (5) (8) (13) L + 5.00% 5.75% 08/27/2027 7,875 7,614 7,568 0.64
28
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Vehlo Purchaser, LLC (5) (8) (13) L + 5.00% 5.75% 08/27/2027 1,167 $ 1,057 $ 1,074 0.09 %
174,783 175,583 14.77
Biotechnology
GraphPad Software, LLC (5) (6) (7) L + 5.50% 6.50% 04/27/2027 15,110 14,971 14,971 1.26
GraphPad Software, LLC (5) (7) (13) L + 6.00% 7.00% 04/27/2027 — (16) (16) 0.00
14,955 14,955 1.26
Commercial Services & Supplies
365 Retail Markets, LLC (5) (7) L + 4.75% 5.75% 12/23/2026 17,456 17,167 17,238 1.45
365 Retail Markets, LLC (5) (7) (13) L + 4.75% 5.75% 12/23/2026 — (34) (34) 0.00
365 Retail Markets, LLC (5) (7) (13) L + 4.75% 5.75% 12/23/2026 800 754 765 0.06
Capstone Acquisition Holdings, Inc. (5) (6) (7) L + 4.75% 5.75% 11/12/2027 3,460 3,433 3,460 0.29
Capstone Acquisition Holdings, Inc. (5) (7) (13) L + 4.75% 5.75% 11/12/2027 194 191 194 0.02
Encore Holdings, LLC (5) (8) L + 4.50% 5.25% 11/23/2028 1,868 1,836 1,836 0.15
Encore Holdings, LLC (5) (8) (13) L + 4.50% 5.25% 11/23/2028 512 477 477 0.04
Encore Holdings, LLC (5) (8) (13) L + 4.50% 5.25% 11/23/2027 — (9) (9) 0.00
FLS Holding, Inc. (5) (7) (10) L + 5.25% 6.25% 12/17/2028 28,750 28,178 28,178 2.37
FLS Holding, Inc. (5) (7) (10) (13) L + 5.25% 6.25% 12/17/2028 — (62) (62) (0.01)
FLS Holding, Inc. (5) (7) (10) (13) L + 5.25% 6.25% 12/17/2027 — (50) (50) 0.00
KWOR Acquisition, Inc. (5) (8) L + 5.25% 6.00% 12/22/2028 878 865 865 0.07
KWOR Acquisition, Inc. (5) (13) P + 4.25% 7.50% 12/22/2027 12 10 10 0.00
MHE Intermediate Holdings, LLC (5) (6) (7) L + 5.75% 6.75% 07/21/2027 28,678 28,139 28,392 2.39
MHE Intermediate Holdings, LLC (5) (7) (13) L + 5.75% 6.75% 07/21/2027 2,160 2,104 2,122 0.18
MHE Intermediate Holdings, LLC (5) (7) (13) L + 5.75% 6.75% 07/21/2027 — (46) (25) 0.00
PDFTron US Acquisition Corp. (5) (6) (7) (10) L + 5.50% 6.50% 07/15/2027 30,723 30,226 29,894 2.52
PDFTron US Acquisition Corp. (5) (7) (10) (13) L + 5.50% 6.50% 07/15/2027 6,160 6,044 5,896 0.50
PDFTron US Acquisition Corp. (5) (7) (10) (13) L + 5.50% 6.50% 07/15/2026 — (140) (208) (0.02)
Pritchard Industries, LLC (5) (8) L + 5.50% 6.25% 10/13/2027 25,789 25,289 25,289 2.13
Pritchard Industries, LLC (5) (8) (13) L + 5.50% 6.25% 10/13/2027 — (59) (59) 0.00
Procure Acquireco, Inc. (Procure Analytics) (5) (8) L + 5.50% 6.25% 12/20/2028 3,968 3,889 3,889 0.33
Procure Acquireco, Inc. (Procure Analytics) (5) (8) (13) L + 5.50% 6.25% 12/20/2028 — (8) (8) 0.00
Procure Acquireco, Inc. (Procure Analytics) (5) (8) (13) L + 5.50% 6.25% 12/20/2028 — (5) (5) 0.00
Sherlock Buyer Corp. (5) (8) L + 5.75% 6.50% 12/08/2028 11,145 10,923 10,923 0.92
Sherlock Buyer Corp. (5) (8) (13) L + 5.75% 6.50% 12/08/2028 — (32) (32) 0.00
Sherlock Buyer Corp. (5) (8) (13) L + 5.75% 6.50% 12/08/2027 — (25) (25) 0.00
Sweep Purchaser, LLC (5) (7) L + 5.75% 6.75% 11/30/2026 8,793 8,644 8,644 0.73
Sweep Purchaser, LLC (5) (7) (13) L + 5.75% 6.75% 11/30/2026 5,029 4,942 4,942 0.42
29
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Sweep Purchaser, LLC (5) (13) P + 4.75% 8.00% 11/30/2026 450 $ 427 $ 427 0.04 %
United Flow Technologies Intermediate Holdco II, LLC (5) (7) L + 5.75% 6.75% 10/29/2027 17,100 16,766 16,766 1.41
United Flow Technologies Intermediate Holdco II, LLC (5) (7) (13) L + 5.75% 6.75% 10/29/2027 2,400 2,280 2,280 0.19
United Flow Technologies Intermediate Holdco II, LLC (5) (7) (13) L + 5.75% 6.75% 10/29/2026 — (58) (58) 0.00
US Infra Svcs Buyer, LLC (5) (6) (7) L + 6.50% 7.50% 04/13/2026 16,991 16,734 16,903 1.42
US Infra Svcs Buyer, LLC (5) (7) (13) L + 6.50% 7.50% 04/13/2026 2,398 2,246 2,343 0.20
US Infra Svcs Buyer, LLC (5) (7) (13) L + 6.50% 7.50% 04/13/2026 2,025 1,993 2,013 0.17
Valcourt Holdings II, LLC (5) (6) (7) L + 5.50% 6.50% 01/07/2027 35,431 34,816 35,431 2.98
Valcourt Holdings II, LLC (5) (7) (13) L + 5.50% 6.50% 01/07/2027 2,521 2,405 2,521 0.21
Vessco Midco Holdings, LLC (5) (6) (7) L + 4.50% 5.50% 11/02/2026 2,735 2,713 2,735 0.23
Vessco Midco Holdings, LLC (5) (7) (13) L + 4.50% 5.50% 11/02/2026 1,472 1,457 1,472 0.12
Vessco Midco Holdings, LLC (5) (13) P + 3.50% 6.75% 10/18/2026 20 16 20 0.00
VRC Companies, LLC (5) (6) (8) L + 5.50% 6.25% 06/29/2027 49,335 48,644 48,921 4.12
VRC Companies, LLC (5) (6) (8) (13) L + 5.50% 6.25% 06/29/2027 3,263 3,148 3,193 0.27
VRC Companies, LLC (5) (8) (13) L + 5.50% 6.25% 06/29/2027 — (23) (14) 0.00
306,205 307,450 25.87
Construction & Engineering
KPSKY Acquisition, Inc. (5) (8) L + 5.50% 6.25% 10/19/2028 34,557 33,882 33,882 2.85
KPSKY Acquisition, Inc. (5) (13) P + 4.50% 7.75% 10/19/2028 1,975 1,917 1,917 0.16
35,799 35,799 3.01
Containers & Packaging
BP Purchaser, LLC (5) (8) L + 5.50% 6.25% 12/10/2028 17,467 17,120 17,120 1.44
Fortis Solutions Group, LLC (5) (8) L + 5.50% 6.25% 10/13/2028 19,430 19,051 19,051 1.60
Fortis Solutions Group, LLC (5) (8) (13) L + 5.50% 6.25% 10/13/2028 — (76) (76) (0.01)
Fortis Solutions Group, LLC (5) (8) (13) L + 5.50% 6.25% 10/15/2027 — (52) (52) 0.00
36,043 36,043 3.03
Distributors
PT Intermediate Holdings III, LLC (5) (8) L + 5.50% 6.25% 11/01/2028 17,400 17,228 17,228 1.45
PT Intermediate Holdings III, LLC (5) (8) (13) L + 5.50% 6.25% 11/01/2028 11,521 11,408 11,408 0.96
28,636 28,636 2.41
Diversified Consumer Services
Mammoth Holdings, LLC (5) (6) (7) L + 6.00% 7.00% 10/16/2023 8,117 8,058 8,117 0.68
Mammoth Holdings, LLC (5) (7) (13) L + 6.00% 7.00% 10/16/2023 28,858 28,590 28,858 2.43
Mammoth Holdings, LLC (5) (7) (13) L + 6.00% 7.00% 10/16/2023 — (6) — 0.00
36,642 36,975 3.11
30
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Diversified Financial Services
SitusAMC Holdings Corporation (5) (8) L + 5.75% 6.50% 12/22/2027 3,600 $ 3,564 $ 3,564 0.30 %
Food Products
AMCP Pet Holdings, Inc. (Brightpet) (5) (6) (7) L + 6.25% 7.25% 10/05/2026 33,825 32,969 33,527 2.82
AMCP Pet Holdings, Inc. (Brightpet) (5) (7) (13) L + 6.25% 7.25% 10/05/2026 — (119) (44) 0.00
AMCP Pet Holdings, Inc. (Brightpet) (5) (7) (13) L + 6.25% 7.25% 10/05/2026 3,938 3,796 3,886 0.33
Nellson Nutraceutical, Inc. (5) (6) (7) L + 5.25% 6.25% 12/23/2023 24,606 24,292 24,606 2.07
Nellson Nutraceutical, Inc. (5) (6) P + 4.25% 7.50% 12/23/2023 66 65 66 0.01
Teasdale Foods, Inc. (Teasdale Latin Foods) (5) (7) L + 6.25%; 1.00% PIK 8.25% 12/18/2025 11,148 10,965 10,029 0.84
71,968 72,070 6.06
Health Care Equipment & Supplies
Performance Health Holdings, Inc. (5) (6) (7) L + 6.00% 7.00% 07/12/2027 10,474 10,278 10,474 0.88
Health Care Providers & Services
Bearcat Buyer, Inc. (5) (6) (7) L + 4.75% 5.75% 07/09/2026 6,843 6,700 6,843 0.58
Bearcat Buyer, Inc. (5) (7) (13) L + 4.75% 5.75% 07/09/2026 6,262 6,122 6,262 0.53
DCA Investment Holdings, LLC (5) (6) (8) L + 6.25% 7.00% 03/12/2027 11,175 11,027 11,175 0.94
DCA Investment Holdings, LLC (5) (8) (13) L + 6.25% 7.00% 03/12/2027 1,079 1,053 1,079 0.09
Heartland Veterinary Partners, LLC (5) (7) L + 4.75% 5.75% 12/10/2026 1,885 1,866 1,866 0.16
Heartland Veterinary Partners, LLC (5) (7) (13) L + 4.75% 5.75% 12/10/2026 424 383 383 0.03
Heartland Veterinary Partners, LLC (5) (7) (13) L + 4.75% 5.75% 12/10/2026 — (4) (4) 0.00
mPulse Mobile, Inc. (5) (8) L + 5.25% 6.00% 12/17/2027 17,500 17,152 17,152 1.44
mPulse Mobile, Inc. (5) (8) (13) L + 5.25% 6.00% 12/17/2027 — (20) (20) 0.00
mPulse Mobile, Inc. (5) (8) (13) L + 5.25% 6.00% 12/17/2027 — (10) (10) 0.00
Promptcare Infusion Buyer, Inc. (5) (7) L + 6.00% 7.00% 09/01/2027 9,165 8,990 8,948 0.75
Promptcare Infusion Buyer, Inc. (5) (7) (13) L + 6.00% 7.00% 09/01/2027 837 792 745 0.06
Suveto Buyer, LLC (5) (8) (13) L + 4.25% 5.00% 09/09/2027 7,755 7,643 7,608 0.64
Suveto Buyer, LLC (5) (13) P + 3.25% 6.50% 09/09/2027 590 575 575 0.05
62,269 62,602 5.27
Health Care Technology
Lightspeed Buyer, Inc. (5) (6) (7) L + 5.75% 6.75% 02/03/2026 12,797 12,506 12,229 1.03
Lightspeed Buyer, Inc. (5) (7) (13) L + 5.75% 6.75% 02/03/2026 9,328 9,056 8,734 0.73
21,562 20,963 1.76
Industrial Conglomerates
Electrical Source Holdings LLC (5) (6) (8) L + 5.50% 6.25% 11/25/2025 29,550 29,330 29,550 2.49
Electrical Source Holdings LLC (5) (6) (8) (13) L + 5.50% 6.25% 11/25/2025 6,538 6,449 6,538 0.55
31
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Electrical Source Holdings LLC (5) (8) (13) L + 5.50% 6.25% 11/25/2025 197 $ 179 $ 197 0.02 %
35,958 36,285 3.05
Insurance
Foundation Risk Partners, Corp. (5) (8) L + 5.75% 6.50% 10/29/2028 43,291 42,654 42,654 3.59
Foundation Risk Partners, Corp. (5) (8) (13) L + 5.75% 6.50% 10/29/2028 5,378 5,269 5,269 0.44
Foundation Risk Partners, Corp. (5) (8) (13) L + 5.75% 6.50% 10/29/2027 — (67) (67) (0.01)
Galway Borrower, LLC (5) (8) L + 5.25% 6.00% 09/29/2028 26,722 26,203 26,260 2.21
Galway Borrower, LLC (5) (8) (13) L + 5.25% 6.00% 09/29/2028 1,843 1,766 1,736 0.15
Galway Borrower, LLC (5) (8) (13) L + 5.25% 6.00% 09/30/2027 — (39) (35) 0.00
Higginbotham Insurance Agency, Inc. (5) (6) (8) L + 5.50% 6.25% 11/25/2026 14,558 14,374 14,413 1.21
Higginbotham Insurance Agency, Inc. (5) (8) (13) L + 5.50% 6.25% 11/25/2026 4,110 4,055 4,069 0.34
High Street Buyer, Inc. (5) (6) (8) L + 6.00% 6.75% 04/14/2028 10,093 9,908 10,093 0.85
High Street Buyer, Inc. (5) (6) (8) (13) L + 6.00% 6.75% 04/14/2028 37,138 36,402 37,138 3.12
High Street Buyer, Inc. (5) (8) (13) L + 6.00% 6.75% 04/16/2027 — (38) — 0.00
Integrity Marketing Acquisition, LLC (5) (6) (8) (13) L + 5.50% 6.25% 08/27/2025 58,911 58,193 58,193 4.90
Integrity Marketing Acquisition, LLC (5) (7) (13) L + 5.75% 6.75% 08/27/2025 24,849 24,545 24,545 2.07
Keystone Agency Investors (5) (7) L + 5.50% 6.50% 05/03/2027 2,003 1,973 1,974 0.17
Keystone Agency Investors (5) (7) (13) L + 5.50% 6.50% 05/03/2027 — (38) (38) 0.00
Majesco (5) (6) (7) L + 7.25% 8.25% 09/21/2027 23,660 23,104 23,660 1.99
Majesco (5) (7) (13) L + 7.25% 8.25% 09/21/2026 — (37) — 0.00
Patriot Growth Insurance Services, LLC (5) (6) (8) L + 5.50% 6.25% 10/14/2028 45,812 44,918 44,918 3.78
Patriot Growth Insurance Services, LLC (5) (7) (13) L + 5.75% 6.75% 10/16/2028 — (171) (171) (0.01)
Patriot Growth Insurance Services, LLC (5) (8) (13) L + 5.50% 6.25% 10/14/2027 — (86) (86) (0.01)
Peter C. Foy & Associates Insurance Services, LLC (5) (8) L + 6.00% 6.75% 11/01/2028 17,972 17,796 17,796 1.50
Peter C. Foy & Associates Insurance Services, LLC (5) (8) (13) L + 6.00% 6.75% 11/01/2028 3,433 3,392 3,392 0.29
Peter C. Foy & Associates Insurance Services, LLC (5) (8) (13) L + 6.00% 6.75% 11/01/2027 — (8) (8) 0.00
RSC Acquisition, Inc. (5) (6) (8) L + 5.50% 6.25% 10/30/2026 18,667 18,287 18,484 1.56
RSC Acquisition, Inc. (5) (8) (13) L + 5.50% 6.25% 10/30/2026 5,911 5,772 5,772 0.49
World Insurance Associates, LLC (5) (6) (7) L + 5.75% 6.75% 04/01/2026 33,658 32,601 32,996 2.78
World Insurance Associates, LLC (5) (6) (7) (13) L + 5.75% 6.75% 04/01/2026 31,487 30,671 30,868 2.60
World Insurance Associates, LLC (5) (7) (13) L + 5.75% 6.75% 04/01/2026 95 74 70 0.01
401,473 403,895 33.98
Interactive Media & Services
FMG Suite Holdings, LLC (5) (7) L + 5.50% 6.50% 10/30/2026 22,253 21,854 22,171 1.87
FMG Suite Holdings, LLC (5) (7) (13) L + 5.50% 6.50% 10/30/2026 — (92) (19) 0.00
FMG Suite Holdings, LLC (5) (7) (13) L + 5.50% 6.50% 10/30/2026 — (46) (10) 0.00
32
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
MSM Acquisitions, Inc. (5) (6) (7) L + 6.00% 7.00% 12/09/2026 31,890 $ 31,412 $ 31,571 2.66 %
MSM Acquisitions, Inc. (5) (7) (13) L + 6.00% 7.00% 12/09/2026 9,782 9,488 9,419 0.79
MSM Acquisitions, Inc. (5) (13) P + 5.00% 8.25% 12/09/2026 365 300 326 0.03
Triple Lift, Inc. (5) (6) (8) L + 5.75% 6.50% 05/08/2028 27,860 27,345 27,604 2.32
Triple Lift, Inc. (5) (8) (13) L + 5.75% 6.50% 05/08/2028 — (72) (37) 0.00
90,189 91,025 7.66
IT Services
Atlas Purchaser, Inc. (6) (8) L + 5.25% 6.00% 05/08/2028 17,413 17,090 17,064 1.44
Donuts, Inc. (5) (6) (7) L + 6.00% 7.00% 12/29/2026 18,563 18,237 18,563 1.56
Govbrands Intermediate, Inc. (5) (6) (8) L + 5.50% 6.25% 08/04/2027 40,162 39,214 39,214 3.30
Govbrands Intermediate, Inc. (5) (8) (13) L + 5.50% 6.25% 08/04/2027 9,059 8,795 8,795 0.74
Govbrands Intermediate, Inc. (5) (8) (13) L + 5.50% 6.25% 08/04/2027 — (99) (99) (0.01)
Recovery Point Systems, Inc. (5) (6) (7) L + 6.50% 7.50% 08/12/2026 41,475 40,805 41,475 3.49
Recovery Point Systems, Inc. (5) (7) (13) L + 6.50% 7.50% 08/12/2026 — (61) — 0.00
Syntax Systems Ltd (5) (8) (10) L + 5.50% 6.25% 10/29/2028 35,811 35,460 35,460 2.98
Syntax Systems Ltd (5) (8) (10) (13) L + 5.50% 6.25% 10/29/2028 — (91) (91) (0.01)
Syntax Systems Ltd (5) (8) (10) (13) L + 5.50% 6.25% 10/29/2026 1,637 1,601 1,601 0.13
Thrive Buyer, Inc. (Thrive Networks) (5) (6) (7) L + 6.00% 7.00% 01/22/2027 20,770 20,402 20,402 1.72
Thrive Buyer, Inc. (Thrive Networks) (5) (7) (13) L + 6.00% 7.00% 01/22/2027 8,031 7,763 7,763 0.65
Thrive Buyer, Inc. (Thrive Networks) (5) (7) (13) L + 6.00% 7.00% 01/22/2027 — (35) (35) 0.00
Upstack Holdco, Inc. (5) (7) L + 6.00% 7.00% 08/20/2027 9,844 9,609 9,635 0.81
Upstack Holdco, Inc. (5) (7) (13) L + 6.00% 7.00% 08/20/2027 3,325 3,223 3,232 0.27
Upstack Holdco, Inc. (5) (7) (13) L + 6.00% 7.00% 08/20/2027 — (23) (19) 0.00
201,890 202,960 17.08
Leisure Products
GSM Acquisition Corp. (GSM Outdoors) (5) (6) (7) L + 5.00% 6.00% 11/16/2026 47,701 47,196 47,701 4.01
GSM Acquisition Corp. (GSM Outdoors) (5) (7) (13) L + 5.00% 6.00% 11/16/2026 7,199 7,096 7,199 0.61
54,292 54,900 4.62
Machinery
Answer Target Holdco, LLC (5) (7) L + 6.00% 7.00% 12/30/2026 10,827 10,611 10,611 0.89
33
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Answer Target Holdco, LLC (5) (7) (13) L + 6.00% 7.00% 12/30/2026 — $ (16) $ (16) 0.00 %
Komline-Sanderson Group, Inc. (5) (9) L + 6.00% 6.50% 03/17/2026 16,798 16,643 16,462 1.39
Komline-Sanderson Group, Inc. (5) (9) (13) L + 6.00% 6.50% 03/17/2026 19,263 19,090 18,877 1.59
Komline-Sanderson Group, Inc. (5) (9) (13) L + 6.00% 6.50% 03/17/2026 2,294 2,254 2,199 0.19
48,582 48,133 4.05
Multi-Utilities
AWP Group Holdings, Inc. (5) (6) (7) L + 4.75% 5.75% 12/22/2027 899 888 899 0.08
AWP Group Holdings, Inc. (5) (7) (13) L + 4.75% 5.75% 12/22/2027 132 129 132 0.01
AWP Group Holdings, Inc. (5) (7) (13) L + 4.75% 5.75% 12/22/2026 43 41 43 0.00
Ground Penetrating Radar Systems, LLC (5) (6) (7) L + 4.75% 5.75% 06/26/2026 8,771 8,619 8,771 0.74
Ground Penetrating Radar Systems, LLC (5) (7) (13) L + 4.75% 5.75% 06/26/2025 755 728 755 0.06
10,405 10,600 0.89
Professional Services
Abacus Data Holdings, Inc. (AbacusNext) (5) (6) (7) L + 6.25% 7.25% 03/10/2027 18,806 18,428 18,806 1.58
Abacus Data Holdings, Inc. (AbacusNext) (5) (7) (13) L + 6.25% 7.25% 03/10/2027 — (34) — 0.00
Abacus Data Holdings, Inc. (AbacusNext) (5) (7) (13) L + 6.25% 7.25% 03/10/2027 210 181 210 0.02
Bullhorn, Inc. (5) (6) (7) L + 5.75% 6.75% 09/30/2026 9,675 9,573 9,629 0.81
Bullhorn, Inc. (5) (7) (13) L + 5.75% 6.75% 09/30/2026 — (25) (25) 0.00
Bullhorn, Inc. (5) (7) (13) L + 5.75% 6.75% 09/30/2026 — (6) (3) 0.00
Citrin Cooperman Advisors, LLC (5) (8) L + 5.00% 5.75% 10/01/2027 20,176 19,787 19,787 1.66
Citrin Cooperman Advisors, LLC (5) (8) (13) L + 5.00% 5.75% 10/01/2027 — (83) (83) (0.01)
Citrin Cooperman Advisors, LLC (5) (8) (13) L + 5.00% 5.75% 10/01/2027 — (469) (469) (0.04)
IQN Holding Corp., dba Beeline (5) (6) (7) L + 5.50% 6.50% 08/20/2024 44,355 44,205 44,355 3.73
IQN Holding Corp., dba Beeline (5) (7) (13) L + 5.50% 6.50% 08/21/2023 — (10) — 0.00
91,547 92,207 7.76
Real Estate Management & Development
Associations, Inc. (5) (6) (7) L + 4.00%; 2.50% PIK 7.50% 07/02/2027 15,853 15,706 15,853 1.33
Associations, Inc. (5) (7) (13) L + 4.00%; 2.50% PIK 7.50% 07/02/2027 2,723 2,698 2,723 0.23
Associations, Inc. (5) (7) (13) L + 6.50% 7.50% 07/02/2027 11,187 11,083 11,187 0.94
Associations, Inc. (5) (7) (13) L + 6.50% 7.50% 07/02/2027 — (17) — 0.00
34
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
MRI Software, LLC (5) (7) L + 5.50% 6.50% 02/10/2026 49,090 $ 48,603 $ 49,090 4.13 %
MRI Software, LLC (5) (6) (7) (13) L + 5.50% 6.50% 02/10/2026 362 338 362 0.03
MRI Software, LLC (5) (7) (13) L + 5.50% 6.50% 02/10/2026 — (15) — 0.00
Zarya Intermediate, LLC (5) (6) (7) L + 6.50% 7.50% 07/01/2027 24,500 24,043 24,500 2.06
Zarya Intermediate, LLC (5) (7) (13) L + 6.50% 7.50% 07/01/2027 19,250 18,884 19,250 1.62
Zarya Intermediate, LLC (5) (7) (13) L + 6.50% 7.50% 07/01/2027 — (86) — 0.00
121,237 122,965 10.35
Software
Alert Media, Inc. (5) (6) (7) L + 5.00% 6.00% 04/12/2027 14,000 13,811 13,657 1.15
Alert Media, Inc. (5) (7) (13) L + 5.00% 6.00% 04/10/2026 — (22) (43) 0.00
Appfire Technologies, LLC (5) (7) L + 5.50% 6.50% 03/09/2027 4,663 4,643 4,663 0.39
Appfire Technologies, LLC (5) (7) (13) L + 5.50% 6.50% 03/09/2027 — (59) — 0.00
Assembly Intermediate, LLC (5) (7) L + 7.00% 8.00% 10/19/2027 20,741 20,337 20,337 1.71
Assembly Intermediate, LLC (5) (7) (13) L + 7.00% 8.00% 10/19/2027 1,244 1,182 1,182 0.10
Assembly Intermediate, LLC (5) (7) (13) L + 7.00% 8.00% 10/19/2027 — (40) (40) 0.00
CLEO Communications Holding, LLC (5) (6) (7) L + 6.75% 7.75% 06/09/2027 39,998 39,628 39,366 3.31
CLEO Communications Holding, LLC (5) (7) (13) L + 6.75% 7.75% 06/09/2027 — (113) (197) (0.02)
Cordeagle US Finco, Inc. (5) (7) (10) L + 6.75% 7.75% 07/30/2027 18,200 17,856 18,200 1.53
Cordeagle US Finco, Inc. (5) (7) (10) (13) L + 6.75% 7.75% 07/30/2027 — (52) — 0.00
Diligent Corporation (5) (6) (7) L + 5.75% 6.75% 08/04/2025 27,790 27,555 27,790 2.34
Diligent Corporation (5) (6) (7) (13) L + 5.75% 6.75% 08/04/2025 860 826 860 0.07
Diligent Corporation (5) (7) (13) L + 5.75% 6.75% 08/04/2025 — (37) — 0.00
GS AcquisitionCo, Inc. (5) (6) (7) L + 5.75% 6.75% 05/22/2026 69,710 69,108 69,361 5.84
GS AcquisitionCo, Inc. (5) (7) (13) L + 5.75% 6.75% 05/22/2026 — (26) (54) 0.00
GS AcquisitionCo, Inc. (5) (7) (13) L + 5.75% 6.75% 05/22/2026 1,149 1,125 1,137 0.10
Gurobi Optimization, LLC (5) (6) (7) L + 5.00% 6.00% 12/19/2023 13,226 13,139 13,226 1.11
Gurobi Optimization, LLC (5) (7) (13) L + 5.00% 6.00% 12/19/2023 — (10) — 0.00
Pound Bidco, Inc. (5) (6) (7) (10) L + 6.50% 7.50% 01/30/2026 9,012 8,854 8,854 0.74
Pound Bidco, Inc. (5) (6) (7) (10) (13) L + 6.50% 7.50% 01/30/2026 — (19) (19) 0.00
Revalize, Inc. (5) (7) (13) L + 5.25% 6.25% 04/15/2027 19,715 19,570 19,512 1.64
35
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Revalize, Inc. (5) (7) (13) L + 5.25% 6.25% 04/15/2027 — $ (1) $ (1) 0.00 %
Skykick, Inc. (5) (7) L + 7.25% 8.25% 09/01/2027 6,300 6,149 6,149 0.52
Skykick, Inc. (5) (7) (13) L + 7.25% 8.25% 09/01/2027 — (31) (31) 0.00
Trunk Acquisition, Inc. (5) (7) L + 6.00% 7.00% 02/19/2027 9,143 9,052 9,052 0.76
Trunk Acquisition, Inc. (5) (7) (13) L + 6.00% 7.00% 02/19/2026 — (9) (9) 0.00
252,416 252,952 21.28
Total First Lien Debt $ 2,213,332 $ 2,224,100 187.12 %
Second Lien Debt
Auto Components
PAI Holdco, Inc. (5) (7) L + 5.50%, 2.00% PIK 8.50% 10/28/2028 25,509 $ 24,843 $ 25,509 2.15 %
Electronic Equipment, Instruments & Components
Infinite Bidco, LLC (5) (9) L + 7.00% 7.50% 03/02/2029 17,000 16,931 17,000 1.43
Infinite Bidco, LLC (5) (9) (13) L + 7.00% 7.50% 03/02/2029 — (19) — 0.00
16,912 17,000 1.43
Energy Equipment & Services
QBS Parent, Inc. (5) L + 8.50% 8.72% 09/21/2026 15,000 14,769 14,748 1.24
Health Care Providers & Services
Heartland Veterinary Partners, LLC (5) (7) L + 8.00% 9.00% 12/10/2027 3,960 3,881 3,882 0.33
Heartland Veterinary Partners, LLC (5) (7) (13) L + 8.00% 9.00% 12/10/2027 585 574 574 0.05
4,455 4,456 0.37
Industrial Conglomerates
Aptean, Inc. (5) (8) L + 7.00% 7.75% 04/23/2027 5,950 5,950 5,950 0.50
IT Services
Help/Systems Holdings, Inc. (5) (8) L + 6.75% 7.50% 11/19/2027 17,500 17,500 17,500 1.47
Idera, Inc. (5) (8) L + 6.75% 7.50% 03/02/2029 3,887 3,860 3,887 0.33
Red Dawn SEI Buyer, Inc. (5) (7) L + 8.50% 9.50% 11/20/2026 19,000 18,584 19,000 1.60
39,944 40,387 3.40
Software
Flexera Software, LLC (5) (7) L + 7.00% 8.00% 03/03/2029 13,500 13,251 13,500 1.14
Total Second Lien Debt $ 120,124 $ 121,550 10.23 %
36
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread
Interest Rate (3)
Maturity Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Other Securities
Unsecured Debt
Familia Intermediate Holdings I Corp. (Teasdale Latin Foods) (5) (11) 16.25% PIK 06/18/2026 1,800 $ 1,777 $ 1,350 0.11 %
Total Unsecured Debt $ 1,777 $ 1,350 0.11 %
37
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated (1)(2)
Footnotes Reference Rate and Spread Acquisition Date Par Amount/ Shares
Cost (4)
Fair Value Percentage of Net Assets
Preferred Equity
Diligent Corporation (5) (12) 10.50% 04/05/2021 5,000 $ 5,143 $ 5,295 0.45 %
Integrity Marketing Acquisition, LLC (5) (12) 10.50% 12/22/2021 3,250,000 3,185 3,185 0.27
Revalize, Inc. (5) (12) 11.00% 12/14/2021 1,500 1,470 1,470 0.12
Skykick, Inc. (5) (12) 08/31/2021 134,101 1,275 1,298 0.11
Total Preferred Equity 11,073 11,248 0.95
Common Equity
Abacus Data Holdings, Inc. (AbacusNext) (5) (12) 07/12/2021 29,441 2,944 2,714 0.23
BP Purchaser, LLC (5) (12) 12/10/2021 1,233,333 1,233 1,233 0.10
CSC Thrive Holdings, LP (Thrive Networks) (5) (12) 03/01/2021 160,016 411 531 0.04
Encore Holdings, LLC (5) (12) 11/23/2021 2,391 275 275 0.02
GSM Equity Investors, LP (GSM Outdoors) (5) (12) 11/16/2020 4,500 450 1,242 0.10
Help HP SCF Investor, LP (10) (12) 05/12/2021 12,460 13,751 1.16
mPulse Mobile, Inc. (5) (12) 12/17/2021 165,761 1,220 1,220 0.10
PCX Holding Corp. (5) (12) 04/22/2021 6,538 654 965 0.08
Pet Holdings, Inc. (Brightpet) (5) (12) 10/06/2020 12,313 1,232 1,052 0.09
Pritchard Industries, Inc. (5) (12) 10/13/2021 1,700,000 1,700 1,700 0.14
Procure Acquiom Financial, LLC (Procure Analytics) (5) (12) 12/20/2021 1,000,000 1,000 1,000 0.08
RPS Group Holdings (Recovery Point Systems, Inc.) (5) (12) 03/05/2021 1,000,000 1,000 750 0.06
Shelby Co-invest, LP. (Spectrum Automotive) (5) (12) 06/29/2021 8,500 850 993 0.08
Suveto Buyer, LLC (5) (10) (12) 11/19/2021 17,000 1,700 1,700 0.14
Total Common Equity 27,129 29,126 2.45
Total Other Securities $ 39,979 $ 41,724 3.51 %
Total Portfolio Investments $ 2,373,435 $ 2,387,374 200.86 %
38
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
(1)
Unless otherwise indicated, issuers of debt and equity investments held by the Company (which such term “Company” shall include the Company’s consolidated subsidiaries for purposes of this Consolidated Schedule of Investments) are denominated in dollars. All debt investments are income producing unless otherwise indicated. All equity investments are non-income producing unless otherwise noted. Certain portfolio company investments are subject to contractual restrictions on sales. Under the Investment Company Act of 1940, as amended (together with the rules and regulations promulgated thereunder, the “1940 Act”), the Company would be deemed to “control” a portfolio company if the Company owned more than 25% of its outstanding voting securities and/or held the power to exercise control over the management or policies of the portfolio company. As of December 31, 2021, the Company does not “control” any of these portfolio companies. Under the 1940 Act, the Company would be deemed an “affiliated person” of a portfolio company if the Company owns 5% or more of the portfolio company’s outstanding voting securities. As of December 31, 2021, the Company is not an “affiliated person” of any of its portfolio companies.
(2)
Unless otherwise indicated, the Company’s investments are pledged as collateral supporting the amounts outstanding under the Truist Credit Facility (as defined below). See Note 6 "Debt".
(3)
Variable rate loans to the portfolio companies bear interest at a rate that is determined by reference to either LIBOR (“L”) or an alternate base rate (commonly based on the Federal Funds Rate (“F”) or the U.S. Prime Rate (“P”)), each of which generally resets periodically. For each loan, the Company has indicated the reference rate used and provided the spread and the interest rate in effect as of December 31, 2021. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at December 31, 2021. As of December 31, 2021, the reference rates for our variable rate loans were the 30-day L at 0.10%, the 90-day L at 0.21%, the 180-day L at 0.34%, and the P at 3.25%.
(4) The cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.
(5) These investments were valued using unobservable inputs and are considered Level 3 investments. Fair value was determined in good faith by or under the direction of the Board of Directors (see Note 2 and Note 5), pursuant to the Company’s valuation policy.
(6) Assets or a portion thereof are pledged as collateral for the BNP Funding Facility. See Note 6 “Debt”.
(7) Loan includes interest rate floor of 1.00%.
(8) Loan includes interest rate floor of 0.75%.
(9) Loan includes interest rate floor of 0.50%.
(10)
The investment is not a qualifying asset under Section 55(a) of the 1940 Act. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2021, non-qualifying assets represented 5.7% of total assets as calculated in accordance with regulatory requirements.
(11)
Represents a senior unsecured note, which is subordinated to senior secured term loans of the portfolio company.
(12)
Securities exempt from registration under the Securities Act of 1933, and may be deemed to be “restricted securities”. As of December 31, 2021, the aggregate fair value of these securities is $40,374 or 3.4% of the Company’s net assets. The initial acquisition dates have been included for such securities.
(13)
Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may earn unused commitment fees. Negative cost and fair value, if any, results from unamortized fees, which are capitalized to the cost of the investment. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. See below for more information on the Company’s unfunded commitments as of December 31, 2021:

Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
First Lien Debt
365 Retail Markets, LLC 1.00% Delayed Draw Term Loan 11/05/2023 $ 5,557 $ (34)
365 Retail Markets, LLC 0.50% Revolver 12/23/2026 2,000 (25)
Abacus Data Holdings, Inc. (AbacusNext) 1.00% Delayed Draw Term Loan 09/08/2022 3,500 —
Abacus Data Holdings, Inc. (AbacusNext) 0.50% Revolver 03/10/2027 1,190 —
Alert Media, Inc. 0.50% Revolver 04/10/2026 1,750 (43)
AMCP Pet Holdings, Inc. (Brightpet) 1.00% Delayed Draw Term Loan 04/06/2022 5,000 (44)
AMCP Pet Holdings, Inc. (Brightpet) 0.50% Revolver 10/05/2026 1,896 (17)
Answer Target Holdco, LLC 0.50% Revolver 12/30/2026 833 (17)
Appfire Technologies, LLC 0.50% Delayed Draw Term Loan 01/05/2023 13,525 —
ARI Network Services, Inc. 0.50% Revolver 02/28/2025 1,697 (13)
Assembly Intermediate, LLC 1.00% Delayed Draw Term Loan 10/19/2023 3,941 (47)
Assembly Intermediate, LLC 0.50% Revolver 10/19/2027 2,074 (40)
39
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Associations, Inc. 0.50% Revolver 07/02/2027 $ 1,860 $ —
AWP Group Holdings, Inc. 1.00% Delayed Draw Term Loan 12/22/2022 132 —
AWP Group Holdings, Inc. 0.50% Revolver 12/22/2026 114 —
Bearcat Buyer, Inc. 1.00% Delayed Draw Term Loan 11/23/2022 513 —
Bullhorn, Inc. 0.50% Delayed Draw Term Loan 10/05/2022 5,172 (25)
Bullhorn, Inc. 0.50% Revolver 09/30/2026 554 (3)
Capstone Acquisition Holdings, Inc. 1.00% Delayed Draw Term Loan 05/13/2022 313 —
CC SAG Holdings Corp. (Spectrum Automotive) 1.00% Delayed Draw Term Loan 06/29/2023 4,437 (52)
CC SAG Holdings Corp. (Spectrum Automotive) 0.50% Revolver 06/29/2027 881 (10)
Citrin Cooperman Advisors, LLC 1.00% Delayed Draw Term Loan 10/01/2023 8,647 (83)
Citrin Cooperman Advisors, LLC 0.50% Revolver 10/01/2027 24,500 (469)
CLEO Communications Holding, LLC 0.50% Revolver 06/09/2027 12,502 (198)
Cordeagle US Finco, Inc. 0.50% Revolver 07/30/2027 2,800 —
DCA Investment Holdings, LLC 1.00% Delayed Draw Term Loan 03/12/2023 1,689 —
Diligent Corporation 1.00% Delayed Draw Term Loan 10/05/2022 3,136 —
Diligent Corporation 0.50% Revolver 08/04/2025 4,500 —
Electrical Source Holdings, LLC 0.50% Revolver 11/25/2025 896 —
Encore Holdings, LLC 0.75% Delayed Draw Term Loan 11/23/2024 3,081 (30)
Encore Holdings, LLC 0.50% Revolver 11/23/2027 539 (9)
FLS Holding, Inc. 1.00% Delayed Draw Term Loan 06/17/2023 6,250 (62)
FLS Holding, Inc. 0.50% Revolver 12/17/2027 2,500 (50)
FMG Suite Holdings, LLC 0.50% Delayed Draw Term Loan 10/28/2022 5,250 (19)
FMG Suite Holdings, LLC 0.50% Revolver 10/30/2026 2,625 (10)
Fortis Solutions Group, LLC 0.50% Delayed Draw Term Loan 10/15/2023 7,871 (76)
Fortis Solutions Group, LLC 0.50% Revolver 10/15/2027 2,699 (52)
Foundation Risk Partners, Corp. 1.00% Delayed Draw Term Loan 10/29/2023 4,033 (47)
Foundation Risk Partners, Corp. 0.50% Revolver 10/29/2027 4,571 (67)
Galway Borrower, LLC 0.50% Delayed Draw Term Loan 09/30/2023 4,311 (75)
Galway Borrower, LLC 0.50% Revolver 09/30/2027 2,053 (36)
Govbrands Intermediate, Inc. 1.00% Delayed Draw Term Loan 08/04/2023 4,185 (83)
Govbrands Intermediate, Inc. 0.50% Revolver 08/04/2027 4,237 (99)
GraphPad Software, LLC 0.50% Revolver 04/27/2027 1,750 (16)
Ground Penetrating Radar Systems, LLC 0.50% Revolver 06/26/2025 886 —
GS AcquisitionCo, Inc. 0.50% Delayed Draw Term Loan 11/03/2022 10,833 (54)
GS AcquisitionCo, Inc. 0.50% Revolver 05/22/2026 1,270 (6)
GSM Acquisition Corp. (GSM Outdoors) 0.50% Revolver 11/16/2026 1,617 —
Gurobi Optimization, LLC 0.50% Revolver 12/19/2023 1,607 —
Heartland Veterinary Partners, LLC 0.75% Delayed Draw Term Loan 11/17/2023 3,816 (37)
40
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Heartland Veterinary Partners, LLC 0.50% Revolver 12/10/2026 $ 375 $ (4)
High Street Buyer, Inc. 1.00% Delayed Draw Term Loan 08/11/2023 3,385 —
High Street Buyer, Inc. 0.50% Revolver 04/16/2027 2,136 —
Integrity Marketing Acquisition, LLC 1.00% Delayed Draw Term Loan 12/03/2023 3,056 (38)
IQN Holding Corp., dba Beeline 0.50% Revolver 08/21/2023 4,545 —
Keystone Agency Investors 1.00% Delayed Draw Term Loan 12/21/2023 2,578 (38)
Komline-Sanderson Group, Inc. 0.50% Revolver 03/17/2026 2,452 (49)
KPSKY Acquisition, Inc. —% Delayed Draw Term Loan 10/19/2023 1,980 (29)
KWOR Acquisition, Inc. 0.50% Revolver 12/22/2027 110 (2)
Lightspeed Buyer, Inc. 1.00% Delayed Draw Term Loan 02/28/2023 4,050 (180)
Majesco 0.50% Revolver 09/21/2026 1,575 —
Mammoth Holdings, LLC 0.50% Delayed Draw Term Loan 12/15/2022 7,434 —
Mammoth Holdings, LLC 0.50% Revolver 10/16/2023 953 —
MHE Intermediate Holdings, LLC 1.00% Delayed Draw Term Loan 07/21/2023 1,585 (16)
MHE Intermediate Holdings, LLC 0.50% Revolver 07/21/2027 2,500 (25)
mPulse Mobile, Inc. 0.50% Delayed Draw Term Loan 12/17/2023 1,996 (20)
mPulse Mobile, Inc. 0.50% Revolver 12/17/2027 504 (10)
MRI Software, LLC 0.50% Delayed Draw Term Loan 03/24/2023 10,637 —
MRI Software, LLC 0.50% Revolver 02/10/2026 2,215 —
MSM Acquisitions, Inc. 1.00% Delayed Draw Term Loan 01/30/2023 26,515 (265)
MSM Acquisitions, Inc. 0.50% Revolver 12/09/2026 3,582 (36)
Omni Intermediate Holdings, LLC 1.00% Delayed Draw Term Loan 12/01/2023 1,264 (6)
Omni Intermediate Holdings, LLC 0.50% Revolver 12/30/2025 799 (8)
Patriot Growth Insurance Services, LLC 0.75% Delayed Draw Term Loan 10/14/2023 17,620 (171)
Patriot Growth Insurance Services, LLC 0.75% Revolver 10/14/2027 4,485 (86)
PCX Holding Corp. 1.00% Delayed Draw Term Loan 04/22/2023 1,851 —
PCX Holding Corp. 0.50% Revolver 04/22/2027 1,851 —
PDFTron US Acquisition Corp. 1.00% Delayed Draw Term Loan 01/15/2023 3,640 (98)
PDFTron US Acquisition Corp. 0.50% Revolver 07/15/2026 7,700 (208)
Peter C. Foy & Associates Insurance Services, LLC 1.00% Delayed Draw Term Loan 05/02/2023 1,559 (13)
Peter C. Foy & Associates Insurance Services, LLC 0.50% Revolver 11/01/2027 832 (8)
Pound Bidco, Inc. 0.50% Revolver 01/30/2026 1,163 (19)
Pritchard Industries, LLC 1.00% Delayed Draw Term Loan 10/13/2023 6,140 (59)
Procure Acquireco, Inc. (Procure Analytics) 0.50% Delayed Draw Term Loan 12/20/2023 794 (8)
Procure Acquireco, Inc. (Procure Analytics) 0.50% Revolver 12/20/2028 238 (5)
Promptcare Infusion Buyer, Inc. 1.00% Delayed Draw Term Loan 09/01/2023 3,050 (72)
PT Intermediate Holdings III, LLC —% Delayed Draw Term Loan 05/11/2022 16,090 —
Recovery Point Systems, Inc. 0.50% Revolver 08/12/2026 4,000 —
41
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Revalize, Inc. 0.50% Delayed Draw Term Loan 06/13/2023 $ 708 $ (7)
Revalize, Inc. 0.50% Revolver 04/15/2027 71 (1)
RSC Acquisition, Inc. 0.50% Delayed Draw Term Loan 11/12/2023 8,474 (82)
Sherlock Buyer Corp. 0.50% Delayed Draw Term Loan 12/08/2023 3,215 (32)
Sherlock Buyer Corp. 0.50% Revolver 12/08/2027 1,286 (25)
Skykick, Inc. 1.00% Delayed Draw Term Loan 03/01/2023 2,625 (31)
Sonny’s Enterprises, Inc. 1.00% Delayed Draw Term Loan 11/01/2022 21,225 (410)
Summit Buyer, LLC 1.00% Delayed Draw Term Loan 06/23/2023 13,656 (108)
Summit Buyer, LLC 0.50% Revolver 01/14/2026 2,420 (19)
Suveto Buyer, LLC 1.00% Delayed Draw Term Loan 09/09/2023 8,442 (78)
Suveto Buyer, LLC 0.50% Revolver 09/09/2027 707 (7)
Sweep Purchaser, LLC 0.50% Revolver 11/30/2026 956 (16)
Syntax Systems Ltd 1.00% Delayed Draw Term Loan 10/29/2023 9,356 (91)
Syntax Systems Ltd 0.50% Revolver 10/29/2026 2,106 (20)
Thrive Buyer, Inc. (Thrive Networks) 1.00% Delayed Draw Term Loan 12/30/2023 6,442 (123)
Thrive Buyer, Inc. (Thrive Networks) 0.50% Revolver 01/22/2027 1,982 (35)
Triple Lift, Inc. 0.50% Revolver 05/08/2028 4,000 (37)
Trunk Acquisition, Inc. 0.50% Revolver 02/19/2026 857 (8)
Turbo Buyer, Inc. 1.00% Delayed Draw Term Loan 11/15/2023 1,610 (31)
Two Six Labs, LLC 0.50% Delayed Draw Term Loan 08/20/2023 4,268 (43)
Two Six Labs, LLC 0.50% Revolver 08/20/2027 2,134 (21)
United Flow Technologies Intermediate Holdco II, LLC 1.00% Delayed Draw Term Loan 10/29/2023 7,500 (73)
United Flow Technologies Intermediate Holdco II, LLC 0.50% Revolver 10/29/2026 3,000 (58)
Upstack Holdco, Inc. 1.00% Delayed Draw Term Loan 08/26/2023 1,050 (22)
Upstack Holdco, Inc. 0.50% Revolver 08/20/2027 875 (18)
US Infra Svcs Buyer, LLC 1.00% Delayed Draw Term Loan 04/13/2022 8,085 (42)
US Infra Svcs Buyer, LLC 0.50% Revolver 04/13/2026 225 (1)
Valcourt Holdings II, LLC 1.00% Delayed Draw Term Loan 01/07/2023 4,378 —
Vehlo Purchaser, LLC 1.00% Delayed Draw Term Loan 08/27/2023 11,569 (183)
Vehlo Purchaser, LLC 0.50% Revolver 08/27/2027 4,666 (74)
Vessco Midco Holdings, LLC 1.00% Delayed Draw Term Loan 11/02/2022 309 —
Vessco Midco Holdings, LLC 0.50% Revolver 10/18/2026 427 —
VRC Companies, LLC 0.75% Delayed Draw Term Loan 12/28/2022 5,000 (42)
VRC Companies, LLC 0.50% Revolver 06/29/2027 1,653 (14)
World Insurance Associates, LLC 0.50% Revolver 04/01/2026 1,173 (23)
Zarya Intermediate, LLC 0.50% Revolver 07/01/2027 1,983 —
Zarya Intermediate, LLC 0.50% Revolver 07/01/2027 2,683 —
Total First Lien Debt Unfunded Commitments $ 499,948 $ (5,196)
42
Morgan Stanley Direct Lending Fund
Consolidated Schedule of Investments (continued)
December 31, 2021
(In thousands)
Investments-non-controlled/non-affiliated Unused Fee Rate Commitment Type Commitment Expiration Date Unfunded Commitment Fair Value
Second Lien Debt
Heartland Veterinary Partners, LLC 0.75% Delayed Draw Term Loan 11/17/2023 $ 955 $ (7)
Infinite Bidco, LLC 1.00% Delayed Draw Term Loan 03/02/2022 8,500 —
Total Second Lien Debt Unfunded Commitments $ 9,455 $ (7)
Total Unfunded Commitments $ 509,403 $ (5,203)































43
Morgan Stanley Direct Lending Fund
Notes to Consolidated Financial Statements (Unaudited)
September 30, 2022
(In thousands, except shares and per share amounts)



(1) Organization
Morgan Stanley Direct Lending Fund (the “Company”) is a non-diversified, externally managed specialty finance company that is focused on lending to middle-market companies. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, the Company has elected to be treated, and intends to comply with the requirements to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is not a subsidiary of or consolidated with Morgan Stanley.
The Company was formed as a Delaware limited liability company on May 30, 2019 and, effective November 25, 2019, converted to a Delaware corporation. The Company commenced investing operations in January 2020. The Company has delegated the right to manage the assets of the Company to MS Capital Partners Adviser Inc., as the investment adviser to the Company (the “Adviser” or “Investment Adviser”). The Investment Adviser is an indirect, wholly owned subsidiary of Morgan Stanley.
The Company’s investment objective is to achieve attractive risk-adjusted returns via current income and, to a lesser extent, capital appreciation by investing primarily in directly originated senior secured term loans issued by U.S. middle-market companies backed by financial sponsors.
The Company has conducted and from time to time may conduct private offerings of its common stock of the Company, par value $0.001 per share (the “Common Stock”), to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At the closing of any private offering, each investor makes a capital commitment (a “Capital Commitment”) to purchase shares of Common Stock pursuant to a subscription agreement entered into with the Company. Investors are required to fund drawdowns to purchase shares of Common Stock up to the amount of their respective Capital Commitments each time the Company delivers a notice to the investors. In accordance with the terms of the subscription agreements (the “Subscription Agreements”) entered into by investors in the Company, the Company’s Board of Directors (the “Board of Directors”) approved a one-year extension of the Investment Period (as defined in the Subscription Agreements) such that the Investment Period will expire on December 23, 2023.
The Company has formed wholly-owned subsidiaries for the purpose of holding certain investments in portfolio companies made by the Company. As of September 30, 2022, the Company’s wholly-owned subsidiaries were formed as Delaware limited liability companies and included: DLF CA SPV LLC (“CA SPV”), DLF SPV LLC (“DLF SPV”), DLF Financing SPV LLC (“DLF LLC”) and DLF Equity Holdings LLC (“DLF Equity Holdings,” and collectively with CA SPV, DLF SPV and DLF LLC, the “subsidiaries”). The Company consolidates its wholly-owned subsidiaries in these consolidated financial statements from the date of the respective subsidiary’s formation.
(2) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). As an investment company, the Company applies the accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”) issued by the Financial Accounting Standards Board (“FASB”). The carrying value for all assets and liabilities approximates their fair value.
The interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of consolidated financial statements for the interim period presented, have been included. The current period’s results of operations will not necessarily be indicative of results that the Company may ultimately achieve for the year ending December 31, 2022.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Such amounts could differ from those estimates and such differences could be material. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. Assumptions and estimates regarding the valuation of investments involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements.
Consolidation
As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the
44
Company consolidated the accounts of the Company’s wholly-owned subsidiaries in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.
Cash
Cash is carried at cost, which approximates fair value. The Company deposits its cash with multiple financial institutions and, at times, may exceed the Federal Deposit Insurance Corporation insured limit.
Foreign Currency Translation
The functional currency of the Company is the U.S. Dollar. Investments denominated in foreign currencies are translated into U.S. Dollars based upon currency exchange rates effective on the last business day of the current reporting period. Net changes in fair value of investments due to foreign exchange rates fluctuation is recorded as change in unrealized appreciation (depreciation) from translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations. Investment and non-investment activities denominated in foreign currencies, including purchase and sales of investments, borrowings and repayments of debt, income and expenses, are translated into U.S. dollars based upon currency exchange rates prevailing on the transaction dates.
Investments
Investment transactions are recorded on the trade date. Receivables/payables from investments sold/purchased on the Consolidated Statements of Assets and Liabilities consist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.
The Company’s Board of Directors, with the assistance of the Company’s audit committee (the “Audit Committee”), determines the fair value of the Company’s investments in accordance with ASC Topic 820, Fair Value Measurements (“ASC 820”) issued by FASB. The Board of Directors has delegated to the Investment Adviser as valuation designee (the “Valuation Designee”) the responsibility of determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors, pursuant to Rule 2a-5 under the 1940 Act. As such, the Valuation Designee is charged with determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors. ASC 820 defines fair value as “the price 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.” Fair value is a market-based measurement, not an entity-specific measurement. For some investments, observable market transactions or market information might be available. For other investments, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the investment would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant). Refer to Note 5 for the Company's framework for determining fair value, fair value hierarchies, and the composition of the Company's portfolio.
Revenue Recognition
Interest Income
Interest income is recorded on an accrual basis and includes the accretion of discounts and amortizations of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective investment using the effective interest method. The amortized cost of debt investments represents the original cost, including loan origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any. Upon prepayment of a loan or debt investment, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.
PIK Income
The Company has loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in PIK income on the Consolidated Statements of Operations. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest is generally reversed through PIK income. This non-cash source of income is included when determining what must be paid out to stockholders in the form of distributions in order for the Company to maintain its status as a RIC, even though the Company has not yet collected cash.
Dividend income
Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date
45
for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Dividend income is presented net of withholding tax, if any.
Other Income
The Company may receive various fees in the ordinary course of business such as structuring, consent, waiver, amendment and syndication fees as well as fees for managerial assistance rendered by the Company to the portfolio companies. Such fees are recognized in income when earned or when the services are rendered and there is no uncertainty or contingency related to the amount to be received.
Non-Accrual Income
Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest are paid current and, in management’s judgment, are likely to remain current. Management may determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
Organization and Offering Costs
Costs associated with the organization of the Company are expensed as incurred, subject to the limitations discussed in Note 3. These costs consist primarily of legal fees and other costs of organizing the Company. Costs associated with the offering of Common Stock are capitalized as “deferred offering costs” on the Consolidated Statements of Assets and Liabilities and amortized over a twelve-month period from the initial capital call, subject to the limitation described in Note 3 below. These costs consist primarily of legal fees and other costs incurred in connection with the Company’s continuous private offerings of its Common Stock.
Expenses
The Company is responsible for investment expenses, professional fees and other general and administrative expenses related to the Company’s operations. Such fees and expenses, including expenses incurred by the Adviser on behalf of the Company, will be reimbursed by the Company, subject to contractual thresholds.
The Company pays the Investment Adviser a base management fee and an incentive fee under the Investment Advisory Agreement between the Company and the Investment Adviser (the “Investment Advisory Agreement”) as described in Note 3 below. The fees are recorded on the Consolidated Statements of Operations.
Deferred Financing Costs and Debt Issuance Costs
The Company records upfront fees, legal and other direct costs incurred in connection with the Company’s issuance of revolving debt facilities as Deferred Financing Costs. These costs are deferred and amortized over the life of the related revolving credit facilities using the straight-line method. Deferred financing costs related to revolving credit facilities are presented separately as an asset on the Company’s Consolidated Statements of Assets and Liabilities. The amortization of such Deferred Financing Costs are presented on the Consolidated Statements of Operations as interest expense and other financing expenses.
The Company records costs related to the issuance of term debt obligations (“Debt Issuance Costs”) on the consolidated financial statements. The costs, including upfront fees, legal and other direct costs incurred in connection with the issuance are deferred and amortized over the life of the related term obligation using the straight-line method. The amortization of Debt Issuance Costs are presented on the Consolidated Statements of Operations as interest expense and other financing expenses. Any unamortized Debt Issuance Costs are presented as a reduction to the outstanding term debt principal amount on the Consolidated Statements of Assets and Liabilities.
Income Taxes
The Company has elected to be treated as a RIC under Subchapter M of the Code. So long as the Company maintains its status as a RIC, it generally will not pay corporate U.S. federal income taxes on any ordinary income or capital gains that it distributes, at least annually, to its stockholders as dividends.
In order to qualify as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute.
The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (the “ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
46
In addition, based on the excise distribution requirements, the Company is subject to a 4% nondeductible federal excise tax on undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of capital gain net income (both long-term and short-term) for the one-year period ending October 31 in that calendar year and (3) any income realized, but not distributed, in the preceding year. For this purpose, however, any ordinary income or capital gain net income retained by the Company that is subject to corporate income tax is considered to have been distributed. The Company intends to make sufficient distributions each taxable year to satisfy the excise distribution requirements.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more likely than not” to be sustained by the applicable tax authority. All penalties and interest associated with income taxes, if any, are included in income tax expense.
For the three and nine months ended September 30, 2022, the Company did not incur any U.S. federal excise tax. For the three and nine months ended September 30, 2021, the Company accrued $0 and $5 of U.S. federal excise tax, respectively.
New Accounting Standards
In March 2020, FASB issued Accounting Standards Update 2020-04 (“ASU 2020-04”) “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This accounting update provides optional accounting relief to entities with contracts, hedge accounting relationships or other transactions that reference LIBOR or other interest rate benchmarks for which the referenced rate is expected to be discontinued or replaced. This optional relief generally allows for contract modifications solely related to the replacement of the reference rate to be accounted for as a continuation of the existing contract instead of as an extinguishment of the contract and would therefore not trigger certain accounting impacts that would otherwise be required. The optional relief can be applied beginning January 1, 2020 and ending December 31, 2022. The Company adopted the accounting relief on January 1, 2022 and noted no material impact on the consolidated financial statements, as relevant contract relationship modifications are made during the course of the reference rate reform transition period.
(3) Related Party Transactions
Investment Advisory Agreement
On November 25, 2019, the Company entered into the Investment Advisory Agreement. The Investment Advisory Agreement had an initial term of two years and continues thereafter from year to year if approved annually by the Board of Directors or our stockholders, including, in each case, a majority of the Independent Directors. The renewal of the Investment Advisory Agreement was most recently approved in August 2022.
The Company pays the Investment Adviser a fee for its services under the Investment Advisory Agreement consisting of two components: a base management fee (the “Base Management Fee”) and an incentive fee. The cost of both the Base Management Fee and the incentive fee are ultimately be borne by the stockholders.
Base Management Fee
The Base Management Fee is calculated at an annual rate of 1.0% of the Company’s average gross assets at the end of the two most recently completed calendar quarters, including assets purchased with borrowed funds or other forms of leverage but excluding cash and cash equivalents. Prior to a listing of the Common Stock on a national securities exchange, the Adviser has agreed to irrevocably waive the portion of the Base Management Fee in excess of 0.25% of the Company’s average gross assets calculated in accordance with the Investment Advisory Agreement. Any Base Management Fees so waived are not subject to recoupment by the Adviser. The Base Management Fee is payable quarterly in arrears, and no management fee is charged on committed but undrawn Capital Commitments.
For the three and nine months ended September 30, 2022, Base Management Fees were $1,716 and $4,896 net of waiver, respectively. For the three and nine months ended September 30, 2021, Base Management Fees were $966 and $2,159 net of waiver, respectively. As of September 30, 2022 and December 31, 2021, $1,716 and $1,306 were payable to the Investment Adviser relating to Base Management Fees.
Incentive Fee
The incentive fee consists of two components that are determined independently of each other, with the result that one component may be payable even if the other is not. One component is based on income and the other component is based on capital gains.
The Company pays its Adviser an income based incentive fee with respect to the Company’s pre-incentive fee net investment income in each calendar quarter as follows:
• No income based incentive fee if the Company’s pre-incentive fee net investment income, expressed as a return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, does not exceed the hurdle rate of 1.5% (6.0% annualized);
• 100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.8182% (7.2728% annualized). This portion of the pre-incentive fee net investment income (which exceeds the Hurdle Rate but is less
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than 1.8182%) is referred to as the “catch-up”. This “catch-up” portion is meant to provide the Adviser with approximately 17.5% of the Company’s pre-incentive fee net investment income as if a hurdle rate did not apply if the “catch up” is achieved; and
• 17.5% of the Company’s pre-incentive fee net investment income, if any, that exceeds the rate of return of 1.8182% (7.2728% annualized)
The second part of the incentive fee is determined on realized capital gains calculated and payable in arrears in cash as of the end of each calendar year or upon the termination of the Investment Advisory Agreement in an amount equal to 17.5% of the realized capital gains, if any, on a cumulative basis from the date of the Company's election to be regulated as a BDC through the end of a given calendar year or upon the termination of the Investment Advisory Agreement, 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 (the “Cumulative Capital Gains”).
Under U.S. GAAP, the Company is required to accrue an incentive fee on capital gains, including unrealized capital appreciation even though such unrealized capital appreciation is not included in calculating the incentive fee payable under the Investment Advisory Agreement. If such amount is positive at the end of a period, then the Company records an incentive fee on capital gain incentive fee equal to 17.5% of such amount, less the aggregate amount of any previously paid capital gain incentive fees. If such amount is negative, no accrual is recorded for such period.
For the three and nine months ended September 30, 2022, $7,173 and $18,517 respectively, of income based incentive fees were accrued to the Investment Adviser. For the three and nine months ended September 30, 2021, $4,119 and $9,965 respectively, of income based incentive fees were accrued to the Investment Adviser.
For the three and nine months ended September 30, 2022, $0 and $2,441 of previously accrued capital gains incentive fees to the Investment Adviser were reversed due to changes in unrealized depreciation on investments during the respective period. For the three and nine months ended September 30, 2021, $598 and $2,090 of capital gains incentive fees were accrued to the Investment Adviser. The Investment Advisory Agreement does not permit unrealized capital appreciation for purposes of calculating the amount payable to the Investment Adviser. Amounts due related to unrealized capital appreciation, if any, will not be paid to the Investment Adviser until realized under the terms of the Investment Advisory Agreement and determined based on the calculation. Incentive fees on Cumulative Capital Gains crystallize at calendar year-end.
As of September 30, 2022, $7,173 was payable to the Investment Adviser relating to income based incentive fees and there was no capital gains incentive fees payable. As of December 31, 2021, $5,886 and $2,773 were payable to the Investment Adviser relating to income based incentive fees and capital gains incentive fees, respectively.
Administration Agreement
MS Private Credit Administrative Services LLC (the “Administrator”) is the administrator of the Company pursuant to an administration agreement (the “Administration Agreement”). The Administrator is an indirect, wholly owned subsidiary of Morgan Stanley.
Pursuant to the Administration Agreement, the Administrator provides services and receives reimbursements from the Company equal to an amount that reimburses the Administrator for its costs and expenses and the Company’s allocable portion of certain expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the compensation paid to the Company’s Chief Compliance Officer and Chief Financial Officer. Reimbursement under the Administration Agreement occurs quarterly in arrears. The Administration Agreement had an initial term of two years and continues thereafter from year to year if approved annually by the Board of Directors, which most recently approved the renewal of the Administration Agreement in August 2022.
For the three and nine months ended September 30, 2022, the Company incurred $54 and $124, respectively, in expenses under the Administration Agreement, which were recorded in administrative service expenses on the Company’s Consolidated Statements of Operations. For the three and nine months ended September 30, 2021, the Company incurred $54 and $158, respectively, in expenses under the Administration Agreement, which were recorded in administrative service expenses on the Company’s Consolidated Statements of Operations.
Amounts unpaid and included in payable to affiliates on the Consolidated Statements of Assets and Liabilities as of September 30, 2022 and December 31, 2021 were $162 and $266, respectively.
Expense Support and Waiver Agreement
On December 31, 2019, the Company entered into an expense support and waiver agreement (the “Expense Support and Waiver Agreement”) with the Investment Adviser. Under the terms of the Expense Support and Waiver Agreement, the Investment Adviser agreed to waive any reimbursement by the Company of offering and organizational expenses to be incurred by the Investment Adviser on behalf of the Company in excess of $1,000 or 0.10% of the aggregate Capital Commitments of the Company, whichever is greater. If actual organization and offering costs incurred exceed the greater of $1,000 or 0.10% of the Company’s total Capital Commitments, the Investment Adviser or its affiliate will bear the excess costs. The Company shall reimburse the Investment Adviser for payments
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of any excess costs borne by the Investment Adviser on the Company’s behalf within three years of December 23, 2019 (the “Initial Closing Date”).
For the three and nine months ended September 30, 2022, the Company did not incur any organization costs. The Investment Adviser recaptured $0 and $39 of previously waived amounts from the Company since actual offering and organizational expenses incurred from May 30, 2019 (inception) as a result of additional closings of investor commitments. For the three and nine months ended September 30, 2021, the Company incurred $0 and $42 towards organization cost and amortization of offering cost, and the Investment Adviser recaptured $1 and $98 of previously waived amounts from the Company.
As of September 30, 2022 and December 31, 2021, organization and offering costs are included in payable to affiliates and accrued expenses and other liabilities in the Consolidated Statements of Assets and Liabilities.
License Agreement
The Company entered into a license agreement with Morgan Stanley Investment Management, Inc. (the “License Agreement”) under which Morgan Stanley Investment Management, Inc., has granted the Company a non-exclusive, royalty-free license to use the name “Morgan Stanley” for specified purposes in the Company’s business. Under the License Agreement, the Company has a right to use the “Morgan Stanley” name, subject to certain conditions, for so long as the Investment Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company has no legal right to the “Morgan Stanley” name.
Placement Agent Agreement
On August 30, 2019, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with Morgan Stanley Distribution Inc. (the “Paying Agent”), Morgan Stanley Smith Barney LLC (the “Placement Agent”) and the Investment Adviser. Under the terms of the Placement Agent Agreement, the Placement Agent and certain of its affiliates will assist in the placement of Common Stock in the Company’s private offerings. The Company is not liable for any payments to the Placement Agent pursuant to the Placement Agent Agreement. Payments are made by the Investment Adviser to the Placement Agent. To the extent the Paying Agent receives any payments it remits the payment to the Placement Agent.
MS Credit Partners Holdings, Inc. Investment
MS Credit Partners Holdings, Inc. (“MS Credit Partners Holdings”), an indirect, wholly owned subsidiary of Morgan Stanley and an affiliate of the Investment Adviser, made an aggregate capital commitment of $200,000 to the Company in 2019. As of September 30, 2022 and December 31, 2021, MS Credit Partners Holdings held approximately 12.0% and 12.5% of our outstanding shares of common stock, respectively. Morgan Stanley has no further capital, liquidity or other financial obligation to us beyond this equity investment.
Morgan Stanley & Co. Related Transactions
Morgan Stanley & Co. LLC, a wholly owned subsidiary of Morgan Stanley and an affiliate of the Investment Adviser, served as an initial purchaser in connection with the private placement of the Company’s 2027 Notes (as defined below in Note 6) and received fees of $0 and $213 for the three and nine months ended September 30, 2022, respectively, under the purchase agreement entered into by the Company in connection with such private placement.
Morgan Stanley & Co. LLC served as a co-agent in connection with the private placement of the Company’s 2025 Notes (as defined below in Note 6) and received fees of $138 and $138 for the three and nine months ended September 30, 2022, respectively.
(4) Investments
The composition of the Company’s investment portfolio at cost and fair value was as follows:
September 30, 2022 December 31, 2021
Cost Fair Value % of Total Investments at Fair Value Cost Fair Value % of Total Investments at Fair Value
First Lien Debt $ 2,613,431 $ 2,568,966 93.5 % $ 2,213,332 $ 2,224,100 93.2 %
Second Lien Debt 136,417 130,558 4.8 120,124 121,550 5.1
Other Securities 45,185 47,566 1.7 39,979 41,724 1.7
Total $ 2,795,033 $ 2,747,090 100.0 % $ 2,373,435 $ 2,387,374 100.0 %
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The industry composition of investments at fair value was as follows:
September 30, 2022 December 31, 2021
Aerospace & Defense 1.9 % 1.7 %
Air Freight & Logistics 1.1 0.5
Auto Components 3.4 3.3
Automobiles 5.3 7.4
Biotechnology 0.5 0.6
Chemicals 0.7 —
Commercial Services & Supplies 10.4 13.0
Construction & Engineering 1.4 1.5
Containers & Packaging 1.6 1.6
Distributors 3.0 1.2
Diversified Consumer Services 3.1 1.5
Diversified Financial Services 0.4 0.1
Electronic Equipment, Instruments & Components 1.1 0.7
Energy Equipment & Services 0.5 0.6
Food Products 2.6 3.1
Health Care Equipment & Supplies 0.3 0.4
Health Care Providers & Services 3.2 2.9
Health Care Technology 0.8 0.9
Industrial Conglomerates 1.5 1.8
Insurance Services 16.2 17.1
Interactive Media & Services 3.6 3.8
IT Services 10.0 10.8
Leisure Products 0.9 2.4
Machinery 3.0 2.0
Multi-Utilities 0.6 0.4
Oil, Gas & Consumable Fuels 0.0 (1) —
Professional Services 2.8 4.0
Real Estate Management & Development 5.6 5.2
Software 14.4 11.5
Total 100.0 % 100.0 %
(1) Amount rounds to 0.0%.
The geographic composition of investments at cost and fair value were as follows:
September 30, 2022 December 31, 2021
Cost Fair Value % of Total
Investments at
Fair Value 		Cost Fair Value % of Total
Investments at
Fair Value
Australia $ 8,257 $ 7,936 0.3 % $ — $ — — %
Canada 91,308 87,473 3.2 81,935 81,386 3.4
United Kingdom — — — 17,804 18,200 0.8
United States 2,695,468 2,651,681 96.5 2,273,696 2,287,788 95.8
Total $ 2,795,033 $ 2,747,090 100.0 % $ 2,373,435 $ 2,387,374 100.0 %
(5) Fair Value Measurements
ASC 820 establishes a hierarchical disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured
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from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.
The three-level hierarchy for fair value measurements is defined as follows:
Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical financial instruments as of the measurement date. The types of financial instruments in this category include unrestricted securities, including equities and derivatives, listed in active markets. The Company will not adjust the quoted price for these instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Level 2—inputs to the valuation methodology are quoted prices in markets that are not active or for which all significant inputs are either directly or indirectly observable as of the measurement date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in markets that are not active, and certain over-the-counter derivatives where the fair value is based on observable inputs.
Level 3—inputs to the valuation methodology are unobservable and significant to the overall fair value measurement, and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments in this category include investments in privately held entities, non-investment grade residual interests in securitizations and certain over-the-counter derivatives where the fair value is based on unobservable inputs.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
Pursuant to the framework set forth above, the Company values securities traded in active markets on the measurement date by multiplying the exchange closing price of such traded securities/instruments by the quantity of shares or amount of the instrument held. The Company may also obtain quotes with respect to certain of the investments from pricing services, brokers or dealers’ quotes, or counterparty marks in order to value liquid assets that are not traded in active markets. Pricing services aggregate, evaluate and report pricing from a variety of sources including observed trades of identical or similar securities, broker or dealer quotes, model-based valuations and internal fundamental analysis and research. When doing so, the Company determines whether the quote obtained is sufficient according to U.S. GAAP to determine the fair value of the security. If determined adequate, the Company uses the quote obtained.
Securities that are illiquid or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Valuation Designee or the Board of Directors, does not represent fair value, each is valued as of the measurement date using all techniques appropriate under the circumstances and for which sufficient data is available. These valuation techniques may vary by investment but include comparable public market valuations, comparable precedent transaction valuations and discounted cash flow analyses. Non-controlled debt investments are generally fair valued using discounted cash flow technique. Expected cash flows are projected based on contractual terms and discounted back to the measurement date based on a discount rate. Discount rate is determined based upon an assessment of current and expected yields for similar investments and risk profiles. Non-controlled equity investments are generally fair valued using a market approach and/or an income approach. The market approach typically utilizes market value multiples of comparable publicly traded companies. The income approach typically utilizes a discounted cash flow analysis of the portfolio company. The Valuation Designee, under the supervision of the Board of Directors undertakes a multi-step valuation process each quarter, as described below:
1) each portfolio company or investment is initially valued by using a standardized template designed to approximate fair market value based on observable market inputs and updated credit statistics and unobservable inputs;
2) preliminary valuation conclusions are documented and reviewed by a valuation committee comprised of members of the Investment Adviser’s senior management;
3) the Board of Directors or Valuation Designee engages independent third-party valuation firms to provide positive assurance on a portion of the Company’s illiquid investments each quarter (such that each illiquid investment will be reviewed by an independent valuation firm at least once on a rolling twelve month basis) including review of management’s preliminary valuation and conclusion of fair value;
4) the Audit Committee reviews the assessments of the Investment Adviser and the independent third-party valuation firm and provide the Board of Directors with recommendations with respect to the fair value of each investment in the Company’s portfolio; and
5) the Board of Directors discusses the valuation recommendations of the Audit Committee and determine the fair value of each investment in the Company’s portfolio in good faith based on the input of the Valuation Designee and, where applicable, the third-party valuation firm.
The fair value is generally determined based on the assessment of the following factors, as relevant:
•     the nature and realizable value of any collateral;
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•     call features, put features and other relevant terms of debt;
•     the portfolio company’s leverage and ability to make payments;
•     the portfolio company’s public or private letter credit ratings;
•     the portfolio company’s actual and expected earnings and discounted cash flow;
•     prevailing interest rates for like securities and expected volatility in future interest rates;
•     the markets in which the issuer does business and recent economic and/or market events; and
•     comparisons to publicly traded securities.
Investment performance data utilized will be the most recently available as of the measurement date which in many cases may reflect up to a one quarter lag in information.
The Board of Directors is ultimately responsible for the determination, in good faith, of the fair value of the Company’s portfolio investments.
Transfer of portfolio investments within the three-level hierarchy is recorded during the period of such reclassification occurrence at the fair value as of the beginning of the respective period. Generally, reclassifications are primarily due to increase/decrease of price transparency.
The following tables present the fair value hierarchy of investments:
September 30, 2022
Level 1 Level 2 Level 3 Total
First Lien Debt $ — $ 26,050 $ 2,542,916 $ 2,568,966
Second Lien Debt — 16,756 113,802 130,558
Other Securities — — 32,345 32,345
Subtotal $ — $ 42,806 $ 2,689,063 $ 2,731,869
Investment measured at net asset value (1)
$ 15,221
Total $ 2,747,090
December 31, 2021
Level 1 Level 2 Level 3 Total
First Lien Debt $ — $ 17,064 $ 2,207,036 $ 2,224,100
Second Lien Debt — — 121,550 121,550
Other Securities — — 27,973 27,973
Subtotal $ — $ 17,064 $ 2,356,559 $ 2,373,623
Investment measured at net asset value (1)
$ 13,751
Total $ 2,387,374
(1) The Company, as a practical expedient, estimates the fair value of its investment in Help HP SCF Investor, LP using the net asset value of the Company’s member’s interest in the entity. As such, the fair value has not been classified within the fair value hierarchy.
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The following table presents changes in the fair value of the investments for which Level 3 inputs were used to determine the fair value for the three months ended September 30, 2022:
First Lien Debt Second Lien Debt Other Securities Total Investments
Fair value, beginning of period $ 2,492,968 $ 116,488 $ 32,898 $ 2,642,354
Purchases of investments 178,809 461 1,016 180,286
Proceeds from principal repayments and sales of investments (94,355) — — (94,355)
Accretion of discount/amortization of premium 3,520 50 — 3,570
Payment-in-kind 228 130 — 358
Net change in unrealized appreciation (depreciation) (18,171) (3,345) (1,569) (23,085)
Net realized gains (losses) — 18 — 18
Transfers into/(out) of Level 3 (20,083) — — (20,083)
Fair value, end of period $ 2,542,916 $ 113,802 $ 32,345 $ 2,689,063
Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2022 $ (17,747) $ (3,345) $ (1,569) $ (22,661)
The following table presents changes in the fair value of the investments for which Level 3 inputs were used to determine the fair value for the nine months ended September 30, 2022:
First Lien Debt Second Lien Debt Other Securities Total Investments
Fair value, beginning of period $ 2,207,036 $ 121,550 $ 27,973 $ 2,356,559
Purchases of investments 709,912 15,694 4,808 730,414
Proceeds from principal repayments and sales of investments (331,077) — (48) (331,125)
Accretion of discount/amortization of premium 8,645 210 — 8,855
Payment-in-kind 665 389 397 1,451
Net change in unrealized appreciation (depreciation) (52,779) (6,541) (833) (60,153)
Net realized gains (losses) 514 — 48 562
Transfers into/(out) of Level 3 — (17,500) — (17,500)
Fair value, end of period $ 2,542,916 $ 113,802 $ 32,345 $ 2,689,063
Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2022 $ (50,808) $ (6,522) $ (833) $ (58,163)
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The following table presents changes in the fair value of the investments for which Level 3 inputs were used to determine the fair value for the three months ended September 30, 2021:
First Lien Debt Second Lien Debt Other Securities Total Investments
Fair value, beginning of period $ 1,175,696 $ 130,051 $ 16,322 $ 1,322,069
Purchases of investments 465,276 — 1,669 466,945
Proceeds from principal repayments and sales of investments (54,971) — — (54,971)
Accretion of discount/amortization of premium 2,095 62 — 2,157
Payment-in-kind — 128 (54) 74
Net change in unrealized appreciation (depreciation) 2,892 391 (5) 3,278
Net realized gains (losses) 126 — — 126
Transfers into/(out) of Level 3 — — — —
Fair value, end of period $ 1,591,114 $ 130,632 $ 17,932 $ 1,739,678
Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2021 $ 3,391 $ 391 $ (5) $ 3,777
The following table presents changes in the fair value of the investments for which Level 3 inputs were used to determine the fair value for the nine months ended September 30, 2021:
First Lien Debt Second Lien Debt Other Securities Total Investments
Fair value, beginning of period $ 558,318 $ 53,155 $ 2,959 $ 614,432
Purchases of investments 1,205,860 89,398 13,904 1,309,162
Proceeds from principal repayments and sales of investments (190,629) (15,000) — (205,629)
Accretion of discount/amortization of premium 5,589 643 — 6,232
Payment-in-kind — 381 197 578
Net change in unrealized appreciation (depreciation) 9,007 2,055 872 11,934
Net realized gains (losses) 120 — — 120
Transfers into/(out) of Level 3 2,849 — — 2,849
Fair value, end of period $ 1,591,114 $ 130,632 $ 17,932 $ 1,739,678
Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2021 $ 10,233 $ 2,055 $ 872 $ 13,160
The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 financial instruments. The table is not intended to be all-inclusive but instead captures the significant unobservable inputs relevant to the Company’s determination of fair value.
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September 30, 2022
Range
Fair
Value 		Valuation Technique Unobservable
Input 		Low High Weighted
Average
Investments in first lien debt $ 2,542,916 Yield Analysis Discount Rate 7.71 % 20.05 % 10.96 %
Investments in second lien debt 113,802 Yield Analysis Discount Rate 11.95 % 16.55 % 14.04 %
Investments in other securities:
Unsecured debt 498 Market Approach EBITDA Multiple 9.00x 9.00x 9.00x
Preferred equity 14,873 Income Approach Discount Rate 9.10 % 14.98 % 12.45 %
1,020 Market Approach Revenue Multiple 8.78x 8.78x 8.78x
Common equity 14,734 Market Approach EBITDA Multiple 8.10x 19.62x 13.39x
1,220 Market Approach Revenue Multiple 10.20x 10.20x 10.20x
Total investments in other securities 32,345
Total Investments $ 2,689,063
December 31, 2021
Range
Fair
Value 		Valuation Technique Unobservable
Input 		Low High Weighted
Average
Investments in first lien debt $ 2,207,036 Yield Analysis Discount Rate 5.55 % 12.44 % 7.52 %
Investments in second lien debt 121,550 Yield Analysis Discount Rate 7.12 % 10.79 % 8.51 %
Investments in other securities:
Unsecured debt 1,350 Yield Analysis Discount Rate 25.33 % 25.33 % 25.33 %
Market Approach EBITDA Multiple 9.00x 9.00x 9.00x
Preferred equity 9,950 Yield Analysis Discount Rate 11.70 % 12.10 % 11.92 %
1,298 Market Approach Revenue Multiple 11.80x 11.80x 11.80x
Common equity 15,375 Market Approach EBITDA Multiple 8.10x 19.97x 13.11x
Total investments in other securities 27,973
Total Investments $ 2,356,559
The significant unobservable input used in yield analysis is discount rate based on comparable market yields. Significant increases in discount rates in isolation would result in a significantly lower fair value measurement. The significant unobservable input used in the market approach is the comparable company multiple. The multiple is used to estimate the enterprise value of the underlying investment. An increase/decrease in the multiple would result in an increase/decrease, respectively, in the fair value.
The carrying amounts of the Company’s assets and liabilities, other than investments at fair value and debt, approximate fair value.
Financial instruments disclosed but not carried at fair value
The Company’s debt, including its credit facilities, 2027 Notes (as defined below in Note 6) and 2025 Notes (as defined below in Note 6), are presented at carrying value on the Consolidated Statements of Assets and Liabilities. The fair value of the Company’s 2027 Notes is based on vendor pricing received by the Company, which is categorized as Level 2 within the fair value hierarchy, and as of September 30, 2022, the fair value of the Company’s 2027 Notes was $375,105. The fair value of the Company’s credit facilities and 2025 Notes are estimated using Level 3 inputs by discounting remaining payments using the appropriate discount rates, if available. The carrying value and fair value of the Company’s debt were as follows:
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September 30, 2022 December 31, 2021
Carrying Value Fair Value Carrying Value Fair Value
CIBC Subscription Facility $ 220,350 $ 220,350 $ 310,350 $ 310,350
BNP Funding Facility 322,000 322,000 463,500 463,500
Truist Credit Facility 282,233 282,233 476,000 476,000
2027 Notes (1)
419,207 375,105 — —
2025 Notes (1)
271,517 275,000 — —
Total $ 1,515,307 $ 1,474,688 $ 1,249,850 $ 1,249,850
(1) The carrying value of the Company’s 2027 Notes and 2025 Notes are presented net of unamortized debt issuance costs of $4,858 and $3,483, and unamortized original issuance discount of $935 and $0, respectively.

(6) Debt
CIBC Subscription Facility
On December 31, 2019, the Company entered into a revolving credit agreement with CIBC Bank USA as administrative agent and arranger, which was subsequently amended on February 3, 2020, November 17, 2020, January 18, 2022 and February 3, 2022 (as amended, the “CIBC Subscription Facility”). The maximum revolving commitment of CIBC Subscription Facility was permanently reduced to $235,000 effective July 28, 2022. The CIBC Subscription Facility allows the Company to borrow up to the maximum revolving commitment at any one time outstanding, subject to certain restrictions, including availability under the borrowing base, which is based on unused Capital Commitments. The CIBC Subscription Facility bears interest at a rate at the Company’s election of either (i) the per annum one or three-month LIBOR, divided by a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities, plus 1.65% or (ii) the prime rate plus 0.65%, as calculated under the CIBC Subscription Facility. The CIBC Subscription Facility is secured by the unfunded commitments of certain stockholders of the Company. The CIBC Subscription Facility has a maturity date of December 31, 2022.
The summary information of the CIBC Subscription Facility is as follows:
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Borrowing interest expense $ 2,271 $ 1,660 $ 5,450 $ 4,812
Facility unused commitment fees 6 17 19 66
Amortization of deferred financing costs 327 355 1,125 1,030
Total $ 2,604 $ 2,032 $ 6,594 $ 5,908
Weighted average interest rate (excluding unused fees and financing costs) 3.76 % 1.77 % 2.57 % 1.78 %
Weighted average outstanding balance $ 236,491 $ 366,714 $ 279,562 $ 356,160
For the three months ended September 30, 2022 and September 30, 2021, the Company borrowed $0 and $166,500, and repaid $55,000 and $123,000, respectively, under the CIBC Subscription Facility. For the nine months ended September 30, 2022 and September 30, 2021, the Company borrowed $0 and $381,500, and repaid $90,000 and $323,000, respectively, under the CIBC Subscription Facility. As of September 30, 2022 and December 31, 2021, the Company had $220,350 and $310,350 outstanding under the CIBC Subscription Facility, respectively. As of September 30, 2022 and December 31, 2021, the Company had $14,650 and $89,650, respectively, of available capacity under the CIBC Subscription Facility (subject to borrowing base restrictions).
BNP Funding Facility
On October 14, 2020, DLF LLC entered into a Revolving Credit and Security Agreement (the “Credit and Security Agreement”, which was subsequently amended on December 11, 2020 and March 2, 2021) with DLF LLC, as the borrower, BNP Paribas (“BNP”), as the administrative agent and lender, the Company, as the equity holder and as the servicer, and U.S. Bank National Association, as collateral agent to (as amended, the “BNP Funding Facility”). As of September 30, 2022, the borrowing capacity under the BNP Funding Facility was $600,000. The applicable margin on borrowings during the reinvestment period ranges between 1.95% and 2.75% and, after the reinvestment period, between 2.45% and 3.25%. The obligations of DLF LLC under the BNP Funding Facility are secured by the assets held by DLF LLC. The BNP Funding Facility has a maturity date of October 13, 2025.
The summary information of the BNP Funding Facility is as follows:
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For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Borrowing interest expense $ 4,517 $ 2,975 $ 10,665 $ 5,546
Facility unused commitment fees 128 34 209 69
Amortization of deferred financing costs 289 289 855 783
Total $ 4,934 $ 3,298 $ 11,729 $ 6,398
Weighted average interest rate (excluding unused fees and financing costs) 4.57 % 2.46 % 3.37 % 2.49 %
Weighted average outstanding balance $ 386,962 $ 472,370 $ 417,700 $ 293,766
For the three months ended September 30, 2022 and September 30, 2021, the Company borrowed $0 and $125,000, and repaid $83,500 and $14,000 under the BNP Funding Facility, respectively. For the nine months ended September 30, 2022 and September 30, 2021, the Company borrowed $13,000 and $514,000, and repaid $154,500 and $32,000 under the BNP Funding Facility, respectively. As of September 30, 2022 and December 31, 2021, the Company had $322,000 and $463,500 outstanding under the BNP Funding Facility, respectively. As of September 30, 2022 and December 31, 2021, the Company had $278,000 and $136,500, respectively, of available capacity under the BNP Funding Facility (subject to borrowing base restrictions).
Truist Credit Facilit y
On July 16, 2021, the Company entered into a Senior Secured Revolving Credit Agreement with Truist Bank, as amended on December 3, 2021 and May 20, 2022 (the “Truist Credit Facility”). The maximum principal amount of the Truist Credit Facility is $975,000, subject to availability under the borrowing base. The Truist Credit Facility includes an uncommitted accordion feature that allows the Company, under certain circumstances, to increase the borrowing capacity to up to $1,000,000. The availability period of the Truist Credit Facility will terminate on July 16, 2025. The Truist Credit Facility is guaranteed by certain domestic subsidiaries of the Company (the “Guarantors”). The Company’s obligations to the lenders under the Truist Credit Facility are secured by a first priority security interest in substantially all of the assets of the Company and each Guarantor, subject to certain exceptions.
The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Borrowings under the Truist Credit Facility bear interest at a per annum rate equal to, (x) for loans for which the Company elects the base rate option, the “alternate base rate” (which is the highest of (a) the prime rate as publicly announced by Truist Bank, (b) the sum of (i) the weighted average of the rates on overnight federal funds transactions, as published by the Federal Reserve Bank of New York plus (ii) 0.5%, and (c) one month LIBOR plus 1% per annum) plus either (A) 0.75% or (B) 0.875%, based on certain borrowing base conditions, and (y) for loans for which the Company elects the Eurocurrency option, the applicable LIBO Rate for the related Interest Period for such Borrowing plus either (A) 1.75% per annum, or (B) 1.875% per annum, based on certain borrowing base conditions. The Company pays an unused fee of 0.375% per annum on the daily unused amount of the revolver commitments. The Truist Credit Facility has a maturity date of July 16, 2026.
The summary information of the Truist Credit Facility is as follows:
For the Three Months Ended September 30, 2022 From July 16, 2021 to
September 30, 2021 		For the Nine Months Ended September 30, 2022 From July 16, 2021 to
September 30, 2021
Borrowing interest expense $ 4,018 $ 267 $ 7,485 $ 267
Facility unused commitment fees 568 476 1,863 476
Amortization of deferred financing costs 267 200 905 200
Total $ 4,853 $ 943 $ 10,253 $ 943
Weighted average interest rate (excluding unused fees and financing costs) 4.05 % 2.22 % 3.05 % 2.22 %
Weighted average outstanding balance $ 388,313 $ 56,065 $ 323,300 $ 56,065
For the three months ended September 30, 2022 and from July 16, 2021 to September 30, 2021, the Company borrowed $127,246 and $172,500, and repaid $222,000 and $0 under the Truist Credit Facility. For the nine months ended September 30, 2022, the Company borrowed $579,246 and repaid $773,000 under the Truist Credit Facility. As of September 30, 2022 and December 31, 2021, the Company had $282,233 and $476,000 outstanding under the Truist Credit Facility, respectively. As of September 30, 2022 and December 31, 2021, the Company had $691,642 and $499,000, respectively, of available capacity under the Truist Credit Facility (subject to borrowing base restrictions).
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Unsecured Notes
2027 Notes
On February 11, 2022, the Company issued $425,000 in aggregate principal amount of 4.50% notes due 2027 (the restricted securities initially issued on February 11, 2022 together with the unrestricted securities issued pursuant to the exchange offer described below, the “2027 Notes”). The 2027 Notes will mature on February 11, 2027 and may be redeemed in whole or in part at the Company’s option at any time or from time to time at the redemption prices set forth in the indenture governing the 2027 Notes. The 2027 Notes are general unsecured obligations of the Company 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 2027 Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively 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, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The summary information of 2027 Notes was as follows:
For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022
Borrowing interest expense $ 4,781 $ 12,219
Accretion of original issuance discount 54 136
Amortization of debt issuance costs 279 704
Total $ 5,114 $ 13,059
Stated interest rate 4.50 % 4.50 %
2025 Notes
On September 13, 2022, the Company entered into a Master Note Purchase Agreement (the “Note Purchase Agreement”) governing the issuance of $275,000 in aggregate principal amount of Series A Senior Notes due September 13, 2025 (the “2025 Notes”) to certain qualified institutional investors in a private placement. The 2025 Notes were delivered and paid for on September 13, 2022, subject to certain customary closing conditions. The 2025 Notes have a fixed interest rate of 7.55% per year. The 2025 Notes will mature on September 13, 2025 unless redeemed, purchased or prepaid prior to such date by the Company in accordance with the terms of the Note Purchase Agreement. Interest on the 2025 Notes is due semiannually in February and August of each year. Subject to the terms of the Note Purchase Agreement, the Company may redeem the 2025 Notes in whole or in part at any time or from time to time at the Company’s option at par plus accrued interest to the prepayment date and, if redeemed on or before June 13, 2025, a make-whole premium. The Company’s obligations under the Note Purchase Agreement are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
The summary information of 2025 Notes was as follows:
For the Three Months Ended September 30, 2022 For the Nine Months Ended September 30, 2022
Borrowing interest expense $ 1,038 $ 1,038
Amortization of debt issuance costs 58 58
Total $ 1,096 $ 1,096
Stated interest rate 7.55 % 7.55 %
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The Company’s debt obligations were as follows. Unused debt capacity of credit facilities were subject to certain borrowing base restrictions:
September 30, 2022 December 31, 2021
Aggregate Principal Committed Outstanding Principal Unused Portion Aggregate Principal Committed Outstanding Principal Unused Portion
CIBC Subscription Facility $ 235,000 $ 220,350 $ 14,650 $ 400,000 $ 310,350 $ 89,650
BNP Funding Facility 600,000 322,000 278,000 600,000 463,500 136,500
Truist Credit Facility (1)(2)
975,000 282,233 691,642 975,000 476,000 499,000
2027 Notes 425,000 425,000 — — — —
2025 Notes 275,000 275,000 — — — —
Total $ 2,510,000 $ 1,524,583 $ 984,292 $ 1,975,000 $ 1,249,850 $ 725,150
(1) As of September 30, 2022, a letter of credit of $1,125 was outstanding, which reduced the unused availability under the Truist Credit Facility by the same amount.
(2) Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of September 30, 2022, the Company had borrowings denominated in Euros (EUR) of 238. As of December 31, 2021, the Company did not have any borrowings denominated in Euros (EUR).

The combined weighted average interest rate of the aggregate borrowings outstanding for the three months ended September 30, 2022 and September 30, 2021 was 4.37% and 2.16%, respectively. The combined weighted average debt of the aggregate borrowings outstanding for the three months ended September 30, 2022 and September 30, 2021 was $1,490,571 and $886,008, respectively.
The combined weighted average interest rate of the aggregate borrowings outstanding for the nine months ended September 30, 2022 and September 30, 2021 was 3.47% and 2.10%, respectively. The combined weighted average debt of the aggregate borrowings outstanding for the nine months ended September 30, 2022 and September 30, 2021 was $1,399,866 and $665,738, respectively.
As of September 30, 2022 and December 31, 2021, the Company was in compliance with all covenants and other requirements of each of the credit facilities, the 2027 Notes and the 2025 Notes.
(7) Commitments and Contingencies
In the normal course of business, the Company may enter into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.
As of September 30, 2022, the Company had $338,261 unfunded commitments to fund delayed draw and revolving senior secured loans. As of December 31, 2021, the Company had $509,403 unfunded commitments to fund delayed draw and revolving senior secured loans.
As of September 30, 2022 and December 31, 2021, the Company had $1,623,964 and $1,585,531, respectively, in total capital commitments from stockholders, of which $309,447 and $425,694, respectively, were unfunded.
(8) Net Assets
The following table shows the components of distributable earnings as shown on the Consolidated Statements of Assets and Liabilities:
For the Nine Months Ended September 30, 2022 For the Year Ended December 31, 2021
Net distributable earnings (accumulated losses), beginning of period $ 15,782 $ 4,702
Net investment income/(loss) after taxes 89,738 72,929
Accumulated realized gain (loss) 556 1,895
Net unrealized appreciation (depreciation) (61,869) 8,431
Dividends declared (86,667) (72,315)
Tax reclassification of stockholders’ equity — 140
Net distributable earnings (accumulated losses), end of period $ (42,460) $ 15,782
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The following table summarizes the total shares issued and proceeds received from the Company’s capital drawdowns delivered pursuant to the Subscription Agreements for the nine months ended September 30, 2022 (dollar amounts in millions):
Share Issuance Date Shares Issued Amount
May 16, 2022 3,548,132 $ 74.9
July 28, 2022 3,903,231 79.8
Total 7,451,363 $ 154.7
The following table summarizes the total shares issued and proceeds received from the Company’s capital drawdowns delivered pursuant to the Subscription Agreements for the nine months ended September 30, 2021 (dollar amounts in millions):
Share Issuance Date Shares Issued Amount
January 20, 2021 1,726,689 $ 35.0
March 12, 2021 2,171,816 45.0
April 12, 2021 5,326,877 110.0
May 26, 2021 4,036,582 85.0
July 16, 2021 7,161,130 149.9
Total 20,423,094 $ 424.9
The following table summarizes the Company’s distributions declared and payable for the nine months ended September 30, 2022:
Date Declared Record Date Payment Date Per Share Amount Total Amount
March 25, 2022 March 25, 2022 April 27, 2022 $ 0.48 $ 27,455
June 24, 2022 June 24, 2022 July 27, 2022 0.47 28,601
September 26, 2022 September 28, 2022 October 19, 2022 0.47 30,611
Total Distributions $ 1.42 $ 86,667

The following table summarizes the Company’s distributions declared and payable for the nine months ended September 30, 2021:
Date Declared Record Date Payment Date Per Share Amount Total Amount
March 18, 2021 March 18, 2021 April 22, 2021 $ 0.45 $ 8,570
June 23, 2021 June 23, 2021 July 22, 2021 0.49 13,974
September 23, 2021 September 23, 2021 October 27, 2021 0.56 20,080
Total Distributions $ 1.50 $ 42,624
The Company adopted an “opt in” dividend reinvestment plan (the "DRIP"). As a result, the Company’s stockholders who elect to “opt in” to the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. Stockholders who receive distributions in the form of shares of Common Stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, those stockholders will not receive cash with which to pay any applicable taxes. Shares issued under the DRIP will not reduce an investor’s outstanding capital commitment.
The following table summarizes the DRIP shares issued to stockholders who have “opted in” to the DRIP for the nine months ended September 30, 2022 and the value of such shares as of the payment dates:
Payment Date DRIP Shares Value DRIP Shares Issued
January 25, 2022 $ 7,540 358,891
April 27, 2022 6,964 332,212
July 27, 2022 7,614 372,338
Total $ 22,118 1,063,441
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The following table summarizes the DRIP shares issued to stockholders who have “opted in” to the DRIP for the nine months ended September 30, 2021 and the value of such shares as of the payment dates:
Payment Date DRIP Shares Value DRIP Shares Issued
January 27, 2021 $ 2,462 121,484
April 22, 2021 2,276 110,191
July 22, 2021 3,733 178,345
Total $ 8,471 410,020
(9) Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Numerator - net increase/(decrease) in net assets resulting from operations $ 9,442 $ 22,236 $ 28,425 $ 56,835
Denominator - weighted average shares outstanding 64,102,092 34,649,255 60,169,337 25,736,110
Basic and diluted earnings per share $ 0.15 $ 0.64 $ 0.47 $ 2.21
(10) Consolidated Financial Highlights
The following are the financial highlights (dollar amounts in thousands, except per share amounts):
For the Nine Months Ended
September 30, 2022 September 30, 2021
Per Share Data: (1)
Net asset value, beginning of period $ 20.91 $ 20.08
Net investment income (loss)
1.49 1.74
Net unrealized and realized gain (loss) (2)
(0.98) 0.53
Net increase (decrease) in net assets resulting from operations 0.51 2.27
Dividends declared (1.42) (1.50)
Issuance of common stock — 0.04
Total increase (decrease) in net assets (0.91) 0.81
Net asset value, end of period $ 20.00 $ 20.89
Shares outstanding, end of period 65,352,831 35,857,539
Total return based on net asset value (3)
2.43 % 11.69 %
Ratio/Supplemental Data (all amounts in thousands except ratios):
Net assets, end of period $ 1,307,150 $ 749,153
Weighted average shares outstanding 60,169,337 25,736,110
Ratio of net expenses to average net assets (4)
6.70 % 6.55 %
Ratio of expenses before waivers to average net assets (4)
8.26 % 8.07 %
Ratio of net investment income to average net assets (4)
9.95 % 11.42 %
Ratios of total contributed capital to total committed capital, end of period 80.94 % 45.54 %
Asset coverage ratio 185.74 % 171.56 %
Portfolio turnover rate 13.10 % 19.20 %
(1) The per share data was derived by using the weighted average shares outstanding during the period.
(2) For the nine months ended September 30, 2022 and September 30, 2021, the amount shown does not correspond with the aggregate amount for the period as it includes the effect of the timing of capital transactions.
(3) Total return (not annualized) is calculated assuming a purchase of common stock at the opening of the first day of the period and a sale on the closing of the last business day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan.
(4) Amounts are annualized except for incentive fees, and expense support amounts relating to organization and offering costs.
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(11) Subsequent Events
Subsequent events have been evaluated through the date the consolidated financial statements were issued. There have been no subsequent events that require recognition or disclosure through the date the consolidated financial statements were issued, except as disclosed below.
On October 27, 2022, the Company closed new capital commitments of $5.4 million, which brings the Company’s total capital commitments to $1,629.4 million.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollar amounts in thousands, except per share amounts, unless otherwise indicated)
In this Quarterly Report on Form 10-Q, or this “Report”, except where context suggests otherwise, the terms “Company,” “we,” “our” or “us” refers to Morgan Stanley Direct Lending Fund and its consolidated subsidiaries. This Report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and you should not place undue reliance on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and opinions and our assumptions. For the avoidance of doubt, we are not a subsidiary of, or consolidated with, Morgan Stanley. Furthermore, Morgan Stanley has no obligation, contractual or otherwise, to financially support us beyond the aggregate capital commitment to purchase shares of our common stock pursuant to a subscription agreement entered into by MS Credit Partners Holdings, Inc. described below. Morgan Stanley has no history of financially supporting any business development companies (“BDCs”) on the MS Private Credit platform, even during periods of financial distress. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “potential,” “predicts,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:
• our future operating results;
• our business prospects and the prospects of our portfolio companies;
• risk associated with possible disruptions in our operations or the economy generally, including disruptions from the impact of global health events, such as COVID-19 (also referred to as the "Coronavirus");
• uncertainty and changes in the general interest rate environment, including as a result of recent rate increases by the Federal Reserve;
• general economic, political and industry trends and other external factors, including uncertainty surrounding the financial and political stability of the United States and other countries;
• the effect of an inflationary economic environment on our portfolio companies, our financial condition and our results of operations;
• the impact of interruptions in the supply chain on our portfolio companies;
• our contractual arrangements and relationships with third parties;
• actual and potential conflicts of interest with MS Capital Partners Adviser Inc., our investment adviser (the “Adviser” or the “Investment Adviser”), and its affiliates;
• the dependence of our future success on the general economy and its effect on the industries in which we invest;
• the ability of our portfolio companies to achieve their objectives;
• the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;
• the use of borrowed money to finance a portion of our investments;
• the adequacy of our financing sources and working capital;
• the timing and amount of cash flows, if any, from the operations of our portfolio companies;
• the ability of our Investment Adviser to locate suitable investments for us and to monitor and administer our investments;
• the ability of our Investment Adviser and its affiliates to attract and retain highly talented professionals;
• our ability to maintain our qualification as a BDC, and as a regulated investment company (a “RIC”), under the Internal Revenue Code of 1986, as amended (the “Code”);
• the impact on our business of U.S. and international financial reform legislation, rules and regulations;
• currency fluctuations, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars, could adversely affect the results of our investments in foreign companies;
• the effect of changes in tax laws and regulations and interpretations thereof; and
• the risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” and elsewhere in this Report.
The information contained in this section should be read in conjunction with “Item 1. Consolidated Financial Statements.” Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Report should not be regarded as a representation by us that our plans and objectives will be achieved. This discussion contains forward-looking statements, which relate to future events or our future performance or financial condition and involves numerous risks and uncertainties, including, but not limited to, those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, or the Form 10-K, and Part II, Item 1A of and elsewhere in this Report. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. You are advised to consult any additional disclosures that we make directly to you or through reports that we have filed or in the future file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
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You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.
OVERVIEW
We are a non-diversified, externally managed specialty finance company focused on lending to middle-market companies. We have elected to be regulated as a BDC under the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated, and intend to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code. We are not a subsidiary of, or consolidated with, Morgan Stanley.
Our investment objective is to achieve attractive risk-adjusted returns via current income and, to a lesser extent, capital appreciation by investing primarily in directly originated senior secured term loans issued by U.S. middle-market companies backed by financial sponsors. For the purposes of this report, “middle-market companies” refers to companies that, in general, generate annual EBITDA in the range of approximately $15 million to $200 million, although not all of our portfolio companies will meet this criteria.
We invest primarily in directly originated senior secured term loans including first lien senior secured term loans (including unitranche loans) and second lien senior secured term loans, with the balance of our investments expected to be in higher-yielding assets such as mezzanine debt, unsecured debt, equity investments and other opportunistic asset purchases. Typical middle-market senior loans may be issued by middle-market companies in the context of leveraged buyouts (“LBOs”), acquisitions, debt refinancings, recapitalizations, and other similar transactions. We generally expect our debt investments to have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark (historically, the London Inter-bank Offered Rate (“LIBOR” or “L”), and currently, the Secured Overnight Financing Rate (“SOFR” or “S”).
We generate revenues primarily in the form of interest income from investments we hold. In addition, we generate income from dividends or distributions of income on any direct equity investments, capital gains on the sale of loans and equity investments and various other loan origination and other fees, including commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.
Pursuant to exemptive relief from the SEC granted to our Adviser (as amended, the “Order”) we are able to enter into certain negotiated co-investment transactions alongside certain Regulated Funds and Affiliated Funds (each as defined in the Order) in a manner consistent with our investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with the Order. Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
Recent Market Developments
Uncertainty as to the probability of, and length and depth of a global recession has created stress on the market and could affect our portfolio companies. In addition, government spending, government policies, including recent increases in certain interest rates by the Federal Reserve and other global central banks, volatile energy prices and disruptions in supply chains in the United States and elsewhere, whether as a result of the impact of the Coronavirus pandemic or otherwise, in conjunction with other factors, including those described elsewhere in this Report and in other filings we have made with the SEC, have led and could continue to lead to inflationary economic environments that could affect our portfolio companies, our financial condition and our results of operations. We will continue to monitor the evolving market environment, including as it relates to the Coronavirus pandemic and guidance from U.S. and international public health authorities. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the developments described above on our financial condition, results of operations or cash flows in the future. Despite these factors, we believe we and our portfolio are well positioned to manage the current environment, and we and our Investment Adviser continue to be fully operational.
KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt available to middle-market companies, the general economic environment and the competitive environment for the type of investments we make.
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Revenue
We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends or distributions on income on direct equity investments, capital gains on the sales of loans and equity securities and various loan origination and other fees. Our debt investments generally have a stated term of five to eight years and typically bear interest at a floating rate usually determined on the basis of a benchmark such as LIBOR or SOFR. Interest on these debt investments is generally paid quarterly. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments are expected to fluctuate significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. We may also generate revenue in the form of commitment, origination, amendment, structuring, syndication or due diligence fees, fees for providing managerial assistance and consulting fees.
Expenses
Our primary operating expenses include the payment of: (i) investment advisory fees, including base management fees and incentive fees, to our Investment Adviser pursuant to the Investment Advisory Agreement between us and our Investment Adviser (the “Investment Advisory Agreement”); (ii) costs and other expenses and our allocable portion of overhead incurred by our Administrator in performing its administrative obligations under the Administration Agreement between us and our Administrator (the “Administration Agreement”); and (iii) other operating expenses as detailed below:

• initial organization costs and offering costs incurred prior to the filing of our election to be regulated as a BDC (subject to the expense waiver described below)
• costs associated with our initial private offering;
• costs of any other offerings of our common stock, par value $0.001 per share (the “Common Stock”), and other securities;
• calculating individual asset values and our net asset value (including the cost and expenses of any third-party valuation services);
• out of pocket expenses, including travel expenses, incurred by the Investment Adviser, or members of its investment team or payable to third parties, performing due diligence on prospective portfolio companies and monitoring actual portfolio companies and, if necessary, enforcing our rights;
• base management fee and any incentive fees payable under the Investment Advisory Agreement;
• certain costs and expenses relating to distributions paid by us;
• administration fees payable under the Administration Agreement and any sub-administration agreements, including related expenses;
• debt service and other costs of borrowings or other financing arrangements;
• the allocated costs incurred by the Investment Adviser in providing managerial assistance to those portfolio companies that request it;
• amounts payable to third parties relating to, or associated with, making or holding investments;
• the costs associated with subscriptions to data service, research-related subscriptions and expenses and quotation equipment and services used in making or holding investments;
• transfer agent and custodial fees;
• costs of hedging;
• commissions and other compensation payable to brokers or dealers;
• any stock exchange listing fees and fees payable to rating agencies;
• cost of effecting any sales and repurchases of our Common Stock and other securities;
• federal and state registration fees;
• U.S. federal, state and local taxes, including any excise taxes;
• independent director fees and expenses;
• costs of preparing consolidated financial statements and maintaining books and records, costs of preparing tax returns, costs of Sarbanes-Oxley Act compliance and attestation and costs of filing reports or other documents with the SEC (or other regulatory bodies), and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation or review of the foregoing;
• the costs of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholders’ meetings, and costs and expenses of preparation for the foregoing and related matters;
• the costs of specialty and custom software for monitoring risk, compliance and overall investments;
• any fidelity bond required by applicable law;
• any necessary insurance premiums;
• indemnification payments;
• any extraordinary expenses (such as litigation or indemnification payments or amounts payable pursuant to any agreement to provide indemnification entered into by the Company);
• direct fees and expenses associated with independent audits, agency, consulting and legal costs;
• cost of winding up; and
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• all other expenses incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement based upon our allocable portion of the compensation paid to our Chief Financial Officer and Chief Compliance Officer and reimbursing third-party expenses incurred by the Administrator in carrying out its administrative services including, but not limited to, the fees and expenses associated with performing compliance functions.
We reimburse the Administrator or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement or otherwise. We expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.
PORTFOLIO, INVESTMENT ACTIVITY AND RESULTS OF OPERATIONS
As of September 30, 2022, we had investments in 139 portfolio companies across 29 industries. Based on fair value as of September 30, 2022, more than 99.9% of our debt portfolio was invested in debt bearing a floating interest rate, which floating rate debt investments primarily are subject to interest rate floors. Less than 0.1% of our debt portfolio at fair value had a fixed interest rate. As of September 30, 2022, our weighted average total yield of investments in debt securities at amortized cost was 9.6%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of September 30, 2022.
As of December 31, 2021, we had investments in 98 portfolio companies across 27 industries. Based on fair value as of December 31, 2021, 99.9% of our debt portfolio was invested in debt bearing a floating interest rate, which primarily are subject to interest rate floors. Approximately 99.3% of our debt portfolio at fair value had an interest rate floor denoted in LIBOR. The weighted average interest rate floor across our floating-rate portfolio was approximately 0.9% as of December 31, 2021. These floors allow us to mitigate (to a degree) any impact of spread widening on the valuation of our investments. As of December 31, 2021, our weighted average total yield of investments in debt securities at amortized cost was 7.2%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of December 31, 2021.
As of September 30, 2022, 77% of our investments, calculated as a percentage of gross debt commitments (funded and unfunded), were loans in support of LBOs and acquisitions of portfolio companies by private equity sponsors. In addition, our debt portfolio displayed the following characteristics, with exception of weighted average yield, as of the closing date of each of our investments 1 unless otherwise noted:
Borrower Characteristics
• Weighted average last 12-month EBITDA of approximately $120 million of our portfolio companies;
• Weighted average of 6.1x net leverage through tranche of our portfolio companies 2 ;
• Weighted average of 45% loan to value of our portfolio companies 3 ;
Portfolio Characteristics
• Weighted average yield on debt investments, at cost, of 9.6% 4 ;
• Approximately 82% of debt investments with one or more financial covenants;
• Approximately 6% of our debt portfolio is in loans that the Investment Adviser believes may be subject to business cycle volatility;
• No realized losses as a result of loan defaults and/or credit deterioration since inception through September 30, 2022;
• One investment of $1.8 million, or approximately 0.1% of total investments at cost on non-accrual as of September 30, 2022; and
• the average position size of our investments was approximately $19.8 million, or 0.72% of total fair value and our top ten portfolio companies represented 22.9% of total fair value as of September 30, 2022.
1 Calculated as a percentage of gross commitments (funds and unfunded). Weighted average EBITDA, net leverage and loan to value exclude recurring revenue investments, which are investments in portfolio companies in which the Company lends based on a multiple of recurring revenue generated by the portfolio company and not based on a multiple of EBITDA.
2 Net leverage is the ratio of total debt minus cash divided by EBITDA and taking into account leverage through the tranche that we are a lender, excluding recurring revenue investments.
3 Calculated using enterprise value from the private equity sponsor or market comparables divided by total outstanding debt through the tranche that the Company is a lender.
4 Weighted average yield includes the effect of accretion of discounts and amortization of premiums and are based on interest rates as of September 30, 2022.
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Our portfolio as of September 30, 2022 and December 31, 2021 is presented below:
As of
September 30, 2022 December 31, 2021
Cost Fair Value % of Total Investments at Fair Value Cost Fair Value % of Total Investments at Fair Value
First Lien Debt $ 2,613,431 $ 2,568,966 93.5 % $ 2,213,332 $ 2,224,100 93.2 %
Second Lien Debt 136,417 130,558 4.8 120,124 121,550 5.1
Other Securities 45,185 47,566 1.7 39,979 41,724 1.7
Total $ 2,795,033 $ 2,747,090 100.0 % $ 2,373,435 $ 2,387,374 100.0 %
Our investment activities for the three months ended September 30, 2022 and September 30, 2021 are presented below (information presented herein is at amortized cost unless otherwise indicated):
As of and For the Three Months Ended
September 30, 2022 September 30, 2021
New Investments Committed/Purchased
Gross Principal Balance (1)
$ 122,087 $ 591,083
Less: Syndications — —
Net New Investments Committed/Purchased $ 122,087 $ 591,083
Investments, at Cost
Investments, beginning of period $ 2,705,519 $ 1,337,637
New investments purchased 180,287 466,945
Net accretion of discount on investments 3,597 2,167
Payment-in-kind 358 74
Net realized gain (loss) on investments 18 126
Investments sold or repaid (94,746) (55,014)
Investments, end of period $ 2,795,033 $ 1,751,935
Amount of investments funded, at principal
First lien debt investments $ 180,542 $ 474,825
Second lien debt investments 471 1,669
Other securities (2)
1,016 —
Total $ 182,029 $ 476,494
Amount of investments sold/fully repaid, at principal
First lien debt investments $ 75,074 $ 42,917
Second lien debt investments — —
Total $ 75,074 $ 42,917
Weighted average yield on debt and income producing investments, at cost (3)
9.6 % 7.3 %
Weighted average yield on debt and income producing investments, at fair value (3)
9.7 % 7.3 %
Number of portfolio companies 139 77
Percentage of debt investments bearing a floating rate, at fair value 100.0 % 99.9 %
Percentage of debt investments bearing a fixed rate, at fair value (4)
0.0 % 0.1 %
(1) Includes new investment commitments, excluding sale/repayments and including new unfunded investment commitments.
(2) Represents dollar amount of other securities funded.
(3) Computed as (a) the annual stated spread, plus reference rate, as applicable, plus the annual accretion of discounts, as applicable, on accruing debt securities, divided by (b) total debt investments (at fair value or cost, as applicable) included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented herein.
(4) less than 0.1%.
As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments. Our Investment Adviser has developed a classification system to group investments into four categories. The investments are evaluated regularly and assigned a category based on certain credit metrics. Our Investment Adviser’s
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ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments. Please see below for a description of the four categories of the Investment Adviser’s Internal Risk Rating system:
Category 1 — In the opinion of our Investment Adviser, investments in Category 1 involve the least amount of risk relative to our initial cost basis at the time of origination or acquisition. Category 1 investments performance is above our initial underwriting expectations and the business trends and risk factors are generally favorable, which may include the performance of the portfolio company, or the likelihood of a potential exit.
Category 2 — In the opinion of our Investment Adviser, investments in Category 2 involve a level of risk relative to our initial cost basis at the time of origination or acquisition. Category 2 investments are generally performing in line with our initial underwriting expectations and risk factors to ultimately recoup the cost of our principal investment are neutral to favorable. All new originated or acquired investments are initially included in Category 2.
Category 3 — In the opinion of our Investment Adviser, investments in Category 3 indicate that the risk to our ability to recoup the initial cost basis at the time of origination or acquisition has increased materially since the origination or acquisition of the investment, such as declining financial performance and non-compliance with debt covenants; however, principal and interest payments are not more than 120 days past due.
Category 4 — In the opinion of our Investment Adviser, investments in Category 4 involve a borrower performing substantially below expectations and indicate that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. For Category 4 investments, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis at the time of origination or acquisition upon exit.
The distribution of our portfolio on the Investment Adviser’s Internal Risk Rating System as of September 30, 2022 and December 31, 2021 was as follows:
September 30, 2022 December 31, 2021
Fair Value % of Portfolio Number of Portfolio Companies Fair Value % of Portfolio Number of Portfolio Companies
Risk rating 1 $ — — % — $ 44,355 1.9 % 1
Risk rating 2 2,718,554 99.0 137 2,343,019 98.1 97
Risk rating 3 28,536 1.0 2 — — —
Risk rating 4 — — — — — —
$ 2,747,090 100.0 % 139 $ 2,387,374 100.0 % 98
CONSOLIDATED RESULTS OF OPERATIONS
The following table represents our operating results:
For the Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Total investment income $ 62,719 $ 31,729 $ 157,017 $ 75,488
Less: Net expenses 28,905 12,909 67,279 30,592
Net investment income 33,814 18,820 89,738 44,896
Less: Excise tax expense — — — 5
Net investment income (loss) after taxes 33,814 18,820 89,738 44,891
Net change in unrealized appreciation (depreciation) (24,390) 3,290 (61,869) 11,824
Net realized gain (loss) 18 126 556 120
Net increase (decrease) in net assets resulting from operations $ 9,442 $ 22,236 $ 28,425 $ 56,835
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Investment Income
Investment income was as follows:
For the Three Months Ended For the Nine Months Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Investment income:
Interest income $ 60,798 $ 30,663 $ 151,976 $ 68,403
Payment-in-kind interest income 506 302 1,055 680
Dividend income 439 138 980 260
Other income 976 626 3,006 6,145
Total investment income $ 62,719 $ 31,729 $ 157,017 $ 75,488
Total investment income increased from $31,729 for the three months ended September 30, 2021 to $62,719 for the three months ended September 30, 2022. Total investment income increased from $75,488 for the nine months ended September 30, 2021 to $157,017 for the nine months ended September 30, 2022. The increases were primarily driven by our deployment of capital and invested balance of investments. The size of our investment portfolio at fair value increased from $1,769,267 as of September 30, 2021 to $2,747,090 as of September 30, 2022. As of such dates, all our senior secured debt investments were income-producing. The amortized cost of an unsecured debt investment on non-accrual status as of September 30, 2022 was $1,777.
Interest income on our debt investments is dependent on the composition and credit quality of the portfolio. Generally, we expect the portfolio to generate predictable quarterly interest income based on the terms stated in each loan’s credit agreement. As of September 30, 2022 and September 30, 2021, and for the periods then ended, all of our first and second lien debt investments were performing and current on their interest payments.
Expenses
The Company is responsible for investment expenses, professional fees, and other general and administrative expenses related to the Company’s operations. Expenses were as follows for the three and nine months ended September 30, 2022 and September 30, 2021, respectively:
For The Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Expenses:
Interest and other financing expenses $ 18,601 $ 6,273 $ 42,731 $ 13,249
Management fees 6,865 3,864 19,583 8,635
Income based incentive fee 7,173 4,119 18,517 9,965
Capital gains incentive fee — 598 (2,441) 2,090
Professional fees 923 554 2,323 1,595
Organization and offering costs — — — 42
Directors’ fees 87 84 262 249
Administrative service fees 54 54 124 158
General and other expenses 351 260 828 987
Total expenses 34,054 15,806 81,927 36,970
Expense support — 1 39 98
Management fees waiver (5,149) (2,898) (14,687) (6,476)
Net expenses $ 28,905 $ 12,909 $ 67,279 $ 30,592
Excise tax expense $ — $ — $ — $ 5
For the three and nine months ended September 30, 2022, net expenses were primarily comprised of interest expense and other financing expenses of $18,601 and $42,731, gross base management fees of $6,865 and $19,583, income based incentive fees of $7,173 and $18,517, capital gains incentive fee of $0 and $(2,441), administrative service expenses of $54 and $124, professional fees of $923 and $2,323, fees to independent directors of $87 and $262, and other expenses of $351 and $828; offset by management fee waiver of $5,149 and $14,687, and increased by expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $0 and $39, respectively.
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For the three and nine months ended September 30, 2021, net expenses were primarily comprised of interest expense and other financing expenses of $6,273 and $13,249, gross base management fees of $3,864 and $8,635, income based incentive fees of $4,119 and $9,965, capital gains incentive fees of $598 and $2,090, administrative service expenses of $54 and $158, professional fees of $554 and $1,595, fees to independent directors of $84 and $249, and other expenses of $260 and $987; offset by management fee waiver of $2,898 and $6,476, and increased by expense support recoupment of previously waived organization and offering costs by the Investment Adviser of $1 and $98, respectively.
Professional fees include legal, audit, tax, and other professional fees incurred related to the management of our Company. Administrative service fees represent fees paid to the Administrator for our allocable portion of the cost of certain of our executive officers that perform duties for us. Other general and administrative expenses include insurance, filing, research, subscriptions and other costs. Organization costs and offering costs include expenses incurred in our initial formation and our offering of stock.
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our stockholders in each taxable year generally at least 90% of the sum of our investment company taxable income (the "ICTI"), as defined by the Code (without regard to the deduction for dividends paid), and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our stockholders, which generally relieve us from corporate-level U.S. federal income taxes. For the three and nine months ended September 30, 2022, we have not accrued any U.S. federal excise tax. For the three and nine months ended September 30, 2021, we have accrued $0 and $5 of U.S. federal excise tax, respectively.
Net Realized Gain (Loss) and Unrealized Gain (Loss) on Investments
For The Three Months Ended For the Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Realized and unrealized gains (losses) on investment transactions:
Realized gain (loss):
Non-controlled/non-affiliated investments $ 18 $ 126 $ 556 $ 120
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments (24,390) 3,290 (61,869) 11,824
Net realized and unrealized gains (losses) $ (24,372) $ 3,416 $ (61,313) $ 11,944
For the three and nine months ended September 30, 2022, net realized gain on our investments was $18 and $556, respectively, primarily driven by the sale of debt and equity investments in our portfolio. For the three and nine months ended September 30, 2021, net realized gain was $126 and $120, respectively, primarily driven by the sale of debt and equity investments in our investment portfolio.
We determine the fair value of our portfolio investments quarterly and any changes in fair value are recorded as unrealized appreciation or depreciation. For the three and nine months ended September 30, 2022, net change in unrealized depreciation on our investments of $24,390 and $61,869 was primarily driven by the decreases of valuations of our debt and equity investments as a result of the volatile credit environment and spread widening in the primary and secondary markets. For the three and nine months ended September 30, 2021, net change in unrealized appreciation on our investments of $3,290 and $11,824 was primarily driven by the increases of valuations of our debt and equity investments in a tightening credit environment and generally strong portfolio company performance.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We generate cash from the net proceeds of offerings of our Common Stock, net borrowings from our credit facilities, and net proceeds of our unsecured debt issuances and through cash flows from operations, including investment sales and repayments as well as income earned on investments and cash equivalents. Details of our credit facilities and unsecured debt issuance are described in “ —Debt ” below. We may from time to time enter into new credit facilities, increase the size of existing credit facilities or issue additional debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.
As of September 30, 2022, we had approximately $59.9 million of cash, which taken together with our approximately $14.7 million, $278.0 million and $691.6 million of availability under the CIBC Subscription Facility, the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability) (each as defined below), respectively, and our approximately $309.4 million of uncalled capital commitments to purchase shares of Common Stock, or capital commitments, we expect will be sufficient for our
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investing activities and sufficient to conduct our operations in the near term. As of September 30, 2022, we believed we had adequate financial resources to satisfy the unfunded portfolio company commitments.
Equity
As of September 30, 2022, we had received aggregate capital commitments of approximately $1,624.0 million. In accordance with the terms of the subscription agreements (the “Subscription Agreements”) entered into by investors in us, our board of directors approved a one-year extension of the Investment Period (as defined in the Subscription Agreements) such that the Investment Period will expire on December 23, 2023.
For the nine months ended September 30, 2022, we received proceeds from two capital calls and issued shares to our stockholders. The total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the nine months ended September 30, 2022 were as follows (dollar amounts in millions):
Share Issuance Date Shares Issued Amount
May 16, 2022 3,548,132 $ 74.9
July 28, 2022 3,903,231 79.8
Total 7,451,363 $ 154.7
The total shares issued and proceeds received related to capital drawdowns delivered pursuant to the Subscription Agreements for the nine months ended September 30, 2021 were as follows (dollar amounts in millions):
Share Issuance Date Shares Issued Amount
January 20, 2021 1,726,689 $ 35.0
March 12, 2021 2,171,816 45.0
April 12, 2021 5,326,877 110.0
May 26, 2021 4,036,582 85.0
July 16, 2021 7,161,130 149.9
Total 20,423,094 $ 424.9
Distributions and Dividend Reinvestment
The following tables summarize our distributions declared and payable for the nine months ended September 30, 2022 and September 30, 2021, respectively:
Date Declared Record Date Payment Date Per Share Amount
Dividend Yield (1)
Total Amount
March 25, 2022 March 25, 2022 April 27, 2022 $ 0.48 9.3 % $ 27,455
June 24, 2022 June 24, 2022 July 27, 2022 0.47 9.3 % 28,601
September 26, 2022 September 28, 2022 October 19, 2022 0.47 9.3 % 30,611
Total Distributions $ 1.42 $ 86,667

Date Declared Record Date Payment Date Per Share Amount
Dividend Yield (1)
Total Amount
March 18, 2021 March 18, 2021 April 22, 2021 $ 0.45 10.1 % $ 8,570
June 23, 2021 June 23, 2021 July 22, 2021 0.49 10.7 % 13,974
September 23, 2021 September 23, 2021 October 27, 2021 0.56 11.1 % 20,080
Total Distributions $ 1.50 $ 42,624
(1) Dividend yield (annualized) is calculated by dividing the declared dividend by the weighted average of the net asset value at the beginning of the quarter, the capital called and dividend reinvested during the quarter and annualizing over 4 quarterly periods.

We adopted an “opt in” dividend reinvestment plan (“DRIP”). As a result, our stockholders who elect to “opt in” to the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. Stockholders who receive distributions in the form of shares of Common Stock will generally be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions; however, those stockholders will not receive cash with which to pay any applicable taxes. Shares issued under the DRIP will not reduce an investor’s outstanding capital commitment.
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The following tables summarize DRIP shares issued and amounts for the nine months ended September 30, 2022 and September 30, 2021:
Payment Date DRIP Shares Value DRIP Shares Issued
January 25, 2022 $ 7,540 358,891
April 27, 2022 6,964 332,212
July 27, 2022 7,614 372,338
Total $ 22,118 1,063,441
Payment Date DRIP Shares Value DRIP Shares Issued
January 27, 2021 $ 2,462 121,484
April 22, 2021 2,276 110,191
July 22, 2021 3,733 178,345
Total $ 8,471 410,020
Debt
Our outstanding debt obligations were as follows:
September 30, 2022 December 31, 2021
Aggregate Principal Committed Outstanding Principal Unused Portion Aggregate Principal Committed Outstanding Principal Unused Portion
CIBC Subscription Facility $ 235,000 $ 220,350 $ 14,650 $ 400,000 $ 310,350 $ 89,650
BNP Funding Facility 600,000 322,000 278,000 600,000 463,500 136,500
Truist Credit Facility (1)(2)
975,000 282,233 691,642 975,000 476,000 499,000
2027 Notes 425,000 425,000 — — — —
2025 Notes 275,000 275,000 — — — —
Total $ 2,510,000 $ 1,524,583 $ 984,292 $ 1,975,000 $ 1,249,850 $ 725,150
(1) As of September 30, 2022, a letter of credit of $1,125 was outstanding, which reduced the unused availability under the Truist Credit Facility of the same amount.
(2) Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of September 30, 2022, the Company had borrowings denominated in Euros (EUR) of 238. As of December 31, 2021, the Company did not have any borrowings denominated in Euros (EUR).

For additional information on our debt obligations see “Item 1. Consolidated Financial Statements—Notes to Consolidated Financial Statements—Note 6. Debt."
RECENT DEVELOPMENTS
Subsequent to September 30, 2022 through November 8, 2022, we have closed or the Investment Committee has committed/approved approximately $45.3 million of new/add-on investments. This includes transactions for which a formal mandate, letter of intent or a signed commitment have been issued, and therefore we believe are likely to close. Of these new commitments, approximately $43.0 million were first lien senior secured loans and $2.3 million were other securities. 100% of the senior secured loans were floating rate loans. We remain highly focused on conducting extensive due diligence and leveraging the Morgan Stanley platform. We continue to seek to invest in companies that are led by strong management teams, generate substantial free cash flow, have leading market positions, benefit from sustainable business models, and are well positioned to perform well despite recent market volatility. We believe the current market environment offers opportunities to seek compelling risk adjusted returns. Our investment pace will depend on several factors including the market environment, deal flow and the impact of inflation on valuations and the operations of potential portfolio companies.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies including those relating to the valuation of our investment portfolio, should be read in connection with our financial statements in Part I, Item 1 of this Report, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies ” in Part II, Item 7 of our Form 10-K, and “ Risk Factors ” in Part II, Item 1A of our Form 10-K.
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RELATED PARTY TRANSACTIONS
We have entered into a number of business relationships with affiliated or related parties, including the following (which are defined in the notes to the accompanying unaudited consolidated financial statements if not defined herein):
• the Investment Advisory Agreement;
• the Administration Agreement;
• the Expense Support and Waiver Agreement;
• the Placement Agent Agreement; and
• the License Agreement.
See “Item 1. Consolidated Financial Statements—Notes to Consolidated Financial Statements—Note 3. Related Party Transactions” in the accompanying unaudited financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including valuation risk, market risk and interest rate risk.
Valuation Risk
We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of portfolio companies. During periods of market dislocation, we will seek to invest prudently in the secondary loan market to provide our investors better risk adjusted returns while adhering to our core investment tenants. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Market Developments.” Most of our investments will not have a readily available market price. To ensure accurate valuation, our investments are valued at fair value in good faith by the Board of Directors, based on, among other things, the input of the Investment Adviser, including the Valuation Designee, our Audit Committee and independent third-party valuation firms engaged at the direction of our Board of Directors, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each investment while employing a consistently applied valuation process for the investments we hold. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.
Market Risk
The market value of a security may move up or down, sometimes rapidly and unpredictably. These fluctuations may cause a security to be worth less than the price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy or the market as a whole. Global economies and financial markets are increasingly interconnected, which increases the probabilities that conditions in one country or region might adversely impact issuers in a different country or region. Conditions affecting the general economy, including political, social, or economic instability at the local, regional, or global level, may also affect the market value of a security. Health crises, such as pandemic and epidemic diseases, as well as other incidents that interrupt the expected course of events, such as natural disasters, war or civil disturbance, acts of terrorism, power outages and other unforeseeable and external events, and the public response to or fear of such diseases or events, have and may in the future have an adverse effect on a company’s investments and net asset value and can lead to increased market volatility. See “Part II, Item 1A. Risk Factors—We are operating in a period of capital markets volatility and economic uncertainty. The conditions have materially and adversely affected debt and equity capital markets in the United States, and any future volatility or instability in capital markets may have a negative impact on our business and operations” in this Form 10-Q and “Terrorist attacks, acts of war, natural disasters, outbreaks or pandemics, such as the Coronavirus pandemic, may impact our portfolio companies and our Adviser and harm our business, operating results and financial condition” in the Form 10-K.
Interest Rate Risk
We are subject to financial market risks, most significantly changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we expect to fund a portion of our investments with borrowings, our net investment income is expected to be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
As of September 30, 2022, 100.0% of our income-producing senior secured debt investments were at floating rates. Based on our Consolidated Statement of Assets and Liabilities as of September 30, 2022, the following table shows the annualized impact on net income of hypothetical reference rate changes in interest rates (considering interest rate floors and ceilings for floating rate debt instruments assuming no changes in our investments and borrowing structure as of September 30, 2022) (dollar amounts in thousands):
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Interest Interest Net
Basis Point Change - Interest Rates Income Expense Income
Up 300 basis points $ 83,780 $ (24,737) $ 59,043
Up 200 basis points $ 55,854 $ (16,492) $ 39,362
Up 100 basis points $ 27,927 $ (8,246) $ 19,681
Down 100 basis points $ (27,807) $ 8,246 $ (19,561)
Down 200 basis points $ (52,229) $ 16,492 $ (35,737)
Down 300 basis points $ (64,176) $ 24,737 $ (39,439)
We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts or our credit facilities, subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates or higher exchange rates with respect to our portfolio of investments with fixed interest rates or investments denominated in foreign currencies. During the periods covered by this Report, we did not engage in interest rate hedging activities.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Report and determined that our disclosure controls and procedures are effective as of the end of the period covered by this Report.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred for the three months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
Item 1. Legal Proceedings
The Company, the Investment Adviser and the Administrator may become party to certain lawsuits in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Each of the Company, the Investment Adviser and the Administrator is not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Company. See also “ Note 1 to Consolidated Financial Statements in Part II, Item 8. Consolidated Financial Statements and Supplementary Data ” of the Form 10-K.
Item 1A. Risk Factors
In addition to the other information set forth in this Report, you should carefully consider the risk factors set forth below and the risk factors previously disclosed under Item 1A of the Form 10-K, which could materially affect our business, financial condition and/or operating results. The risks disclosed below and in the Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and/or operating results.
Certain investors are limited in their ability to make significant investments in us.
Investment companies registered under the 1940 Act are restricted from acquiring directly or through a controlled entity more than 3% of our total outstanding voting stock (measured at the time of the acquisition), unless these funds comply with certain requirements under the 1940 Act that would restrict the amount that they are able to invest in our securities. Private funds that are excluded from the definition of “investment company” either pursuant to Section 3(c)(1) or 3(c)(7) of the 1940 Act are also subject to these restrictions. As a result, certain investors may be precluded from acquiring additional shares at a time that they might desire to do so.
The majority of our portfolio investments are recorded at fair value as determined in good faith by our Valuation Designee, under the supervision of our Board of Directors and, as a result, there may be uncertainty as to the value of our portfolio investments.
The majority of our portfolio investments take the form of securities for which no market quotations are readily available. The fair value of securities and other investments that are not publicly traded may not be readily determinable, and we value these securities at fair value as determined in good faith by our Board of Directors, including to reflect significant events affecting the value of our securities. As discussed in more detail under “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates ”, most, if not all, of our investments (other than cash and cash equivalents) are classified as Level 3 under ASC 820. This means that our portfolio valuations are based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. Inputs into the determination of fair value of our portfolio
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investments require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which may include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information.
The Board of Directors has delegated to the Adviser as Valuation Designee the responsibility of determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors, pursuant to Rule 2a-5 under the 1940 Act. As such, the Valuation Designee is charged with determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors. The participation of the Adviser’s investment professionals in our valuation process could result in a conflict of interest as the Adviser’s base management fee is based, in part, on our average adjusted gross assets and our incentive fees will be based, in part, on unrealized losses.
We have retained the services of independent service providers to review the valuation of these securities. The valuation of all or portion of our portfolio investments for which a market quote is not readily available will be reviewed by an independent valuation firm each quarter and month-end. The types o f factors that our Valuation Designee, under the supervision of our Board of Directors, may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities, including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors. Because such valuations, and in particular, the valuations of private securities and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.
We adjust quarterly (or as otherwise may be required by the 1940 Act in connection with the issuance of shares of our Common Stock) the valuation of our portfolio to reflect our Board of Directors’ approval of the fair value of each investment in our portfolio, as determined by the Valuation Designee. Any changes in fair value are recorded in the aggregate in our consolidated statement of operations as a net change in unrealized appreciation or depreciation.
We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer and our portfolio may be concentrated in a limited number of industries.
We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Additionally, our portfolio may be concentrated in a limited number of industries and a downturn in any particular industry in which we are invested could significantly impact the aggregate returns we realize.
To the extent that we assume large positions in the securities of a small number of issuers or our portfolio is concentrated in a limited number of industries, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the issuer or particular industry. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our asset diversification requirements as a RIC under the Code, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. Although we are classified as a non-diversified investment company within the meaning of the 1940 Act, we maintain the flexibility to operate as a diversified investment company. To the extent that we operate as a non-diversified investment company, we may be subject to greater risk.
We may be subject to risks associated with our investments in the software industry.
Portfolio companies in the software industry are subject to a number of risks. The revenue, income (or losses) and valuations of software and other technology-related companies can and often do fluctuate suddenly and dramatically. In addition, because of rapid technological change, the average selling prices of software products have historically decreased over their productive lives. As a result, the average selling prices of software offered by our portfolio companies may decrease over time, which could adversely affect their operating results and, correspondingly, the value of any securities that we may hold. Additionally, companies operating in the software industry are subject to vigorous competition, changing technology, changing client and end-consumer needs, evolving industry standards and frequent introductions of new products and services. Our portfolio companies in the software industry could compete with companies that are larger and could be engaged in a greater range of businesses or have greater financial, technical, sales or other resources than our portfolio companies do. Our portfolio companies could lose market share if their competitors introduce or acquire new products that compete with their software and related services or add new features to existing products. Any deterioration in the results of our portfolio companies due to competition or otherwise could, in turn, materially adversely affect our business, financial condition and results of operations.
Laws and regulations regulating insurance activities are complex and could negatively affect the business of our portfolio companies in the insurance industry, which could reduce their profitability and potentially limit their growth.
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We may invest portions of our portfolio in the insurance industry. The insurance industry in the United States is heavily regulated, and the insurance regulatory framework addresses, among other things: (i) granting licenses to companies and agents to transact particular business activities and (ii) regulating trade, marketing, compensation, and claims practices. Certain of our portfolio companies may be subject to laws and regulations applicable to insurance brokers and to the authority of the insurance regulators in their respective jurisdictions of operation. The cost of compliance with such regulations or any non-compliance could impose material costs on our portfolio companies and negatively affect their business, marketing practices, and budgets. Any of these factors could affect our portfolio company investments and, in turn, materially adversely affect our business, financial condition and results of operations.
Furthermore, the laws and regulations governing the sale of insurance may change in ways that adversely impact the business of our portfolio companies. These changes could impact the manner in which our portfolio companies are permitted to conduct their businesses and could result in increased expenses and/or decreased revenues as well as negatively affect their marketing practices, budgets, and overall level of business, which could adversely impact our business, financial condition, operating results and cash flows.
We may be subject to risks associated with our investments in the commercial services and supplies industry.
We could invest in portfolio companies in the commercial services and supply industry and a downturn in the industry could significantly impact the aggregate returns we realize on such investments. For example, the operating results and financial condition of our portfolio companies in the commercial services and supplies industry could be adversely affected due to a number of factors, including but not limited to a decrease in demand for their services or supplies relating to seasonality or market forces and various other factors. In addition, there are risks involved with sales, marketing, managerial and related capabilities of our portfolio companies in the commercial services and supplies industry. For example, recruiting and training
a workforce is expensive and time-consuming and could delay the provision of commercial services, result in diminished services, or delay the delivery of supplies. If our portfolio companies in the commercial services and supplies industry fail to devote resources and attention to sell and market their services or products effectively, they could fail to generate sufficient revenues and reach or sustain profitability and to repay interest or principal on our debt investments. Any of these factors could affect our portfolio company investments and, in turn, materially adversely affect our business, financial condition and results of operations.
Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited.
In November 2020, the SEC adopted a revised version of Rule 18f-4, which is designed to modernize the regulation of the use of derivatives by registered investment companies and BDCs. Among other things, Rule 18f-4 requires BDCs that use derivatives to be subject to a value-at-risk leverage limit and requires the adoption and implementation of a derivatives risk management program that is reasonably designed to identify, assess and manage its derivatives transaction trading risk, subject to certain exceptions. Additionally, subject to certain conditions, funds that do not invest heavily in derivatives may be deemed limited derivatives users and would not be subject to the full requirements of Rule 18f-4. The Company intends to operate under the limited derivatives user exemption of Rule 18f-4 and has adopted written policies and procedures reasonably designed to manage the Company’s derivatives risk pursuant to Rule 18f-4. In connection with the adoption of Rule 18f-4, the SEC also eliminated the asset segregation and cover framework arising from prior SEC guidance for covering derivatives and certain financial instruments. Compliance with Rule 18f-4 has been required since August 19, 2022. Collectively, these requirements may limit our ability to use derivatives and/or enter into certain other financial contracts.
Inflation and supply chain risk could adversely impact our portfolio companies and our results of our operations.
Economic activity has accelerated across sectors and regions in recent periods. Nevertheless, due to global supply chain issues, a rise in energy prices, strong consumer demand and other factors, inflation has accelerated in the U.S. and globally. Higher inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy could continue to tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins.
We are operating in a period of capital markets volatility and economic uncertainty. The conditions have materially and adversely affected debt and equity capital markets in the United States, and any future volatility or instability in capital markets may have a negative impact on our business and operations.
From time to time, capital markets may experience periods of volatility and instability for a variety of reasons. We are currently operating in a period of market volatility, as a result of, among other factors, elevated levels of inflation and following a period of uncertainty as a result of the Coronavirus pandemic. Uncertainty remains as to the probability of, and length and depth of a global recession and the impact of actions taken by the Federal Reserve, foreign central banks and other U.S. and global governmental entities or the impact of the Coronavirus pandemic or other public health concerns. Government spending, government policies, including recent increases in certain interest rates by the Federal Reserve, and disruptions in supply chains in the United States and elsewhere, whether in response to the Coronavirus pandemic or otherwise, in conjunction with other factors have led and could continue to lead to a continued inflationary economic environment that could affect the Company’s portfolio companies, the Company’s financial condition and the Company’s results of operations. In addition to the factors described above, other factors described herein that may affect market, economic and geopolitical conditions, and thereby adversely affect the Company including, without limitation, economic slowdown in the United States and internationally, changes in interest rates and/or a lack of availability
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of credit in the United States and internationally, commodity price volatility and changes in law and/or regulation, and uncertainty regarding government and regulatory policy. The full impact of any such risks is uncertain and difficult to predict.
Capital markets volatility and instability have also occurred in the past and may occur in the future. For example, from 2008 to 2009, the global capital markets were unstable as evidenced by the lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and various foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. There have been more recent periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves in the future. Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused volatility in the global markets, and we cannot assure you that these market conditions will not continue or worsen in the future. Terrorist acts, acts of war, natural disasters, or disease outbreaks, pandemics or other public health crises may cause periods of market instability and volatility and may disrupt the operations of us and our portfolio companies for extended periods of time. If similar adverse and volatile market conditions repeat in the future, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital in order to grow. Equity capital may be particularly difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of Common Stock at a price less than the net asset value per share without first obtaining approval for such issuance from our stockholders and our Board of Directors, including all of our directors who are not “interested persons” of the Company, as defined in the 1940 Act.
Moreover, the re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time or worsened market conditions, including as a result of U.S. government shutdowns or the perceived creditworthiness of the United States, could make it difficult for us to borrow money or to extend the maturity of or refinance any indebtedness we may have under similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if any, may be at a higher cost and on less favorable terms and conditions than would currently be available. If we are unable to raise or refinance debt, stockholders may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
Given the periods of extreme volatility and dislocation in the capital markets from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise or access capital. In addition, significant changes in the capital markets, including the extreme volatility and disruption over the past several years, has had, and may in the future have, a negative effect on asset valuations and on the potential for liquidity events. While most of our investments will not be publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through to maturity). As a result, volatility in the capital markets can adversely affect the valuations of our investments. Further, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required. As a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. In addition, a prolonged period of market illiquidity may cause us to reduce the volume of loans and debt securities we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows. An inability to raise or access capital could have a material adverse impact on our business, financial condition or results of operations.
New or modified laws or regulations governing our or Morgan Stanley’s operations may adversely affect our business.
We and certain of our portfolio companies are subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, may change from time to time, including as the result of interpretive guidance or other directives from the relevant government agencies charged with implementing those laws and regulations, and new laws, regulations and interpretations may also come into effect. For example, because a Morgan Stanley affiliate is acting as the Adviser and Morgan Stanley has a 5% or greater voting investment in us, we are subject to the certain federal banking and financial requirements, including the Bank Holding Company Act of 1956, as amended (the “BHCA”) regulations of the Federal Reserve, and certain provisions of the Dodd-Frank Act. Because we are controlled by Morgan Stanley for purposes of the BHCA, we must generally comply with the investment and activity restrictions applicable to Morgan Stanley under the BHCA. Such restrictions may place certain limitations on our ability to engage in activities or make investments in companies. For instance, the BHCA permits a bank holding company, or BHC, as well as any non-bank affiliate of such BHC, to make investment representing less than 5% of any class of voting shares of another company so long as that investment is otherwise non-controlling under the BHCA. The BHCA also permits well-capitalized, well- managed BHCs that have elected to be treated as a FHC to engage in expanded “financial in nature” activities without prior approval of the Federal Reserve. Such financial in nature activities include bona fide merchant banking activities, so long as (i) the FHC holds its merchant banking investments only for a period of time sufficient to enable the sale or disposition thereof on a reasonable basis (generally no more than 10 years) and (ii) the FHC does not routinely manage or operate the companies in which it invests except as necessary or required to obtain a reasonable return on its investment. The BHCA does not, however, require Morgan Stanley to financially support us.
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Similarly, the Volcker Rule generally restricts any banking entity (which includes Morgan Stanley and most affiliates of Morgan Stanley, including us as a BDC controlled by Morgan Stanley) from engaging in “proprietary trading” as well as from acquiring or retaining any “ownership interest” in a “covered fund”, in each case unless the investment or activity is conducted in accordance with an exclusion or exemption. The Volcker Rule also generally prohibits certain transactions between a banking entity and any of its affiliates, on the one hand, and a covered fund for which the banking entity or any of its affiliates serves, directly or indirectly, as the investment manager, investment adviser, or that the banking entity or any of its affiliates sponsors in connection with organizing and offering that fund (or with any other covered fund that is controlled by such fund, on the other hand. It is not certain how all aspects of the Volcker Rule will be interpreted and applied, or what the impact of the Volcker Rule will have on us. In addition, the restrictions and limitation on Morgan Stanley and us may change in the future as the Federal Reserve and other agencies consider whether and how to revise and apply the Volcker Rule. We believe that we may perform our activities and services without violation of applicable U.S. banking laws and regulations. However, it is possible that future changes or clarifications in the BHCA and Volcker Rule, as well as judicial or administrative decisions or interpretations of present of future laws or regulations, could restrict (or possibly prevent) our ability to continue to conduct our operations as currently contemplated. In such event, we, the Adviser and/or Morgan Stanley may agree to make certain amendments or changes to the extent necessary to permit the Adviser to continue to provide services to us, while enabling us to continue to achieve our purposes and objectives.
These regulations and any future legislative and regulatory proposals, as well as future interpretations of existing rules, that are directed at the financial services industry, including those that may be proposed or pending in the U.S. Congress, may negatively impact the operations, cash flows or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio companies. Laws that apply to us, either now or in the future, are often highly complex and may include licensing requirements. The licensing process can be lengthy and can be expected to subject us to increased regulatory oversight. Failure, even if unintentional, to comply fully with applicable laws may result in sanctions, fines or limitations on the ability of the Company or the Adviser to do business in the relevant jurisdiction or to procure required licenses in other jurisdictions, all of which could have a material adverse effect on us. In addition, if we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.
Additionally, changes to the laws and regulations governing our operations, including those associated with RICs and BDCs, may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities, or to comply with additional restrictions on our investments or capital structure, or result in the imposition of corporate-level taxes on us. Such changes could result in material differences to our strategies and plans and may shift our investment focus from the areas of expertise of the Adviser to other types of investments in which the Adviser may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment. The Adviser currently acts pursuant to an exemption from registration as a commodity trading advisor with the Commodity Futures Trading Commission (“CFTC”). These requirements restrict the types of commodity investment strategies that the Adviser can pursue while remaining exempt, and if the Adviser were to seek other investment strategies that required it to register with the CFTC, that registration would increase their, and therefore our, costs. In addition, new legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders of such qualification, or could have other adverse consequences. Stockholders are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.
In addition, certain regulations applicable to debt securitizations implementing credit risk retention requirements in effect in both the United States and in Europe may adversely affect or prevent us from entering into any future securitization transaction. These risk retention rules may cause an increase in our cost of funds under or may prevent us from completing any future securitization transactions. The U.S. risk retention rules require the sponsor (directly or through a majority-owned affiliate) of a debt securitization subject to such rules, such as collateralized loan obligations, in the absence of an exemption, to retain an economic interest in the credit risk of the assets being securitized. If, and to the extent that, we engage in securitization transactions that require the retention of an economic interest, these rules would increase our financing costs in comparison to other types of financings and this increase in financing costs would ultimately be borne by our stockholders.
Over the last several years, there also has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation. While it cannot be known at this time whether any regulation will be implemented or what form it will take, increased regulation of non-bank credit extension could negatively impact our operations, cash flows or financial condition, impose additional costs on us, intensify the regulatory supervision of us or otherwise adversely affect our business, financial condition and results of operations.
To the extent that certain tax law changes announced but not yet enacted, including, among others, a minimum tax on book income and profits of certain multinational corporations, are subsequently enacted, such legislative changes, any other significant changes in economic or tax policy and/or government programs, as well as any future such changes could have a material adverse impact on us and on our investments.
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Ongoing implementation of, or changes in, including changes in interpretation or enforcement of, laws and regulations could impose greater costs on us and on financial services companies and impact the value of assets we hold and our business, financial condition and results of operations. In addition, uncertainty regarding legislation and regulations affecting the financial services industry or taxation could also adversely impact our business or the business of our portfolio companies. If we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.
We are highly dependent on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect the value of shares of our Common Stock and our ability to pay distributions.
The operations of the Company, the Adviser, the Administrator and any third-party service provider to any of the foregoing are susceptible to risks from cybersecurity attacks and incidents due to reliance on the secure processing, storage and transmission of confidential and other information in the relevant computer systems and networks. In particular, cyber security incidents and cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. These attacks could involve gaining unauthorized access to information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption and result in disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships, any of which could have a material adverse effect on our business, financial condition and results of operations. We, the Adviser and the Administrator must each continuously monitor and innovate our cybersecurity to protect our technology and data from corruption or unauthorized access. In addition, due to the use of third-party vendors, agents, exchanges, clearing houses and other financial institutions and service providers, we, the Adviser and the Administrator could be adversely impacted if any of us are subject to a successful cyber-attack or other breach of our information.
Furthermore, in recent years cybersecurity risks for financial institutions have significantly increased in part because of the proliferation of new technologies, the use of the internet, mobile telecommunications and cloud technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external extremist parties, including foreign state actors in some circumstances as a means to promote political ends. Global events and geopolitical instability may lead to increased nation state targeting of financial institutions in the U.S. and abroad. Any of these parties may also attempt to fraudulently induce employees, customers, clients, vendors, or other third parties or users of the Company, the Adviser, the Administrator and their affiliates’ systems to disclose sensitive information in order to gain access to such parties’ data or that of their employees or clients. Cybersecurity risks may also derive from human error, fraud or malice on the part of the Adviser or the Administrator and their affiliates’ employees or third parties, or may result from accidental technological failure.
Like other financial services firms, Morgan Stanley continues to be the subject of unauthorized access attacks, mishandling or misuse of information, computer viruses or malware, cyber attacks designed to obtain confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, denial of service attacks, data breaches, social engineering attacks and other events, and there can be no assurance that such unauthorized access, mishandling or misuse of information, or cyber incidents will not occur in the future, and they could occur more frequently and on a more significant scale. Given Morgan Stanley’s global footprint and the high volume of transactions it processes, the large number of clients, partners, vendors and counterparties with which it does business, and the increasing sophistication of cyber attacks, a cyber attack, information or security breaches could occur and persist for an extended period of time without detection.
Although we, the Adviser, the Administrator and Morgan Stanley have developed protocols, processes, internal controls and other protective measures to help mitigate cybersecurity risks and cyber intrusions, these measures, as well as our increased awareness of the nature and extent of the risk of a cyber incident, may be ineffective and do not guarantee that a cyber incident will not occur or that our financial results, operations or confidential information will not be negatively impacted by such an incident. If any of the foregoing events occur, the confidential and other information of the Company, the Adviser, and the Administrator could be compromised. Such events could also cause interruptions or malfunctions in the operations of the Company, the Adviser or the Administrator, and in particular the Adviser’s investment activities on our behalf and the provision of administrative services to us by the Administrator. In addition, the Company, the Adviser, the Administrator or our portfolio companies could be required to make a significant investment to remedy the effects of any cybersecurity incident, harm to their reputations, legal claims that they and their respective affiliates may be subjected to, regulatory action or enforcement arising out of applicable privacy and other laws, adverse publicity, and other events that may affect their business and financial performance. The increased use of mobile and cloud technologies can heighten these and other operational risks.
We, the Adviser and the Administrator currently or in the future are expected to routinely transmit and receive personal, confidential and proprietary information by email and other electronic means. We, the Adviser and the Administrator have discussed and worked with clients, vendors, service providers, counterparties and other third parties to develop secure transmission capabilities and protect against
cyber-attacks. However, we, the Adviser and the Administrator may not be able to ensure secure capabilities with all of our clients, vendors, service providers, counterparties and other third parties to protect the confidentiality of the information.
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In addition, the systems and technology resources used by us, our Adviser, our Administrator and our and their respective affiliates could be strained by extended periods of remote working by our Adviser, our Administrator and their affiliate’s employees and such extended remote working could introduce operational risks, including heightened cybersecurity risk. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.
Terrorist attacks, acts of war, natural disasters, outbreaks or pandemics, such as the Coronavirus pandemic, may impact our portfolio companies and our Adviser and harm our business, operating results and financial condition.
Terrorist acts, acts of war, natural disasters, disease outbreaks, pandemics or other similar events may disrupt our operations, as well as the operations of our portfolio companies and our Adviser. Such acts have created, and continue to create, economic and political uncertainties and have contributed to recent global economic instability. For example, many countries have experienced outbreaks of infectious illnesses in recent decades, including polio, swine flu, avian influenza, SARS, coronaviruses and the monkeypox virus.
In February 2022, Russia launched a large-scale invasion of Ukraine. The extent and duration of Russian military action in the Ukraine, resulting sanctions and resulting future market disruptions, including declines in stock markets in Russia and elsewhere and the value of the ruble against the U.S. dollar, are impossible to predict, but could be significant. Any such disruptions caused by Russian military or other actions (including cyberattacks, espionage or the use or threatened use of nuclear weapons) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located in Europe or that have substantial business relationships with European or Russian companies. It is not possible to predict the duration or extent of longer-term consequences of this conflict, which could include further sanctions, retaliatory and escalating measures taken by Russia, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe. Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
Market volatility resulting from the Coronavirus pandemic and other public health concerns has had a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment continue to be impacted by such events. In addition to these and any future developments potentially having adverse consequences for certain portfolio companies and other issuers in or through which we may invest and the value of our investments therein, the operations of the Adviser (including those relating to us) have been, and could continue to be, adversely impacted. Any of the foregoing events could materially and adversely affect our ability to source, manage and divest our investments and our ability to fulfill our investment objectives. Similar consequences could arise with respect to other comparable infectious diseases.
The extent to which the Coronavirus and/or other disease outbreaks or health pandemics may negatively affect our and our portfolio companies’ operating results, or the duration of any potential business or supply- chain disruption, is uncertain. These potential impacts, while uncertain, could adversely affect our operating results and the operating results of the portfolio companies in which we invest. There is a risk that any future disease outbreaks or health pandemics (including a recurrence of the Coronavirus) would impact our ability to achieve our investment objectives. Further, if a future pandemic occurs during a period when
our investments are maturing, we may not be able to realize our investments within the Company’s term, or at all. In addition, future terrorist activities, military or security operations, natural disasters, disease outbreaks, pandemics or other similar events could weaken the domestic/global economies and create additional uncertainties, which may negatively impact our portfolio companies and, in turn, could have a material adverse impact on our business, operating results and financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
Refer to “Item 1. Financial Statements—Notes to Consolidated Financial Statements—Note 8. Net Assets” in this Report and our Current Report on Form 8-K filed on August 1, 2022 for an issuance of our Common Stock for the three months ended September 30, 2022. Such issuance was part of our Private Offering pursuant to Section 4(a)(2) of the Securities Act and Regulation D thereunder.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
(a) Documents filed as part of this report
(b) Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MORGAN STANLEY DIRECT LENDING FUND
Dated: November 8, 2022
By
/s/ Jeffrey S. Levin
Jeffrey S. Levin
Director and Chief Executive Officer
(principal executive officer)
Dated: November 8, 2022
By:
/s/ Venugopal Rathi
Venugopal Rathi
Chief Financial Officer
(principal financial officer)




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