Morgan Stanley Direct Lending Fund

Previous wording

•risk associated with possible disruptions in our operations or the economy generally, including disruptions from the impact of global health events;

Current wording

•risk associated with possible disruptions in our operations or the economy generally, including disruptions from the impact of global health events and natural disasters;

Previous wording

•the timing and amount of cash flows, if any, from the operations of our portfolio companies;

Current wording

•the timing and amount of cash flows, distributions and dividends, if any, from the operations of our portfolio companies;

Previous wording

•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”);

Current wording

•our ability to maintain our qualification as a BDC and as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”);

Previous wording

•the risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and elsewhere in this Report.

Current wording

•the risks, uncertainties and other factors we identify under “Part I, Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and elsewhere in this Report.

Previous wording

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, 2023, 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.

Current wording

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, 2024 (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.

Previous wording

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

Current wording

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.

Previous wording

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 Investment Company Act of 1940, as amended (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 externally managed by our Adviser, an indirect, wholly owned subsidiary of Morgan Stanley. We are not a subsidiary of, or consolidated with, Morgan Stanley.

Current wording

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 Investment Company Act of 1940, as amended (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 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. We are externally managed by our Adviser, an indirect, wholly owned subsidiary of Morgan Stanley. We are not a subsidiary of, or consolidated with, Morgan Stanley.

Previous wording

Pursuant to the exemptive relief granted by the SEC to us and 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.

Current wording

Pursuant to the exemptive relief granted by the SEC to us and 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) including any proprietary accounts of Morgan Stanley, if applicable, 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.

Previous wording

We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends or distributions of 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 SOFR, or historically LIBOR. 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 fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities.

Current wording

We generate revenue primarily in the form of interest income on debt investments we hold. In addition, we generate income from dividends or distributions of 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 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 fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities.

Previous wording

Our primary operating expenses include the payment of: (i) investment advisory fees, including base management fees and incentive fees, to our 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 (the “Administration Agreement”) between us and MS Private Credit Administrative Services LLC (the “Administrator”); and (iii) other operating expenses as detailed below:

Current wording

Our primary operating expenses include the payment of: (i) investment advisory fees, including base management fees and incentive fees, to our 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 MS Private Credit Administrative Services LLC (the “Administrator”) in performing its administrative obligations under the administration agreement (the “Administration Agreement”) between us and the Administrator; and (iii) other operating expenses as detailed below:

Previous wording

Our debt portfolio displayed the following characteristics of each of our investments 1,2 unless otherwise noted:

Current wording

Our debt portfolio displayed the following characteristics of each of our investments(1)(2)unless otherwise noted:

Previous wording

(2)Represents dollar amount of equity investments funded.

Current wording

(2)Represents dollar amount of other investments funded.

Previous wording

In the table above, total investment income increased from $94,451 and $266,984 for the three and nine months ended September 30, 2023 to $109,752 and $313,041 for the three and nine months ended September 30, 2024, respectively. The increase was primarily driven by our deployment of capital. The size of our investment portfolio at amortized cost increased from $3,158,601 as of September 30, 2023 to $3,662,618 as of September 30, 2024.

Current wording

In the table above, total investment income increased from $99,101 for the three months ended March 31, 2024 to $101,458 for the three months ended March 31, 2025. The increase was primarily driven by our deployment of capital. The size of our investment portfolio at amortized cost increased from $3,323,767 as of March 31, 2024 to $3,826,731 as of March 31, 2025. This was partially offset by a decrease in our weighted average yield at cost of 10.2% at March 31, 2025 from 11.9% at March 31, 2024, which was primarily driven by the reduction in base rates and repricing on our existing portfolio.

Previous wording

In the table above, interest and other financing expenses, including unused commitment fees, amortization of debt issuance costs and deferred financing costs, increased from $29,686 and $84,260 for the three and nine months ended September 30, 2023 to $33,153 and $89,715 for the three and nine months ended September 30, 2024, respectively. The increase was primarily driven by our increased borrowings. Our debt outstanding (at par) increased from $1,725,252 as of September 30, 2023 to $1,841,987 as of September 30, 2024.

Current wording

Interest and other financing expenses, including unused commitment fees, amortization of debt issuance costs, net change in unrealized (appreciation) depreciation on effective interest rate swaps and hedged items and deferred financing costs, were $34,179 and $27,260 for the three months ended March 31, 2025 and March 31, 2024 respectively. The increase was primarily due to higher average borrowings outstanding for the three months ended March 31, 2025. For the three months ended March 31, 2025 and March 31, 2024, average borrowings outstanding were $2,030,967 and $1,462,796 respectively.

Previous wording

Base management fees, net of waiver, were $6,825 and $1,938 for the three months ended September 30, 2024 and September 30, 2023, and $18,437 and $5,625 for the nine months ended September 30, 2024 and September 30, 2023, respectively. The increases were primarily due to an increase in average gross assets as well as the management fee waiver pre and post IPO. Refer to Note 3 “Related Party Transactions” for additional information about the management fee waiver.

Current wording

Base management fees, net of waiver, were $8,977 and $5,132 for the three months ended March 31, 2025 and March 31, 2024, respectively. The increase was primarily due to an increase in average gross assets as well as the duration of the management fee waiver which expired on January 24, 2025.

Previous wording

The incentive fee consists of two components: (1) income based incentive fee and (2) capital gains incentive fee. The income based incentive fees, net of waiver, were $8,448 and $10,727 for the three months ended September 30, 2024 and September 30, 2023 and $28,476 and $30,246 for the nine months ended September 30, 2024 and September 30, 2023. Refer to Note 3 “Related Party Transactions” for additional information about the incentive fees waiver.

Current wording

The incentive fee consists of two components: (1) income based incentive fee and (2) capital gains incentive fee. The income based incentive fees, net of waiver, were $9,468 and $10,126 for the three months ended March 31, 2025 and March 31, 2024, respectively.

Previous wording

For the three and nine months ended September 30, 2024 net realized losses on our investments was $(10,965) and $(16,482), which was primarily due to the restructuring of one and four portfolio companies, respectively.

Current wording

For the three months ended March 31, 2025, net realized gains on our investments was $562 which was primarily due to the sale/repayment on certain equity positions offset by the restructuring of one of our portfolio companies. For the three months ended March 31, 2024, net realized losses on our investments was $5,625, which was primarily due to the restructuring of three portfolio companies.

Previous wording

For the three and nine months ended September 30, 2024, net change in unrealized appreciation on our investments of $5,442 and $10,916, was primarily the result of the changes in spreads in the primary and secondary markets, partially offset by the reversal of unrealized depreciation in connection with the aforementioned restructuring. For the three and nine months ended September 30, 2023, net change in unrealized appreciation on our investments of $22,829 and $30,909, respectively, was primarily driven by changes in spreads in the primary and secondary markets.

Current wording

For the three months ended March 31, 2025, net change in unrealized depreciation on our investments of $17,106 was primarily the result of the changes in spreads in the secondary markets as well as financial performance in certain portfolio companies. For the three months ended March 31, 2024, net change in unrealized appreciation on our investments of $2,658 was primarily driven by changes in spreads in the primary and secondary markets.

Previous wording

As of September 30, 2024, we had approximately $88.4 million of unrestricted cash and cash equivalents, which taken together with our approximately $354.0 million and $748.7 million of availability under the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability) (each as defined in Note 6. “Debt” in the notes to the accompanying consolidated financial statements), respectively, we expect to be sufficient for our investing activities and sufficient to conduct our operations in the near term. As of September 30, 2024, we believed we had adequate financial resources to satisfy unfunded portfolio company commitments of $552.4 million.

Current wording

As of March 31, 2025, we had approximately $65.6 million of unrestricted cash and cash equivalents, which taken together with our approximately $284.0 million and $800.1 million of availability under the BNP Funding Facility and the Truist Credit Facility (subject to borrowing base availability) (each as defined in Note 6. “Debt” in the notes to the accompanying consolidated financial statements), respectively, we expect to be sufficient for our investing activities and sufficient to conduct our operations in the near term. As of March 31, 2025, we believed we had adequate financial resources to satisfy unfunded portfolio company commitments of $584.9 million.

Previous wording

On January 26, 2024, we closed our Initial Public Offering ("IPO"), issuing 5,000,000 shares of our Common Stock at a public offering price of $20.67 per share. Net of underwriting fees, we received net cash proceeds, before offering expenses, of approximately $97.1 million. Our Common Stock began trading on the NYSE under the symbol “MSDL” on January 24, 2024.

Current wording

On January 26, 2024, we closed our IPO, issuing 5,000,000 shares of our Common Stock at a public offering price of $20.67 per share. Net of underwriting fees, we received net cash proceeds, before offering expenses, of approximately $97.1 million. Our Common Stock began trading on the NYSE under the symbol “MSDL” on January 24, 2024.

Previous wording

In connection with the IPO, the Company redeemed any fractional shares of Common Stock outstanding for cash in an amount equal to the pro rata portion of $20.67 per share of Common Stock, which was the initial public offering price in the IPO.

Current wording

In connection with the IPO, we redeemed any fractional shares of Common Stock outstanding for cash in an amount equal to the pro rata portion of $20.67 per share of Common Stock, which was the initial public offering price in the IPO.

Previous wording

Prior to January 26, 2024, we had an “opt in” dividend reinvestment plan, or the DRIP. As a result, our stockholders who elected to “opt in” to the DRIP had their cash dividends or distributions automatically reinvested in additional shares of Common Stock, rather than receiving cash. We adopted an “opt out” DRIP effective as of January 26, 2024. As a result, our stockholders who have not “opted out” of 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. For more information, see “—Recent Developments.”

Current wording

We adopted an “opt out” DRIP effective as of January 26, 2024 and later amended effective December 7, 2024. As a result, our stockholders who have not “opted out” of 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.

Previous wording

The following table summarize our distributions declared and payable for the nine months ended September 30, 2024 and September 30, 2023, respectively:

Current wording

The following table summarizes our distributions declared and payable for the three months ended March 31, 2025 and March 31, 2024, respectively:

Previous wording

On January 25, 2024, we entered into a share repurchase plan, or the 10b5-1 Plan, to acquire up to $100 million in the aggregate of our Common Stock at prices below our net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

Current wording

On January 25, 2024, we entered into the Company 10b5-1 Plan (the "Original Company 10b5-1 Plan"), to acquire up to $100 million in the aggregate of our Common Stock at prices below our net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b5-1 and Rule 10b-18 of the Exchange Act, which was further amended and restated by our Board on February 27, 2025 (the "Amended and Restated Company 10b5-1 Plan").

Previous wording

No shares were repurchased under our 10b5-1 Plan during the six months ended June 30, 2024 and during the nine months ended September 30, 2023.

Current wording

No shares were repurchased under our Original Company 10b5-1 Plan during the three months ended March 31, 2024.

Previous wording

(1)As of September 30, 2024 and December 31, 2023, a letter of credit of $5,278 and $253, respectively, was outstanding, which reduced the unused availability under the Truist Credit Facility by the same amount. Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of September 30, 2024 and December 31, 2023, the Company had borrowings denominated in Euros (EUR) of 238 and 238, respectively and Canadian dollars (CAD) of $300 and 0, respectively.

Current wording

(1)As of March 31, 2025 and December 31, 2024, a letter of credit of $2,275 and $1,828, respectively, was outstanding, which reduced the unused availability under the Truist Credit Facility by the same amount. Under the Truist Credit Facility, the Company may borrow in U.S. dollars or certain other permitted currencies. As of March 31, 2025 and December 31, 2024, the Company had borrowings denominated in Euros (EUR) of 3,298 and 3,298, respectively, Canadian dollars (CAD) of 300 and 300, respectively and Pound Sterling (GBP) of 1,020 and 1,020, respectively.

Previous wording

(2)As of September 30, 2024, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $2,657, $1,155 and $3,608 and unamortized original issuance discount of $506, $0 and $3,594, respectively. As of December 31, 2023, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $3,499, $2,065 $0, and unamortized original issuance discount of $667, $0 and $0, respectively.

Current wording

(2)As of March 31, 2025, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $2,097, $555 and $2,982 and unamortized original issuance discount of $399, $0 and $3,207, respectively. As of December 31, 2024, the carrying value of the Company’s 2027 Notes, 2025 Notes and 2029 Notes were presented net of unamortized debt issuance costs of $2,374, $856 $3,297, and unamortized original issuance discount of $452, $0 and $3,398, respectively.

Previous wording

On November 4, 2024, the Board declared a distribution of $0.50 per share, which is payable on January 24, 2025 to shareholders of record as of December 31, 2024.

Current wording

On May 8, 2025, the Board declared a distribution of $0.50 per share, which is payable on or around July 25, 2025 to shareholders of record as of June 30, 2025.

Previous wording

We consider the most significant accounting policies to be those related to our Investments, Revenue Recognition, Deferred Financing Costs and Debt Issuance Costs and Income Taxes. The valuation of investments is our most significant critical estimate. The most significant input is the discount rate used in yield analysis that is based on comparable market yields. Significant increases in the discount rates in isolation would result in a significantly lower fair value measurement. For a further discussion and disclosure of key inputs and considerations related to this estimate, refer to "Note 5—Fair Value Measurements" included in the notes to the consolidated financial statements.

Current wording

We consider the most significant accounting policies to be those related to our Investments, Revenue Recognition, Deferred Financing Costs and Debt Issuance Costs and Income Taxes. The valuation of investments is our most significant critical estimate. The most significant input is the discount rate used in yield analysis that is based on comparable market yields. Significant increases in the discount rates in isolation would result in a significantly lower fair value measurement. For further discussion and disclosure of key inputs and considerations related to this estimate, refer to Note 5 "Fair Value Measurements" included in the notes to the consolidated financial statements included in Part I, Item I of this Report.

Previous wording

in the notes to the accompanying unaudited financial statements if not defined herein):

Current wording

in the notes to the accompanying consolidated financial statements if not defined herein):