Sound Point Direct Lending BDC

Inaugural Fiscal 2025 Operating Period Performance

The newly formed BDC focused on U.S. middle-market private credit completed its first operating period from inception in March 2025 through December 31, 2025. The $649K net loss recorded for the period is entirely attributable to one-time organizational and setup costs incurred ahead of the launch of investment operations on December 15, 2025. No recurring operating losses drove the deficit, and these one-time costs will not repeat in future periods, positioning the Fund to generate positive net income as its loan portfolio generates recurring interest income. Net cash used in operating activities of $99.1M for the period is tied to pre-launch operational outlays and setup costs ahead of active investment deployment.

Core Investment Mandate and Associated Risk Factors

The Fund’s stated investment focus is secured loans within the capital structure of U.S. middle-market companies. Middle-market companies generally have less predictable operating results and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. Key risk factors that may impact performance include: a general economic recession or major decline in demand for middle-market products and services, which would likely have a materially adverse impact on the value of the Fund’s securities; an inability to raise capital or access debt financing, which would negatively affect the Fund’s business, inhibit its ability to scale operations, and lead to an increase in operating expenses as a percentage of the Fund’s net assets; and a scenario where income and capital appreciation on investments made with borrowed funds are less than the costs of the leverage, which would decrease the value of the Fund’s assets.

Shareholder Considerations