MSIF

MSC Income Fund, Inc. (MSIF) 2025 Annual Report Summary

Business Context and Reporting Period

This summary covers the fiscal year ended December 31, 2025, for MSC Income Fund, Inc. (MSIF), a Maryland corporation operating as a Business Development Company (BDC) and Regulated Investment Company (RIC). In January 2025, MSIF completed its listing on the New York Stock Exchange (NYSE) under the ticker "MSIF" and executed a two-for-one reverse stock split. Concurrently, the Fund shifted its investment strategy to focus solely on its "Private Loan" strategy (debt capital to private companies owned by private equity funds), while winding down its Lower Middle Market (LMM), Middle Market, and Other Portfolio investments.

Key Financial Metrics

Material Changes vs. Prior Period

• Portfolio Growth: The Investment Portfolio fair value increased to $1.335 billion in 2025 from $1.178 billion in 2024. The Private Loan portfolio grew to $809.0 million (from $677.9 million), while the LMM portfolio grew to $487.6 million (from $436.1 million).
• Capital Raise: In connection with its NYSE listing, MSIF completed a follow-on public offering in January/February 2025, raising net proceeds of $90.5 million.
• Realized Losses: The Fund reported a net realized loss of $9.5 million in 2025, compared to a net realized gain of $15.8 million in 2024. This was driven by restructuring losses in the Middle Market portfolio and other portfolio adjustments.
• Unrealized Appreciation: Net unrealized appreciation was $36.4 million in 2025, a significant improvement from net unrealized depreciation of $15.4 million in 2024.
• Expense Reduction: Total expenses decreased by 5% to $73.6 million, primarily due to a reduction in interest expense (lower benchmark rates) and the elimination of certain internal administrative service expense waivers that were previously required under the prior advisory agreement.

Guidance, Outlook, and Risks

Outlook and Strategy: Management intends to continue focusing on the Private Loan strategy for new investments. The Fund expects the LMM, Middle Market, and Other Portfolio segments to decline as existing investments are repaid or sold. MSIF maintains a share repurchase plan of up to $65.0 million and a dividend reinvestment plan (DRIP).

Dividends: In February 2026, the Fund declared a regular quarterly dividend of $0.35 per share and a supplemental dividend of $0.01 per share.

Risks and Contingencies:

• Valuation Uncertainty: Approximately 99.7% of the portfolio consists of Level 3 investments (illiquid securities with no readily available market values), requiring significant management judgment and unobservable inputs for valuation.
• Leverage: The Fund utilizes significant leverage (Asset Coverage Ratio of 222%). Rising interest rates could increase borrowing costs, though 97% of debt investments have interest rate floors.
• Interest Rate Sensitivity: A 200 basis point increase in interest rates would decrease Net Investment Income by approximately $5.6 million annually, while a 200 basis point decrease would increase it by $5.7 million.
• Adviser Conflicts: The Adviser is wholly-owned by Main Street Capital Corporation, creating potential conflicts in allocating investment opportunities between MSIF and other advisory clients.

Key Facts for Investor Verification

• NAV vs. Market Price: As of February 25, 2026, the stock traded at $12.53, representing a 21% discount to the December 31, 2025 NAV of $15.85.
• Debt Maturities: Significant debt maturities include $150.0 million in Series A Notes due in 2026, $209.0 million in the Corporate Facility due in 2029, and $244.0 million in the SPV Facility due in 2030.
• Non-Accrual Assets: Investments on non-accrual status comprised 1.4% of the total Investment Portfolio at fair value as of December 31, 2025.
• Expense Waivers: Unlike prior years, there were no internal administrative services expense waivers in 2025; these costs are now capped under the new Advisory Agreement.
• Tax Status: The Fund maintains RIC status, distributing 90% of taxable income to avoid corporate-level taxes, though it incurs a 4% excise tax on undistributed income.