Houston – October 12, 2026 -- MSC Income Fund (NYSE: MSIF) posted a 15.9% annualized return on equity for the second quarter of 2026, as net asset value rose 4.0% to $16.51 per share from $15.87 on March 31. Net increase in net assets from operations reached $29.3 million, or $0.65 per share, up $13.0 million from the year-earlier quarter.
Net fair value gains of $19.0 million drive the earnings increase
The net fair value change on portfolio investments was $19.0 million, against $0.9 million in the second quarter of 2025. It comprised a $9.9 million net realized gain and $9.1 million of net unrealized appreciation. The largest single contributor was an $11.6 million realized gain on the full exit of Centre Technologies Holdings, LLC, a lower middle market (LMM) portfolio company. Trailing twelve-month return on equity was 13.5%. NAV is also up $0.66, or 4.2%, from $15.85 at December 31, 2025.
Net investment income falls to $0.26 per share on higher expenses
Net investment income (NII) was $12.0 million, down $4.3 million year over year, or $0.09 per share. Adjusted NII was $14.9 million, or $0.33 per share, compared with $16.3 million, or $0.35, a year earlier. Adjusted NII before taxes was $0.36 per share.
Total investment income was $35.7 million, up just $0.1 million. Interest income rose $0.7 million and fee income rose $0.5 million, but dividend income fell $1.1 million, including a $0.9 million drop from LMM portfolio companies.
Expenses net of waivers rose 21.8% to $22.3 million from $18.3 million. The drivers were:
- a $2.9 million increase in the capital gains incentive fee accrual, equal to $0.07 per share, tied to portfolio appreciation;
- a $1.2 million rise in interest expense, linked to higher average borrowings and the May 2029 Notes issued in the first quarter of 2026;
- a $0.4 million increase in base management fees.
Incentive fee on income, net of waivers, fell $0.6 million, including a $0.3 million voluntary waiver by the Adviser. The operating expenses to assets ratio held at 1.9% annualized. A 3.6% decline in weighted-average shares outstanding, mainly from buybacks, also affected per-share comparisons.
Fund switches to monthly dividends of $0.11 per share from July
The Fund changed its regular dividend frequency from quarterly to monthly beginning in July 2026. It declared $0.11 per share for each of July, August and September, or $0.33 for the third quarter. A supplemental dividend of $0.03 per share is payable in September. Total dividends declared in the second quarter came to $0.36 per share.
Private loan book adds $62.2 million in new investments
The Fund completed $62.2 million of private loan portfolio investments. After repayments, return of invested equity capital and a cost-basis reduction from a realized loss, the private loan portfolio's cost basis grew by a net $9.7 million. It also completed $13.1 million of LMM follow-on investments. After repayments and return of invested equity capital, the LMM cost basis declined by a net $2.2 million.
CEO Dwayne L. Hyzak cited net fair value appreciation in both the private loan and LMM portfolios, along with the material realized gain, and pointed to the portfolio's quality, liquidity position and investment pipeline as the basis for his outlook.