Company: PDCC
Filing Date: 2025-09-03
Form Type: N-CSRS
Source: 0001398344-25-017467
Chunk: 20

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-09-03
Form: N-CSRS
Chunk 20
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time or that the Adviser will continue indefinitely as the Company’s investment adviser.

| 16 | www.pearldivercreditcompany.com |

| Pearl Diver Credit Company Inc. | Notes to Financial Statements |

June 30, 2025 (Unaudited)

Prepayment Risk

The assets underlying the CLO securities in which
the Company invests are subject to prepayment by the underlying corporate borrowers. As such, the CLO securities and related investments
in which the Company invests are subject to prepayment risk. If the Company or a CLO collateral manager are unable to reinvest prepaid
amounts in a new investment with an expected rate of return at least equal to that of the investment repaid, the Company’s investment
performance will be adversely impacted.

Liquidity Risk

Generally, CLO investments in which the company invests
do not trade on any exchange. As such, the Company may not be able to sell such investments quickly, or at all. If the Company can sell
such investments, the prices the Company receives may not reflect the Adviser’s assessment of their fair value or the amount paid
for such investments by the Company.

Fair Valuation of the Company’s Portfolio Investments

Generally, CLO investments in which the company invests
do not trade on any exchange. The Adviser values these securities at least monthly, or more frequently as may be required from time to
time, at fair value. The Adviser’s determinations of the fair value of the Company’s investments have a material impact on
the Company’s net earnings through the recording of unrealized appreciation or depreciation of investments and may cause the Company’s
NAV on a given date to understate or overstate, possibly materially, the value that the Company ultimately realizes on one or more of
the Company’s investments.

Limited Investment Opportunities Risk

The market for CLO securities is more limited than
the market for other credit related investments. The Company can offer no assurances that sufficient investment opportunities for the
Company’s capital will be available. In recent years there has been a marked increase in the number of, and flow of capital into,
investment vehicles established to pursue investments in CLO securities whereas the size of the market is relatively limited. While the
Company cannot determine the precise effect of such competition, such increase may result in greater competition for investment opportunities,
which may result in an increase in the price of such investments relative to the risk taken on by holders of such investments. Such competition
may also result,