EX-99.1

EX-99.1 6 ck0001603480-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

TCW Direct Lending Strategic Ventures LLC

Financial Statements

September 30, 2023

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

CONTENTS


	Page(s)
Financial Statements

Schedules of Investments as of September 30, 2023 (unaudited) and December 31, 2022	2-5

Statements of Assets and Liabilities as of September 30, 2023 (unaudited) and December 31, 2022	6

Statements of Operations for the nine months ended September 30, 2023 and 2022 (unaudited)	7

Statements of Changes in Members’ Capital for the nine months ended September 30, 2023 and 2022 (unaudited)	8

Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)	9

Notes to Financial Statements (unaudited)	10-17

Administration	18

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

As of September 30, 2023

SCHEDULE OF INVESTMENTS


Industry	Issuer	Acquisition Date	Investment	% of Members’ Capital			Par Amount		Maturity Date	Amortized Cost		Fair Value
DEBT
Distributors
	Animal Supply Company, LLC(1)	08/14/20	Term Loan - 14.18% inc PIK (SOFR + 8.50%, 1.00% Floor, all PIK)		15.4	%	$	20,805,246	08/14/25	$	20,805,246	$	13,169,721
	Retail & Animal Intermediate, LLC(1)(2)	08/14/20	Subordinated Loan - 7.00% inc PIK (7.00%, Fixed Coupon, all PIK)		0.0	%		23,127,647	11/14/25		17,603,046		—
					15.4	%					38,408,292		13,169,721
Diversified Consumer Services
	School Specialty, Inc.(1)	09/15/20	Term Loan - 13.42% (SOFR + 8.00%, 1.25% Floor)		6.7	%		5,695,160	12/29/26		5,680,401		5,695,160
Pharmaceuticals
	Noramco, LLC	07/01/16	Term Loan - 13.77% inc PIK (SOFR + 8.38%, 1.00% Floor, 0.38% PIK)		28.7	%		25,024,277	01/31/25		25,009,761		24,573,842
TOTAL DEBT (50.8%)					50.8	%					69,098,454		43,438,723

							Shares/ Contracts			Cost		Fair Value
EQUITY
Distributors
	Retail & Animal Supply Holdings, LLC(1)(2)		Class A Common		0.0	%		170,438			1,195,825		—
Diversified Consumer Services
	SSI Parent, LLC (fka School Specialty, Inc.)(1)(2)		Common Stock		18.2	%		51,000			34,124		15,587,426
	SSI Parent, LLC (fka School Specialty, Inc.)(1)(2)		Class A Preferred Stock		11.4	%		510,549			5,105,495		9,751,494
	SSI Parent, LLC (fka School Specialty, Inc.)(1)(2)		Class B Preferred Stock		3.6	%		227,629			225,831		3,095,759
					33.2	%					5,365,450		28,434,679
TOTAL EQUITY (33.2%)											6,561,275		28,434,679
	Total Debt & Equity Investments (84.0%)(3)				84.0	%					75,659,729		71,873,402
	Cash Equivalents
	First American Government Obligation Fund, Yield 5.26%				15.6	%		13,371,411			13,371,411		13,371,411
	Total Cash Equivalents				15.6	%					13,371,411		13,371,411
	Total Investments (99.6%)									$	89,031,140	$	85,244,813
	Net unrealized depreciation on unfunded commitments (0.0%)												-
	Other Assets in Excess of Other Liabilities (0.4%)												295,711
	Members’ Capital (100.0%)											$	85,540,524

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

As of September 30, 2023

SCHEDULE OF INVESTMENTS (continued)

(1)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2022 and September 30, 2023 along with transactions during the period ended September 30, 2023 in these affiliated investments are as follows:


Name of Investments	Fair Value at December 31, 2022		Gross Additions(a)		Gross Reductions(b)			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at September 30, 2023		Interest/ Dividend/ Other income
Retail & Animal Supply Holdings, LLC Class A Common	$	—	$	—	$	—		$	—	$	—		$	—	$	—
Retail & Animal Intermediate, LLC Subordinated Loan - 7.00%		—		—		—			—		—			—		—
Animal Supply Company, LLC Term Loan - 14.18%		17,202,678		2,045,509		—			—		(6,078,466	)		13,169,721		2,062,247
SSI Parent, LLC (fka School Specialty, Inc.) Common Stock		17,328,145		—		—			—		(1,740,719	)		15,587,426		3,916,094
SSI Parent, LLC (fka School Specialty, Inc.) Class A Preferred Stock		8,270,814		—		—			—		1,480,680			9,751,494		1,374
SSI Parent, LLC (fka School Specialty, Inc.) Class B Preferred Stock		2,868,130		—		—			—		227,629			3,095,759		476
School Specialty, Inc. Term Loan - 13.42%		22,405,559		12,395		(16,657,316	)		—		(65,478	)		5,695,160		1,288,207
Total non-controlled affiliated investments	$	68,075,326	$	2,057,904	$	(16,657,316	)	$	—	$	(6,176,354	)	$	47,299,560	$	7,268,398

(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(2)

Non-income producing

(3)

The fair value of each non-controlled/non-affiliated investment was determined using significant unobservable inputs and such investment are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

SOFR - Secured Overnight Financing Rate, generally 1-Month or 3-Month


Geographic Breakdown of Portfolio
United States	100	%

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $2,101,816 and $16,911,377, respectively, for the period ended September 30, 2023. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

As of December 31, 2022

SCHEDULE OF INVESTMENTS


Industry	Issuer	Acquisition Date	Investment	% of Members’ Capital			Par Amount		Maturity Date	Amortized Cost		Fair Value
DEBT
Distributors
	Animal Supply Company, LLC(1)	08/14/20	Term Loan - 13.16% inc PIK (SOFR + 8.50%, 1.00% Floor, all PIK)		16.3	%	$	18,759,736	08/14/25	$	18,759,737	$	17,202,678
	Retail & Animal Intermediate, LLC(1)(2)	08/14/20	Subordinated Loan - 7.00% inc PIK (7.00%, Fixed Coupon, all PIK)		—			21,935,400	11/14/25		17,603,046		—
					16.3	%					36,362,783		17,202,678
Diversified Consumer Services
	School Specialty, Inc.(1)	09/15/20	Term Loan - 12.43% (SOFR + 8.00%, 1.25% Floor)		21.3	%		22,405,559	09/15/25		22,325,322		22,405,559
Pharmaceuticals
	Noramco, LLC	07/01/16	Term Loan - 12.13% inc PIK (LIBOR + 8.38%, 1.00% Floor, 0.38% PIK)		23.7	%		25,161,394	12/31/23		25,121,093		24,884,619
TOTAL DEBT (61.3%)					61.3	%					83,809,198		64,492,856

							Shares/ Contracts			Cost		Fair Value
EQUITY
Distributors
	Animal Supply Holdings, LLC (1) (2)		Class A Common		0.0	%		170,438			1,195,825		—
Diversified Consumer Services
	School Specialty, Inc. (1) (2)		Common Stock		16.5	%		51,000			34,124		17,328,145
	School Specialty, Inc. (1) (2)		Class A Preferred Stock		7.9	%		510,549			5,105,495		8,270,814
	School Specialty, Inc. (1) (2)		Class B Preferred Stock		2.7	%		227,629			225,831		2,868,130
					27.1	%					5,365,450		28,467,089
TOTAL EQUITY (27.1%)					27.1	%					6,561,275		28,467,089
	Total Portfolio Investments (88.4%) (3)				88.4	%					90,370,473		92,959,945
										$	90,370,473	$	92,959,945
	Net unrealized depreciation on unfunded commitments (0.0%)												—
	Other Assets in Excess of Other Liabilities (11.6%)												12,217,197
	Members’ Capital (100.0%)											$	105,177,142

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

As of December 31, 2022

SCHEDULE OF INVESTMENTS (continued)

(1)

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, between 5% and 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company. Fair value as of December 31, 2021 and December 31, 2022 along with transactions during the year ended December 31, 2022 in these affiliated investments are as follows:


Name of Investments	Fair Value at December 31, 2021		Gross Additions(a)		Gross Reductions(b)			Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2022		Interest/ Dividend/ Other income
Animal Supply Holdings, LLC Class A Common Stock	$	—	$	—	$	—		$	—	$	—		$	—	$	—
ASC Acquisition Holdings, LLC Subordinated Loan - 7.00%		3,229,645		—		—			—		(3,229,645	)		—		778
ASC Acquisition Holdings, LLC Term Loan - 13.16%		16,916,451		1,880,670		(37,384	)		—		(1,557,059	)		17,202,678		1,907,447
School Specialty, Inc. Common Stock		—		—		—			—		17,328,145			17,328,145		1,977
School Specialty, Inc. Preferred Stock A		7,658,242		—		—			—		612,572			8,270,814		1,245
School Specialty, Inc. Preferred Stock B		437,048		—		—			—		2,431,082			2,868,130		432
School Specialty, Inc. Term Loan - 12.43%		22,500,377		29,718		(94,313	)		—		(30,223	)		22,405,559		2,334,795
Total non-controlled affiliated investments	$	50,741,763	$	1,910,388	$	(131,697	)	$	—	$	15,554,872		$	68,075,326	$	4,246,674

(a)

Gross additions include new purchases, PIK income and amortization of original issue and market discounts.

(b)

Gross reductions include decreases in the cost basis from sales, paydown and the amortization of premium.

(2)

Non-income producing

(3)

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month


Geographic Breakdown of Portfolio
United States	100	%

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $2,055,798 and $3,824,379, respectively, for the period ended December 31, 2022. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

(Dollar amounts in thousands)

September 30, 2023

STATEMENTS OF ASSETS AND LIABILITIES


	As of
	September 30,		As of
	2023		December 31,
	(unaudited)		2022
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $25,010 and $25,121, respectively)	$	24,574	$	24,885
Non-controlled affiliated investments (amortized cost of $50,650 and $65,249, respectively)		47,300		68,075
Cash and cash equivalents		13,371		11,963
Interest receivable		308		292
Prepaid and other assets		54		42
Total Assets	$	85,607	$	105,257
Liabilities
Sub-administrator and custody fees payable		54		75
Audit fees payable		7		5
Transfer agent fee payable		5		—
Total Liabilities		66		80
Members’ Capital	$	85,541	$	105,177
Commitments and Contingencies (Note 7)
Members’ Capital
Preferred members		85,541		105,177
Members’ Capital	$	85,541	$	105,177


							Noncontrolling
							interest in
Members’ Capital Represented by:	Preferred Members			Common Members			consolidated subsidiary fund			Members’ Capital
Net contributed capital	$	454,279		$	1,000		$	3,507		$	458,786
Net distributed capital		(596,679	)		(1,000	)		(4,235	)		(601,914	)
Cumulative net income, before organization costs		227,941			704			728			229,373
Organization costs		—			(704	)		—			(704	)
Total Members’ Capital as of September 30, 2023 (Unaudited)	$	85,541		$	—		$	—		$	85,541


							Noncontrolling
							interest in
Members’ Capital Represented by:	Preferred Members			Common Members			consolidated subsidiary fund			Members’ Capital
Net contributed capital	$	454,279		$	1,000		$	3,507		$	458,786
Net distributed capital		(573,179	)		(1,000	)		(4,235	)		(578,414	)
Cumulative net income, before organization costs		224,077			704			728			225,509
Organization costs		—			(704	)		—			(704	)
Total Members’ Capital as of December 31, 2022	$	105,177		$	—		$	—		$	105,177

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

(Dollar amounts in thousands)

September 30, 2023

STATEMENTS OF OPERATIONS (Unaudited)


	For the Nine			For the Nine
	Months Ended			Months Ended
	September 30, 2023			September 30, 2022
Investment Income:
Non-controlled/non-affiliated investments:
Interest income	$	3,127		$	2,027
Interest income paid-in-kind		56			78
Fee income		59			—

Non-controlled affiliated investments:
Interest income		1,288			1,656
Interest income paid-in-kind		2,046			1,316
Dividend income		3,914			—
Fee income		20			19
Total investment income		10,510			5,096

Expenses:
Audit fees		54			53
Sub-administrator and custody fees		116			69
Insurance fees		60			73
Tax service fee		22			22
Valuation fees		16			10
Other		2			2
Total expense		270			229
Net investment income		10,240			4,867

Net realized and unrealized gain/(loss) on investments
Net change in unrealized appreciation/(depreciation):
Non-controlled/non-affiliated investments		(200	)		(229	)
Non-controlled affiliated investments		(6,176	)		11,700
Net realized and unrealized gain/(loss) on investments		(6,376	)		11,471
Net increase (decrease) in Members’ Capital from operations		3,864			16,338
Net increase (decrease) in Members’ Capital from operations attributable to the Preferred
Members from operations	$	3,864		$	16,338

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

(Dollar amounts in thousands)

September 30, 2023

STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL (Unaudited)


						For the Nine
						Months Ended
						September 30, 2023
						Noncontrolling
						interest in
						consolidated
	Preferred Members			Common Members		subsidiary fund		Total
Members’ Capital, beginning of period	$	105,177		$	—	$	—	$	105,177
Net increase (decrease) in Members’ Capital resulting from operations:
Net investment income		10,240			—		—		10,240
Net change in unrealized appreciation/(depreciation) on investments		(6,376	)		—		—		(6,376	)
Net decrease in Members’ Capital resulting from capital activity:
Distributions to Members		(23,500	)		—		—		(23,500	)
Total decrease in Members’ Capital		(19,636	)		—		—		(19,636	)
Members’ Capital, end of period	$	85,541		$	—	$	—	$	85,541


						For the Nine
						Months Ended
						September 30, 2022
						Noncontrolling
						interest in
						consolidated
	Preferred Members			Common Members		subsidiary fund		Total
Members’ Capital, beginning of period	$	110,418		$	—	$	—	$	110,418
Net increase (decrease) in Members’ Capital resulting from operations:
Net investment income		4,867			—		—		4,867
Net change in unrealized appreciation/(depreciation) on investments		11,471			—		—		11,471
Net decrease in Members’ Capital resulting from capital activity:
Distributions to Members		(25,300	)		—		—		(25,300	)
Total decrease in Members’ Capital		(8,962	)		—		—		(8,962	)
Members’ Capital, end of period	$	101,456		$	—	$	—	$	101,456

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

(Dollar amounts in thousands)

September 30, 2023

STATEMENTS OF CASH FLOWS (Unaudited)


	For the Nine			For the Nine
	Months Ended			Months Ended
	September 30, 2023			September 30, 2022
Cash Flows from Operating Activities
Net increase (decrease) in members’ capital resulting from operations	$	3,864		$	16,338
Adjustments to reconcile the net increase (decrease) in members’ capital resulting from operations to net cash provided by operating activities:
Proceeds from sales and paydowns of investments		16,911			3,607
Net change in unrealized (appreciation)/depreciation on investments		6,376			(11,471	)
Interest paid-in-kind		(2,102	)		(1,394	)
Accretion of discount		(99	)		(55	)
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		(16	)		(28	)
(Increase) decrease in prepaid and other assets		(12	)		28
Increase (decrease) in sub-administrator and custody fees payable		(21	)		30
Increase (decrease) in audit fees payable		2			3
Increase (decrease) in transfer agent fees payable		5			—
Net cash provided by operating activities		24,908			7,058
Cash Flows from Financing Activities
Distributions to Members		(23,500	)		(25,300	)
Net cash used in financing activities		(23,500	)		(25,300	)
Net increase (decrease) in cash		1,408			(18,242	)
Cash and cash equivalents, beginning of period		11,963			30,554
Cash and cash equivalents, end of period	$	13,371		$	12,312

The accompanying notes are an integral part of these financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)

ORGANIZATION

Investment Objective: TCW Direct Lending Strategic Ventures LLC (the “Fund”) is a closed-end investment company formed as a Delaware limited liability company for the purpose of investing in corporate senior secured middle-market floating rate loans. Investments may include other loans and securities received as a result of the restructuring, workout or bankruptcy of an existing loan.

Limited Liability Company Agreement: The Amended and Restated Limited Liability Company agreement (the “Agreement”), dated June 5, 2015, was entered into by and among TCW Direct Lending LLC, an affiliated fund (also known as the “BDC”) and two third-party members (the “Third-Party Members”). The BDC and each Third-Party Member own a Preferred Membership Interest (collectively the “Preferred Members”) and a Common Membership Interest (collectively the “Common Members”) (together, the “Members”). The BDC owns 80% of the Preferred and Common Membership Interests and the Third-Party Members own the remaining 20% of Preferred and Common Membership Interests. The initial closing date of the Fund was June 5, 2015 (“Initial Closing Date”).

The Agreement amends and restates the original agreement, dated May 26, 2015 that the BDC entered into as the sole member of the Fund.

Term: The Fund will continue until the sixth anniversary of the Initial Closing Date unless dissolved earlier or extended for two additional one-year periods by the BDC, in its sole discretion upon notice to the Management Committee. Thereafter, the term of the Fund may be extended by the BDC for additional one-year periods, in each case with the prior consent of the Management Committee. On February 25, 2021, the Management Committee approved a one year extension of the term of the Fund to June 5, 2022. On February 1, 2022, the Management Committee approved a one year extension of the term of the Fund to June 5, 2023. On April 17, 2023, the Management Committee approved a one year extension of the term of the Fund to June 5, 2024.

Commitment Period: The Commitment Period commenced on June 5, 2015, the Initial Closing Date, and ended June 5, 2019, the third anniversary of the Initial Closing Date. In accordance with the Fund’s Limited Liability Company Agreement, the Fund may complete investment transactions that were significantly in process as of the end of the Commitment Period and which the Fund reasonably expects to be consummated prior to 90 days subsequent to the expiration date of the Commitment Period. The Fund may also affect follow-on investments in existing portfolio companies.

Management Committee: Pursuant to the Agreement, the Management Committee of the Fund has exclusive responsibility for the management, policies and control of the Fund. The BDC and one of the two Third-Party Members, collectively, each appointed one voting member of the Management Committee. The Management Committee can act on behalf and in the name of the Fund to implement the objectives of the Fund and exercise any rights and powers the Fund may possess. The Management Committee will authorize portfolio investment activity, transactions between the Fund and the BDC, and other Members and borrowings of the Fund.

Administration Agreement: The Fund entered into an Administration Agreement with TCW Asset Management Company LLC (“TAMCO”), dated June 5, 2015 to furnish, or arrange for others to furnish, administrative services necessary for the operation of the Fund. In connection therein, TAMCO, as Administrator retained the services of State Street Bank and Trust Company (“State Street”) to assist in providing certain administrative, accounting, operational, investor and financial reporting services for the Fund. On June 13, 2022, the Fund approved the insourcing of administration services previously outsourced by TAMCO to State Street. In connection with TAMCO’s insourcing of administration services, TAMCO terminated its agreement with State Street.

Custody Services Agreement: The Fund entered into a Custody Services Agreement dated June 3, 2015 with State Street to provide custodian services for the Fund. On June 13, 2022, the Fund approved the termination of the Custody Services Agreement effective July 29, 2022. On July 13, 2022, the Fund entered into a Custody Services Agreement with U.S. National Bank Association to provide custodian services for the Fund.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

Capital Commitments: Commitments from the Preferred Members and Preferred Members as Common Members are as follows. The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Fund did not consummate and therefore returned to the Members as unused capital. As of September 30, 2023, aggregate commitments and commitments funded were as follows:


	Committed Capital		Commitments Funded		Percentage Funded
Preferred Membership Interests	$	600,000,000	$	454,279,088		75.7	%
Common Membership Interests		2,000,000		1,000,000		50.0	%
Total	$	602,000,000	$	455,279,088

Recallable Amounts: Each Preferred Member may be required to re-contribute amounts previously distributed equal to 100% of distributions of proceeds during the Commitment Period representing a return of capital contributions made in respect of the Preferred Membership Interest. The recallable amounts as of September 30, 2023 were as follows:


	Recallable Amounts		Recallable Amounts Funded	Percentage Funded
Preferred Membership Interests	$	127,837,000	none	n/a

SIGNIFICANT ACCOUNTING POLICIES

The Fund is an investment company following the accounting and reporting guidance in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 946 Financial Services – Investment Companies.

Basis of Presentation: The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for investment companies.

Use of Estimates: The preparation of the accompanying financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting year. Actual results could differ from those estimates.

Investments: The Fund records investment transactions on the trade date. The Fund considers trade date for investments not traded on a recognizable exchange, or traded in the over-the-counter markets, to be the date on which the Fund receives legal or contractual title to the asset and bears the risk of loss.

Income Recognition: Interest, interest paid-in-kind and unused commitment fee income are recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. Amendment, consent, waiver and forbearance fees received in exchange for a concession that result in a change in yield are recognized immediately when earned as interest income. The Fund typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, as reported in the Statement of Operations, and reflected in the amortized cost basis of the investment. Discounts associated with a revolver as well as fees associated with a delayed draw that remains unfunded are treated as a discount to the issuers’ term loan. Fee income received from the Adviser that the Adviser received from a portfolio company for services rendered, are recognized immediately as income.

Cash and Cash Equivalents: The Fund considers cash equivalents to be liquid investments, including money market funds or individual securities purchased with an original maturity of three months or less. Cash and cash equivalents held by the Fund are generally comprised of money market funds and demand deposits, valued at cost, which approximates fair value.

Income Taxes: The Fund is exempt from federal and state income taxes and, consequently, no income tax provision has been made in the accompanying financial statements.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

The Fund has invested in numerous jurisdictions and is therefore subject to varying policies and statutory time limitations with respect to examination of tax positions. The Fund reviews and evaluates tax positions in its major jurisdictions and determines whether or not there are uncertain tax positions that require financial statement recognition.

The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as an income tax expense in the Statement of Operations. As of and during the periods ended September 30, 2023 and 2022, the Fund did not have a liability for any unrecognized tax benefits, nor did it recognize any interest and penalties related to unrecognized tax benefits.

The Fund is subject to examination by U.S. federal tax authorities for returns filed for the prior three years and by state tax authorities for returns filed for the prior four years.

The Fund's investment in School Specialty, Inc.'s common stock is held through TCW DL SSP LLC, an unconsolidated special purpose vehicle. The fair value of such equity investment as of September 30, 2023 is net of a $6,396,342 deferred tax liability recorded by TCW DL SSP LLC. TCW DL SSP LLC accounts for income taxes under the liability method prescribed by FASB ASC 740, Accounting for Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis.

Recent Accounting Pronouncements: In June 2022, the FASB issued ASU No. 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”). ASU 2022-03 (1) clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity security. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and interim periods within that fiscal year, with early adoption permitted. Management is currently evaluating the impact of the adoption of ASU 2022-03 on the Fund's financial statements.

Subsequent Events: The Management Committee evaluated the activity of the Fund through November 9, 2023, the date that the financial statements are available to be issued, and have concluded that no other subsequent events have occurred that would require recognition or disclosure.

INVESTMENT VALUATIONS AND FAIR VALUE MEASUREMENTS

Investments at Fair Value: Investments held by the Fund for which market quotes are readily available are valued at fair value. Fair value is generally determined on the basis of last reported sales price or official closing price on the primary exchange in which each security trades, or if no sales are reported, based on the midpoint of the valuation range obtained for debt investments from a quotation reporting system, established market makers or pricing service. Investments held by the Fund for which market quotes are not readily available or market quotations are not considered reliable are valued at fair value by the Management Committee based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by the Fund based on valuation inputs used to determine fair value into three levels.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect the Fund’s determination of assumptions that market participants might reasonably use in valuing the assets.

Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in these securities.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Schedule of Investments as of September 30, 2023.


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	43,438,723	$	43,438,723
Equity		—		—		28,434,679		28,434,679
Cash equivalents		13,371,411		—		—		13,371,411
Total Assets	$	13,371,411	$	—	$	71,873,402	$	85,244,813

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Schedule of Investments as of December 31, 2022.


Investments	Level 1		Level 2		Level 3		Total
Debt	$	—	$	—	$	64,492,856	$	64,492,856
Equity		—		—		28,467,089		28,467,089
Total Assets	$	—	$	—	$	92,959,945	$	92,959,945

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the period ended September 30, 2023:


	Debt			Equity
Balance at December 31, 2022	$	64,492,856		$	28,467,089
Accreted Discounts		98,817			—
Purchases1		2,101,816			—
Sales and paydowns		(16,911,377	)		—
Change in unrealized appreciation/(depreciation)		(6,343,389	)		(32,410	)
Balance at September 30, 2023	$	43,438,723		$	28,434,679
Change in unrealized appreciation/(depreciation) in investments still held as of September 30, 2023	$	(6,343,389	)	$	(32,410	)

1 Purchases of Debt include payment in-kind (PIK) interest of $2,101,816.

During the period ended September 30, 2023, the Fund did not have any transfers between levels.

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the period ended September 30, 2022:


	Debt			Equity
Balance at December 31, 2021	$	71,475,125		$	8,095,290
Accreted Discounts		55,297			—
Purchases1		1,393,832			—
Sales and paydowns		(3,607,808	)		—
Change in unrealized appreciation/(depreciation)		(5,228,000	)		16,699,455
Balance at September 30, 2022	$	64,088,446		$	24,794,745
Change in unrealized appreciation/(depreciation) in investments still held as of September 30, 2022	$	(5,228,000	)	$	16,699,455

1 Purchases of Debt include payment in-kind (PIK) $1,393,832.

During the period ended September 30, 2022, the Fund did not have any transfers between levels.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), includes investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach incorporating a weighted average cost of capital is generally used to determine fair value or, in some cases, an enterprise value waterfall method. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Equity, (Level 3), includes common stock, preferred stock and warrants. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health, and relevant business developments of the issuer; EBITDA, market multiples of comparable companies, comparable market transactions and recent trades or transactions; issuer, industry and market events; contractual or legal restrictions on the sale of the security. When a Black-Scholes pricing model is used, the pricing model takes into account the contract terms as well as multiple inputs, including: time value, implied volatility, equity prices and interest rates. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized from sales or other dispositions of investments.

The following table summarizes by major security type the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of September 30, 2023.

Investment
Type

Fair Value at
September 30, 2023

Valuation
Technique

Unobservable
Input

Range

Weighted Average

Impact to Valuation
from an Increase in
Input

Debt

24,573,842

Income Method

Discount Rate

15.9% to 18.6%

17.3%

Decrease

Debt

13,169,721

Market Method

Revenue Multiple

0.1x to 0.1x

N/A

Increase

Debt

5,695,160

Market Method

EBITDA Multiple

7.0x to 8.0x

N/A

Increase

Total Debt

43,438,723

Equity

—

Market Method

Revenue Multiple

0.1x to 0.1x

N/A

Increase

Equity

28,434,679

Market Method

EBITDA Multiple

7.0x to 8.0x

N/A

Increase

Total Equity

28,434,679

Total Investment

71,873,402

The following table summarizes by major security type the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2022.

Investment
Type

Fair Value at
December 31, 2022

Valuation
Technique

Unobservable Input

Range

Weighted Average

Impact to Valuation
from an Increase in
Input

Debt

24,884,619

Income Method

Discount Rate

14.6% to 17.6%

16.1%

Decrease

Debt

17,202,678

Market Method

Revenue Multiple

0.1x to 0.2x

N/A

Increase

Debt

22,405,559

Market Method

EBITDA Multiple

7.0x to 8.0x

N/A

Increase

Revenue Multiple

0.3x to 0.4x

N/A

Increase

Total Debt

64,492,856

Equity

—

Market Method

Revenue Multiple

0.1x to 0.2x

N/A

Increase

Equity

28,467,089

Market Method

EBITDA Multiple

7.0x to 8.0x

N/A

Increase

Revenue Multiple

0.3x to 0.4x

N/A

Increase

Total Equity

28,467,089

Total Investment

92,959,945

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

ALLOCATIONS AND DISTRIBUTIONS

Allocation of profit and loss: Income, expenses, gains and losses of the Fund are allocated among the Members in such a manner that, at the end of each period, each Member’s capital account is equal to the respective net amount, positive or negative, which would be distributed to such Member if the Fund were to liquidate the assets of the Fund for an amount equal to book value and distribute the proceeds in a manner consistent with the distribution priorities described in the Agreement.

Distribution: Interest, dividends, and other cash flow received by the Fund in respect of Portfolio Investments (“Interest Amounts”) and proceeds attributable to the repayment or disposition of Portfolio Investments (“Proceeds”) received by the Fund are distributed by the Fund to the Members to the extent that such Interest Amounts and Proceeds are available to the Fund after the application of the priority of payments stipulated in the Credit Agreement and after taking into account reserves and working capital needs.

Interest Amounts available to the Fund for distribution to the Members will be distributed in the following order and priorities:

First, one-hundred percent (100%) to the Preferred Members in an amount equal to any declared and unpaid dividends on Preferred Membership Interests, which amounts shall be distributed pro rata among the Preferred Members in accordance with their respective entitlements to such dividends.

Second, one-hundred percent (100%) to the payment of Fund expenses; and

Thereafter, one-hundred percent (100%) to the Common Members, which amounts shall be distributed among the Common Members pro rata based on their respective Unreturned Contributions or, if the Unreturned Contributions of the Common Members equal zero, pro rata based on the respective Commitments of such Common Members in their capacities as Preferred Members with respect to Preferred Membership Interest.

Proceeds available to the Fund for distribution to the Members will be distributed in the following order and priorities:

Second, one-hundred percent (100%) to the Preferred Members pro rata based on, and up to the amount of, their respective Unreturned Contributions; and

Preferred Member Dividends: Each Preferred Membership Interest is entitled to quarterly dividends at a rate equal to LIBOR plus 6.50% per annum (subject to a LIBOR floor of 1.5% per annum) of the Unreturned Contributions associated with their Preferred Membership Interest. Dividends are cumulative and paid when declared by the Management Committee.

Unreturned Contributions: With respect to any Member in respect of each class such Member holds, an amount equal to the excess, if any, of (a) the aggregate contributions of such Member over (b) the aggregate amount distributed to such Member from Proceeds (other than amounts paid in respect of dividends to such Member).

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

FUND EXPENSES

The Fund is responsible for all costs and expenses which include organizational expenses, operating expenses; investigative, travel, legal and other transactional expenses incurred with respect to the acquisition, formation, holding and disposition of the Fund’s Portfolio Investments or incurred in connection with Portfolio Investments or transactions not consummated; costs and expenses relating to the liquidation of the Fund; taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Management Committee or the Administrative Agent); valuation-related costs and expenses; and all other costs and expenses of the Fund’s operations, administration and transactions.

Organizational Expenses: Organization expenses will be paid from capital contributions called from the holders of Common Membership Interests. As of September 30, 2023 and December 31, 2022, organization expenses paid inception-to-date total $704,290.

Portfolio Investment Expenses: Expenses related to Portfolio Investments will be paid from capital contributions called from Preferred Membership Interests.

Fund Expenses: Other Fund expenses including those related to unconsummated investments will be paid first from Interest Amounts as provided for in the above Distribution footnote. To the extent that such Interest Amounts are insufficient or unavailable to pay expenses when due, such expenses will be paid from capital contributions called from the holders of Common Membership Interests provided that the aggregate amount called for Fund expenses (including organizational expenses) does not exceed $2 million. To the extent that the foregoing sources of payment are insufficient or unavailable to pay when due, such expenses will be paid from capital contributions called from the Preferred Members.

ADVISER FEE INCOME

Any (i) transaction, advisory, consulting, management, monitoring, directors’ or similar fees, (ii) closing, investment banking, finders’, transaction or similar fees, (iii) commitment, breakup or topping fees or litigation proceeds and (iv) other fee or payment of services performed or to be performed with respect to an investment or proposed investment received from or with respect to Portfolio Companies or prospective Portfolio Companies in connection with the Fund’s activities will be allocated pro rata among the Fund and any other funds or accounts advised by the Adviser participating in such investment and the Fund’s share will be the property of the Fund. Notwithstanding the foregoing, for administrative or other reasons, certain fees described in clauses (i) through (iv) above (including any fees for administrative agent services provided by the Adviser or an affiliate with respect to a particular loan or portfolio of loans made by the Fund) may be paid to the Adviser or the affiliate (rather than directly to the Fund), in which case the amount of such fees (net of any related expenses associated with the generation of such fees borne by the Adviser or such affiliate that have not been and will not be reimbursed by the Portfolio Company) shall be paid to the Fund.

Since inception of the Fund through September 30, 2023 and December 31, 2022, the Adviser was paid directly $1,762,015 and $1,741,881, respectively, of which $20,134 and $25,366 were paid during the period ended September 30, 2023 and the year ended December 31, 2022, respectively. Since inception of the Fund through September 30, 2023 and December 31, 2022, the Fund has recognized $1,762,015 and $1,741,881, respectively, of these fees.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

September 30, 2023

NOTES TO FINANCIAL STATEMENTS (Unaudited)(continued)

COMMITMENTS AND CONTINGENCIES

The Fund had the following unfunded commitments and unrealized depreciation by investment as of September 30, 2023 and December 31, 2022:


		September 30, 2023				December 31, 2022
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Depreciation		Amount		Unrealized Depreciation
Retail & Animal Intermediate, LLC	November 2025	$	3,787,500	$	—	$	3,787,500	$	—
Total		$	3,787,500	$	—	$	3,787,500	$	—

In the normal course of business, the Fund enters into contracts which provide a variety of representations and warranties, and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Fund under these arrangements is unknown as it would involve future claims that may be made against the Fund; however, based on the Fund’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Fund has not accrued any liability in connection with such indemnifications.

FINANCIAL HIGHLIGHTS

The following summarizes the Fund’s financial highlights for the period ended September 30, 2023 and 2022:


	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
	Members			Members
As a percentage of average members’ capital
Net investment income ratio (annualized) 1		12.95	%		6.36	%
Expense ratios (annualized) 1
Operating expenses		0.38	%		0.30	%
Total expense ratio		0.38	%		0.30	%

1 The net investment income and expense ratio are calculated for the Members taken as a whole.

The Internal Rates of Return (IRR) since inception of the Members, after financing costs and other operating expenses are 12.3% and 12.6% through September 30, 2023 and 2022, respectively.

The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the Members) and the net assets (residual value) of the Members’ capital account at period end and is calculated for the Members taken as a whole.

The IRR is calculated based on the fair value of investments using principles and methods in accordance with GAAP and does not necessarily represent the amounts that may be realized from sales or other dispositions. Accordingly, the return may vary significantly upon realization.

TCW Direct Lending Strategic Ventures LLC

(A Delaware Limited Liability Company)

ADMINISTRATION

ADMINISTRATOR

TCW Asset Management Company

1251 Avenue of the Americas, Suite 4700

New York, NY 10020

(212) 771-4000

PORTFOLIO MANAGER

Richard T. Miller

Group Managing Director

INDEPENDENT AUDITORS

Deloitte & Touche LLP

555 West 5th Street

Los Angeles, CA 90013

CUSTODIAN

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111

SUB-ADMINISTRATOR

State Street Bank and Trust Company

One Lincoln Street

Boston, MA 02111