Franklin Square Capital Partners builds a differentiated BDC Innovative Model, Differentiated Experience, New Alternative Alternative Thinking Series Franklin Square Capital Partners (Franklin Square) was founded in 2007, just prior to the Great Recession. It was a time marked by uncertainty, volatility, and above all diminished trust in public markets and financial institutions. Many investors experienced catastrophic losses and wealth destruction not seen since the Great Depression. Seeing these events unfold, it became clear to us at Franklin Square that investors needed an alternative to how they had been investing for decades. With that goal in mind, Franklin Square s mission has been to provide investors with access to asset classes, strategies and asset managers typically available to only the largest institutional investors. In the process, we believe we have created an innovative model and alternative investment solution to meet today s investment challenges. An investment in Franklin Square s funds involves a high degree of risk and may be considered speculative. You can obtain a prospectus, or summary prospectus if available, at www.franklinsquare.com or by contacting Franklin Square Capital Partners at 201 Rouse Boulevard, Philadelphia, PA 19112 or by phone at 215-495-1150. The prospectus includes information on investment objectives, risks, expenses, fees and other information. Investors should read and carefully consider all information found in the fund prospectus and other reports filed with the SEC, including the sections entitled Risk Factors therein, before deciding to invest in such securities. Franklin Square Capital Partners is not affiliated with Franklin Resources/Franklin Templeton Investments or the Franklin Funds.
Innovative Model Creating a solution for today s investment challenges At the time of our founding, Franklin Square recognized that investors faced several long-term, fundamental investment challenges. First, high investment minimums and rigid suitability requirements limited many investors access to the highly skilled managers used by some of the world s leading institutions and endowments. Second, traditional investments such as stocks and bonds were growing increasingly correlated and individual investors needed investments that performed differently from the traditional investments within their portfolios. Third, asset managers and their investors were not aligned in their timing, outlook, or investment horizon. Many managers were forced sellers in order to raise cash to meet both investor redemptions and margin requirements. Even those managers that did not have to contend with redemptions were often unable to raise fresh capital to take advantage of once-in-a-generation opportunities created by the severe asset price declines of the Great Recession. Based on these observations, Franklin Square set out to build a differentiated asset management platform dedicated to designing and sponsoring innovative alternative investment funds. Our investment approach was based on a commitment to bringing the same relentless focus on portfolio construction, best practices and transparency as institutions. The result of our vision was the creation of the industry s first non-traded business development company (BDC), FS Investment Corporation (FSIC). FSIC provided a completely new way for individuals to access and invest in alternative assets. FSIC provided a completely new way for individuals to access and invest in alternative assets. Selecting a leading asset manager Franklin Square began laying FSIC s foundation in 2007 by commencing a rigorous manager selection process. We believe, especially when it comes to alternative asset classes, that an asset manager s discipline and investment process can impact investor returns as much as, if not more than, the performance of the underlying assets in which it invests. Just as large endowments and pension funds spend significant time, capital and resources performing due diligence on asset managers, Franklin Square seeks to marry the expertise of leading asset managers with transparent fund structures that offer a high degree of investor protections and can help to maximize returns. To deliver on this goal, we chose to employ an adviser/sub-adviser structure when creating FSIC. The fund s investments and activities are managed by an affiliate of Franklin Square, FB Advisor, LLC (FB Advisor). The adviser engaged a sub-adviser to identify and source investments for the fund while it retains ultimate discretion over the fund s investment decisions. We believe this model allows the adviser and sub-adviser to focus on their respective core competencies. In 2008, Franklin Square selected GSO / Blackstone Debt Funds Management LLC (GSO / Blackstone), the credit platform of Blackstone, one of the world s largest alternative asset managers, as sub-adviser for FSIC. With over $72.9 billion in assets under management and approximately 260 investment professionals across the world, 1 a key determinant in selecting GSO / Blackstone as FSIC s sub-adviser was based on our shared, disciplined approach to investing along with our commitment to staying at the forefront of industry best practices. The selection of GSO / Blackstone as sub-adviser marked just the beginning of FB Advisor s role as FSIC s investment adviser. $72.9 billion assets under management. 1 Since its launch, Franklin Square and its team of investment professionals have provided continuous oversight to FSIC and its sub-adviser to help ensure the interests of our stockholders are placed above all others. For example, before any asset is purchased for FSIC s portfolio, the respective investment committees of GSO / Blackstone and Franklin Square must review and approve the investment to ensure it meets the fund s investment objectives and the diversification guidelines mandated for regulated investment companies (RICs) under the U.S. Internal Revenue Code. We believe this dual layer of underwriting and oversight serves to benefit our investors by helping to minimize downside risks and maximize returns. As mentioned, a cornerstone of our asset management business is based on a set of best practices. Institutional investors demand transparency, accountability and an alignment of interests with their managers and we believe that individuals deserve the same treatment. Our best practices begin with a significant sponsor investment in our funds. To that end, individuals and entities affiliated with Franklin 1 As of December 31, 2014 2 FS Public Listing
Square and GSO / Blackstone invested directly in FSIC at inception, through the fund s capital raising period and continue to have a significant financial investment in the fund. It is our belief that a significant sponsor commitment helps to align the interests of a fund s manager with those of its investors. We believe the breadth and depth of experience of Franklin Square and GSO / Blackstone, together with the wider resources of Blackstone, provided a significant and differentiated competitive advantage for Franklin Square to bring the first non-traded BDC to market. We believe that a non-traded BDC fund structure offers many benefits over funds that offer daily liquidity. Finding the right fund structure Just as Franklin Square deployed significant resources selecting FSIC s sub-adviser, we dedicated equal resources to identify what we believe to be the most effective fund structure through which individuals could access alternative investment strategies. We believe that funds regulated under the Investment Company Act of 1940, such as open-end mutual funds and closed-end funds, including BDCs, provide investors with a high degree of regulatory protections. However, given the often illiquid and long-term nature of alternative investment strategies, we recognized some inefficiencies in the way closed-end funds, including BDCs, had historically raised capital. In our view, FSIC would need to have a long-term investment structure to match its investment horizon, as well as the long-term nature of its underlying assets. It was and remains our belief that a non-traded BDC structure offers many benefits over other types of funds that offer daily liquidity. First among these is the ability to continuously raise capital, which significantly reduces execution and market timing risks. In a continuous offering, shares are offered to the public over an extended period of time, often lasting for multiple years. In contrast, BDCs and many other closed-end funds have historically raised capital through underwritten, point-in-time offerings. This traditional method of raising capital often places tremendous pressure on the manager to quickly invest the capital regardless of the market environment (often requiring managers to invest new capital at high prices in strong markets). FSIC s continuous equity offering allowed Franklin Square and GSO / Blackstone to raise and invest capital over the course of approximately three years. During that time, FSIC was able to opportunistically deploy capital during short-term market dislocations. Having the flexibility to invest across the corporate capital structure and through changing market environments allowed FSIC to invest in areas of the credit markets that we believed offered the strongest risk-adjusted returns. For example, as the financial crisis continued to unfold in 2009 and market volatility increased after the credit rating of the U.S. national debt was downgraded in 2011, FSIC took advantage of buying opportunities within the broadly syndicated loan and high yield markets by deploying the capital raised through its continuous offering (see Figure 1). FIGURE 1: 2011 NET BANK LOAN MUTUAL FUND FLOWS VS. CREDIT SUISSE LEVERAGED LOAN INDEX (CSLLI) 2 WHAT THE DATA TELLS US: Unlike traditional floating rate funds, Franklin Square s non-traded funds are not forced sellers during periods of market volatility. In addition, our funds can be opportunistic buyers while bank loan mutual fund managers sell assets to meet investor redemptions. 1 BUYING HIGH During the first half of 2011, bank loan mutual funds raised over $22 billion during periods of market strength... 2 SELLING LOW...but faced over $9 billion in net investor redemptions during periods of market volatility in the second half of 2011. 3 FSIC S CONTINUOUS OFFERING FSIC raised and invested $760 million during the same period. Fund flows ($ tens of millions) 1 450 350 250 150 3 0-150 -250 JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC FSIC capital raised ($ millions) -350-450 Mutual fund flows ($ tens of millions) 3 CSLLI average price During these periods, loans and high yield bonds generally traded well below what we believed to be their intrinsic value due to, among other factors, selling pressure from daily liquid funds, such as traditional openend mutual funds, as managers were forced to meet investor redemptions. 2 Source: The Credit Suisse Leveraged Loan Index (CSLLI) is an index designed to mirror the investable universe of the U.S. dollardenominated leveraged loan market. FSIC invests primarily in floating rate loans of private U.S. companies. The data regarding the CSLLI is for illustrative purposes only and is not indicative of any investment. An investment cannot be made directly in an index. 3 Source: S&P Leveraged Commentary & Data (LCD). LCD compiles mutual fund inflows and outflows with the cooperation of a number of mutual fund complexes. LCD collects daily fund-flow data for a representative sample of loan funds. 2 97 96 95 94 93 92 91 90 89 88 87 Average loan price Franklin Square Capital Partners 3
Alternatively, during periods of tight credit conditions, when the market overpaid for liquidity in our view, we focused instead on investing in more illiquid credit investments and grew FSIC s direct lending business by leveraging the size, scale and relationships of GSO / Blackstone. Since the financial crisis, the number of traditional lending sources serving private companies has declined. FSIC acts as a direct lender to many private companies, lending money to companies similarly to a bank. By growing FSIC s direct lending business and increasing the portfolio s allocation to direct originations, we managed to increase FSIC s portfolio yield even as prevailing market interest rates declined. In 2010, the spread of FSIC s yield over the Credit Suisse Leveraged Loan Index, the benchmark index for the senior secured loan market, FSIC s primary asset class, was approximately 192 basis points. As of December 31, 2014, the spread had increased to 430 basis points as direct originations grew to 75% of FSIC s investment portfolio based on fair value. Over the course of five years, we strategically and deliberately built what ultimately became a $4.6 billion portfolio diversified across portfolio companies, geographies and industries. We do not believe this result would have been possible without the benefits provided by the continuous offering model. FIGURE 2: FSIC S PORTFOLIO COMPOSITION Core investment strategies as % of portfolio 4 Core investment strategies Broadly syndicated loans 2010 2011 2012 2013 2014 12% 42% 58% 79% 94% FSIC unlevered 8.5% 10.5% 10.6% 10.2% 10.5% portfolio yield 5 Credit Suisse Leveraged Loan Index (CSLLI) Yield, 3 year life 6.6% 7.3% 5.9% 5.3% 6.2% FSIC Spread +190 bps +320 bps +470 bps +490 bps +430 bps Over CSLLI 6 Annualized Increase +4.47% +4.46% +6.67% +3.13% in Distributions 7 4 Core investment strategies include investments classified as directly originated or opportunistic as of December 31, 2010, 2011, 2012, 2013 and 2014 respectively. See FSIC s filings with the SEC for additional information on its investment classifications. 5 FSIC s unlevered portfolio yield is the gross annualized portfolio yield which is calculated by dividing the estimated annualized income received from FSIC s investments as of December 31, 2014 by the amortized cost of FSIC s investments as of December 31, 2014. 6 The FSIC spread over the Credit Suisse Leveraged Loan Index is the difference between FSIC s gross annualized portfolio yield prior to leverage (based on amortized cost) excluding non-income producing assets and the Credit Suisse Leveraged Loan Index yield to a 3 year life. FSIC yield spread based on fair value as of December 31, 2010, 2011, 2012, 2013 and 2014 respectively. The data regarding the Credit Suisse Leveraged Loan Index is for illustrative purposes only and is not indicative of any investment. An investment cannot be made directly in an index. The Credit Suisse Leveraged Loan Index is the benchmark index for the senior secured loan market (also known as the leveraged loan market), FSIC s primary asset class. With respect to the term leveraged in the Credit Suisse Leveraged Loan index, leveraged refers to the credit rating of the loans that comprise the index and is not reflective of borrowings of the index. Therefore, the yield comparisons between FSIC and the CSLLI do not assume the use of leverage, or borrowings. As of December 31, 2014, senior secured loans represented approximately 70% of FSIC s portfolio on a fair value basis. The valuation of FSIC s investments are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services. 7 Percentage increase in per share regular cash distributions during respective calendar year. To date, the distribution rate has not included distributions paid from offering proceeds or borrowings; however, even if distributions are not paid from offering proceeds or borrowings, a portion of FSIC s distributions to stockholders may be deemed to constitute a return of capital for tax purposes due to the character of certain dividends and other distributions received by FSIC from its portfolio companies. Any such return of capital will not reduce the amounts available to FSIC for investments. FSIC s previous distributions to investors were funded in significant part by the reimbursement of certain expenses, including through the waiver of certain investment advisory fees. Significant portions of these distributions were not based on our investment performance and such waivers and reimbursements by FB Income Advisor, LLC may not continue in the future. If FB Income Advisor, LLC had not agreed to reimburse certain of FSIC s expenses, including through the waiver of certain of its advisory fees, significant portions of these distributions would have come from offering proceeds or borrowings. During the years ended December 2014, 2013, 2012, 2011, 2010 and 2009, approximately 73%, 100%, 73%, 86%, 63% and 61%, respectively, of FSIC s distributions were funded through net investment income. During the same periods, approximately 27%, 0%, 27%, 14%, 37% and 31%, respectively, of FSIC s distributions were funded through capital gains proceeds from the sale of assets. During the year ended 2009, approximately 8% of FSIC s distributions were funded through an expense reimbursement from the fund s sponsor. The repayment of any future amounts owed to FB Income Advisor, LLC will reduce the future distributions to which an investor would otherwise be entitled. The payment of future distributions is subject to the discretion of FSIC s board of directors and applicable legal restrictions, and, therefore, there can be no assurance as to the amount or timing of any such future distributions. 4 FS Public Listing
Differentiated Experience Delivering liquidity to our investors The trade off for individuals investing in a non-traded fund is illiquidity; generally, until the non-traded fund s shares are listed on an exchange or its assets are liquidated, non-traded investors have limited liquidity on a quarterly basis. With this in mind, Franklin Square sought to provide FSIC s investors with a liquidity event within five to seven years of its launch. We delivered on this goal on April 16, 2014, as Franklin Square rang the opening bell on the New York Stock Exchange (NYSE) to celebrate FSIC s public listing. As of December 31, 2014, the fund s initial public investors achieved a cumulative total return of 105.6% and an annualized total return of 12.8%. 8 FSIC listed on the NYSE on April 16, 2014. While we were pleased with the strong support FSIC received in the public markets, transitioning FSIC from a non-traded to a publicly listed BDC required a coordinated effort between Franklin Square and GSO / Blackstone along with over 5,500 advisors and 59,000 investors that had placed their capital and trust with us. Leading up to the listing, we endeavored to mitigate the risks within our control and remained cognizant of domestic and global macroeconomic events that could impact the timing of the listing. Above all, we recognized that a successful listing would hinge on our ability to educate advisors, our investors and the public markets. We believe these factors played well to the strengths of Franklin Square, where advisor and client education are critical components of our asset management practice. As part of this education process for advisors and investors, it was imperative to communicate FSIC s value proposition along with the potential benefits and risks of owning a publicly listed FSIC security. In tight coordination with many of the broker dealers who were involved with FSIC s continuous offering, we worked to ensure a seamless operational experience. In addition, through our efforts to educate and prepare the public markets, we met with Wall Street research analysts and institutional investors across the country, spending a significant amount of time introducing these audiences to FSIC s robust and differentiated BDC platform. Based on the initial demand for FSIC s shares on the day of its listing and in the weeks that followed, we believe our message was well received by advisors, investors and the public markets. Generating a differentiated investor experience While the listing of FSIC s shares was a milestone event and allowed many of our investors to realize significant gains on their investment, our goal has always been to create a positive overall investment experience for our investors. Throughout FSIC s life cycle as a non-traded BDC, the fund generated a high level of current income for our investors. At the time of its listing, FSIC had paid 64 consecutive regular distributions, increased its distribution amount seven times and had not lowered its distribution amount. In addition, we believe FSIC generated stronger risk-adjusted returns than what we believe is its peer group. One of the most widely used metrics of measuring the quality of an investment s return is the Sharpe ratio. It measures how well the return of an investment compensates an investor relative to its level of risk, as measured by standard deviation. The greater a portfolio s Sharpe ratio, the better its quality of returns (higher returns with lower risk). By this measure, FSIC stands out among its peer group as shown in Figure 3 for its ability to generate strong risk adjusted returns over a multi-year period. 8 Cumulative Total Return is the percentage return an investor received for the highlighted period taking into account all cash distributions and stock distributions during such period and assuming that such investor sold its shares on December 31, 2014 having paid no commissions or fees as part of such sale. Annualized Total Return is the compounded annual percentage return an investor received taking into account all cash distributions and stock distributions and assuming such investor sold its shares on December 31, 2014 having paid no commissions or fees as part of such sale. Both Cumulative Total Return and Annualized Total Return calculations assume that the investor purchased shares on January 2, 2009 at FSIC s public offering price, had not sold or otherwise transferred such shares until the assumed sale date and reinvested all distributions pursuant to FSIC s Distribution Reinvestment Plan (DRP) before termination of the DRP. Prior to October 31, 2012, DRP investments were made at 90% of the current offering price. Commencing October 31, 2012, DRP investments were made at a price per share (i) not less than the net asset value (NAV) per share of FSIC s common stock (as determined in good faith by FSIC s board of directors or a committee thereof) immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the NAV per share as of such date (the DRP price). Beginning in April 2014, and in connection with the termination of the DRP, returns are calculated and compounded monthly and assume an investor received all distributions as cash. Past performance is not indicative of future results. Amounts may be rounded. The calculation of Cumulative Total Return and Annualized Total Return reflects the deduction of all applicable fees and expenses, including sales commissions and dealer manager fees of up to 7.0% and 3.0% per share, respectively, organization and offering expenses of up to 1.5% of gross offering proceeds and ongoing expenses relating to FSIC s operations, including base management fees, incentive fees, interest expense, administrative services expenses and other expenses. Franklin Square Capital Partners 5
FIGURE 3: FSIC SHARPE RATIO VERSUS PEERS (JAN 2, 2009 APRIL, 16, 2014) 9,10 2.5 Sharpe Ratio 2.0 1.0 We remain committed to creating innovative investment funds for individuals to use. 0.5 0.0 FSIC TICC PNNT ARCC FSC PSEC AINV BKCC We believe FSIC s ability to generate strong risk-adjusted returns, while delivering consistent income to our investors, provides a differentiated investment experience and validates the non-traded BDC model. 11 New Alternative Since FSIC s launch in 2009, Franklin Square has grown to become the largest manager of BDC assets. We started with a simple vision of providing investors with access to asset classes, strategies and managers that had historically been available only to large institutions. Furthermore, we recognized that the convictions and practices of an investment manager could significantly impact investment returns. Finally, in the absence of an investment structure that we believed was necessary to execute on our vision, we created the industry s first non-traded BDC. While the listing of FSIC on the NYSE was just one step in its life cycle, it represented the culmination of our vision and the fulfillment of the goal we set in 2009. As Franklin Square continues to grow, we remain committed to creating innovative investment funds for individuals to use to help address ever-changing investment challenges, while generating diversified sources of return for our investors. 9 TICC: TICC Capital Corp.; PNNT: PennantPark Investment Corporation; ARCC: Ares Capital Corporation; ACAS: American Capital, Ltd.; FSC: Fifth Street Finance Corp.; PSEC: Prospect Capital Corporation; AINV: Apollo Investment Corporation; BKCC: BlackRock Kelso Capital Corp. Franklin Square Capital Partners determined FSIC s peer group based on the following criteria: all BDCs were publicly traded during the period shown, had assets under management greater than $1 billion as of September 30, 2014, are externally managed, and invested at least 60% of its portfolio in the senior secured debt of private middle market U.S. companies. The time period shown was based on FSIC s life cycle as a non-traded BDC since its inception until listing on the New York Stock Exchange on April 16, 2014. 10 Sharpe ratio uses a fund s standard deviation and its excess return (the difference between the fund s return and the risk free return of 90-day Treasury Bills) to determine reward per unit of risk. Data used to calculate the Sharpe ratios was obtained from publicly available sources. FSIC was non-traded during the relevant time period and its share price was based on its net asset value in accordance with the fund s share pricing policy. The BDCs within the peer group were publicly traded during the relevant period and, therefore, their share prices were subject to daily market volatility. From April 16, 2014 through March 31, 2015, FSIC s Sharpe ratio was 0.8. 11 Unlike non-traded BDCs, traded BDCs are listed on a national securities exchange and offer daily liquidity to shareholders. In addition, the transactional costs for the purchase of shares of traded and non-traded BDCs can differ significantly. The BDCs listed may also differ in management structures or investment strategies. 6 FS Public Listing
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Securities offered through FS 2 Capital Partners, LLC ( FS 2 Capital ) (member FINRA/ SIPC). FS 2 Capital is an affiliated broker dealer that serves as the wholesaling distributor of non-traded funds sponsored by Franklin Square Capital Partners. This is neither an offer to sell nor a solicitation of an offer to buy securities involving the assets described herein. An offering is made only by a prospectus. A copy of the applicable prospectus is available free of charge by contacting FS 2 Capital Partners, LLC at 201 Rouse Boulevard, Philadelphia, PA 19112 or by phone at 877-372-9880. This sales and advertising literature must be read in conjunction with the applicable prospectus in order to fully understand all of the implications and risks of the offering of securities to which the applicable prospectus relates. A copy of the applicable prospectus must be made available to you in connection with any offering. No offering is made to New York investors except by a prospectus filed with the Department of Law of the State of New York. None of the U.S. Securities and Exchange Commission, the Attorney General of the State of New York or any state securities regulator has approved or disapproved of these securities or determined if any related prospectus is truthful or complete. Any representation to the contrary is a criminal offense. RISK FACTORS An investment in the securities of non-traded investment funds sponsored by Franklin Square (the funds ) involves a high degree of risk and may be considered speculative. The following are some of the risks an investment in such securities involves; however, investors should carefully consider all of the information found in the section of the applicable prospectus entitled Risk Factors or Types of Investments and Related Risks, as applicable, before deciding to invest in such securities. Investments in expectation of a specific event or catalyst can result in losses if the event fails to occur or it does not have the effect foreseen. Because there is no public trading market for shares of the funds and the funds are not obligated to effectuate a liquidity event by a specified date, if at all, it is unlikely that investors will be able to sell their shares. While the funds intend to conduct quarterly tender offers for their shares, only a limited number of shares will be eligible for repurchase and the funds may suspend or terminate their repurchase programs at any time. Investors may not receive distributions or the funds distributions may not grow over time. The funds may pay distributions from offering proceeds, borrowings or the sale of assets and the funds have not established limits on the amount of funds that they may use from net offering proceeds or borrowings to make distributions. Distribution proceeds may exceed the funds earnings, and, therefore, portions of the distributions that they make may represent a return of capital for tax purposes. An investment strategy focused primarily on privately-held companies presents certain challenges, including the lack of available information about these companies. Investing in middle market companies involves a number of significant risks, any one of which could have a material adverse effect on the funds operating results. Investments in securities and other obligations of companies that are experiencing distress involve a substantial degree of risk, require a high level of analytical sophistication for successful investment and require active monitoring. A lack of liquidity in certain of the funds investments may adversely affect the funds business. The funds are subject to financial market risks, including changes in interest rates, which may have a substantial negative impact on their investments. The funds may borrow funds to make investments, which would increase the volatility of their investments and may increase the risks of investing in their securities. The funds have limited operating histories and are subject to the business risks and uncertainties associated with any new business. The funds offerings are best efforts offerings and if the funds are unable to raise substantial funds, then they will be more limited in the number and type of investments they make. Franklin Square Capital Partners 7
201 Rouse Boulevard, Philadelphia, PA 19112 215-495-1150 www.franklinsquare.com FS 2 Capital is an affiliate of the investment advisers to Franklin Square s funds and serves or has served as the dealer manager for the public offerings of shares by Franklin Square s funds. These relationships may create conflicts in connection with FS 2 Capital s due diligence obligations under the federal securities laws. FS 2 Capital is or was, as applicable, entitled to compensation in connection with the public offerings of Franklin Square s funds, including receiving selling commissions (which are or were, as applicable, generally re-allowed to selling broker-dealers) and a dealer manager fee based on the gross offering proceeds of shares sold in such offerings. FS 2 Capital is or was, as applicable, also reimbursed for accountable due diligence expenses based on the gross offering proceeds of shares sold in the offerings. In addition, the investment advisers to Franklin Square s funds and their affiliates may face actual or potential conflicts of interest as a result of compensation arrangements, time constraints and competition for investments, which they will attempt to resolve in a fair and equitable manner. The information presented herein is provided for informational use only and should not be considered investment advice. The views expressed herein are subject to change at any time based on market or other conditions, and Franklin Square disclaims any responsibility to update such views. These views should not be relied upon as investment advice, and because investment decisions for a Franklin Square fund are based on numerous factors, may not be relied on as an indication of the investment intent of any Franklin Square fund. Neither Franklin Square nor its funds nor their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any investor s reliance on the opinions expressed herein. Investors should consult their tax and financial advisors for additional information concerning their specific situation. This is neither an offer to sell nor a solicitation of an offer to buy securities involving the assets described herein. An offering is made only by a prospectus. A copy of the applicable prospectus is available free of charge by contacting FS 2 Capital Partners, LLC at 201 Rouse Boulevard, Philadelphia, PA 19112 or by phone at 877-372-9880 or by visiting www.franklinsquare.com. This sales and advertising literature must be read in conjunction with the applicable prospectus in order to fully understand all of the implications and risks of the offering of securities to which the applicable prospectus relates. A copy of the applicable prospectus must be made available to you in connection with any offering. No offering is made to New York investors except by a prospectus filed with the Department of Law of the State of New York. None of the U.S. Securities and Exchange Commission, the Attorney General of the State of New York or any state securities regulator has approved or disapproved of these securities or determined if any related prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Franklin Square funds are offered by FS 2 Capital Partners, LLC, a wholesaling broker dealer and member FINRA/SIPC. 2015 Franklin Square Capital Partners WP-FSIC-LIST CRW 7/2015