FS Energy & Power Fund - FORM 10-Q

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TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 814-00841

FS Energy and Power Fund
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		27-6822130 (I.R.S. Employer Identification No.)
201 Rouse Boulevard Philadelphia, Pennsylvania (Address of principal executive office)		19112 (Zip Code)

Registrant's telephone number, including area code: (215) 495-1150

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The issuer had 392,438,883 common shares of beneficial interest outstanding as of April 26, 2016.

Table of Contents

TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015	1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	2
	Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2016 and 2015	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	4
	Consolidated Schedules of Investments as of March 31, 2016 (Unaudited) and December 31, 2015	5
	Notes to Unaudited Consolidated Financial Statements	18
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	50
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	73
ITEM 4.	CONTROLS AND PROCEDURES	74
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	75
ITEM 1A.	RISK FACTORS	75
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	75
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	75
ITEM 4.	MINE SAFETY DISCLOSURES	75
ITEM 5.	OTHER INFORMATION	75
ITEM 6.	EXHIBITS	76
	SIGNATURES	81

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FS Energy and Power Fund

Consolidated Balance Sheets
(in thousands, except share and per share amounts)

	March 31, 2016 (Unaudited)			December 31, 2015

Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$3,233,960 and $3,267,830, respectively)	$	2,457,923		$	2,518,595
Non-controlled/affiliated investments (amortized cost—$573,047 and $356,188, respectively)		480,320			276,993
Controlled/affiliated investments (amortized cost—$0 and $270,389, respectively)		—			273,910

Total investments, at fair value (amortized cost—$3,807,007 and $3,894,407, respectively)		2,938,243			3,069,498
Cash		403,584			368,867
Receivable for investments sold and repaid		75			13,792
Interest receivable		42,457			34,921
Receivable for common shares purchased		9,274			6,915
Deferred financing costs		3,178			3,865
Deferred offering costs		1,375			—
Prepaid expenses and other assets		184			247

Total assets	$	3,398,370		$	3,498,105

Liabilities
Payable for investments purchased	$	789		$	—
Credit facilities payable (net of deferred financing costs of $1,249 and $1,094, respectively)		616,758			714,416
Repurchase agreement payable (net of deferred financing costs of $188 and $220, respectively)⁽¹⁾		324,796			324,764
Shareholder distributions payable		32			48
Management fees payable		17,241			18,338
Subordinated income incentive fees payable⁽²⁾		5,774			12,048
Administrative services expense payable		1,552			1,872
Interest payable		4,619			3,046
Trustees' fees payable		250			254
Other accrued expenses and liabilities		5,289			5,458

Total liabilities		977,100			1,080,244

Commitments and contingencies⁽³⁾
Shareholders' equity
Preferred shares, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding		—			—
Common shares, $0.001 par value, 450,000,000 shares authorized, 389,470,260 and 372,210,264 shares issued and outstanding, respectively		389			372
Capital in excess of par value		3,537,244			3,428,672
Accumulated undistributed net realized gains (losses) on investments and gain/loss on foreign currency⁽⁴⁾		(257,231	)		(200,220	)
Accumulated undistributed net investment income⁽⁴⁾		9,694			14,024
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency		(868,826	)		(824,987	)

Total shareholders' equity		2,421,270			2,417,861

Total liabilities and shareholders' equity	$	3,398,370		$	3,498,105

Net asset value per common share at period end	$	6.22		$	6.50

(1): See Note 8 for a discussion of the Company's repurchase transaction.
(2): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.
(3): See Note 9 for a discussion of the Company's commitments and contingencies.
(4): See Note 5 for a discussion of the sources of distributions paid by the Company.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Operations
(in thousands, except share and per share amounts)

	Three Months Ended March 31,

	2016			2015
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	77,742		$	76,202
Fee income		820			4,518
From non-controlled/affiliated investments:
Interest income		11,992			4,867
Fee income		7,356			—

Total investment income		97,910			85,587

Operating expenses
Management fees		17,241			18,745
Subordinated income incentive fees⁽¹⁾		5,774			2,879
Administrative services expenses		884			1,500
Share transfer agent fees		742			794
Accounting and administrative fees		286			360
Interest expense		9,352			7,316
Trustees' fees		250			225
Offering costs		125			—
Other general and administrative expenses		833			954

Total operating expenses		35,487			32,773
Income taxes		33			89

Total expenses		35,520			32,862

Net investment income		62,390			52,725

Realized and unrealized gain/loss
Net realized gain (loss) on investments
Non-controlled/unaffiliated		(59,276	)		(17,957	)
Non-controlled/affiliated		2,265			—
Net change in unrealized gain (loss) on foreign currency		—			(238	)
Net change in unrealized appreciation (depreciation) on investments
Non-controlled/unaffiliated		(31,337	)		16,118
Non-controlled/affiliated		(12,518	)		2,468
Net change in unrealized gain (loss) on foreign currency		16			(128	)

Total net realized and unrealized gain (loss) on investments		(100,850	)		263

Net increase (decrease) in net assets resulting from operations	$	(38,460	)	$	52,988



Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	(0.10	)	$	0.17



Weighted average shares outstanding		377,688,379			310,241,395

(1): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Changes in Net Assets
(in thousands)

	Three Months Ended March 31,

	2016			2015
Operations
Net investment income	$	62,390		$	52,725
Net realized gain (loss) on investments and foreign currency		(57,011	)		(18,195	)
Net change in unrealized appreciation (depreciation) on investments		(43,855	)		18,586
Net change in unrealized gain (loss) on foreign currency		16			(128	)

Net increase (decrease) in net assets resulting from operations		(38,460	)		52,988

Shareholder distributions⁽¹⁾
Distributions from net investment income		(66,720	)		(41,234	)
Distributions from net realized gain on investments		—			(13,591	)

Net decrease in net assets resulting from shareholder distributions		(66,720	)		(54,825	)

Capital share transactions
Issuance of common shares⁽²⁾		84,697			167,767
Reinvestment of shareholder distributions⁽²⁾		42,231			21,167
Repurchases of common shares⁽²⁾		(18,339	)		(3,972	)
Offering costs		—			(2,500	)

Net increase in net assets resulting from capital share transactions		108,589			182,462

Total increase (decrease) in net assets		3,409			180,625
Net assets at beginning of period		2,417,861			2,565,721

Net assets at end of period	$	2,421,270		$	2,746,346



Accumulated undistributed net investment income⁽¹⁾	$	9,694		$	15,832

(1): See Note 5 for a discussion of the sources of distributions paid by the Company.
(2): See Note 3 for a discussion of transactions with respect to the Company's common shares during the three months ended March 31, 2016 and 2015.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Cash Flows
(in thousands)

	Three Months Ended March 31,

	2016			2015
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(38,460	)	$	52,988
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(108,640	)		(211,629	)
Paid-in-kind interest		(8,071	)		(7,453	)
Proceeds from sales and repayments of investments		151,330			194,530
Net realized (gain) loss on investments		57,011			17,957
Net change in unrealized (appreciation) depreciation on investments		43,855			(18,586	)
Accretion of discount		(4,230	)		(2,283	)
Amortization of deferred financing costs		785			613
Amortization of deferred offering costs		125			—
(Increase) decrease in receivable for investments sold and repaid		13,717			37,599
(Increase) decrease in interest receivable		(7,536	)		(2,850	)
(Increase) decrease in prepaid expenses and other assets		63			(232	)
Increase (decrease) in payable for investments purchased		789			(245	)
Increase (decrease) in management fees payable		(1,097	)		833
Increase (decrease) in subordinated income incentive fees payable		(6,274	)		(9,263	)
Increase (decrease) in administrative services expense payable		(320	)		127
Increase (decrease) in interest payable⁽¹⁾		1,573			1,313
Increase (decrease) in trustees' fees payable		(4	)		(4	)
Increase (decrease) in other accrued expenses and liabilities		(169	)		(664	)

Net cash provided by (used in) operating activities		94,447			52,751

Cash flows from financing activities
Issuance of common shares		82,338			177,673
Reinvestment of shareholder distributions		42,231			21,167
Repurchases of common shares		(18,339	)		(3,972	)
Offering costs incurred		(1,500	)		(2,500	)
Shareholder distributions		(66,736	)		(33,177	)
Borrowings under credit facilities		—			5,000
Repayments under credit facilities		(97,503	)		(130,086	)
Deferred financing costs paid		(221	)		—

Net cash provided by financing activities		(59,730	)		34,105

Total increase (decrease) in cash		34,717			86,856
Cash at beginning of period		368,867			225,130

Cash at end of period	$	403,584		$	311,986



Supplemental disclosure
Excise and state taxes paid	$	400		$	310



Non-cash purchase of investment	$	(25,026	)	$	—



Non-cash sale of investment	$	25,026		$	—

(1): See Note 8 for a discussion of the Company's credit facilities and repurchase transaction. During the three months ended March 31, 2016 and 2015, the Company paid $4,314 and $5,390, respectively, in interest expense on the credit facilities. During the three months ended March 31, 2016 and 2015, the Company paid $2,680 and $0, respectively, in interest expense pursuant to the repurchase agreement.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Loans—First Lien—32.8%
Abaco Energy Technologies LLC	(g)(i)(j)	Service & Equipment	L+700, 2.5% PIK (2.5% Max PIK)		1.0	%	11/20/20	$	60,559	$	57,687		$	36,335
Allied Wireline Services, LLC	(g)(i)(k)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		104,468		103,412			92,062
Alon USA Partners, L.P.	(g)(i)(l)	Downstream	L+800		1.3	%	11/26/18		7,139		7,309			7,121
Altus Power America, Inc.	(j)	Power	L+750		1.5	%	10/10/21		53,305		53,305			52,772
Altus Power America, Inc.	(e)	Power	L+750		1.5	%	10/10/21		31,070		31,070			30,759
AP Exhaust Acquisition, LLC	(g)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			14,585
BL Sand Hills Unit, L.P.		Upstream	Prime+650		3.5	%	12/17/17		39,959		34,702			34,115
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		15,922		13,827			13,593
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		51,713		50,920			19,392
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 3.8% PIK (3.8% Max PIK)		1.0	%	12/15/19		24,105		24,105			22,779
Crestwood Holdings LLC	(g)(j)	Midstream	L+800				6/19/19		30,153		30,267			15,478
EnergySolutions, LLC	(i)(j)	Service & Equipment	L+575		1.0	%	5/29/20		20,462		20,164			19,030
EP Acquisition LLC	(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	2/26/16		525		525			—
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		14,926		14,926			14,777
Lusk Operating LLC	(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	9/30/16		25,172		24,989			7,803
Lusk Operating LLC	(e)(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	9/30/16		4,828		5,011			1,497
MB Precision Holdings LLC	(g)	Service & Equipment	L+725		1.3	%	1/23/20		12,821		12,821			12,308
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,432		32,534			29,676
Panda Sherman Power, LLC	(g)(j)	Power	L+750		1.5	%	9/14/18		22,586		22,855			19,537
Panda Temple Power, LLC	(j)	Power	L+625		1.0	%	3/6/22		9,900		9,730			7,475
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		27,740		28,039			23,440
ProPetro Services, Inc.	(i)	Service & Equipment	L+625		1.0	%	9/30/19		11,449		11,437			6,583
Stallion Oilfield Holdings, Inc.	(g)(i)(j)(q)(y)	Service & Equipment	L+675		1.3	%	6/19/18		45,025		45,042			24,426
Stonewall Gas Gathering LLC	(j)	Midstream	L+775		1.0	%	1/28/22		23,293		22,488			23,060
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(o)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		147,827		145,322			147,827
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+1100		1.0	%	7/20/21		59,057		59,057			59,057
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		4,473		3,467			2,801
Warren Resources, Inc.	(k)(y)	Upstream	L+850		1.0	%	5/22/20		131,175		131,175			105,596

Total Senior Secured Loans—First Lien											1,011,997			843,884
Unfunded Loan Commitments											(49,908	)		(49,908	)

Net Senior Secured Loans—First Lien											962,089			793,976

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—Second Lien—37.8%
Alison US LLC	(j)(l)	Service & Equipment	L+850		1.0	%	8/29/22	$	17,222	$	16,660	$	14,007
American Energy—Marcellus, LLC		Upstream	L+750		1.0	%	8/4/21		10,000		9,874		391
Ameriforge Group Inc.	(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,414		7,130
AP Exhaust Acquisition, LLC		Service & Equipment	12.0% PIK (12.0% Max PIK)				9/28/21		3,444		3,444		3,074
Arena Energy, LP	(i)(k)	Upstream	L+1000		1.0	%	1/24/21		65,000		65,000		57,363
Ascent Resources—Utica, LLC	(g)(j)(k)	Upstream	L+950, 2.0% PIK (2.0% Max PIK)		1.5	%	9/30/18		282,157		281,090		266,638
Atlas Resource Partners, L.P.	(i)(k)	Upstream	L+900		1.0	%	2/23/20		100,000		97,623		80,750
BlackBrush Oil & Gas, L.P.	(f)(i)	Upstream	L+650		1.0	%	7/30/21		31,519		30,743		24,401
Brock Holdings III, Inc.	(g)(j)	Service & Equipment	L+825		1.8	%	3/16/18		29,605		29,750		21,612
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.0	%	5/16/21		19,576		19,506		11,787
Consolidated Precision Products Corp.	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		11,574		11,531		10,031
Emerald Performance Materials, LLC	(j)	Downstream	L+675		1.0	%	8/1/22		5,319		5,297		4,867
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	11.0%				5/29/19		74,186		74,186		75,206
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	10.0%				5/29/19		32,462		32,462		32,868
Fieldwood Energy LLC	(i)	Upstream	L+713		1.3	%	9/30/20		41,047		41,911		7,594
Granite Intermediate Holdings, Inc.	(f)	Power	L+725		1.0	%	10/15/22		13,150		13,050		10,323
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,304		11,250
Horn Intermediate Holdings, Inc.	(g)(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250		49,999
Jonah Energy LLC	(i)(j)	Upstream	L+650		1.0	%	5/12/21		25,133		24,834		12,944
MD America Energy, LLC	(f)(g)(j)	Upstream	L+850		1.0	%	8/4/19		41,612		40,206		31,937
Neff Rental LLC	(j)	Service & Equipment	L+625		1.0	%	6/9/21		15,039		15,075		13,346
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/19/20		15,000		14,910		11,938
P2 Upstream Acquisition Co.	(g)(j)	Service & Equipment	L+800		1.0	%	4/30/21		32,599		32,853		21,515
Templar Energy LLC	(g)(i)(y)	Upstream	L+750		1.0	%	11/25/20		91,746		88,592		10,321
Total Safety U.S., Inc.	(g)(j)	Service & Equipment	L+800		1.3	%	9/13/20		14,795		14,969		6,658
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		36,192		36,231		16,407
Vantage Energy, LLC	(i)(j)	Upstream	L+750		1.0	%	12/20/18		30,002		29,868		15,976
Vantage Energy II, LLC	(i)(j)	Upstream	L+750		1.0	%	5/8/17		85,000		85,000		85,000

Total Senior Secured Loans—Second Lien											1,215,633		915,333

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Bonds—13.4%
American Energy—Woodford, LLC	(h)(q)(y)	Upstream	12.0% PIK (12.0% Max PIK)		12/30/20	$	7,806	$	5,662		$	1,600
FourPoint Energy, LLC	(j)(k)(o)	Upstream	8.0%		12/31/20		290,813		282,327			229,015
FourPoint Energy, LLC	(e)(o)	Upstream	8.0%		12/31/20		18,563		18,470			14,618
Light Tower Rentals, Inc.	(h)(n)	Service & Equipment	8.1%		8/1/19		17,500		17,322			9,603
Lightstream Resources Ltd.	(k)(l)	Upstream	9.9%		6/15/19		62,400		62,400			54,132
Mirant Mid-Atlantic Trust	(f)(h)(n)	Power	10.1%		12/30/28		23,344		26,061			22,790
SandRidge Energy, Inc.	(h)(n)(q)(y)	Upstream	8.8%		6/1/20		46,700		46,600			11,442

Total Senior Secured Bonds									458,842			343,200
Unfunded Bond Commitment									(18,470	)		(18,470	)

Net Senior Secured Bonds									440,372			324,730

Subordinated Debt—22.3%
Alta Mesa Holdings, LP	(h)	Upstream	9.6%		10/15/18		18,451		18,386			5,097
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		4/1/21		3,055		2,642			2,272
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		10/1/22		10,533		8,905			7,597
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	7.8%		1/15/21		28,285		25,950			3,907
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	9.3%		8/15/21		24,460		23,597			3,440
Bellatrix Exploration Ltd.	(f)(h)(l)	Upstream	8.5%		5/15/20		45,590		44,771			23,821
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%		12/1/21		27,500		27,268			25,884
Calpine Corp.	(f)(l)	Power	5.8%		1/15/25		5,100		5,092			4,936
Canbriam Energy Inc.	(h)(j)(l)	Upstream	9.8%		11/15/19		115,200		111,744			100,032
Compressco Partners, LP	(f)(h)	Service & Equipment	7.3%		8/15/22		20,050		19,893			14,010
Crestwood Equity Partners L.P.	(f)(l)	Midstream	6.1%		3/1/22		5,500		5,500			4,132
Dynegy Finance I/II Inc.	(f)(l)	Power	7.6%		11/1/24		17,080		16,663			15,521
Eclipse Resources Corp.	(h)(l)	Upstream	8.9%		7/15/23		32,500		28,621			16,646
EV Energy Partners, L.P.	(h)(n)	Upstream	8.0%		4/15/19		33,964		24,404			9,005
Everest Acquisition LLC	(h)(l)	Upstream	9.4%		5/1/20		19,970		15,740			10,160

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Genesis Energy, L.P.	(f)(l)	Midstream	6.8%				8/1/22	$	12,100	$	11,700	$	11,298
GenOn Energy, Inc.	(h)(n)	Power	9.9%				10/15/20		42,698		44,591		27,751
GenOn Energy, Inc.	(h)	Power	7.9%				6/15/17		5,000		4,827		3,752
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		654		654		654
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,155		4,155		4,155
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		859		859		859
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		808		808		808
Global Partners L.P.	(f)(h)(l)(n)	Midstream	6.3%				7/15/22		68,350		68,350		50,693
Jupiter Resources Inc.	(h)(l)	Upstream	8.5%				10/1/22		71,125		67,409		37,718
Lonestar Resources America Inc.	(h)(n)	Upstream	8.8%				4/15/19		21,500		21,586		12,497
Martin Midstream Partners L.P.	(f)(l)	Midstream	7.3%				2/15/21		15,658		16,123		13,525
ONEOK, Inc.	(f)(h)(l)(n)	Midstream	7.5%				9/1/23		28,000		26,801		27,304
Seven Generations Energy Ltd.	(f)(l)	Upstream	6.8%				5/1/23		5,150		4,702		4,852
Talos Production LLC	(h)(n)	Upstream	9.8%				2/15/18		43,250		43,256		13,256
Tenrgys, LLC	(i)(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		65,625
Whiting Petroleum Corp.	(h)(l)	Upstream	5.0%				3/15/19		4,685		4,162		3,250
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		14,300		14,371		13,853

Total Subordinated Debt											788,530		538,310

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—15.1%^(m)
Abaco Energy Technologies LLC, Common Equity	(q)	Service & Equipment		6,944,444	$	6,944	$	347
Allied Downhole Technologies, LLC, Common Equity	(k)(p)(q)	Service & Equipment		6,600,000		6,600		2,310
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(p)(q)	Service & Equipment		5,344,680		1,865		1,871
Altus Power America Holdings, LLC, Preferred Equity		Power		17,768,478		17,713		31,095
Altus Power America Management, LLC, Class B Units	(q)(r)	Power		2,250		—		—
AP Exhaust Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		811		811		341
Ascent Resources Utica Holdings, LLC, Common Equity	(q)(s)	Upstream		148,692,909		44,700		33,319
BL Sand Hills Unit, L.P., Net Profits Interest	(q)(u)	Upstream		N/A		5,074		4,409
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(u)	Upstream		N/A		725		349
Cimarron Energy Holdco Inc., Common Equity	(q)	Service & Equipment		3,201,631		2,991		2,241
Extraction Oil & Gas Holdings, LLC, Common Equity	(k)(p)(q)	Upstream		4,191,800		11,250		18,863
Fortune Creek Co-Invest I L.P., LP Interest	(l)(q)(v)(y)	Midstream		N/A		16,697		3,017
FourPoint Energy, LLC, Common Equity, Class C Units	(k)(o)(p)(q)	Upstream		66,000		66,000		21,615
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(o)(p)(q)	Upstream		12,374		8,176		4,083
Global Jet Capital Holdings, LP, Preferred Equity	(q)	Service & Equipment		2,448,883		2,449		2,449
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		371,901		372		614
Lusk Operating LLC, Common Equity	(q)(t)	Upstream		1,000		1,000		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(p)(q)	Service & Equipment		490,213		490		245
Plains Offshore Operations Inc., Preferred Equity	(f)	Upstream		21,067		26,757		26,031
Plains Offshore Operations Inc., Warrants, 11/18/2019	(q)	Upstream		427,005		689		—
Summit Midstream Partners, LLC, Preferred Equity		Midstream		39,163		39,163		37,988
Sunnova Energy Corp., Common Equity	(o)(q)	Power		6,667,368		25,026		35,470
Sunnova Energy Corp., Preferred Equity	(o)(q)	Power		8,677,024		46,196		46,162
Swift Worldwide Resources Holdco Limited, Common Equity	(l)(q)(w)	Service & Equipment		3,750,000		6,029		4,125
Synergy Offshore LLC, Preferred Equity	(k)(x)	Upstream		50,000		62,666		88,950

Total Equity/Other						400,383		365,894

TOTAL INVESTMENTS—121.4%					$	3,807,007		2,938,243



LIABILITIES IN EXCESS OF OTHER ASSETS—(21.4%)								(516,973	)

NET ASSETS—100.0%							$	2,421,270

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)

(a): Security may be an obligation of one or more entities affiliated with the named company.
(b): Certain variable rate securities in the Company's portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2016, the three-month London Interbank Offered Rate, or LIBOR, was 0.63% and the U.S. Prime Lending Rate, or Prime, was 3.50%.
(c): Denominated in U.S. dollars, unless otherwise noted.
(d): Fair value determined by the Company's board of trustees (see Note 7).
(e): Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and may not indicate the actual rate received upon funding.
(f): Security or portion thereof held within FSEP Term Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Note 8).
(g): Security or portion thereof held within Energy Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Natixis, New York Branch (see Note 8).
(h): Security or portion thereof held within Berwyn Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNP. Securities held within Berwyn Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8).
(i): Security or portion thereof held within Wayne Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Wells Fargo Securities, LLC (see Note 8).
(j): Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the repurchase transaction with Goldman Sachs Bank USA (see Note 8).
(k): Security or portion thereof held within Foxfields Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility with Fortress Credit Co LLC (see Note 8).
(l): The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company's total assets. As of March 31, 2016, 87.7% of the Company's total assets represented qualifying assets.
(m): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(n): Security or portion thereof held within Berwyn Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8). As of March 31, 2016, the fair value of securities rehypothecated by BNP was $91,837.
(o): Under the 1940 Act, the Company generally is deemed to be an "affiliated person" of a portfolio company if it owns 5% or more of the portfolio company's voting securities and generally is deemed to "control" a portfolio company if it owns 25% or more of the portfolio company's voting securities or it has the power to exercise control over the management or policies of a portfolio company. As of March 31, 2016, the Company held investments in portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control." The following table presents certain information with respect to such portfolio companies for the three months ended March 31, 2016:

Portfolio Company	Purchases		Sales and Repayments		Interest Income		Fee Income		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Loans—First Lien
Sunnova Asset Portfolio 5 Holdings, LLC	$	10,434	$	112,745	$	5,736	$	7,356	$	2,265	$	3,519
Senior Secured Bonds
FourPoint Energy, LLC		—		—	$	6,256		—		—	$	2,779
Equity/Other
FourPoint Energy, LLC, Common Equity, Class C Units		—		—		—		—		—	$	(24,585	)
FourPoint Energy, LLC, Common Equity, Class D Units		—		—		—		—		—	$	(4,641	)
Sunnova Energy Corp., Common Equity	$	25,026		—		—		—		—	$	10,444
Sunnova Energy Corp., Preferred Equity	$	46,196		—		—		—		—	$	(34	)

(p): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(q): Security is non-income producing.
(r): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of the Company.
(s): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(t): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.
(u): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(v): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2016.
(w): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2016.
(x): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(y): Security was on non-accrual status as of March 31, 2016.

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Loans—First Lien—38.5%
Abaco Energy Technologies LLC	(g)(i)(j)	Service & Equipment	L+700		1.0	%	11/20/20	$	60,938	$	57,911		$	31,383
Allied Wireline Services, LLC	(g)(i)(j)(k)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		103,061		101,930			96,234
Alon USA Partners, L.P.	(g)(i)(l)	Downstream	L+800		1.3	%	11/26/18		7,158		7,342			7,140
Altus Power America, Inc.	(j)	Power	L+750		1.5	%	10/10/21		46,555		46,555			46,090
Altus Power America, Inc.	(e)	Power	L+750		1.5	%	10/10/21		37,820		37,820			37,441
AP Exhaust Acquisition, LLC	(g)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			14,842
BBH Operating LLC		Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		24,441		24,441			17,719
BBH Operating LLC	(e)	Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		5,559		5,559			4,031
BL Sand Hills Unit, L.P.		Upstream	Prime+650		3.5	%	12/17/17		36,626		31,807			34,016
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		19,367		16,819			17,987
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		51,844		51,012			37,457
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 0.0% PIK (3.75% Max PIK)		1.0	%	12/15/19		24,250		24,250			24,129
Crestwood Holdings LLC	(f)(g)(j)	Midstream	L+600		1.0	%	6/19/19		30,565		30,689			19,816
EnergySolutions, LLC	(i)(j)	Service & Equipment	L+575		1.0	%	5/29/20		20,462		20,150			18,211
EP Acquisition LLC	(q)(y)	Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		525		525			—
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		14,951		14,951			14,801
MB Precision Holdings LLC	(g)	Service & Equipment	L+725		1.3	%	1/23/20		12,855		12,855			12,726
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,432		32,540			30,162
Panda Sherman Power, LLC	(g)(j)	Power	L+750		1.5	%	9/14/18		22,643		22,937			20,492
Panda Temple Power, LLC	(j)	Power	L+625		1.0	%	3/6/22		9,925		9,747			8,188
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		27,809		28,132			24,750
ProPetro Services, Inc.	(i)	Service & Equipment	L+625		1.0	%	9/30/19		11,612		11,599			7,838
Stallion Oilfield Holdings, Inc.	(g)(i)(j)	Service & Equipment	L+675		1.3	%	6/19/18		45,025		45,045			24,404
Stonewall Gas Gathering LLC	(j)	Midstream	L+775		1.0	%	1/28/22		26,794		25,803			26,727
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(z)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		250,138		245,363			244,510
Sunnova Asset Portfolio 5 Holdings, LLC	(e)(z)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		7,167		7,167			7,006
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+800		1.3	%	4/30/19		59,057		59,057			59,057
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		4,485		3,443			3,091
Warren Resources, Inc.	(k)	Upstream	L+850		1.0	%	5/22/20		131,175		131,175			106,907

Total Senior Secured Loans—First Lien											1,122,435			997,155
Unfunded Loan Commitments											(67,365	)		(67,365	)

Net Senior Secured Loans—First Lien											1,055,070			929,790

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—Second Lien—38.2%
Alison US LLC	(f)(j)(l)	Service & Equipment	L+850		1.0	%	8/29/22	$	17,222	$	16,641	$	13,993
American Energy—Marcellus, LLC		Upstream	L+750		1.0	%	8/4/21		10,000		9,874		233
Ameriforge Group Inc.	(f)(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,433		2,831
AP Exhaust Acquisition, LLC		Service & Equipment	12.0%, 0.0% PIK (12.0% Max PIK)				9/28/21		3,243		3,243		2,959
Arena Energy, LP	(i)(k)	Upstream	L+1000		1.0	%	1/24/21		65,000		65,000		59,854
Ascent Resources—Utica, LLC	(g)(j)(k)	Upstream	L+950, 2.0% PIK (2.0% Max PIK)		1.5	%	9/30/18		280,735		279,572		251,258
Atlas Resource Partners, L.P.	(i)(k)	Upstream	L+900		1.0	%	2/23/20		100,000		97,489		79,986
BlackBrush Oil & Gas, L.P.	(f)(i)	Upstream	L+650		1.0	%	7/30/21		31,519		30,708		25,268
Brock Holdings III, Inc.	(f)(g)(j)	Service & Equipment	L+825		1.8	%	3/16/18		29,605		29,766		22,796
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.0	%	5/16/21		19,576		19,504		13,143
Consolidated Precision Products Corp.	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		11,574		11,529		10,532
Emerald Performance Materials, LLC	(j)	Downstream	L+675		1.0	%	8/1/22		5,319		5,296		5,055
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	11.0%				5/29/19		74,186		74,186		74,650
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	10.0%				5/29/19		32,462		32,462		32,259
Fieldwood Energy LLC	(f)(i)	Upstream	L+713		1.3	%	9/30/20		41,047		41,951		6,547
Granite Intermediate Holdings, Inc.	(f)	Power	L+725		1.0	%	10/15/22		13,150		13,047		10,257
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,281		14,288
Horn Intermediate Holdings, Inc.	(g)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250		49,496
Jonah Energy LLC	(i)(j)	Upstream	L+650		1.0	%	5/12/21		25,133		24,821		15,960
MD America Energy, LLC	(f)(g)(j)	Upstream	L+850		1.0	%	8/4/19		41,612		40,121		34,815
Neff Rental LLC	(j)	Service & Equipment	L+625		1.0	%	6/9/21		15,145		15,182		12,570
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/19/20		15,000		14,904		12,631
P2 Upstream Acquisition Co.	(g)(j)	Service & Equipment	L+800		1.0	%	4/30/21		32,599		32,862		27,302
Templar Energy LLC	(f)(g)(i)	Upstream	L+750		1.0	%	11/25/20		89,923		88,451		10,903
Total Safety U.S., Inc.	(f)(g)(j)	Service & Equipment	L+800		1.3	%	9/13/20		14,795		14,978		8,335
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		36,192		36,232		23,706
Vantage Energy, LLC	(i)(j)	Upstream	L+750		1.0	%	12/20/18		30,078		29,933		19,325
Vantage Energy II, LLC	(i)(j)	Upstream	L+750		1.0	%	5/8/17		85,000		85,000		82,450

Total Senior Secured Loans—Second Lien											1,213,716		923,402

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Bonds—13.4%
American Energy—Woodford, LLC	(h)(q)(y)	Upstream	12.0% PIK (12.0% Max PIK)		12/30/20	$	7,806	$	5,662		$	1,112
FourPoint Energy, LLC	(j)(k)(o)	Upstream	8.0%		12/31/20		290,813		282,012			226,107
FourPoint Energy, LLC	(e)(o)	Upstream	8.0%		12/31/20		18,563		18,470			14,432
Gastar Exploration USA, Inc.	(h)	Upstream	8.6%		5/15/18		5,690		5,393			2,902
Light Tower Rentals, Inc.	(h)(n)	Service & Equipment	8.1%		8/1/19		17,500		17,313			8,947
Lightstream Resources Ltd.	(k)(l)	Upstream	9.9%		6/15/19		62,400		62,400			52,104
Mirant Mid-Atlantic Trust	(f)(h)(n)	Power	10.1%		12/30/28		23,344		26,097			22,556
SandRidge Energy, Inc.	(h)(n)	Upstream	8.8%		6/1/20		46,700		46,598			14,258

Total Senior Secured Bonds									463,945			342,418
Unfunded Bond Commitment									(18,470	)		(18,470	)

Net Senior Secured Bonds									445,475			323,948

Subordinated Debt—24.0%
Alta Mesa Holdings, LP	(h)(n)	Upstream	9.6%		10/15/18		18,451		18,376			6,481
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		4/1/21		3,055		2,625			2,452
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		10/1/22		10,533		8,858			8,124
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	7.8%		1/15/21		28,285		25,869			5,648
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	9.3%		8/15/21		24,460		23,574			5,022
Bellatrix Exploration Ltd.	(f)(h)(l)	Upstream	8.5%		5/15/20		45,590		44,731			30,716
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%		12/1/21		27,500		27,261			23,684
Calpine Corp.	(f)(l)	Power	5.8%		1/15/25		5,100		5,093			4,501
Canbriam Energy Inc.	(h)(j)(l)	Upstream	9.8%		11/15/19		115,200		111,556			104,256
Chaparral Energy Inc.	(h)(n)	Upstream	7.6%		11/15/22		15,225		16,150			3,191
Compressco Partners, LP	(f)(h)(l)	Service & Equipment	7.3%		8/15/22		20,050		19,889			14,862
Crestwood Equity Partners L.P.	(f)(l)	Midstream	6.1%		3/1/22		5,500		5,500			3,827
Dynegy Finance I/II Inc.	(f)(l)	Power	7.6%		11/1/24		17,080		16,654			14,603
Eclipse Resources Corp.	(h)(l)	Upstream	8.9%		7/15/23		27,500		26,949			13,234
EV Energy Partners, L.P.	(h)(n)	Upstream	8.0%		4/15/19		25,560		21,221			12,716
Everest Acquisition LLC	(f)(l)	Upstream	9.4%		5/1/20		14,250		14,250			9,054

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Genesis Energy, L.P.	(f)(l)	Midstream	6.8%				8/1/22	$	12,100	$	11,688	$	10,179
GenOn Energy, Inc.	(f)(h)(n)	Power	9.9%				10/15/20		42,698		44,669		31,383
GenOn Energy, Inc.	(h)	Power	7.9%				6/15/17		5,000		4,795		4,371
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		635		635		635
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,030		4,030		4,030
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		828		828		828
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		779		779		779
Global Partners L.P.	(f)(h)(l)(n)	Midstream	6.3%				7/15/22		68,350		68,350		54,424
Jones Energy, Inc.	(h)(n)	Upstream	6.8%				4/1/22		8,000		8,000		4,345
Jupiter Resources Inc.	(h)(l)	Upstream	8.5%				10/1/22		71,125		67,291		28,539
Kenan Advantage Group, Inc.	(f)	Service & Equipment	7.9%				7/31/23		11,970		11,970		11,820
Legacy Reserves LP	(h)	Upstream	8.0%				12/1/20		16,750		16,499		3,371
Legacy Reserves LP	(h)	Upstream	6.6%				12/1/21		14,000		13,847		3,028
Lonestar Resources America Inc.	(h)(n)	Upstream	8.8%				4/15/19		21,500		21,591		13,231
Martin Midstream Partners L.P.	(f)(l)	Midstream	7.3%				2/15/21		15,658		16,144		13,877
Memorial Production Partners L.P.	(h)	Upstream	6.9%				8/1/22		12,250		12,059		3,690
ONEOK, Inc.	(f)(h)(l)(n)	Midstream	7.5%				9/1/23		28,000		26,771		23,363
Seven Generations Energy Ltd.	(f)(l)	Upstream	6.8%				5/1/23		6,150		5,612		5,220
Talos Production LLC	(f)(h)(n)	Upstream	9.8%				2/15/18		43,250		43,258		17,841
Tenrgys, LLC	(i)(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		64,875
Whiting Petroleum Corp.	(f)(l)	Upstream	5.0%				3/15/19		4,685		4,124		3,562
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		14,300		14,376		13,978

Total Subordinated Debt											860,872		579,740

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—12.9%^(m)
Abaco Energy Technologies LLC, Common Equity	(q)	Service & Equipment		6,944,444	$	6,944	$	1,042
Allied Downhole Technologies, LLC, Common Equity	(k)(p)(q)	Service & Equipment		6,600,000		6,600		4,950
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(p)(q)	Service & Equipment		5,344,680		1,865		4,009
Altus Power America Holdings, LLC, Preferred Equity		Power		15,518,478		15,464		28,709
Altus Power America Management, LLC, Class B Units	(q)(r)	Power		2,250		—		—
AP Exhaust Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		811		811		405
Ascent Resources Utica Holdings, LLC, Common Equity	(q)(s)	Upstream		15,657,194		14,900		3,131
BBH Operating LLC, Common Equity	(q)(t)	Upstream		1,000		1,000		—
BL Sand Hills Unit, L.P., Net Profits Interest	(q)(u)	Upstream		N/A		4,677		5,966
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(u)	Upstream		N/A		668		227
Cimarron Energy Holdco Inc., Common Equity	(q)	Service & Equipment		2,500,000		2,500		1,750
Extraction Oil & Gas Holdings, LLC, Common Equity	(k)(p)(q)	Upstream		4,191,800		11,250		15,090
Fortune Creek Co-Invest I L.P., LP Interest	(l)(q)(v)(y)	Midstream		N/A		16,697		3,281
FourPoint Energy, LLC, Common Equity, Class C Units	(k)(o)(p)(q)	Upstream		66,000		66,000		46,200
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(o)(p)(q)	Upstream		12,374		8,176		8,724
Global Jet Capital Holdings, LP, Preferred Equity	(q)	Service & Equipment		2,448,883		2,449		2,449
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		371,901		372		614
MB Precision Investment Holdings LLC, Class A-2 Units	(q)	Service & Equipment		490,213		490		466
Plains Offshore Operations Inc., Preferred Equity	(f)	Upstream		21,067		26,321		25,869
Plains Offshore Operations Inc., Warrants, 11/18/2019	(f)(q)	Upstream		427,005		689		—
Summit Midstream Partners, LLC, Preferred Equity		Midstream		39,163		39,163		37,205
Sunnova Holdings, LLC, Common Equity	(q)(z)	Power		1,074,951		25,026		29,561
Swift Worldwide Resources Holdco Limited, Common Equity	(l)(q)(w)	Service & Equipment		3,750,000		6,029		3,870
Synergy Offshore LLC, Preferred Equity	(k)(x)	Upstream		50,000		61,183		89,100

Total Equity/Other						319,274		312,618

TOTAL INVESTMENTS—127.0%					$	3,894,407		3,069,498



LIABILITIES IN EXCESS OF OTHER ASSETS—(27.0%)								(651,637	)

NET ASSETS—100.0%							$	2,417,861

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)

(a): Security may be an obligation of one or more entities affiliated with the named company.
(b): Certain variable rate securities in the Company's portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2015, the three-month London Interbank Offered Rate was 0.61% and the U.S. Prime Lending Rate was 3.50%.
(c): Denominated in U.S. dollars, unless otherwise noted.
(d): Fair value determined by the Company's board of trustees (see Note 7).
(e): Security is an unfunded commitment.
(f): Security or portion thereof held within FSEP Term Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Note 8).
(g): Security or portion thereof held within Energy Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Natixis, New York Branch (see Note 8).
(h): Security or portion thereof held within Berwyn Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNP. Securities held within Berwyn Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8).
(i): Security or portion thereof held within Wayne Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Wells Fargo Securities, LLC (see Note 8).
(j): Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the repurchase transaction with Goldman Sachs Bank USA (see Note 8).
(k): Security or portion thereof held within Foxfields Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility with Fortress Credit Co LLC (see Note 8).
(l): The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company's total assets. As of December 31, 2015, 87.8% of the Company's total assets represented qualifying assets.
(m): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(n): Security or portion thereof held within Berwyn Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8). As of December 31, 2015, the fair value of securities rehypothecated by BNP was $108,340.
(o): Under the 1940 Act, the Company generally is deemed to be an "affiliated person" of a portfolio company if it owns 5% or more of the portfolio company's voting securities. As of December 31, 2015, the Company held investments in a portfolio company of which it is deemed to be an "affiliated person" but is not deemed to "control." The following table presents certain information with respect to such portfolio company for the year ended December 31, 2015:

Portfolio Company	Purchases			Interest Income		Fee Income			Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Bonds
FourPoint Energy, LLC	$	67,722	—	$	21,503	$	681	—	$	(32,843	)
Equity/Other
FourPoint Energy, LLC, Common Equity, Class C Units		—	—		—		—	—	$	(37,950	)
FourPoint Energy, LLC, Common Equity, Class D Units		—	—		—		—	—	$	(7,177	)

(p): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(q): Security is non-income producing.
(r): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of the Company.
(s): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(t): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)

(u): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(v): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2015.
(w): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2015.
(x): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(y): Security was on non-accrual as of December 31, 2015.
(z): Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns 25% or more of the portfolio company's voting securities or it has the power to exercise control over the management or policies of a portfolio company. As of December 31, 2015, the Company held investments in a portfolio company of which it is deemed to be an "affiliated person" and is also deemed to "control." The following table presents certain information with respect to such portfolio company for the year ended December 31, 2015:

Portfolio Company	Purchases			Interest Income		Fee Income			Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Loans—First Lien
Sunnova Asset Portfolio 5 Holdings, LLC	$	187,636	—	$	19,950	$	2,162	—	$	(1,014	)
Equity/Other
Sunnova Holdings, LLC, Common Equity	$	25,026	—		—	$	6,523	—	$	4,535

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements
(in thousands, except share and per share amounts)

Note 1. Principal Business and Organization

FS Energy and Power Fund, or the Company, was formed as a Delaware statutory trust under the Delaware Statutory Trust Act on September 16, 2010 and formally commenced investment operations on July 18, 2011 upon raising gross proceeds in excess of $2,500, or the minimum offering requirement, from sales of its common shares of beneficial interest, or common shares, in its continuous public offering to persons who were not affiliated with the Company or the Company's investment adviser, FS Investment Advisor, LLC, or FS Advisor, a private investment firm that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act, and an affiliate of the Company.

The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of March 31, 2016, the Company had seven wholly-owned financing subsidiaries, six wholly-owned subsidiaries through which it holds interests in certain non-controlled portfolio companies and one wholly-owned subsidiary through which it will hold interests in certain non-controlled portfolio companies. The unaudited consolidated financial statements include both the Company's accounts and the accounts of its wholly-owned subsidiaries as of March 31, 2016. All significant intercompany transactions have been eliminated in consolidation. Certain of the Company's consolidated subsidiaries are subject to U.S. federal and state income taxes.

The Company's investment objective is to generate current income and long-term capital appreciation by investing primarily in privately-held U.S. companies in the energy and power industry. The Company's investment policy is to invest, under normal circumstances, at least 80% of its total assets in securities of energy and power related, or Energy, companies. The Company considers Energy companies to be those companies that engage in the exploration, development, production, gathering, transportation, processing, storage, refining, distribution, mining, generation or marketing of natural gas, natural gas liquids, crude oil, refined products, coal or power, including those companies that provide equipment or services to companies engaged in any of the foregoing.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company's interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 2015 included in the Company's annual report on Form 10-K. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 consolidated balance sheet and consolidated schedule of investments are derived from the Company's audited consolidated financial statements as of and for the year ended December 31, 2015. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies. The Company has evaluated the impact of subsequent events through the date the consolidated financial statements were issued and filed with the Securities and Exchange Commission, or the SEC.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

Use of Estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded, and all amounts are in thousands, except share and per share amounts.

Capital Gains Incentive Fee: The Company entered into an investment advisory and administrative services agreement with FS Advisor, dated as of April 28, 2011, which was amended on August 10, 2012, and which, as amended, is referred to herein as the investment advisory and administrative services agreement. Pursuant to the terms of the investment advisory and administrative services agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of such agreement). Such fee equals 20.0% of the Company's incentive fee capital gains (i.e., the Company's realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

While the investment advisory and administrative services agreement with FS Advisor neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute of Certified Public Accountants Technical Practice Aid, or AICPA, for investment companies, the Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to FS Advisor as if the Company's entire portfolio was liquidated at its fair value as of the balance sheet date even though FS Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Subordinated Income Incentive Fee: Pursuant to the investment advisory and administrative services agreement, FS Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income, which is calculated and payable quarterly in arrears, equals 20.0% of the Company's "pre-incentive fee net investment income" for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on adjusted capital equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS Advisor does not earn this incentive fee for any quarter until the Company's pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.625%. For purposes of this fee, "adjusted capital" means cumulative gross proceeds generated from sales of the Company's common shares (including proceeds from its distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company's investments paid to shareholders and amounts paid for share repurchases pursuant to the Company's share repurchase program. Once the Company's pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS Advisor is entitled to a "catch-up" fee equal to the amount of the pre-incentive fee net investment income in excess of the hurdle rate, until the Company's pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. Thereafter, FS Advisor is entitled to receive 20.0% of pre-incentive fee net investment income.

Offering Costs: The Company's offering costs primarily include, among other things, marketing expenses and printing, legal and due diligence fees and other costs pertaining to the Company's continuous public offering of its common shares. Historically, the Company has charged offering costs

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

against capital in excess of par value on its consolidated balance sheets. Following recent discussions with the Staff of the Division of Investment Management of the SEC, the Company has decided to change its accounting treatment of offering costs and defer and amortize such costs as an expense over twelve months. The Company evaluated this change in accounting treatment of offering costs, which it implemented effective January 1, 2016, and determined that it did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Reclassifications: Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2015 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2016. These reclassifications had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

In April 2015, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update No. 2015-03, Interest—Imputation of Interest, or ASU 2015-03, to simplify the presentation of debt issuance costs in financial statements. Under pre-existing guidance, debt issuance costs were recognized as a deferred charge and presented as an asset on the balance sheet. ASU 2015-03 requires that debt issuance costs related to a recognized liability for indebtedness be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. In August 2015, the FASB issued Accounting Standards Update No. 2015-15, Interest—Imputation of Interest, or ASU 2015-15, to update the guidance to include SEC staff views regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC indicated that it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

During the three months ended March 31, 2016, the Company adopted ASU 2015-03 and changed its method of disclosing debt issuance costs incurred in connection with its repurchase agreement entered into in connection with its financing arrangement with Goldman Sachs Bank USA, or Goldman, and its multiple draw term loan agreement entered into in connection with its financing arrangement with Fortress Credit Co LLC, or Fortress. ASU 2015-03 affects the presentation and disclosure of such costs in the Company's financial statements. There is no change to the Company's recognition and measurement of debt issuance costs. In accordance with ASU 2015-15, the Company elected to continue to present debt issuance costs associated with line-of-credit arrangements as an asset, which is unchanged from its prior method of disclosure.

Comparative financial statements of prior interim periods have been adjusted to apply the new method retrospectively. The adoption and retrospective adjustment of ASU 2015-03 had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions

Below is a summary of transactions with respect to the Company's common shares during the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,

	2016						2015
	Shares			Amount			Shares			Amount
Gross Proceeds from Offering		13,333,668		$	92,620			19,243,929		$	184,430
Reinvestment of Distributions		6,643,252			42,231			2,437,037			21,167

Total Gross Proceeds		19,976,920			134,851			21,680,966			205,597
Commissions and Dealer Manager Fees		—			(7,923	)		—			(16,663	)

Net Proceeds to Company		19,976,920			126,928			21,680,966			188,934
Share Repurchase Program		(2,716,924	)		(18,339	)		(450,293	)		(3,972	)

Net Proceeds from Share Transactions		17,259,996		$	108,589			21,230,673		$	184,962

Status of Continuous Public Offering

Since commencing its continuous public offering and through April 26, 2016, the Company has sold 401,344,745 common shares (as adjusted for share distributions) for gross proceeds of $3,997,317, including common shares issued under its distribution reinvestment plan. As of April 26, 2016, the Company had raised total gross proceeds of $4,017,521, including $200 of seed capital contributed by the principals of FS Advisor in December 2010 and $20,004 in proceeds raised from the principals of FS Advisor, other individuals and entities affiliated with FS Advisor, certain members of the Company's board of trustees and certain individuals and entities affiliated with GSO Capital Partners LP, or GSO, the Company's investment sub-adviser, in a private placement conducted in April 2011 (see Note 4).

During the three months ended March 31, 2016 and 2015, the Company sold 19,976,920 and 21,680,966 common shares for gross proceeds of $134,851 and $205,597, respectively, at an average price per share of $6.75 and $9.48, respectively. The gross proceeds received during the three months ended March 31, 2016 and 2015 include reinvested shareholder distributions of $42,231 and $21,167, respectively, for which the Company issued 6,643,252 and 2,437,037 common shares, respectively. During the period from April 1, 2016 to April 26, 2016, the Company sold 5,165,365 common shares for gross proceeds of $36,148 at an average price per share of $7.00.

The proceeds from the issuance of common shares as presented on the Company's unaudited consolidated statements of changes in net assets and unaudited consolidated statements of cash flows are presented net of selling commissions and dealer manager fees of $7,923 and $16,663 for the three months ended March 31, 2016 and 2015, respectively.

The Company previously announced that it intended to close its public offering to new investors near the end of the second quarter or the beginning of the third quarter of 2016, subject to market conditions and the pace of capital raising. Based on and subject to market conditions and the pace of capital raising, the Company now expects to close its public offering to new investors near the end of the third quarter of 2016.

Share Repurchase Program

The Company intends to conduct quarterly tender offers pursuant to its share repurchase program. The Company's board of trustees will consider the following factors, among others, in making its

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions (Continued)

determination regarding whether to cause the Company to offer to repurchase common shares and under what terms:

•: the effect of such repurchases on the Company's qualification as a RIC (including the consequences of any necessary asset sales);
•: the liquidity of the Company's assets (including fees and costs associated with disposing of assets);
•: the Company's investment plans and working capital requirements;
•: the relative economies of scale with respect to the Company's size;
•: the Company's history in repurchasing common shares or portions thereof; and
•: the condition of the securities markets.

The Company currently intends to limit the number of common shares to be repurchased during any calendar year to the number of common shares it can repurchase with the proceeds it receives from the issuance of common shares under its distribution reinvestment plan. At the discretion of the Company's board of trustees, the Company may also use cash on hand, cash available from borrowings and cash from the liquidation of securities investments as of the end of the applicable period to repurchase common shares. In addition, the Company will limit the number of common shares to be repurchased in any calendar year to 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each quarter, though the actual number of common shares that the Company offers to repurchase may be less in light of the limitations noted above. The Company intends to offer to repurchase such common shares on each date of repurchase at a price equal to 90% of the offering price in effect on the date of repurchase. In months in which the Company repurchases common shares pursuant to its share repurchase program, it expects to conduct repurchases on the same date that it holds its first weekly closing in such month for the sale of common shares in its public offering. The Company's board of trustees may amend, suspend or terminate the share repurchase program at any time, upon 30 days' notice.

The following table provides information concerning the Company's repurchases of common shares pursuant to its share repurchase program during the three months ended March 31, 2016 and 2015:

For the Three Months Ended	Repurchase Date				Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares

Fiscal 2015
December 31, 2014	January 7, 2015	450,293	100	%	$	8.82	$	3,972
Fiscal 2016
December 31, 2015	January 6, 2016	2,716,924	100	%	$	6.75	$	18,339

On April 6, 2016, the Company repurchased 2,196,742 common shares (representing 100% of common shares tendered for repurchase) at $6.345 per share for aggregate consideration totaling $13,938.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions

Compensation of the Investment Adviser and Dealer Manager

Pursuant to the investment advisory and administrative services agreement, FS Advisor is entitled to an annual base management fee of 2.0% of the average value of the Company's gross assets and an incentive fee based on the Company's performance. The Company commenced accruing fees under the investment advisory and administrative services agreement on July 18, 2011, upon commencement of the Company's investment operations. Base management fees are paid on a quarterly basis in arrears.

The incentive fee consists of two parts. The first part of the incentive fee, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears, equals 20.0% of the Company's "pre-incentive fee net investment income" for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on adjusted capital, equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS Advisor does not earn this incentive fee for any quarter until the Company's pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.625%. For purposes of this fee, "adjusted capital" means cumulative gross proceeds generated from sales of the Company's common shares (including proceeds from its distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company's investments paid to shareholders and amounts paid for share repurchases pursuant to the Company's share repurchase program. Once the Company's pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS Advisor is entitled to a "catch-up" fee equal to the amount of the pre-incentive fee net investment income in excess of the hurdle rate, until the Company's pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. This "catch-up" feature allows FS Advisor to recoup the fees foregone as a result of the existence of the hurdle rate. Thereafter, FS Advisor is entitled to receive 20.0% of pre-incentive fee net investment income.

The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory and administrative services agreement). This fee equals 20.0% of the Company's incentive fee capital gains, which equal the Company's realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees. The Company accrues for the capital gains incentive fee, which, if earned, is paid annually. The Company accrues the capital gains incentive fee based on net realized and unrealized gains; however, under the terms of the investment advisory and administrative services agreement, the fee payable to FS Advisor is based on realized gains and no such fee is payable with respect to unrealized gains unless and until such gains are actually realized.

The Company reimburses FS Advisor for expenses necessary to perform services related to the Company's administration and operations, including FS Advisor's allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P., or Franklin Square Holdings, the Company's sponsor and an affiliate of FS Advisor, providing administrative services to the Company on behalf of FS Advisor. The amount of the reimbursement payable to FS Advisor is the lesser of (1) FS Advisor's actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for comparable services in the same geographic location. FS Advisor is required to allocate the cost of such services to the Company based on factors such as assets, revenues, time allocations and/or other reasonable metrics. The Company's board of trustees reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed allocation of the administrative expenses among the Company and certain affiliates of FS Advisor. The Company's board of trustees then assesses the reasonableness of such reimbursements for expenses allocated to the Company based on the breadth,

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (Continued)

depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party providers known to be available. In addition, the Company's board of trustees considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company's board of trustees, among other things, compares the total amount paid to FS Advisor for such services as a percentage of the Company's net assets to the same ratio as reported by other comparable BDCs. The Company will not reimburse FS Advisor for any services for which it receives a separate fee, or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a controlling person of FS Advisor.

Under the investment advisory and administrative services agreement, the Company, either directly or through reimbursement to FS Advisor or its affiliates, is responsible for its organization and offering costs in an amount up to 1.5% of gross proceeds raised in the Company's continuous public offering. Organization and offering costs primarily include legal, accounting, printing and other expenses relating to the Company's continuous public offering, including costs associated with technology integration between the Company's systems and those of its selected broker-dealers, marketing expenses, salaries and direct expenses of FS Advisor's personnel, employees of its affiliates and others while engaged in registering and marketing the Company's common shares, which includes the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Prior to satisfaction of the minimum offering requirement and for a period of time thereafter, Franklin Square Holdings funded certain of the Company's organization and offering costs. Following this period, the Company paid certain of its organization and offering costs directly and reimbursed FS Advisor for offering costs incurred by FS Advisor on the Company's behalf, including marketing expenses, salaries and other direct expenses of FS Advisor's personnel and employees of its affiliates while engaged in registering and marketing the Company's common shares. Organization and offering costs funded directly by Franklin Square Holdings were recorded by the Company as a contribution to capital. These offering costs were offset against capital in excess of par value on the consolidated financial statements and organization costs were charged to expense as incurred by the Company. All other offering costs, including costs incurred directly by the Company, amounts reimbursed to FS Advisor for ongoing offering costs and any reimbursements paid to Franklin Square Holdings for organization and offering costs previously funded, are recorded as a reduction of capital. Commencing January 1, 2016, offering costs incurred by the Company are deferred and amortized as an expense over twelve months (see Note 2).

The dealer manager for the Company's continuous public offering is FS² Capital Partners, LLC, or FS², which is one of the Company's affiliates. Under the dealer manager agreement among the Company, FS Advisor and FS², or the dealer manager agreement, FS² is entitled to receive sales commissions and dealer manager fees in connection with the sale of common shares in the Company's continuous public offering, all or a portion of which may be re-allowed to selected broker-dealers and financial representatives.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (Continued)

The following table describes the fees and expenses accrued under the investment advisory and administrative services agreement and the dealer manager agreement during the three months ended March 31, 2016 and 2015:

			Three Months Ended March 31,

Related Party	Source Agreement	Description	2016		2015
FS Advisor	Investment Advisory and Administrative Services Agreement	Base Management Fee⁽¹⁾	$	17,241	$	18,745
FS Advisor	Investment Advisory and Administrative Services Agreement	Subordinated Incentive Fee on Income⁽²⁾	$	5,774	$	2,879
FS Advisor	Investment Advisory and Administrative Services Agreement	Administrative Services Expenses⁽³⁾	$	884	$	1,500
FS Advisor	Investment Advisory and Administrative Services Agreement	Offering Costs⁽⁴⁾	$	713	$	1,624
FS²	Dealer Manager Agreement	Dealer Manager Fee⁽⁵⁾	$	1,479	$	3,217

(1): During the three months ended March 31, 2016 and 2015, $18,338 and $17,912, respectively, in base management fees were paid to FS Advisor. As of March 31, 2016, $17,241 in base management fees were payable to FS Advisor.
(2): During the three months ended March 31, 2016 and 2015, $12,048 and $12,142, respectively, of subordinated incentive fees on income were paid to FS Advisor. As of March 31, 2016, a subordinated incentive fee on income of $5,774 was payable to FS Advisor.
(3): During the three months ended March 31, 2016 and 2015, $861 and $1,412, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS Advisor and the remainder related to other reimbursable expenses. The Company paid $1,204 and $1,373 in administrative services expenses to FS Advisor during the three months ended March 31, 2016 and 2015, respectively.
(4): During the three months ended March 31, 2016 and 2015, the Company incurred offering costs of $1,500 and $2,500, respectively, of which $713 and $1,624, respectively, related to reimbursements to FS Advisor for offering costs incurred on the Company's behalf, including marketing expenses, salaries and other direct expenses of FS Advisor's personnel and employees of its affiliates while engaged in registering and marketing the Company's common shares.
(5): Represents aggregate dealer manager fees retained by FS² and not re-allowed to selected broker-dealers and financial representatives.

Capital Contribution by FS Advisor and GSO

In December 2010, Michael C. Forman and David J. Adelman, the principals of FS Advisor, contributed an aggregate of $200 to purchase 22,444 common shares (as adjusted for share distributions) at $8.91 per share, which represents the initial public offering price (as adjusted for share distributions), net of selling commissions and dealer manager fees. The principals have agreed not to tender these common shares for repurchase as long as FS Advisor remains the Company's investment adviser.

In April 2011, pursuant to a private placement, Messrs. Forman and Adelman agreed to purchase, through affiliated entities controlled by each of them, 224,444 additional common shares (as adjusted for share distributions) at $8.91 per share (as adjusted for share distributions). The principals have agreed not to tender these common shares for repurchase as long as FS Advisor remains the Company's investment adviser. In connection with the same private placement, certain members of the

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (Continued)

Company's board of trustees and other individuals and entities affiliated with FS Advisor agreed to purchase 1,459,320 common shares (as adjusted for share distributions), and certain individuals and entities affiliated with GSO agreed to purchase 561,111 common shares (as adjusted for share distributions), in each case at a price of $8.91 per share (as adjusted for share distributions). In connection with the private placement, the Company issued an aggregate of 2,244,875 common shares (as adjusted for share distributions) for aggregate proceeds of $20,004, upon satisfaction of the minimum offering requirement on July 18, 2011. As of April 26, 2016, the Company has issued an aggregate of 5,417,794 common shares (as adjusted for share distributions) for aggregate gross proceeds of $45,942 to members of its board of trustees and individuals and entities affiliated with FS Advisor and GSO, including common shares sold to Messrs. Forman and Adelman in December 2010 and common shares sold in the private placement conducted in April 2011.

Potential Conflicts of Interest

FS Advisor's senior management team is comprised of substantially the same personnel as the senior management teams of FB Income Advisor, LLC, FSIC II Advisor, LLC, FSIC III Advisor, LLC, FSIC IV Advisor, LLC and FS Global Advisor, LLC, the investment advisers to Franklin Square Holdings' other affiliated BDCs and affiliated closed-end management investment company. As a result, such personnel provide investment advisory services to the Company and each of FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV and FS Global Credit Opportunities Fund. While none of FS Advisor, FB Income Advisor, LLC, FSIC II Advisor, LLC, FSIC III Advisor, LLC, FSIC IV Advisor, LLC or FS Global Advisor, LLC is currently making private corporate debt investments for clients other than the Company, FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV or FS Global Credit Opportunities Fund, respectively, any, or all, may do so in the future. In the event that FS Advisor undertakes to provide investment advisory services to other clients in the future, it intends to allocate investment opportunities in a fair and equitable manner consistent with the Company's investment objectives and strategy, if necessary, so that the Company will not be disadvantaged in relation to any other client of FS Advisor or its management team. In addition, even in the absence of FS Advisor retaining additional clients, it is possible that some investment opportunities may be provided to FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV and/or FS Global Credit Opportunities Fund rather than to the Company.

Exemptive Relief

As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permitted to co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term. In an order dated June 4, 2013, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of FS Advisor, including FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV, and any future BDCs that are advised by FS Advisor or its affiliated investment advisers, or collectively the Company's co-investment affiliates. The Company believes this relief has and may continue to enhance its ability to further its investment objectives and strategy. The Company believes this relief may also increase favorable investment opportunities for the Company, in part, by allowing it to participate in larger investments, together with the Company's co-investment affiliates, than would be available to it if such relief had not been obtained. Because the Company did not seek exemptive relief to engage in

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (Continued)

co-investment transactions with its investment sub-adviser, GSO, and its affiliates, it will continue to be permitted to co-invest with GSO and its affiliates only in accordance with existing regulatory guidance (e.g., where price is the only negotiated term).

Expense Reimbursement

Pursuant to an expense support and conditional reimbursement agreement, amended and restated as of May 16, 2013, or, the expense reimbursement agreement, Franklin Square Holdings has agreed to reimburse the Company for expenses in an amount that is sufficient to ensure that no portion of the Company's distributions to shareholders will be paid from its offering proceeds or borrowings. However, because certain investments the Company may make, including preferred and common equity investments, may generate dividends and other distributions to the Company that are treated for tax purposes as a return of capital, a portion of the Company's distributions to shareholders may also be deemed to constitute a return of capital for tax purposes to the extent that the Company may use such dividends or other distribution proceeds to fund its distributions to shareholders. Under those circumstances, Franklin Square Holdings will not reimburse the Company for the portion of such distributions to shareholders that represent a return of capital for tax purposes, as the purpose of the expense reimbursement arrangement is not to prevent tax-advantaged distributions to shareholders.

Under the expense reimbursement agreement, Franklin Square Holdings will reimburse the Company quarterly for expenses in an amount equal to the difference between the Company's cumulative distributions paid to its shareholders in each quarter, less the sum of the Company's net investment company taxable income, net capital gains and dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent such amounts are not included in net investment company taxable income or net capital gains) in each quarter.

Pursuant to the expense reimbursement agreement, the Company has a conditional obligation to reimburse Franklin Square Holdings for any amounts funded by Franklin Square Holdings under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which Franklin Square Holdings funded such amount, the sum of the Company's net investment company taxable income, net capital gains and the amount of any dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent not included in net investment company taxable income or net capital gains) exceeds the distributions paid by the Company to its shareholders; provided, however, that (i) the Company will only reimburse Franklin Square Holdings for expense support payments made by Franklin Square Holdings with respect to any calendar quarter beginning on or after July 1, 2013 to the extent that the payment of such reimbursement (together with any other reimbursement paid during such fiscal year) does not cause "other operating expenses" (as defined below) (on an annualized basis and net of any expense support payments received by the Company during such fiscal year) to exceed the lesser of (A) 1.75% of the Company's average net assets attributable to its common shares for the fiscal year-to-date period after taking such payments into account and (B) the percentage of the Company's average net assets attributable to its common shares represented by "other operating expenses" during the fiscal year in which such expense support payment from Franklin Square Holdings was made (provided, however, that this clause (B) shall not apply to any reimbursement payment which relates to an expense support payment from Franklin Square Holdings made during the same fiscal year) and (ii) the Company will not reimburse Franklin Square Holdings for expense support payments made by Franklin Square Holdings if the aggregate amount of distributions per share declared by the Company in such calendar quarter is less than the aggregate amount of distributions per share declared by the Company in the calendar quarter in which Franklin Square Holdings made the expense support

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (Continued)

payment to which such reimbursement relates. The Company is not obligated to pay interest on the payments it receives from Franklin Square Holdings. "Other operating expenses" means the Company's total "operating expenses" (as defined below), excluding base management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses. "Operating expenses" means all operating costs and expenses incurred, as determined in accordance with GAAP for investment companies.

The Company or Franklin Square Holdings may terminate the expense reimbursement agreement at any time. The specific amount of expenses reimbursed by Franklin Square Holdings, if any, will be determined at the end of each quarter. Upon termination of the expense reimbursement agreement by Franklin Square Holdings, Franklin Square Holdings will be required to fund any amounts accrued thereunder as of the date of termination. Similarly, the Company's conditional obligation to reimburse Franklin Square Holdings pursuant to the terms of the expense reimbursement agreement shall survive the termination of such agreement by either party.

Franklin Square Holdings is controlled by the Company's chairman, president and chief executive officer, Michael C. Forman, and the Company's vice-chairman, David J. Adelman. There can be no assurance that the expense reimbursement agreement will remain in effect or that Franklin Square Holdings will reimburse any portion of the Company's expenses in future quarters.

As of March 31, 2016, the Company had no reimbursements due from Franklin Square Holdings and no further amounts remained subject to repayment by the Company to Franklin Square Holdings in the future.

FS Benefit Trust

On May 30, 2013, FS Benefit Trust was formed as a Delaware statutory trust for the purpose of awarding equity incentive compensation to employees of Franklin Square Holdings and its affiliates. During the three months ended March 31, 2016 and 2015, FS Benefit Trust did not purchase any of the Company's common shares.

Note 5. Distributions

The following table reflects the cash distributions per share that the Company declared and paid on its common shares during the three months ended March 31, 2016 and 2015:

	Distribution

For the Three Months Ended	Per Share		Amount
Fiscal 2015
March 31, 2015	$	0.1771	$	54,825
Fiscal 2016
March 31, 2016	$	0.1771	$	66,720

The Company authorizes and declares ordinary cash distributions on a weekly basis and pays such distributions on a monthly basis. On March 9, 2016, the Company's board of trustees declared regular weekly cash distributions for April 2016 through June 2016. These distributions have been or will be paid monthly to shareholders of record as of weekly record dates previously determined by the Company's board of trustees in the amount of $0.013625 per share. The timing and amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion of the Company's board of trustees.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 5. Distributions (Continued)

The Company has adopted an "opt in" distribution reinvestment plan for its shareholders. As a result, if the Company makes a cash distribution, its shareholders will receive distributions in cash unless they specifically "opt in" to the distribution reinvestment plan so as to have their cash distributions reinvested in additional common shares. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a shareholder's ability to participate in the distribution reinvestment plan.

The Company may fund its cash distributions to shareholders from any sources of funds legally available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies and expense reimbursements from Franklin Square Holdings. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

For a period of time following commencement of the Company's continuous public offering, substantial portions of the Company's distributions were funded through the reimbursement of certain expenses by Franklin Square Holdings and its affiliates, including through the waiver of certain investment advisory fees by FS Advisor, that were subject to repayment by the Company within three years. The purpose of this arrangement was to ensure that no portion of the Company's distributions to shareholders was paid from offering proceeds or borrowings. Any such distributions funded through expense reimbursements or waivers of advisory fees were not based on the Company's investment performance.

No portion of the distributions paid during the three months ended March 31, 2016 or 2015 was funded through the reimbursement of operating expenses by Franklin Square Holdings. During the three months ended March 31, 2016 and 2015, the Company did not repay any amounts to Franklin Square Holdings for expenses previously reimbursed or waived. There can be no assurance that the Company will continue to achieve the performance necessary to sustain its distributions or that the Company will be able to pay distributions at a specific rate or at all. Franklin Square Holdings and its affiliates have no obligation to waive advisory fees or otherwise reimburse expenses in future periods.

The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common shares during the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,

	2016					2015
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Offering proceeds	$	—		—		$	—		—
Borrowings		—		—			—		—
Net investment income⁽¹⁾		66,720		100	%		41,234		75	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			13,591		25	%
Non-capital gains proceeds from the sale of assets		—		—			—		—
Distributions on account of limited partnership interest		—		—			—		—
Expense reimbursement from sponsor		—		—			—		—

Total	$	66,720		100	%	$	54,825		100	%

(1): During the three months ended March 31, 2016 and 2015, 89.4% and 88.6%, respectively, of the Company's gross investment income was attributable to cash income earned, 2.4% and 2.7%,

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 5. Distributions (Continued)

respectively, was attributable to non-cash accretion of discount and 8.2% and 8.7%, respectively, was attributable to paid-in-kind, or PIK, interest.

The Company's net investment income on a tax basis for the three months ended March 31, 2016 and 2015 was $62,858 and $53,492, respectively. As of March 31, 2016 and December 31, 2015, the Company had $12,574 and $16,436, respectively, of undistributed ordinary income on a tax basis and distributable income received from a limited partnership interest. As of March 31, 2016, the Company had excess undistributed ordinary income on a tax basis of $5,716. During the last twelve months, the Company's distributions exceeded tax-basis net investment income by $7,199. In addition, $24,138 of the Company's tax-basis net investment income was generated by fee income, which is generally non-recurring in nature and the full amount of which is recorded as revenue when earned. Excluding fee income from net investment income during the last twelve months, the Company would have had distributions in excess of tax-basis net investment income of $31,337. No portion of the distributions paid during the three months ended March 31, 2016 or 2015 was funded from offering proceeds or borrowings.

The Company has seen some positive developments in its investment portfolio and a subsequent increase in its net asset value. However, the Company anticipates that certain investments in the portfolio may need to be restructured or may experience defaults. These restructurings and defaults may have an impact on the level of income received by the Company. As a result, the Company is evaluating the current distribution rate payable on its common shares and there can be no assurance that the Company will be able to maintain a weekly cash distribution amount of $0.013625 per common share. FS Advisor will waive its incentive fees and may waive a portion of its management fee through the second quarter of 2016 to ensure that no portion of the Company's distributions to shareholders is paid from offering proceeds or borrowings.

The difference between the Company's GAAP-basis net investment income and its tax-basis net investment income was primarily due to the reclassification of unamortized original issue discount and prepayment fees recognized upon prepayment of loans from income for GAAP purposes to realized gains for tax purposes and the impact of certain subsidiaries that are consolidated for purposes of computing GAAP-basis net investment income but are not consolidated for purposes of computing tax-basis net investment income.

The following table sets forth a reconciliation between GAAP-basis net investment income and tax-basis net investment income during the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,

	2016			2015
GAAP-basis net investment income	$	62,390		$	52,725
Income on limited partnership interest		—			(372	)
Reclassification of unamortized original issue discount and prepayment fees		(1,873	)		(856	)
GAAP vs. tax-basis consolidation of subsidiaries		2,222			2,242
Other miscellaneous differences		119			(247	)

Tax-basis net investment income	$	62,858		$	53,492

The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon the Company's taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company's distributions for a full year. The actual tax

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 5. Distributions (Continued)

characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV.

As of March 31, 2016 and December 31, 2015, the components of accumulated earnings (deficit) on a tax basis were as follows:

	March 31, 2016 (Unaudited)			December 31, 2015

Distributable ordinary income	$	5,716		$	9,578
Distributable capital gains (accumulated capital losses)⁽¹⁾		(255,329	)		(200,191	)
Other temporary differences		62			56
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency⁽²⁾		(877,981	)		(831,920	)

Total	$	(1,127,532	)	$	(1,022,477	)

(1): Under the Regulated Investment Company Modernization Act of 2010, net capital losses recognized for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term capital losses, as applicable. As of March 31, 2016 and December 31, 2015, the Company had capital loss carryforwards available to offset future capital gains of $255,329 and $200,191, respectively.
(2): As of March 31, 2016 and December 31, 2015, the gross unrealized appreciation on the Company's investments and unrealized gain on foreign currency was $48,376 and $44,089, respectively. As of March 31, 2016 and December 31, 2015, the gross unrealized depreciation on the Company's investments and unrealized loss on foreign currency was $926,357 and $876,009, respectively.

The aggregate cost of the Company's investments for federal income tax purposes totaled $3,807,732 and $3,895,733 as of March 31, 2016 and December 31, 2015, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(877,981) and $(831,920) as of March 31, 2016 and December 31, 2015, respectively.

Note 6. Investment Portfolio

The following table summarizes the composition of the Company's investment portfolio at cost and fair value as of March 31, 2016 and December 31, 2015:

	March 31, 2016 (Unaudited)							December 31, 2015

	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	962,089	$	793,976		27	%	$	1,055,070	$	929,790		30	%
Senior Secured Loans—Second Lien		1,215,633		915,333		31	%		1,213,716		923,402		30	%
Senior Secured Bonds		440,372		324,730		11	%		445,475		323,948		11	%
Subordinated Debt		788,530		538,310		18	%		860,872		579,740		19	%
Equity/Other		400,383		365,894		13	%		319,274		312,618		10	%

Total	$	3,807,007	$	2,938,243		100	%	$	3,894,407	$	3,069,498		100	%

(1): Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 6. Investment Portfolio (Continued)

As of March 31, 2016, except for FourPoint Energy, LLC, in which the Company held a senior secured bond and two equity/other investments, Sunnova Energy Corp., in which the Company held two equity/other investments, and Sunnova Asset Portfolio 5 Holdings, LLC, in which the Company held a first lien senior secured loan, the Company was not an "affiliated person" of any of its portfolio companies, as defined in the 1940 Act. As of March 31, 2016, the Company did not "control" any of its portfolio companies, as defined in the 1940 Act. In general, under the 1940 Act, the Company would be presumed to "control" a portfolio company if it owned 25% or more of its voting securities or it had the power to exercise control over the management or policies of a portfolio company, and would be an "affiliated person" of a portfolio company if it owned 5% or more of its voting securities.

The Company's investment portfolio may contain loans or bonds that are in the form of lines of credit or revolving credit facilities, or other investments, pursuant to which the Company may be required to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of March 31, 2016, the Company had three senior secured loan investments with aggregate unfunded commitments of $49,908, one senior secured bond investment with an unfunded commitment of $18,470 and four equity/other investments with aggregate unfunded commitments of $26,910. As of March 31, 2016, these unfunded equity/other investments were Altus Power America Holdings, LLC, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, and Synergy Offshore LLC. As of December 31, 2015, the Company had four senior secured loan investments with aggregate unfunded commitments of $67,365, one senior secured bond investment with an unfunded commitment of $18,470 and five equity/other investments with aggregate unfunded commitments of $33,890. As of December 31, 2015, these unfunded equity/other investments were Altus Power America Holdings, LLC, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, Sunnova Holdings, LLC and Synergy Offshore LLC. The Company maintains sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2016 and December 31, 2015:

	March 31, 2016 (Unaudited)					December 31, 2015

Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Upstream	$	1,656,204		56	%	$	1,689,705		55	%
Midstream		208,302		7	%		215,906		7	%
Downstream		11,988		1	%		12,195		0	%
Power		478,216		16	%		519,593		17	%
Service & Equipment		583,533		20	%		632,099		21	%

Total	$	2,938,243		100	%	$	3,069,498		100	%

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 7. Fair Value of Financial Instruments

Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs that are quoted prices for similar assets or liabilities in active markets.

Level 3: Inputs that are unobservable for an asset or liability.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of March 31, 2016 and December 31, 2015, the Company's investments were categorized as follows in the fair value hierarchy:

Valuation Inputs	March 31, 2016 (Unaudited)		December 31, 2015

Level 1—Price quotations in active markets	$	—	$	—
Level 2—Significant other observable inputs		—		—
Level 3—Significant unobservable inputs		2,938,243		3,069,498

Total	$	2,938,243	$	3,069,498

The Company's investments as of March 31, 2016 consisted primarily of debt investments that were acquired directly from the issuer. Twenty senior secured loan investments, two senior secured bond investments and five subordinated debt investments were valued by independent valuation firms, which determined the fair value of such investments by considering, among other factors, the borrower's ability to adequately service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the debt. All of the Company's equity/other investments were valued by an independent valuation firm, which determined the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. Except as described above, the Company valued its other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service.

The Company's investments as of December 31, 2015 consisted primarily of debt investments that were acquired directly from the issuer. Twenty senior secured loan investments, two senior secured bond investment and five subordinated debt investments were valued by an independent valuation firm,

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 7. Fair Value of Financial Instruments (Continued)

which determined the fair value of such investments by considering, among other factors, the borrower's ability to adequately service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the debt. All of the Company's equity/other investments were valued by an independent valuation firm, which determined the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. Except as described above, the Company valued its other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service.

The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing service and/or dealers, as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company's management in purchasing and selling these investments, the Company believes that these prices are reliable indicators of fair value. However, because of the private nature of this marketplace (meaning actual transactions are not publicly reported), the Company believes that these valuation inputs are classified as Level 3 within the fair value hierarchy. The Company may also use other methods, including the use of independent valuation firms, to determine fair value for securities for which it cannot obtain prevailing bid and ask prices through third-party pricing services or independent dealers or where the Company's board of trustees otherwise determines that the use of such methods is appropriate. The Company periodically benchmarks the valuations provided by the independent valuation firms against the actual prices at which it purchases and sells its investments. The valuation committee of the board of trustees, or the valuation committee, and the board of trustees reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Company's valuation policy.

The following is a reconciliation for the three months ended March 31, 2016 and 2015 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

	For the Three Months Ended March 31, 2016

	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Senior Secured Bonds			Subordinated Debt			Equity/ Other			Total
Fair value at beginning of period	$	929,790		$	923,402		$	323,948		$	579,740		$	312,618		$	3,069,498
Accretion of discount (amortization of premium)		2,144			354			291			1,005			436			4,230
Net realized gain (loss)		577			—			(2,420	)		(55,168	)		—			(57,011	)
Net change in unrealized appreciation (depreciation)		(42,833	)		(9,986	)		5,885			30,912			(27,833	)		(43,855	)
Purchases		19,170			124			—			5,893			108,479			133,666
Paid-in-kind interest		4,686			1,622			—			280			1,483			8,071
Sales and redemptions		(119,558	)		(183	)		(2,974	)		(24,352	)		(29,289	)		(176,356	)
Net transfers in or out of Level 3		—			—			—			—			—			—

Fair value at end of period	$	793,976		$	915,333		$	324,730		$	538,310		$	365,894		$	2,938,243



The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(43,792	)	$	(9,986	)	$	3,353		$	(11,476	)	$	(27,833	)	$	(89,734	)

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 7. Fair Value of Financial Instruments (Continued)

	For the Three Months Ended March 31, 2015

	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Senior Secured Bonds			Subordinated Debt			Equity/ Other		Total
Fair value at beginning of period	$	854,825		$	989,972		$	285,485		$	940,313		$	304,582	$	3,375,177
Accretion of discount (amortization of premium)		1,134			313			213			268			355		2,283
Net realized gain (loss)		(2,187	)		(287	)		(3,374	)		(12,109	)		—		(17,957	)
Net change in unrealized appreciation (depreciation)		(17,960	)		(1,343	)		9,197			20,555			8,137		18,586
Purchases		83,258			105,290			6,891			13,962			2,228		211,629
Paid-in-kind interest		2,226			2,876			—			—			2,351		7,453
Sales and redemptions		(95,459	)		(12,201	)		(17,428	)		(69,442	)		—		(194,530	)
Net transfers in or out of Level 3		—			—			—			—			—		—

Fair value at end of period	$	825,837		$	1,084,620		$	280,984		$	893,547		$	317,653	$	3,402,641



The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(4,063	)	$	(2,063	)	$	4,897		$	(403	)	$	8,137	$	6,505

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of March 31, 2016 and December 31, 2015 were as follows:

Type of Investment	Fair Value at March 31, 2016 (Unaudited)		Valuation Technique⁽¹⁾	Unobservable Input	Range	Weighted Average

Senior Secured Loans— First Lien	$	454,026	Market Comparables	Market Yield (%)	9.0% - 21.8%		13.2	%
				Proved Reserves Multiples (Mmboe)	$11.5 - $12.0	$	11.8
				PV-10 Multiples (x)	1.1x - 1.3x		1.2x
		105,596	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		234,354	Market Quotes	Indicative Dealer Quotes	35.0% - 100.0%		73.8	%
Senior Secured Loans—Second Lien		650,898	Market Comparables	Market Yield (%)	8.0% - 19.7%		13.5	%
		264,435	Market Quotes	Indicative Dealer Quotes	3.3% - 92.0%		65.2	%
Senior Secured Bonds		279,295	Market Comparables	Market Yield (%)	14.0% - 15.8%		14.4	%
		45,435	Market Quotes	Indicative Dealer Quotes	19.5% - 97.8%		67.5	%
Subordinated Debt		65,625	Market Comparables	Market Yield (%)	17.3% - 17.8%		17.5	%
		466,209	Market Quotes	Indicative Dealer Quotes	13.8% - 97.6%		72.9	%
		6,476	Other⁽²⁾	Other⁽²⁾	N/A		N/A
Equity/Other		337,414	Market Comparables	Market Yield (%)	12.0% - 13.0%		12.5	%
				EBITDA Multiples (x)	4.8x - 16.2x		12.5x
				Production Multiples (Mmb/d)	$32,500.0 - $72,500.0	$	49,815.7
				Proved Reserves Multiples (Mmboe)	$5.9 - $14.0	$	8.5
				PV-10 Multiples (x)	0.4x - 2.3x		0.7x
				Capacity Multiple ($/kW)	$2,000.0 - $2,500.0	$	2,250.0
				Undeveloped Acreage Multiple ($/acre)	$9,289.0 - $9,289.0	$	9,289.0
			Discounted Cash Flow	Discount Rate (%)	11.0% - 40.0%		23.1	%
		28,480	Other⁽²⁾	Other⁽²⁾	N/A		N/A

Total	$	2,938,243

(1): Investments using a market quotes valuation technique were valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service. For investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement.
(2): Fair valued based on expected outcome of proposed corporate transactions, the expected value of the liquidation preference of the investment or other factors.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 7. Fair Value of Financial Instruments (Continued)

Type of Investment	Fair Value at December 31, 2015		Valuation Technique⁽¹⁾	Unobservable Input	Range	Weighted Average

Senior Secured Loans— First Lien	$	670,131	Market Comparables	Market Yield (%)	8.5% - 19.0%	13.0	%
				Production Multiples (Mmb/d)	$95,000.0 - $100,000.0	$97,500.0
				Proved Reserves Multiples (Mmboe)	$7.8 - $8.3	$8.0
				PV-10 Multiples (x)	0.4x - 0.4x	0.4x
		259,659	Market Quotes	Indicative Dealer Quotes	46.5% - 100.3%	77.8	%
Senior Secured Loans—Second Lien		632,912	Market Comparables	Market Yield (%)	9.3% - 19.9%	14.8	%
		290,490	Market Quotes	Indicative Dealer Quotes	1.8% - 96.0%	73.1	%
Senior Secured Bonds		274,173	Market Comparables	Market Yield (%)	14.0% - 16.5%	14.6	%
		49,775	Market Quotes	Indicative Dealer Quotes	14.0% - 96.8%	65.0	%
Subordinated Debt		64,875	Market Comparables	Market Yield (%)	17.3% - 17.8%	17.5	%
		508,593	Market Quotes	Indicative Dealer Quotes	19.9% - 99.0%	73.2	%
		6,272	Other⁽²⁾	Other⁽²⁾	N/A	N/A
Equity/Other		284,300	Market Comparables	Market Yield (%)	13.0% - 14.0%	13.5	%
				EBITDA Multiples (x)	5.0x - 14.3x	9.9x
				Production Multiples (Mmb/d)	$50,000.0 - $100,000.0	$56,271.9
				Proved Reserves Multiples (Mmboe)	$7.8 - $14.0	$9.0
				PV-10 Multiples (x)	0.4x - 1.0x	0.5x
				Capacity Multiple ($/kW)	$2,000.0 - $2,500.0	$2,250.0
			Discounted Cash Flow	Discount Rate (%)	12.0% - 31.3%	30.1	%
		28,318	Other⁽²⁾	Other⁽²⁾	N/A	N/A

Total	$	3,069,498

(1): Investments using a market quotes valuation technique were valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service. For investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement.
(2): Fair valued based on expected outcome of proposed corporate transactions, the expected value of the liquidation preference of the investment or other factors.

Note 8. Financing Arrangements

The following table presents a summary of information with respect to the Company's outstanding financing arrangements as of March 31, 2016. For additional information regarding these financing arrangements, please see the notes to the Company's audited consolidated financial statements contained in its annual report on Form 10-K for the fiscal year ended December 31, 2015 and the additional disclosure set forth in this Note 8.

Facility	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date

BNP Facility	Prime Brokerage	L+1.10%	$	113,737	$	186,263	December 26, 2016⁽¹⁾
Deutsche Bank Credit Facility	Revolving	L+1.80%	$	200,000	$	140,000	June 11, 2016
Fortress Facility	Term	L+5.00%⁽²⁾	$	89,600	$	65,400	November 6, 2020
Goldman Facility	Repurchase	L+2.75%	$	324,984	$	16	September 15, 2017
Natixis Credit Facility	Revolving	CP+2.25%	$	89,670		—	July 11, 2023
Wells Fargo Credit Facility	Revolving	L+2.50% to 2.75%	$	125,000		—	September 9, 2019

(1): As described below, the BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2016, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(2): As described below, borrowings under the Fortress facility accrue interest at a rate equal to the London Interbank Offered Rate, or LIBOR, plus 5.00%, subject to a floor of 0.75%.

The Company's average borrowings and weighted average interest rate, including the effect of non-usage fees, for the three months ended March 31, 2016 were $1,019,353 and 3.32%, respectively. As of March 31, 2016, the Company's weighted average effective interest rate on borrowings was 3.10%.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

BNP Facility

On December 11, 2013, Berwyn Funding LLC, or Berwyn Funding, the Company's wholly-owned, special-purpose financing subsidiary, entered into a committed facility arrangement, or the BNP facility, with BNP Paribas Prime Brokerage, Inc., or BNP. As amended to date, Berwyn Funding can borrow, from time to time, up to $300,000 from BNP. The BNP facility was effected through a committed facility agreement by and between Berwyn Funding and BNP, or the committed facility agreement, a U.S. PB Agreement by and between Berwyn Funding and BNP and a special custody and pledge agreement by and among Berwyn Funding, BNP and State Street Bank and Trust Company, or State Street, as custodian, each dated as of December 11, 2013, as amended to date, and which are collectively referred to herein as the BNP financing agreements.

The Company may contribute securities to Berwyn Funding from time to time, subject to certain restrictions set forth in the committed facility agreement, and will retain a residual interest in any securities contributed through its ownership of Berwyn Funding or will receive fair market value for any securities sold to Berwyn Funding. Berwyn Funding may purchase additional securities from various sources. Berwyn Funding has appointed the Company to manage its portfolio of securities pursuant to the terms of an investment management agreement. Berwyn Funding will pledge certain of its securities as collateral to secure borrowings under the BNP facility. Such pledged securities will be held in a segregated custody account with State Street. The value of securities required to be pledged by Berwyn Funding is determined in accordance with the margin requirements described in the BNP financing agreements. Berwyn Funding's obligations to BNP under the facility are secured by a first priority security interest in substantially all of the assets of Berwyn Funding, including its portfolio of securities. The obligations of Berwyn Funding under the facility are non-recourse to the Company and the Company's exposure under the facility is limited to the value of the Company's investment in Berwyn Funding.

Borrowings under the BNP facility accrue interest at a rate equal to three-month London Interbank Offered Rate, or LIBOR, plus 1.10% per annum. Berwyn Funding is required to pay a non-usage fee of 0.55% per annum to the extent the aggregate principal amount available under the facility is not borrowed. Berwyn Funding may terminate the committed facility agreement upon 270 days' notice. Subject to certain cancellation rights, and absent a default or facility termination event, BNP is required to provide Berwyn Funding with 270 days' notice prior to terminating or amending the committed facility agreement.

As of March 31, 2016 and December 31, 2015, $113,737 was outstanding under the BNP facility. The carrying amount outstanding under the facility approximates its fair value. The Company incurred costs of $449 in connection with obtaining and amending the facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortized to interest expense over the 270 day period following the closing date of the BNP facility or the amendment thereto, as applicable. As of March 31, 2016, all of the deferred financing costs had been amortized to interest expense.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

For the three months ended March 31, 2016 and 2015, the components of total interest expense for the BNP facility were as follows:

	Three Months Ended March 31,

	2016		2015
Direct interest expense	$	497	$	759
Non-usage fees		259		106
Amortization of deferred financing costs		—		50

Total interest expense	$	756	$	915

For the three months ended March 31, 2016 and 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the BNP facility were as follows:

	Three Months Ended March 31,

	2016			2015
Cash paid for interest expense⁽¹⁾	$	527		$	875
Average borrowings under the facility	$	113,737		$	223,000
Effective interest rate on borrowings		1.73	%		1.37	%
Weighted average interest rate (including the effect of non-usage fees)		2.63	%		1.55	%

(1): Interest under the BNP facility is paid monthly in arrears and commenced on January 2, 2014.

Under the terms of the BNP financing agreements, BNP has the ability to borrow a portion of the pledged collateral, or, collectively, the rehypothecated securities, subject to certain limits. Berwyn Funding may designate any security within the pledged collateral as ineligible to be a rehypothecated security, provided there remain securities eligible to be rehypothecated within the segregated custody account in an amount equal to the outstanding borrowings owed by Berwyn Funding to BNP. Berwyn Funding may recall any rehypothecated security at any time and BNP must return such security or an equivalent security within a commercially reasonable period. In the event BNP does not return the security, Berwyn Funding will have the right to, among other things, apply and set off an amount equal to 100% of the then-current fair market value of such rehypothecated securities against any outstanding borrowings owed to BNP under the facility. Rehypothecated securities are marked-to-market daily and if the value of all rehypothecated securities exceeds 100% of the outstanding borrowings owed by Berwyn Funding under the facility, BNP may either reduce the amount of rehypothecated securities to eliminate such excess or deposit into the segregated custody account an amount of cash equal to such excess. Berwyn Funding will continue to receive interest and the scheduled repayment of principal balances on rehypothecated securities. For the three months ended March 31, 2016 and 2015, Berwyn Funding received a fee of $0 and $1, respectively, from BNP for securities that had been rehypothecated pursuant to the BNP financing agreements. As of March 31, 2016 and December 31, 2015, the fair value of those securities rehypothecated by BNP was $91,837 and $108,340, respectively.

Borrowings of Berwyn Funding will be considered borrowings by the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Citibank Credit Facility

On March 24, 2015, EP Funding LLC, or EP Funding, the Company's wholly-owned, special-purpose financing subsidiary, repaid and terminated the revolving credit facility, or the Citibank credit

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

facility, with Citibank, N.A., or Citibank, as administrative agent, and the financial institutions and other lenders from time to time party thereto. The Citibank credit facility provided for borrowings in an aggregate principal amount up to $175,000 on a committed basis. Prior to the termination of the Citibank credit facility, borrowings under the facility accrued interest at a rate equal to three-month LIBOR plus 2.75% per annum. Under the Citibank credit facility, EP Funding was subject to a non-usage fee of 0.50% per annum to the extent that the aggregate principal amount available under the facility was not borrowed.

As of March 31, 2016 and December 31, 2015, no amounts remained outstanding under the Citibank credit facility. The carrying amount outstanding under the facility approximated its fair value. The Company incurred costs of $657 in connection with obtaining the facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortized to interest expense over the life of the facility.

For the three months ended March 31, 2015, the components of total interest expense for the Citibank credit facility were as follows:

	Three Months Ended March 31, 2015

Direct interest expense	$	471
Amortization of deferred financing costs		130

Total interest expense	$	601

For the three months ended March 31, 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Citibank credit facility were as follows:

	Three Months Ended March 31, 2015

Cash paid for interest expense⁽¹⁾	$	1,011
Average borrowings under the facility⁽²⁾	$	70,020
Effective interest rate on borrowings		—
Weighted average interest rate (including the effect of non-usage fees)		2.99	%

(1): Interest under the Citibank credit facility was paid quarterly in arrears.
(2): Average borrowings for the three months ended March 31, 2015 were calculated for the period from January 1, 2015 to the date on which the Company repaid and terminated the facility.

Borrowings of EP Funding were considered borrowings by the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Deutsche Bank Credit Facility

On June 24, 2011, FSEP Term Funding, LLC, or FSEP Funding, the Company's wholly-owned, special-purpose financing subsidiary, entered into a revolving credit facility, or the Deutsche Bank credit facility, with Deutsche Bank AG, New York Branch, or Deutsche Bank, as administrative agent and the lender party thereto. The Deutsche Bank credit facility subsequently was amended to increase the maximum commitments under the facility to $340,000 and extend the maturity date to June 11, 2016.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

Under the Deutsche Bank credit facility, the Company has transferred from time to time cash or securities to FSEP Funding as a contribution to capital and retains a residual interest in the contributed cash or securities through the Company's ownership of FSEP Funding. The Company may contribute additional cash or securities to FSEP Funding from time to time and FSEP Funding may purchase additional securities from various sources. FSEP Funding has appointed the Company to manage its portfolio of securities pursuant to the terms of an investment management agreement. FSEP Funding's obligations to the lenders under the facility are secured by a first priority security interest in substantially all of the assets of FSEP Funding, including its portfolio of securities. The obligations of FSEP Funding under the facility are non-recourse to the Company and the Company's exposure under the facility is limited to the value of the Company's investment in FSEP Funding.

Pricing under the Deutsche Bank credit facility is based on LIBOR for an interest period closest to the weighted average LIBOR interest period of eligible securities owned by FSEP Funding plus 1.80% per annum. FSEP Funding is subject to a non-usage fee of 0.75% per annum to the extent that the aggregate principal amount available under the facility is not borrowed. Any amounts borrowed under the Deutsche Bank credit facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on June 11, 2016.

As of March 31, 2016 and December 31, 2015, $200,000 and $280,000, respectively, was outstanding under the Deutsche Bank credit facility. The carrying amount outstanding under the facility approximates its fair value. The Company incurred costs of $3,340 in connection with obtaining and amending the facility, which the Company has recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the facility. As of March 31, 2016, $233 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2016 and 2015, the components of total interest expense for the Deutsche Bank credit facility were as follows:

	Three Months Ended March 31,

	2016		2015
Direct interest expense	$	1,621	$	1,411
Non-usage fees		139		113
Amortization of deferred financing costs		296		210

Total interest expense	$	2,056	$	1,734

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

For the three months ended March 31, 2016 and 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Deutsche Bank credit facility were as follows:

	Three Months Ended March 31,

	2016			2015
Cash paid for interest expense⁽¹⁾	$	1,870		$	1,549
Average borrowings under the facility	$	266,813		$	280,000
Effective interest rate on borrowings		2.42	%		2.01	%
Weighted average interest rate (including the effect of non-usage fees)		2.61	%		2.18	%

(1): Interest under the Deutsche Bank credit facility is paid quarterly in arrears.

Borrowings of FSEP Funding will be considered borrowings by the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Fortress Facility

On November 6, 2015, Foxfields Funding LLC, or Foxfields Funding, a wholly-owned financing subsidiary of the Company, entered into a senior secured multiple draw term loan facility, or the Fortress facility, with Fortress, the lenders from time to time party thereto and the other loan parties from time to time party thereto. The Fortress facility, as amended, provides for $155,000 of term loans available to be borrowed during the first two years after the initial closing date of November 6, 2015 with an option for the Company to request, at one or more times during the first two years after the closing date, that existing or new lenders, at their election provide up to $45,000 of additional commitments.

Interest under the Fortress facility for (i) loans bearing interest by reference to LIBOR accrues at a rate equal to LIBOR (subject to a floor of 0.75%) plus 5.00% per annum, and (ii) loans bearing interest by reference to the base rate accrues at 4.00% per annum plus the greater of: (x) the per annum rate of interest announced, from time to time, within Wells Fargo Bank, National Association at its principal office in San Francisco as its "prime rate," and (y) 1.75% per annum. Interest is payable quarterly in arrears and began accruing the quarter ended March 31, 2016. During the first year after the closing date, Foxfields Funding is subject to a commitment fee at a rate equal to 100 basis points on the average daily undrawn initial facility amount of $125,000. Under certain conditions, Foxfields Funding will be subject to a prepayment premium if all or any part of the principal balance of the borrowings is prepaid prior to a date that is two years after the closing date. Foxfields Funding incurred certain customary fees, costs and expenses in connection with obtaining the facility.

As of March 31, 2016 and December 31, 2015, $89,600 was outstanding under the Fortress facility. The carrying amount outstanding under the facility approximates its fair value. The Company incurred costs of $1,342 in connection with obtaining and amending the Fortress facility, which the Company has recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the facility. As of March 31, 2016, $1,249 of such deferred financing costs had yet to be amortized to interest expense.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

For the three months ended March 31, 2016, the components of total interest expense for the Fortress facility were as follows:

	Three Months Ended March 31, 2016

Direct interest expense	$	1,303
Non-usage fees		199
Amortization of deferred financing costs		66

Total interest expense	$	1,568

For the three months ended March 31, 2016, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Fortress facility were as follows:

	Three Months Ended March 31, 2016

Cash paid for interest expense⁽¹⁾	$	—
Average borrowings under the facility	$	89,600
Effective interest rate on borrowings		5.75	%
Weighted average interest rate (including the effect of non-usage fees)		6.63	%

(1): Interest under the Fortress facility is paid quarterly in arrears and payments commenced on April 14, 2016.

Borrowings of Foxfields Funding will be considered borrowings by the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Goldman Financing

On September 11, 2014, through its two wholly-owned, special-purpose financing subsidiaries, Gladwyne Funding LLC, or Gladwyne Funding, and Strafford Funding LLC, or Strafford Funding, the Company entered into a debt financing arrangement with Goldman. The amount available under the financing arrangement, as amended, is $325,000. The Company elected to structure the financing in the manner described more fully below in order to, among other things, obtain such financing at a lower cost than would have been available through alternate arrangements.

Under the financing arrangement, assets in the Company's portfolio may be sold and/or contributed by it from time to time to Gladwyne Funding, pursuant to an Amended and Restated Sale and Contribution Agreement, dated as of September 11, 2014, between the Company and Gladwyne Funding, or the Sale and Contribution Agreement. As of March 31, 2016, the fair value of assets held by Gladwyne Funding was $677,473, which includes an initial contribution by the Company of a portfolio of assets with an aggregate par value of $427,061. The assets held by Gladwyne Funding secure the obligations of Gladwyne Funding under certain Floating Rate Notes, or the Notes, to be issued from time to time by Gladwyne Funding to Strafford Funding, pursuant to an indenture, dated as of September 11, 2014, as supplemented by the First Supplemental Indenture dated as of December 15, 2014, or the Indenture, with Citibank, as trustee. Pursuant to the Indenture, the aggregate principal amount of Notes that may be issued by Gladwyne Funding from time to time is $577,750. Interest on the Notes under the Indenture accrues at three-month LIBOR plus a spread of 4.00% per annum. Principal and any unpaid interest on the Notes will be due and payable on the stated maturity date of November 15, 2025. As of March 31, 2016, Strafford Funding had purchased

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

$577,750 of Notes, the maximum principal amount of Notes that may be purchased under the Goldman facility (as defined below).

Strafford Funding, in turn, entered into a repurchase transaction with Goldman, pursuant to the terms of a master repurchase agreement and the related annex thereto, each dated as of September 11, 2014, and an amended and restated master confirmation dated as of December 15, 2014, or collectively, the Goldman facility. Pursuant to the Goldman facility, on one or more occasions beginning December 15, 2014, Goldman began purchasing Notes held by Strafford Funding for an aggregate purchase price equal to approximately 56.25% of the principal amount of the Notes purchased. As of March 31, 2016, Goldman had purchased Notes in the principal amount of $577,750 from Strafford Funding, the maximum principal amount of Notes available to be purchased under the Goldman facility, for a total purchase price equal to $324,984.

Strafford Funding will repurchase the Notes sold to Goldman under the Goldman facility no later than September 15, 2017. The repurchase price paid by Strafford Funding to Goldman will be equal to the purchase price paid by Goldman for the repurchased Notes, plus financing fees accrued at the applicable pricing rate under the Goldman facility. Through March 15, 2015, financing fees accrued on the greater of $225,000 or the aggregate purchase price paid by Goldman for such Notes. Thereafter, financing fees accrue on $325,000 (even in prior periods when the aggregate purchase price paid for Notes purchased by Goldman was less than that amount), unless and until the outstanding amount is reduced in accordance with the terms of the Goldman facility.

If the Goldman facility is accelerated prior to September 15, 2017 due to an event of default or the failure of Gladwyne Funding to commit to sell any underlying assets that become defaulted obligations within 30 days and thereafter to use commercially reasonable efforts to sell any such defaulted obligations, then Strafford Funding must pay to Goldman a fee equal to the present value of the aggregate amount of the financing fees that would have been payable to Goldman through September 15, 2017 had the acceleration not occurred. The financing fee under the Goldman facility is equal to three-month LIBOR plus a spread of up to 2.75% per annum for the relevant period.

Goldman may require Strafford Funding to post cash collateral if the market value of the Notes (measured by reference to the market value of Gladwyne Funding's portfolio of assets) declines and is less than the required margin amount under the Goldman facility. In such event, in order to satisfy any such margin-posting requirements, Strafford Funding has the option to borrow funds from the Company pursuant to an uncommitted revolving credit agreement, dated as of September 11, 2014 and amended and restated on December 15, 2014, between Strafford Funding, as borrower, and the Company, as lender, or the Revolving Credit Agreement. Borrowings under the Revolving Credit Agreement may not exceed $325,000 and will accrue interest at a rate equal to one-month LIBOR plus a spread of 0.75% per annum.

As of March 31, 2016, Notes in an aggregate principal amount of $577,750 had been purchased by Strafford Funding from Gladwyne Funding and subsequently sold to Goldman under the Goldman facility for aggregate proceeds of $324,984. The carrying amount outstanding under the Goldman facility approximates its fair value. The Company funded each purchase of Notes by Strafford Funding through a capital contribution to Strafford Funding. As of March 31, 2016, Strafford Funding's liability under the Goldman facility was $324,984, plus $501 of accrued interest expense. The Notes issued by Gladwyne Funding and purchased by Strafford Funding eliminate in consolidation on the Company's financial statements.

The Company incurred costs of $380 in connection with obtaining and amending the Goldman facility, which the Company has recorded as deferred financing costs on its consolidated balance sheets

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

and amortizes to interest expense over the life of the facility. As of March 31, 2016, $188 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2016 and 2015, the components of total interest expense for the Goldman facility were as follows:

	Three Months Ended March 31,

	2016		2015
Direct interest expense	$	2,707	$	1,867
Amortization of deferred financing costs		32		32

Total interest expense	$	2,739	$	1,899

For the three months ended March 31, 2016 and 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Goldman facility were as follows:

	Three Months Ended March 31,

	2016			2015
Cash paid for interest expense⁽¹⁾	$	2,680			—
Average borrowings under the facility	$	324,984		$	189,113
Effective interest rate on borrowings		3.26	%		2.99	%
Weighted average interest rate		3.30	%		3.95	%

(1): Interest under the Goldman facility is paid quarterly in arrears.

Amounts outstanding under the Goldman facility will be considered borrowings of the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Natixis Credit Facility

On July 11, 2013, Energy Funding LLC, or Energy Funding, the Company's wholly-owned, special-purpose financing subsidiary, entered into a revolving credit facility, or the Natixis credit facility, with Natixis, New York Branch, or Natixis, as administrative agent and lender, Wells Fargo Bank, National Association, as collateral agent and custodian, and the other lenders from time to time party thereto. The Natixis credit facility provided for revolving borrowings through January 11, 2015 in an aggregate principal amount up to $150,000 on a committed basis. After that date, the Company was no longer permitted to borrow under the facility and outstanding amounts began to amortize. During the three months ended March 31, 2016, the Company repaid $2,503 of outstanding borrowings under the facility.

The Company contributed cash and debt securities to Energy Funding from time to time prior to the commencement of the amortization period under the facility, subject to certain restrictions set forth in the Natixis credit facility. The Company continues to retain a residual interest in any assets contributed through its ownership of Energy Funding or it received fair market value for any debt securities sold to Energy Funding. Energy Funding was also permitted to purchase additional debt securities from various sources prior to the commencement of the amortization period under the facility. Energy Funding has appointed the Company to manage its portfolio of debt securities pursuant to the terms of a collateral management agreement. Energy Funding's obligations to the lenders under

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

the facility are secured by a first priority security interest in substantially all of the assets of Energy Funding, including its portfolio of debt securities. The obligations of Energy Funding under the facility are non-recourse to the Company and the Company's exposure under the facility is limited to the value of the Company's investment in Energy Funding.

Borrowings under the Natixis credit facility accrue interest at a rate equal to the applicable commercial paper rate plus 2.25% per annum. Prior to the commencement of the amortization period, Energy Funding was subject to a non-usage fee of 1.00% per annum to the extent that the aggregate principal amount available under the Natixis credit facility had not been borrowed. Any amounts borrowed under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on July 11, 2023.

As of March 31, 2016 and December 31, 2015, $89,670 and $92,173, respectively, was outstanding under the Natixis credit facility. The carrying amount outstanding under the facility approximates its fair value. The Company incurred costs of $2,544 in connection with obtaining the facility, which the Company has recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the facility. As of March 31, 2016, $1,126 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2016 and 2015, the components of total interest expense for the Natixis credit facility were as follows:

	Three Months Ended March 31,

	2016		2015
Direct interest expense	$	655	$	946
Amortization of deferred financing costs		260		62

Total interest expense	$	915	$	1,008

For the three months ended March 31, 2016 and 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Natixis credit facility were as follows:

	Three Months Ended March 31,

	2016			2015
Cash paid for interest expense⁽¹⁾	$	657		$	971
Average borrowings under the facility	$	90,317		$	149,206
Effective interest rate on borrowings		2.97	%		2.56	%
Weighted average interest rate		2.87	%		2.54	%

(1): Interest under the Natixis credit facility is paid quarterly in arrears.

Borrowings of Energy Funding will be considered borrowings of the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Wells Fargo Credit Facility

On September 9, 2014, Wayne Funding LLC, or Wayne Funding, the Company's wholly-owned, special purpose financing subsidiary, entered into a revolving credit facility, or the Wells Fargo credit facility, with Wells Fargo Securities, LLC, as administrative agent, each of the conduit lenders and institutional lenders from time to time party thereto and Wells Fargo Bank, National Association,

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

collectively referred to herein as Wells Fargo, as the collateral agent, account bank and collateral custodian under the Wells Fargo credit facility. The Wells Fargo credit facility originally provided for borrowings in an aggregate principal amount up to $200,000 on a committed basis, subject to Wayne Funding's option to reduce the commitment amount as provided in the Wells Fargo credit facility. Wayne Funding elected to reduce the commitment amount on February 23, 2016 to $125,000.

The Company may contribute cash, loans or bonds to Wayne Funding from time to time and will retain a residual interest in any assets contributed through its ownership of Wayne Funding or will receive fair market value for any assets sold to Wayne Funding. Wayne Funding may purchase additional assets from various sources. Wayne Funding has appointed the Company to manage its portfolio of assets pursuant to the terms of a collateral management agreement. Wayne Funding's obligations to Wells Fargo under the Wells Fargo credit facility are secured by a first priority security interest in substantially all of the assets of Wayne Funding, including its portfolio of assets. The obligations of Wayne Funding under the Wells Fargo credit facility are non-recourse to the Company and the Company's exposure under the facility is limited to the value of its investment in Wayne Funding.

Borrowings under the Wells Fargo credit facility accrue interest at a rate equal to three-month LIBOR plus a spread ranging between 2.50% and 2.75% per annum, depending on the composition of the portfolio of assets for the relevant period. During the period beginning October 10, 2014 through June 5, 2015, Wayne Funding was subject to a non-usage fee to the extent the aggregate principal amount available under the Wells Fargo credit facility was not borrowed. Beginning June 6, 2015, the non-usage fee increased to the sum of (a) 0.50% per annum on the first $40,000 of unborrowed principal amount available under the Wells Fargo credit facility and (b) 2.00% on any unborrowed principal amount available under the facility in excess of $40,000. Any amounts borrowed under the Wells Fargo credit facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on September 9, 2019. Borrowings under the Wells Fargo credit facility are subject to compliance with a borrowing base, pursuant to which the amount of funds advanced to Wayne Funding varies depending upon the types of assets in Wayne Funding's portfolio.

As of March 31, 2016 and December 31, 2015, $125,000 and $140,000, respectively, was outstanding under the Wells Fargo credit facility. The carrying amount outstanding under the facility approximates its fair value. The Company incurred costs of $2,641 in connection with obtaining the facility, which the Company has recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the facility. As of March 31, 2016, $1,819 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2016 and 2015, the components of total interest expense for the Wells Fargo credit facility were as follows:

	Three Months Ended March 31,

	2016		2015
Direct interest expense	$	1,097	$	933
Non-usage fees		90		97
Amortization of deferred financing costs		131		129

Total interest expense	$	1,318	$	1,159

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 8. Financing Arrangements (Continued)

For the three months ended March 31, 2016 and 2015, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Wells Fargo credit facility were as follows:

	Three Months Ended March 31,

	2016			2015
Cash paid for interest expense⁽¹⁾	$	1,260		$	984
Average borrowings under the facility	$	133,901		$	122,056
Effective interest rate on borrowings		3.25	%		2.91	%
Weighted average interest rate (including the effect of non-usage fees)		3.51	%		3.38	%

(1): Interest under the Wells Fargo credit facility is paid quarterly in arrears.

Borrowings of Wayne Funding will be considered borrowings of the Company for purposes of complying with the asset coverage requirements under the 1940 Act applicable to BDCs.

Note 9. Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions. The Company's maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of FS Advisor has reviewed the Company's existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company's knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company's rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

See Note 6 for a discussion of the Company's unfunded commitments.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 10. Financial Highlights

The following is a schedule of financial highlights of the Company for the three months ended March 31, 2016 and the year ended December 31, 2015:

	Three Months Ended March 31, 2016 (Unaudited)			Year Ended December 31, 2015

Per Share Data:⁽¹⁾
Net asset value, beginning of period	$	6.50		$	8.57
Results of operations⁽²⁾
Net investment income (loss)		0.17			0.67
Net realized and unrealized appreciation (depreciation) on investments and gain/loss on foreign currency		(0.27	)		(2.18	)

Net increase (decrease) in net assets resulting from operations		(0.10	)		(1.51	)

Shareholder distributions⁽³⁾
Distributions from net investment income		(0.18	)		(0.67	)
Distributions from net realized gain on investments		—			(0.04	)

Net decrease in net assets resulting from shareholder distributions		(0.18	)		(0.71	)

Capital share transactions
Issuance of common shares⁽⁴⁾		—			0.18
Repurchases of common shares⁽⁵⁾		—			—
Offering costs⁽²⁾		—			(0.03	)

Net increase (decrease) in net assets resulting from capital share transactions		—			0.15

Net asset value, end of period	$	6.22		$	6.50



Shares outstanding, end of period		389,470,260			372,210,264



Total return⁽⁶⁾		(1.54	)%		(15.87	)%



Ratio/Supplemental Data:
Net assets, end of period	$	2,421,270		$	2,417,861



Ratio of net investment income to average net assets⁽⁷⁾		2.66	%		8.31	%
Ratio of total expenses to average net assets⁽⁷⁾		1.52	%		5.55	%
Portfolio turnover⁽⁸⁾		4.52	%		22.70	%
Total amount of senior securities outstanding, exclusive of treasury securities	$	942,991		$	1,040,494
Asset coverage per unit⁽⁹⁾		3.57			3.32

(1): Per share data may be rounded in order to recompute the ending net asset value per share.
(2): The per share data was derived by using the weighted average shares outstanding during the applicable period.
(3): The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.
(4): The issuance of common shares on a per share basis reflects the incremental net asset value changes as a result of the issuance of common shares in the Company's continuous public offering and pursuant to the Company's distribution reinvestment plan. The issuance of common shares at an offering price, net of selling commissions and dealer manager fees, that is greater than the net

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 10. Financial Highlights (Continued)

asset value per share results in an increase in net asset value per share. The per share impact of the Company's issuance of common shares was an increase in net asset value of less than $0.01 per share during the three months ended March 31, 2016.

(5): The per share impact of the Company's repurchases of common shares was a reduction to net asset value of less than $0.01 per share during each period.
(6): The total return for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share which were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the applicable period. The total return does not consider the effect of the sales load from the sale of the Company's common shares. The total return includes the effect of the issuance of common shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. The historical calculation of total return in the table should not be considered a representation of the Company's future total return, which may be greater or less than the returns shown in the table due to a number of factors, including the Company's ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company's expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company's investment portfolio during the applicable period and do not represent an actual return to shareholders.
(7): Weighted average net assets during the applicable period are used for this calculation. Ratios for the three months ended March 31, 2016 are not annualized. The following is a schedule of supplemental ratios for the three months ended March 31, 2016 and year ended December 31, 2015:



Ratio of subordinated income incentive fees to average net assets	0.25	%	1.13	%
Ratio of interest expense to average net assets	0.40	%	1.12	%
Ratio of offering costs to average net assets	0.01	%	—
Ratio of income and excise taxes to average net assets	0.00	%	0.01	%

(8): Portfolio turnover for the three months ended March 31, 2016 is not annualized.
(9): Asset coverage per unit is the ratio of the carrying value of the Company's total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
(in thousands, except share and per share amounts)

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. In this report, "we," "us" and "our" refer to FS Energy and Power Fund.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

•: our future operating results;
•: our business prospects and the prospects of the companies in which we may invest;
•: the impact of the investments that we expect to make;
•: the ability of our portfolio companies to achieve their objectives;
•: our current and expected financing arrangements and investments;
•: changes in the general interest rate environment;
•: the adequacy of our cash resources, financing sources and working capital;
•: the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;
•: our contractual arrangements and relationships with third parties;
•: actual and potential conflicts of interest with FS Advisor, FB Income Advisor, LLC, FSIC II Advisor, LLC, FSIC III Advisor, LLC, FSIC IV Advisor, LLC, FS Global Advisor, LLC, FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV, FS Global Credit Opportunities Fund, GSO or any of their affiliates;
•: the dependence of our future success on the general economy and its effect on the industries in which we may invest;
•: our use of financial leverage;
•: the ability of FS Advisor to locate suitable investments for us and to monitor and administer our investments;
•: the ability of FS Advisor or its affiliates to attract and retain highly talented professionals;
•: our ability to maintain our qualification as a RIC and as a BDC;
•: the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued thereunder;
•: the effect of changes to tax legislation and our tax position; and
•: the tax status of the enterprises in which we may invest.

In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:

•: changes in the economy;
•: risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and
•: future changes in laws or regulations and conditions in our operating areas.

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We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Shareholders are advised to consult any additional disclosures that we may make directly to shareholders or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Overview

We were formed as a Delaware statutory trust under the Delaware Statutory Trust Act on September 16, 2010 and formally commenced investment operations on July 18, 2011 upon raising gross proceeds in excess of $2,500 from sales of our common shares in our continuous public offering to persons who were not affiliated with us or FS Advisor. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. Prior to satisfying the minimum offering requirement, we had no operations except for matters relating to our organization.

Our investment activities are managed by FS Advisor and supervised by our board of trustees, a majority of whom are independent. Under our investment advisory and administrative services agreement, we have agreed to pay FS Advisor an annual base management fee based on our gross assets as well as incentive fees based on our performance. FS Advisor has engaged GSO to act as our investment sub-adviser. GSO assists FS Advisor in identifying investment opportunities and makes investment recommendations for approval by FS Advisor according to guidelines set by FS Advisor.

Our investment policy is to invest, under normal circumstances, at least 80% of our total assets in securities of Energy companies. This investment policy may not be changed without at least 60 days' prior notice to holders of our common shares of any such change.

Our investment objective is to generate current income and long-term capital appreciation. We have identified and intend to focus on the following investment categories, which we believe will allow us to generate an attractive total return with an acceptable level of risk.

Direct Originations: We intend to leverage our relationship with GSO and its global sourcing and origination platform, including its industry relationships, to directly source investment opportunities. Such investments are originated or structured for us or made by us and are not generally available to the broader market. These investments may include both debt and equity components, although we do not expect to make equity investments (other than income-oriented equity investments) independent of having an existing credit relationship. We believe directly originated investments may offer higher returns and more favorable protections than broadly syndicated transactions.

Opportunistic: We seek to capitalize on market price inefficiencies by investing in loans, bonds and other securities where the market price of such investment reflects a lower value than deemed warranted by our fundamental analysis. We believe that market price inefficiencies may occur due to, among other things, general dislocations in the markets, a misunderstanding by the market of a particular company or an Energy industry sub-sector being out of favor with the broader investment community. We seek to allocate capital to these securities that have been misunderstood or mispriced by the market and where we believe there is an opportunity to earn an attractive return on our investment. Such opportunities may include both event driven investments and anchor orders.

In the case of event driven investments, we intend to take advantage of dislocations that arise in the markets due to an impending event and where the market's apparent expectation of value differs substantially from our fundamental analysis. Such events may include a looming debt maturity or default, a merger, spin-off or other corporate reorganization, an adverse regulatory or legal ruling, or a material contract expiration, any of which may significantly improve or impair a company's financial position. Compared to other investment strategies, event driven investing depends more heavily on our

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ability to successfully predict the outcome of an individual event rather than on underlying macroeconomic fundamentals. As a result, successful event driven strategies may offer both substantial diversification benefits and the ability to generate performance in uncertain market environments.

We may also invest in certain opportunities that are originated and then syndicated by a commercial or investment bank but where we provide a capital commitment significantly above the average syndicate participant, i.e., an anchor order. In these types of investments, we may receive fees, preferential pricing or other benefits not available to other lenders in return for our significant capital commitment. Our decision to provide an anchor order to a syndicated transaction is predicated on a rigorous credit analysis, our familiarity with a particular company, Energy industry sub-sector or financial sponsor, and the broader investment experiences of FS Advisor and GSO.

Broadly Syndicated/Other: Although our primary focus is to invest in directly originated transactions and opportunistic investments, in certain circumstances we will also invest in the broadly syndicated loan and high yield markets. Broadly syndicated loans and bonds are generally more liquid than our directly originated investments and provide a complement to our less liquid strategies. In addition, and because we typically receive more attractive financing terms on these positions than we do on our less liquid assets, we are able to leverage the broadly syndicated portion of our portfolio in such a way that maximizes the levered return potential of our portfolio.

Our portfolio is comprised primarily of income-oriented securities, which refers to debt securities and income-oriented preferred and common equity interests, of privately-held Energy companies within the United States. We intend to weight our portfolio towards senior and subordinated debt. In addition to investments purchased from dealers or other investors in the secondary market, we expect to invest in primary market transactions and directly originated investments as this will provide us with the ability to tailor investments to best match a project's or company's needs with our investment objectives. Our portfolio may also be comprised of select income-oriented preferred or common equity interests, which refers to equity interests that pay consistent, high-yielding dividends, that we believe will produce both current income and long-term capital appreciation. These income-oriented preferred or common equity interests may include interests in master limited partnerships. In connection with certain of our debt investments, we may on occasion receive equity interests such as warrants or options as additional consideration.

Revenues

The principal measure of our financial performance is net increase or decrease in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net change in unrealized appreciation or depreciation on investments and net change in unrealized gain or loss on foreign currency. Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations. Net change in unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net change in unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.

We principally generate revenues in the form of interest income on the debt investments we hold. We also generate revenues in the form of dividends and other distributions on the equity or other securities we may hold. In addition, we may generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. Any such fees generated in connection with our investments will be recognized as earned.

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Expenses

Our primary operating expenses include the payment of advisory fees and other expenses under the investment advisory and administrative services agreement, interest expense from financing arrangements and other expenses necessary for our operations. Our investment advisory fee compensates FS Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments. FS Advisor is responsible for compensating our investment sub-adviser.

We reimburse FS Advisor for expenses necessary to perform services related to our administration and operations, including FS Advisor's allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings providing administrative services to us on behalf of FS Advisor. Such services include the provision of general ledger accounting, fund accounting, legal services, investor relations and other administrative services. FS Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our shareholders and reports filed with the SEC. In addition, FS Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our shareholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. See "—Related Party Transactions" for additional information regarding the reimbursements payable to FS Advisor for administrative services and the methodology for determining the amount of any such reimbursements. We bear all other expenses of our operations and transactions. For additional information regarding these expenses, please see our annual report on Form 10-K for the year ended December 31, 2015.

In addition, we have contracted with State Street to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial information for review by FS Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

Expense Reimbursement

Pursuant to an expense support and conditional reimbursement agreement, amended and restated as of May 16, 2013, or the expense reimbursement agreement, Franklin Square Holdings has agreed to reimburse us for expenses in an amount that is sufficient to ensure that no portion of our distributions to shareholders will be paid from our offering proceeds or borrowings. However, because certain investments we may make, including preferred and common equity investments, may generate dividends and other distributions to us that are treated for tax purposes as a return of capital, a portion of our distributions to shareholders may also be deemed to constitute a return of capital for tax purposes to the extent that we may use such dividends or other distribution proceeds to fund our distributions to shareholders. Under those circumstances, Franklin Square Holdings will not reimburse us for the portion of such distributions to shareholders that represent a return of capital for tax purposes, as the purpose of the expense reimbursement arrangement is not to prevent tax-advantaged distributions to shareholders.

Under the expense reimbursement agreement, Franklin Square Holdings will reimburse us quarterly for expenses in an amount equal to the difference between our cumulative distributions paid to our shareholders in each quarter, less the sum of our net investment company taxable income, net capital gains and dividends and other distributions paid to us on account of preferred and common equity investments in portfolio companies (to the extent such amounts are not included in net investment company taxable income or net capital gains) in each quarter.

Pursuant to the expense reimbursement agreement, we have a conditional obligation to reimburse Franklin Square Holdings for any amounts funded by Franklin Square Holdings under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which Franklin Square Holdings funded such amount, the sum of our net investment company taxable income, net capital gains and the amount of any dividends and other distributions paid to us on account of preferred and common equity investments in portfolio companies (to the extent not included in net investment company taxable income or net capital gains) exceeds the distributions paid by us to our shareholders; provided, however, that (i) we will only reimburse Franklin Square Holdings

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for expense support payments made by Franklin Square Holdings with respect to any calendar quarter beginning on or after July 1, 2013 to the extent that the payment of such reimbursement (together with any other reimbursement paid during such fiscal year) does not cause "other operating expenses" (as defined below) (on an annualized basis and net of any expense support payments received by us during such fiscal year) to exceed the lesser of (A) 1.75% of our average net assets attributable to our common shares for the fiscal year-to-date period after taking such payments into account and (B) the percentage of our average net assets attributable to our common shares represented by "other operating expenses" during the fiscal year in which such expense support payment from Franklin Square Holdings was made (provided, however, that this clause (B) shall not apply to any reimbursement payment which relates to an expense support payment from Franklin Square Holdings made during the same fiscal year) and (ii) we will not reimburse Franklin Square Holdings for expense support payments made by Franklin Square Holdings if the aggregate amount of distributions per share declared by us in such calendar quarter is less than the aggregate amount of distributions per share declared by us in the calendar quarter in which Franklin Square Holdings made the expense support payment to which such reimbursement relates. We are not obligated to pay interest on the payments we receive from Franklin Square Holdings. "Other operating expenses" means our total "operating expenses" (as defined below), excluding base management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses. "Operating expenses" means all operating costs and expenses incurred, as determined in accordance with GAAP for investment companies.

We or Franklin Square Holdings may terminate the expense reimbursement agreement at any time. The specific amount of expenses reimbursed by Franklin Square Holdings, if any, will be determined at the end of each quarter. Upon termination of the expense reimbursement agreement by Franklin Square Holdings, Franklin Square Holdings will be required to fund any amounts accrued thereunder as of the date of termination. Similarly, our conditional obligation to reimburse Franklin Square Holdings pursuant to the terms of the expense reimbursement agreement shall survive the termination of such agreement by either party.

Franklin Square Holdings is controlled by our chairman, president and chief executive officer, Michael C. Forman, and our vice-chairman, David J. Adelman. There can be no assurance that the expense reimbursement agreement will remain in effect or that Franklin Square Holdings will reimburse any portion of our expenses in future quarters.

As of March 31, 2016, we had no reimbursements due from Franklin Square Holdings and no further amounts remained subject to repayment by us to Franklin Square Holdings in the future.

Portfolio Investment Activity for the Three Months Ended March 31, 2016 and for the Year Ended December 31, 2015

During the three months ended March 31, 2016, we made investments in portfolio companies totaling $133,666. During the same period, we sold investments for proceeds of $85,812 and received principal repayments of $90,544. As of March 31, 2016, our investment portfolio, with a total fair value of $2,938,243 (27% in first lien senior secured loans, 31% in second lien senior secured loans, 11% in senior secured bonds, 18% in subordinated debt and 13% in equity/other), consisted of interests in 84 portfolio companies. The portfolio companies that comprised our portfolio as of such date had an average annual EBITDA of approximately $247.3 million. As of March 31, 2016, the debt investments in our portfolio were purchased at a weighted average price of 97.9% of par value, and our estimated gross annual portfolio yield, prior to leverage (which represents the expected annualized yield to be generated by us on our investment portfolio based on the composition of our portfolio as of such date), was 8.5% based upon the amortized cost of our investments.

Based on our regular weekly cash distribution rate of $0.013625 per share as of March 31, 2016 and our public offering price of $7.05 per share as of such date, the annualized distribution rate to shareholders as of March 31, 2016 was 10.05%. The distribution rate to shareholders may include income, realized capital gains and a return of investors' capital.

During the year ended December 31, 2015, we made investments in portfolio companies totaling $1,195,947. During the same period, we sold investments for proceeds of $590,726 and received principal repayments of $209,808. As of December 31, 2015, our investment portfolio, with a total fair

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value of $3,069,498 (30% in first lien senior secured loans, 30% in second lien senior secured loans, 11% in senior secured bonds, 19% in subordinated debt and 10% in equity/other), consisted of interests in 90 portfolio companies. The portfolio companies that comprised our portfolio as of such date had an average annual EBITDA of approximately $244.8 million. As of December 31, 2015, the investments in our portfolio were purchased at a weighted average price of 98.4% of par value and our estimated gross annual portfolio yield, prior to leverage, was 9.3% based upon the amortized cost of our investments.

Based on our regular weekly cash distribution rate of $0.013625 per share as of December 31, 2015 and our public offering price of $7.50 per share as of such date, the annualized distribution rate to shareholders as of December 31, 2015 was 9.45%. The distribution rate to shareholders may include income, realized capital gains and a return of investors' capital.

Our estimated gross portfolio yield and annualized distribution rate to shareholders do not represent actual investment returns to shareholders. Our gross annual portfolio yield and distribution rate to shareholders are subject to change and in the future may be greater or less than the rates set forth above. See the sections entitled "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2015 and in our other periodic reports filed with the SEC for a discussion of the uncertainties, risks and assumptions associated with these statements.

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the three months ended March 31, 2016 and the year ended December 31, 2015:

Net Investment Activity	For the Three Months Ended March 31, 2016			For the Year Ended December 31, 2015

Purchases	$	133,666		$	1,195,947
Sales and Redemptions		(176,356	)		(800,534	)

Net Portfolio Activity	$	(42,690	)	$	395,413

	For the Three Months Ended March 31, 2016					For the Year Ended December 31, 2015

New Investment Activity by Asset Class	Purchases		Percentage			Purchases		Percentage
Senior Secured Loans—First Lien	$	19,170		14	%	$	439,617		37	%
Senior Secured Loans—Second Lien		124		0	%		261,831		22	%
Senior Secured Bonds		—		—			196,821		16	%
Subordinated Debt		5,893		5	%		258,418		22	%
Equity/Other		108,479		81	%		39,260		3	%

Total	$	133,666		100	%	$	1,195,947		100	%

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The following table summarizes the composition of our investment portfolio at cost and fair value as of March 31, 2016 and December 31, 2015:

	March 31, 2016 (Unaudited)							December 31, 2015

	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	962,089	$	793,976		27	%	$	1,055,070	$	929,790		30	%
Senior Secured Loans—Second Lien		1,215,633		915,333		31	%		1,213,716		923,402		30	%
Senior Secured Bonds		440,372		324,730		11	%		445,475		323,948		11	%
Subordinated Debt		788,530		538,310		18	%		860,872		579,740		19	%
Equity/Other		400,383		365,894		13	%		319,274		312,618		10	%

Total	$	3,807,007	$	2,938,243		100	%	$	3,894,407	$	3,069,498		100	%

(1): Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

The following table presents certain selected information regarding the composition of our investment portfolio as of March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015

Number of Portfolio Companies		84			90
% Variable Rate (based on fair value)		51.6	%		50.9	%
% Fixed Rate (based on fair value)		35.9	%		38.9	%
% Income Producing Equity/Other Investments (based on fair value)		6.3	%		5.9	%
% Non-Income Producing Equity/Other Investments (based on fair value)		6.2	%		4.3	%
Average Annual EBITDA of Portfolio Companies	$	247,291		$	244,789
Weighted Average Purchase Price of Debt Investments (as a % of par value)		97.9	%		98.4	%
% of Investments on Non-Accrual (based on fair value)		5.5	%		0.1	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)		8.5	%		9.3	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)—Excluding Non-Income Producing Assets		9.6	%		9.8	%

Direct Originations

The following tables present certain selected information regarding our direct originations for the three months ended March 31, 2016 and the year ended December 31, 2015:

Net Direct Originations	For the Three Months Ended March 31, 2016			For the Year Ended December 31, 2015

Total Commitments (including Unfunded Commitments)	$	160,570		$	555,867
Exited Investments (including partial paydowns)		(201,635	)		(27,257	)

Net Direct Originations	$	(41,065	)	$	528,610

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	For the Three Months Ended March 31, 2016					For the Year Ended December 31, 2015

New Direct Originations by Asset Class (including Unfunded Commitments)	Commitment Amount		Percentage			Commitment Amount		Percentage
Senior Secured Loans—First Lien	$	59,057		37	%	$	186,513		34	%
Senior Secured Loans—Second Lien		—		—			252,532		45	%
Senior Secured Bonds		—		—			62,400		11	%
Subordinated Debt		—		—			6,997		1	%
Equity/Other		101,513		63	%		47,425		9	%

Total	$	160,570		100	%	$	555,867		100	%

	For the Three Months Ended March 31, 2016			For the Year Ended December 31, 2015

Average New Direct Origination Commitment Amount	$	40,143		$	34,742
Weighted Average Maturity for New Direct Originations		7/20/21			6/12/20
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period		4.8	%		10.4	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period—Excluding Non-Income Producing Assets		12.0	%		10.8	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period		9.9	%		10.7	%

The following table presents certain selected information regarding our direct originations as of March 31, 2016 and December 31, 2015:

Characteristics of All Direct Originations held in Portfolio	March 31, 2016			December 31, 2015

Number of Portfolio Companies		27			27
Average Annual EBITDA of Portfolio Companies	$	91,181		$	82,111
Average Leverage Through Tranche of Portfolio Companies—Excluding Equity/Other Securities		5.2x			4.8x
% of Investments on Non-Accrual (based on fair value)		5.8	%		0.1	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations		8.8	%		9.9	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations—Excluding Non-Income Producing Assets		10.8	%		10.9	%

Portfolio Composition by Strategy and Industry

The table below summarizes the composition of our investment portfolio by strategy and enumerates the percentage, by fair value, of the total portfolio assets in such strategies as of March 31, 2016 and December 31, 2015:

	March 31, 2016					December 31, 2015

Portfolio Composition by Strategy	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Direct Originations	$	1,939,060		66	%	$	1,975,269		64	%
Opportunistic		527,123		18	%		567,149		19	%
Broadly Syndicated/Other		472,060		16	%		527,080		17	%

Total	$	2,938,243		100	%	$	3,069,498		100	%

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	March 31, 2016 (Unaudited)					December 31, 2015

Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Upstream	$	1,656,204		56	%	$	1,689,705		55	%
Midstream		208,302		7	%		215,906		7	%
Downstream		11,988		1	%		12,195		0	%
Power		478,216		16	%		519,593		17	%
Service & Equipment		583,533		20	%		632,099		21	%

Total	$	2,938,243		100	%	$	3,069,498		100	%

As of March 31, 2016, except for FourPoint Energy, LLC, in which we held a senior secured bond and two equity/other investments, Sunnova Energy Corp., in which we held two equity/other investments, and Sunnova Asset Portfolio 5 Holdings, LLC, in which we held a first lien senior secured loan, we were not an "affiliated person" of any of our portfolio companies, as defined in the 1940 Act. As of March 31, 2016, we did not "control" any of our portfolio companies, as defined in the 1940 Act. In general, under the 1940 Act, we would be presumed to "control" a portfolio company if we owned 25% or more of its voting securities or we had the power to exercise control over the management or policies of a portfolio company, and would be an "affiliated person" of a portfolio company if we owned 5% or more of its voting securities.

Our investment portfolio may contain loans or bonds that are in the form of lines of credit or revolving credit facilities, or other investments, which may require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of March 31, 2016, we had three senior secured loan investments with aggregate unfunded commitments of $49,908, one senior secured bond investment with an unfunded commitment of $18,470 and four equity/other investments with aggregate unfunded commitments of $26,910. As of March 31, 2016, these unfunded equity/other investments were Altus Power America Holdings, LLC, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, and Synergy Offshore LLC. As of December 31, 2015, we had four senior secured loan investments with aggregate unfunded commitments of $67,365, one senior secured bond investment with an unfunded commitment of $18,470 and five equity/other investments with aggregate unfunded commitments of $33,890. As of December 31, 2015, these unfunded equity/other investments were Altus Power America Holdings, LLC, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, Sunnova Holdings, LLC and Synergy Offshore LLC. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

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Portfolio Asset Quality

In addition to various risk management and monitoring tools, FS Advisor uses an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio. FS Advisor uses an investment rating scale of 1 to 5. The following is a description of the conditions associated with each investment rating:

Investment Rating		Summary Description

1		Investment exceeding expectations and/or capital gain expected.
2		Performing investment generally executing in accordance with the portfolio company's business plan—full return of principal and interest expected.
3		Performing investment requiring closer monitoring.
4		Underperforming investment—some loss of interest or dividend possible, but still expecting a positive return on investment.
5		Underperforming investment with expected loss of interest and some principal.

The following table shows the distribution of our investments on the 1 to 5 investment rating scale at fair value as of March 31, 2016 and December 31, 2015:

	March 31, 2016					December 31, 2015

Investment Rating	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
1	$	200,395		7	%	$	159,204		5	%
2		999,260		34	%		1,340,637		44	%
3		1,457,370		50	%		1,288,144		42	%
4		186,346		6	%		203,084		7	%
5		94,872		3	%		78,429		2	%

Total	$	2,938,243		100	%	$	3,069,498		100	%

The amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values. As of March 31, 2016, 50% of our portfolio consisted of investments with an investment rating of three, 6% of our portfolio consisted of investments with an investment rating of four and 3% of our portfolio consisted of investments with an investment rating of five, in each case, based on fair value. The increase in the amount of our investments rated a three, four or five is due primarily to the pronounced decline in the price of oil and the increased volatility of the energy credit markets over the first half of the first quarter of 2016.

Results of Operations

Despite a significant rally during the latter part of the quarter, commodity prices negatively impacted the performance of energy credit during the three months ended March 31, 2016. The "spread-to-worst" of the Bank of America Merrill Lynch High Yield Energy Index, or the Index, which measures the difference from the worst performing security to the best, increased from 1,405 basis points as of December 31, 2015 to a multi-year high of 1,971 basis points as of February 11, 2016. Over the second half of the quarter, spreads tightened significantly reaching 1,278 basis points as of March 31, 2016. Overall, the Index ended the first quarter of 2016 with a yield-to-worst of 14.2% after rebounding from levels not seen since November 2008.

The significant volatility in energy credit prices was attributable, in large part, to changes in commodity prices. West Texas Intermediate (WTI) crude prices, which began the year at $40.71 per barrel, reached a multi-year low on January 20, 2016 and ended at $39.75 per barrel as of March 31, 2016. The average par weighted price of the Bank of America Merrill Lynch High Yield Energy Index began the year at $64.89, reached a recent low of $52.17 on February 11, 2016 and rebounded to $68.14

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as of March 31, 2016. The continued pressure on energy credit prices impacted our reported unrealized depreciation for the quarter ended March 31, 2016.

Comparison of the Three Months Ended March 31, 2016 and 2015

Revenues

We generated investment income of $97,910 and $85,587 for the three months ended March 31, 2016 and 2015, respectively, in the form of interest and fees earned on senior secured loans (first and second lien), senior secured bonds and subordinated debt investments in our portfolio and dividends and other distributions earned on equity/other investments. Such revenues represent $87,482 and $75,851 of cash income earned as well as $10,428 and $9,736 in non-cash portions relating to accretion of discount, PIK interest and accrual of limited partnership income for the three months ended March 31, 2016 and 2015, respectively. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

The level of investment income we receive is directly related to the balance of income-producing investments multiplied by the weighted average yield of our investments. We expect the dollar amount of interest and any dividend income that we earn to increase as the size of our investment portfolio increases and the proportion of directly originated investments in our portfolio increases.

During the three months ended March 31, 2016 and 2015, we generated $8,176 and $4,518 of fee income, which represented 8.4% and 5.3%, respectively, of total investment income. Such fee income is transaction based, and typically consists of amendment and consent fees, prepayment fees, structuring fees, upfront fees and other non-recurring fees. As such, future fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

Expenses

Our total expenses were $35,520 and $32,862 for the three months ended March 31, 2016 and 2015, respectively. Our expenses include base management fees attributed to FS Advisor of $17,241 and $18,745 for the three months ended March 31, 2016 and 2015, respectively. Our expenses also include administrative services expenses attributed to FS Advisor of $884 and $1,500 for the three months ended March 31, 2016 and 2015, respectively.

FS Advisor is eligible to receive incentive fees based on our performance. During the three months ended March 31, 2016 and 2015, we accrued a subordinated incentive fee on income of $5,774 and $2,879, respectively. During the three months ended March 31, 2016 and 2015, we did not accrue any capital gains incentive fees. See "—Critical Accounting Policies—Capital Gains Incentive Fee" and "—Critical Accounting Policies—Subordinated Income Incentive Fee" for additional information about how the incentive fees are calculated.

We recorded interest expense of $9,352 and $7,316 for the three months ended March 31, 2016 and 2015, respectively, in connection with our financing arrangements. For the three months ended March 31, 2016 and 2015, fees and expenses incurred with our fund administrator, which provides various accounting and administrative services to us, totaled $286 and $360, respectively, and fees and expenses incurred with our share transfer agent totaled $742 and $794, respectively. Fees for our board of trustees were $250 and $225 for the three months ended March 31, 2016 and 2015, respectively. Amortization of our deferred offering costs was $125 and $0 for the three months ended March 31, 2016 and 2015, respectively.

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Our other general and administrative expenses totaled $833 and $954 for the three months ended March 31, 2016 and 2015, respectively, and consisted of the following:

	Three Months Ended March 31,

	2016		2015
Expenses associated with our independent audit and related fees	$	123	$	136
Compensation of our chief compliance officer⁽¹⁾		—		20
Legal fees		166		223
Printing fees		198		120
Insurance expense		61		74
Other		285		381

Total	$	833	$	954

(1): On April 1, 2015, James F. Volk was appointed as our chief compliance officer. Prior to that date, we had contracted with Vigilant Compliance, LLC to provide the services of Salvatore Faia as our chief compliance officer. Mr. Volk is employed by Franklin Square Holdings and will not receive any direct compensation from us in this capacity.

During the three months ended March 31, 2016 and 2015, the ratio of our total expenses to our average net assets was 1.52% and 1.25%, respectively. During the three months ended March 31, 2016 and 2015, our ratio of total expenses to average net assets included $9,352 and $7,316, respectively, related to interest expense, $5,774 and $2,879, respectively, related to accruals for incentive fees, $125 and $0, respectively, related to amortization of deferred offering costs and $33 and $89, respectively, related to accruals for income and excise taxes. Without such expenses, our ratio of expenses to average net assets would have been 0.86% and 0.86% for the three months ended March 31, 2016 and 2015, respectively. Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in benchmark interest rates such as LIBOR, among other factors.

Net Investment Income

Our net investment income totaled $62,390 ($0.17 per share) and $52,725 ($0.17 per share) for the three months ended March 31, 2016 and 2015, respectively.

Net Realized Gains or Losses

We sold investments and received principal repayments of $85,812 and $90,544, respectively, during the three months ended March 31, 2016, from which we realized a net loss of $57,011. We sold investments and received principal repayments of $127,336 and $67,194, respectively, during the three months ended March 31, 2015, from which we realized a net loss of $17,957. We realized a net loss of $238 from settlements on foreign currency during the three months ended March 31, 2015.

Net Change in Unrealized Appreciation (Depreciation) on Investments and Unrealized Gain (Loss) on Foreign Currency

For the three months ended March 31, 2016 and 2015, the net change in unrealized appreciation (depreciation) on investments totaled $(43,855) and $18,586, respectively, and the net change in unrealized gain (loss) on foreign currency was $16 and $(128), respectively. The change in unrealized appreciation (depreciation) on our investments during the three months ended March 31, 2016 was primarily driven by increased volatility and a general widening of credit spreads in the Energy high yield and leveraged loan markets and by the performance of our directly originated and opportunistic investments. The change in unrealized appreciation (depreciation) on our investments during the three months ended March 31, 2015 was primarily driven by the performance of our directly originated investments.

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Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended March 31, 2016 and 2015, the net increase (decrease) in net assets resulting from operations was $(38,460) ($(0.10) per share) and $52,988 ($0.17 per share), respectively.

Financial Condition, Liquidity and Capital Resources

We previously announced that we intended to close our public offering to new investors near the end of the second quarter or the beginning of the third quarter of 2016, subject to market conditions and the pace of capital raising. Based on and subject to market conditions and the pace of capital raising, we now expect to close our public offering to new investors near the end of the third quarter of 2016. Since the middle of February 2016, energy credit market conditions have improved and oil prices have rebounded. With the improving market conditions, we have seen some positive developments in the portfolio and a subsequent increase in our net asset value. However, we anticipate that certain investments in the portfolio may need to be restructured or may experience defaults. These restructurings and defaults may have an impact on the level of income received by us. As a result, we are evaluating the current distribution rate payable on our common shares and there can be no assurance that we will be able to maintain a weekly cash distribution amount of $0.013625 per common share. FS Advisor will waive its incentive fees and may waive a portion of its management fee through the second quarter of 2016 to ensure that no portion of our distributions to shareholders is paid from offering proceeds or borrowings.

Overview

As of March 31, 2016, we had $403,584 in cash, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $391,679 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. To seek to enhance our returns, we employ leverage as market conditions permit and at the discretion of FS Advisor, but in no event may leverage employed exceed 50% of the value of our assets, as required by the 1940 Act. See "—Financing Arrangements." As of March 31, 2016, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of March 31, 2016, we had three senior secured loan investments with aggregate unfunded commitments of $49,908, one senior secured bond investment with an unfunded commitment of $18,470 and four equity/other investments with aggregate unfunded commitments of $26,910. We maintain sufficient cash on hand and available borrowings to fund such unfunded commitments should the need arise.

During the three months ended March 31, 2016, we sold 19,976,920 common shares for gross proceeds of $134,851 at an average price per share of $6.75. The gross proceeds received during the three months ended March 31, 2016 include reinvested shareholder distributions of $42,231, for which we issued 6,643,252 common shares. During the three months ended March 31, 2016, we also incurred offering costs of $1,500 in connection with the sale of our common shares, which consisted primarily of legal, accounting, printing and other expenses, including costs associated with technology integration between our systems and those of our selected broker-dealers, marketing expenses and due diligence fees. The offering costs are deferred and amortized to expense over a twelve month period. The sales commissions and dealer manager fees related to the sale of our common shares were $7,923 for the three months ended March 31, 2016. These sales commissions and fees include $1,479 retained by the dealer manager, FS², which is one of our affiliates.

Since commencing our continuous public offering and through April 26, 2016, we have sold 401,344,745 common shares (as adjusted for share distributions) for gross proceeds of $3,997,317, including common shares issued under our distribution reinvestment plan. As of April 26, 2016, we have raised total gross proceeds of $4,017,521, including $200 of seed capital contributed by the principals of FS Advisor in December 2010 and $20,004 in proceeds raised from the principals of FS Advisor, other individuals and entities affiliated with FS Advisor, certain members of our board of trustees and certain individuals and entities affiliated with GSO in a private placement conducted in April 2011.

We generate cash primarily from the net proceeds of our continuous public offering and from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. We are engaged in a continuous public offering of our common shares. We accept subscriptions on a continuous basis and issue common shares at weekly closings. Shares are issued at prices that, after deducting selling commissions and dealer manager fees, must be above our net asset value per share.

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Prior to investing in securities of portfolio companies, we invest the net proceeds from our continuous public offering and from sales and paydowns of existing investments primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

To provide our shareholders with limited liquidity, we conduct quarterly tender offers pursuant to our share repurchase program. The first such tender offer commenced in August 2012, and the repurchase occurred in connection with our October 1, 2012 semi-monthly closing.

The following table provides information concerning our repurchases of common shares pursuant to our share repurchase program during the three months ended March 31, 2016 and 2015:

For the Three Months Ended	Repurchase Date				Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares

Fiscal 2015
December 31, 2014	January 7, 2015	450,293	100	%	$	8.82	$	3,972
Fiscal 2016
December 31, 2015	January 6, 2016	2,716,924	100	%	$	6.75	$	18,339

On April 6, 2016, we repurchased 2,196,742 common shares (representing 100% of common shares tendered for repurchase) at $6.345 per share for aggregate consideration totaling $13,938.

Financing Arrangements

The following table presents a summary of information with respect to our outstanding financing arrangements as of March 31, 2016:

Facility	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date

BNP Facility	Prime Brokerage	L+1.10%	$	113,737	$	186,263	December 26, 2016⁽¹⁾
Deutsche Bank Credit Facility	Revolving	L+1.80%	$	200,000	$	140,000	June 11, 2016
Fortress Facility	Term	L+5.00%⁽²⁾	$	89,600	$	65,400	November 6, 2020
Goldman Facility	Repurchase	L+2.75%	$	324,984	$	16	September 15, 2017
Natixis Credit Facility	Revolving	CP+2.25%	$	89,670		—	July 11, 2023
Wells Fargo Credit Facility	Revolving	L+2.50% to 2.75%	$	125,000		—	September 9, 2019

(1): The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2016, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(2): As described in Note 8, borrowings under the Fortress facility accrue interest at a rate equal to LIBOR plus 5.00%, subject to a floor of 0.75%.

Our average borrowings and weighted average interest rate, including the effect of non-usage fees, for the three months ended March 31, 2016 were $1,019,353 and 3.32%, respectively. As of March 31, 2016, our weighted average effective interest rate on borrowings was 3.10%.

For additional information regarding our outstanding financing arrangements as of March 31, 2016, see Note 8 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q.

RIC Tax Treatment and Distributions

We have elected to be treated for U.S. federal income tax purposes, and intend to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute as dividends to our shareholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our shareholders, for each tax year, dividends generally of an amount at least equal to 90% of our "investment company taxable income," which is generally the sum of our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net

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long-term capital losses, determined without regard to any deduction for dividends paid. In addition, we may, in certain cases, satisfy the Annual Distribution Requirement by distributing dividends relating to a tax year after the close of such tax year under the "spillover dividend" provisions of Subchapter M of the Code. If we distribute a spillover dividend, such dividend will be included in a shareholder's gross income for the tax year in which the spillover distribution is paid. We intend to make sufficient distributions to our shareholders to maintain our RIC tax treatment each tax year. We will also be subject to nondeductible U.S. federal excise taxes on certain undistributed income unless we distribute in a timely manner to our shareholders of an amount at least equal to the sum of (1) 98% of our net ordinary taxable income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains over capital losses (adjusted for certain ordinary losses), for the one-year period ending October 31 of that calendar year and (3) any ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November or December of any calendar year, payable to our shareholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our U.S. shareholders, on December 31 of the calendar year in which the distribution was declared. We generally will endeavor in each tax year to avoid any material U.S. federal excise tax on our earnings.

We authorize and declare ordinary cash distributions on a weekly basis, while continuing to pay such distributions on a monthly basis, in each case subject to our board of trustees' discretion and applicable legal restrictions. We will calculate each shareholder's specific distribution amount for the period using record and declaration dates and each shareholder's distributions will begin to accrue on the date we accept such shareholder's subscription for our common shares. From time to time, we may also pay special interim distributions in the form of cash or common shares at the discretion of our board of trustees.

During certain periods, our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our continuous public offering of common shares. As a result, it is possible that a portion of the distributions we make will represent a return of capital. A return of capital generally is a return of an investor's investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with our continuous public offering, including any fees payable to FS Advisor. Moreover, a return of capital will generally not be taxable, but will reduce each shareholder's cost basis in our common shares, and will result in a higher reported capital gain or lower reported capital loss when the common shares on which such return of capital was received are sold. Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our shareholders.

The following table reflects the cash distributions per share that we have declared and paid on our common shares during the three months ended March 31, 2016 and 2015:

	Distribution

For the Three Months Ended	Per Share		Amount
Fiscal 2015
March 31, 2015	$	0.1771	$	54,825
Fiscal 2016
March 31, 2016	$	0.1771	$	66,720

On March 9, 2016, our board of trustees declared regular weekly cash distributions for April 2016 through June 2016. These distributions have been or will be paid monthly to shareholders of record as of weekly record dates previously determined by our board of trustees in the amount of $0.013625 per share. The timing and amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion of our board of trustees.

We have adopted an "opt in" distribution reinvestment plan for our shareholders. As a result, if we make a cash distribution, our shareholders will receive distributions in cash unless they specifically "opt in" to the distribution reinvestment plan so as to have their cash distributions reinvested in additional common shares. However, certain state authorities or regulators may impose restrictions

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from time to time that may prevent or limit a shareholder's ability to participate in the distribution reinvestment plan. Although distributions paid in the form of additional common shares will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, shareholders who elect to participate in our distribution reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes. Shareholders receiving distributions in the form of additional common shares will generally be treated as receiving a distribution in the amount of the fair market value of our common shares.

We may fund our cash distributions to shareholders from any sources of funds legally available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and expense reimbursements from Franklin Square Holdings. We have not established limits on the amount of funds we may use from available sources to make distributions.

For a period of time following commencement of our continuous public offering, substantial portions of our distributions were funded through the reimbursement of certain expenses by Franklin Square Holdings and its affiliates, including through the waiver of certain investment advisory fees by FS Advisor, that were subject to repayment by us within three years. The purpose of this arrangement was to ensure that no portion of our distributions to shareholders was paid from offering proceeds or borrowings. Any such distributions funded through expense reimbursements or waivers of advisory fees were not based on our investment performance.

No portion of the distributions paid during the three months ended March 31, 2016 or 2015 was funded through the reimbursement of operating expenses by Franklin Square Holdings. During the three months ended March 31, 2016 and 2015, we did not repay any amounts to Franklin Square Holdings for expenses previously reimbursed or waived. There can be no assurance that we will continue to achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at a specific rate or at all. Franklin Square Holdings and its affiliates have no obligation to waive advisory fees or otherwise reimburse expenses in future periods.

The following table reflects the sources of the cash distributions on a tax basis that we paid on our common shares during the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,

	2016					2015
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Offering proceeds	$	—		—		$	—		—
Borrowings		—		—			—		—
Net investment income⁽¹⁾		66,720		100	%		41,234		75	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			13,591		25	%
Non-capital gains proceeds from the sale of assets		—		—			—		—
Distributions on account of limited partnership interest		—		—			—		—
Expense reimbursement from sponsor		—		—			—		—

Total	$	66,720		100	%	$	54,825		100	%

(1): During the three months ended March 31, 2016 and 2015, 89.4% and 88.6%, respectively, of our gross investment income was attributable to cash income earned, 2.4% and 2.7%, respectively, was attributable to non-cash accretion of discount and 8.2% and 8.7%, respectively, was attributable to PIK interest.

Our net investment income on a tax basis for the three months ended March 31, 2016 and 2015 was $62,858 and $53,492, respectively. As of March 31, 2016 and December 31, 2015, we had $12,574 and $16,436, respectively, of undistributed ordinary income on a tax basis and distributable income received from a limited partnership interest. As of March 31, 2016 we had excess undistributed ordinary income on a tax basis of $5,716. During the last twelve months, our distributions exceeded tax-basis net investment income by $7,199. In addition, $24,138 of our tax-basis net investment income

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was generated by fee income, which is generally non-recurring in nature and the full amount of which is recorded as revenue when earned. Excluding fee income from net investment income during the last twelve months, we would have had distributions in excess of tax-basis net investment income of $31,337. No portion of the distributions paid during the three months ended March 31, 2016 or 2015 was funded from offering proceeds or borrowings.

We have seen some positive developments in our investment portfolio and a subsequent increase in its net asset value. However, we anticipate that certain investments in the portfolio may need to be restructured or may experience defaults. These restructurings and defaults may have an impact on the level of income received by us. As a result, we are evaluating the current distribution rate payable on our common shares and there can be no assurance that we will be able to maintain a weekly cash distribution amount of $0.013625 per common share. FS Advisor will waive its incentive fees and may waive a portion of its management fee through the second quarter of 2016 to ensure that no portion of our distributions to shareholders is paid from offering proceeds or borrowings.

See Note 5 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for additional information regarding our distributions, a reconciliation of our GAAP-basis net investment income and tax-basis net investment income for the three months ended March 31, 2016 and 2015 and the components of accumulated earnings on a tax basis as of March 31, 2016 and December 31, 2015.

Critical Accounting Policies

Our financial statements are prepared in conformity with GAAP, which requires us 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 revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below.

Valuation of Portfolio Investments

We determine the net asset value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of trustees. In connection with that determination, FS Advisor provides our board of trustees with portfolio company valuations which 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 independent third-party valuation services.

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the FASB clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities

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where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

•: our quarterly fair valuation process begins with FS Advisor's management team reviewing and documenting preliminary valuations of each portfolio company or investment, which valuations may be obtained from an independent third-party valuation service, if applicable;
•: FS Advisor's management team then provides the valuation committee with the preliminary valuations for each portfolio company or investment;
•: preliminary valuations are then discussed with the valuation committee;
•: the valuation committee reviews the preliminary valuations and FS Advisor's management team, together with our independent third-party valuation services, if applicable, supplements the preliminary valuations to reflect any comments provided by the valuation committee;
•: following its review, the valuation committee will recommend that our board of trustees approve our fair valuations; and
•: our board of trustees discusses the valuations and determines the fair value of each such investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of FS Advisor, the valuation committee and any independent third-party valuation services, if applicable.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of trustees may use any approved independent third-party pricing or valuation services. However, our board of trustees is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from FS Advisor or any approved independent third-party valuation or pricing service that our board of trustees deems to be reliable in determining fair value under the circumstances. Below is a description of factors that FS Advisor's management team, any approved independent third-party valuation services and our board of trustees may consider when determining the fair value of our investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower's ability to adequately service its debt, the fair market value of the portfolio company in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.

For convertible debt securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value. Our board of trustees, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.

FS Advisor's management team, any approved independent third-party valuation services and our board of trustees may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the

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portfolio companies or industry practices in determining fair value. FS Advisor's management team, any approved independent third-party valuation services and our board of trustees may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of trustees, in consultation with FS Advisor's management team and any approved independent third-party valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.

When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of trustees subsequently values these warrants or other equity securities received at their fair value.

The fair values of our investments are determined in good faith by our board of trustees. Our board of trustees is solely responsible for the valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of trustees has delegated day-to-day responsibility for implementing our valuation policy to FS Advisor's management team, and has authorized FS Advisor's management team to utilize independent third-party valuation and pricing services that have been approved by our board of trustees. The valuation committee is responsible for overseeing FS Advisor's implementation of the valuation process.

Our investments as of March 31, 2016 consisted primarily of debt investments that were acquired directly from the issuer. Twenty senior secured loan investments, two senior secured bond investments and five subordinated debt investments were valued by independent valuation firms, which determined the fair value of such investments by considering, among other factors, the borrower's ability to adequately service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the debt. All of our equity/other investments were valued by an independent valuation firm, which determined the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. Except as described above, we valued our other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service.

Our investments as of December 31, 2015 consisted primarily of debt investments that were acquired directly from the issuer. Twenty senior secured loan investments, two senior secured bond investments and five subordinated debt investments were valued by independent valuation firms, which determined the fair value of such investments by considering, among other factors, the borrower's ability to adequately service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the debt. All of our equity/other investments were valued by an independent valuation firm, which determined the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. Except as described above, we valued our other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service.

We periodically benchmark the bid and ask prices we receive from third-party pricing services and/or dealers, as applicable, against the actual prices at which we purchase and sell our investments. Based on the results of the benchmark analysis and the experience of our management in purchasing and selling these investments, we believe that these prices are reliable indicators of fair value. However, because of the private nature of this marketplace (meaning actual transactions are not publicly

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reported), we believe that these valuation inputs are classified as Level 3 within the fair value hierarchy. We may also use other methods, including the use of independent valuation firms, to determine fair value for securities for which we cannot obtain prevailing bid and ask prices through third-party pricing services or independent dealers or where our board of trustees otherwise determines that the use of such other method is appropriate. We periodically benchmark the valuations provided by the independent valuation firms against the actual prices at which we purchase and sell our investments. Our valuation committee and board of trustees reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with our valuation policy.

Revenue Recognition

Security transactions are accounted for on the trade date. We record interest income on an accrual basis to the extent that we expect to collect such amounts. We record dividend income on the ex-dividend date. We do not accrue as a receivable interest or dividends on loans and securities if we have reason to doubt our ability to collect such income. Our policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. We consider many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that we will receive any previously accrued interest, then the previously recognized interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest payments become current and are likely to remain current based on our judgment.

Loan origination fees, original issue discount and market discount are capitalized and we amortize such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. Structuring and other non-recurring upfront fees are recorded as fee income when earned. We record prepayment premiums on loans and securities as fee income when we receive such amounts.

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency

Gains or losses on the sale of investments are calculated by using the specific identification method. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses when gains or losses are realized and the respective unrealized gain or loss on foreign currency for any foreign denominated investments we may hold. Net change in unrealized gains or losses on foreign currency reflects the change in the value of foreign currency held, receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

Capital Gains Incentive Fee

Pursuant to the terms of the investment advisory and administrative services agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of such agreement). Such fee equals 20.0% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, we accrue for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

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While the investment advisory and administrative services agreement with FS Advisor neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an AICPA Technical Practice Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to FS Advisor as if our entire portfolio was liquidated at its fair value as of the balance sheet date even though FS Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Subordinated Income Incentive Fee

Pursuant to the investment advisory and administrative services agreement, FS Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income, which is calculated and payable quarterly in arrears, equals 20.0% of our "pre-incentive fee net investment income" for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on adjusted capital equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS Advisor does not earn this incentive fee for any quarter until our pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.625%. For purposes of this fee, "adjusted capital" means cumulative gross proceeds generated from sales of our common shares (including proceeds from our distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of our investments paid to shareholders and amounts paid for share repurchases pursuant to our share repurchase program. Once our pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS Advisor is entitled to a "catch-up" fee equal to the amount of the pre-incentive fee net investment income in excess of the hurdle rate, until our pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. Thereafter, FS Advisor is entitled to receive 20.0% of pre-incentive fee net investment income.

Uncertainty in Income Taxes

We evaluate our tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in our consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is "more likely than not" to be sustained assuming examination by taxing authorities. We recognize interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in our consolidated statements of operations. During the three months ended March 31, 2016 and 2015, we did not incur any interest or penalties.

Contractual Obligations

We have entered into an agreement with FS Advisor to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory and administrative services agreement are equal to (a) an annual base management fee of 2.0% of the average value of our gross assets and (b) an incentive fee based on our performance. FS Advisor, and to the extent it provides such services, GSO, are reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein and "—Related Party Transactions—Compensation of the Investment Adviser and Dealer Manager" for a discussion of these agreements and for the amount of fees and expenses accrued under these agreements during the three months ended March 31, 2016 and 2015.

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A summary of our significant contractual payment obligations for the repayment of outstanding borrowings under the BNP facility, the Deutsche Bank credit facility, the Fortress facility, the Goldman facility, the Natixis credit facility and the Wells Fargo credit facility at March 31, 2016 is as follows:

	Payments Due By Period

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
BNP Facility⁽¹⁾	$	113,737	$	113,737		—		—		—
Deutsche Bank Credit Facility⁽²⁾	$	200,000	$	200,000		—		—		—
Fortress Facility⁽³⁾	$	89,600		—		—	$	89,600		—
Goldman Facility⁽⁴⁾	$	324,984		—	$	324,984		—		—
Natixis Credit Facility⁽⁵⁾	$	89,670		—		—		—	$	89,670
Wells Fargo Credit Facility⁽⁶⁾	$	125,000		—		—	$	125,000		—

(1): At March 31, 2016, $186,263 remained unused under the BNP facility. The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2016, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(2): At March 31, 2016, $140,000 remained unused under the Deutsche Bank credit facility. All amounts borrowed under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on June 11, 2016.
(3): At March 31, 2016, $65,400 remained unused under the Fortress facility. All amounts borrowed under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on November 6, 2020.
(4): At March 31, 2016, $16 remained unused under the Goldman facility. Strafford Funding will repurchase all Notes sold to Goldman under the Goldman facility and will owe all accrued and unpaid interest thereunder, on September 15, 2017.
(5): At March 31, 2016, no amounts remained unused under the Natixis credit facility. All amounts borrowed under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on July 11, 2023. Amounts under the Natixis credit facility began to amortize after the first repayment thereunder and we cannot borrow additional amounts under the facility thereafter.
(6): At March 31, 2016, no amounts remained unused under the Wells Fargo credit facility. All amounts borrowed under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on September 9, 2019.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Related Party Transactions

Compensation of the Investment Adviser and Dealer Manager

Pursuant to the investment advisory and administrative services agreement, FS Advisor is entitled to an annual base management fee of 2.0% of the average value of our gross assets and an incentive fee based on our performance. We commenced accruing fees under the investment advisory and administrative services agreement on July 18, 2011, upon commencement of our investment operations. Base management fees are paid on a quarterly basis in arrears.

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to shareholders and amounts paid for share repurchases pursuant to our share repurchase program. The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is accrued for on a cumulative basis and, if earned, is paid annually. We accrue this incentive fee based on net realized and unrealized gains; however, under the terms of the investment advisory and administrative services agreement, the fee payable to FS Advisor is based on realized gains and no such fee is payable with respect to unrealized gains unless and until such gains are actually realized.

We reimburse FS Advisor for expenses necessary to perform services related to our administration and operations, including FS Advisor's allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings providing administrative services to us on behalf of FS Advisor. The amount of the reimbursement payable to FS Advisor is the lesser of (1) FS Advisor's actual costs incurred in providing such services and (2) the amount that we estimate we would be required to pay alternative service providers for comparable services in the same geographic location. FS Advisor is required to allocate the cost of such services to us based on factors such as assets, revenues, time allocations and/or other reasonable metrics. Our board of trustees reviews the methodology employed in determining how the expenses are allocated to us and the proposed allocation of the administrative expenses among us and certain affiliates of FS Advisor. Our board of trustees then assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party providers known to be available. In addition, our board of trustees considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of trustees, among other things, compares the total amount paid to FS Advisor for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs. We will not reimburse FS Advisor for any services for which it receives a separate fee, or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a controlling person of FS Advisor.

Under the investment advisory and administrative services agreement, we, either directly or through reimbursement to FS Advisor or its affiliates, are responsible for our organization and offering costs in an amount up to 1.5% of gross proceeds raised in our continuous public offering. Organization and offering costs primarily include legal, accounting, printing and other expenses relating to our continuous public offering, including costs associated with technology integration between our systems and those of our selected broker-dealers, marketing expenses, salaries and direct expenses of FS Advisor's personnel, employees of its affiliates and others while engaged in registering and marketing our common shares, which includes the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for us.

Prior to satisfaction of the minimum offering requirement and for a period of time thereafter, Franklin Square Holdings funded certain of our organization and offering costs. Following this period, we have paid certain of our organization and offering costs directly and reimbursed FS Advisor for offering costs incurred by FS Advisor on our behalf, including marketing expenses, salaries and other direct expenses of FS Advisor's personnel and employees of its affiliates while engaged in registering and marketing our common shares. Organization and offering costs funded directly by Franklin Square Holdings were recorded by us as a contribution to capital. These offering costs were offset against capital in excess of par value on the consolidated financial statements and organization costs were charged to expense as incurred by us. All other offering costs, including costs incurred directly by us, amounts reimbursed to FS Advisor for ongoing offering costs and any reimbursements paid to Franklin Square Holdings for organization and offering costs previously funded, are recorded as a reduction of capital. Commencing January 1, 2016, offering costs incurred by us are deferred and amortized as an expense over twelve months (see Note 2 in our Notes to Unaudited Consolidated Financial Statements).

The dealer manager for our continuous public offering is FS², which is one of our affiliates. Under the dealer manager agreement among us, FS Advisor and FS², FS² is entitled to receive sales commissions and dealer manager fees in connection with the sale of common shares in our continuous public offering, all or a portion of which may be re-allowed to selected broker-dealers and financial representatives.

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			Three Months Ended March 31,

Related Party			Three Months Ended March 31,
Related Party	Source Agreement	Description	2016		2015
FS Advisor	Investment Advisory and Administrative Services Agreement	Base Management Fee⁽¹⁾	$	17,241	$	18,745
FS Advisor	Investment Advisory and Administrative Services Agreement	Subordinated Incentive Fee on Income⁽²⁾	$	5,774	$	2,879
FS Advisor	Investment Advisory and Administrative Services Agreement	Administrative Services Expenses⁽³⁾	$	884	$	1,500
FS Advisor	Investment Advisory and Administrative Services Agreement	Offering Costs⁽⁴⁾	$	713	$	1,624
FS²	Dealer Manager Agreement	Dealer Manager Fee⁽⁵⁾	$	1,479	$	3,217

(1): During the three months ended March 31, 2016 and 2015, $18,338 and $17,912, respectively, in base management fees were paid to FS Advisor. As of March 31, 2016, $17,241 in base management fees were payable to FS Advisor.
(2): During the three months ended March 31, 2016 and 2015, $12,048 and $12,142, respectively, of subordinated incentive fees on income were paid to FS Advisor. As of March 31, 2016, a subordinated incentive fee on income of $5,774 was payable to FS Advisor.
(3): During the three months ended March 31, 2016 and 2015, $861 and $1,412, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to us by FS Advisor and the remainder related to other reimbursable expenses. We paid $1,204 and $1,373 in administrative services expenses to FS Advisor during the three months ended March 31, 2016 and 2015, respectively.
(4): During the three months ended March 31, 2016 and 2015, we incurred offering costs of $1,500 and $2,500, respectively, of which $713 and $1,624, respectively, related to reimbursements to FS Advisor for offering costs incurred on our behalf, including marketing expenses, salaries and other direct expenses of FS Advisor's personnel and employees of its affiliates while engaged in registering and marketing our common shares.
(5): Represents aggregate dealer manager fees retained by FS² and not re-allowed to selected broker-dealers or financial representatives.

See Note 4 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for additional information regarding our related party transactions and relationships, including capital contributions by FS Advisor and GSO, potential conflicts of interest, our exemptive relief order, our expense reimbursement arrangement with Franklin Square Holdings, and FS Benefit Trust's purchases of our common shares.

Recent Developments

During the period from April 1, 2016 to April 26, 2016, we sold 5,165,365 common shares for gross proceeds of $36,148 at an average price per share of $7.00.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in interest rates. As of March 31, 2016, 51.6% of our portfolio investments (based on fair value) paid variable interest rates, 35.9% paid fixed interest rates, 6.3% were income producing equity or other investments and the remainder (6.2%) consisted of non-income producing equity or other investments. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to the variable rate investments we hold and to declines in the value of any fixed rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to FS Advisor with respect to our increased pre-incentive fee net investment income.

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Pursuant to the terms of the BNP facility, Deutsche Bank credit facility, Fortress facility, Goldman facility, Natixis credit facility and Wells Fargo credit facility, Berwyn Funding, FSEP Funding, Foxfields Funding, Strafford Funding, Energy Funding and Wayne Funding, respectively, borrow at a floating rate based on a benchmark interest rate. To the extent that any present or future credit facilities or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.

The following table shows the effect over a twelve-month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments, and our borrowing arrangements in effect as of March 31, 2016 (dollar amounts are presented in thousands):

Basis Point Change in Interest Rates	Increase (Decrease) in Interest Income			Increase (Decrease) in Interest Expense			Increase (Decrease) in Net Interest Income

Down 60 basis points	$	(20	)	$	(5,496	)	$	5,476		1.9	%
No change		—			—			—		—
Up 100 basis points		6,554			9,159			(2,605	)	(0.9	)%
Up 300 basis points		39,517			27,478			12,039		4.2	%
Up 500 basis points		73,200			45,797			27,403		9.5	%

We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. During the three months ended March 31, 2016 and 2015, we did not engage in interest rate hedging activities.

In addition, we may have risk regarding portfolio valuation. See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments."

Item 4. Controls and Procedures.

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2016. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the three month period ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings and, to our knowledge, no material legal proceedings are threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors.

There have been no material changes from the risk factors set forth in our annual report on Form 10-K for the fiscal year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below provides information concerning our repurchases of common shares during the three months ended March 31, 2016 pursuant to our share repurchase program.

Period		Average Price Paid per Share

January 1 to January 31, 2016	2,716,924	$	6.75	2,716,924	(1	)
February 1 to February 29, 2016	—		—	—	—
March 1 to March 31, 2016	—		—	—	—

Total	2,716,924	$	6.75	2,716,924	(1	)

(1): A description of the maximum number of common shares that may be repurchased under our share repurchase program is set forth in Note 3 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q.

See Note 3 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for a more detailed discussion of the terms of our share repurchase program.

Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.



3.1		Third Amended and Restated Declaration of Trust of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on March 13, 2012.)
3.2		Amended and Restated Bylaws of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on March 13, 2012.)
4.1		Form of Subscription Agreement. (Incorporated by reference to FS Energy and Power Fund's final prospectus filed on September 23, 2015 with the Securities and Exchange Commission pursuant to Rule 497 of the Securities Act of 1933, as amended.)
4.2		Amended and Restated Distribution Reinvestment Plan of FS Energy and Power Fund. (Incorporated by reference to Exhibit 4.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 14, 2011.)
10.1		Investment Advisory and Administrative Services Agreement, dated as of April 28, 2011, by and between FS Energy and Power Fund and FS Investment Advisor, LLC. (Incorporated by reference to Exhibit (g)(1) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.2		Amendment No. 1 dated as of August 10, 2012, to Investment Advisory and Administrative Services Agreement, dated as of April 28, 2011, by and between FS Energy and Power Fund and FS Investment Advisor, LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on August 14, 2012.)
10.3		Investment Sub-advisory Agreement, dated as of April 28, 2011, by and between FS Investment Advisor, LLC and GSO Capital Partners LP. (Incorporated by reference to Exhibit (g) (2) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.4		Dealer Manager Agreement, dated as of April 28, 2011, by and between FS Energy and Power Fund and FS² Capital Partners, LLC. (Incorporated by reference to Exhibit (h)(1) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.5		Form of Follow-On Dealer Manager Agreement by and among FS Energy and Power Fund, FS Investment Advisor, LLC and FS² Capital Partners, LLC. (Incorporated by reference to Exhibit (h)(2) filed with Pre-Effective Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-184407) filed on May 10, 2013.)
10.6		2014 Follow-On Dealer Manager Agreement, dated as of January 7, 2015, by and among FS Energy and Power Fund, FS Investment Advisor, LLC and FS² Capital Partners, LLC. (Incorporated by reference to Exhibit (h)(3) filed with Post-Effective Amendment No. 1 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-199777) filed on April 1, 2015.)
10.7		Form of Selected Dealer Agreement (Included as Appendix A to the Dealer Manager Agreement). (Incorporated by reference to Exhibit (h)(1) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.8		Form of Follow-On Selected Dealer Agreement. (Included as Exhibit A to the Form of Follow-On Dealer Manager Agreement.) (Incorporated by reference to Exhibit (h)(2) filed with Pre-Effective Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-184407) filed on May 10, 2013.)
10.9		Custodian Agreement, dated as of November 14, 2011, by and between State Street Bank and Trust Company and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on November 14, 2011.)

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10.10		Escrow Agreement, dated as of March 29, 2011, by and between FS Energy and Power Fund and UMB Bank, N.A. (Incorporated by reference to Exhibit (k) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.11		Credit Agreement, dated as of June 24, 2011, by and among FSEP Term Funding, LLC, Deutsche Bank AG, New York Branch, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.7 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.12		First Amendment to Credit Agreement, dated as of May 30, 2012, by and among FSEP Term Funding, LLC, Deutsche Bank AG, New York Branch, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 30, 2012.)
10.13		Second Amendment to Credit Agreement, dated as of August 28, 2012, by and among FSEP Term Funding, LLC, Deutsche Bank AG, New York Branch, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on August 30, 2012.)
10.14		Third Amendment to Credit Agreement, dated as of October 18, 2012, by and among FSEP Term Funding, LLC, Deutsche Bank AG, New York Branch, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on October 18, 2012.)
10.15		Fourth Amendment to Credit Agreement, dated as of June 24, 2013, by and among FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 25, 2013.)
10.16		Amended and Restated Credit Agreement, dated as of June 11, 2014, by and among FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 17, 2014.)
10.17		First Amendment to Amended and Restated Credit Agreement, dated as of June 11, 2015, by and among FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 15, 2015.)
10.18		Asset Contribution Agreement, dated as of June 24, 2011, by and between FS Energy and Power Fund and FSEP Term Funding, LLC. (Incorporated by reference to Exhibit 10.8 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.19		Investment Management Agreement, dated as of June 24, 2011, by and between FS Energy and Power Fund and FSEP Term Funding, LLC. (Incorporated by reference to Exhibit 10.9 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.20		Security Agreement, dated as of June 24, 2011, by and between FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.10 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.21		ISDA 2002 Master Agreement, together with the Schedule thereto and Credit Support Annex to such Schedule, each dated as of August 11, 2011, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.11 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on August 15, 2011.)
10.22		Termination and Release Acknowledgment, dated as of May 11, 2012, by Citibank N.A. in favor of FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.15 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on May 15, 2012.)
10.23		Amendment Agreement, dated as of May 11, 2012, to the ISDA 2002 Master Agreement, together with the Schedule thereto and Credit Support Annex to such Schedule, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.16 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on May 15, 2012.)

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10.24		Amended and Restated Confirmation Letter Agreement, dated as of May 11, 2012, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.17 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on May 15, 2012.)
10.25		Amended and Restated Confirmation Letter Agreement, dated as of October 11, 2012, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on October 12, 2012.)
10.26		Termination Acknowledgment (TRS), dated as of May 24, 2013, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 31, 2013.)
10.27		Loan Agreement, dated as of May 24, 2013, by and among EP Funding LLC, the financial institutions and other lenders from time to time party thereto and Citibank, N.A., as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.28		Account Control Agreement, dated as of May 24, 2013, by and among EP Funding LLC, Citibank, N.A. and Virtus Group, LP. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.29		Security Agreement, dated as of May 24, 2013, by and between EP Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.30		Investment Management Agreement, dated as of May 24, 2013, by and between FS Energy and Power Fund and EP Funding LLC. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.31		Credit Agreement, dated as of July 11, 2013, by and among Energy Funding LLC, Natixis, New York Branch, Wells Fargo Bank, National Association and the other lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.32		Securities Account Control Agreement, dated as of July 11, 2013, by and among Energy Funding LLC and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.33		Collateral Management Agreement, dated as of July 11, 2013, by and between FS Energy and Power Fund and Energy Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.34		Amended and Restated Expense Support and Conditional Reimbursement Agreement, dated May 16, 2013, by and between FS Energy and Power Fund and Franklin Square Holdings, L.P. (Incorporated by reference to Exhibit 99.1 to FS Energy and Power Fund's Current report on Form 8-K filed on May 17, 2013.)
10.35		Committed Facility Agreement, dated as of December 11, 2013, by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.36		First Amendment Agreement, dated as of August 18, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities, and Berwyn Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on August 21, 2014.)
10.37		U.S. PB Agreement, dated as of December 11, 2013, by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.38		Special Custody and Pledge Agreement, dated as of December 11, 2013, by and among State Street Bank and Trust Company, Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)

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10.39		Investment Management Agreement, dated as of December 11, 2013, by and between FS Energy and Power Fund and Berwyn Funding LLC. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.40		Loan and Servicing Agreement, dated as of September 9, 2014, among Wayne Funding LLC, as borrower, Wells Fargo Securities, LLC, as administrative agent, Wells Fargo Bank, National Association, as collateral agent, account bank and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.41		Purchase and Sale Agreement, dated as of September 9, 2014, by and between Wayne Funding LLC, as purchaser, and FS Energy and Power Fund, as seller. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.42		Collateral Management Agreement, dated as of September 9, 2014, by and between Wayne Funding LLC and FS Energy and Power Fund, as collateral manager. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.43		Securities Account Control Agreement, dated as of September 9, 2014, by and among Wayne Funding LLC, as pledgor, Wells Fargo Bank, National Association, as collateral agent, and Wells Fargo Bank, National Association, as securities intermediary. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.44		Amended and Restated Sale and Contribution Agreement, dated as of September 11, 2014, by and between FS Energy and Power Fund and Gladwyne Funding LLC. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.45		Indenture, dated as of September 11, 2014, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.46		First Supplemental Indenture, dated as of December 15, 2014, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.1 of FS Energy and Power Fund's Current Report on Form 8-K filed on December 19, 2014.)
10.47		Gladwyne Funding LLC Floating Rate Notes due 2024. (Incorporated by reference to Exhibit 10.7 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.48		September 1996 Version Master Repurchase Agreement between Goldman Sachs Bank USA and Strafford Funding LLC, together with the related Annex and Master Confirmation thereto, each dated as of September 11, 2014. (Incorporated by reference to Exhibit 10.8 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.49		Amended and Restated Master Confirmation, dated as of December 15, 2014, by and between Goldman Sachs Bank USA and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.2 of FS Energy and Power Fund's Current Report on Form 8-K filed on December 19, 2014.)
10.50		Revolving Credit Agreement, dated as of September 11, 2014, by and between FS Energy and Power Fund and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.9 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.51		Amended and Restated Revolving Credit Agreement, dated as of December 15, 2014, by and between FS Energy and Power Fund and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.3 of FS Energy and Power Fund's Current Report on Form 8-K filed on December 19, 2014.)

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10.52		Amended and Restated Investment Management Agreement, dated as of September 11, 2014, by and between Gladwyne Funding LLC and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.10 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.53		Collateral Administration Agreement, dated as of September 11, 2014, by and among Gladwyne Funding LLC, FS Energy and Power Fund and Virtus Group, LP. (Incorporated by reference to Exhibit 10.11 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.54		Term Loan and Security Agreement, dated as of November 6, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent, the lenders from time to time party thereto and the other loan parties from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.55		Contribution Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Foxfields Funding LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.56		Investment Management Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Foxfields Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.57		Securities Account Control Agreement, dated as of November 6, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent and State Street Bank and Trust Company. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.58		Guaranty, dated as of November 6, 2015, by and between FS Energy and Power Fund and Fortress Credit Co LLC. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.59		Pledge Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Fortress Credit Co LLC. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.60		First Amendment to Term Loan and Security Agreement, dated as of November 25, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent, the lenders signatory thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 1, 2015.)
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*: Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May 9, 2016.


		FS Energy and Power Fund
		By:		/s/ MICHAEL C. FORMAN Michael C. Forman Chief Executive Officer (Principal Executive Officer)
		By:		/s/ EDWARD T. GALLIVAN, JR. Edward T. Gallivan, Jr. Chief Financial Officer (Principal Financial and Accounting Officer)

FS Energy & Power Fund - FORM 10-Q - May 9, 2016

Attached files

FS Energy & Power Fund Reports