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, 2017
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", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 441,431,224 common shares of beneficial interest outstanding as of May 11, 2017.

Table of Contents

TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016	1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016	2
	Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2017 and 2016	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016	4
	Consolidated Schedules of Investments as of March 31, 2017 (Unaudited) and December 31, 2016	5
	Notes to Unaudited Consolidated Financial Statements	19
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	55
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	78
ITEM 4.	CONTROLS AND PROCEDURES	79
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	80
ITEM 1A.	RISK FACTORS	80
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	80
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	80
ITEM 4.	MINE SAFETY DISCLOSURES	80
ITEM 5.	OTHER INFORMATION	80
ITEM 6.	EXHIBITS	81
	SIGNATURES	87

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, 2017 (Unaudited)			December 31, 2016

Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$3,268,628 and $2,959,314, respectively)	$	3,174,926		$	2,838,377
Non-controlled/affiliated investments (amortized cost—$974,523 and $977,010, respectively)		1,046,950			1,071,032
Controlled/affiliated investments (amortized cost—$27,164 and $26,664, respectively)		—			1,031

Total investments, at fair value (amortized cost—$4,270,315 and $3,962,988, respectively)		4,221,876			3,910,440
Cash		96,398			317,520
Receivable for investments sold and repaid		306,514			22
Income receivable		59,005			37,857
Deferred financing costs		1,704			2,443
Reimbursement due from sponsor⁽¹⁾		18,220			—
Prepaid expenses and other assets		212			15

Total assets	$	4,703,929		$	4,268,297

Liabilities
Payable for investments purchased	$	279,110		$	6,046
Credit facilities payable (net of deferred financing costs of $978 and $1,045, respectively)		683,414			547,620
Repurchase agreement payable (net of deferred financing costs of $59 and $91, respectively)⁽²⁾		324,941			324,909
Shareholder distributions payable		10,585			9,474
Management fees payable		22,385			20,855
Subordinated income incentive fees payable⁽³⁾		10,499			—
Administrative services expense payable		1,355			1,477
Interest payable		4,648			4,328
Trustees' fees payable		250			250
Other accrued expenses and liabilities		4,593			4,444

Total liabilities		1,341,780			919,403

Commitments and contingencies ($18,220 and $0, respectively)⁽⁴⁾
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, 443,982,283 and 440,162,095 shares issued and outstanding, respectively		444			440
Capital in excess of par value⁽⁵⁾		3,831,979			3,802,263
Accumulated undistributed net realized gains (losses) on investments and gain/loss on foreign currency⁽⁵⁾		(418,102	)		(387,452	)
Accumulated undistributed (distributions in excess of) net investment income⁽⁵⁾		(3,714	)		(13,738	)
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency		(48,458	)		(52,619	)

Total shareholders' equity		3,362,149			3,348,894

Total liabilities and shareholders' equity	$	4,703,929		$	4,268,297

Net asset value per common share at period end	$	7.57		$	7.61

(1): See Note 4 for a discussion of expense reimbursements payable to the Company by its investment adviser and affiliates.
(2): See Note 8 for a discussion of the Company's repurchase transaction.
(3): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.
(4): See Note 9 for a discussion of the Company's commitments and contingencies.
(5): 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,

	2017			2016
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	74,541		$	77,742
Fee income		23,822			820
From non-controlled/affiliated investments:
Interest income		17,883			11,992
Fee income		—			7,356

Total investment income		116,246			97,910

Operating expenses
Management fees		22,385			17,241
Subordinated income incentive fees⁽¹⁾		10,499			5,774
Administrative services expenses		808			884
Share transfer agent fees		734			742
Accounting and administrative fees		422			286
Interest expense		10,235			9,352
Trustees' fees		250			250
Offering costs		—			125
Other general and administrative expenses		1,069			833

Total operating expenses		46,402			35,487
Less: Expense reimbursement from sponsor⁽²⁾		(18,220	)		—

Net expenses		28,182			35,487

Net investment income before taxes		88,064			62,423
Income taxes		56			33

Net investment income		88,008			62,390

Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated		(30,861	)		(59,276	)
Non-controlled/affiliated		208			2,265
Net realized gain (loss) on foreign currency		3			—
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated		27,235			(31,337	)
Non-controlled/affiliated		(21,595	)		(12,518	)
Controlled/affiliated		(1,531	)		—
Net change in unrealized gain (loss) on foreign currency		52			16

Total net realized and unrealized gain (loss)		(26,489	)		(100,850	)

Net increase (decrease) in net assets resulting from operations	$	61,519		$	(38,460	)



Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	0.14		$	(0.10	)



Weighted average shares outstanding		440,957,676			377,688,379

(1): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.
(2): See Note 4 for a discussion of expense reimbursements payable to the Company by its investment adviser and affiliates.

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,

	2017			2016
Operations
Net investment income	$	88,008		$	62,390
Net realized gain (loss) on investments and foreign currency		(30,650	)		(57,011	)
Net change in unrealized appreciation (depreciation) on investments		4,109			(43,855	)
Net change in unrealized gain (loss) on foreign currency		52			16

Net increase (decrease) in net assets resulting from operations		61,519			(38,460	)

Shareholder distributions⁽¹⁾
Distributions from net investment income		(77,984	)		(66,720	)

Net decrease in net assets resulting from shareholder distributions		(77,984	)		(66,720	)

Capital share transactions⁽²⁾
Issuance of common shares		—			84,697
Reinvestment of shareholder distributions		46,964			42,231
Repurchases of common shares		(17,244	)		(18,339	)

Net increase (decrease) in net assets resulting from capital share transactions		29,720			108,589

Total increase (decrease) in net assets		13,255			3,409
Net assets at beginning of period		3,348,894			2,417,861

Net assets at end of period	$	3,362,149		$	2,421,270



Accumulated undistributed (distributions in excess of) net investment income⁽¹⁾	$	(3,714	)	$	9,694

(1): See Note 5 for a discussion of the sources of distributions paid by the Company.
(2): See Note 3 for a discussion of the Company's common share transactions.

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,

	2017			2016
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	61,519		$	(38,460	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(766,544	)		(108,640	)
Paid-in-kind interest		(8,223	)		(8,071	)
Proceeds from sales and repayments of investments		442,033			151,330
Net realized (gain) loss on investments		30,653			57,011
Net change in unrealized (appreciation) depreciation on investments		(4,109	)		43,855
Accretion of discount		(5,246	)		(4,230	)
Amortization of deferred financing costs		838			785
Amortization of deferred offering costs		—			125
(Increase) decrease in receivable for investments sold and repaid		(306,492	)		13,717
(Increase) decrease in income receivable		(21,148	)		(7,536	)
(Increase) decrease in expense reimbursement due from sponsor⁽¹⁾		(18,220	)		—
(Increase) decrease in prepaid expenses and other assets		(197	)		63
Increase (decrease) in payable for investments purchased		273,064			789
Increase (decrease) in management fees payable		1,530			(1,097	)
Increase (decrease) in subordinated income incentive fees payable		10,499			(6,274	)
Increase (decrease) in administrative services expense payable		(122	)		(320	)
Increase (decrease) in interest payable⁽²⁾		320			1,573
Increase (decrease) in trustees' fees payable		—			(4	)
Increase (decrease) in other accrued expenses and liabilities		149			(169	)

Net cash provided by (used in) operating activities		(309,696	)		94,447

Cash flows from financing activities
Issuance of common shares		—			82,338
Reinvestment of shareholder distributions		46,964			42,231
Repurchases of common shares		(17,244	)		(18,339	)
Offering costs incurred		—			(1,500	)
Shareholder distributions		(76,873	)		(66,736	)
Borrowings under credit facilities		140,000			—
Repayments under credit facilities		(4,273	)		(97,503	)
Deferred financing costs paid		—			(221	)

Net cash provided by (used in) financing activities		88,574			(59,730	)

Total increase (decrease) in cash		(221,122	)		34,717
Cash at beginning of period		317,520			368,867

Cash at end of period	$	96,398		$	403,584



Supplemental disclosure
Excise and state taxes paid	$	3		$	400



Non-cash purchase of investments	$	(16,062	)	$	(25,026	)



Non-cash sales of investments	$	16,062		$	25,026

(1): See Note 4 for a discussion of expense reimbursements payable to the Company by its investment adviser and affiliates.
(2): See Note 8 for a discussion of the Company's credit facilities and repurchase transaction. During the three months ended March 31, 2017 and 2016, the Company paid $5,548 and $4,314, respectively, in interest expense on the credit facilities. During the three months ended March 31, 2017 and 2016, the Company paid $3,529 and $2,680, 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, 2017
(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—28.5%
Abaco Energy Technologies LLC	(f)(g)(j)(bb)	Service & Equipment	L+700, 2.5% PIK (2.5% Max PIK)		1.0	%	11/20/20	$	65,166	$	62,214		$	57,998
Allied Wireline Services, LLC	(g)(k)(l)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		110,434		109,695			109,053
Alon USA Partners, L.P.	(g)(i)(j)(m)	Downstream	L+800		1.3	%	11/26/18		11,034		11,154			11,061
Altus Power America, Inc.	(j)(p)	Power	L+750		1.5	%	9/30/21		75,732		75,732			77,057
Altus Power America, Inc.	(e)(p)	Power	L+750		1.5	%	9/30/21		25,518		25,518			25,965
AP Exhaust Acquisition, LLC	(g)(l)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			15,455
BL Sand Hills Unit, L.P.	(l)	Upstream	Prime+650		3.5	%	12/17/17		40,807		35,439			31,422
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		15,000		13,027			11,550
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		60,712		58,949			58,283
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 3.8% PIK (3.8% Max PIK)		1.0	%	12/15/19		23,664		23,664			23,546
CITGO Holding, Inc.	(f)	Downstream	L+850		1.0	%	5/12/18		27,685		28,009			28,198
Crestwood Holdings LLC	(f)(g)	Midstream	L+800		1.0	%	6/19/19		29,617		29,700			29,691
EnergySolutions, LLC		Service & Equipment	L+575		1.0	%	5/29/20		1,859		1,837			1,883
Gulf Finance, LLC	(f)(i)	Midstream	L+525		1.0	%	8/25/23		18,905		18,381			18,913
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		22,218		22,218			22,551
JSS Holdings, Inc.		Service & Equipment	L+800		1.0	%	3/31/23		15,000		14,850			14,850
JSS Holdings, Inc.	(e)	Service & Equipment	L+800		1.0	%	3/31/23		2,727		2,727			2,727
Lusk Operating LLC	(r)(z)(aa)	Upstream	Prime+500 PIK (8.8% Max PIK)		3.3	%	4/30/17		28,997		27,164			—
MB Precision Holdings LLC	(g)	Service & Equipment	L+725, 1.5% PIK (1.5% Max PIK)		1.3	%	1/23/20		12,868		12,868			12,675
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,074		32,155			31,674
Panda Temple Power, LLC	(j)(r)(z)	Power	L+625		1.0	%	3/6/22		9,923		9,782			8,435
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		18,852		18,979			16,566
Power Distribution, Inc.	(i)	Power	L+725		1.3	%	1/25/23		30,155		30,155			30,155
Strike, LLC	(e)	Midstream	L+800		1.0	%	5/30/19		35,000		34,504			35,700
Strike, LLC	(i)(j)	Midstream	L+800		1.0	%	11/30/22		51,844		50,361			52,881
Summit Midstream Partners Holdings LLC	(f)	Midstream	L+600		1.0	%	5/15/22		16,667		16,500			17,000
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(l)(p)	Power	12.0%, 0.0% PIK (12.0% Max PIK)				11/14/21		137,449		135,525			137,449
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+1100		1.0	%	7/20/21		58,467		58,467			59,490
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		16,390		14,689			15,418
Warren Resources, Inc.	(k)(p)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		78,636		78,636			77,358
Warren Resources, Inc.	(e)(p)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		5,590		5,590			5,499

Total Senior Secured Loans—First Lien											1,074,300			1,040,503
Unfunded Loan Commitments											(81,366	)		(81,366	)

Net Senior Secured Loans—First Lien											992,934			959,137

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, 2017
(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—22.7%
Alison US LLC	(f)(j)(m)	Service & Equipment	L+850		1.0	%	8/29/22	$	23,722	$	22,627		$	23,662
Ameriforge Group Inc.	(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,331			3,820
AP Exhaust Acquisition, LLC		Service & Equipment	12.0% PIK (12.0% Max PIK)				9/28/21		3,876		3,876			4,012
Arena Energy, LP	(i)(k)	Upstream	L+900, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		104,456		104,456			104,978
Ascent Resources—Marcellus, LLC	(z)	Upstream	L+750		1.0	%	8/4/21		10,000		9,874			1,275
Brock Holdings III, Inc.	(g)(j)	Service & Equipment	Prime+725				3/16/18		29,605		29,681			28,643
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.3	%	5/16/21		46,576		45,130			45,509
Chisholm Oil and Gas Operating, LLC	(k)(l)	Upstream	L+800		1.0	%	3/21/24		147,000		147,000			147,000
Chisholm Oil and Gas Operating, LLC	(e)	Upstream	L+800		1.0	%	3/21/24		49,000		49,000			49,000
Emerald Performance Materials, LLC	(f)	Downstream	L+775		1.0	%	8/1/22		11,819		11,757			11,834
Fieldwood Energy LLC	(f)	Upstream	L+713		1.3	%	9/30/20		41,047		41,745			29,861
Granite Acquisition, Inc.	(f)	Power	L+725		1.0	%	12/19/22		20,150		19,732			19,974
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,395			14,550
Horn Intermediate Holdings, Inc.	(g)(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250			49,936
Jonah Energy LLC	(i)(j)	Upstream	L+650		1.0	%	5/12/21		37,293		36,283			35,895
Neff Rental LLC	(f)(j)	Service & Equipment	L+625		1.0	%	6/9/21		32,948		32,279			33,045
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/17/20		15,000		14,932			15,047
P2 Upstream Acquisition Co.	(f)(g)(j)	Service & Equipment	L+800		1.3	%	4/30/21		47,399		46,955			45,660
Titan Energy Operating, LLC	(k)(p)	Upstream	2.0%, L+900 PIK (L+900 Max PIK)		1.0	%	2/23/20		107,070		90,969			82,123
UTEX Industries, Inc.	(f)(j)(bb)	Service & Equipment	L+725		1.0	%	5/20/22		58,192		54,579			51,221
WP CPP Holdings, LLC	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		15,260		14,960			14,707

Total Senior Secured Loans—Second Lien											876,811			811,752
Unfunded Loan Commitment											(49,000	)		(49,000	)

Net Senior Secured Loans—Second Lien											827,811			762,752

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, 2017
(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—15.6%
Black Swan Energy Ltd.	(m)	Upstream	9.0%		1/20/24	$	90,000	$	90,000	$	88,875
Calpine Corp.	(h)(m)	Power	5.3%		6/1/26		11,156		11,154		11,367
CITGO Holding, Inc.	(f)	Downstream	10.8%		2/15/20		9,000		9,062		9,705
EP Energy LLC	(h)(m)	Upstream	8.0%		11/29/24		10,000		10,000		10,513
EP Energy LLC	(f)(h)(m)(o)	Upstream	8.0%		2/15/25		38,880		38,878		36,304
FourPoint Energy, LLC	(j)(k)(l)(p)	Upstream	9.0%		12/31/21		235,125		228,199		237,476
KCA Deutag UK Finance plc	(h)(m)(bb)	Service & Equipment	9.9%		4/1/22		17,000		16,756		17,446
Mirant Mid-Atlantic Trust	(f)(h)	Power	10.1%		12/30/28		31,752		33,802		28,624
Ridgeback Resources Inc.	(k)(m)(p)	Upstream	12.0%		12/29/20		3,887		3,809		3,887
Velvet Energy Ltd.	(j)(l)(m)	Upstream	9.0%		10/5/23		80,000		80,000		79,560

Total Senior Secured Bonds									521,660		523,757

Subordinated Debt—38.9%
Alta Mesa Holdings, LP	(h)	Upstream	7.9%		12/15/24		20,425		20,425		21,365
Archrock Partners, L.P.	(h)(m)(o)	Midstream	6.0%		4/1/21		8,555		7,557		8,541
Archrock Partners, L.P.	(h)(m)	Midstream	6.0%		10/1/22		14,283		12,464		14,140
Ascent Resources Utica Holdings, LLC	(f)(h)(bb)	Upstream	10.0%		4/1/22		225,000		225,000		232,734
Bellatrix Exploration Ltd.	(f)(h)(m)	Upstream	8.5%		5/15/20		59,090		58,031		56,320
Brand Energy & Infrastructure Services, Inc.	(f)(h)(o)	Service & Equipment	8.5%		12/1/21		43,311		42,511		45,768
Canbriam Energy Inc.	(f)(h)(j)(m)	Upstream	9.8%		11/15/19		115,200		112,552		120,959
Compressco Partners, LP	(f)(h)(m)	Service & Equipment	7.3%		8/15/22		20,050		19,913		19,048
Dynegy Finance I/II Inc.	(h)(m)(o)	Power	7.6%		11/1/24		22,542		21,981		21,527
Dynegy Finance I/II Inc.	(f)(m)	Power	8.0%		1/15/25		12,000		11,995		11,514
Eclipse Resources Corp.	(f)(h)(m)(o)	Upstream	8.9%		7/15/23		62,745		57,081		64,052
EP Energy LLC	(h)(m)(o)	Upstream	9.4%		5/1/20		48,970		44,409		46,225
EP Energy LLC	(h)(m)	Upstream	6.4%		6/15/23		3,000		2,214		2,325
EV Energy Partners, L.P.	(f)(h)(o)	Upstream	8.0%		4/15/19		48,814		37,066		37,322
Exterran Energy Solutions, L.P.	(h)(m)(bb)	Service & Equipment	8.1%		5/1/25		17,143		17,143		17,507
Extraction Oil & Gas Holdings, LLC	(h)(m)(o)	Upstream	7.9%		7/15/21		37,500		37,500		39,604

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, 2017
(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)(m)	Midstream	6.8%				8/1/22	$	23,540	$	22,969	$	24,270
Genesis Energy, L.P.	(f)(m)	Midstream	6.0%				5/15/23		15,280		14,152		15,376
GenOn Energy, Inc.	(h)(o)	Power	9.9%				10/15/20		27,198		28,263		17,781
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		759		759		754
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,824		4,824		4,794
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		997		997		991
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		938		938		933
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				12/2/26		825		825		820
Global Partners L.P.	(f)(h)(m)(o)	Midstream	6.3%				7/15/22		69,435		69,270		67,583
Global Partners L.P.	(h)(m)(o)	Midstream	7.0%				6/15/23		2,824		2,430		2,785
Great Western Petroleum, LLC	(h)	Upstream	9.0%				9/30/21		23,830		23,701		24,724
Gulfport Energy Corporation	(h)(m)	Upstream	6.0%				10/15/24		10,000		10,000		9,725
Jupiter Resources Inc.	(h)(m)	Upstream	8.5%				10/1/22		71,125		67,898		58,856
Laredo Petroleum, Inc.	(h)(m)	Upstream	7.4%				5/1/22		25,384		25,105		26,431
Lonestar Resources America Inc.	(f)(h)	Upstream	8.8%				4/15/19		22,500		22,366		19,294
Martin Midstream Partners L.P.	(f)(h)(m)(o)	Midstream	7.3%				2/15/21		29,660		29,129		29,734
NRG Energy, Inc.	(f)(m)	Power	7.3%				5/15/26		28,000		27,826		28,893
ONEOK, Inc.	(f)(h)(m)	Midstream	7.5%				9/1/23		28,000		26,919		32,862
SRC Energy Inc.	(j)(m)	Upstream	9.0%				6/14/21		40,000		40,000		41,300
Talos Production LLC		Upstream	9.8%				2/15/18		43,250		43,247		29,626
Tenrgys, LLC	(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		66,188
Whiting Petroleum Corp.	(h)(m)(o)	Upstream	5.0%				3/15/19		11,685		10,669		11,663
WildHorse Resource Development Corporation	(h)(m)	Upstream	6.9%				2/1/25		10,000		9,925		9,613
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		23,925		23,932		24,688

Total Subordinated Debt											1,308,986		1,308,635

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, 2017
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—19.9%⁽ⁿ⁾
Abaco Energy Technologies LLC, Common Equity	(r)	Service & Equipment		6,944,444	$	6,944	$	347
Abaco Energy Technologies LLC, Preferred Equity	(r)	Service & Equipment		28,942,003		1,447		1,447
Allied Downhole Technologies, LLC, Common Equity	(k)(q)(r)	Service & Equipment		7,431,113		7,223		3,716
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(q)(r)	Service & Equipment		5,344,680		1,865		2,672
Altus Power America Holdings, LLC, Common Equity	(k)(p)(r)	Power		12,474,205		12,474		12,474
Altus Power America Holdings, LLC, Preferred Equity	(k)(p)(s)	Power		25,243,902		25,244		25,244
AP Exhaust Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment		811		811		811
Ascent Resources Utica Holdings, LLC, Common Equity	(r)(t)	Upstream		148,692,909		44,700		35,389
BL Sand Hills Unit, L.P., Net Profits Interest	(r)(v)	Upstream		N/A		5,180		—
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(v)	Upstream		N/A		740		183
Chisholm Oil and Gas, LLC, Series A Units	(r)(cc)	Upstream		10,543,448		10,543		10,543
Cimarron Energy Holdco Inc., Common Equity	(r)	Service & Equipment		3,201,631		2,991		1,601
Extraction Oil & Gas, Inc. Common Equity	(k)(r)	Upstream		1,140,637		11,250		21,159
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	(k)(p)(q)(r)	Upstream		66,000		66,000		31,350
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(p)(q)(r)	Upstream		12,374		8,176		5,940
FourPoint Energy, LLC, Common Equity, Class E-II Units	(p)(r)(cc)	Upstream		274,688		68,672		123,610
FourPoint Energy, LLC, Common Equity, Class E-III Units	(k)(p)(q)(r)(cc)	Upstream		222,750		55,688		105,806
Global Jet Capital Holdings, LP, Preferred Equity	(r)	Service & Equipment		2,785,562		2,786		2,786
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment		472,755		473		827
JSS Holdco, LLC, Net Profits Interest	(r)	Service & Equipment		N/A		—		—
Lusk Operating LLC, Common Equity	(r)(u)(aa)	Upstream		2,000		—		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(q)(r)	Service & Equipment		490,213		490		147
PDI Parent LLC, Common Equity	(r)	Power		1,384,615		1,385		1,385
Ridgeback Resources Inc., Common Equity	(k)(l)(m)(p)(r)(w)	Upstream		9,599,928		58,985		56,203
SandRidge Energy, Inc., Common Equity	(h)(l)(m)(r)	Upstream		1,009,878		22,542		18,673
Sunnova Energy Corp., Common Equity	(p)(r)	Power		6,667,368		25,026		38,204
Sunnova Energy Corp., Preferred Equity	(p)(r)	Power		578,468		3,080		3,315
Swift Worldwide Resources Holdco Limited, Common Equity	(m)(r)(x)	Service & Equipment		3,750,000		6,029		2,063
Synergy Offshore LLC, Preferred Equity	(k)(y)	Upstream		67,381		87,373		87,191
TE Holdings, LLC, Common Equity	(r)(cc)	Upstream		2,225,950		18,921		17,947
TE Holdings, LLC, Preferred Equity	(l)(r)	Upstream		1,475,531		14,734		18,813
Titan Energy, LLC, Common Equity	(k)(p)(r)	Upstream		555,496		17,554		10,110
Total Safety Holdings, LLC, Common Equity	(g)(j)(r)	Service & Equipment		12,897		4,707		4,514
Warren Resources, Inc., Common Equity	(l)(p)(r)	Upstream		4,415,749		20,754		18,988
White Star Petroleum Holdings, LLC, Common Equity	(r)(cc)	Upstream		4,867,084		4,137		4,137

Total Equity/Other						618,924		667,595

TOTAL INVESTMENTS—125.6%					$	4,270,315		4,221,876



LIABILITIES IN EXCESS OF OTHER ASSETS—(25.6%)								(859,727	)

NET ASSETS—100.0%							$	3,362,149

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, 2017
(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, 2017, the three-month London Interbank Offered Rate, or LIBOR or 'L,' was 1.15% and the U.S. Prime Lending Rate, or Prime, was 4.00%. PIK means paid-in-kind.
(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): Security or portion thereof held within Bryn Mawr Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Barclays Bank PLC (see Note 8).
(m): 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, 2017, 75.7% of the Company's total assets represented qualifying assets.
(n): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(o): 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, 2017, the fair value of securities rehypothecated by BNP was $194,672.
(p): 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 more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2017, 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, 2017:

Portfolio Company	Fair Value at December 31, 2016		Purchases, Paid-in-Kind Interest and Other		Sales, Repayments and Other			Accretion of Discount		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at March 31, 2017		Interest Income

Senior Secured Loans—First Lien
Altus Power America, Inc.⁽¹⁾	$	73,294	$	3,787		—			—		—	$	423		$	77,504	$	1,724	—
Sunnova Asset Portfolio 5 Holdings, LLC	$	151,148		—	$	(12,202	)	$	84	$	208	$	(1,789	)	$	137,449	$	4,045	—
Warren Resources, Inc.⁽²⁾	$	78,437	$	199		—			—		—	$	(1,369	)	$	77,267	$	1,962	—
Senior Secured Loans—Second Lien
Titan Energy Operating, LLC	$	85,427	$	2,661		—		$	1,174		—	$	(7,139	)	$	82,123	$	4,334	—
Senior Secured Bonds
FourPoint Energy, LLC	$	240,709		—		—		$	340		—	$	(3,573	)	$	237,476	$	4,826	—
Ridgeback Resources Inc.	$	3,887		—		—			—		—		—		$	3,887	$	108	—
Equity/Other
Altus Power America Holdings, LLC, Common Equity	$	12,474		—		—			—		—		—		$	12,474		—	—
Altus Power America Holdings, LLC, Preferred Equity	$	23,982	$	1,262		—			—		—		—		$	25,244	$	884	—
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	$	31,845		—		—			—		—	$	(495	)	$	31,350		—	—
FourPoint Energy, LLC, Common Equity, Class D Units	$	6,032		—		—			—		—	$	(92	)	$	5,940		—	—
FourPoint Energy, LLC, Common Equity, Class E-II Units	$	125,670		—		—			—		—	$	(2,060	)	$	123,610		—	—
FourPoint Energy, LLC, Common Equity, Class E-III Units	$	107,477		—		—			—		—	$	(1,671	)	$	105,806		—	—
Ridgeback Resources Inc., Common Equity	$	58,985		—		—			—		—	$	(2,782	)	$	56,203		—	—
Sunnova Energy Corp., Common Equity	$	36,204		—		—			—		—	$	2,000		$	38,204		—	—
Sunnova Energy Corp., Preferred Equity	$	3,141		—		—			—		—	$	174		$	3,315		—	—
Titan Energy, LLC, Common Equity	$	13,332		—		—			—		—	$	(3,222	)	$	10,110		—	—
Warren Resources, Inc., Common Equity	$	18,988		—		—			—		—		—		$	18,988		—	—

(1): Security includes a partially unfunded commitment with an amortized cost of $25,518 and a fair value of $25,965.
(2): Security includes a partially unfunded commitment with an amortized cost of $5,590 and a fair value of $5,499.

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, 2017
(in thousands, except share amounts)

(q): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(r): Security is non-income producing.
(s): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of Foxfields Funding LLC.
(t): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(u): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.
(v): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(w): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2017.
(x): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2017.
(y): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(z): Security was on non-accrual status as of March 31, 2017.
(aa): Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2017, the Company held an investment in one portfolio company of which it is deemed to be an "affiliated person" of and deemed to "control". The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an "affiliated person" of and deemed to "control" for the three months ended March 31, 2017:

Portfolio Company	Fair Value at December 31, 2016		Purchases, Paid-in-Kind Interest and Other		Sales, Repayments and Other					Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Loans—First Lien
Lusk Operating LLC	$	1,031	$	1,500		—		—	—	$	(2,531	)	—	—	—
Equity/Other
Lusk Operating LLC, Common Equity		—		—	$	(1,000	)	—	—	$	1,000		—	—	—

(bb): Position or portion thereof unsettled as of March 31, 2017.
(cc): Security held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments
As of December 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—27.2%
Abaco Energy Technologies LLC	(g)(i)(j)	Service & Equipment	L+700, 2.5% PIK (2.5% Max PIK)		1.0	%	11/20/20	$	60,455	$	58,038		$	45,795
Allied Wireline Services, LLC	(g)(i)(k)(l)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		108,920		108,099			106,877
Alon USA Partners, L.P.	(g)(i)(j)(m)	Downstream	L+800		1.3	%	11/26/18		11,063		11,199			11,035
Altus Power America, Inc.	(j)(p)	Power	L+750		1.5	%	9/30/21		71,945		71,945			73,294
Altus Power America, Inc.	(e)(p)	Power	L+750		1.5	%	9/30/21		29,305		29,305			29,854
AP Exhaust Acquisition, LLC	(g)(l)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			14,309
BL Sand Hills Unit, L.P.	(l)	Upstream	Prime+650		3.5	%	12/17/17		40,821		35,451			38,321
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		15,000		13,027			14,081
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		56,392		54,715			51,458
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 3.8% PIK (3.8% Max PIK)		1.0	%	12/15/19		23,664		23,664			24,019
CITGO Holding, Inc.	(f)	Downstream	L+850		1.0	%	5/12/18		16,822		16,947			17,109
Crestwood Holdings LLC	(f)(g)	Midstream	L+800		1.0	%	6/19/19		29,703		29,794			29,146
EnergySolutions, LLC	(i)(j)	Service & Equipment	L+575		1.0	%	5/29/20		18,193		17,965			18,375
Gulf Finance, LLC	(f)(i)	Midstream	L+525		1.0	%	8/25/23		18,953		18,407			19,095
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		22,240		22,240			22,573
Lusk Operating LLC	(r)(z)(aa)	Upstream	Prime+500 PIK (8.8% Max PIK)		3.3	%	1/31/17		27,497		25,664			1,031
MB Precision Holdings LLC	(g)	Service & Equipment	L+725, 1.5% PIK (1.5% Max PIK)		1.3	%	1/23/20		12,853		12,853			12,355
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,155		32,241			31,794
P2 Upstream Acquisition Co.	(f)	Service & Equipment	L+400		1.0	%	10/30/20		5,101		4,801			4,865
Panda Temple Power, LLC	(j)	Power	L+625		1.0	%	3/6/22		9,825		9,677			8,744
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		27,531		27,761			25,604
ProPetro Services, Inc.	(i)	Service & Equipment	L+625		1.0	%	9/30/19		10,839		10,833			9,837
Strike, LLC	(e)	Midstream	L+800		1.0	%	5/30/19		35,000		34,482			34,475
Strike, LLC	(i)(j)(bb)	Midstream	L+800		1.0	%	11/30/22		52,500		50,937			51,975
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(l)(p)	Power	12.0%, 0.0% PIK (12.0% Max PIK)				11/14/21		149,652		147,435			151,148
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+1100		1.0	%	7/20/21		58,614		58,614			58,614
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		5,432		4,275			5,085
Warren Resources, Inc.	(k)(p)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		78,437		78,437			78,437
Warren Resources, Inc.	(e)(p)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		5,590		5,590			5,590

Total Senior Secured Loans—First Lien											1,030,207			994,895
Unfunded Loan Commitments											(82,404	)		(82,404	)

Net Senior Secured Loans—First Lien											947,803			912,491

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 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—26.1%
Alison US LLC	(f)(j)(m)	Service & Equipment	L+850		1.0	%	8/29/22	$	23,722	$	22,591	$	23,011
Ameriforge Group Inc.	(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,352		5,707
AP Exhaust Acquisition, LLC		Service & Equipment	12.0% PIK (12.0% Max PIK)				9/28/21		3,763		3,763		3,279
Arena Energy, LP	(i)(k)	Upstream	L+900, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		103,410		103,410		103,927
Ascent Resources—Marcellus, LLC		Upstream	L +750		1.0	%	8/4/21		10,000		9,874		1,325
Ascent Resources—Utica, LLC	(g)(j)(k)(l)	Upstream	L+950		1.5	%	9/30/18		285,257		284,490		287,753
Brock Holdings III, Inc.	(g)(j)	Service & Equipment	L+825		1.8	%	3/16/18		29,605		29,699		28,273
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.3	%	5/16/21		36,576		35,139		35,935
Emerald Performance Materials, LLC	(f)	Downstream	L+775		1.0	%	8/1/22		11,819		11,754		11,834
EP Energy, LLC	(f)(m)	Upstream	L+875		1.0	%	6/30/21		17,209		17,379		18,047
Fieldwood Energy LLC		Upstream	L+713		1.3	%	9/30/20		41,047		41,788		29,246
Granite Acquisition, Inc.	(f)	Power	L+725		1.0	%	12/19/22		20,150		19,718		19,445
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,372		11,875
Horn Intermediate Holdings, Inc.	(g)(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250		50,250
Jonah Energy LLC	(f)(i)	Upstream	L+650		1.0	%	5/12/21		34,293		33,325		32,579
Neff Rental LLC	(f)(j)	Service & Equipment	L+625		1.0	%	6/9/21		33,789		33,089		33,657
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/17/20		15,000		14,927		14,738
P2 Upstream Acquisition Co.	(f)(g)(j)	Service & Equipment	L+800		1.0	%	4/30/21		34,099		34,144		31,243
Titan Energy Operating, LLC	(k)(p)	Upstream	2.0%, L+900 PIK (L+900 Max PIK)		1.0	%	2/23/20		104,409		87,134		85,427
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		36,192		36,227		25,696
W3 Co.	(g)(j)	Service & Equipment	L+800		1.3	%	9/13/20		14,795		14,943		6,695
WP CPP Holdings, LLC	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		14,680		14,394		13,927

Total Senior Secured Loans—Second Lien											948,762		873,869

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 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—11.9%
Calpine Corp.	(f)(m)	Power	5.3%		6/1/26	$	19,800	$	19,809	$	19,508
Cheniere Corpus Christi Holdings, LLC	(f)	Midstream	7.0%		6/30/24		4,000		4,134		4,357
CITGO Holding, Inc.	(f)	Downstream	10.8%		2/15/20		9,000		9,063		9,645
EP Energy LLC	(h)(m)	Upstream	8.0%		11/29/24		10,000		10,000		10,780
FourPoint Energy, LLC	(j)(k)(l)(p)	Upstream	9.0%		12/31/21		235,125		227,859		240,709
Mirant Mid-Atlantic Trust	(f)(h)	Power	10.1%		12/30/28		31,752		33,838		26,936
Ridgeback Resources Inc.	(k)(m)(p)	Upstream	12.0%		12/29/20		3,887		3,809		3,887
Velvet Energy Ltd.	(j)(l)(m)	Upstream	9.0%		10/5/23		80,000		80,000		81,792

Total Senior Secured Bonds									388,512		397,614

Subordinated Debt—31.2%
Alta Mesa Holdings, LP	(h)	Upstream	7.9%		12/15/24		20,425		20,425		21,242
Archrock Partners, L.P.	(h)(m)	Midstream	6.0%		4/1/21		8,555		7,505		8,384
Archrock Partners, L.P.	(h)(m)	Midstream	6.0%		10/1/22		14,283		12,400		13,881
Bellatrix Exploration Ltd.	(f)(h)(m)	Upstream	8.5%		5/15/20		53,590		52,560		52,753
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%		12/1/21		43,311		42,479		44,502
Calpine Corp.	(f)(m)	Power	5.8%		1/15/25		5,100		5,093		4,941
Canbriam Energy Inc.	(f)(h)(j)(m)	Upstream	9.8%		11/15/19		115,200		112,341		121,536
Compressco Partners, LP	(f)(h)(m)	Service & Equipment	7.3%		8/15/22		20,050		19,908		18,972
Crestwood Equity Partners L.P.	(f)(m)	Midstream	6.1%		3/1/22		5,500		5,500		5,641
Dynegy Finance I/II Inc.	(f)(m)	Power	7.6%		11/1/24		22,542		21,968		20,894
Dynegy Finance I/II Inc.	(f)(m)	Power	8.0%		1/15/25		12,000		11,995		11,243
Eclipse Resources Corp.	(f)(h)(m)(o)	Upstream	8.9%		7/15/23		59,745		53,883		62,334
EP Energy LLC	(h)(m)	Upstream	9.4%		5/1/20		19,970		16,006		18,440
EV Energy Partners, L.P.	(h)(m)	Upstream	8.0%		4/15/19		48,814		36,060		34,609

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

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



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Extraction Oil & Gas Holdings, LLC	(h)(o)	Upstream	7.9%				7/15/21	$	37,500	$	37,500	$	40,313
Genesis Energy, L.P.	(f)(m)	Midstream	6.8%				8/1/22		23,540		22,949		24,473
Genesis Energy, L.P.	(f)(m)	Midstream	6.0%				5/15/23		15,280		14,116		15,599
GenOn Energy, Inc.	(h)	Power	7.9%				6/15/17		4,000		3,945		2,868
GenOn Energy, Inc.	(h)	Power	9.9%				10/15/20		32,698		34,010		22,419
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		732		732		727
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,649		4,649		4,620
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		961		961		955
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		904		904		899
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				12/2/26		795		795		795
Global Partners L.P.	(f)(h)(m)(o)	Midstream	6.3%				7/15/22		69,435		69,264		66,831
Global Partners L.P.	(h)(m)(o)	Midstream	7.0%				6/15/23		2,824		2,419		2,744
Great Western Petroleum, LLC	(f)(h)	Upstream	9.0%				9/30/21		23,830		23,692		24,932
Gulfport Energy Corp.	(f)(m)	Upstream	6.0%				10/15/24		10,000		10,000		10,205
Jupiter Resources Inc.	(h)(m)	Upstream	8.5%				10/1/22		71,125		67,772		61,760
Laredo Petroleum, Inc.	(f)(m)	Upstream	7.4%				5/1/22		25,384		25,093		26,375
Lonestar Resources America Inc.	(h)	Upstream	8.8%				4/15/19		21,500		21,566		19,780
Martin Midstream Partners L.P.	(f)(h)(m)	Midstream	7.3%				2/15/21		29,660		29,102		29,438
NRG Energy, Inc.	(f)(m)	Power	7.3%				5/15/26		28,000		27,823		27,965
ONEOK, Inc.	(f)(h)(m)	Midstream	7.5%				9/1/23		28,000		26,887		31,910
SandRidge Energy, Inc.	(l)(m)(r)	Upstream	0.0%				10/4/20		10,550		14,060		13,245
Synergy Resources Corp.	(j)(m)	Upstream	9.0%				6/14/21		40,000		40,000		41,700
Talos Production LLC	(h)	Upstream	9.8%				2/15/18		43,250		43,249		24,004
Tenrgys, LLC	(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		73,125
Whiting Petroleum Corp.	(h)(m)	Upstream	5.0%				3/15/19		11,685		10,552		11,739
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		23,925		23,934		24,374

Total Subordinated Debt											1,049,097		1,043,167

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

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



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—20.4%⁽ⁿ⁾
Abaco Energy Technologies LLC, Common Equity	(r)	Service & Equipment		6,944,444	$	6,944	$	347
Abaco Energy Technologies LLC, Preferred Equity	(r)	Service & Equipment		28,942,003		1,447		1,447
Allied Downhole Technologies, LLC, Common Equity	(k)(q)(r)	Service & Equipment		7,431,113		7,223		5,945
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(q)(r)	Service & Equipment		5,344,680		1,865		4,276
Altus Power America Holdings, LLC, Common Equity	(p)(r)	Power		12,474,205		12,474		12,474
Altus Power America Holdings, LLC, Preferred Equity	(p)(s)	Power		23,981,707		23,982		23,982
AP Exhaust Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment		811		811		41
Ascent Resources Utica Holdings, LLC, Common Equity	(r)(t)	Upstream		148,692,909		44,700		33,307
BL Sand Hills Unit, L.P., Net Profits Interest	(r)(v)	Upstream		N/A		5,180		570
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(v)	Upstream		N/A		740		212
Cimarron Energy Holdco Inc., Common Equity	(r)	Service & Equipment		3,201,631		2,991		1,921
Extraction Oil & Gas, Inc. Common Equity	(k)(r)	Upstream		1,140,637		11,250		22,858
Fortune Creek Co-Invest I L.P., LP Interest	(m)(r)(w)(z)	Midstream		N/A		16,697		553
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	(k)(p)(q)(r)	Upstream		66,000		66,000		31,845
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(p)(q)(r)	Upstream		12,374		8,176		6,032
FourPoint Energy, LLC, Common Equity, Class E-II Units	(p)(r)(cc)	Upstream		274,688		68,672		125,670
FourPoint Energy, LLC, Common Equity, Class E-III Units	(k)(p)(q)(r)(cc)	Upstream		222,750		55,688		107,477
Global Jet Capital Holdings, LP, Preferred Equity	(r)	Service & Equipment		2,785,562		2,786		2,786
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment		472,755		473		827
Lusk Operating LLC, Common Equity	(r)(u)(aa)	Upstream		2,000		1,000		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(q)(r)	Service & Equipment		490,213		490		98
Ridgeback Resources Inc., Common Equity	(k)(l)(m)(p)(r)(w)	Upstream		9,599,928		58,985		58,985
SandRidge Energy, Inc., Common Equity	(h)(m)(o)(r)	Upstream		447,491		11,187		10,538
Summit Midstream Partners, LLC, Preferred Equity	(l)	Midstream		24,830		24,830		24,955
Sunnova Energy Corp., Common Equity	(p)(r)	Power		6,667,368		25,026		36,204
Sunnova Energy Corp., Preferred Equity	(p)(r)	Power		578,468		3,080		3,141
Swift Worldwide Resources Holdco Limited, Common Equity	(m)(r)(x)	Service & Equipment		3,750,000		6,029		1,875
Synergy Offshore LLC, Preferred Equity	(k)(y)	Upstream		66,250		83,988		89,040
TE Holdings, LLC, Common Equity	(r)(cc)	Upstream		2,225,950		18,921		16,695
TE Holdings, LLC, Preferred Equity	(r)	Upstream		1,475,531		14,734		22,133
Titan Energy, LLC, Common Equity	(k)(p)(r)	Upstream		555,496		17,554		13,332
Warren Resources, Inc., Common Equity	(l)(p)(r)	Upstream		4,415,749		20,754		18,988
White Star Petroleum Holdings, LLC, Common Equity	(r)(cc)	Upstream		4,867,084		4,137		4,745

Total Equity/Other						628,814		683,299

TOTAL INVESTMENTS—116.8%					$	3,962,988		3,910,440



LIABILITIES IN EXCESS OF OTHER ASSETS—(16.8%)								(561,546	)

NET ASSETS—100.0%							$	3,348,894

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 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 December 31, 2016, the three-month London Interbank Offered Rate, or LIBOR or 'L,' was 1.00% and the U.S. Prime Lending Rate, or Prime, was 3.75%. PIK means paid-in-kind.
(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): Security or portion thereof held within Bryn Mawr Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Barclays Bank PLC (see Note 8).
(m): 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, 2016, 77.1% of the Company's total assets represented qualifying assets.
(n): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(o): 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, 2016, the fair value of securities rehypothecated by BNP was $106,488.
(p): 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 more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 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 year ended December 31, 2016:

Portfolio Company	Fair Value at December 31, 2015		Purchases, Paid-in-Kind Interest and Other		Sales, Repayments and Other			Accretion of Discount		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2016		Interest Income		Fee Income

Senior Secured Loans—First Lien
Altus Power America, Inc.		—	$	88,820	$	(16,875	)		—		—	$	1,349		$	73,294	$	5,835		—
Sunnova Asset Portfolio 5 Holdings, LLC		—	$	258,383	$	(114,519	)	$	1,991	$	566	$	4,727		$	151,148	$	21,050	$	7,356
Warren Resources, Inc.		—	$	78,437		—			—		—		—		$	78,437	$	11,477	$	335
Senior Secured Loans—Second Lien
Titan Energy Operating, LLC		—	$	85,609		—		$	1,525		—	$	(1,707	)	$	85,427	$	5,685		—
Senior Secured Bonds
FourPoint Energy, LLC	$	222,069		—	$	(55,688	)	$	1,535		—	$	72,793		$	240,709	$	24,737		—
Ridgeback Resources Inc.		—	$	3,809		—			—		—	$	78		$	3,887	$	12		—
Equity/Other
Altus Power America Holdings, LLC, Common Equity		—	$	12,474		—			—		—		—		$	12,474		—		—
Altus Power America Holdings, LLC, Preferred Equity		—	$	23,982		—			—		—		—		$	23,982	$	1,554		—
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	$	46,200		—		—			—		—	$	(14,355	)	$	31,845		—		—
FourPoint Energy, LLC, Common Equity, Class D Units	$	8,724		—		—			—		—	$	(2,692	)	$	6,032		—		—
FourPoint Energy, LLC, Common Equity, Class E-II Units		—	$	68,672		—			—		—	$	56,998		$	125,670		—		—
FourPoint Energy, LLC, Common Equity, Class E-III Units		—	$	55,688		—			—		—	$	51,789		$	107,477		—		—
Ridgeback Resources Inc., Common Equity		—	$	58,985		—			—		—		—		$	58,985		—		—
Sunnova Energy Corp., Common Equity		—	$	25,026		—			—		—	$	11,178		$	36,204		—		—
Sunnova Energy Corp., Preferred Equity		—	$	46,196	$	(43,122	)		—	$	6	$	61		$	3,141		—		—
Titan Energy, LLC, Common Equity		—	$	17,554		—			—		—	$	(4,222	)	$	13,332		—		—
Warren Resources, Inc., Common Equity		—	$	20,754		—			—		—	$	(1,766	)	$	18,988		—		—

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

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

(q): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(r): Security is non-income producing.
(s): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of the Company.
(t): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(u): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.
(v): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(w): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2016.
(x): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2016.
(y): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(z): Security was on non-accrual status as of December 31, 2016.
(aa): Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2016, the Company held an investment in one portfolio company of which it is deemed to be an "affiliated person" of and deemed to "control". The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an "affiliated person" of and deemed to "control" for the year ended December 31, 2016:

Portfolio Company	Fair Value at December 31, 2015		Purchases, Paid-in-Kind Interest and Other		Sales, Repayments and Other					Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2016

Senior Secured Loans—First Lien
Lusk Operating LLC		—	$	17,414		—		—	—	$	(16,383	)	$	1,031	—	—
Senior Secured Bonds
Sunnova Asset Portfolio 5 Holdings, LLC	$	244,349		—	$	(244,349	)	—	—		—			—	—	—
Equity/Other
Lusk Operating LLC, Common Equity		—		—		—		—	—		—			—	—	—
Sunnova Holdings, LLC, Common Equity	$	29,561		—	$	(29,561	)	—	—		—			—	—	—

(bb): Position or portion thereof unsettled as of December 31, 2016.
(cc): Security held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

Table of Contents

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, 2017, the Company had eight wholly-owned financing subsidiaries, seven wholly-owned subsidiaries through which it holds interests in certain portfolio companies and two wholly-owned subsidiaries through which it expects to hold interests in certain 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, 2017. 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, 2016 included in the Company's annual report on Form 10-K. Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The December 31, 2016 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, 2016. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Accounting Standards Update No. 2013-08, Financial Services—Investment Companies. The Company has evaluated the impact

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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)

of subsequent events through the date the consolidated financial statements were issued and filed with the Securities and Exchange Commission, or the SEC.

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.

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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)

Reclassifications: Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2016 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2017. These reclassifications had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

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, 2017 and 2016:

	Three Months Ended March 31,

	2017						2016
	Shares			Amount			Shares			Amount
Gross Proceeds from Offering		—		$	—			13,333,668		$	92,620
Reinvestment of Distributions		6,059,668			46,964			6,643,252			42,231

Total Gross Proceeds		6,059,668			46,964			19,976,920			134,851
Commissions and Dealer Manager Fees		—			—			—			(7,923	)

Net Proceeds to Company		6,059,668			46,964			19,976,920			126,928
Share Repurchase Program		(2,239,480	)		(17,244	)		(2,716,924	)		(18,339	)

Net Proceeds from Share Transactions		3,820,188		$	29,720			17,259,996		$	108,589

Public Offering of Shares

In November 2016, the Company closed its continuous public offering of common shares to new investors. The Company sold 449,543,498 common shares (as adjusted for share distributions) for gross proceeds of $4,362,119 in its continuous public offering, including shares issued pursuant to its distribution reinvestment plan during that period. Following the closing of its continuous public offering, the Company has continued to issue shares pursuant to its distribution reinvestment plan. As of May 11, 2017, the Company had raised total gross proceeds of $4,477,553, 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, 2017 and 2016, the Company issued 6,059,668 and 19,976,920 common shares for gross proceeds of $46,964 and $134,851, respectively, at an average price per share of $7.75 and $6.75, respectively. All of the common shares the Company issued during the three months ended March 31, 2017 were issued on account of reinvested shareholder distributions pursuant to the Company's distribution reinvestment plan. The gross proceeds received during the three months ended March 31, 2016 included reinvested shareholder distributions of $42,231 for which the Company issued 6,643,252 common shares. During the period from April 1, 2017 to May 11, 2017, the Company issued 2,036,247 common shares pursuant to its distribution reinvestment plan for gross proceeds of $15,630 at an average price per share of $7.68.

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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)

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 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.

Historically, the Company limited the number of common shares to be repurchased during any calendar year to the lesser of (i) the number of common shares that the Company could repurchase with the proceeds it received from the sale of common shares under the Company's distribution reinvestment plan during the calendar year (less the amount of any such proceeds used to repurchase common shares on each previous repurchase date during the calendar year) and (ii) 10.0% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter. On May 5, 2017, the board of trustees of the Company further amended the share repurchase program so that the maximum number of common shares to be repurchased for any repurchase offer will not exceed (i) the greater of (x) the number of common shares that the Company can repurchase with the proceeds it receives from the sale of common shares under its distribution reinvestment plan during the twelve-month period ending on the expiration date of such repurchase offer (less the amount of any such proceeds used to repurchase common shares on each previous repurchase date for tender offers conducted during such period) and (y) the number of common shares that the Company can repurchase with the proceeds it receives from the sale of common shares under its distribution reinvestment plan during the three-month period ending on the expiration date of such repurchase offer and (ii) 10.0% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter. The purpose of further amending the share repurchase plan was to provide the potential for the repurchase of a greater number of shares under the share repurchase program, particularly in the early quarters of the calendar year, in light of the limitation relating to proceeds received in connection with the Company's 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. 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 common shares at a price equal to the price at which common shares are issued pursuant to the Company's distribution reinvestment plan on the distribution date coinciding with the applicable share repurchase date. The price at which common shares are issued under the Company's distribution reinvestment plan is determined by the Company's board of trustees or a committee thereof, in its sole discretion, and will be (i) not less than the net asset value per common share as determined in good faith by the Company's board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and (ii) not

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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)

more than 2.5% greater than the net asset value per common share as of such date. 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, 2017 and 2016:

For the Three Months Ended	Repurchase Date						Repurchase Price Per Share⁽¹⁾		Aggregate Consideration for Repurchased Shares

Fiscal 2016
December 31, 2015	January 6, 2016	2,716,924	100	%	0.73	%	$	6.75	$	18,339
Fiscal 2017
December 31, 2016	January 3, 2017	2,239,480	100	%	0.51	%	$	7.70	$	17,244

(1): On October 13, 2016, and in connection with the closing of its continuous public offering, the Company amended the terms of its share repurchase program, which was first effective for the Company's quarterly repurchase offer for the fourth quarter of 2016 to provide that shares repurchased under the program would be repurchased at a price determined as described above. Prior to amending the share repurchase program, the Company offered to repurchase common shares at a price equal to 90% of the offering price in effect on the date of repurchase.

On April 17, 2017, the Company repurchased 4,587,306 common shares (representing 100% of common shares tendered for repurchase and 1.03% of the shares outstanding as of such date) at $7.75 per share for aggregate consideration totaling $35,552.

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 (gross assets equals total assets as set forth on the Company's consolidated balance sheets) 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

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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 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.

Pursuant to an investment sub-advisory agreement between FS Advisor and GSO, or the sub-advisory agreement, GSO will receive 50% of all management and incentive fees payable to FS Advisor under the investment advisory and administrative services agreement with respect to each year.

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 FS Investments, 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, 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, was 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 included 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 included the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

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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)

Prior to satisfaction of the minimum offering requirement and for a period of time thereafter, FS Investments 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 FS Investments were recorded by the Company as a contribution to capital. The offering costs were offset against capital in excess of par value on the consolidated financial statements and the 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 FS Investments for organization and offering costs previously funded, were recorded as a reduction of capital. Commencing January 1, 2016, offering costs incurred by the Company were deferred and amortized as an expense over twelve months. Following the closing of the Company's continuous public offering to new investors in November 2016, all deferred offering costs were expensed.

The dealer manager for the Company's continuous public offering was FS Investment Solutions, LLC (formerly FS² Capital Partners, LLC), or FS Investment Solutions, which is one of the Company's affiliates. Under the dealer manager agreement among the Company, FS Advisor and FS Investment Solutions, or the dealer manager agreement, FS Investment Solutions was 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 were re-allowed to selected broker-dealers and financial representatives. The dealer manager agreement terminated in connection with the closing of the Company's continuous public offering in November 2016.

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, 2017 and 2016:

			Three Months Ended March 31,

Related Party	Source Agreement	Description	2017		2016
FS Advisor	Investment Advisory and Administrative Services Agreement	Base Management Fee⁽¹⁾	$	22,385	$	17,241
FS Advisor	Investment Advisory and Administrative Services Agreement	Subordinated Incentive Fee on Income⁽²⁾	$	10,499	$	5,774
FS Advisor	Investment Advisory and Administrative Services Agreement	Administrative Services Expenses⁽³⁾	$	808	$	884
FS Advisor	Investment Advisory and Administrative Services Agreement	Offering Costs⁽⁴⁾		—	$	713
FS Investment Solutions	Dealer Manager Agreement	Dealer Manager Fee⁽⁵⁾		—	$	1,479

(1): Of the $22,385 in base management fees accrued and payable as of March 31, 2017, it is intended that $7,721 of such fees will be applied to offset the liability of FS Investments under the expense reimbursement agreement (see "—Expense Reimbursement" below) as of March 31, 2017 and the balance, $14,664, will be paid to FS Advisor. During the three months ended March 31, 2017 and 2016, $20,855 and $18,338, respectively, in base management fees were paid to FS Advisor.
(2): Of the $10,499 in subordinated incentive fee on income accrued and payable as of March 31, 2017, it is intended that all of such fees will be applied to offset the liability of FS Investments under the expense reimbursement agreement (see "—Expense Reimbursement" below) as of March 31, 2017. During the three months ended March 31, 2016, $12,048 of subordinated incentive fees on income were paid to FS Advisor.
(3): During the three months ended March 31, 2017 and 2016, $785 and $861, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by

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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)

FS Advisor and the remainder related to other reimbursable expenses. The Company paid $930 and $1,204 in administrative services expenses to FS Advisor during the three months ended March 31, 2017 and 2016, respectively.

(4): During the three months ended March 31, 2016, the Company incurred offering costs of $1,500, of which $713 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 FS Investment Solutions and not re-allowed to selected broker-dealers or 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 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 May 11, 2017, the Company has issued an aggregate of 5,989,652 common shares (as adjusted for share distributions) for aggregate gross proceeds of $50,111 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 the investment advisers to certain other BDCs, open-and closed-end management investment companies and real estate investment trusts sponsored by FS Investments, or the Fund Complex. As a result, such personnel provide investment advisory services to certain other funds or products in the Fund Complex and such personnel may serve in similar or other capacities for the investment advisers to future investment vehicles in the Fund Complex. While none of the investment advisers are currently providing investment advisory services to clients other than the funds in the Fund Complex, any, or all, may do so in the future. In the event that FS Advisor or its management team 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 strategies, if necessary, so that the Company will not be disadvantaged in relation to any other client of FS Advisor or its management team. For additional information regarding potential conflicts of interest, please see the Company's annual report on Form 10-K for the year ended December 31, 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 4. Related Party Transactions (Continued)

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 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, FS Investments 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, FS Investments 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, FS Investments 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 FS Investments for any amounts funded by FS Investments under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which FS Investments 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 FS

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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)

Investments for expense support payments made by FS Investments 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 FS Investments was made (provided, however, that this clause (B) shall not apply to any reimbursement payment which relates to an expense support payment from FS Investments made during the same fiscal year) and (ii) the Company will not reimburse FS Investments for expense support payments made by FS Investments 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 FS Investments made the expense support payment to which such reimbursement relates. The Company is not obligated to pay interest on the payments it receives from FS Investments. "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 FS Investments may terminate the expense reimbursement agreement at any time. The specific amount of expenses reimbursed by FS Investments, if any, will be determined at the end of each quarter. Upon termination of the expense reimbursement agreement by FS Investments, FS Investments will be required to fund any amounts accrued thereunder as of the date of termination. Similarly, the Company's conditional obligation to reimburse FS Investments pursuant to the terms of the expense reimbursement agreement shall survive the termination of such agreement by either party.

For the three months ended March 31, 2017, the Company accrued $18,220 for expense reimbursements that FS Investments has agreed to pay. As discussed in the footnotes to the table above, it is intended that these reimbursements will be funded through the offset of management fees and subordinated income incentive fees payable by the Company to FS Advisor. As of March 31, 2017, the Company had $18,220 of reimbursements due from FS Investments, which the Company expects to offset against management fees and subordinated income incentive fees payable by the Company to FS Advisor.

As discussed above, under the expense reimbursement agreement, amounts reimbursed to the Company by FS Investments may become subject to repayment by the Company in the future. For the three months ended March 31, 2017, the Company did not accrue any expense recoupments payable to FS Advisor or its affiliates. The following table reflects the expense reimbursement payments due from FS Investments to the Company as of March 31, 2017 that may become subject to repayment by the Company to FS Advisor or its affiliates:

For the Three Months Ended		Amount of Expense Reimbursement Payment			Annualized "Other Operating Expenses" Ratio as of the Date of Expense Reimbursement			Annualized Rate of Distributions Per Share⁽¹⁾			Reimbursement Eligibility Expiration

March 31, 2017		$	18,220			0.40	%		9.14	%	March 31, 2020

(1): The annualized rate of distributions per share is expressed as a percentage equal to the projected annualized distribution amount as of March 31, 2017 (which is calculated by annualizing the regular monthly cash distribution per share as of such date without compounding), divided by the Company's distribution reinvestment price per share as of such date.

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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)

FS Investments 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 FS Investments will reimburse any portion of the Company's expenses in future quarters.

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 FS Investments and its affiliates. During the three months ended March 31, 2017 and 2016, 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, 2017 and 2016:

	Distribution

For the Three Months Ended	Per Share		Amount
Fiscal 2016
March 31, 2016	$	0.1771	$	66,720
Fiscal 2017
March 31, 2017	$	0.1771	$	77,984

Effective November 30, 2016, and subject to applicable legal restrictions and the sole discretion of the Company's board of trustees, the Company authorizes, declares and pays regular cash distributions on a monthly basis. On March 30, 2017 and April 26, 2017, the Company's board of trustees declared regular monthly cash distributions for April 2017 and May 2017, respectively. These distributions have been or will be paid monthly to shareholders of record as of monthly record dates previously determined by the Company's board of trustees in the amount of $0.059042 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.

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.

On October 13, 2016, the Company further amended and restated its distribution reinvestment plan, or the amended distribution reinvestment plan, which first applied to the reinvestment of cash distributions paid on or after November 30, 2016. Under the original plan, cash distributions to participating shareholders were reinvested in additional common shares at a purchase price equal to 90% of the public offering price per share in effect as of the date of issuance. Under the amended distribution reinvestment plan, cash distributions to participating shareholders will be reinvested in additional common shares at a purchase price determined by the Company's board of trustees, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per common share as determined in good faith by the Company's board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater

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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)

than the net asset value per common share as of such date. Any distributions reinvested under the plan will remain taxable to a U.S. shareholder.

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 FS Investments. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

For the three months ended March 31, 2017, certain portions of the Company's distributions were funded through the reimbursement of certain expenses by FS Investments and its affiliates, including through the offset of certain investment advisory fees by FS Advisor, that are, if certain conditions are met, subject to repayment by the Company within three years. Any such distributions funded through expense reimbursements or the offset of advisory fees are not based on the Company's investment performance, and can only be sustained if the Company achieves positive investment performance in future periods and/or FS Investments and its affiliates continues to make such reimbursements or offset such fees. The Company's future repayments of amounts reimbursed or offset by FS Investments or its affiliates will reduce the distributions that shareholders would otherwise receive in the future. 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. FS Investments and its affiliates have no obligation to offset or waive advisory fees or otherwise reimburse expenses in future periods. If FS Investments had not reimbursed certain of the Company's expenses, 23% of the aggregate amount of distributions paid during the three months ended March 31, 2017 would have been funded from offering proceeds or borrowings.

No portion of the distributions paid during the three months ended March 31, 2016 was funded through the reimbursement of operating expenses by FS Investments. During the three months ended March 31, 2017 and 2016, the Company did not repay any amounts to FS Advisor or its affiliates for expenses previously reimbursed or waived.

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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 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, 2017 and 2016:

	Three Months Ended March 31,

	2017					2016
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Offering proceeds	$	—		—		$	—		—
Borrowings		—		—			—		—
Net investment income (prior to expense reimbursement)⁽¹⁾		58,396		75	%		66,720		100	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			—		—
Non-capital gains proceeds from the sale of assets		—		—			—		—
Distributions on account of investments in portfolio companies		1,368		2	%		—		—
Expense reimbursement from sponsor		18,220		23	%		—		—

Total	$	77,984		100	%	$	66,720		100	%

(1): During the three months ended March 31, 2017 and 2016, 85.0% and 88.2%, respectively, of the Company's gross investment income on a tax basis was attributable to cash income earned and 0.9% and 0.0%, respectively, was attributable to non-cash income earned. In addition, 11.6% and 9.4%, respectively, was attributed to paid-in-kind, or PIK, interest and 2.5% and 2.4%, respectively, was attributed to accretion of discount during the three months ended March 31, 2017 and 2016.

The Company's net investment income on a tax basis for the three months ended March 31, 2017 and 2016 was $76,616 and $62,858, respectively. As of March 31, 2017 and December 31, 2016, the Company had $0 and $19, respectively, of undistributed ordinary income on a tax basis and distributions received from investments in portfolio companies.

During the three months ended March 31, 2017, the Company saw positive developments in its investment portfolio. However, certain investments in the portfolio were restructured or experienced defaults due to the recently depressed prices of oil and natural gas, and the Company may experience additional restructurings or defaults in the future. 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 monthly cash distribution amount of $0.059042 per common share.

For the three months ended March 31, 2017, the difference between the Company's GAAP-basis net investment income and its tax-basis net investment income was primarily due to prepayment fees recognized upon prepayment of loans from income for GAAP purposes to realized gains or deferred to future periods 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.

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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 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, 2017 and 2016:

	Three Months Ended March 31,

	2017			2016
GAAP-basis net investment income	$	88,008		$	62,390
Reclassification or deferral of unamortized original issue discount and prepayment fees		(17,436	)		(1,873	)
GAAP versus tax-basis impact of consolidation of certain subsidiaries		6,418			2,222
Income subject to tax not recorded for GAAP		(371	)		—
Other miscellaneous differences		(3	)		119

Tax-basis net investment income	$	76,616		$	62,858

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

As of March 31, 2017 and December 31, 2016, the components of accumulated earnings (deficit) on a tax basis were as follows:

	March 31, 2017 (Unaudited)			December 31, 2016

Distributable ordinary income, net of distributions received from investments in portfolio companies	$	—		$	19
Accumulated capital losses⁽¹⁾		(384,997	)		(367,653	)
Other temporary differences		(216	)		79
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency⁽²⁾		(203,356	)		(115,266	)

Total	$	(588,569	)	$	(482,821	)

(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, 2017, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $62,770 and $322,227, respectively.
(2): As of March 31, 2017 and December 31, 2016, the gross unrealized appreciation on the Company's investments and unrealized gain on foreign currency was $104,831 and $224,411, respectively. As of March 31, 2017 and December 31, 2016, the gross unrealized depreciation on the Company's investments and unrealized loss on foreign currency was $308,187 and $339,677, respectively.

The aggregate cost of the Company's investments for federal income tax purposes totaled $4,419,549 and $4,014,678 as of March 31, 2017 and December 31, 2016, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(203,356) and $(115,266) as of March 31, 2017 and December 31, 2016, respectively.

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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)

As of March 31, 2017 and December 31, 2016, the Company had deferred tax liabilities of $30,949 and $46,278, respectively, resulting from unrealized appreciation on investments held by the Company's wholly-owned taxable subsidiaries and deferred tax assets of $75,192 and $81,116, respectively, resulting from net operating and capital losses of the Company's wholly-owned taxable subsidiaries. As of March 31, 2017 and December 31, 2016, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating and capital losses, therefore the deferred tax assets were offset by valuation allowances of $44,243 and $34,838, respectively. For the three months ended March 31, 2017 and year ended December 31, 2016, the Company did not record a provision for taxes related to wholly-owned taxable subsidiaries.

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, 2017 and December 31, 2016:

	March 31, 2017 (Unaudited)							December 31, 2016

	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	992,934	$	959,137		23	%	$	947,803	$	912,491		23	%
Senior Secured Loans—Second Lien		827,811		762,752		18	%		948,762		873,869		22	%
Senior Secured Bonds		521,660		523,757		12	%		388,512		397,614		10	%
Subordinated Debt		1,308,986		1,308,635		31	%		1,049,097		1,043,167		27	%
Equity/Other		618,924		667,595		16	%		628,814		683,299		18	%

Total	$	4,270,315	$	4,221,876		100	%	$	3,962,988	$	3,910,440		100	%

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

In general, under the 1940 Act, the Company would be presumed to "control" a portfolio company if it owned more than 25% 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.

As of March 31, 2017, the Company held investments in six portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control". As of March 31, 2017, except for Lusk Operating LLC, the Company did not "control" any of its portfolio companies. For additional information with respect to such portfolio companies, please see footnotes (p) and (aa) to the unaudited consolidated schedule of investments as of March 31, 2017 in this quarterly report on Form 10-Q.

As of December 31, 2016, the Company held investments in six portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control". As of December 31, 2016, except for Lusk Operating LLC, the Company did not "control" any of its portfolio companies. For additional information with respect to such portfolio companies, please see footnotes (p) and (aa) to the consolidated schedule of investments as of December 31, 2016 in this quarterly report on Form 10-Q.

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

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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)

required to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of March 31, 2017, the Company had six senior secured loan investments with aggregate unfunded commitments of $130,366 and five equity/other investments with aggregate unfunded commitments of $17,835. As of March 31, 2017, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, Chisholm Oil and Gas, LLC and Synergy Offshore LLC. As of December 31, 2016, the Company had four senior secured loan investments with aggregate unfunded commitments of $82,404 and four equity/other investments with aggregate unfunded commitments of $14,942. As of December 31, 2016, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest 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, 2017 and December 31, 2016:

	March 31, 2017 (Unaudited)					December 31, 2016

Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Upstream	$	2,494,836		59	%	$	2,270,769		58	%
Midstream		330,019		8	%		343,713		9	%
Downstream		60,798		2	%		49,623		1	%
Power		522,085		12	%		523,153		13	%
Service & Equipment		814,138		19	%		723,182		19	%

Total	$	4,221,876		100	%	$	3,910,440		100	%

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.

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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)

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, 2017 and December 31, 2016, the Company's investments were categorized as follows in the fair value hierarchy:

Valuation Inputs	March 31, 2017 (Unaudited)		December 31, 2016

Level 1—Price quotations in active markets	$	49,942	$	46,728
Level 2—Significant other observable inputs		—		—
Level 3—Significant unobservable inputs		4,171,934		3,863,712

Total	$	4,221,876	$	3,910,440

The Company's investments as of March 31, 2017 consisted primarily of debt investments that were acquired directly from the issuer. Sixteen senior secured loan investments, four senior secured bond investments and seven 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. Twenty-seven 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. Three equity/other investments, which were traded on an active public market, were valued at their closing price as of March 31, 2017. Two senior secured loan investments and two equity/other investments, which were newly issued and purchased near March 31, 2017, were valued at cost as the Company's board of trustees determined that the cost of these investments were the best indication of their fair value. Except as described above, the Company valued its other investments, including three of its equity/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, 2016 consisted primarily of debt investments that were acquired directly from the issuer. Sixteen senior secured loan investments, three senior secured bond investments and seven 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. Twenty-eight 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. Three equity/other investments, which were traded on an active public market, were valued at their closing price as of December 30, 2016. One senior secured loan investment, which was newly issued and purchased near December 31, 2016, was valued at cost as the Company's board of trustees determined that the cost of such investment was the best indication of its fair value. Except as described above, the Company valued its other investments, including two of its equity/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.

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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)

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 other method 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, 2017 and 2016 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

	For the Three Months Ended March 31, 2017

	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Senior Secured Bonds			Subordinated Debt			Equity/ Other			Total
Fair value at beginning of period	$	912,491		$	873,869		$	397,614		$	1,043,167		$	636,571		$	3,863,712
Accretion of discount (amortization of premium)		820			2,102			299			2,025			—			5,246
Net realized gain (loss)		(350	)		(10,711	)		466			(5,016	)		(15,042	)		(30,653	)
Net change in unrealized appreciation (depreciation)		1,515			9,834			(7,005	)		5,579			2,327			12,250
Purchases		98,622			198,327			148,977			305,961			19,364			771,251
Paid-in-kind interest		2,236			3,820			—			301			1,866			8,223
Sales and redemptions		(56,197	)		(314,489	)		(16,594	)		(43,382	)		(27,433	)		(458,095	)
Net transfers in or out of Level 3		—			—			—			—			—			—

Fair value at end of period	$	959,137		$	762,752		$	523,757		$	1,308,635		$	617,653		$	4,171,934



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	$	(10,204	)	$	17,127		$	(18,887	)	$	(665	)	$	(1,390	)	$	14,019

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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, 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	)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of March 31, 2017 and December 31, 2016 were as follows:

Type of Investment	Fair Value at March 31, 2017 (Unaudited)		Valuation Technique⁽¹⁾	Unobservable Input	Range	Weighted Average

Senior Secured Loans—First Lien	$	442,186	Market Comparables	Market Yield (%)	8.0% - 14.0%		10.8	%
				Proved Reserves Multiples (Mmboe)	$7.3 - $7.8	$	7.5
				PV-10 Multiples (x)	0.8x - 0.9x		0.9x
		14,850	Cost	Cost	99.0% - 100.0%		99.5	%
		152,904	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		349,197	Market Quotes	Indicative Dealer Quotes	83.5% - 102.5%		96.8	%
Senior Secured Loans—Second Lien		237,037	Market Comparables	Market Yield (%)	9.3% - 30.0%		16.7	%
		147,000	Cost	Cost	100.0% - 100.0%		100.0	%
		4,012	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		374,703	Market Quotes	Indicative Dealer Quotes	9.5% - 100.7%		93.4	%
Senior Secured Bonds		409,798	Market Comparables	Market Yield (%)	8.5% - 9.8%		9.0	%
				Production Multiples (Mboe/d)	$40,000.0 - $42,500.0	$	41,250.0
				Proved Reserves Multiples (Mmboe)	$11.5 - $12.5	$	12.0
				EBITDA Multiples (x)	4.8x - 5.3x		5.0x
				PV-10 Multiples (x)	0.8x - 0.9x		0.8x
		113,959	Market Quotes	Indicative Dealer Quotes	89.5% - 107.9%		97.1	%
Subordinated Debt		115,780	Market Comparables	Market Yield (%)	7.8% - 16.8%		13.4	%
		1,192,855	Market Quotes	Indicative Dealer Quotes	65.3% - 117.9%		98.7	%
Equity/Other		562,239	Market Comparables	EBITDA Multiples (x)	4.8x - 14.8x		8.1x
				Production Multiples (Mboe/d)	$37,500.0 - $57,500.0	$	39,491.2
				Proved Reserves Multiples (Mmboe)	$5.9 - $12.5	$	10.6
				Production Multiples (MMcfe/d)	$2,375.0 - $2,625.0	$	2,500.0
				Proved Reserves Multiples (Bcfe)	$1.1 - $1.2	$	1.1
				PV-10 Multiples (x)	0.3x - 6.6x		2.6x
				Capacity Multiple ($/kW)	$2,750.0 - $3,250.0	$	3,000.0
				Undeveloped Acreage Multiple ($/Acre)	$8,000.0 - $10,000.0	$	9,000.0
				Market Yield (%)	13.8% - 14.3%		14.0	%
			Discounted Cash Flow	Discount Rate (%)	9.3% - 24.8%		23.7	%
		10,543	Cost	Cost	$1.00 - $1.00	$	1.00
		3,597	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		41,274	Market Quotes	Indicative Dealer Quotes	$7.4 - $365.0	$	47.6

Total	$	4,171,934

Table of Contents

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)

(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.

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

Senior Secured Loans—First Lien	$	581,550	Market Comparables	Market Yield (%)	8.0% - 17.8%		11.5	%
		1,024	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		329,917	Market Quotes	Indicative Dealer Quotes	72.0% - 102.0%		93.7	%
Senior Secured Loans—Second Lien		530,636	Market Comparables	Market Yield (%)	8.8% - 22.9%		12.7	%
		343,233	Market Quotes	Indicative Dealer Quotes	12.0% - 105.4%		89.6	%
Senior Secured Bonds		326,388	Market Comparables	Market Yield (%)	7.5% - 9.0%		8.0	%
				Production Multiples (Mboe/d)	$45,000.0 - $50,000.0	$	47,500.0
				Proved Reserves Multiples (Mmboe)	$14.5 - $15.0	$	14.8
				EBITDA Multiples (x)	6.8x - 7.3x		7.0x
				PV-10 Multiples (x)	0.8x - 0.9x		0.9x
		71,226	Market Quotes	Indicative Dealer Quotes	84.2% - 109.3%		96.6	%
Subordinated Debt		122,821	Market Comparables	Market Yield (%)	7.5% - 15.3%		11.2	%
		920,346	Market Quotes	Indicative Dealer Quotes	54.5% - 125.5%		97.7	%
Equity/Other		594,404	Market Comparables	EBITDA Multiples (x)	4.5x - 16.3x		9.4x
				Production Multiples (Mmb/d)	$2,225.0 - $55,000.0	$	41,329.5
				Proved Reserves Multiples (Mmboe)	$0.7 - $15.0	$	8.9
				PV-10 Multiples (x)	0.3x - 2.1x		0.7x
				Capacity Multiple ($/kW)	$2,375.0 - $2,875.0	$	2,625.0
				Undeveloped Acreage Multiple ($/acre)	$8,000.0 - $10,000.0	$	9,000.0
				Market Yield (%)	10.0% - 14.3%		12.2	%
			Discounted Cash Flow	Discount Rate (%)	9.3% - 24.8%		23.7	%
		3,339	Other⁽²⁾	Other⁽²⁾	N/A		N/A
		38,828	Market Quotes	Indicative Dealer Quotes	$7.0 - $16.0	$	10.7

Total	$	3,863,712

(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 tables present a summary of information with respect to the Company's outstanding financing arrangements as of March 31, 2017 and December 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 year ended December 31, 2016 and the additional disclosure set forth in this Note 8.

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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)

	As of March 31, 2017 (Unaudited)

Facility	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date
Barclays Credit Facility	Revolving	L+3.25%		—	$	100,000	May 18, 2021
BNP Facility	Prime Brokerage	L+1.35%⁽¹⁾	$	213,737	$	86,263	December 26, 2017⁽²⁾
Deutsche Bank Credit Facility	Revolving	L+2.05%	$	240,000	$	75,000	June 11, 2017
Fortress Facility	Term	L+5.00%⁽³⁾	$	155,000		—	November 6, 2020
Goldman Facility⁽⁴⁾	Repurchase	L+3.38%	$	325,000		—	September 15, 2018
Natixis Credit Facility	Revolving	CP+2.25%	$	48,955		—	July 11, 2023
Wells Fargo Credit Facility	Revolving	L+2.50% to 2.75%	$	26,700	$	33,300	September 9, 2018

(1): Beginning on January 2, 2017, borrowings under the BNP facility began to accrue interest at a rate equal to LIBOR plus 1.35%.
(2): As described below, the BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2017, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(3): As described below, borrowings under the Fortress facility accrue interest at a rate equal to LIBOR plus 5.00%, subject to a floor of 0.75%.
(4): On April 19, 2017, the Company's wholly-owned, special-purpose financing subsidiaries, Gladwyne Funding LLC and Strafford Funding LLC entered into various agreements which, among other things, resulted in (a) the prepayment and dissolution of the Indenture and the Goldman facility; (b) the dissolution of Strafford Funding LLC; (c) the restructuring of the financing into a term loan facility that included the availability of an additional $100,000, resulting in a total facility amount of $425,000, (d) extending the maturity date of the facility to September 15, 2019, and (e) increasing the interest rate to LIBOR plus 3.72% per annum.

The Company's average borrowings and weighted average interest rate, including the effect of non-usage fees, for the three months ended March 31, 2017 were $888,732 and 4.23%, respectively. As of March 31, 2017, the Company's weighted average effective interest rate on borrowings was 3.80%.

	As of December 31, 2016

Facility	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date
Barclays Credit Facility	Revolving	L+3.25%		—	$	100,000	May 18, 2021
BNP Facility	Prime Brokerage	L+1.10%⁽¹⁾	$	113,737	$	186,263	September 27, 2017⁽²⁾
Deutsche Bank Credit Facility	Revolving	L+2.05%⁽³⁾	$	200,000	$	115,000	June 11, 2017
Fortress Facility	Term	L+5.00%⁽⁴⁾	$	155,000		—	November 6, 2020
Goldman Facility	Repurchase	L+3.38%⁽⁵⁾	$	325,000		—	September 15, 2018
Natixis Credit Facility	Revolving	CP+2.25%	$	50,328		—	July 11, 2023
Wells Fargo Credit Facility	Revolving	L+2.50% to 2.75%	$	29,600	$	30,400	September 9, 2018

(1): Beginning on January 2, 2017, borrowings under the BNP facility will accrue interest at a rate equal to LIBOR plus 1.35%.
(2): As described below, the BNP facility generally is terminable upon 270 days' notice by either party. As of December 31, 2016, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the BNP facility.
(3): Prior to June 11, 2016, borrowings under the Deutsche Bank credit facility accrued interest at a rate equal to LIBOR plus 1.80% per annum. Beginning on June 11, 2016, borrowings under the Deutsche Bank credit facility accrue interest at a rate equal to LIBOR plus 2.05% per annum.
(4): As described below, borrowings under the Fortress facility accrue interest at a rate equal to LIBOR plus 5.00%, subject to a floor of 0.75%.

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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)

(5): Prior to September 21, 2016, borrowings under the Goldman facility accrued interest at a rate equal to LIBOR plus 2.75% per annum. Beginning on September 21, 2016, borrowings under the Goldman facility accrue interest at a rate equal to LIBOR plus 3.38% per annum.

The Company's average borrowings and weighted average interest rate, including the effect of non-usage fees, for the year ended December 31, 2016 were $918,992 and 3.69%, respectively. As of December 31, 2016, the Company's weighted average effective interest rate on borrowings was 3.85%.

Barclays Credit Facility

On May 18, 2016, Bryn Mawr Funding LLC, or Bryn Mawr Funding, a wholly-owned subsidiary, entered into a revolving credit facility, or the Barclays credit facility, with Barclays Bank PLC, or Barclays, as administrative agent, and the lenders from time to time party thereto. The Barclays credit facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate amount of up to $100,000, including a subfacility for the issuance of letters of credit for Bryn Mawr Funding's account in an aggregate face amount of up to $10,000. Bryn Mawr Funding's obligations to Barclays under the Barclays credit facility are secured by a first priority security interest in substantially all of the assets of Bryn Mawr Funding, including its portfolio of assets and the assets of its subsidiaries, subject to customary exceptions. In addition, the Company has agreed to guaranty the obligations of Barclays and grant a first priority lien in favor of Barclays, for the benefit of the lenders, on the membership interests in Bryn Mawr Funding.

The Barclays credit facility provides for a four year revolving period followed by a one year term-out period, after which time all outstanding advances and other amounts will become due and payable. Interest under the Barclays credit facility for (i) loans for which the Company elects the eurocurrency option is payable at a rate equal to LIBOR plus 3.25% per annum; and (ii) loans for which the Company elects the base rate option is payable at a rate equal to 2.25% per annum plus the greatest of (a) the U.S. Prime Rate, (b) the federal funds effective rate for such day plus 0.50%, (c) three-month LIBOR plus 1.00% per annum and (d) zero. Bryn Mawr Funding will pay a commitment fee of 0.375% per annum on the unused portion of the commitments under the Barclays credit facility during the revolving period and letter of credit participation fees and a fronting fee on the average daily amount of any letters of credit issued under the Barclays credit facility. Interest and fees are payable in arrears at the end of each interest period or three-month measurement period, as applicable, and, in each case, began on October 31, 2016.

As of March 31, 2017 and December 31, 2016, no amounts were outstanding under the Barclays credit facility. The Company incurred costs of $283 in connection with obtaining the Barclays credit facility, which the Company recorded as deferred financing costs on its consolidated balance sheet and amortizes to interest expense over the life of the Barclays credit facility. As of March 31, 2017, $240 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, 2017, the components of total interest expense for the Barclays credit facility were as follows:

	Three Months Ended March 31, 2017

Non-usage fees	$	94
Amortization of deferred financing costs		14

Total interest expense	$	108

Interest under the Barclays credit facility is paid quarterly in arrears and payments commenced on February 6, 2017. For the three months ended March 31, 2017, cash paid for interest expense was $96.

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

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 BNP 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 BNP facility are non-recourse to the Company and the Company's exposure under the BNP facility is limited to the value of the Company's investment in Berwyn Funding. On May 4, 2016, Berwyn Funding entered into an amendment to the BNP financing arrangements that permits Berwyn Funding to enter into trades, including but not limited to purchasing options, through the prime brokerage arrangement provided under the BNP financing arrangements.

Prior to January 2, 2017, borrowings under the BNP facility accrued interest at a rate equal to three-month LIBOR plus 1.10% per annum and Berwyn Funding paid a non-usage fee of 0.55% per annum to the extent the aggregate principal amount available under the BNP facility was not borrowed. On May 4, 2016, Berwyn Funding entered into an amendment to the BNP facility which increased the (i) interest rate payable on borrowings to LIBOR plus 1.35% per annum effective on and after January 2, 2017 and (ii) the commitment fee payable on all unused amounts to, effective on and after January 2, 2017, (a) 0.65% per annum on unused amounts so long as 75% or more of the facility

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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)

amount is utilized or (b) 0.85% per annum on unused amounts if less than 75% of the facility amount is utilized. 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, 2017 and December 31, 2016, $213,737 and $113,737, respectively, 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, 2017, all of the deferred financing costs had been amortized to interest expense.

For the three months ended March 31, 2017 and 2016, the components of total interest expense for the BNP facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	772	$	497
Non-usage fees		368		259

Total interest expense	$	1,140	$	756

For the three months ended March 31, 2017 and 2016, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	989		$	527
Average borrowings under the facility	$	127,071		$	113,737
Effective interest rate on borrowings		2.50	%		1.73	%
Weighted average interest rate (including the effect of non-usage fees)		3.59	%		2.63	%

(1): Interest under the BNP facility is paid monthly in arrears.

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

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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)

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, 2017 and 2016, Berwyn Funding received a fee of $1 and $0, respectively, from BNP for securities that had been rehypothecated pursuant to the BNP financing agreements. As of March 31, 2017 and December 31, 2016, the fair value of those securities rehypothecated by BNP was $194,672 and $106,488, 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.

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 multiple times, most recently, to set the maximum commitments under the facility at $315,000 and extend the maturity date to June 11, 2017.

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 Deutsche Bank credit 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 Deutsche Bank credit facility are non-recourse to the Company and the Company's exposure under the Deutsche Bank credit facility is limited to the value of the Company's investment in FSEP Funding.

During the period from June 24, 2011 to June 10, 2016, interest on borrowings under the Deutsche Bank credit facility accrued at a rate equal to 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. Beginning June 11, 2016, interest on borrowings 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 2.05% 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 Deutsche Bank credit 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, 2017.

As of March 31, 2017 and December 31, 2016, $240,000 and $200,000, respectively, was outstanding under the Deutsche Bank credit facility. The carrying amount outstanding under the Deutsche Bank credit facility approximates its fair value. The Company incurred costs of $4,443 in connection with obtaining and amending the Deutsche Bank credit 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 Deutsche Bank credit facility. As of March 31, 2017, $216 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, 2017 and 2016, the components of total interest expense for the Deutsche Bank credit facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	1,569	$	1,621
Non-usage fees		206		139
Amortization of deferred financing costs		271		296

Total interest expense	$	2,046	$	2,056

For the three months ended March 31, 2017 and 2016, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	1,741		$	1,870
Average borrowings under the facility	$	205,333		$	266,813
Effective interest rate on borrowings		3.03	%		2.42	%
Weighted average interest rate (including the effect of non-usage fees)		3.46	%		2.61	%

(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 as administrative agent, 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 during 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 1.00% per annum of the average daily undrawn amount under the Fortress facility. 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 Fortress facility.

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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)

As of March 31, 2017 and December 31, 2016, $155,000 was outstanding under the Fortress facility. The carrying amount outstanding under the Fortress 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 Fortress facility. As of March 31, 2017, $978 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2017 and 2016, the components of total interest expense for the Fortress facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	2,176	$	1,303
Non-usage fees		—		199
Amortization of deferred financing costs		67		66

Total interest expense	$	2,243	$	1,568

For the three months ended March 31, 2017, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	2,041		$	—
Average borrowings under the facility	$	155,000		$	89,600
Effective interest rate on borrowings		5.79	%		5.75	%
Weighted average interest rate (including the effect of non-usage fees)		5.62	%		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 Facility

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, 2017, the fair value of assets held by Gladwyne Funding was $702,170, 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

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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)

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 Second Supplemental Indenture dated as of September 21, 2016, 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, 2017, Strafford Funding had purchased $577,750 of Notes, the maximum principal amount of Notes that may be purchased under the Goldman facility (as defined below).

Pursuant to the Indenture, Gladwyne Funding has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The Indenture contains customary events of default for similar financing transactions, including: (a) the failure to make principal payments on the Notes at their stated maturity or any earlier redemption date or to make interest payments on the Notes within five business days of when due; (b) the failure to disburse amounts in excess of $1 in accordance with the priority of payments; and (c) the occurrence of certain bankruptcy and insolvency events with respect to Gladwyne Funding.

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, as supplemented by the second amended and restated master confirmation dated as of September 21, 2016, 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, 2017, 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 $325,000.

Strafford Funding will repurchase the Notes sold to Goldman under the Goldman facility no later than September 15, 2018. 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. 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, 2018 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, 2018 had the acceleration not occurred. The financing fee under the Goldman facility is equal to three-month LIBOR plus a spread of up to 3.38% per annum for the relevant period.

Pursuant to the Goldman facility, Strafford Funding has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar transactions. The Goldman facility contains customary events of default for similar financing transactions, including: (a) failure to transfer the Notes to Goldman on the applicable purchase date or repurchase the Notes from Goldman on the applicable repurchase date;

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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)

(b) failure to pay certain fees and make-whole amounts when due; (c) failure to post cash collateral as required; (d) the occurrence of insolvency events with respect to Strafford Funding; and (e) the admission by Strafford Funding of its inability to, or its intention not to, perform any of its obligations under the Goldman facility.

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 September 21, 2016, 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, 2017 and December 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 $325,000. 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, 2017 and December 31, 2016, Strafford Funding's liability under the Goldman facility was $325,000 and $325,000, respectively, plus $667 and $649, respectively, 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 and amortizes to interest expense over the life of the facility. As of March 31, 2017, $59 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2017 and 2016, the components of total interest expense for the Goldman facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	3,546	$	2,707
Amortization of deferred financing costs		32		32

Total interest expense	$	3,578	$	2,739

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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, 2017 and 2016, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	3,529		$	2,680
Average borrowings under the facility	$	325,000		$	324,984
Effective interest rate on borrowings		4.34	%		3.26	%
Weighted average interest rate		4.36	%		3.30	%

(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, 2017, the Company repaid $1,373 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 Natixis credit 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 Natixis credit 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 the Natixis credit 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 Natixis credit facility are non-recourse to the Company and the Company's exposure under the Natixis credit facility is limited to the value of the Company's investment in Energy Funding.

Remaining outstanding borrowings under the Natixis credit facility accrue interest at a rate equal to the applicable commercial paper rate plus 2.25% per annum. Any amounts outstanding under the Natixis credit facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on July 11, 2023.

As of March 31, 2017 and December 31, 2016, $48,955 and $50,328, respectively, was outstanding under the Natixis credit facility. The carrying amount outstanding under the Natixis credit facility approximates its fair value. The Company incurred costs of $2,544 in connection with obtaining 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 8. Financing Arrangements (Continued)

Natixis credit 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, 2017, $86 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2017 and 2016, the components of total interest expense for the Natixis credit facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	423	$	655
Amortization of deferred financing costs		256		260

Total interest expense	$	679	$	915

For the three months ended March 31, 2017 and 2016, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	433		$	657
Average borrowings under the facility	$	49,466		$	90,317
Effective interest rate on borrowings		3.48	%		2.97	%
Weighted average interest rate		3.42	%		2.87	%

(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, 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 subsequently was amended multiple times, most recently, to (1) reduce the maximum commitment from $125,000 to $60,000; (2) shorten the maturity date from September 9, 2019 to September 9, 2018; and (3) eliminate the non-usage fee.

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

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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)

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 Wells Fargo credit 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 June 6, 2015 and through October 12, 2016, the non-usage fee was equal 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 Wells Fargo credit facility in excess of $40,000. Any amounts outstanding under the Wells Fargo credit facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on September 9, 2018. 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, 2017 and December 31, 2016, $26,700 and $29,600, respectively, was outstanding under the Wells Fargo credit facility. The carrying amount outstanding under the Wells Fargo credit facility approximates its fair value. The Company incurred costs of $2,641 in connection with obtaining the Wells Fargo credit 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 Wells Fargo credit facility. As of March 31, 2017, $1,162 of such deferred financing costs had yet to be amortized to interest expense.

For the three months ended March 31, 2017 and 2016, the components of total interest expense for the Wells Fargo credit facility were as follows:

	Three Months Ended March 31,

	2017		2016
Direct interest expense	$	243	$	1,097
Non-usage fees		—		90
Amortization of deferred financing costs		198		131

Total interest expense	$	441	$	1,318

For the three months ended March 31, 2017 and 2016, 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,

	2017			2016
Cash paid for interest expense⁽¹⁾	$	248		$	1,260
Average borrowings under the facility	$	26,861		$	133,901
Effective interest rate on borrowings		3.71	%		3.25	%
Weighted average interest rate (including the effect of non-usage fees)		3.62	%		3.51	%

(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.

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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 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 4 for a discussion of the Company's commitments to FS Advisor and its affiliates (including FS Investments) and 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, 2017 and the year ended December 31, 2016:

	Three Months Ended March 31, 2017 (Unaudited)			Year Ended December 31, 2016

Per Share Data:⁽¹⁾
Net asset value, beginning of period	$	7.61		$	6.50
Results of operations⁽²⁾
Net investment income (loss)		0.20			0.57
Net realized and unrealized appreciation (depreciation) on investments and gain/loss on foreign currency		(0.06	)		1.25

Net increase (decrease) in net assets resulting from operations		0.14			1.82

Shareholder distributions⁽³⁾
Distributions from net investment income		(0.18	)		(0.67	)
Distributions representing tax return of capital		—			(0.04	)

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

Capital share transactions
Issuance of common shares⁽⁴⁾		—			—
Repurchases of common shares⁽⁵⁾		—			—

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

Net asset value, end of period	$	7.57		$	7.61



Shares outstanding, end of period		443,982,283			440,162,095



Total return⁽⁶⁾		1.80	%		29.53	%



Total return (without assuming reinvestment of distributions)⁽⁷⁾		1.84	%		28.00	%



Ratio/Supplemental Data:
Net assets, end of period	$	3,362,149		$	3,348,894



Ratio of net investment income to average net assets⁽⁸⁾		2.61	%		8.19	%
Ratio of total operating expenses to average net assets⁽⁸⁾		1.38	%		4.88	%
Ratio of net expenses to average net assets⁽⁶⁾		0.84	%		4.88	%
Portfolio turnover⁽⁹⁾		11.04	%		35.85	%
Total amount of senior securities outstanding, exclusive of treasury securities	$	1,009,392		$	873,665
Asset coverage per unit⁽¹⁰⁾		4.33			4.83

(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, pursuant to the Company's distribution reinvestment plan. The issuance of common shares at a price that is greater than the net asset

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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)

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, 2017.

(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 based on the change in net asset value during the applicable period, including the impact of distributions reinvested in accordance with the Company's distribution reinvestment plan. The total return does not consider the effect of any sales commissions or charges that may be incurred in connection with 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 return 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): The total return (without assuming reinvestment of distributions) 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 (without assuming reinvestment of distributions) does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of the Company's common shares. The total return (without assuming reinvestment of distributions) 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 (without assuming reinvestment of distributions) in the table should not be considered a representation of the Company's future total return (without assuming reinvestment of distributions), which may be greater or less than the return 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.

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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)

(8): Weighted average net assets during the applicable period are used for this calculation. Ratios for the three months ended March 31, 2017 are not annualized. The following is a schedule of supplemental ratios for the three months ended March 31, 2017 and year ended December 31, 2016:



Ratio of subordinated income incentive fees to average net assets	0.31	%	0.20	%
Ratio of interest expense to average net assets	0.30	%	1.31	%
Ratio of offering costs to average net assets	—		0.17	%
Ratio of income and excise taxes to average net assets	0.00	%	0.01	%

(9): Portfolio turnover for the three months ended March 31, 2017 is not annualized.
(10): 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.

Note 11. Subsequent Events

Goldman Term Loan Agreement and Termination of the Goldman Facility

On September 11, 2014, two wholly owned, special-purpose financing subsidiaries of the Company, Gladwyne Funding and Strafford Funding, entered into a debt financing agreement, or the Goldman Facility, with Goldman. Under the Goldman Facility, Gladwyne issued floating rate notes, or the Notes, to Strafford pursuant to an Indenture, dated as of September 11, 2014, as amended and restated on December 15, 2014 and September 21, 2016, (as may have been further amended, modified or supplemented from time to time), or the Indenture, with Citibank, N.A., as trustee. The Notes were, in turn, purchased by Goldman for a purchase price of $325,000 pursuant to a Master Repurchase Agreement, dated as of September 11, 2014, as amended and restated on December 15, 2014 and September 21, 2016, or the Global Master Repurchase Agreement together with the related Annex and Confirmation thereto, as amended and restated.

On April 19, 2017, the Company, Gladwyne Funding, Strafford Funding and Goldman effected a series of transactions to refinance the Goldman Facility through a $425,000 senior-secured loan with Goldman as administrative agent and lender, or the Goldman Term Loan Facility. In connection with this refinancing, on April 19, 2017, Gladwyne Funding entered into a Credit Agreement with Goldman, as lender, sole lead arranger and administrative agent, Citibank, N.A., as collateral agent, and Virtus Group, LP, as collateral administrator, pursuant to which Goldman advanced $325,000 to Gladwyne Funding with a 60-day availability period for Gladwyne Funding to borrow an additional $100,000. The outstanding advances under the Goldman Term Loan Facility bear interest at a rate equal to three-month LIBOR plus a spread of 3.72% per annum. Interest is payable in arrears beginning on June 15, 2017 and each quarter thereafter. The Goldman Term Loan Facility will mature, and the principal and accrued and unpaid interest thereunder, will be due and payable, on September 15, 2019.

Additionally, in connection with the Goldman Term Loan Facility, (a) the Goldman Facility was terminated by (i) effecting a cancellation of the Notes issued by Gladwyne Funding to Strafford Funding pursuant to the Indenture; (ii) discharging the Indenture; and (iii) terminating the Global Master Repurchase Agreement and (b) Strafford Funding was dissolved on May 4, 2017.

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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 the Fund Complex or any affiliates thereof;
•: 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 on us and the portfolio companies in which we may invest and our and their 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. In November 2016, we closed our continuous public offering of common shares to new investors.

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

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position. Compared to other investment strategies, event driven investing depends more heavily on our 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 or any restructuring of these debt investments, we may on occasion receive equity interests, including warrants or options, as additional consideration or otherwise in connection with a restructuring.

In addition, a portion of our portfolio may be comprised of minority interests in the form of common or preferred equity or other equity-related securities, such as rights and warrants that may be converted into or exchanged for common stock or other equity or the cash value of common stock or other equity, in our target companies, as well as derivatives, including total return swaps and credit default swaps. FS Advisor will seek to tailor our investment focus as market conditions evolve. Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital structure or other more opportunistic investments. We expect that the size of our individual investments will generally range between $5 million and $75 million each, although investments may vary proportionately as the size of our capital base changes and will ultimately be at the discretion of FS Advisor, subject to oversight by our board of trustees.

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

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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.

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 FS Investments 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, 2016.

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, FS Investments 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, FS Investments 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, FS Investments 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

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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 FS Investments for any amounts funded by FS Investments under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which FS Investments 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 FS Investments for expense support payments made by FS Investments 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 FS Investments was made (provided, however, that this clause (B) shall not apply to any reimbursement payment which relates to an expense support payment from FS Investments made during the same fiscal year) and (ii) we will not reimburse FS Investments for expense support payments made by FS Investments 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 FS Investments made the expense support payment to which such reimbursement relates. We are not obligated to pay interest on the payments we receive from FS Investments. "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 FS Investments may terminate the expense reimbursement agreement at any time. The specific amount of expenses reimbursed by FS Investments, if any, will be determined at the end of each quarter. Upon termination of the expense reimbursement agreement by FS Investments, FS Investments will be required to fund any amounts accrued thereunder as of the date of termination. Similarly, our conditional obligation to reimburse FS Investments pursuant to the terms of the expense reimbursement agreement shall survive the termination of such agreement by either party.

For the three months ended March 31, 2017, we accrued $18,220 for expense reimbursements that FS Investments has agreed to pay. As discussed in Note 4 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q, it is intended that these reimbursements will be funded through the offset of management fees and subordinated income incentive fees payable by us to FS Advisor. As of March 31, 2017, we had $18,220 of reimbursements due from FS Investments, which we expect to offset against management fees and subordinated income incentive fees payable by us to FS Advisor.

As discussed above, under the expense reimbursement agreement, amounts reimbursed to us by FS Investments may become subject to repayment by us in the future. For the three months ended March 31, 2017, we did not accrue any expense recoupments payable to FS Advisor or its affiliates. The

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following table reflects the expense reimbursement payments due from FS Investments to us as of March 31, 2017 that may become subject to repayment by us to FS Advisor or its affiliates:

For the Three Months Ended		Amount of Expense Reimbursement Payment			Annualized "Other Operating Expenses" Ratio as of the Date of Expense Reimbursement			Annualized Rate of Distribution Per Share⁽¹⁾			Reimbursement Eligibility Expiration

March 31, 2017		$	18,220			0.40	%		9.14	%		March 31, 2020

(1): The annualized rate of distributions per share is expressed as a percentage equal to the projected annualized distribution amount as of March 31, 2017 (which is calculated by annualizing the regular monthly cash distribution per share as of March 31, 2017 without compounding), divided by our distribution reinvestment price per share as of March 31, 2017.

FS Investments 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 FS Investments will reimburse any portion of our expenses in future quarters.

Portfolio Investment Activity for the Three Months Ended March 31, 2017 and for the Year Ended December 31, 2016

During the three months ended March 31, 2017, we made investments in portfolio companies totaling $782,606. During the same period, we sold investments for proceeds of $97,055 and received principal repayments of $361,040. As of March 31, 2017, our investment portfolio, with a total fair value of $4,221,876 (23% in first lien senior secured loans, 18% in second lien senior secured loans, 12% in senior secured bonds, 31% in subordinated debt and 16% in equity/other), consisted of interests in 87 portfolio companies. The portfolio companies that comprised our portfolio as of such date had an average annual EBITDA of approximately $280.6 million. As of March 31, 2017, the debt investments in our portfolio were purchased at a weighted average price of 97.2% 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 8.8% based upon the amortized cost of our investments.

Based on our regular monthly cash distribution rate of $0.059042 per share as of March 31, 2017 and the price at which we issue shares pursuant to our distribution reinvestment plan of $7.75 per share, the annualized distribution rate to shareholders as of March 31, 2017 was 9.14%. The distribution rate to shareholders may include income, realized capital gains and a return of investors' capital.

During the year ended December 31, 2016, we made investments in portfolio companies totaling $1,488,179. During the same period, we sold investments for proceeds of $680,239 and received principal repayments of $544,813. As of December 31, 2016, our investment portfolio, with a total fair value of $3,910,440 (23% in first lien senior secured loans, 22% in second lien senior secured loans, 10% in senior secured bonds, 27% in subordinated debt and 18% 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 $304.3 million. As of December 31, 2016, the investments in our portfolio were purchased at a weighted average price of 97.2% of par value and our estimated gross annual portfolio yield, prior to leverage, was 8.8% based upon the amortized cost of our investments.

Based on our annual cash distribution amount of $0.7085 per share and our final public offering price of $8.35 per share, the annualized distribution rate to shareholders as of December 31, 2016 was 8.49%. Based on our annual cash distribution amount of $0.7085 per share and the price at which we issued shares pursuant to our distribution reinvestment plan of $7.70 per share, the annualized distribution rate to shareholders as of December 31, 2016 was 9.20%. The distribution rate to shareholders does not represent an actual investment return to shareholders and may include income, realized capital gains and a return of investors' capital.

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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, 2016 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, 2017 and year ended December 31, 2016:

Net Investment Activity	For the Three Months Ended March 31, 2017			For the Year Ended December 31, 2016

Purchases	$	782,606		$	1,488,179
Sales and Redemptions		(458,095	)		(1,225,052	)

Net Portfolio Activity	$	324,511		$	263,127

	For the Three Months Ended March 31, 2017					For the Year Ended December 31, 2016

New Investment Activity by Asset Class	Purchases		Percentage			Purchases		Percentage
Senior Secured Loans—First Lien	$	98,622		13	%	$	307,960		21	%
Senior Secured Loans—Second Lien		198,327		25	%		203,980		14	%
Senior Secured Bonds		148,977		19	%		147,795		10	%
Subordinated Debt		305,961		39	%		410,587		27	%
Equity/Other		30,719		4	%		417,857		28	%

Total	$	782,606		100	%	$	1,488,179		100	%

The following table summarizes the composition of our investment portfolio at cost and fair value as of March 31, 2017 and December 31, 2016:

	March 31, 2017 (Unaudited)							December 31, 2016

	Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio			Amortized Cost⁽¹⁾		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	992,934	$	959,137		23	%	$	947,803	$	912,491		23	%
Senior Secured Loans—Second Lien		827,811		762,752		18	%		948,762		873,869		22	%
Senior Secured Bonds		521,660		523,757		12	%		388,512		397,614		10	%
Subordinated Debt		1,308,986		1,308,635		31	%		1,049,097		1,043,167		27	%
Equity/Other		618,924		667,595		16	%		628,814		683,299		18	%

Total	$	4,270,315	$	4,221,876		100	%	$	3,962,988	$	3,910,440		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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The following table presents certain selected information regarding the composition of our investment portfolio as of March 31, 2017 and December 31, 2016:

	March 31, 2017			December 31, 2016

Number of Portfolio Companies		87			84
% Variable Rate (based on fair value)		39.0	%		43.6	%
% Fixed Rate (based on fair value)		45.2	%		38.9	%
% Income Producing Equity/Other Investments (based on fair value)		2.7	%		3.5	%
% Non-Income Producing Equity/Other Investments (based on fair value)		13.1	%		14.0	%
Average Annual EBITDA of Portfolio Companies	$	280,603		$	304,299
Weighted Average Purchase Price of Debt Investments (as a % of par value)		97.2	%		97.2	%
% of Investments on Non-Accrual (based on fair value)		0.2	%		0.0	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)		8.8	%		8.8	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)—Excluding Non-Income Producing Assets		10.1	%		10.2	%

Direct Originations

The following tables present certain selected information regarding our direct originations for the three months ended March 31, 2017 and year ended December 31, 2016:

New Direct Originations	For the Three Months Ended March 31, 2017			For the Year Ended December 31, 2016

Total Commitments (including unfunded commitments)	$	352,674		$	892,177
Exited Investments (including partial paydowns)		(327,148	)		(930,778	)

Net Direct Originations	$	25,526		$	(38,601	)

	For the Three Months Ended March 31, 2017					For the Year Ended December 31, 2016

New Direct Originations by Asset Class (including Unfunded Commitments)	Commitment Amount		Percentage			Commitment Amount		Percentage
Senior Secured Loans—First Lien	$	49,458		14	%	$	184,094		21	%
Senior Secured Loans—Second Lien		196,000		56	%		202,375		23	%
Senior Secured Bonds		90,000		25	%		83,887		9	%
Subordinated Debt		—		—			40,786		4	%
Equity/Other		17,216		5	%		381,035		43	%

Total	$	352,674		100	%	$	892,177		100	%



Average New Direct Origination Commitment Amount	$58,779		$46,957
Weighted Average Maturity for New Direct Originations	12/27/23		6/23/21
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period	8.7	%	7.7	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period—Excluding Non-Income Producing Assets	9.1	%	12.7	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period	10.6	%	7.5	%

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The following table presents certain selected information regarding our direct originations as of March 31, 2017 and December 31, 2016:

Characteristics of All Direct Originations held in Portfolio	March 31, 2017			December 31, 2016

Number of Portfolio Companies		30			28
Average Annual EBITDA of Portfolio Companies	$	59,706		$	71,509
Average Leverage Through Tranche of Portfolio Companies—Excluding Equity/Other Securities		4.7x			4.8x
% of Investments on Non-Accrual (based on fair value)		0.0	%		0.1	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations		8.6	%		8.9	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations—Excluding Non-Income Producing Assets		11.0	%		11.4	%

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, 2017 and December 31, 2016:

	March 31, 2017					December 31, 2016

Portfolio Composition by Strategy	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Direct Originations	$	2,145,761		51	%	$	2,208,234		57	%
Opportunistic		1,133,967		27	%		867,477		22	%
Broadly Syndicated/Other		942,148		22	%		834,729		21	%

Total	$	4,221,876		100	%	$	3,910,440		100	%

	March 31, 2017 (Unaudited)					December 31, 2016

Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Upstream	$	2,494,836		59	%	$	2,270,769		58	%
Midstream		330,019		8	%		343,713		9	%
Downstream		60,798		2	%		49,623		1	%
Power		522,085		12	%		523,153		13	%
Service & Equipment		814,138		19	%		723,182		19	%

Total	$	4,221,876		100	%	$	3,910,440		100	%

In general, under the 1940 Act, we would be presumed to "control" a portfolio company if we owned more than 25% 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.

As of March 31, 2017, we held investments in six portfolio companies of which we were deemed to be an "affiliated person" but were not deemed to "control". As of March 31, 2017, except for Lusk Operating LLC, we did not "control" any of our portfolio companies. For additional information with respect to such portfolio companies, please see footnotes (p) and (aa) to the unaudited consolidated schedule of investments as of March 31, 2017 in this quarterly report on Form 10-Q.

As of December 31, 2016, we held investments in six portfolio companies of which we were deemed to be an "affiliated person" but were not deemed to "control". As of December 31, 2016, except for Lusk Operating LLC, we did not "control" any of our portfolio companies. For additional information with respect to such portfolio companies, please see footnotes (p) and (aa) to the consolidated schedule of investments as of December 31, 2016 in this quarterly report on Form 10-Q.

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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, 2017, we had six senior secured loan investments with aggregate unfunded commitments of $130,366 and five equity/other investments with aggregate unfunded commitments of $17,835. As of March 31, 2017, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest, Chisholm Oil and Gas, LLC and Synergy Offshore LLC. As of December 31, 2016, we had four senior secured loan investments with aggregate unfunded commitments of $82,404 and four equity/other investments with aggregate unfunded commitments of $14,942. As of December 31, 2016, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity, BL Sand Hills Unit, L.P., net profits interest, BL Sand Hills Unit, L.P., overriding royalty interest and Synergy Offshore LLC. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

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, 2017 and December 31, 2016:

	March 31, 2017					December 31, 2016

Investment Rating	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
1	$	161,585		4	%	$	115,927		3	%
2		3,004,380		71	%		2,719,833		70	%
3		864,869		20	%		899,835		23	%
4		108,339		3	%		85,427		2	%
5		82,703		2	%		89,418		2	%

Total	$	4,221,876		100	%	$	3,910,440		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.

Results of Operations

Comparison of the Three Months Ended March 31, 2017 and 2016

Revenues

We generated investment income of $116,246 and $97,910 for the three months ended March 31, 2017 and 2016, respectively, in the form of interest and fees earned on senior secured loans (first and

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second lien), senior secured bonds and subordinated debt investments in our portfolio. Such revenues represent $103,768 and $87,482 of cash income earned as well as $12,478 and $10,428 in non-cash portions relating to accretion of discount, PIK interest and accrual of limited partnership income for the three months ended March 31, 2017 and 2016, 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 will increase or decrease to the extent the size of our investment portfolio increases or decreases and as the proportion of directly originated investments in our portfolio increases or decreases.

During the three months ended March 31, 2017 and 2016, we generated $23,822 and $8,176 of fee income, which represented 20.5% and 8.4%, 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. The increase in fee income during the three months ended March 31, 2017 compared to three months ended March 31, 2016 was primarily due to a prepayment fee received on account of the prepayment of a large investment during the three months ended March 31, 2017.

Expenses

Our total expenses were $46,458 and $35,520 for the three months ended March 31, 2017 and 2016, respectively. Our expenses include base management fees attributed to FS Advisor of $22,385 and $17,241 for the three months ended March 31, 2017 and 2016, respectively. Our expenses also include administrative services expenses attributed to FS Advisor of $808 and $884 for the three months ended March 31, 2017 and 2016, respectively.

FS Advisor is eligible to receive incentive fees based on our performance. During the three months ended March 31, 2017 and 2016, we accrued a subordinated incentive fee on income of $10,499 and $5,774, respectively. During the three months ended March 31, 2017 and 2016, 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 $10,235 and $9,352 for the three months ended March 31, 2017 and 2016, respectively, in connection with our financing arrangements. For the three months ended March 31, 2017 and 2016, fees and expenses incurred with our fund administrator, which provides various accounting and administrative services to us, totaled $422 and $286, respectively, and fees and expenses incurred with our share transfer agent totaled $734 and $742, respectively. Fees for our board of trustees were $250 and $250 for the three months ended March 31, 2017 and 2016, respectively. Amortization of our deferred offering costs was $125 for the three months ended March 31, 2016.

Our other general and administrative expenses totaled $1,069 and $833 for the three months ended March 31, 2017 and 2016, respectively, and consisted of the following:

	Three Months Ended March 31,

	2017		2016
Expenses associated with our independent audit and related fees	$	122	$	123
Legal fees		67		166
Printing fees		507		198
Insurance expense		44		61
Other		329		285

Total	$	1,069	$	833

During the three months ended March 31, 2017 and 2016, the ratio of our total expenses to our average net assets was 1.38% and 1.52%, respectively. During the three months ended March 31, 2017 and 2016, the ratio of our net expenses to our average net assets, which includes $18,220 and $0,

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respectively, of expense reimbursements from FS Investments, was 0.84% and 1.52%, respectively. During the three months ended March 31, 2017 and 2016, our ratio of total expenses to average net assets included $10,235 and $9,352, respectively, related to interest expense, $10,499 and $5,774, respectively, related to accruals for incentive fees, $0 and $125, respectively, related to amortization of deferred offering costs and $56 and $33, respectively, related to accruals for income taxes. Without such expenses, our ratio of expenses to average net assets would have been 0.76% and 0.86% for the three months ended March 31, 2017 and 2016, 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.

Expense Reimbursement

During the three months ended March 31, 2017, we accrued $18,220 for expense reimbursements that FS Investments has agreed to pay. It is intended that these reimbursements will be funded through the offset of management fees payable and subordinated income incentive fees payable by us to FS Advisor. Under the expense reimbursement agreement, amounts reimbursed to us by FS Investments may become subject to repayment by us in the future. As of March 31, 2017, we had $18,220 of reimbursements due from FS Investments, which we expect to offset against management fees payable and subordinated income incentive fees payable by us to FS Advisor. During the three months ended March 31, 2017, we did not accrue any expense recoupments payable to FS Advisor or its affiliates. See "—Overview—Expense Reimbursement" for a discussion of the expense reimbursement agreement.

Net Investment Income

Our net investment income totaled $88,008 ($0.20 per share) and $62,390 ($0.17 per share) for the three months ended March 31, 2017 and 2016, respectively. The increase in net investment income on a per share basis can be attributed primarily to an increase in fee income and the reimbursements of expenses provided to us by FS Investments through the offset of management fees and subordinated income incentive fees.

Net Realized Gains or Losses

We sold investments and received principal repayments of $97,055 and $361,040, respectively, during the three months ended March 31, 2017, from which we realized a net loss of $30,653. 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 realized a net gain of $3 from settlements on foreign currency during the three months ended March 31, 2017.

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

For the three months ended March 31, 2017 and 2016, the net change in unrealized appreciation (depreciation) on investments totaled $4,109 and $(43,855), respectively, and the net change in unrealized gain (loss) on foreign currency was $52 and $16, respectively. The change in unrealized appreciation (depreciation) on our investments during the three months ended March 31, 2017 was primarily driven by a continuation of the recovery in the energy markets and by the conversion of unrealized depreciation to realized losses. 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.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended March 31, 2017 and 2016, the net increase (decrease) in net assets resulting from operations was $61,519 ($0.14 per share) and $(38,460) ($(0.10) per share), respectively.

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Financial Condition, Liquidity and Capital Resources

Overview

As of March 31, 2017, we had $96,398 in cash, which we or our wholly-owned subsidiaries held in custodial accounts, and $294,563 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, 2017, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of March 31, 2017, we had six senior secured loan investments with aggregate unfunded commitments of $130,366 and five equity/other investments with aggregate unfunded commitments of $17,835. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

In November 2016, we closed our continuous public offering of common shares to new investors. We sold 449,543,498 common shares (as adjusted for share distributions) for gross proceeds of $4,362,119 in our continuous public offering, including shares issued pursuant to our distribution reinvestment plan. Following the closing of our continuous public offering, we will continue to issue shares pursuant to our distribution reinvestment plan. As of May 11, 2017, we have raised total gross proceeds of $4,477,553, 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.

During the three months ended March 31, 2017, we received gross proceeds pursuant to our distribution reinvestment plan for gross proceeds of $46,964, for which we issued 6,059,668 common shares.

We generate cash primarily from the issuance of shares under our distribution reinvestment plan 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.

Prior to investing in securities of portfolio companies, we invest the net proceeds from the issuance of shares under our distribution reinvestment plan as well as from sales and paydowns of existing investments primarily in cash, cash equivalents, including money market funds, 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.

We intend to offer to repurchase common shares at a price equal to the price at which common shares are issued pursuant to our distribution reinvestment plan on the distribution date coinciding with the applicable share repurchase date. The price at which common shares are issued under our distribution reinvestment plan is determined by our board of trustees or a committee thereof, in its sole discretion, and will be (i) not less than the net asset value per common share as determined in good faith by our board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and (ii) not more than 2.5% greater than the net asset value per common share as of such date.

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The following table provides information concerning our repurchases of common shares pursuant to our share repurchase program during the three months ended March 31, 2017 and 2016:

For the Three Months Ended	Repurchase Date						Repurchase Price Per Share⁽¹⁾		Aggregate Consideration for Repurchased Shares

Fiscal 2016
December 31, 2015	January 6, 2016	2,716,924	100	%	0.73	%	$	6.75	$	18,339
Fiscal 2017
December 31, 2016	January 3, 2017	2,239,480	100	%	0.51	%	$	7.70	$	17,244

(1): On October 13, 2016, and in connection with the closing of our continuous public offering, we amended the terms of our share repurchase program, which was first effective for our quarterly repurchase offer for the fourth quarter of 2016 to provide that shares repurchased under the program would be repurchased at a price determined as described above. Prior to amending the share repurchase program, we offered to repurchase common shares at a price equal to 90% of the offering price in effect on the date of repurchase.

On April 17, 2017, we repurchased 4,587,306 common shares (representing 100% of common shares tendered for repurchase and 1.03% of the shares outstanding as of such date) at $7.75 per share for aggregate consideration totaling $35,552.

Financing Arrangements

The following table presents a summary of information with respect to our outstanding financing arrangements as of March 31, 2017:

Facility	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date

Barclays Credit Facility	Revolving	L+3.25%		—	$	100,000	May 18, 2021
BNP Facility	Prime Brokerage	L+1.35%⁽¹⁾	$	213,737	$	86,263	December 26, 2017⁽²⁾
Deutsche Bank Credit Facility	Revolving	L+2.05%	$	240,000	$	75,000	June 11, 2017
Fortress Facility	Term	L+5.00%⁽³⁾	$	155,000		—	November 6, 2020
Goldman Facility⁽⁴⁾	Repurchase	L+3.38%	$	325,000		—	September 15, 2018
Natixis Credit Facility	Revolving	CP+2.25%	$	48,955		—	July 11, 2023
Wells Fargo Credit Facility	Revolving	L+2.50% to 2.75%	$	26,700	$	33,300	September 9, 2018

(1): Beginning on January 2, 2017, borrowings under the BNP facility began to accrue interest at a rate equal to LIBOR plus 1.35%.
(2): The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2017, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(3): 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%.
(4): On April 19, 2017, our wholly-owned, special-purpose financing subsidiaries, Gladwyne Funding LLC and Strafford Funding LLC entered into various agreements which, among other things, resulted in (a) the prepayment and dissolution of the Indenture and the Goldman facility; (b) the dissolution of Strafford Funding LLC; (c) the restructuring of the financing into a term loan facility that included the availability of an additional $100,000, resulting in a total facility amount of $425,000, (d) extending the maturity date of the facility to September 15, 2019, and (e) increasing the interest rate to LIBOR plus 3.72% per annum.

Our average borrowings and weighted average interest rate, including the effect of non-usage fees, for the three months ended March 31, 2017 were $888,732 and 4.23%, respectively. As of March 31, 2017, our weighted average effective interest rate on borrowings was 3.80%.

For additional information regarding our outstanding financing arrangements, see Note 8 to our unaudited consolidated financial statements included herein.

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

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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 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.

Prior to the closing of our continuous public offering in November 2016, we declared regular cash distributions on a weekly basis, and paid such distributions on a monthly basis. Effective November 30, 2016, and subject to applicable legal restrictions and the sole discretion of our board of trustees, we intend to declare and pay regular cash distributions on a monthly basis. 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 that common shares are issued to such shareholder. 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. 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.

During certain periods, our distributions may exceed our earnings. 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, 2017 and 2016:

	Distribution

For the Three Months Ended	Per Share		Amount
Fiscal 2016
March 31, 2016	$	0.1771	$	66,720
Fiscal 2017
March 31, 2017	$	0.1771	$	77,984

On March 30, 2017 and April 26, 2017, our board of trustees declared regular monthly cash distributions for April 2017 and May 2017, respectively. These distributions have been or will be paid monthly to shareholders of record as of monthly record dates previously determined by our board of trustees in the amount of $0.059042 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.

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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 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.

On October 13, 2016, we further amended and restated our distribution reinvestment plan, or the amended distribution reinvestment plan, which first applied to the reinvestment of cash distributions paid on or after November 30, 2016. Under the original plan, cash distributions to participating shareholders were reinvested in additional common shares at a purchase price equal to 90% of the public offering price per share in effect as of the date of issuance. Under the amended distribution reinvestment plan, cash distributions to participating shareholders will be reinvested in additional common shares at a purchase price determined by our board of trustees, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per common share as determined in good faith by our board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per common share as of such date. Any distributions reinvested under the plan will remain taxable to a U.S. shareholder.

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 FS Investments. We have not established limits on the amount of funds we may use from available sources to make distributions.

Pursuant to the expense reimbursement agreement, FS Investments 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. For the three months ended March 31, 2017, certain portions of our distributions were funded through the reimbursement of certain expenses by FS Investments and its affiliates, including through the offset of certain investment advisory fees by FS Advisor, that are, if certain conditions are met, subject to repayment by us within three years. Any such distributions funded through expense reimbursements or the offset of advisory fees are not based on our investment performance, and can only be sustained if we achieve positive investment performance in future periods and/or FS Investments and its affiliates continues to make such reimbursements or offset such fees. Our future repayments of amounts reimbursed or offset by FS Investments or its affiliates will reduce the distributions that shareholders would otherwise receive in the future. There can be no assurance that we will continue to achieve the performance necessary to sustain our distribution or that we will be able to pay distributions at a specific rate or at all. FS Investments and its affiliates have no obligation to offset or waive advisory fees or otherwise reimburse expenses in future periods. If FS Investments had not reimbursed certain of our expenses, 23% of the aggregate amount of distributions paid during the three months ended March 31, 2017 would have been funded from offering proceeds or borrowings.

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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, 2017 and 2016:

	Three Months Ended March 31,

	2017					2016
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Offering proceeds	$	—		—		$	—		—
Borrowings		—		—			—		—
Net investment income (prior to expense reimbursement)⁽¹⁾		58,396		75	%		66,720		100	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			—		—
Non-capital gains proceeds from the sale of assets		—		—			—		—
Distributions on account of investments in portfolio companies		1,368		2	%		—		—
Expense reimbursement from sponsor		18,220		23	%		—		—

Total	$	77,984		100	%	$	66,720		100	%

(1): During the three months ended March 31, 2017 and 2016, 85.0% and 88.2%, respectively, of our gross investment income on a tax basis was attributable to cash income earned and 0.9% and 0.0%, respectively, was attributable to non-cash income earned. In addition, 11.6% and 9.4%, respectively, was attributed to PIK interest and 2.5% and 2.4%, respectively, was attributed to accretion of discount during the three months ended March 31, 2017 and 2016.

Our net investment income on a tax basis for the three months ended March 31, 2017 and 2016 was $76,616 and $62,858, respectively. As of March 31, 2017 and December 31, 2016, we had $0 and $19, respectively, of undistributed ordinary income on a tax basis and distributions received from investments in portfolio companies.

During the three months ended March 31, 2017, we saw positive developments in our investment portfolio. However, certain investments in the portfolio were restructured or experienced defaults due to the recently depressed prices of oil and natural gas, and we may experience additional restructurings or defaults in the future. 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 monthly cash distribution amount of $0.059042 per common share.

See Note 5 to our unaudited consolidated financial statements included herein for additional information regarding our distributions, including a reconciliation of our GAAP-basis net investment income to our tax-basis net investment income for the three months ended March 31, 2017 and 2016, the components of accumulated earnings on a tax basis and deferred taxes as of March 31, 2017 and December 31, 2016.

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

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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 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.

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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 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, 2017 consisted primarily of debt investments that were acquired directly from the issuer. Sixteen senior secured loan investments, four senior secured bond investments and seven 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. Twenty-seven 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. Three equity/other investments, which were traded on an

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active public market, were valued at their closing price as of March 31, 2017. Two senior secured loan investments and two equity/other investments, which were newly issued and purchased near March 31, 2017, were valued at cost as our board of trustees determined that the cost of such investments were the best indication of their fair value. Except as described above, we valued our other investments, including three of our equity/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, 2016 consisted primarily of debt investments that were acquired directly from the issuer. Sixteen senior secured loan investments, three senior secured bond investments and seven 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. Twenty-eight of the 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. Three equity/other investments, which were traded on an active public market, were valued at their closing price as of December 30, 2016. One senior secured loan investment, which was newly issued and purchased near December 31, 2016, was valued at cost as our board of trustees determined that the cost of this investment was the best indication of its fair value. Except as described above, we valued our other investments, including two of our equity/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 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.

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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 earn 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.

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.

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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, 2017 and 2016, 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, 2017 and 2016.

A summary of our significant contractual payment obligations for the repayment of outstanding borrowings under the BNP facility, the Barclays credit 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, 2017 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⁾	$	213,737	$	213,737		—		—		—
Deutsche Bank Credit Facility⁽²⁾	$	240,000	$	240,000		—		—		—
Fortress Facility⁽³⁾	$	155,000		—		—	$	155,000		—
Goldman Facility⁽⁴⁾	$	325,000		—	$	325,000		—		—
Natixis Credit Facility⁽⁵⁾	$	48,955		—		—		—	$	48,955
Wells Fargo Credit Facility⁽⁶⁾	$	26,700		—	$	26,700		—		—

(1): At March 31, 2017, $86,263 remained unused under the BNP facility. The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2017, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.
(2): At March 31, 2017, $75,000 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, 2017.
(3): At March 31, 2017, no amounts 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, 2017, no amounts remained unused under the Goldman facility. On April 19, 2017, our wholly-owned, special-purpose financing subsidiaries, Gladwyne Funding LLC and Strafford Funding LLC entered into various agreements which, among other things, resulted in (a) the prepayment and dissolution of the Indenture and the Goldman facility; (b) the dissolution of Strafford Funding LLC; (c) the restructuring of the financing into a term loan facility that included the availability of an additional $100,000, resulting in a total facility amount of $425,000, (d) extending the maturity date of the facility to September 15, 2019, and (e) increasing the interest rate to LIBOR plus 3.72% per annum.

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(5): At March 31, 2017, 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, 2017, $33,300 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, 2018, as amended.

As of March 31, 2017, no amounts were outstanding under the Barclays credit facility. All borrowed amounts under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on May 18, 2021.

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 (gross assets equals total assets set forth on our consolidated balance sheet) and an incentive fee based on our performance. Pursuant to the investment sub-advisory agreement, GSO will receive 50% of all management and incentive fees payable to FS Advisor under the investment advisory and administrative services agreement with respect to each year. 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.

The dealer manager for our continuous public offering was FS Investment Solutions, which is one of our affiliates. Under the dealer manager agreement, FS Investment Solutions was 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 were re-allowed to selected broker-dealers and financial representatives. The dealer manager agreement terminated in connection with the closing of our continuous public offering in November 2016.

			Three Months Ended March 31,

Related Party	Source Agreement	Description	2017		2016
FS Advisor	Investment Advisory and Administrative Services Agreement	Base Management Fee⁽¹⁾	$	22,385	$	17,241
FS Advisor	Investment Advisory and Administrative Services Agreement	Subordinated Incentive Fee on Income⁽²⁾	$	10,499	$	5,774
FS Advisor	Investment Advisory and Administrative Services Agreement	Administrative Services Expenses⁽³⁾	$	808	$	884
FS Advisor	Investment Advisory and Administrative Services Agreement	Offering Costs⁽⁴⁾		—	$	713
FS Investment Solutions	Dealer Manager Agreement	Dealer Manager Fee⁽⁵⁾		—	$	1,479

(1): Of the $22,385 in base management fees accrued and payable as of March 31, 2017, it is intended that $7,721 of such fees will be applied to offset the liability of FS Investments under the expense reimbursement agreement (see "—Overview—Expense Reimbursement") as of March 31, 2017 and the balance, $14,664, will be paid to FS Advisor. During the three months ended March 31, 2017 and 2016, $20,855 and $18,338, respectively, in base management fees were paid to FS Advisor.
(2): Of the $10,499 in subordinated incentive fee on income accrued and payable as of March 31, 2017, it is intended that all of such fees will be applied to offset the liability of FS Investments under the expense reimbursement agreement (see

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"—Overview—Expense Reimbursement") as of March 31, 2017. During the three months ended March 31, 2016, $12,048 of subordinated incentive fees on income were paid to FS Advisor.

(3): During the three months ended March 31, 2017 and 2016, $785 and $861, 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 $930 and $1,204 in administrative services expenses to FS Advisor during the three months ended March 31, 2017 and 2016, respectively.
(4): During the three months ended March 31, 2016, we incurred offering costs of $1,500, of which $713 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 FS Investment Solutions and not re-allowed to selected broker-dealers or financial representatives.

See Note 4 to our unaudited consolidated financial statements included herein for additional information regarding our related party transactions and relationships, including a description of the fees and amounts due to FS Advisor, capital contributions by FS Advisor and GSO, potential conflicts of interest, our exemptive relief order, our expense reimbursement arrangement with FS Investments and FS Benefit Trust's purchases of our common shares.

Recent Developments

During the period from April 1, 2017 to May 11, 2017, we issued 2,036,247 common shares under our distribution reinvestment plan for gross proceeds of $15,630 at an average price per share of $7.68.

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, 2017, 39.0% of our portfolio investments (based on fair value) paid variable interest rates, 45.2% paid fixed interest rates, 2.7% were income producing equity/other investments and the remainder (13.1%) 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.

Pursuant to the terms of the Barclays credit facility, BNP facility, Deutsche Bank credit facility, Fortress facility, Goldman facility, Natixis credit facility and Wells Fargo credit facility, Bryn Mawr Funding, Berwyn Funding, FSEP Funding, Foxfields Funding, Gladwyne 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

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of our investment portfolio, including the accrual status of our investments, and our borrowing arrangements in effect as of March 31, 2017 (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 100 basis points	$	(1,938	)	$	(11,632	)	$	9,694	3.0	%
No change		—			—			—	—
Up 100 basis points		15,400			11,632			3,768	1.1	%
Up 300 basis points		49,486			34,896			14,590	4.4	%
Up 500 basis points		83,835			58,160			25,675	7.8	%

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, 2017 and 2016, 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, 2017. 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, 2017 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, 2016.

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, 2017 pursuant to our share repurchase program.

Period		Average Price Paid per Share⁽²⁾

January 1 to January 31, 2017	2,239,480	$	7.70	2,239,480	(1	)
February 1 to February 28, 2017	—		—	—	—
March 1 to March 31, 2017	—		—	—	—

Total	2,239,480	$	7.70	2,239,480	(1	)

(1): The maximum number of common shares available for repurchase on January 1, 2017 was 10,224,187. 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.
(2): On October 13, 2016, and in connection with the closing of our continuous public offering, we amended the terms of our share repurchase program, which was first effective for our quarterly repurchase offer for the fourth quarter of 2016 to provide that shares repurchased under the program would be repurchased at a price determined as described above. Prior to amending the share repurchase program, we offered to repurchase common shares at a price equal to 90% of the offering price in effect on the date of repurchase.

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 July 6, 2016 with the Securities and Exchange Commission pursuant to Rule 497 of the Securities Act of 1933, as amended.)
	4.2		Second 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 October 17, 2016.)
	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 FS Investment Solutions, LLC (formerly 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 FS Investment Solutions, LLC (formerly 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 FS Investment Solutions, LLC (formerly 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 2014 Follow-On Selected Dealer Agreement. (Included as Exhibit A to the Form of Follow-On Dealer Manager Agreement.) (Incorporated by reference to Exhibit (h)(5) filed with FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-199777) filed on October 31, 2014.)
	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		Second Amendment to Amended and Restated Credit Agreement, dated as of June 10, 2016, by and among FSEP Term Funding, LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent and a lender, 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 June 16, 2016.)
	10.19		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.)
	10.20		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.)
	10.21		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.)
	10.22		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.)

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	10.23		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.)
	10.24		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.)
	10.25		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.)
	10.26		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.)
	10.27		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.)
	10.28		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.)
	10.29		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.)
	10.30		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.)
	10.31		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.)
	10.32		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.)
	10.33		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.)
	10.34		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.)
	10.35		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.)
	10.36		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.)
	10.37		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.)

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	10.38		Fifth Amendment to the Committed Facility Agreement, dated as of May 4, 2016 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 May 10, 2016.)
	10.39		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.)
	10.40		First Amendment to the U.S. PB Agreement, dated as of May 4, 2016, 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 May 10, 2016.)
	10.41		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.)
	10.42		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.)
	10.43		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.)
	10.44		First Amendment to the Loan and Servicing Agreement, dated as of October 13, 2016, among Wayne Funding LLC, as Borrower, Wells Fargo Securities, LLC, as Administrative Agent, Wells Fargo Bank, National Association, as institutional lender, and Wells Fargo Bank, National Association, as collateral agent, account bank and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on October 14, 2016.)
	10.45		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.)
	10.46		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.)
	10.47		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.)
	10.48		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.)
	10.49		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.)
	10.50		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.)

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	10.51		Second Supplemental Indenture, dated as of September 21, 2016, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 22, 2016.)
	10.52		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.)
	10.53		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.)
	10.54		Amended and Restated September 1996 Version Master Repurchase Agreement between Goldman Sachs Bank USA and Strafford Funding LLC, dated as of September 21, 2016. (Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on September 22, 2016.)
	10.55		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.)
	10.56		Second Amended and Restated Master Confirmation, dated as of September 21, 2016, by and between Goldman Sachs Bank USA and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.56 of FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on November 9, 2016.)
	10.57		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.)
	10.58		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.)
	10.59		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.)
	10.60		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.)
	10.61		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.)
	10.62		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.)
	10.63		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.)

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	10.64		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.)
	10.65		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.)
	10.66		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.)
	10.67		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.)
	10.68		Senior Secured Revolving Credit Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, Barclays Bank PLC, as administrative agent, and the 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 May 24, 2016.)
	10.69		Contribution Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Bryn Mawr Funding LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.70		Investment Management Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Bryn Mawr Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.71		Control Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, Barclays Bank PLC, as collateral agent, and State Street Bank and Trust Company, as custodian. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.72		Guaranty, dated as of May 18, 2016, by and between FS Energy and Power Fund and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.73		Pledge Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.74		Guarantee, Pledge and Security Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, any subsidiary guarantors from time to time party thereto, Barclays Bank PLC, as revolving administrative agent, and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.7 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
	10.75		Credit Agreement, dated as of April 19, 2017, among Gladwyne Funding LLC, Goldman Sachs Bank USA, as lender, sole lead arranger and administrative agent, Citibank, N.A., as collateral agent, and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on April 25, 2017.)
	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 12, 2017.


		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 12, 2017

Attached files

FS Energy & Power Fund Reports