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FS Investments to Launch $2 Billion Interval Fund

FS Investments, a sponsor of alternative investment funds formerly known as Franklin Square Capital Partners, is launching a $2 billion interval fund called FS Energy Total Return Fund, according to registration materials filed with the Securities and Exchange Commission.

FS Energy Total Return Fund intends to invest at least 80 percent of its total assets in natural resource companies, including those engaged in the development of energy infrastructure and the acquisition, exploration, production, mining, refining, transportation, storage, servicing or marketing of natural resources. The remaining 20 percent may be invested in issuers not considered natural resource companies.

The fund’s investment adviser, FS Energy Advisor, will oversee the management of the fund’s activities and will be responsible for making investment decisions for its portfolio. Magnetar Asset Management LLC, an affiliated group of alternative asset managers, will act as the fund’s investment sub-adviser.

The fund is offering 80 million class A, class C, and class I shares on a continuous basis that will be sold through FS Investment Solutions, a registered broker-dealer and an affiliate of FS Energy Advisor. Initially, the shares will be priced at $25.00 per share.

Class A shares have a front-end sales load of up to 5.75 percent and a shareholder servicing fee of 0.25 percent. The sales load depends on the amount purchased and may range from 0 to 5.75 percent, with up to 0.75 percent paid as a fee to the fund’s dealer manager, FS Solutions.

Class C shares have no front-end sales load, and include a 0.25 percent shareholder servicing fee and a 0.75 percent distribution fee. Class C shareholders may be charged a 1 percent contingent deferred sales fee for shares redeemed within the first 365 days of their purchase. The distributor pays 1 percent to dealers who sell class C shares, which the adviser or an affiliate reimburses to the distributor.

Class I shares have no sales load or other fees. FS Energy Total Return Fund intends to conduct a private placement of Class I Shares to certain board members and other FS Investments and Magnetar affiliates who intend to purchase at least $20 million shares total.

Class A and class C shares have a minimum initial investment of $2,500 for regular accounts and $1,000 for retirement plan accounts. The minimum initial investment for class I shares is not yet determined.

The company estimates that approximately $15 million in organization and offering expenses will be incurred if the maximum number of registered shares is sold. The advisor has agreed to pay, on a quarterly basis, the ordinary operating expenses of the fund to the extent that such expenses exceed 0.75 percent annually of the average daily net assets attributable to the class A, class C, and class I shares.

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