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As filed with the Securities and Exchange Commission on July 3, 2019

Registration No. [ ● ]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-14

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.   ☐

Post-Effective Amendment No.   ☐

(Check appropriate box or boxes)

FS Investment Corporation II

(Exact Name of Registrant as Specified in Charter)

201 Rouse Boulevard

Philadelphia, PA 19112

(Address of Principal Executive Offices)

(215) 495-1150

(Area Code and Telephone Number)

Michael C. Forman

201 Rouse Boulevard

Philadelphia, PA 19112

(215) 495-1150

(Name and Address of Agent for Service)

Copies to:

James A. Lebovitz, Esq.

Eric S. Siegel, Esq.

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Telephone: (215) 994-4000

Fax: (215) 994-2222

Approximate Date of Proposed Public Offering: As soon as practicable after this registration statement becomes effective and upon completion of the merger described in the enclosed document.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION—DATED JULY 3, 2019

FS INVESTMENT CORPORATION II

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Fellow Stockholder:

You are cordially invited to attend an Annual Meeting of Stockholders of FS Investment Corporation II (“FSIC II”) to be held on [●], 2019 at [●] [a.m.]/[p.m.], Eastern Time, at 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112 (together with any adjournments or postponements thereof, the “FSIC II Annual Meeting”).

The Notice of Annual Meeting of Stockholders and joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the FSIC II Annual Meeting. At the FSIC II Annual Meeting, you will be asked to consider and vote upon:

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FSIC II, FSIC III, CCT II and FSIC IV are proposing a combination of the four companies by merger and related transactions pursuant to the Merger Agreement, in which FSIC III, CCT II and FSIC IV would each first be merged with a wholly-owned subsidiary of FSIC II and, immediately thereafter, be merged into FSIC II. First, Merger Sub 1 would merge with and into FSIC III, with FSIC III continuing as the surviving company (FSIC III is sometimes referred to in such capacity as “Surviving Company 1,” and such transaction, “Merger 1A”). Immediately following Merger 1A, in a subsequent combination, Surviving Company 1 would merge with and into FSIC II (“Merger 1B”), with FSIC II as the surviving company in Merger 1B. Following Merger 1B, Merger Sub 2 would merge with and into CCT II (“Merger 2A”), with CCT II as the surviving company in Merger 2A (CCT II is sometimes referred to in such capacity as “Surviving Company 2”). Immediately after Merger 2A, Surviving Company 2 would merge with and into FSIC II (“Merger 2B”), with FSIC II as the surviving company in Merger 2B. Following Merger 2B, Merger Sub 3 would merge with and into FSIC IV (“Merger 3A”), with FSIC IV as the surviving company in Merger 3A (FSIC IV is sometimes referred to in such capacity as “Surviving Company 3”). Immediately after Merger 3A, Surviving Company 3 would merge with and into FSIC II, with FSIC II as the surviving company in Merger 3B and ultimate survivor of the Mergers. Merger 1A is a condition precedent to Merger 2A and Merger 3A, but Merger 2A is not a condition precedent to Merger 1A or Merger 3A and Merger 3A is not a condition precedent to Merger 1A or Merger 2A.

Subject to the terms and conditions of the Merger Agreement, if the Mergers are completed, each holder of common stock of FSIC III, CCT II and FSIC IV issued and outstanding immediately prior to the effective time of the Mergers will have the right to receive, for each share of common stock held, that number of shares of common stock of FSIC II with a net asset value (“NAV”) equal to the NAV of a share of such common stock held, in each case calculated as of the same date within 48 hours (excluding Sundays and holidays) prior to the closing of the Mergers (the “Merger Consideration”). Holders of common stock of FSIC III, CCT II and FSIC IV will receive cash in lieu of fractional shares at the discretion of FSIC II.

The value of the Merger Consideration will fluctuate with changes in the NAV of FSIC II.

Your vote is extremely important. At the FSIC II Annual Meeting, you will be asked to vote on the (i) the FSIC II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC II Merger Charter Amendment Proposals, (iv) the Listing Charter Amendment Proposals, (v) the Advisory Agreement Amendment Proposal, (vi) the FSIC II Director Election Proposal and (vii) the FSIC II Auditor Ratification Proposal. Please see “The Annual Meetings” contained in this joint proxy statement/prospectus for additional information regarding the minimum votes required for approval of these proposals.

After careful consideration, the board of directors of FSIC II unanimously recommends that FSIC II stockholders vote “FOR” each of (i) the FSIC II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC II Merger Charter Amendment Proposals, (iv) the Listing Charter Amendment Proposals, (v) the Advisory Agreement Amendment Proposal, (vi) the FSIC II Director Election Proposal and (vii) the FSIC II Auditor Ratification Proposal.

It is important that your shares of common stock of FSIC II be represented at the FSIC II Annual Meeting. If you are unable to attend the FSIC II Annual Meeting in person, we urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card. If you do not vote, it may result in FSIC II not having a sufficient quorum of one-third of outstanding common stock of FSIC II represented in person or by proxy at the FSIC II Annual Meeting and a meeting cannot be held unless a quorum is present.

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This joint proxy statement/prospectus concisely describes the FSIC II Annual Meeting, the Mergers, the documents related to the Mergers (including the Merger Agreement) and other related matters that FSIC II stockholders ought to know before voting on the proposals mentioned herein and should be retained for future reference. Please carefully read this entire document, including “Risk Factors” beginning on page 24, for a discussion of the risks relating to the Mergers. You also can obtain information free of charge about FSIC II, FSIC III, CCT II and FSIC IV from documents that each has filed with the U.S. Securities and Exchange Commission. See “Where You Can Find More Information” for instructions on how to obtain such information.

Sincerely,

Michael C. Forman

Chairman and Chief Executive Officer of FS Investment Corporation II

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of common stock of FSIC II to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [●], 2019 and it is first being mailed or otherwise delivered to FSIC II stockholders on or about [●], 2019.

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FS INVESTMENT CORPORATION II

201 Rouse Boulevard

Philadelphia, PA 19112

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On [ ● ], 2019

To the Stockholders of FS Investment Corporation II:

NOTICE IS HEREBY GIVEN THAT an annual meeting of stockholders of FS Investment Corporation II (“FSIC II”) will be held at 201 Rouse Boulevard, Philadelphia, PA 19112 on [●], 2019, at [●]:00 [a.m.]/[p.m.], Eastern Time (together with any adjournments or postponements thereof, the “FSIC II Annual Meeting”), to consider and vote upon:

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The FSIC II board of directors unanimously recommends that FSIC II stockholders vote “FOR” each of (i) the FSIC II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC II Merger Charter Amendment Proposals, (iv) the Listing Charter Amendment Proposals, (v) the Advisory Agreement Amendment Proposal, (vi) the FSIC II Director Election Proposal and (vii) the FSIC II Auditor Ratification Proposal.

It is important that your shares of common stock of FSIC II be represented at the FSIC II Annual Meeting. If you are unable to attend the FSIC II Annual Meeting in person, please complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card.

The Mergers and the Merger Agreement are each described in more detail in this joint proxy statement/prospectus, which you should read carefully and in its entirety before authorizing a proxy to vote. Attached to this joint proxy statement/prospectus as Annex A is a copy of the Merger Agreement.

The board of directors of FSIC II has fixed the close of business on [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the FSIC II Annual Meeting.

Important notice regarding the availability of proxy materials for the FSIC II Annual Meeting. FSIC II’s joint proxy statement/prospectus and the proxy card are available at www.proxyvote.com.

If you plan on attending the FSIC II Annual Meeting and voting your shares of common stock of FSIC II in person, you will need to bring photo identification in order to be admitted to the FSIC II Annual Meeting. If your shares are held through a broker and you attend the FSIC II Annual Meeting in person, please bring a letter from your broker identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the FSIC II Annual Meeting. To obtain directions to the FSIC II Annual Meeting, please call FSIC II at (877) 628-8575.

By Order of the Board of Directors,

Stephen S. Sypherd

General Counsel and Secretary

[●], 2019

FSIC II stockholders are requested to promptly authorize a proxy over the Internet or by telephone, or execute and return the accompanying proxy card, which is being solicited by the board of directors of FSIC II. Instructions are shown on the proxy card. Authorizing a proxy is important to ensure a quorum at the FSIC II Annual Meeting. Proxies may be revoked at any time before they are exercised by submitting a written notice of revocation or a subsequently executed proxy, or by attending the FSIC II Annual Meeting and voting in person.

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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION—DATED JULY 3, 2019

FS INVESTMENT CORPORATION III

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Fellow Stockholder:

You are cordially invited to attend an Annual Meeting of Stockholders of FS Investment Corporation III (“FSIC III”) to be held on [●], 2019 at [●] [a.m.]/[p.m.], Eastern Time, at 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112 (together with any adjournments or postponements thereof, the “FSIC III Annual Meeting”).

The Notice of Annual Meeting of Stockholders and joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the FSIC III Annual Meeting. At the FSIC III Annual Meeting, you will be asked to consider and vote upon:

FSIC II, FSIC III, CCT II and FSIC IV are proposing a combination of the four companies by merger and related transactions pursuant to the Merger Agreement, in which FSIC III, CCT II and FSIC IV would each first be merged with a wholly-owned subsidiary of FSIC II and, immediately thereafter, be merged into FSIC II. First, Merger Sub 1 would merge with and into FSIC III, with FSIC III continuing as the surviving company (FSIC III is sometimes referred to in such capacity as “Surviving Company 1”). Immediately following Merger 1A, in a subsequent combination, Surviving Company 1 would merge with and into FSIC II (“Merger 1B”), with FSIC II as the surviving company in Merger 1B. Following Merger 1B, Merger Sub 2 would merge with and into CCT II (“Merger 2A”), with CCT II as the surviving company in Merger 2A (CCT II is sometimes referred to in such capacity as “Surviving Company 2”). Immediately after Merger 2A, Surviving Company 2 would merge with and into FSIC II (“Merger 2B”), with FSIC II as the surviving company in Merger 2B. Following Merger 2B,

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Merger Sub 3 would merge with and into FSIC IV (“Merger 3A”), with FSIC IV as the surviving company in Merger 3A (FSIC IV is sometimes referred to in such capacity as “Surviving Company 3”). Immediately after Merger 3A, Surviving Company 3 would merge with and into FSIC II, with FSIC II as the surviving company in Merger 3B and ultimate survivor of the Mergers. Merger 1A is a condition precedent to Merger 2A and Merger 3A, but Merger 2A is not a condition precedent to Merger 1A or Merger 3A and Merger 3A is not a condition precedent to Merger 1A or Merger 2A.

Subject to the terms and conditions of the Merger Agreement, if Merger 1A is completed, each holder of common stock of FSIC III issued and outstanding immediately prior to the effective time of Merger 1A will have the right to receive, for each share of common stock held, that number of shares of common stock of FSIC II with a net asset value (“NAV”) equal to the NAV of a share of such common stock held, in each case calculated as of the same date within 48 hours (excluding Sundays and holidays) prior to the closing of the Mergers (the “FSIC III Merger Consideration”). Holders of common stock of FSIC III, CCT II and FSIC IV will receive cash in lieu of fractional shares at the discretion of FSIC II.

The value of the FSIC III Merger Consideration will fluctuate with changes in the NAV of FSIC II.

Your vote is extremely important. At the FSIC III Annual Meeting, you will be asked to vote on (i) the FSIC III Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC III Charter Amendment Proposals, (iv) the FSIC III Director Election Proposal and (v) the FSIC III Auditor Ratification Proposal. Please see “The Annual Meetings” contained in this joint proxy statement/prospectus for additional information regarding the minimum votes required for approval of these proposals.

After careful consideration, the board of directors of FSIC III unanimously recommends that FSIC III stockholders vote “FOR” (i) the FSIC III Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC III Charter Amendment Proposals, (iv) the FSIC III Director Election Proposal and (v) the FSIC III Auditor Ratification Proposal.

It is important that your shares of FSIC III common stock be represented at the FSIC III Annual Meeting. If you are unable to attend the FSIC III Annual Meeting in person, we urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card. If you do not vote, it may result in FSIC III not having a sufficient quorum of one-third of outstanding FSIC III common stock represented in person or by proxy at the FSIC III Annual Meeting and a meeting cannot be held unless a quorum is present.

This joint proxy statement/prospectus concisely describes the FSIC III Annual Meeting, the Mergers, the documents related to the Mergers (including the Merger Agreement) and other related matters that FSIC III stockholders ought to know before voting on the FSIC III Merger Proposal and should be retained for future reference. Please carefully read this entire document, including “Risk Factors” beginning on page 24, for a discussion of the risks relating to the Mergers. You also can obtain information free of charge about FSIC II, FSIC III, CCT II and FSIC IV from documents that each has filed with the U.S. Securities and Exchange Commission. See “Where You Can Find More Information” for instructions on how to obtain such information.

Sincerely,

Michael C. Forman

Chairman and Chief Executive Officer of FS Investment Corporation III

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of common stock of FSIC II to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

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This joint proxy statement/prospectus is dated [●], 2019 and it is first being mailed or otherwise delivered to FSIC III stockholders on or about [●], 2019.

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FS INVESTMENT CORPORATION III

201 Rouse Boulevard

Philadelphia, PA 19112

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On [ ● ], 2019

To the Stockholders of FS Investment Corporation III:

NOTICE IS HEREBY GIVEN THAT an annual meeting of stockholders of FS Investment Corporation III (“FSIC III”) will be held at 201 Rouse Boulevard, Philadelphia, PA 19112 on [●], 2019, at [●]:00 [a.m.]/[p.m.], Eastern Time (together with any adjournments or postponements thereof, the “FSIC III Annual Meeting”), to consider and vote upon:

The FSIC III board of directors unanimously recommends that FSIC III stockholders vote “FOR” each of (i) the FSIC III Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC III Charter Amendment Proposals, (iv) the FSIC III Director Election Proposal and (v) the FSIC III Auditor Ratification Proposal.

It is important that your shares of FSIC III common stock be represented at the FSIC III Annual Meeting. If you are unable to attend the FSIC III Annual Meeting in person, please complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card.

The Mergers and the Merger Agreement are each described in more detail in this joint proxy statement/prospectus, which you should read carefully and in its entirety before authorizing a proxy to vote. Attached to this joint proxy statement/prospectus as Annex A is a copy of the Merger Agreement.

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The board of directors of FSIC III has fixed the close of business on [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the FSIC III Annual Meeting.

Important notice regarding the availability of proxy materials for the FSIC III Annual Meeting. FSIC III’s joint proxy statement/prospectus and the proxy card are available at www.proxyvote.com.

If you plan on attending the FSIC III Annual Meeting and voting your shares of FSIC III common stock in person, you will need to bring photo identification in order to be admitted to the FSIC III Annual Meeting. If your shares are held through a broker and you attend the FSIC III Annual Meeting in person, please bring a letter from your broker identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the FSIC III Annual Meeting. To obtain directions to the FSIC III Annual Meeting, please call FSIC III at (877) 628-8575.

By Order of the Board of Directors,

Stephen S. Sypherd

General Counsel and Secretary

[●], 2019

FSIC III stockholders are requested to promptly authorize a proxy over the Internet or by telephone, or execute and return the accompanying proxy card, which is being solicited by the board of directors of FSIC III. Instructions are shown on the proxy card. Authorizing a proxy is important to ensure a quorum at the FSIC III Annual Meeting. Proxies may be revoked at any time before they are exercised by submitting a written notice of revocation or a subsequently executed proxy, or by attending the FSIC III Annual Meeting and voting in person.

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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION—DATED JULY 3, 2019

CORPORATE CAPITAL TRUST II

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[●], 2019

Dear Fellow Shareholder:

You are cordially invited to attend an Annual Meeting of Shareholders (together with any adjournments or postponements thereof, the “CCT II Annual Meeting”) of Corporate Capital Trust II (“CCT II”) to be held at Corporate Capital Trust II, 201 Rouse Boulevard, Philadelphia, PA 19112 on [●], 2019 at [●]:00 [a.m.]/[p.m.], Eastern Time.

The Notice of Annual Meeting of Shareholders and joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the CCT II Annual Meeting. At the CCT II Annual Meeting, you will be asked to consider and vote upon:

FSIC II, FSIC III, CCT II and FSIC IV are proposing a combination of the four companies by merger and related transactions pursuant to the Merger Agreement, in which FSIC III, CCT II and FSIC IV would each first be merged with a wholly-owned subsidiary of FSIC II and, immediately thereafter, be merged into FSIC II. First, Merger Sub 1 would merge with and into FSIC III, with FSIC III continuing as the surviving company (FSIC III is sometimes referred to in such capacity as “Surviving Company 1,” and such transaction, “Merger 1A”). Immediately following Merger 1A, in a subsequent combination, Surviving Company 1 would merge with and into FSIC II (“Merger 1B”), with FSIC II as the surviving company in Merger 1B. Following Merger 1B, Merger Sub 2 would merge with and into CCT II, with CCT II as the surviving company in Merger 2A (CCT II is sometimes referred to in such capacity as “Surviving Company 2”). Immediately after Merger 2A, Surviving Company 2 would merge with and into FSIC II (“Merger 2B”), with FSIC II as the surviving company in Merger 2B. Following Merger 2B, Merger Sub 3 would merge with and into FSIC IV (“Merger 3A”), with FSIC IV as

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the surviving company in Merger 3A (FSIC IV is sometimes referred to in such capacity as “Surviving Company 3”). Immediately after Merger 3A, Surviving Company 3 would merge with and into FSIC II, with FSIC II as the surviving company in Merger 3B and ultimate survivor of the Mergers. Merger 1A is a condition precedent to Merger 2A and Merger 3A, but Merger 2A is not a condition precedent to Merger 1A or Merger 3A and Merger 3A is not a condition precedent to Merger 1A or Merger 2A.

Subject to the terms and conditions of the Merger Agreement, if Merger 2A is completed, each holder of common stock of CCT II issued and outstanding immediately prior to the effective time of Merger 2A will have the right to receive, for each share of common stock held, that number of shares of common stock of FSIC II with a net asset value (“NAV”) equal to the NAV of a share of such common stock held, in each case calculated as of the same date within 48 hours (excluding Sundays and holidays) prior to the closing of the Mergers (the “CCT II Merger Consideration”). Holders of common stock of FSIC III, CCT II and FSIC IV will receive cash in lieu of fractional shares at the discretion of FSIC II.

The value of the CCT II Merger Consideration will fluctuate with changes in the NAV of FSIC II.

Your vote is extremely important. At the CCT II Annual Meeting, you will be asked to vote on the (i) the CCT II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the CCT II Charter Amendment Proposals, (iv) the CCT II Trustee Election Proposal and (v) the CCT II Auditor Ratification Proposal. Please see “The Annual Meetings” contained in this joint proxy statement/prospectus for additional information regarding the minimum votes required for approval of these proposals.

After careful consideration, the board of trustees of CCT II unanimously recommends that CCT II shareholders vote “FOR” (i) the CCT II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the CCT II Charter Amendment Proposals, (iv) the CCT II Trustee Election Proposal and (v) the CCT II Auditor Ratification Proposal.

It is important that your shares of CCT II common stock be represented at the CCT II Annual Meeting. If you are unable to attend the CCT II Annual Meeting in person, we urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card. If you do not vote, it may result in CCT II not having a sufficient quorum of one-third of outstanding CCT II common stock represented in person or by proxy at the CCT II Annual Meeting and a meeting cannot be held unless a quorum is present.

This joint proxy statement/prospectus concisely describes the CCT II Annual Meeting, the Mergers, the documents related to the Mergers (including the Merger Agreement) and other related matters that CCT II shareholders ought to know before voting on the CCT II Merger Proposal and should be retained for future reference. Please carefully read this entire document, including “Risk Factors” beginning on page 24, for a discussion of the risks relating to the Mergers. You also can obtain information free of charge about FSIC II, FSIC III, CCT II and FSIC IV from documents that each has filed with the U.S. Securities and Exchange Commission. See “Where You Can Find More Information” for instructions on how to obtain such information.

Sincerely,

Michael C. Forman

Chief Executive Officer of Corporate Capital Trust II

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of common stock of FSIC II to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

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This joint proxy statement/prospectus is dated [●], 2019 and it is first being mailed or otherwise delivered to CCT II shareholders on or about [●], 2019.

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CORPORATE CAPITAL TRUST II

201 Rouse Boulevard

Philadelphia, PA 19112

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Corporate Capital Trust II:

NOTICE IS HEREBY GIVEN THAT an annual meeting of shareholders of Corporate Capital Trust II (“CCT II”) will be held at 201 Rouse Boulevard, Philadelphia, PA 19112 on [●], 2019, at [●]:00 [a.m.]/[p.m.], Eastern Time (together with any adjournments or postponements thereof, the “CCT II Annual Meeting”), to consider and vote upon:

The CCT II board of trustees unanimously recommends that CCT II stockholders vote “FOR” each of (i) the CCT II Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the CCT II Charter Amendment Proposals, (iv) the CCT II Trustee Election Proposal and (v) the CCT II Auditor Ratification Proposal.

It is important that your shares of CCT II common stock be represented at the CCT II Annual Meeting. If you are unable to attend the CCT II Annual Meeting in person, please complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card.

The Mergers and the Merger Agreement are each described in more detail in this joint proxy statement/prospectus, which you should read carefully and in its entirety before authorizing a proxy to vote. Attached to this joint proxy statement/prospectus as Annex A is a copy of the Merger Agreement.

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The board of trustees of CCT II has fixed the close of business on [●], 2019 as the record date for the determination of shareholders entitled to notice of, and to vote at, the CCT II Annual Meeting.

Important notice regarding the availability of proxy materials for the CCT II Annual Meeting. CCT II’s joint proxy statement/prospectus and the proxy card are available at www.proxyvote.com.

If you plan on attending the CCT II Annual Meeting and voting your shares of CCT II Common Stock in person, you will need to bring photo identification in order to be admitted to the CCT II Annual Meeting. If your shares are held through a broker and you attend the CCT II Annual Meeting in person, please bring a letter from your broker identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the CCT II Annual Meeting. To obtain directions to the CCT II Annual Meeting, please call CCT II at (877) 628-8575.

By Order of the Board of Trustees,

Stephen Sypherd

General Counsel and Secretary

Philadelphia, Pennsylvania

[●], 2019

[●], 2019

CCT II shareholders are requested to promptly authorize a proxy over the Internet or by telephone, or execute and return the accompanying proxy card, which is being solicited by the board of trustees of CCT II. Instructions are shown on the proxy card. Authorizing a proxy is important to ensure a quorum at the CCT II Annual Meeting. Proxies may be revoked at any time before they are exercised by submitting a written notice of revocation or a subsequently executed proxy, or by attending the CCT II Annual Meeting and voting in person.

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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION—DATED JULY 3, 2019

FS INVESTMENT CORPORATION IV

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear Fellow Stockholder:

You are cordially invited to attend an Annual Meeting of Stockholders of FS Investment Corporation IV (“FSIC IV”) to be held on [●], 2019 at [●] [a.m.]/[p.m.], Eastern Time, at 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112 (together with any adjournments or postponements thereof, the “FSIC IV Annual Meeting”).

The Notice of Annual Meeting of Stockholders and joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the FSIC IV Annual Meeting. At the FSIC IV Annual Meeting, you will be asked to consider and vote upon:

FSIC II, FSIC III, CCT II, and FSIC IV are proposing a combination of the four companies by merger and related transactions pursuant to the Merger Agreement, in which FSIC III, CCT II and FSIC IV would each first be merged with a wholly-owned subsidiary of FSIC II and, immediately thereafter, be merged into FSIC II. First, Merger Sub 1 would merge with and into FSIC III, with FSIC III continuing as the surviving company (FSIC III is sometimes referred to in such capacity as “Surviving Company 1,” and such transaction, “Merger 1A”). Immediately following Merger 1A, in a subsequent combination, Surviving Company 1 would merge with and into FSIC II (“Merger 1B”), with FSIC II as the surviving company in Merger 1B. Following Merger 1B, Merger Sub 2 would merge with and into CCT II (“Merger 2A”), with CCT II as the surviving company in Merger 2A

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(CCT II is sometimes referred to in such capacity as “Surviving Company 2”). Immediately after Merger 2A, Surviving Company 2 would merge with and into FSIC II (“Merger 2B”), with FSIC II as the surviving company in Merger 2B. Following Merger 2B, Merger Sub 3 would merge with and into FSIC IV, with FSIC IV as the surviving company in Merger 3A (FSIC IV is sometimes referred to in such capacity as “Surviving Company 3”). Immediately after Merger 3A, Surviving Company 3 would merge with and into FSIC II, with FSIC II as the surviving company in Merger 3B and ultimate survivor of the Mergers. Merger 1A is a condition precedent to Merger 2A and Merger 3A, but Merger 2A is not a condition precedent to Merger 1A or Merger 3A and Merger 3A is not a condition precedent to Merger 1A or Merger 2A.

Subject to the terms and conditions of the Merger Agreement, if Merger 3A is completed, each holder of common stock of FSIC IV, issued and outstanding immediately prior to the effective time of Merger 3A will have the right to receive, for each share of common stock held, that number of shares of common stock of FSIC II with a net asset value (“NAV”) equal to the NAV of a share of such common stock held, in each case calculated as of the same date within 48 hours (excluding Sundays and holidays) prior to the closing of the Mergers (the “FSIC IV Merger Consideration”).

Holders of common stock of FSIC III, CCT II and FSIC IV will receive cash in lieu of fractional shares at the discretion of FSIC II.

The value of the FSIC IV Merger Consideration will fluctuate with changes in the NAV of FSIC II.

Your vote is extremely important. At the FSIC IV Annual Meeting, you will be asked to vote on (i) the FSIC IV Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC IV Charter Amendment Proposals, (iv) the FSIC IV Director Election Proposal and (v) the FSIC IV Auditor Ratification Proposal. Please see “The Annual Meetings” contained in this joint proxy statement/prospectus for additional information regarding the minimum votes required for approval of these proposals.

After careful consideration, the board of directors of FSIC IV unanimously recommends that FSIC IV stockholders vote “FOR” each of (i) the FSIC IV Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC IV Charter Amendment Proposals, (iv) the FSIC IV Director Election Proposal and (v) the FSIC IV Auditor Ratification Proposal.

It is important that your shares of FSIC IV common stock be represented at the FSIC IV Annual Meeting. If you are unable to attend the FSIC IV Annual Meeting in person, we urge you to complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card. If you do not vote, it may result in FSIC IV not having a sufficient quorum of one-third of outstanding FSIC IV common stock represented in person or by proxy at the FSIC IV Annual Meeting and a meeting cannot be held unless a quorum is present.

This joint proxy statement/prospectus concisely describes the FSIC IV Annual Meeting, the Mergers, the documents related to the Mergers (including the Merger Agreement) and other related matters that FSIC IV stockholders ought to know before voting on the FSIC IV Merger Proposal and should be retained for future reference. Please carefully read this entire document, including “Risk Factors” beginning on page 24, for a discussion of the risks relating to the Mergers. You also can obtain information free of charge about FSIC II, FSIC III, CCT II and FSIC IV from documents that each has filed with the U.S. Securities and Exchange Commission. See “Where You Can Find More Information” for instructions on how to obtain such information.

Sincerely,

Michael C. Forman

Chairman and Chief Executive Officer of FS Investment Corporation IV

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Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of common stock of FSIC II to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [●], 2019 and it is first being mailed or otherwise delivered to FSIC IV stockholders on or about [●], 2019.

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FS INVESTMENT CORPORATION IV

201 Rouse Boulevard

Philadelphia, PA 19112

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On [ ● ], 2019

To the Stockholders of FS Investment Corporation IV:

NOTICE IS HEREBY GIVEN THAT an annual meeting of stockholders of FS Investment Corporation IV (“FSIC IV”) will be held at 201 Rouse Boulevard, Philadelphia, PA 19112 on [●], 2019, at [●]:00 [a.m.]/[p.m.], Eastern Time (together with any adjournments or postponements thereof, the “FSIC IV Annual Meeting”), to consider and vote upon:

The FSIC IV board of directors has unanimously recommends that FSIC IV stockholders vote “FOR” each of (i) the FSIC IV Merger Proposal, (ii) the Recapitalization Transaction Advisory Proposal, (iii) the FSIC IV Charter Amendment Proposals, (iv) the FSIC IV Director Election Proposal and (v) the FSIC IV Auditor Ratification Proposal.

It is important that your shares of FSIC IV common stock be represented at the FSIC IV Annual Meeting. If you are unable to attend the FSIC IV Annual Meeting in person, please complete, date and sign the enclosed proxy card and promptly return it in the envelope provided. If you prefer, you can save time by voting through the Internet or by telephone as described in this joint proxy statement/prospectus and on the enclosed proxy card.

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The Mergers and the Merger Agreement are each described in more detail in this joint proxy statement/prospectus, which you should read carefully and in its entirety before authorizing a proxy to vote. Attached to this joint proxy statement/prospectus as Annex A is a copy of the Merger Agreement.

The board of directors of FSIC IV has fixed the close of business on [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the FSIC IV Annual Meeting.

Important notice regarding the availability of proxy materials for the FSIC IV Annual Meeting. FSIC IV’s joint proxy statement/prospectus and the proxy card are available at www.proxyvote.com.

If you plan on attending the FSIC IV Annual Meeting and voting your shares of FSIC IV common stock in person, you will need to bring photo identification in order to be admitted to the FSIC IV Annual Meeting. If your shares are held through a broker and you attend the FSIC IV Annual Meeting in person, please bring a letter from your broker identifying you as the beneficial owner of the shares and authorizing you to vote your shares at the FSIC IV Annual Meeting. To obtain directions to the FSIC IV Annual Meeting, please call FSIC IV at (877) 628-8575.

By Order of the Board of Directors,

Stephen S. Sypherd

General Counsel and Secretary

[●], 2019

FSIC IV stockholders are requested to promptly authorize a proxy over the Internet or by telephone, or execute and return the accompanying proxy card, which is being solicited by the board of directors of FSIC IV. Instructions are shown on the proxy card. Authorizing a proxy is important to ensure a quorum at the FSIC IV Annual Meeting. Proxies may be revoked at any time before they are exercised by submitting a written notice of revocation or a subsequently executed proxy, or by attending the FSIC IV Annual Meeting and voting in person.

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ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form N-14 filed with the U.S. Securities and Exchange Commission (the “SEC”) by FSIC II (File No. [●]), constitutes a prospectus of FSIC II under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the shares of FSIC II Common Stock (as defined below) to be issued to stockholders of the Acquired Funds (as defined below) as required by the Merger Agreement (as defined below).

This document also constitutes joint proxy statements of the Fund Parties (as defined below) under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to: (1) the FSIC II Annual Meeting (as defined below), at which FSIC II stockholders will be asked to vote upon the FSIC II Annual Meeting Proposals (as defined below); (2) the FSIC III Annual Meeting (as defined below), at which FSIC III stockholders will be asked to vote on the FSIC III Annual Meeting Proposals (as defined below); (3) the CCT II Annual Meeting (as defined below), at which CCT II stockholders will be asked to vote on the CCT II Annual Meeting Proposals (as defined below); and (4) the FSIC IV Annual Meeting (as defined below), at which FSIC IV stockholders will be asked to vote on the FSIC IV Annual Meeting Proposals (as defined below).

You should rely only on the information contained in this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [●], 2019. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date. Neither the mailing of this joint proxy statement/prospectus to the stockholders of the Fund Parties nor the issuance of FSIC II Common Stock in connection with the Mergers (as defined below) will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Except where the context otherwise indicates, information contained in this joint proxy statement/prospectus regarding each Fund Party (as defined below) has been provided by the respective Fund Party.

When used in this document, unless otherwise indicated in this document or the context otherwise requires:

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETINGS AND THE MERGERS

The questions and answers below highlight only selected information from this joint proxy statement/prospectus. They do not contain all of the information that may be important to you. You should read carefully this entire document to fully understand the Merger Agreement and the transactions contemplated thereby (including the Mergers) and the voting procedures for the Annual Meetings.

Questions and Answers about the Annual Meetings

This joint proxy statement/prospectus and the accompanying materials are being mailed on or about [●], 2019 to stockholders of record of the Fund Parties described below and are available at www.proxyvote.com.

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At the FSIC III Annual Meeting, FSIC III stockholders will be asked to approve:

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At the CCT II Annual Meeting, CCT II stockholders will be asked to approve:

At the FSIC IV Annual Meeting, FSIC IV stockholders will be asked to approve:

The FSIC III Board, including each of the independent directors, unanimously recommends that FSIC III stockholders vote “FOR” each of the FSIC III Annual Meeting Proposals.

The CCT II Board, including each of independent trustees, unanimously recommends that CCT II shareholders vote “FOR” each of the CCT II Annual Meeting Proposals.

The FSIC IV Board, including each of the independent directors, unanimously recommends that FSIC IV stockholders vote “FOR” each of the FSIC IV Annual Meeting Proposals.

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Important notice regarding the availability of proxy materials for the Annual Meetings. This joint proxy statement/prospectus and applicable proxy cards are available at www.proxyvote.com.

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Under the CCT II Charter and the bylaws of CCT II as currently in effect (the “CCT II Bylaws”), the presence in person or by proxy of the stockholders of CCT II holding fifty percent of the outstanding shares of CCT II Common Stock constitutes a quorum for the transaction of business.

Abstentions will be treated as shares of common stock that are present for purposes of determining the presence of a quorum for transacting business at each Fund Party’s Annual Meeting.

A “broker non-vote” occurs when a broker, bank or other institution or nominee holding shares on behalf of a beneficial owner and present (in person or by proxy) at a meeting for purposes of voting on a routine proposal (or a non-routine proposal for which it has received instructions from the beneficial owner) has not received voting instructions from the beneficial owner of the shares on a particular proposal and does not have, or chooses not to exercise, discretionary authority to vote the shares on such proposal. All of the proposals to be considered at the Annual Meetings are non-routine matters, other than the ratifications of the appointments of the independent registered public accounting firm, which are routine matters.

Because the proposal to ratify the appointment of the independent public accounting firm of each Fund Party is a routine matter, if a beneficial owner does not instruct its broker, bank or other institution or nominee holding its shares of a Fund Party’s common stock on its behalf with respect to any of the proposals to be considered at the applicable Annual Meeting, such shares of common stock may still be treated as present for purposes of determining the presence of a quorum for transacting business at the applicable Annual Meeting.

In the event that a quorum is not present or if it appears that there are not enough votes to approve the proposals presented at the Annual Meetings of the FS Funds, the chairman of such Annual Meeting shall have the power to adjourn the such Annual Meeting from time to time to a date not more than 120 days after the record date originally fixed for such Annual Meeting without notice, other than the announcement at such Annual Meeting, to permit further solicitation of proxies. Any business that might have been transacted at such Annual Meeting originally called may be transacted at any such adjourned session(s) at which a quorum is present.

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In the event that a quorum is not present or if it appears that there are not enough votes to approve the proposals presented at the CCT II Annual Meeting, the chairman of the CCT II Acquired Fund’s Annual Meeting or the stockholders entitled to vote at the CCT II Annual Meeting shall have the power to adjourn the CCT II Annual Meeting from time to time to a date not more than 120 days after the record date originally fixed for the CCT II Annual Meeting without notice, other than the announcement at the CCT II Annual Meeting, to permit further solicitation of proxies. Any business that might have been transacted at the CCT II Annual Meeting originally called may be transacted at any such adjourned session(s) at which a quorum is present.

If sufficient votes in favor of one proposal have been received at the time of the any annual meeting, such proposal will be acted upon and such action will be final, regardless of any subsequent adjournments to consider other proposals.

In addition to the solicitation of proxies by mail, proxies may be solicited in person and by telephone or facsimile transmission by directors, officers or employees of each of the Fund Parties and their respective affiliates (without special compensation therefor). Each of the Fund Parties have also retained Broadridge Investor Communication Solutions, Inc. to assist in the solicitation of proxies, and it is expected that FSIC II will pay an estimated fee of approximately $355,000, FSIC III will pay an estimated fee of approximately $325,000, CCT II will pay an estimated fee of approximately $29,000 and FSIC IV will pay an estimated fee of approximately $59,000, plus out-of-pocket expenses.

For more information regarding expenses related to the Mergers, see “Questions and Answers about the Mergers—‘Who is responsible for paying the expenses relating to completing the Mergers?’”

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The registration statement (of which this joint proxy statement/prospectus forms a part), each Notice of Annual Meeting of Stockholders and each proxy card are available at www.proxyvote.com.

Pursuant to the rules adopted by the SEC, each of the Fund Parties will furnish proxy materials by email to those stockholders who have elected to receive their proxy materials electronically. While each of the Fund Parties encourages its stockholders to take advantage of electronic delivery of proxy materials, which helps to reduce the environmental impact of stockholder meetings and the cost associated with the physical printing and mailing of materials, stockholders who have elected to receive proxy materials electronically by email, as well as beneficial owners of shares of FSIC II Common Stock, FSIC III Common Stock, CCT II Common Stock and FSIC IV Common Stock, as applicable, held by a broker or custodian, may request a printed set of proxy materials.

Broadridge Financial Solutions, Inc.

51 Mercedes Way

Edgewood, New York 11717

1-833-868-3374.

Questions and Answers about the Mergers

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In Merger 1A, Merger Sub 1, a wholly owned subsidiary of FSIC II, will merge with and into FSIC III. FSIC III will be the surviving company of such merger. Immediately following such merger, FSIC III shall merge with and into FSIC II, with FSIC II continuing as the surviving company. Merger 1A is a condition precedent to the other Mergers.

In Merger 2A, Merger Sub 2, a wholly owned subsidiary of FSIC II, will merge with and into CCT II. CCT II will be the surviving company of such merger. Immediately following such merger, CCT II shall merge with and into FSIC II, with FSIC II continuing as the surviving company. Merger 2A is not a condition precedent to any other Merger.

In Merger 3A, Merger Sub 3, a wholly owned subsidiary of FSIC II, will merge with and into FSIC IV. FSIC IV will be the surviving company of such merger. Immediately following such merger, FSIC IV shall merge with and into FSIC II, with FSIC II continuing as the surviving company. Merger 3A is not a condition precedent to any other Merger.

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No dividends or other distributions with respect to the FSIC II Common Stock will be paid to the holder of any unsurrendered shares of common stock of the Acquired Funds with respect to the shares of the FSIC II Common Stock represented thereby, in each case unless such shares are surrendered in accordance with the Merger Agreement. Following surrender of any such shares of FSIC III Common Stock, CCT II Common Stock or FSIC IV Common Stock, the record holders of such shares of such common stock, as applicable, shall be entitled to receive, without interest, (i) the amount of dividends or other distributions with a record date after the Effective Time theretofore payable with respect to the whole shares of FSIC II Common Stock represented by such shares of FSIC III Common Stock, CCT II Common Stock or FSIC IV Common Stock, respectively, and not paid and/or (ii) at the appropriate payment date, the amount of dividends or other distributions payable with respect to shares of FSIC II Common Stock represented by such shares of common stock of the Acquired Funds, with a record date after the Effective Time (but before such surrender date) and with a payment date subsequent to the issuance of the FSIC II Common Stock issuable with respect to such shares of common stock of the Acquired Funds.

The Fund Parties have agreed to cooperate with each other and use their reasonable best efforts to take, or cause to be taken, in good faith, all actions, and to do, or cause to be done, all things necessary, including to obtain as promptly as practicable all consents, approvals, confirmations and authorizations of all third parties, in each case, that are necessary or advisable, to consummate the transactions contemplated by the Merger Agreement, including the Mergers, in the most expeditious manner practicable. There can be no assurance that any consents, approvals, confirmations or authorizations will be obtained or that such consents, approvals, confirmations or authorizations will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following the Mergers.

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If Merger 2A does not occur, CCT II’s stockholders will not receive any payment for their shares of CCT II Common Stock. Instead, CCT II will remain an independent company.

If Merger 3A does not occur, FSIC IV’s stockholders will not receive any payment for their shares of FSIC IV Common Stock. Instead, FSIC IV will remain an independent company.

Questions and Answers about the Recapitalization Transaction

Each of the Fund Parties is seeking an advisory vote of its stockholders of the Recapitalization Transaction because FSIC II is considering whether to consummate the Recapitalization Transaction following the closing of the Mergers.

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While there are limited comparables in the BDC sector, there is a well-developed and liquid market for $25.00 par preferred stock securities, including in the property real estate investment trust (“REIT”) and mortgage REIT sectors. The analysis covered a broad range of issuers as well as structures, including fixed and floating rate securities, and issuance sizes.

The combined company’s expected distribution rate takes into account the results of the competitor analysis as well as the preferred dividend required to achieve the objective of aligning the dividend yield on the combined company’s common shares to a competitive level with the largest publicly traded BDCs.

Questions and Answers about the Listing

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RISK FACTORS

In addition to the other information included in this document, stockholders should carefully consider the matters described below in determining whether to approve (i) in the case of FSIC II stockholders, the FSIC II Annual Meeting Proposals, (ii) in the case of FSIC III stockholders, the FSIC III Annual Meeting Proposals, (iii) in the case of CCT II stockholders, the CCT II Annual Meeting Proposals and (iv) in the case of FSIC IV stockholders, the FSIC IV Annual Meeting Proposals. The risks set out below are not the only risks the Fund Parties and, following the Mergers, the combined company, face. Additional risks and uncertainties not currently known to the Fund Parties or that they currently deem to be immaterial also may materially adversely affect their or, following the Mergers, the combined company’s, business, financial condition or operating results. If any of the following events occur, the Fund Parties or, following the Mergers, the combined company’s, business, financial condition or results of operations could be materially adversely affected.

Risks Relating to the Mergers

Because the NAV per share of FSIC II Common Stock will fluctuate, the Acquired Funds’ common stockholders cannot be sure of the value of the Merger Consideration they will receive until the Closing Date.

The value of the Merger Consideration may vary from the value on the date the Mergers were announced, on the date that this joint proxy statement/prospectus was mailed to stockholders, on the date of the Annual Meetings and on the date the Mergers are completed and thereafter. Any change in the value of FSIC II Common Stock prior to completion of the Mergers will affect the value of the Merger Consideration that Acquired Funds’ stockholders will receive upon completion of the Mergers.

Accordingly, at the time of the FSIC III Annual Meeting, the CCT II Annual Meeting and the FSIC IV Annual Meeting, the Acquired Funds’ stockholders will not know or be able to calculate the value of the Merger Consideration they would receive upon completion of the Mergers. None of the Fund Parties are permitted to terminate the Merger Agreement or resolicit the vote of their respective stockholders solely because of changes in the value of shares of FSIC II Common Stock. There will be no adjustment to the Merger Consideration for changes in the value of shares of FSIC II Common Stock. Changes in the value of FSIC II Common Stock may result from a variety of factors, including, among other things, (i) changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; (ii) loss of RIC or BDC status; (iii) changes in earnings or variations in operating results; (iv) changes in the value of their portfolio of investments; (v) changes in accounting guidelines governing valuation of their investments; (vi) any shortfall in revenue or net income or any increase in losses from levels expected by investors; (vii) departure of their investment adviser or certain of its key personnel; (viii) general economic trends and other external factors; and (ix) loss of a major funding source. These factors are generally beyond the control of FSIC II. See “Special Note Regarding Forward-Looking Statements” for other factors that could cause the value of FSIC II Common Stock to change.

Stockholders of the Fund Parties will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers.

Stockholders of the Fund Parties will experience a substantial reduction in their respective percentage ownership interests and effective voting power in respect of the combined company relative to their respective percentage ownership interests in the Fund Parties prior to the Mergers. Consequently, stockholders of the Fund Parties should expect to exercise less influence over the management and policies of the combined company following the Mergers than they currently exercise over the management and policies of the applicable Fund Party or Fund Parties.

If each of the Mergers is consummated, based on the number of shares of FSIC II Common Stock issued and outstanding on March 31, 2019, the NAV per share of FSIC II Common Stock, FSIC III Common Stock, CCT II Common Stock and FSIC IV Common Stock, each as of March 31, 2019, it is expected that FSIC II

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stockholders will own approximately 49.4% of the outstanding stock of the combined company, FSIC III stockholders will own approximately 42.3% of the outstanding stock of the combined company, CCT II stockholders will own approximately 2.0% of the outstanding stock of the combined company and FSIC IV stockholders will own approximately 6.3% of the outstanding stock of the combined company. In addition, both prior to and after completion of the Mergers, subject to certain restrictions in the Merger Agreement and stockholder approval, FSIC II may issue additional shares of FSIC II Common Stock (including, subject to certain restrictions under the 1940 Act, at prices below FSIC II Common Stock’s then current NAV per share), all of which would further reduce the percentage ownership of the combined company held by former FSIC III stockholders, CCT II stockholders, FSIC IV stockholders and current FSIC II stockholders. In addition, the issuance or sale by FSIC II of shares of FSIC II Common Stock at a discount to NAV poses a risk of dilution to stockholders.

FSIC II may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.

The realization of certain benefits anticipated as a result of the Mergers will depend in part on the integration of the Acquired Funds’ investment portfolios with FSIC II’s and the integration of the Acquired Funds’ business with FSIC II’s. There can be no assurance that the Acquired Funds’ investment portfolios or businesses can be operated profitably or integrated successfully into FSIC II’s operations in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of the combined company and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts. Such effects, including, but not limited to, incurring unexpected costs or delays in connection with such integration and failure of the Acquired Funds’ investment portfolios to perform as expected, could have a material adverse effect on the financial results of the combined company.

FSIC II also expects to achieve certain cost savings from the Mergers when the four companies have fully integrated their portfolios. It is possible that the estimates of the potential cost savings could ultimately be incorrect. The cost savings estimates also assume FSIC II will be able to combine the operations of the Acquired Funds with its operations in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if FSIC II is not able to successfully combine the Acquired Funds’ investment portfolios or businesses with the operations of FSIC II, the anticipated cost savings may not be fully realized or realized at all or may take longer to realize than expected.

The Mergers may trigger certain “change of control” provisions and other restrictions in contracts of the Fund Parties or their affiliates and the failure to obtain any required consents or waivers could adversely impact the combined company.

Certain agreements of the Fund Parties or their affiliates will or may require by their terms the consent or waiver of one or more counterparties in connection with the Mergers. The failure to obtain any such consent or waiver may permit such counterparties to terminate, or otherwise increase their rights or any of the Fund Parties’ obligations under, any such agreement because the Mergers or other transactions contemplated by the Merger Agreement may violate an anti-assignment, change of control or similar provision relating to any of such transactions. If this occurs, FSIC II may have to seek to replace that agreement with a new agreement or seek an amendment to such agreement. The Fund Parties cannot assure you that FSIC II will be able to replace or amend any such agreement on comparable terms or at all.

If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Mergers, including preventing FSIC II from operating a material part of the Acquired Funds’ businesses.

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In addition, the consummation of the Mergers may violate, conflict with, result in a breach of provisions of, or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under, certain agreements of one or more of the Fund Parties. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Mergers.

If one or more of the Mergers do not close, certain of the Fund Parties will not benefit from the expenses incurred in its pursuit.

One or more of the Mergers may not be completed. If one or more of the Mergers are not completed, the applicable Fund Parties will have incurred substantial expenses for which no ultimate benefit will have been received. Each of the Fund Parties has incurred out-of-pocket expenses in connection with the Mergers for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if one or more of the Mergers are not completed.

The termination of the Merger Agreement could negatively impact each of the Fund Parties.

If the Merger Agreement is terminated, there may be various consequences, including: (i) the Fund Parties’ businesses may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers, and (ii) in the case of the Acquired Funds, they may not be able to find a party willing to pay an equivalent or more attractive price than the price FSIC II agreed to pay in the Mergers.

The Merger Agreement limits the Acquired Funds’ ability to pursue alternatives to the Mergers.

The Merger Agreement contains provisions that limit the Acquired Funds’ ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of such Fund Party. These provisions, which are typical for transactions of this type, might discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of the Acquired Funds from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the Mergers or might result in a potential competing acquiror proposing to pay a lower per share price to acquire one or more of the Acquired Funds, as applicable, than it might otherwise have proposed to pay.

The Mergers are subject to closing conditions, including the occurrence of Merger 1A and the required stockholder approvals, that, if not satisfied or waived, will result in the Mergers not being completed, which may result in material adverse consequences to the Fund Parties’ business and operations.

The Mergers are subject to closing conditions, including the occurrence of Merger 1A and certain approvals of the Fund Parties’ respective stockholders that, if not satisfied, will prevent the Mergers from being completed. The closing condition that each of the Acquired Funds’ stockholders approve the Mergers and the Merger Agreement and that each Fund Party approve the applicable Merger Amendment Charter Proposals may not be waived under applicable law and must be satisfied for the Mergers to be completed. The Fund Parties each currently expect that all of their directors and executive officers will vote their shares of common stock in favor of the proposals presented at the annual meeting of each Fund Party. If the Fund Parties’ stockholders do not approve the required stockholder matters and the Mergers are not completed, the resulting failure of the Mergers could have a material adverse impact on the Fund Parties’ businesses and operations.

The Fund Parties will be subject to operational uncertainties and contractual restrictions while the Mergers are pending.

Uncertainty about the effect of the Mergers may have an adverse effect on each of the Fund Parties and, consequently, on the combined company following completion of the Mergers. These uncertainties may impair

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each of the Fund Parties’ abilities to motivate key personnel until the Mergers are consummated and could cause those that deal with each of the Fund Parties to seek to change their existing business relationships with the Fund Parties. In addition, the Merger Agreement restricts each of the Fund Parties from taking actions that they might otherwise consider to be in their best interests. These restrictions may prevent the Fund Parties from pursuing certain business opportunities that may arise prior to the completion of the Mergers. Please see the section entitled “Description of the Merger Agreement—Conduct of Business Pending Completion of the Mergers” for a description of the restrictive covenants to which each of the Fund Parties is subject.

The Fund Parties may waive one or more conditions to the Mergers without resoliciting stockholder approval.

Certain conditions to the Fund Parties’ obligations to complete the Mergers may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of the Fund Parties. In the event that any such waiver does not require resolicitation of stockholders, the parties to the Merger Agreement will have the discretion to complete the Mergers without seeking further stockholder approval. The conditions requiring the approval of each Fund Party’s stockholders, however, cannot be waived.

The value of FSIC II Common Stock after the Mergers may be affected by factors different from those affecting FSIC II Common Stock currently.

The businesses of each of the Fund Parties differ in some respects and, accordingly, the results of operations of the combined company and the value of FSIC II Common Stock after the Mergers may be affected by factors different from those currently affecting the independent results of operations of each of the Fund Parties. These factors include:

Accordingly, the financial results of FSIC II may not be indicative of these matters for the combined company following the Mergers. For a discussion of the business of each of the Fund Parties and of certain factors to consider in connection with their businesses, see “Business of the Fund Parties.” As described elsewhere in the joint proxy statement/prospectus, the risks associated with an investment in each of the Fund Parties are substantially identical.

If the Recapitalization Transaction occurs, stockholders may not be able to resell shares of preferred stock of FSIC II issued in the Recapitalization Transaction because there is not expected to be an established market for such securities, and, in any case, such securities may trade at a significant discount to their liquidation preference.

The shares of FSIC II preferred stock which would be issued in the Recapitalization Transaction are expected to be illiquid assets for which there is not a secondary market. While FSIC II contemplates that at some point following a Listing, FSIC II will seek to list the shares of preferred stock on a national securities exchange, any such listing is not guaranteed and remains subject to market conditions and approval by the FSIC II Board.

There can be no assurance that an active trading market will develop for the preferred stock or that any trading market that does develop will be liquid. Even if an active trading market for the preferred stock does develop, the preferred stock may trade at a significant discount compared to more liquid securities. In addition, if the preferred stock is listed, the shares of preferred stock may trade at a significant discount to their liquidation preference, depending upon prevailing interest rates, the market for similar securities, and FSIC II’s financial and operating performance, among other factors.

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Risks Related to Economic Conditions

Future disruptions or instability in capital markets could negatively impact the valuation of the Fund Parties’ investments and their ability to raise capital.

From time to time, the global capital markets may experience periods of disruption and instability, which could be prolonged and which could materially and adversely impact the broader financial and credit markets, have a negative impact on the valuations of the Fund Parties’ investments and reduce the availability of debt and equity capital. For example, between 2008 and 2009, instability in the global capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major domestic and international financial institutions. In particular, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial firms declined, impairing their capital positions and abilities to lend and invest.

While most of the Fund Parties’ investments are not publicly traded, applicable accounting standards require them to assume as part of their valuation process that such investments are sold in a principal market to market participants (even if the Fund Parties plan on holding an investment through its maturity) and impairments of the market values or fair market values of their investments, even if unrealized, must be reflected in their financial statements for the applicable period, which could result in significant reductions to their NAV for the period. With certain limited exceptions, the Fund Parties are only allowed to borrow amounts or issue debt securities if their asset coverage, as calculated pursuant to the 1940 Act, equals at least 200% immediately after such borrowing. Equity capital may also be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as BDCs, the Fund Parties are generally not able to issue additional shares of their common stock at a price less than NAV without first obtaining approval for such issuance from the Fund Parties’ stockholders and independent directors or trustees, as applicable. If the Fund Parties are unable to raise capital or refinance existing debt on acceptable terms, then the Fund Parties may be limited in their ability to make new commitments or to fund existing commitments to their portfolio companies. Significant changes in the capital markets may also affect the pace of the Fund Parties’ investment activity and the potential for liquidity events involving their investments. Thus, the illiquidity of the Fund Parties’ investments may make it difficult for them to sell such investments to access capital if required, and as a result, they could realize significantly less than the value at which the Fund Parties have recorded their investments if they were required to sell them for liquidity purposes.

Uncertainty with respect to the financial stability of the United States and several countries in the European Union could have a significant adverse effect on the business, financial condition and results of operations of the Fund Parties.

In August 2011, S&P lowered its long-term sovereign credit rating on the U.S. from “AAA” to “AA+,” which was last affirmed by S&P in June 2018. Moody’s and Fitch Ratings, Inc. have also warned that they may downgrade the U.S. federal government’s credit rating. In addition, the economic downturn and the significant government interventions into the financial markets and fiscal stimulus spending over the last several years have contributed to significantly increased U.S. budget deficits. The U.S. government has on several occasions adopted legislation to suspend the federal debt ceiling to allow the U.S. Treasury Department to issue additional debt. Further downgrades or warnings by S&P or other rating agencies, and the U.S. government’s credit and deficit concerns in general, including issues around the federal debt ceiling, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with the Fund Parties’ debt portfolio and their ability to access the debt markets on favorable terms. Furthermore, in February 2014, the Federal Reserve began scaling back its bond-buying program, or quantitative easing, which it ended in October 2014. Quantitative easing was designed to stimulate the economy and expand the Federal Reserve’s holdings of long-term securities until key economic indicators, such as the unemployment rate, showed signs of improvement. The Federal Reserve also raised interest rates several times since the fourth quarter of 2015. To the

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extent the Federal Reserve continues to raise rates, and without quantitative easing by the Federal Reserve, there is a risk that the debt markets may experience increased volatility and that the liquidity of certain of the Fund Parties’ investments may be reduced. It is unclear what other effects, if any, the end of quantitative easing, future interest rate raises, if any, and the pace of any such raises will have on the value of the Fund Parties’ investments or their ability to access the debt markets on favorable terms.

In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt in Greece, Ireland, Italy, Portugal and Spain, which created concerns about the ability of these nations to continue to service their sovereign debt obligations. In January 2012, S&P lowered its long-term sovereign credit rating for France, Italy, Spain and six other European countries, which has negatively impacted global markets and economic conditions. In addition, in April 2012, S&P further lowered its long-term sovereign credit rating for Spain. While the financial stability of such countries has improved, risks resulting from any future debt crisis in Europe or any similar crisis could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in these countries and the financial condition of U.S. and European financial institutions. Furthermore, following the United Kingdom’s referendum to leave the European Union, (the “EU”), S&P lowered its long-term sovereign credit rating. Market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, could negatively impact the global economy, and there can be no assurance that assistance packages will be available, or if available, will be sufficient to stabilize countries and markets in Europe. To the extent uncertainty regarding any economic recovery in Europe negatively impacts consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, or other credit factors, the business, financial condition and results of operations of the Fund Parties could be significantly and adversely affected.

The Fund Parties may invest in European companies and companies that have operations that may be affected by the Eurozone economy.

The Fund Parties may invest in European companies and companies that have operations that may be affected by the Eurozone economy. For example, concerns regarding the sovereign debt of various Eurozone countries and proposals for investors to incur substantial write-downs and reductions in the face value of certain countries’ sovereign debt have given rise to new concerns about sovereign defaults, particularly following the vote by the United Kingdom to leave the EU, and the possibility that one or more further countries might leave the EU or the Eurozone and various proposals for support of affected countries and the Euro as a currency. The outcome of this situation cannot yet be predicted. Sovereign debt defaults and EU and/or Eurozone exits, could have material adverse effects on the Fund Parties’ investments in European companies, including, but not limited to, the availability of credit to support such companies’ financing needs, uncertainty and disruption in relation to financing, customer and supply contracts denominated in the Euro and wider economic disruption in markets served by those companies, while austerity and other measures introduced in order to limit or contain these issues may themselves lead to economic contraction and resulting adverse effects for the business, financial condition and results of operations of the Fund Parties. It is possible that a number of the Fund Parties’ investments will be denominated in the Euro. Greece, Ireland and Portugal received one or more “bailouts” from other members of the EU. Although several countries in the Eurozone have agreed to multi-year bailout loans with the European Central Bank and the International Monetary Fund, it is unclear how much additional funding these countries, or other Eurozone countries, will require. Legal uncertainty about the funding of Euro denominated obligations following any breakup or exits from the Eurozone (particularly in the case of investments in companies in affected countries) could also have material adverse effects on the business, financial condition and results of operations of the Fund Parties.

On June 23, 2016, the United Kingdom voted, via referendum, to exit from the EU, triggering political, economic and legal uncertainty. While such uncertainty most directly affects the United Kingdom and the EU, global markets suffered immediate and significant disruption. On March 29, 2017, the United Kingdom made a formal notification to the European Council under Article 50 of the Treaty on EU, which triggered a two year period during which the terms of an exit will be negotiated. The United Kingdom and the EU are therefore in a

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period of legal, regulatory and political uncertainty. The United Kingdom’s exit from the EU will impact the Fund Parties and their investments (and their underlying issuers) in a variety of ways, not all of which are currently readily apparent immediately following the exit vote. The Fund Parties may invest in portfolio companies and other issuers with significant operations and/or assets in the United Kingdom, any of which could be adversely impacted by any new legal, tax and regulatory environment, whether by increased costs or impediments to the implementation of their business plan. Further, the vote by the United Kingdom to leave the EU may increase the likelihood of similar referenda in other member states of the EU, which could result in additional departures from the EU and may trigger steps by countries within the United Kingdom to leave the United Kingdom. The uncertainty resulting from any such developments, or the possibility of such developments, would also be likely to cause significant market disruption in the EU and the United Kingdom and more broadly across the global economy, as well as introduce further legal, tax and regulatory uncertainty in the EU and the United Kingdom.

Economic sanction laws in the United States and other jurisdictions may prohibit the Fund Parties and their affiliates from transacting with certain countries, individuals and companies.

Economic sanction laws in the United States and other jurisdictions may prohibit the Fund Parties and their affiliates from transacting with certain countries, individuals and companies. In the United States, the U.S. Department of the Treasury’s Office of Foreign Assets Control administers and enforces laws, executive orders and regulations establishing U.S. economic and trade sanctions, which prohibit, among other things, transactions with, and the provision of services to, certain non-U.S. countries, territories, entities and individuals. These types of sanctions may significantly restrict or completely prohibit investment activities in certain jurisdictions, and if the Fund Parties or their portfolio companies or other issuers in which they invest were to violate any such laws or regulations, the Fund Parties may face significant legal and monetary penalties.

The Foreign Corrupt Practices Act (the “FCPA”), and other anti-corruption laws and regulations, as well as anti-boycott regulations, may also apply to and restrict the Fund Parties’ activities, their portfolio companies and other issuers of the Fund Parties’ investments. If an issuer or the Fund Parties were to violate any such laws or regulations, such issuer or the Fund Parties may face significant legal and monetary penalties. The U.S. government has indicated that it is particularly focused on FCPA enforcement, which may increase the risk that an issuer or the Fund Parties become the subject of such actual or threatened enforcement. In addition, certain commentators have suggested that private investment firms and the funds that they manage may face increased scrutiny and/or liability with respect to the activities of their underlying portfolio companies. As such, a violation of the FCPA or other applicable regulations by the Fund Parties or an issuer of the Fund Parties’ portfolio investments could have a material adverse effect on them. The Fund Parties are committed to complying with the FCPA and other anti-corruption laws and regulations, as well as anti-boycott regulations, to which it is subject. As a result, the Fund Parties may be adversely affected because of its unwillingness to enter into transactions that violate any such laws or regulations.

Future economic recessions or downturns could impair the Fund Parties’ portfolio companies and harm their operating results.

Many of the Fund Parties’ portfolio companies may be susceptible to economic slowdowns or recessions and may be unable to repay the Fund Parties’ debt investments during these periods. Therefore, the Fund Parties’ non-performing assets are likely to increase, and the value of each of the Fund Parties’ portfolios is likely to decrease during these periods. Adverse economic conditions may also decrease the value of any collateral securing the Fund Parties’ debt investments. A prolonged recession may further decrease the value of such collateral and result in losses of value in the Fund Parties’ portfolios and a decrease in the Fund Parties’ revenues, net income and NAV. Unfavorable economic conditions also could increase each of the Fund Parties’ funding costs, limit their access to the capital markets or result in a decision by lenders not to extend credit to the Fund Parties on terms they deem acceptable. These events could prevent the Fund Parties from increasing investments and harm their operating results. Economic downturns or recessions may also result in a portfolio

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company’s failure to satisfy financial or operating covenants imposed by the Fund Parties or other lenders, which could lead to defaults and, potentially, acceleration of the time when the loans are due and foreclosure on its assets representing collateral for its obligations, which could trigger cross defaults under other agreements and jeopardize the Fund Parties’ portfolio company’s ability to meet its obligations under the debt that the Fund Parties hold and the value of any equity securities the Fund Parties own. The Fund Parties may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company.

A prolonged continuation of depressed oil and natural gas prices could negatively impact the energy and power industry and energy-related investments within the Fund Parties’ investment portfolios.

Prices for oil and natural gas, which historically have been volatile and may continue to be volatile, may be subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas. A prolonged continuation of depressed oil and natural gas prices would adversely affect the credit quality and performance of certain of the Fund Parties’ debt and equity investments in energy and power and related companies. A decrease in credit quality and performance would, in turn, negatively affect the fair value of these investments, which would consequently negatively affect each of the Fund Parties’ NAV. Should a prolonged period of depressed oil and natural gas prices occur, the ability of certain of the Fund Parties’ portfolio companies in the energy and power and related industries to satisfy financial or operating covenants imposed by the Fund Parties or other lenders may be adversely affected, which could, in turn, negatively impact their financial condition and their ability to satisfy their debt service and other obligations. Likewise, should a prolonged period of depressed oil and natural gas prices occur, it is possible that the cash flow and profit generating capacity of these portfolio companies could also be adversely affected thereby negatively impacting their ability to pay the Fund Parties dividends or distributions on the Fund Parties’ investments.

Risks Related to the Fund Parties’ Business and Structure

The Fund Parties’ ability to achieve their investment objectives depends on the Advisor’s ability to manage and support the Fund Parties’ investment process and if their agreements with the Advisor were to be terminated, or if the Advisor loses any members of its senior management team, the Fund Parties’ ability to achieve their investment objectives could be significantly harmed.

Because the Fund Parties have no employees, they depend on the investment expertise, skill and network of business contacts of the Advisor. The Advisor evaluates, negotiates, structures, executes, monitors and services the Fund Parties’ investments. Their future success depends to a significant extent on the continued service of the Advisor as well as its senior management team. The departure of any members of the Advisor’s senior management team could have a material adverse effect on the Fund Parties’ ability to achieve their investment objectives.

The Fund Parties’ ability to achieve their investment objectives depends on the Advisor’s ability to identify, analyze, invest in, finance and monitor companies that meet their investment criteria. The Advisor’s capabilities in structuring the investment process, providing competent, attentive and efficient services to the Fund Parties, and facilitating access to financing on acceptable terms depend on the employment of investment professionals in an adequate number and of adequate sophistication to match the corresponding flow of transactions. To achieve the Fund Parties’ investment objectives, the Advisor may need to hire, train, supervise and manage new investment professionals to participate in their investment selection and monitoring process. The Advisor may not be able to find investment professionals in a timely manner or at all. Failure to support the Fund Parties’ investment processes could have a material adverse effect on the business, financial condition and results of operations of the Fund Parties.

In addition, the Fund Parties’ respective investment advisory and administrative services agreements have termination provisions that allow the parties to terminate the agreement without penalty. Each Fund Party’s investment advisory and administrative services agreement may be terminated at any time, without penalty, by

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the Advisor, upon 60 days’ notice to any of the Fund Parties. If the investment advisory and administrative services agreement of a Fund Party is terminated, it may adversely affect the quality of the Fund Parties’ investment opportunities. In addition, in the event such agreement is terminated, it may be difficult for the Fund Parties to replace the Advisor and the termination of such agreement may adversely impact the terms of any existing or future financing arrangement, which could have a material adverse effect on the Fund Parties’ business and financial condition.

The Advisor is a recently-formed investment adviser with a limited track record of acting as an investment adviser to BDCs, and any failure by the Advisor to manage and support the Fund Parties’ investment process may hinder the achievement of their investment objectives.

The Advisor is a recently-formed investment adviser jointly operated by an affiliate of FS Investments and KKR Credit with limited prior experience acting as an investment adviser to BDCs. The 1940 Act and the Code impose numerous constraints on the operations of BDCs that do not apply to other investment vehicles. While both affiliates of FS Investments and KKR Credit have individually acted as investment advisers to BDCs previously, the Advisor’s limited experience in managing a portfolio of assets under the constraints of the 1940 Act and the Code may hinder the Advisor’s ability to take advantage of attractive investment opportunities and, as a result, may adversely affect the Fund Parties’ ability to achieve their investment objectives. FS Investments’ and KKR Credit’s individual track records and achievements are not necessarily indicative of the future results they will achieve as a joint investment adviser. Accordingly, the Fund Parties can offer no assurance that they will replicate the historical performance of other investment companies with which FS Investments and KKR Credit have been affiliated, and the Fund Parties caution that their investment returns could be lower than the returns achieved by such other companies.

Because the Fund Parties’ business model depends to a significant extent upon relationships with private equity sponsors, investment banks and commercial banks, the inability of the Advisor to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect the Fund Parties’ business.

If the Advisor fails to maintain its existing relationships with private equity sponsors, investment banks and commercial banks on which it relies to provide the Fund Parties with potential investment opportunities, or develop new relationships with other sponsors or sources of investment opportunities, the Fund Parties may not be able to grow their investment portfolio. In addition, individuals with whom the Advisor has relationships generally are not obligated to provide the Fund Parties with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for the Fund Parties.

The Fund Parties may face increasing competition for investment opportunities, which could delay deployment of their capital, reduce returns and result in losses.

The Fund Parties compete for investments with other BDCs and investment funds (including private equity funds, mezzanine funds and CLO funds), as well as traditional financial services companies such as commercial banks and other sources of funding. Moreover, alternative investment vehicles, such as hedge funds, have begun to invest in areas in which they have not traditionally invested, including making investments in middle market private U.S. companies. Furthermore, the potentially changing regulatory landscape as a result of the presidential administration may increase the number of middle-market investors. As a result of these new entrants, competition for investment opportunities in middle market private U.S. companies may intensify. Many of the Fund Parties’ competitors are substantially larger and have considerably greater financial, technical and marketing resources than the Fund Parties do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to the Fund Parties. In addition, some of the Fund Parties’ competitors may have higher risk tolerances or different risk assessments than the Fund Parties have. These characteristics could allow the Fund Parties’ competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than the Fund Parties are able to do. The

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Fund Parties may lose investment opportunities if the Fund Parties do not match their competitors’ pricing, terms and structure. If the Fund Parties are forced to match their competitors’ pricing, terms and structure, the Fund Parties may not be able to achieve acceptable returns on their investments or may bear substantial risk of capital loss. A significant part of the Fund Parties’ competitive advantage stems from the fact that the market for investments in middle market private U.S. companies is underserved by traditional commercial banks and other financial sources. A significant increase in the number and/or the size of the Fund Parties’ competitors in this target market could force the Fund Parties to accept less attractive investment terms. Furthermore, many of the Fund Parties’ competitors have greater experience operating under, or are not subject to, the regulatory restrictions that the 1940 Act imposes on the Fund Parties as BDCs.

The Fund Parties’ boards of directors or trustees, as applicable, may change their operating policies and strategies without prior notice or stockholder approval.

The Fund Parties’ boards of directors or trustees, as applicable, have the authority to modify or waive the Fund Parties’ current operating policies, investment criteria and strategies without prior notice and without stockholder approval. Moreover, the Fund Parties have significant investment flexibility within the Fund Parties’ investment strategies. Therefore, the Fund Parties may invest their assets in ways with which investors may not agree. The Fund Parties also cannot predict the effect any changes to their current operating policies, investment criteria and strategies would have on each of the Fund Parties’ business, NAV, operating results and the value of each of the Fund Parties’ stock. However, the effects might be adverse, which could negatively impact the Fund Parties’ ability to pay stockholders distributions and cause them to lose all or part of their investment. Finally, because the Fund Parties’ shares are not expected to be listed on a national securities exchange for the foreseeable future, stockholders will be limited in their ability to sell their shares in response to any changes in the Fund Parties’ investment policies, operating policies, investment criteria or strategies.

Changes in laws or regulations governing the Fund Parties’ operations or the operations of the Fund Parties’ business partners may adversely affect the Fund Parties’ businesses or cause the Fund Parties to alter their business strategy.

The Fund Parties, their portfolio companies and their business partners are subject to regulation at the local, state and federal level. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments the Fund Parties are permitted to make and the deductibility of interest expense by the Fund Parties’ portfolio companies, potentially with retroactive effect. In particular, over the last several years there has been an increase in regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank financial sector will be subject to new regulation. New or repealed legislation, interpretations, rulings or regulations could require changes to certain business practices of the Fund Parties or their portfolio companies, negatively impact the operations, cash flows or financial condition of the Fund Parties or their portfolio companies, impose additional costs on the Fund Parties or their portfolio companies or otherwise adversely affect the Fund Parties’ business or the business of their portfolio companies. In addition, any changes to the laws and regulations governing the Fund Parties’ operations, including with respect to permitted investments, may cause the Fund Parties to alter their investment strategies to avail themselves of new or different opportunities or make other changes to the Fund Parties’ business. Such changes could result in material differences to the Fund Parties’ strategies and plans as set forth in this joint proxy statement/prospectus and may result in each of the Fund Parties’ investment focuses shifting from the areas of expertise of the Advisor to other types of investments in which the Advisor may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on the Fund Parties’ results of operations and the value of a stockholder’s investment.

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The impact on the Fund Parties of recent financial reform legislation, including the Dodd-Frank Act, is uncertain.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended (the “Dodd-Frank Act”), made broad changes to the “over-the-counter” (“OTC”) derivatives market, granted significant new authority to the Commodity Futures Trading Commission, or CFTC, and the SEC to regulate OTC derivatives (swaps and security-based swaps) and participants in these markets. The Dodd-Frank Act is intended to regulate the OTC derivatives market by requiring many derivative transactions to be cleared and traded on an exchange, expanding entity registration requirements, imposing business conduct requirements on dealers and requiring banks to move some derivatives trading units to a non-guaranteed affiliate separate from the deposit-taking bank or divest them altogether. The CFTC has implemented mandatory clearing and exchange-trading of certain OTC derivatives contracts including many standardized interest rate swaps and credit default index swaps. The CFTC continues to approve contracts for central clearing. Exchange-trading and central clearing are expected to reduce counterparty credit risk by substituting the clearinghouse as the counterparty to a swap and increase liquidity, but exchange-trading and central clearing do not make swap transactions risk-free. Uncleared swaps, such as non-deliverable foreign currency forwards, are subject to certain margin requirements that mandate the posting and collection of minimum margin amounts. This requirement may result in the portfolio and its counterparties posting higher margin amounts for uncleared swaps than would otherwise be the case. Certain rules require centralized reporting of detailed information about many types of cleared and uncleared swaps. Reporting of swap data may result in greater market transparency, but may subject a portfolio to additional administrative burdens, and the safeguards established to protect trader anonymity may not function as expected. Future CFTC or SEC rulemakings to implement the Dodd-Frank Act requirements could potentially limit or completely restrict the Fund Parties’ abilities to use these instruments as a part of the Fund Parties’ investment strategy, increase the costs of using these instruments or make them less effective. Limits or restrictions applicable to the counterparties with which the Fund Parties engage in derivative transactions could also prevent the Fund Parties from using these instruments or affect the pricing or other factors relating to these instruments, or may change availability of certain investments. The SEC has also indicated that it may adopt new policies on the use of derivatives by registered investment companies. Such policies could affect the nature and extent of the Fund Parties’ use of derivatives.

The presidential administration has announced its intention to repeal, amend or replace certain portions of the Dodd-Frank Act and the regulations implemented thereunder. Given the uncertainty associated with the manner in which and whether the provisions of the Dodd-Frank Act will be implemented, repealed, amended or replaced, the full impact such requirements will have on the Fund Parties’ business, results of operations or financial condition is unclear. The changes resulting from the Dodd-Frank Act or any changes to the regulations already implemented thereunder may require the Fund Parties to invest significant management attention and resources to evaluate and make necessary changes in order to comply with new statutory and regulatory requirements. Failure to comply with any such laws, regulations or principles, or changes thereto, may negatively impact the Fund Parties’ business, results of operations and financial condition. While the Fund Parties cannot predict what effect any changes in the laws or regulations or their interpretations would have on the Fund Parties as a result of recent financial reform legislation, these changes could be materially adverse to the Fund Parties and their stockholders.

Regulations adopted by prudential regulators have begun to require that certain qualified financial contracts entered into with certain counterparties that are part of a U.S. or foreign banking organization designated as a global-systemically important banking organization to include contractual provisions that delay or restrict the rights of counterparties, such as the portfolio, to exercise certain close-out, cross-default and similar rights under certain conditions. Qualified financial contracts include agreements relating to swaps, foreign currency forward contracts and other derivatives. Qualified financial contracts are subject to a stay for a specified time period during which counterparties, such as the portfolio, will be prevented from closing out a qualified financial contract if the counterparty is subject to resolution proceedings and prohibit the portfolio from exercising default rights due to a receivership or similar proceeding of an affiliate of the counterparty. Implementation of these requirements may increase credit and other risks to the portfolio.

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The SBCA Act allows the Fund Parties to incur additional leverage.

On March 23, 2018, the SBCA Act became law. The SBCA Act, among other things, amends Section 61(a) of the 1940 Act to add a new Section 61(a)(2) which reduces the asset coverage requirements for senior securities applicable to BDCs from 200% to 150% provided that certain disclosure and approval requirements are met. Before the reduced asset coverage requirements under Section 61(a)(2) are effective with respect to the Fund Parties, the application of that section of the 1940 Act must be approved by either (1) a “required majority,” as defined in the Section 57(o) of the 1940 Act, of the Fund Parties’ boards of directors or trustees, as applicable, or (2) a majority of votes cast at a special or annual meeting of stockholders. As a result, the Fund Parties may be able to incur additional indebtedness in the future, and, therefore the risk of an investment in them may increase.

Future legislation or rules could modify how the Fund Parties treat derivatives and other financial arrangements for purposes of the Fund Parties’ compliance with the leverage limitations of the 1940 Act.

Future legislation or rules may modify how the Fund Parties treat derivatives and other financial arrangements for purposes of the Fund Parties’ compliance with the leverage limitations of the 1940 Act. For example, the SEC proposed a new rule in December 2015 that is designed to enhance the regulation of the use of derivatives by registered investments companies and BDCs. While the adoption of the December 2015 rule is currently uncertain, the proposed rule, if adopted, or any future legislation or rules, may modify how leverage is calculated under the 1940 Act and, therefore, may increase or decrease the amount of leverage currently available to the Fund Parties under the 1940 Act, which may be materially adverse to them and their stockholders.

As public companies, the Fund Parties are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations will involve significant expenditures, and non-compliance with such regulations may adversely affect the Fund Parties.

As public companies, the Fund Parties incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act, and other rules implemented by the SEC. The Fund Parties’ management teams are required to report on their internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and rules and regulations of the SEC thereunder. In particular, the Fund Parties’ management teams are required to review on an annual basis their internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in their internal control over financial reporting. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from their independent registered public accounting firm on the effectiveness of their internal control over financial reporting.

The Fund Parties incur significant expenses in connection with compliance with the Sarbanes-Oxley Act and other regulations applicable to public companies, which may negatively impact the Fund Parties’ financial performance and their ability to make distributions. Compliance with such regulations also requires a significant amount of the Fund Parties’ managements’ time and attention. For example, the Fund Parties cannot be certain as to the timing of the completion of their Sarbanes-Oxley mandated evaluations, testings and remediation actions, if any, or the impact of the same on the Fund Parties’ operations, and the Fund Parties may not be able to ensure that the process is effective or that their internal control over financial reporting is or will be deemed effective in the future. In the event that the Fund Parties are unable to maintain an effective system of internal control and maintain compliance with the Sarbanes-Oxley Act and related rules, the Fund Parties may be adversely affected.

The Fund Parties may experience fluctuations in their quarterly results.

The Fund Parties could experience fluctuations in their quarterly operating results due to a number of factors, including their ability or inability to make investments in companies that meet their investment criteria, the interest rate payable on the debt securities the Fund Parties acquire, the level of their expenses, variations in

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and the timing of fee income and the recognition of realized and unrealized gains or losses, the degree to which the Fund Parties encounter competition in their 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.

If the Fund Parties, their affiliates and each of their respective third-party service providers are unable to maintain the availability of electronic data systems and safeguard the security of data, the Fund Parties’ ability to conduct business may be compromised, which could impair their liquidity, disrupt their business, damage their reputation or otherwise adversely affect their business.

Cybersecurity refers to the combination of technologies, processes, and procedures established to protect information technology systems and data from unauthorized access, attack, or damage. The Fund Parties, their affiliates and their respective third-party service providers are subject to cybersecurity risks. Cybersecurity risks have significantly increased in recent years and, while the Fund Parties have not experienced any material losses relating to cyber attacks or other information security breaches, they could suffer such losses in the future. The Fund Parties, their affiliates and their respective third-party service providers’ computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize confidential and other information, including nonpublic personal information and sensitive business data, processed and stored in, and transmitted through, computer systems and networks, or otherwise cause interruptions or malfunctions in the Fund Parties’ operations or the operations of their affiliates and each of their respective third-party service providers. This could result in significant losses, reputational damage, litigation, regulatory fines or penalties, or otherwise adversely affect the business, financial condition and results of operations of the Fund Parties. Privacy and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes. In addition, the Fund Parties may be required to expend significant additional resources to modify their protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks.

Risks Related to the Advisor and its Affiliates

The Advisor and its affiliates, including the Fund Parties’ officers and some of their directors or trustees, as applicable, face conflicts of interest as a result of compensation arrangements between the Fund Parties and the Advisor, which could result in actions that are not in the best interests of the Fund Parties’ stockholders.

The Advisor and its affiliates receive substantial fees from the Fund Parties in return for their services, and these fees could influence the advice provided to the Fund Parties. The Fund Parties pay to the Advisor an incentive fee that is based on the performance of each of their portfolios and an annual base management fee that is based on the average weekly value of each of their gross assets. Because the incentive fee is based on the performance of each of the Fund Parties’ portfolios, the Advisor may be incentivized to make investments on the Fund Parties’ behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive fee is determined may also encourage the Advisor to use leverage to increase the return on the Fund Parties’ investments. In addition, because the base management fee is based upon the average weekly value of each of the Fund Parties’ gross assets, which includes any borrowings for investment purposes, the Advisor may be incentivized to recommend the use of leverage or the issuance of additional equity to make additional investments and increase the average weekly value of each of the Fund Parties’ gross assets. Under certain circumstances, the use of leverage may increase the likelihood of default, which could disfavor holders of the Fund Parties’ common stock. The Fund Parties’ compensation arrangements could therefore result in their making riskier or more speculative investments, or relying more on leverage to make investments, than would otherwise be the case. This could result in higher investment losses, particularly during cyclical economic downturns.

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A Fund Party may be obligated to pay the Advisor incentive compensation even if it incurs a net loss due to a decline in the value of its portfolio, or on income that it has not received.

The Fund Parties’ respective investment advisory and administrative services agreements entitle the Advisor to receive incentive compensation on income regardless of any capital losses. In such case, a Fund Party may be required to pay the Advisor incentive compensation for a fiscal quarter even if there is a decline in the value of its portfolio or if it incurs a net loss for that quarter.

In addition, any incentive fee payable by a Fund Party that relates to its net investment income may be computed and paid on income that may include interest that has been accrued but not yet received. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously included in the calculation of the incentive fee will become uncollectible. The Advisor is not under any obligation to reimburse the Fund Parties for any part of the incentive fee it received that was based on accrued income that the Fund Parties never received as a result of a default by an entity on the obligation that resulted in the accrual of such income, and such circumstances would result in their paying an incentive fee on income the Fund Parties never received.

For U.S. federal income tax purposes, the Fund Parties are required to recognize taxable income (such as deferred interest that is accrued as original issue discount) in some circumstances in which the Fund Parties do not receive a corresponding payment in cash and to make distributions with respect to such income to maintain their status as RICs. Under such circumstances, the Fund Parties may have difficulty meeting the Annual Distribution Requirement (as defined below) necessary to maintain RIC tax treatment under the Code. This difficulty in making the required distribution may be amplified to the extent that the Fund Parties are required to pay an incentive fee with respect to such accrued income. As a result, the Fund Parties may have to sell some of their investments at times and/or at prices the Fund Parties would not consider advantageous, raise additional debt or equity capital, or forgo new investment opportunities for this purpose. If a Fund Party is not able to obtain cash from other sources, they may fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.

There may be conflicts of interest related to obligations the Advisor’s senior management and investment teams have to the Fund Parties’ affiliates and to other clients.

The members of the senior management and investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Fund Parties do, or of investment vehicles managed by the same personnel. For example the Advisor is also the investment adviser to FSK and the officers, managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or KKR Credit. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Fund Parties’ best interests or in the best interest of their stockholders. The Fund Parties’ investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For example, the Fund Parties rely on the Advisor to manage their day-to-day activities and to implement their investment strategy. The Advisor and certain of its affiliates are presently, and plan in the future to continue to be, involved with activities which are unrelated to the Fund Parties. As a result of these activities, the Advisor, its employees and certain of its affiliates will have conflicts of interest in allocating their time between the Fund Parties and other activities in which they are or may become involved, including the management of other entities affiliated with FS Investments or KKR Credit. The Advisor and its employees will devote only as much of its or their time to the Fund Parties’ business as the Advisor and its employees, in their judgment, determine is reasonably required, which may be substantially less than their full time.

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The time and resources that individuals employed by the Advisor devote to the Fund Parties may be diverted and the Fund Parties may face additional competition due to the fact that individuals employed by the Advisor are not prohibited from raising money for or managing another entity that makes the same types of investments that the Fund Parties target.

Neither the Advisor nor persons providing services to the Fund Parties on behalf of the Advisor, are prohibited from raising money for and managing another investment entity that makes the same types of investments as those the Fund Parties target. As a result, the time and resources that these individuals may devote to the Fund Parties may be diverted. In addition, the Fund Parties may compete with any such investment entity for the same investors and investment opportunities.

The Advisor’s liability is limited under the investment advisory and administrative services agreements with each of the Fund Parties, and the Fund Parties are required to indemnify it against certain liabilities, which may lead it to act in a riskier manner on the Fund Parties’ behalf than it would when acting for its own account.

Pursuant to the investment advisory and administrative services agreements with each of the Fund Parties, the Advisor and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with, or acting on behalf of, the Advisor will not be liable to the Fund Parties for their acts under the investment advisory and administrative services agreement, absent willful misfeasance, bad faith or gross negligence in the performance of their duties. The Fund Parties have each agreed to indemnify, defend and protect the Advisor and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with, or acting on behalf of, the Advisor with respect to all damages, liabilities, costs and expenses resulting from acts of the Advisor not arising out of willful misfeasance, bad faith or gross negligence in the performance of their duties under the investment advisory and administrative services agreement. These protections may lead the Advisor to act in a riskier manner when acting on the Fund Parties’ behalf than it would when acting for its own account.

Risks Related to Business Development Companies

Failure to maintain the Fund Parties’ status as BDCs would reduce their operating flexibility.

If the Fund Parties do not remain BDCs, they might be regulated as a closed-end investment company under the 1940 Act, which would subject them to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease their operating flexibility.

The Fund Parties are uncertain of their sources for funding their future capital needs and if they cannot obtain debt or equity financing on acceptable terms, or at all, their ability to acquire investments and to expand their operations will be adversely affected.

Any working capital reserves the Fund Parties maintain may not be sufficient for investment purposes, and the Fund Parties may require debt or equity financing to operate. The Fund Parties may also need to access the capital markets to refinance existing debt obligations to the extent maturing obligations are not repaid with cash flows from operations. In order to maintain RIC tax treatment, each of the Fund Parties must distribute distributions to their stockholders each tax year on a timely basis generally of an amount at least equal to 90% of each of their investment company taxable income, determined without regard to any deduction for distributions paid, and the amounts of such distributions will therefore not be available to fund investment originations or to repay maturing debt. In addition, with certain limited exceptions, the Fund Parties are only allowed to borrow amounts or issue debt securities or preferred stock, which each of the Fund Parties refer to collectively as “senior securities,” such that their asset coverage, as calculated pursuant to the 1940 Act, equals at least 200% immediately after such borrowing, which, in certain circumstances, may restrict their ability to borrow or issue

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debt securities or preferred stock. In the event that the Fund Parties develop a need for additional capital in the future for investments or for any other reason, and the Fund Parties cannot obtain debt or equity financing on acceptable terms, or at all, their ability to acquire investments and to expand their operations will be adversely affected. As a result, the Fund Parties would be less able to allocate their portfolios among various issuers and industries and achieve their investment objectives, which may negatively impact their results of operations and reduce their ability to make distributions to their stockholders.

The requirement that the Fund Parties invest a sufficient portion of their assets in qualifying assets could preclude them from investing in accordance with their current business strategy; conversely, the failure to invest a sufficient portion of their assets in qualifying assets could result in their failure to maintain their status as BDCs.

As BDCs, the Fund Parties may not acquire any assets other than “qualifying assets” unless, at the time of such acquisition, at least 70% of their total assets are qualifying assets. Therefore, the Fund Parties may be precluded from investing in what the Fund Parties believe are attractive investments if such investments are not qualifying assets. Similarly, these rules could prevent the Fund Parties from making additional investments in existing portfolio companies, which could result in the dilution of their position, or could require the Fund Parties to dispose of investments at an inopportune time to comply with the 1940 Act. If the Fund Parties were forced to sell non-qualifying investments in the portfolio for compliance purposes, the proceeds from such sale could be significantly less than the current value of such investments. Conversely, if the Fund Parties fail to invest a sufficient portion of their assets in qualifying assets, the Fund Parties could lose their status as BDCs, which would subject the Fund Parties to substantially more regulatory restrictions and significantly decrease their operating flexibility.

Regulations governing the Fund Parties’ operation as BDCs and RICs will affect their ability to raise, and the way in which they raise, additional capital or borrow for investment purposes, which may have a negative effect on their growth.

As a result of the Fund Parties’ need to satisfy the Annual Distribution Requirement in order to maintain RIC tax treatment under Subchapter M of the Code, the Fund Parties may need to periodically access the capital markets to raise cash to fund new investments. The Fund Parties may issue “senior securities,” as defined in the 1940 Act, including issuing preferred stock, borrowing money from banks or other financial institutions, or issuing debt securities only in amounts such that their asset coverage, as defined in the 1940 Act, equals at least 200% after such incurrence or issuance. The Fund Parties’ ability to issue certain other types of securities is also limited. Under the 1940 Act, the Fund Parties are also generally prohibited from issuing or selling their common stock at a price per share, after deducting underwriting commissions, that is below their NAV per share, without first obtaining approval for such issuance from their stockholders and their independent directors or trustees, as applicable. Compliance with these limitations on their ability to raise capital may unfavorably limit their investment opportunities. These limitations may also reduce the Fund Parties’ ability in comparison to other companies to profit from favorable spreads between the rates at which they can borrow and the rates at which they can lend.

In addition, because the Fund Parties incur indebtedness for investment purposes, if the value of their assets declines, they may be unable to satisfy the asset coverage test under the 1940 Act, which would prohibit the Fund Parties from paying distributions and, as a result, could cause them to be subject to corporate-level tax on each of their income and capital gains, regardless of the amount of distributions paid. If the Fund Parties cannot satisfy the asset coverage test, they may be required to sell a portion of their investments and, depending on the nature of their debt financing, repay a portion of their indebtedness at a time when such sales may be disadvantageous.

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The Fund Parties’ ability to enter into transactions with their affiliates is restricted.

The Fund Parties are prohibited under the 1940 Act from participating in certain transactions with certain of their affiliates without the prior approval of a majority of the independent members of their board of directors or trustees, as applicable, and, in some cases, the SEC. Any person that owns, directly or indirectly, 5% or more of any of the Fund Parties’ outstanding voting securities will be that particular Fund Party’s affiliate for purposes of the 1940 Act, and the Fund Parties will generally be prohibited from buying or selling any securities from or to such affiliate, absent the prior approval of their respective board of directors or trustees, as applicable. The 1940 Act also prohibits certain “joint” transactions with certain of the Fund Parties’ affiliates, which could include investments in the same portfolio company (whether at the same or different times), without prior approval of their board of directors or trustees, as applicable, and, in some cases, the SEC. In an order dated April 3, 2018, the SEC granted exemptive relief permitting the Fund Parties, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions, including investments originated and directly negotiated by the Advisor or KKR Credit, with the Fund Parties’ respective co-investment affiliates. If a person acquires more than 25% of any of the Fund Parties’ voting securities, the Fund Parties will be prohibited from buying or selling any security from or to such person or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons to the extent not covered by the exemptive relief, absent the prior approval of the SEC. Similar restrictions limit the Fund Parties’ ability to transact business with their officers or directors or their respective affiliates. As a result of these restrictions, the Fund Parties may be prohibited from buying or selling any security from or to any portfolio company of a fund managed by the Advisor without the prior approval of the SEC, which may limit the scope of investment opportunities that would otherwise be available to them.

Risks Related to the Fund Parties’ Investments

The Fund Parties’ investments in prospective portfolio companies may be risky, and they could lose all or part of their investment.

The Fund Parties’ investments in senior secured loans, second lien secured loans, senior secured bonds, subordinated debt and equity of private U.S. companies, including middle market companies, may be risky and there is no limit on the amount of any such investments in which the Fund Parties may invest.

Senior Secured Loans, Second Lien Secured Loans and Senior Secured Bonds . There is a risk that any collateral pledged by portfolio companies in which the Fund Parties have taken a security interest may decrease in value over time or lose its entire value, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the portfolio company to raise additional capital. To the extent a Fund Party’s debt investment is collateralized by the securities of a portfolio company’s subsidiaries, such securities may lose some or all of their value in the event of the bankruptcy or insolvency of the portfolio company. Also, in some circumstances, a Fund Party’s security interest may be contractually or structurally subordinated to claims of other creditors. In addition, deterioration in a portfolio company’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the debt. Secured debt that is under-collateralized involves a greater risk of loss. In addition, second lien secured debt is granted a second priority security interest in collateral, which means that any realization of collateral will generally be applied to pay senior secured debt in full before second lien secured debt is paid. Consequently, the fact that debt is secured does not guarantee that the Fund Parties will receive principal and interest payments according to the debt’s terms, or at all, or that the Fund Parties will be able to collect on the debt should they be forced to enforce their remedies.

Subordinated Debt . The Fund Parties’ subordinated debt investments will generally rank junior in priority of payment to senior debt and will generally be unsecured. This may result in a heightened level of risk and volatility or a loss of principal, which could lead to the loss of the entire investment. These investments may

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involve additional risks that could adversely affect the Fund Parties’ investment returns. To the extent interest payments associated with such debt are deferred, such debt may be subject to greater fluctuations in valuations, and such debt could subject the Fund Parties and their stockholders to non-cash income. Because the Fund Parties will not receive any principal repayments prior to the maturity of some of their subordinated debt investments, such investments will be of greater risk than amortizing loans.

Equity and Equity-Related Securities . The Fund Parties may make select equity investments. In addition, in connection with their debt investments, the Fund Parties on occasion receive equity interests such as warrants or options as additional consideration. The equity interests the Fund Parties receive may not appreciate in value and, in fact, may decline in value. Accordingly, the Fund Parties may not be able to realize gains from their equity interests, and any gains that they do realize on the disposition of any equity interests may not be sufficient to offset any other losses the Fund Parties experience.

Convertible Securities. The Fund Parties may invest in convertible securities, such as bonds, debentures, notes, preferred stocks or other securities that may be converted into, or exchanged for, a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument. If a convertible security held by the Fund Parties is called for redemption, it will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. Any of these actions could have an adverse effect on the Fund Parties’ ability to achieve their investment objectives.

Structured Products. The Fund Parties may invest in structured products, which may include collateralized debt obligations, collateralized bond obligations, CLOs, structured notes and credit-linked notes. When investing in structured products, the Fund Parties may invest in any level of the subordination chain, including subordinated (lower-rated) tranches and residual interests (the lowest tranche). Structured products may be highly levered and therefore, the junior debt and equity tranches that the Fund Parties may invest in are subject to a higher risk of total loss and deferral or nonpayment of interest than the more senior tranches to which they are subordinated. In addition, the Fund Parties will generally have the right to receive payments only from the issuer or counterparty, and will generally not have direct rights against the underlying borrowers or entities. Furthermore, the investments the Fund Parties make in structured products are at times thinly traded or have only a limited trading market. As a result, investments in such structured products may be characterized as illiquid securities.

Non-U.S. Securities . The Fund Parties may invest in non-U.S. securities, which may include securities denominated in U.S. dollars or in non-U.S. currencies and securities of companies in emerging markets, to the extent permitted by the 1940 Act. Because evidences of ownership of such securities usually are held outside the United States, the Fund Parties would be subject to additional risks if the Fund Parties invested in non-U.S. securities, which include possible adverse political and economic developments, seizure or nationalization of foreign deposits and adoption of governmental restrictions which might adversely affect or restrict the payment of principal and interest on the non-U.S. securities to investors located outside the country of the issuer, whether from currency blockage or otherwise.

Because non-U.S. securities may be purchased with and payable in foreign currencies, the value of these assets as measured in U.S. dollars may be affected unfavorably by changes in currency rates and exchange control regulations. In addition, investing in securities of companies in emerging markets involves many risks, including potential inflationary economic environments, regulation by foreign governments, different accounting standards, political uncertainties and economic, social, political, financial, tax and security conditions in the applicable emerging market, any of which could negatively affect the value of companies in emerging markets or investments in their securities.

Derivatives. The Fund Parties may invest from time to time in derivatives, including total return swaps, interest rate swaps, credit default swaps and foreign currency forward contracts. Derivative investments have

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risks, including: the imperfect correlation between the value of such instruments and their underlying assets, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying assets in each of the Fund Parties’ portfolios; the loss of principal; the possible default of the other party to the transaction; and illiquidity of the derivative investments. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund Parties may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding, or may not recover at all. In addition, in the event of the insolvency of a counterparty to a derivative transaction, the derivative contract would typically be terminated at its fair market value. If the Fund Parties are owed this fair market value in the termination of the derivative contract and their claim is unsecured, the Fund Parties will be treated as a general creditor of such counterparty and will not have any claim with respect to the underlying security. Certain of the derivative investments in which the Fund Parties may invest may, in certain circumstances, give rise to a form of financial leverage, which may magnify the risk of owning such instruments. The ability to successfully use derivative investments depends on the ability of the Advisor to predict pertinent market movements, which cannot be assured. In addition, amounts paid by the Fund Parties as premiums and cash or other assets held in margin accounts with respect to their derivative investments would not be available to it for other investment purposes, which may result in lost opportunities for gain.

The Dodd-Frank Act could, depending on future rulemaking by regulatory agencies, impact the use of derivatives. The Dodd-Frank Act is intended to regulate the OTC derivatives market by requiring many derivative transactions to be cleared and traded on an exchange, expanding entity registration requirements, imposing business conduct requirements on dealers and requiring banks to move some derivatives trading units to a non-guaranteed affiliate separate from the deposit-taking bank or divest them altogether. Future rulemaking to implement these requirements could potentially limit or completely restrict the Fund Parties’ ability to use these instruments as a part of their investment strategy, increase the costs of using these instruments or make them less effective. Limits or restrictions applicable to the counterparties with which the Fund Parties engage in derivative transactions could also prevent the Fund Parties from using these instruments or affect the pricing or other factors relating to these instruments, or may change availability of certain investments. The SEC has also indicated that it may adopt new policies on the use of derivatives by registered investment companies. Such policies could affect the nature and extent of the Fund Parties’ use of derivatives.

Investments in Private Funds. the Fund Parties may invest in, or wholly own, private investment funds, including hedge funds, private equity funds, limited liability companies, real estate investment trusts, and other business entities. In valuing their investments in private investment funds, the Fund Parties rely primarily on information provided by managers of such funds. Valuations of illiquid securities, such as interests in certain private investment funds, involve various judgments and consideration of factors that may be subjective. There is a risk that inaccurate valuations provided by managers of private investment funds could adversely affect the value of the Fund Parties’ common stock. The Fund Parties may not be able to withdraw their investment in certain private investment funds promptly after it has made a decision to do so, which may result in a loss to the Fund Parties and adversely affect their investment returns.

Below Investment Grade Risk. In addition, the Fund Parties invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be difficult to value and illiquid.

International investments create additional risks.

The Fund Parties expect to make investments in portfolio companies that are domiciled outside of the United States. Each of the Fund Parties anticipate that up to 30% of its investments may be in these types of assets. Their investments in foreign portfolio companies are deemed “non-qualifying assets,” which means, as required by the 1940 Act, they, along with other non-qualifying assets, may not constitute more than 30% of each of the Fund Parties’ total assets at the time of their acquisition of any asset, after giving effect to the acquisition.

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Notwithstanding the limitation on the Fund Parties’ ownership of foreign portfolio companies, such investments subject the Fund Parties to many of the same risks as their domestic investments, as well as certain additional risks, including the following:

In addition, the Fund Parties may make investments in countries whose governments or economies may prove unstable. Certain of the countries in which the Fund Parties may invest may have political, economic and legal systems that are unpredictable, unreliable or otherwise inadequate with respect to the implementation, interpretation and enforcement of laws protecting asset ownership and economic interests. In some of the countries in which the Fund Parties may invest, there may be a risk of nationalization, expropriation or confiscatory taxation, which may have an adverse effect on their portfolio companies in those countries and the rates of return that the Fund Parties are able to achieve on such investments. The Fund Parties may also lose the total value of any investment which is nationalized, expropriated or confiscated. The financial results and investment opportunities available to the Fund Parties, particularly in developing countries and emerging markets, may be materially and adversely affected by any or all of these political, economic and legal risks.

The Fund Parties’ investments in private investment funds, including hedge funds, private equity funds, limited liability companies and other business entities, subject them indirectly to the underlying risks of such private investment funds and additional fees and expenses.

The Fund Parties may invest in private investment funds, including hedge funds, private equity funds, limited liability companies and other business entities which would be required to register as investment companies but for an exemption under Sections 3(c)(1) and 3(c)(7) of the 1940 Act. Investments in private funds

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are subject to substantial risks. Investments in such private investment funds expose the Fund Parties to the risks associated with the businesses of such funds or entities as well as such private investment funds’ portfolio companies. These private investment funds may or may not be registered investment companies and, thus, may not be subject to protections afforded by the 1940 Act, covering, among other areas, liquidity requirements, governance by an independent board, affiliated transaction restrictions, leverage limitations, public disclosure requirements and custody requirements.

The Fund Parties rely primarily on information provided by managers of private investment funds in valuing their investments in such funds. There is a risk that inaccurate valuations provided by managers of private investment funds could adversely affect the value of the Fund Parties’ common stock. In addition, there can be no assurance that a manager of a private investment fund will provide advance notice of any material change in such private investment fund’s investment program or policies and thus, the Fund Parties’ investment portfolios may be subject to additional risks which may not be promptly identified by the Advisor. Moreover, the Fund Parties may not be able to withdraw their investments in certain private investment funds promptly after the Fund Parties make a decision to do so, which may result in a loss to the Fund Parties and adversely affect their investment returns.

Investments in the securities of private investment funds may also involve duplication of advisory fees and certain other expenses. By investing in private investment funds indirectly through the Fund Parties, you bear a pro rata portion of the Fund Parties’ advisory fees and other expenses, and also indirectly bear a pro rata portion of the advisory fees, performance-based allocations and other expenses borne by the Fund Parties as an investor in the private investment funds. In addition, the purchase of the shares of some private investment funds requires the payment of sales loads and (in the case of closed-end investment companies) sometimes substantial premiums above the value of such investment companies’ portfolio securities.

In addition, certain private investment funds may not provide the Fund Parties with the liquidity they require and would thus subject them to liquidity risk. Further, even if an investment in a private investment fund is deemed liquid at the time of investment, the private investment fund may, in the future, alter the nature of the Fund Parties’ investments and cease to be a liquid investment fund, subjecting them to liquidity risk.

The Fund Parties may acquire various structured financial instruments for purposes of “hedging” or reducing their risks, which may be costly and ineffective and could reduce the cash available to service debt or for distribution to stockholders.

The Fund Parties may seek to hedge against interest rate and currency exchange rate fluctuations and credit risk by using structured financial instruments such as futures, options, swaps and forward contracts, subject to the requirements of the 1940 Act. Use of structured financial instruments for hedging purposes may present significant risks, including the risk of loss of the amounts invested. Defaults by the other party to a hedging transaction can result in losses in the hedging transaction. Hedging activities also involve the risk of an imperfect correlation between the hedging instrument and the asset being hedged, which could result in losses both on the hedging transaction and on the instrument being hedged. Use of hedging activities may not prevent significant losses and could increase the Fund Parties’ losses. Further, hedging transactions may reduce cash available to service their debt or pay distributions to their stockholders.

Investing in middle market companies involves a number of significant risks, any one of which could have a material adverse effect on the Fund Parties’ operating results.

Investments in middle market companies involve some of the same risks that apply generally to investments in larger, more established companies. However, such investments have more pronounced risks in that they:

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The Fund Parties’ portfolio companies may incur debt that ranks equally with, or senior to, their investments in such companies.

The Fund Parties’ portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which the Fund Parties invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which the Fund Parties are entitled to receive payments with respect to the debt instruments in which the Fund Parties invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to a Fund Party’s investment in that portfolio company would typically be entitled to receive payment in full before the Fund Parties receive any proceeds. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to the Fund Parties. In the case of debt ranking equally with debt instruments in which the Fund Parties invest, they would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

There may be circumstances where the Fund Parties’ debt investments could be subordinated to claims of other creditors or the Fund Parties could be subject to lender liability claims.

If one of the Fund Parties’ portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which the applicable Fund Party actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize their debt investment and subordinate all or a portion of their claim to that of other creditors. In situations where a bankruptcy carries a high degree of political significance, their legal rights may be subordinated to other creditors. The Fund Parties may also be subject to lender liability claims for actions taken by them with respect to a borrower’s business or in instances where the Fund Parties exercise control over the borrower or render significant managerial assistance.

Second priority liens on collateral securing debt investments that the Fund Parties make to their portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and the Fund Parties.

Certain debt investments that the Fund Parties make in portfolio companies may be secured on a second priority basis by the same collateral securing first priority debt of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by such company under the agreements governing

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the loans. The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before the Fund Parties. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the debt obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds are not sufficient to repay amounts outstanding under the debt obligations secured by the second priority liens, then the Fund Parties, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against such company’s remaining assets, if any.

The Fund Parties may also make unsecured debt investments in portfolio companies, meaning that such investments will not benefit from any interest in collateral of such companies. Liens on any such portfolio company’s collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured debt agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before the Fund Parties. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy the Fund Parties’ unsecured debt obligations after payment in full of all secured debt obligations. If such proceeds were not sufficient to repay the outstanding secured debt obligations, then the Fund Parties’ unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights the Fund Parties may have with respect to the collateral securing the debt investments they make in their portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that the Fund Parties enter into with the holders of senior debt. Under such an intercreditor agreement, at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past defaults under collateral documents. The Fund Parties may not have the ability to control or direct such actions, even if their rights are adversely affected.

The Fund Parties generally will not control their portfolio companies.

The Fund Parties do not expect to control most of their portfolio companies, even though they may have board representation or board observation rights, and their debt agreements with such portfolio companies may contain certain restrictive covenants. As a result, the Fund Parties are subject to the risk that a portfolio company in which they invest may make business decisions with which the Fund Parties disagree and the management of such company, as representatives of the holders of their common equity, may take risks or otherwise act in ways that do not serve their interests as debt investors. Due to the lack of liquidity for their investments in non-traded companies, the Fund Parties may not be able to dispose of their interests in their portfolio companies as readily as the Fund Parties would like or at an appropriate valuation. As a result, a portfolio company may make decisions that could decrease the value of their portfolio holdings.

Declines in market values or fair market values of the Fund Parties’ investments could result in significant net unrealized depreciation of their portfolios, which in turn would reduce their respective NAV.

Under the 1940 Act, the Fund Parties are required to carry their investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by or under the direction of their board of directors or trustees, as applicable. While most of the Fund Parties’ investments are not publicly traded,

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applicable accounting standards require them to assume as part of their valuation process that their investments are sold in a principal market to market participants (even if the Fund Parties plan on holding an investment through its maturity) and impairments of the market values or fair market values of their investments, even if unrealized, must be reflected in their financial statements for the applicable period as unrealized depreciation, which could result in a significant reduction to the Fund Parties’ NAV for a given period.

A significant portion of the Fund Parties’ investment portfolio is and will be recorded at fair value as determined in good faith by their board of directors or trustees, as applicable, and, as a result, there is and will be uncertainty as to the value of their portfolio investments.

Under the 1940 Act, the Fund Parties are required to carry their portfolio investments at market value or, if there is no readily available market value, at fair value, as determined by their or board of trustees, as applicable. There is not a public market for the securities of the privately held companies in which the Fund Parties invest. Most of the Fund Parties’ investments are not publicly traded or actively traded on a secondary market but are, instead, traded on a privately negotiated OTC secondary market for institutional investors or are not traded at all. As a result, the Fund Parties value these securities quarterly at fair value as determined in good faith by their board of directors or trustees, as applicable.

Certain factors that may be considered in determining the fair value of the Fund Parties’ investments include dealer quotes for securities traded on the secondary market for institutional investors, the nature and realizable value of any collateral, the portfolio company’s earnings and its ability to make payments on its indebtedness, the markets in which the portfolio company does business, comparison to comparable publicly traded companies, discounted cash flows and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, the Fund Parties’ determinations of fair value may differ materially from the values that would have been used if a ready market for these non-traded securities existed. Due to this uncertainty, the Fund Parties’ fair value determinations may cause their NAV on a given date to materially understate or overstate the value that the Fund Parties may ultimately realize upon the sale of one or more of their investments.

The Fund Parties are exposed to risks associated with changes in interest rates.

The Fund Parties are subject to financial market risks, including changes in interest rates. General interest rate fluctuations may have a substantial negative impact on their investments, investment opportunities and cost of capital and, accordingly, may have a material adverse effect on their investment objectives, their rate of return on invested capital and their ability to service their debt and make distributions to their stockholders. In addition, an increase in interest rates would make it more expensive to use debt for their financing needs, if any.

The Fund Parties’ investment portfolios primarily consist of senior secured debt with maturities typically ranging from three to seven years. The longer the duration of these securities, generally, the more susceptible they are to changes in market interest rates. As market interest rates increase, those securities with a lower yield-at-cost can experience a mark-to-market unrealized loss. An impairment of the fair market value of the Fund Parties’ investments, even if unrealized, must be reflected in their financial statements for the applicable period and may therefore have a material adverse effect on their results of operations for that period.

Because the Fund Parties incur indebtedness to make investments, their net investment income is dependent, in part, upon the difference between the rate at which the Fund Parties borrow funds or pay interest on outstanding debt securities and the rate at which the Fund Parties invest these funds. An increase in interest rates would make it more expensive to use debt to finance their investments or to refinance their current financing arrangements. In addition, certain of their financing arrangements provide for adjustments in the loan interest rate along with changes in market interest rates. Therefore, in periods of rising interest rates, the Fund Parties’ cost of funds will increase, which could materially reduce their net investment income. Any reduction in the level of interest rates on new investments relative to interest rates on their current investments could also adversely impact their net investment income.

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The Fund Parties have and may continue to structure the majority of their debt investments with floating interest rates to position their portfolio for rate increases. However, there can be no assurance that this will successfully mitigate their exposure to interest rate risk. For example, in the event of a rising interest rate environment, payments under floating rate debt instruments generally would rise and there may be a significant number of issuers of such floating rate debt instruments that would be unable or unwilling to pay such increased interest costs and may otherwise be unable to repay their loans. Rising interest rates could also cause portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults. Investments in floating rate debt instruments may also decline in value in response to rising interest rates if the interest rates of such investments do not rise as much, or as quickly, as market interest rates in general. Similarly, during periods of rising interest rates, the Fund Parties’ fixed rate investments may decline in value because the fixed rate of interest paid thereunder may be below market interest rates.

In July 2017, the head of the United Kingdom Financial Conduct Authority announced the desire to phase out the use of the London Interbank Offered Rate (“LIBOR”) by the end of 2021. It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. In addition, in April 2018, the Federal Reserve System, in conjunction with the Alternative Reference Rates Committee, announced the replacement of LIBOR with a new index, calculated by short-term repurchase agreements collateralized by U.S. Treasury securities, called the Secured Overnight Financing Rate (the “SOFR”). At this time, it is not possible to predict whether SOFR will attain market traction as a LIBOR replacement tool, and the future of LIBOR is still uncertain. As such, the potential effect of the phase-out or replacement of LIBOR on the Fund Parties’ cost of capital and net investment income cannot yet be determined.

Furthermore, because a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to the Fund Parties’ debt investments, an increase in interest rates would make it easier for them to meet or exceed the incentive fee hurdle rate in the investment advisory and administrative services agreement and may result in a substantial increase of the amount of incentive fees payable to the Advisor with respect to pre-incentive fee net investment income.

A covenant breach by the Fund Parties’ portfolio companies may harm their operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by the Fund Parties or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company’s ability to meet its obligations under the debt or equity securities that the Fund Parties hold. The Fund Parties may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

The Fund Parties’ portfolio companies may be highly leveraged.

Some of the Fund Parties’ portfolio companies may be highly leveraged, which may have adverse consequences to these companies and to the Fund Parties as investors. These companies may be subject to restrictive financial and operating covenants and the leverage may impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.

The Fund Parties may not realize gains from their equity investments.

Certain investments that the Fund Parties may make may include equity related securities, such as rights and warrants that may be converted into or exchanged for common stock or the cash value of the common stock. In

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addition, the Fund Parties may make direct equity investments in portfolio companies. The equity interests the Fund Parties receive may not appreciate in value and, in fact, may decline in value. Accordingly, the Fund Parties may not be able to realize gains from their equity interests and any gains that they do realize on the disposition of any equity interests may not be sufficient to offset any other losses the Fund Parties experience. The Fund Parties may also be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow the Fund Parties to sell the underlying equity interests. The Fund Parties may be unable to exercise any put rights they acquire, which grant them the right to sell their equity securities back to the portfolio company, for the consideration provided in their investment documents if the issuer is in financial distress.

An investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies.

The Fund Parties’ investments are primarily in privately held companies. Investments in private companies pose significantly greater risks than investments in public companies. First, private companies have reduced access to the capital markets, resulting in diminished capital resources and the ability to withstand financial distress. As a result, these companies, which may present greater credit risk than public companies, may be unable to meet the obligations under their debt securities that the Fund Parties hold. Second, the investments themselves often may be illiquid. The securities of most of the companies in which the Fund Parties invest are not publicly traded or actively traded on the secondary market and are, instead, traded on a privately negotiated OTC secondary market for institutional investors. In addition, such securities may be subject to legal and other restrictions on resale. As such, the Fund Parties may have difficulty exiting an investment promptly or at a desired price prior to maturity or outside of a normal amortization schedule. In addition, in a restructuring, the Fund Parties may receive substantially different securities than their original investment in a portfolio company, including securities in a different part of the capital structure. These investments may also be difficult to value because little public information generally exists about private companies, requiring an experienced due diligence team to analyze and value the potential portfolio company. Finally, these companies often may not have third-party debt ratings or audited financial statements. The Fund Parties must therefore rely on the ability of the Advisor to obtain adequate information through due diligence to evaluate the creditworthiness and potential returns from investing in these companies. These companies and their financial information will generally not be subject to the Sarbanes-Oxley Act and other rules and regulations that govern public companies. If the Fund Parties are unable to uncover all material information about these companies, they may not make a fully informed investment decision, and they may lose money on their investments.

A lack of liquidity in certain of the Fund Parties’ investments may adversely affect their businesses.

The Fund Parties invest in certain companies whose securities are not publicly traded or actively traded on the secondary market and are, instead, traded on a privately negotiated OTC secondary market for institutional investors and whose securities are subject to legal and other restrictions on resale or are otherwise less liquid than publicly traded securities. The illiquidity of certain investments may make it difficult to sell these investments when desired. In addition, if a Fund Party is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it had previously recorded these investments. The reduced liquidity of investments may make it difficult for a Fund Party to dispose of them at a favorable price or at all, and, as a result, a Fund Party may suffer losses.

The Fund Parties may not have the funds or ability to make additional investments in their portfolio companies.

The Fund Parties may not have the funds or ability to make additional investments in their portfolio companies. After their initial investment in a portfolio company, the Fund Parties may be called upon from time to time to provide additional funds to such company or have the opportunity to increase their investment through the exercise of a warrant to purchase common stock. There is no assurance that the Fund Parties will make, or

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will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on their part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for the Fund Parties to increase their participation in a successful operation or may reduce the expected return on the investment.

Prepayments of the Fund Parties’ debt investments by their portfolio companies could adversely impact their results of operations and reduce their return on equity.

The Fund Parties are subject to the risk that the investments the Fund Parties make in their portfolio companies may be repaid prior to maturity. When this occurs, the Fund Parties will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and the Fund Parties could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, their results of operations could be materially adversely affected if one or more of their portfolio companies elect to prepay amounts owed to the Fund Parties. Additionally, prepayments, net of prepayment fees, could negatively impact their return on equity.

The Fund Parties’ investments may include original issue discount and paid-in-kind (“PIK”) instruments.

To the extent that the Fund Parties invest in original issue discount or PIK instruments and the accretion of original issue discount or PIK interest income constitutes a portion of their income, the Fund Parties will be exposed to risks associated with the requirement to include such non-cash income in taxable and accounting income prior to receipt of cash, including the following:

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The Fund Parties may from time to time enter into total return swaps, credit default swaps or other derivative transactions which expose them to certain risks, including credit risk, market risk, liquidity risk and other risks similar to those associated with the use of leverage.

The Fund Parties may from time to time enter into total return swaps, credit default swaps or other derivative transactions that seek to modify or replace the investment performance of a particular reference security or other asset. These transactions are typically individually negotiated, non-standardized agreements between two parties to exchange payments, with payments generally calculated by reference to a notional amount or quantity. Swap contracts and similar derivative contracts are not traded on exchanges; rather, banks and dealers act as principals in these markets. These investments may present risks in excess of those resulting from the referenced security or other asset. Because these transactions are not an acquisition of the referenced security or other asset itself, the investor has no right directly to enforce compliance with the terms of the referenced security or other asset and has no voting or other consensual rights of ownership with respect to the referenced security or other asset. In the event of insolvency of a counterparty, the Fund Parties will be treated as a general creditor of the counterparty and will have no claim of title with respect to the referenced security or other asset.

A total return swap is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the referenced security or other assets underlying the total return swap during a specified period, in return for periodic payments based on a fixed or variable interest rate.

A total return swap is subject to market risk, liquidity risk and risk of imperfect correlation between the value of the total return swap and the debt obligations underlying the total return swap. In addition, the Fund Parties may incur certain costs in connection with a total return swap that could in the aggregate be significant.

A credit default swap is a contract in which one party buys or sells protection against a credit event with respect to an issuer, such as an issuer’s failure to make timely payments of interest or principal on its debt obligations, bankruptcy or restructuring during a specified period. Generally, if the Fund Parties sell credit protection using a credit default swap, they will receive fixed payments from the swap counterparty and if a credit event occurs with respect to the applicable issuer, they will pay the swap counterparty par for the issuer’s defaulted debt securities and the swap counterparty will deliver the defaulted debt securities to the Fund Parties. Generally, if the Fund Parties buy credit protection using a credit default swap, they will make fixed payments to the counterparty and if a credit event occurs with respect to the applicable issuer, they will deliver the issuer’s defaulted securities underlying the swap to the swap counterparty and the counterparty will pay the Fund Parties par for the defaulted securities. Alternatively, a credit default swap may be cash settled and the buyer of protection would receive the difference between the par value and the market value of the issuer’s defaulted debt securities from the seller of protection.

Credit default swaps are subject to the credit risk of the underlying issuer. If the Fund Parties are selling credit protection, there is a risk that they will not properly assess the risk of the underlying issuer, a credit event will occur and they will have to pay the counterparty. If the Fund Parties are buying credit protection, there is a risk that they will not properly assess the risk of the underlying issuer, no credit event will occur and they will receive no benefit for the premium paid.

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A derivative transaction is also subject to the risk that a counterparty will default on its payment obligations thereunder or that the Fund Parties will not be able to meet their obligations to the counterparty. In some cases, the Fund Parties may post collateral to secure their obligations to the counterparty, and the Fund Parties may be required to post additional collateral upon the occurrence of certain events such as a decrease in the value of the reference security or other asset. In some cases, the counterparty may not collateralize any of its obligations to the Fund Parties.

Derivative investments effectively add leverage to a portfolio by providing investment exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. In addition to the risks described above, such arrangements are subject to risks similar to those associated with the use of leverage.

Risks Related to Debt Financing

The Fund Parties currently incur indebtedness to make investments, which magnifies the potential for gain or loss on amounts invested in their common stock and may increase the risk of investing in their common stock.

The use of borrowings and other types of financing, also known as leverage, magnifies the potential for gain or loss on amounts invested and, therefore, increases the risks associated with investing in their common stock. When the Fund Parties use leverage to partially finance their investments, through borrowing from banks and other lenders or issuing debt securities, they, and therefore their stockholders, will experience increased risks of investing in their common stock. Any lenders and debt holders would have fixed dollar claims on the Fund Parties’ assets that are senior to the claims of their stockholders. If the value of their assets increases, then leverage would cause the NAV attributable to their common stock to increase more sharply than it would have had the Fund Parties not utilized leverage. Conversely, if the value of their assets decreases, leverage would cause NAV to decline more sharply than it otherwise would have had the Fund Parties not utilized leverage. Similarly, any increase in their income in excess of interest payable on their indebtedness would cause their net investment income to increase more than it would without leverage, while any decrease in their income would cause net investment income to decline more sharply than it would have had the Fund Parties not utilized leverage. Such a decline could negatively affect their ability to make distributions to stockholders. Leverage is generally considered a speculative investment technique.

In addition, the decision to utilize leverage will increase the Fund Parties’ assets and, as a result, will increase the amount of base management fees payable to the Advisor. See “Risks Related to the Advisor and its Affiliates – The Advisor and its affiliates, including the Fund Parties’ officers and some of their directors or trustees, as applicable, face conflicts of interest as a result of compensation arrangements between the Fund Parties and the Advisor, which could result in actions that are not in the best interests of the Fund Parties’ stockholders.”

The agreements governing the Fund Parties’ debt financing arrangements contain, and agreements governing future debt financing arrangements may contain, various covenants which, if not complied with, could have a material adverse effect on their ability to meet their investment obligations and to pay distributions to their stockholders.

The agreements governing certain of the Fund Parties’ debt financing arrangements contain, and agreements governing future debt financing arrangements may contain, certain financial and operational covenants. These covenants require the Fund Parties and their subsidiaries to, among other things, maintain certain financial ratios, including asset coverage and minimum stockholders’ equity. Compliance with these covenants depends on many factors, some of which are beyond their and their control. In the event of deterioration in the capital markets and pricing levels subsequent to this period, net unrealized depreciation in the Fund Parties’ and their subsidiaries’ portfolios may increase in the future and could result in non-compliance with certain covenants, or their taking actions which could disrupt their business and impact their ability to meet their investment objectives.

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There can be no assurance that the Fund Parties and their subsidiaries will continue to comply with the covenants under their financing arrangements. Failure to comply with these covenants could result in a default which, if the Fund Parties and their subsidiaries were unable to obtain a waiver, consent or amendment from the debt holders, could accelerate repayment under any or all of their and their debt instruments and thereby force the Fund Parties to liquidate investments at a disadvantageous time and/or at a price which could result in losses, or allow their lenders to sell assets pledged as collateral under their financing arrangements in order to satisfy amounts due thereunder. These occurrences could have a material adverse impact on their liquidity, financial condition, results of operations and ability to pay distributions.

Risks Related to an Investment in the Fund Parties’ Common Stock

The Fund Parties’ shares are not listed on an exchange or quoted through a quotation system, and may not be for the foreseeable future, if ever, and there can be no assurance that the Fund Parties will complete a liquidity event by a specified date, or at all. Therefore, stockholders will have limited liquidity and may not receive a full return of invested capital upon selling shares.

The Fund Parties’ shares are illiquid assets for which there is not a secondary market and it is not expected that a secondary market will develop in the foreseeable future. While FSIC II contemplates a Listing following the closing of the Mergers, any such Listing remains subject to market conditions and approval by the FSIC II board of directors. There can be no assurance that the Fund Parties will complete a liquidity event by a specified date or at all. A liquidity event could include (1) a listing of a Fund Party’s shares on a national securities exchange, (2) the sale of all or substantially all of its assets either on a complete portfolio basis or individually followed by a liquidation or (3) a merger or another transaction approved by its respective board of directors or trustees, as applicable, in which its stockholders likely will receive cash or shares of a publicly-traded company. If a Fund Party’s shares are listed, no assurance can be given that a public trading market will develop. In addition, a liquidity event involving a listing of a Fund Party’s shares on a national securities exchange may include certain restrictions on the ability of stockholders to sell their shares. Further, even if a Fund Party does complete a liquidity event, stockholders may not receive a return of all of their invested capital.

If the Fund Parties do not successfully complete a liquidity event, liquidity for an investor’s shares will be limited to their share repurchase program, which the Fund Parties have no obligation to maintain. On May 31, 2019, the share repurchase program of each Fund Party was suspended pending the completion of the Mergers. Any shares repurchased pursuant to their share repurchase program may be purchased at a price which reflects a significant discount from the purchase price a stockholder paid for the shares being repurchased. In addition, there are significant limitations placed on the number of shares the Fund Parties may repurchase under the applicable share repurchase programs, which may prevent a stockholder from selling all of its shares under the program.

Stockholders who choose to participate in a Fund Party’s share repurchase program will not know the purchase price per share at the time they submit their intent to participate and their shares may be repurchased at a significant discount from the purchase price paid for the shares being repurchased.

In the event a stockholder chooses to participate in a Fund Party’s share repurchase program, the stockholder will be required to provide the Fund Party with notice of intent to participate prior to knowing what the repurchase price will be on the repurchase date. Although a stockholder will have the ability to withdraw a repurchase request prior to the repurchase date, to the extent a stockholder seeks to sell shares to a given Fund Party as part of its share repurchase program, the stockholder will be required to do so without knowledge of the repurchase price of its shares. In addition, when the Fund Parties make quarterly repurchase offers pursuant to their share repurchase program, they may offer to repurchase shares at a price that is lower than the price that stockholders paid for shares in the continuous public offering. As a result, to the extent stockholders have the ability to sell their shares to the Fund Parties as part of their share repurchase programs, the price at which a stockholder may sell shares may be at a significant discount to what such stockholder paid in connection with the purchase of shares in the offering.

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There is a risk that investors in the Fund Parties’ common stock may not receive distributions.

The Fund Parties cannot assure stockholders that they will achieve investment results that will allow them to make a specified level of cash distributions. All distributions will be paid at the discretion of the Fund Parties’ boards of directors or trustees, as applicable, and will depend on their earnings, their net investment income, their financial condition, maintenance of their RIC status, compliance with applicable BDC regulations and such other factors as their board of directors or trustees, as applicable, may deem relevant from time to time. Furthermore, the Fund Parties are permitted to issue senior securities, including multiple classes of debt and one class of stock senior to their shares of common stock. If any such senior securities are outstanding, the Fund Parties are prohibited from paying distributions to holders of shares of their common stock unless the Fund Parties meet the applicable asset coverage ratios at the time of distribution. As a result, the Fund Parties may be limited in their ability to make distributions.

The Fund Parties’ distribution proceeds may exceed their earnings. Therefore, portions of the distributions that the Fund Parties make may represent a return of capital to stockholders, which will lower their tax basis in their shares of common stock.

The tax treatment and characterization of the Fund Parties’ distributions may vary significantly from time to time due to the nature of their investments. The ultimate tax characterization of the distributions made during a tax year may not finally be determined until after the end of that tax year. The Fund Parties may make distributions during a tax year that exceed their investment company taxable income and net capital gains for that tax year. In such a situation, the amount by which their total distributions exceed investment company taxable income and net capital gains generally would be treated as a return of capital up to the amount of a stockholder’s tax basis in the shares, with any amounts exceeding such tax basis treated as a gain from the sale or exchange of such shares. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from their investment activities. Moreover, the Fund Parties may pay all or a substantial portion of their distributions from the proceeds of the sale of shares of their common stock or from borrowings in anticipation of future cash flow, which could constitute a return of stockholders’ capital and will lower such stockholders’ tax basis in their shares, which may result in increased tax liability to stockholders when they sell such shares.

The Fund Parties may pay distributions from offering proceeds, borrowings or the sale of assets to the extent their cash flows from operations, net investment income or earnings are not sufficient to fund declared distributions.

The Fund Parties may fund distributions from the uninvested proceeds of a securities offering and borrowings, and they have not established limits on the amount of funds they may use from such proceeds or borrowings to make any such distributions. The Fund Parties have paid and may continue to pay distributions from the sale of assets to the extent distributions exceed their earnings or cash flows from operations. Distributions from offering proceeds or from borrowings could reduce the amount of capital the Fund Parties ultimately invest in their portfolio companies.

A stockholder’s interest in a Fund Party will be diluted if the given Fund Party issues additional shares, which could reduce the overall value of the investment.

The Fund Parties’ investors do not have preemptive rights to any shares that the Fund Parties may issue in the future. Pursuant to each of the Fund Parties’ charters, a majority of their entire boards of directors or trustees, as applicable, may amend their charter to increase the number of authorized shares of common stock without stockholder approval. After an investor purchases shares, their board of directors or trustees, as applicable, may elect to sell additional shares in the future, issue equity interests in private offerings or issue share-based awards to their independent directors or trustees, as applicable, or employees of the Advisor. To the extent the Fund Parties issue additional equity interests after an investor purchases their shares, an investor’s percentage

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ownership interest in the given Fund Party will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of the Fund Parties’ investments, an investor may also experience dilution in the book value and fair value of his or her shares.

Certain provisions of the Fund Parties’ organizational documents as well as provisions of the Maryland General Corporation Law and the Delaware Statutory Trust Act could deter takeover attempts and have an adverse impact on the value of their common stock.

The MGCL and the FS Funds’ charters and bylaws contain certain provisions that may have the effect of discouraging, delaying or making difficult a change in control of an FS Fund or the removal of its incumbent directors. Under the Business Combination Act of the MGCL, certain business combinations between an FS Fund and an “interested stockholder” (defined generally to include any person who beneficially owns 10% or more of the voting power of a company’s outstanding shares) or an affiliate thereof is prohibited for five years and thereafter is subject to special stockholder voting requirements, to the extent that such statute is not superseded by applicable requirements of the 1940 Act. However, the FS Funds’ boards of directors have adopted resolutions exempting from the Business Combination Act any business combination between an FS Fund and any person to the extent that such business combination receives the prior approval of the applicable board of directors, including a majority of directors who are not “interested persons” as defined in the 1940 Act. Under the Control Share Acquisition Act of the MGCL, “control shares” acquired in a “control share acquisition” have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by officers or by directors who are employees of the corporation. The FS Funds’ bylaws contain provisions exempting from the Control Share Acquisition Act any and all acquisitions by any person of shares of the FS Funds’ common stock, but such provision may be repealed at any time (before or after a control share acquisition). However, an FS Fund will amend its bylaws to repeal such provision (so as to be subject to the Control Share Acquisition Act) only if its applicable board of directors determines that it would be in its best interests and if the staff of the SEC does not object to its determination that its being subject to the Control Share Acquisition Act does not conflict with the 1940 Act. The Business Combination Act (if an FS Fund’s board of directors should repeal the resolution) and the Control Share Acquisition Act (if an FS Fund amends its bylaws to be subject to that Act) may discourage others from trying to acquire control of an FS Fund and increase the difficulty of consummating any offer.

The FS Funds have also adopted measures that may make it difficult for a third party to obtain control of them, including: (a) classifying their boards of directors into three classes serving staggered three-year terms, (b) providing that a director may be removed only for cause and only by vote of at least two-thirds of the votes entitled to be cast, and (c) authorizing their boards of directors to (i) classify or reclassify shares of their stock into one or more classes or series, (ii) cause the issuance of additional shares of their stock, and (iii) amend the applicable charter from time to time, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. These provisions, as well as other provisions of the FS Funds’ charters and bylaws, may discourage, delay, defer, make more difficult or prevent a transaction or a change in control that might otherwise be in the best interest of the FS Funds’ stockholders.

The CCT II Charter, as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a third party from attempting to acquire it. The CCT II Board may, without shareholder action, authorize the issuance of shares in one or more classes or series, including shares of preferred stock; the CCT II Board may, without shareholder action, amend its declaration of trust to increase the number of its shares of common stock, of any class or series, that it will have authority to issue; and its declaration of trust provides that, upon and following the occurrence of a listing of any class of its shares on a national securities exchange, its board of trustees will be divided into three classes of trustees serving staggered terms of three years each. These anti-takeover provisions may inhibit a change of control in circumstances that could give the holders of CCT II’s shares of common stock the opportunity to realize a premium over the value of its shares of common stock.

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The NAV of the Fund Parties’ common stock may fluctuate significantly.

The NAV of the Fund Parties’ common stock may be significantly affected by numerous factors, some of which are beyond their control and may not be directly related to their operating performance. These factors include: (i) changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; (ii) loss of RIC or BDC status; (iii) changes in earnings or variations in operating results; (iv) changes in the value of their portfolio of investments; (v) changes in accounting guidelines governing valuation of their investments; (vi) any shortfall in revenue or net income or any increase in losses from levels expected by investors; (vii) departure of their investment adviser or certain of its key personnel; (viii) general economic trends and other external factors; and (ix) loss of a major funding source.

Holders of any preferred stock that the Fund Parties may issue will have the right to elect members of the board of directors or trustees, as applicable, and have class voting rights on certain matters.

The 1940 Act requires that holders of shares of preferred stock must be entitled as a class to elect two directors or trustees, as applicable, at all times and to elect a majority of the directors or trustees, as applicable, if dividends on such preferred stock are in arrears by two years or more, until such arrearage is eliminated. In addition, certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock, including changes in fundamental investment restrictions and conversion to open-end status and, accordingly, preferred stockholders could veto any such changes. Restrictions imposed on the declarations and payment of dividends or other distributions to the holders of the Fund Parties’ common stock and preferred stock, both by the 1940 Act and by requirements imposed by rating agencies, might impair their ability to maintain their qualification as RICs for U.S. federal income tax purposes.

Risks Related to U.S. Federal Income Tax

The Fund Parties will be subject to corporate-level income tax if they are unable to qualify as RICs under Subchapter M of the Code or to satisfy the RIC annual distribution requirements.

Besides maintaining the Fund Parties’ elections to be treated as BDCs under the 1940 Act, in order for them to qualify as a RIC under Subchapter M of the Code, the Fund Parties must meet the following annual distribution, income source and asset diversification requirements.

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Failure to satisfy any of the Diversification Tests may result in the applicable Fund Party having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of the applicable Fund Party’s investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses.

In any tax year in which the Fund Parties qualify as RICs, in order for each of the Fund Parties to be able to be subject to tax as RICs, they are required to meet an annual distribution requirement. The annual distribution requirement for RIC tax treatment will be satisfied if a given Fund Party distributes to its stockholders, for each tax year, dividends of an amount generally at least equal to the sum of 90% of their investment company taxable income, which is generally the sum of their ordinary net income and realized net short-term capital gains in excess of realized net long-term capital losses, without regard to any deduction for dividends paid. Because the Fund Parties may use debt financing, they are subject to an asset coverage ratio requirement under the 1940 Act and may in the future become subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict the Fund Parties from making distributions necessary to satisfy the Annual Distribution Requirement. If the Fund Parties are unable to obtain cash from other sources, they could fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax.

The Fund Parties must satisfy these tests on an ongoing basis in order to maintain RIC tax treatment, and may be required to make distributions to stockholders at times when it would be more advantageous to invest cash in their existing or other investments, or when the Fund Parties do not have funds readily available for distribution. Compliance with the RIC tax requirements may hinder their ability to operate solely on the basis of maximizing profits and the value of their stockholders’ investments. Also, the rules applicable to their qualification as RICs are complex, with many areas of uncertainty. If the Fund Parties fail to qualify for or maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce their net assets, the amount of income available for distribution and the amount of their distributions. Such a failure may have a material adverse effect on the Fund Parties and on any investment in them. The Code provides certain forms of relief from RIC disqualification due to failures of the 90% Income Test or any of the Diversification Tests, although there may be additional taxes due in such cases. The Fund Parties cannot assure you that they would qualify for any such relief should they fail either the 90% Income Test or any of the Diversification Tests.

Some of the Fund Parties’ investments may be subject to corporate-level income tax.

The Fund Parties may invest in certain debt and equity investments through taxable subsidiaries and the taxable income of these taxable subsidiaries will be subject to federal and state corporate income taxes. The Fund Parties may invest in certain foreign debt and equity investments which could be subject to foreign taxes (such as income tax, withholding and value added taxes).

The Fund Parties may have difficulty paying required distributions if they recognize income before or without receiving cash representing such income.

For U.S. federal income tax purposes, the Fund Parties may be required to recognize taxable income in circumstances in which they do not receive a corresponding payment in cash. For example, their investments may include debt instruments that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or debt instruments that were issued with warrants). To the extent original issue discount or PIK interest constitutes a portion of the Fund Parties’ income, the Fund Parties must include in taxable income each tax year a portion of the original issue discount or PIK interest that accrues over the life of the instrument, regardless of whether cash representing such income is received by the Fund Parties in the same tax year. The Fund Parties may also have to include in income other amounts that they have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation such as warrants or stock. The Fund Parties anticipate that a portion of the Fund Parties’ income may constitute original issue discount or other income

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required to be included in taxable income prior to receipt of cash. Further, the Fund Parties may elect to amortize market discount and include such amounts in their taxable income in the current tax year, instead of upon disposition, as not making the election would limit their ability to deduct interest expenses for tax purposes.

Because any original issue discount or other amounts accrued will be included in their investment company taxable income for the tax year of the accrual, the Fund Parties may be required to make a distribution to their stockholders in order to satisfy the Annual Distribution Requirement, even though the Fund Parties will not have received any corresponding cash amount. As a result, the Fund Parties may have difficulty meeting the Annual Distribution Requirement necessary to qualify for and maintain RIC tax treatment under Subchapter M of the Code. The Fund Parties may have to sell some of their investments at times and/or at prices they would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If the Fund Parties are not able to obtain cash from other sources, they may fail to qualify for or maintain RIC tax treatment and thus become subject to corporate-level income tax.

Furthermore, the Fund Parties may invest in the equity securities of non-U.S. corporations (or other non-U.S. entities classified as corporations for U.S. federal income tax purposes) that could be treated under the Code and U.S. Treasury regulations as “passive foreign investment companies” and/or “controlled foreign corporations.” The rules relating to investment in these types of non-U.S. entities are designed to ensure that U.S. taxpayers are either, in effect, taxed currently (or on an accelerated basis with respect to corporate level events) or taxed at increased tax rates at distribution or disposition. In certain circumstances, these rules also could require the Fund Parties to recognize taxable income or gains where they do not receive a corresponding payment in cash and under recently proposed U.S. federal income tax regulations, all or a portion of such taxable income and gains may not be considered qualifying income for purposes of the 90% Income Test.

The Fund Parties portfolio investments may present special tax issues.

Investments in below-investment grade debt instruments and certain equity securities may present special tax issues for the Fund Parties. U.S. federal income tax rules are not entirely clear about issues such as when the Fund Parties may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless debt in equity securities, how payments received on obligations in default should be allocated between principal and interest income, as well as whether exchanges of debt instruments in a bankruptcy or workout context are taxable. Such matters could cause the Fund Parties to recognize taxable income for U.S. federal income tax purposes, even in the absence of cash or economic gain, and require the Fund Parties to make taxable distributions to their stockholders to maintain their RIC status or preclude the imposition of either U.S. federal corporate income or excise taxation. Additionally, because such taxable income may not be matched by corresponding cash received by the Fund Parties, they may be required to borrow money or dispose of other investments to be able to make distributions to their stockholders. These and other issues will be considered by the Fund Parties, to the extent determined necessary, in order that the Fund Parties minimize the level of any U.S. federal income or excise tax that the Fund Parties would otherwise incur.

If a Fund Party does not qualify as a “publicly offered regulated investment company,” as defined in the Code, a stockholder will be taxed as though such stockholder received a distribution of some of their expenses.

A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by at least 500 persons at all times during the tax year. If the Fund Parties do not qualify as a publicly offered regulated investment company for any tax year, a noncorporate stockholder’s allocable portion of their affected expenses, including their management fees, will be treated as an additional distribution to the stockholder and will be deductible by such stockholder only to the extent permitted under the limitations described below. For noncorporate stockholders, including individuals, trusts, and estates, significant limitations generally apply to the deductibility of certain expenses of a non-publicly offered regulated investment company, including management fees. In particular, these expenses, referred to as miscellaneous itemized deductions, are deductible

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to an individual only to the extent they exceed 2% of such a stockholder’s adjusted gross income for taxable years after 2025 and are entirely not deductible against gross income before 2026, are not deductible for alternative minimum tax purposes and are subject to the overall limitation on itemized deductions imposed by the Code. Although the Fund Parties believe that they are currently considered a publicly offered regulated investment company, as defined in the Code, there can be no assurance, however, that the Fund Parties will be considered a publicly offered regulated investment company in the future.

Legislative or regulatory tax changes could adversely affect investors.

At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be amended. Any of those new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation of the Fund Parties or their stockholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of an investment in their shares or the value or the resale potential of their investments. In particular, on December 22, 2017, the Tax Cuts and Jobs Act was signed into law. This tax legislation lowers the general corporate income tax rate from 35 percent to 21 percent, makes changes regarding the use of net operating losses, repeals the corporate alternative minimum tax and makes significant changes with respect to the U.S. international tax rules. In addition, the legislation generally requires a holder that uses the accrual method of accounting for U.S. tax purposes to include certain amounts in income no later than the time such amounts are reflected on certain financial statements, which therefore if applicable would require the Fund Parties to accrue income earlier than under prior law, although the precise application of this rule is unclear at this time. The legislation also limits the amount or value of interest deductions of borrowers and in that way may potentially affect the loan market and their and their portfolio companies’ use of leverage. For individual taxpayers, the legislation reduces the maximum individual income tax rate and eliminates the deductibility of miscellaneous itemized deductions for taxable years 2018 through 2025. The impact of this new legislation is uncertain.

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COMPARATIVE FEES AND EXPENSES

Comparative Fees and Expenses Relating to the Mergers

The following tables are intended to assist you in understanding the costs and expenses that an investor in the common stock of each of the Fund Parties bears directly or indirectly, and based on the assumptions set forth below, the pro forma costs and expenses estimated to be incurred by the combined company in the first year following the Mergers. The Fund Parties caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this document contains a reference to fees or expenses paid or to be paid by “you,” “FSIC II,” “FSIC III,” “CCT II” or “FSIC IV” stockholders will indirectly bear such fees or expenses as investors in each of the Fund Parties.

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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 applicable investment advisory and administrative services agreement). This fee equals 20.0% of the respective Fund Party’s incentive fee capital gains, which equals its 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 Fund Parties accrue for the capital gains incentive fee, which, if earned, is paid annually. The Fund Parties accrue the incentive fee on capital gains based on net realized and unrealized gains; however, the fee payable to the Advisor is based on realized gains and no such fee is payable with respect to unrealized gains unless and until such gains are actually realized. The amount in the table for the Fund Parties assumes that there is no incentive fee on capital gains and is based on the net unrealized depreciation as of March 31, 2019. Such amounts are expressed as a percentage of the average net assets as of such date.

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The figure in the table for FSIC III assumes it borrows the full amount available under each financing facility as of March 31, 2019 and that the annualized weighted average borrowing costs under the financing facilities, including amortized costs and expenses, is 4.99%. Because the total assumed borrowing ($2.10 billion) represents 95.09% of its average net assets for the three months ended March 31, 2019 ($2.21 billion), the borrowing cost as a percentage of net assets set forth in the table above is 4.74% (or 95.09% of 4.99%). See “Management’s Discussion and Analysis of Financial Condition and Results of Operation of FS Investment Corporation III—Financial Condition, Liquidity and Capital Resources—Financing Arrangements” for a discussion of FSIC III’s financing arrangements.

The figure in the table for FSIC IV assumes it borrows the full amount available under each financing facility as of March 31, 2019 and that the annualized weighted average borrowing costs under the financing facilities, including amortized costs and expenses, is 3.86%. Because the total assumed borrowing ($50 million) represents 14.93% of its average net assets for the three months ended March 31, 2019 ($335 million), the borrowing cost as a percentage of net assets set forth in the table above is 0.58% (or 14.93% of 3.86%). See “Management’s Discussion and Analysis of Financial Condition and Results of Operation of FS Investment Corporation IV—Financial Condition, Liquidity and Capital Resources—Financing Arrangements” for a discussion of FSIC IV’s financing arrangements.

The figure in the table for CCT II assumes it borrows the full amount available under each financing facility as of March 31, 2019 and that the annualized weighted average borrowing costs under the financing facilities, including amortized costs and expenses, is 5.27%. Because the total assumed borrowing ($82 million) represents 76.43% of its average net assets for the three months ended March 31, 2019 ($107 million), the borrowing cost as a percentage of net assets set forth in the table above is 4.03% (or 76.43% of 5.27%). See “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Corporate Capital Trust II—Financial Condition, Liquidity and Capital Resources—Financing Arrangements” for a discussion of CCT II’s financing arrangements.

Example

The following example demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in FSIC II, FSIC III, CCT II or FSIC IV or the combined company’s common stock following the Mergers. In calculating the following expense amounts, each of FSIC II, FSIC III, CCT II and FSIC IV has assumed that it would have no additional leverage and that its annual operating expenses would remain at the levels set forth in the tables above. Transaction expenses related to the Mergers are not included in the following examples.

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The above table is to assist you in understanding the various costs and expenses that an investor in each of the Fund Parties or, following the Mergers, the combined company’s, common stock will bear directly or indirectly. Because the example assumes, as required by the SEC, no subordinated incentive fee on income would be accrued and payable in any of the indicated time periods. Performance will vary and may result in a return greater or less than 5%. If each of the Fund Parties were to achieve sufficient returns on its investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, its expenses, and returns to its investors, would be higher. In addition, while the example assumes reinvestment of all

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distributions at NAV, reinvestment of distributions under the distribution reinvestment plans may occur at a price per share that differs from the then-current NAV per share of common stock of the respective company. See “FSIC II Distribution Reinvestment Plan,” “FSIC III and FSIC IV Distribution Reinvestment Plan” and “CCT II Distribution Reinvestment Plan” for additional information regarding each of the Fund Parties’ distribution reinvestment plans.

The example and the expenses in the table above should not be considered a representation of the Fund Parties’, or, following the Mergers, the combined company’s, future expenses, and actual expenses may be greater or less than those shown.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains statements that constitute forward-looking statements, which relate to each of the Fund Parties or, following the Mergers, the combined company, regarding future events or the future performance or future financial condition of each of the Fund Parties or, following the Mergers, the combined company. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about each of the Fund Parties or, following the Mergers, the combined company, their industry and their respective beliefs and assumptions. The forward-looking statements contained in this joint proxy statement/prospectus involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including:

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In addition, words such as “anticipate,” “believe,” “expect,” “intend,” “seek,” “plan,” “estimate” and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this joint proxy statement/prospectus involve risks and uncertainties. Actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including those factors set forth in “Risk Factors” and elsewhere in this joint proxy statement/prospectus. Other factors that could cause actual results to differ materially include:

The forward-looking statements included in this joint proxy statement/prospectus have been based on information available to the Fund Parties’ stockholders on the date of this joint proxy statement/prospectus. Except as required by the federal securities laws, none of the Fund Parties undertakes any obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

You are advised to consult any additional disclosures that the Fund Parties may make directly to you or through reports that they 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 in this joint proxy statement/prospectus, any prospectus supplement or in periodic reports any of the Fund Parties may file under the Exchange Act are excluded from the safe harbor protection provided by Section 27A of the Securities Act and Section 21E of the Exchange Act.

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SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA OF FS INVESTMENT CORPORATION II

You should read this selected consolidated financial data in conjunction with FSIC II’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations of FS Investment Corporation II” and the consolidated financial statements and notes thereto included elsewhere in this joint proxy statement/prospectus. The selected financial data as of the three months ended March 31, 2019 and 2018 have been derived from FSIC II’s unaudited financial statements and the selected financial data as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 has been derived from FSIC II’s audited consolidated financial statements.