FS GLOBAL CREDIT OPPORTUNITIES FUND Positioning the portfolio for - - PowerPoint PPT Presentation

FS GLOBAL CREDIT OPPORTUNITIES FUND

Positioning the portfolio for long-term success

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WHY THE CHANGE?

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BUILD A DIFFERENTIATED PORTFOLIO

• Reduce number of

holdings to create a more concentrated portfolio of high-conviction ideas

• Focus on investments with

return premiums driven by illiquidity, complexity or corporate events

• Target differentiated

public investments + niche private investments

MANAGE PORTFOLIO VOLATILITY

• Selectively rotate out
• f under-performing

investments

• Selectively reduce

investments with high correlation to the broader markets

LOWER MANAGEMENT + INCENTIVE FEES

• Lower management fee

from 2.00% to 1.50%1,2

• Waive incentive fees

for one year2

• Supported by existing

$30 million sponsor investment from FS employees and affiliates3

1 Based on gross assets. 2 Effective as of January 1, 2018. The adviser will waive 0.50% of based management fee for one year beginning January 1, 2018. 3 Sponsor investment refers to proceeds from investors affiliated with FS Investments, including members of FSGCO’s boards of trustees. As of November 6, 2017. 4 The timing of any liquidity event is uncertain, cannot be assured and is subject to, among other factors, board approval and market conditions.

PREPARE FOR LIQUIDITY EVENT4

• Build portfolio of

differentiated value compared to public investment options

• Reduce annualized

distribution amounts

• f FSGCO Funds

A CONTINUED FOCUS ON HIGH-CONVICTION INVESTMENTS

EVENT-DRIVEN OPPORTUNITIES

Events may include corporate events, such as mergers or acquisitions

MARKET PRICE INEFFICIENCIES

Companies or industries that are out of favor with the broader markets

SPECIAL SITUATIONS

Mispricing of a loan

• r bond due to

financial stress

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FS GLOBAL CREDIT OPPORTUNITIES FUND

A value-based approach to credit investing

FOCUS ON INVESTMENTS WITH ENHANCED RETURN OPPORTUNITIES

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Focus on niche, high-conviction investments while reducing portfolio volatility

1 As of September 30, 2017

75

Current number of portfolio companies1

40-45

Targeted number of portfolio companies

VS.

Target niche private investments + differentiated public investments (e.g. misunderstood by the market or have identifiable catalysts) Seek investments with return premiums driven by illiquidity, complexity or corporate events Rotate out of under-performing investments and investment with high correlation to the broader high yield market

• We believe this is a necessary step towards

a liquidity event

• Never cut distribution amount since inception
• FS has provided ~$59 million to support

distributions since FSGCO’s inception

• Greater flexibility to generate total returns

absent the need to focus on the highest income opportunities to meet the distribution

• While the market environment has changed

significantly since the credit market downturn in 2015, the Fund’s total return expectations remain the same

RESET DISTRIBUTION WITH THE GOAL TO GROW NAV AND PREPARE FOR A PUBLIC LISTING

Distribution yield at NAV as of December 7, 20171

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1 The payment of future distributions on the FSGCO funds’ common shares are subject to the discretion of the FSGCO funds’ board of trustees and applicable legal restrictions and, therefore, there can be no assurance as to the amount

• r timing of any such future distributions.

2 As of December 7, 2017. ICE Bank of America Merrill Lynch High Yield Bond Index yield-to-worst.

CURRENT GROSS NET FUND–A&D

$0.87 $0.51 $0.51

FUND–ADV

$0.66 $0.51 $0.46

FUND–T & T2

$0.62 $0.51 $0.41

11.46% 11.46% 8.07% 8.12% 8.78% 6.72% 6.72% 5.37% 5.41% 6.08%

0% 2% 4% 6% 8% 10% 12% 14% Fund-A Fund-D Fund-T Fund-T2 Fund-Adv

Pre-distributon cut Post-distribution cut

TODAY: 5.8%

High yield bond yield2

Q1 2016: 9.0%

High yield bond yield2

RESOURCES

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Website Webinars

FSPROXY.COM COMMUNICATION SAMPLES PRESS RELEASES FREQUENTLY ASKED QUESTIONS EMAIL INVITATIONS TO COME WEBINARS

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APPENDIX

KEY PERSONNEL

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Andrew Beckman

• Mr. Beckman was formally a Partner and the Head of Corporate Credit and Special Situations at DW Partners. Prior to

that he was with Magnetar Capital from 2012- Q1 2016 where he served as Head of Event Credit and Head of the Magnetar Credit Opportunities Fund. He was also a member of both the Event Driven and Firmwide Investment

• Committees. As Head of Event Credit, he ran a special situations credit portfolio for the firm’s multi strategy Event Driven
• business. Mr. Beckman also started and managed the special situations focused Credit Opportunities Fund. The focus for

both vehicles was stressed debt, distressed debt, liquidations and opportunistic performing credit. He recruited, hired and built out the entire Event Credit team. Prior to joining Magnetar, Mr. Beckman was a Managing Director and Co-Head of Goldman Sachs’ Special Situations Group’s Multi Strategy Investing business. In this capacity he served as the co-portfolio manager of a special situations focused investing business and managed a team of 10+ analysts and two traders. From 1998-2004, Mr. Beckman worked at Investcorp International in their North American private equity business. He was responsible for identifying, evaluating and executing leveraged buyout investments in a broad variety of industries. Mr. Beckman started his career at Salomon Smith Barney working in the Investment Bank’s Mergers and Acquisitions Group. Mr. Beckman earned a B.S in Economics with a concentration in finance and management from the University of Pennsylvania’s Wharton School of Business.

DISCLOSURES

FORWARD-LOOKING STATEMENTS

This presentation contains statements which constitute “forward-looking” statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements with regard to future events or the future performance or operations

• f FS Global Credit Opportunities Fund (the “Company”) and FS Investments. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify

forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption to the Company’s operations or the economy generally due to terrorism or natural disasters, future changes in laws or regulations and conditions in the Company’s operating area, and failure to consummate the matters discussed in this presentation. The inclusion of forward-looking statements should not be regarded as a representation that any plans, estimates or expectations will be achieved. Any forward-looking statements speak only as of the date of this presentation. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on any forward-looking statements.

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