southland capital management

OpportunityFund Summary Considerations Expenses

Month BDC Fund II* HFRI EHI S&P 500 TR Dow Jones

August- 2015 -2.30% -2.62% -6.03% -6.57%July - 2015

- 20150.53% -0.77% 2.10% 0.40%

June - 2015 -1.59% -0.92% -1.94% -2.10%May- 2015 -0.27% 1.30% 1.29% 0.95%April - 2015 0.75% 2.04% 0.96% 0.36%

March - 2015 -0.46% 0.31% -1.58% -1.97%February - 2015 5.79% 2.76% 5.49% 5.64%January - 2015 -3.53% -0.62% -3.00% -3.69%FYE — 2014 -12.52% 2.26% 13.69% 7.52%FYE — 2013 13.20% 14.28% 32.41% 26.51%FYE — 2012 28.21% 7.41% 16.00% 7.25%FYE — 2011 -46.38% -8.38% 2.11% 5.53%FYE — 2010 73.04% 10.45% 15.07% 11.02%FYE — 2009 4.37% 2.92% 5.49% 7.37%YTD - 2015 -1.34% 0.07% -2.88% -7.27%

Inception to Date* 21.37% 30.25% 111.26% 70.18%1/1/12 to Date** 20.12% 25.05% 69.56% 35.28%

* Fund's inception was October 1, 2009. Performance shown is net of all fees & expenses including management & performance fees. Past performance is not necessarily indicative of future performance. This material does not constitute an offer to sell (nor the solicitation of an offer to buy) interests in BDC Fund II, LP (the "Fund"). Offering is made by Private Placement Memorandum from a Principal only. The indices included above are presented only to provide a general indication of U.S. Stock market performance for the periods indicated and not as a standard of comparison because they are unmanaged, broadly based indices.

** Represents investor with initial contribution of 1/1/2012. (After revised investment strategy.)

The General Partner of BDC Fund II, LP

The general partner of BDC Fund II, LP (the “Fund”) is Southland Capital Management, LLC (“SCM”), a limited liability company. SCM is registered as an investment adviser in the State of California and has discretionary trading authority. Nicholas Marshi is the Chief Investment Officer; William Hansen is the Chief Marketing Officer.

Prime Broker MS Howells and Co.Custodian Pershing, LLC / The Bank of New YorkAdministrator PartnersAdmin, LLC — Monthly statementsAuditor Weaver & Tidwell LLP - Annual AuditLegal Counsel Ragghianti / Freitas LLPWeb Site www.southlandcapitalmanagement.comBDC Blog www.bdcreporter.comAUM, USD $21 millionGross Assets $55 million

Every year, thousands of companies in America raise hundreds of billions of dollars of debt to finance buy-outs, recapitalizations or to refinance existing obligations, typically by issuing bonds or by taking on loans. At a time when interest rates are very low, borrowers pay a premium to attract debt capital. Depending on size, credit risk and market conditions borrowers pay between 5%-15% per annum. Outside of recessionary periods, these loans have very low default rates, pay interest regularly and rank in

priority above the Private Equity groups, which typically provide the equity capital for the underlying transactions. Until recently investors could invest in private company debt, which is also known as leveraged finance, only through private partnerships and only to a small number of borrowers. Moreover, capital invested was typically tied up for several years, and little information was provided about the composition, performance, and value of the underlying loans in these partnerships.

Southland Capital Management, LLC 1600 Rosecrans Ave., 4th Fl. Manhattan Beach CA 90266 (800) 579-1651www.southlandcapitalmanagement.com

Executive Summary | September 2015 |

Investment Opportunity

Investment Universe However, in recent years a new publicly-traded asset class has emerged that provides investors broad and diversified access to all types of borrowers from the very largest corporations to the lower middle market: Business Development Companies (“BDC”). A BDC is a unique kind of lender, set up by the Congress in 1980, with the express purpose of encouraging loan and equity investments in American private companies. BDCs are not required to pay corporate tax on their income, but must distribute at least ninety percent of their taxable ordinary income to investors, and are required to use only modest amounts of indebtedness.

As a result, BDCs generate relatively high and steady yields (typically 8%-12%) for investors, and are less leveraged than many other types of vehicles that are involved in business lending such as banks, finance companies and Collateralized Loan Obligations. No BDC has ever filed for bankruptcy. Most of the BDCs in the market are managed by affiliates of blue-chip Private Equity and Asset Management firms such as Goldman Sachs, Apollo Group, Ares Management, TH Lee, Fifth Street Management, etc.

BDC UNIVERSE

According to the Closed-End Fund Advisors (CEFA), there are over 50 publicly-traded BDCs, with a market capitalization in excess of $35 billion, responsible for over $70 billion in loans to thousands of borrowers throughout the United States. All BDCs are publicly registered investment companies that trade on an U.S. stock exchange. Furthermore, there are dozens of publicly traded fixed rate Notes issued by BDCs in which to invest, with interest rates which range between 4%-8%, and which trade like stocks.

We believe there is an exceptional and long term opportunity for investors to achieve above-average returns from investing in a carefully selected portfolio of BDC common stock and debt investments, with the added benefits of liquidity and transparency from investing in publicly traded and regulated instruments. Given the relative stability of the income streams, SCM is comfortable using a modest amount of leverage to enhance investor returns. The Fund is generally leveraged 2:1.

OUTLOOK

We project the number of publicly traded BDCs-as well as total market capitalization and assets under management-will continue to increase in the years ahead, increasing market share in leveraged lending at the expense of national and regional banks and private funds.

There are over 50 Business Development Companies in existence; with a market capitalization in excess of $30 billion

”


Executive Summary | May 2015 |



Investment Strategy: The Fund’s principal objective is to generate a stable stream of investment income by assembling a highly diversified portfolio of debt and common stock investments in Business Development Companies. SCM undertakes a “bottom up” analysis on all the investments in the Fund’s universe, reading all public filings, published articles and, where possible, talking to management, analysts and experts. The Fund’s extensive research is contained in a proprietary database, which is critical to SCM’s selection of appropriate investments. Moreover, by using leverage of up to 2x the Fund’s equity, the goal is to generate superior levels of income for investors.

Although the Fund’s universe of investments pay out relatively stable distributions, their stock price movements are subject to wide fluctuations, i.e. market volatility. The Fund seeks to reduce market volatility by a variety of methods. SCM will periodically shift the Fund’s investment mix between debt and equity investments, and/or will reduce leverage by selling assets. Moreover, SCM will sell “short” over-valued securities where appropriate to take advantage of potential drops in market value.

SCM’s principals have substantial experience in leveraged debt investing, and in hedge fund management. The Fund’s principals have over 50 years of experience in leveraged finance. Mr. Marshi, who serves as the Chief Investment Officer, was previously a commercial lender and investment banker with Citibank and Kleinwort Benson, as well as the founder and Managing Director of two private equity firms: Kensington Capital Corporation and Southland Capital Partners. Moreover, Mr. Marshi has been investing personal and family funds in leveraged debt investments for over 10 years. Mr Marshi edits the highly regarded specialist financial website “BDC Reporter” (www.bdcreporter.com), and is a regular contributor on Seeking Alpha and other publications. Messrs.’ Marshi and Hansen have been managing the Fund for over 5 years. SCM is a Registered Investment Advisor based in California.

The Fund’s portfolio is highly diversified. By investing in a mix of BDC common stock and Notes, the Fund's risk exposure is highly fragmented, especially as the average BDC itself is diversified across dozens or hundreds of different loans. SCM estimates that the Fund has potential exposure to companies in every sector of the U.S. economy, in every region of the country, and of every size from starts-ups to businesses with billions in revenues. SCM estimates the Fund has exposure to thousands of leveraged debt borrowers, a degree of diversification far in excess of any single mutual fund, closed end fund, private fund or hedge fund vehicle involved in leveraged lending.

Investment Considerations




Modest use of margin borrowing results in very high levels of investment income compared to other investment opportunities. The Fund generally borrows up to two times its capital to take advantage of the arbitrage between the high yields on leveraged debt investments and the low cost of borrowing (currently under 1.0% per annum). Currently the Fund is generating a gross yield of nearly 2.0% monthly, or 22.0% per annum.

Investors have option to receive distributions monthly. The Fund provides every investor with the option of being paid their share of gross dividend income on a monthly basis, or reinvesting the proceeds.

The Fund has generated volatile but superior returns since inception. Given the use of leverage, the Fund’s monthly results have been subject to above average volatility since the launch of the Fund in October 2009. In 2010, the Fund was one of the best performing funds in America with a 73% return. However, the Fund was negatively impacted by the financial crisis of 2011, which resulted in being down -46%. However, after taking measures to reduce volatility, the Fund performed very well in 2012 & 2013. For the year ending 2014, the Fund was down 12% in a difficult year for debt investments. Inception to date, the fund is up 21.37%. Year to date in 2015, the Fund is down -2.30%. Since SCM’s change of investment strategy in January 2012, the Fund is up 20%. All performance results are after all fees and expenses.

The Fund’s portfolio is highly liquid. All the Fund’s investments are in public equity or debt BDC securities traded on a major U.S. exchange, which are independently valued on a daily basis, and which can be liquidated on short notice. The liquidity of the Fund's investments allows SCM to quickly redeploy assets to take advantage of investment opportunities and to meet any investor redemption requests on very short notice.

No Lock-Up Period on Capital. Any Limited Partner may withdraw all or some of their capital or income at the end of any month, subject only to a minimum investment amount and on at least ten days advance notice. The Fund’s financial management is fully transparent. PartnersAdmin LLC, a respected third party fund administrator, calculates the Fund’s returns and provides monthly financial statements to every Limited Partner. Weaver & Tidwell, LLP, a leading hedge fund accounting firm, undertakes a full audit of the Fund, which is circulated to the Limited Partners annually. Pershing LLC serves as independent custodian for all investments. Pershing is a subsidiary of the Bank of New York Mellon and is the custodian for over 1,500 institutional clients, and holds custody assets in excess of $1 trillion. M.S. Howells & Co, a leading Scottsdale based broker-dealer, serves as the Fund’s prime broker. SCM’s principals’ interests are aligned with the Limited Partners. SCMʼs principals, as well as members of their extended family, have invested substantial portions of their own capital in the Fund.

Investment Considerations (cont’d)




The Fund is offering its limited partnership interests (“Interests”) to a limited number of qualified subscribers –generally individuals with a net worth of at least $1.5 million and entities with assets of at least $5 million. The minimum initial investment is $250,000. SCM may, in its discretion, waive or change the investment minimum. There is no minimum or maximum amount of Interests to be sold. Limited Partners are admitted on the first day of each month in SCM’s discretion. Full payment for Interests must be made at the time of subscription.

The Offering / Minimum Investment

Management Fee & Expenses


Management Fee. The Fund pays a Management Fee to SCM of approximately 2.0% per annum of each Limited Partner’s pro rate share of the value of the Fund’s total assets, including leveraged amounts. Performance Allocation. At the end of each fiscal year (or a shorter period in certain circumstances), net profits and net losses for the year are allocated among the Partners, and SCM receives a “Performance Allocation” as to each Limited Partner equal to twenty percent (20%) of the net profits allocated to that Limited Partner, but only to the extent those net profits exceed net losses previously allocated to the Limited Partner that have not been recovered. Solely for purposes of computing the Performance Allocation, net profits and net losses include unrealized gains and losses. This limitation prevents SCM from receiving a Performance Allocation as to profits that simply restore previous losses. SCM is entitled to receive a Performance Allocation as to a Limited Partner only to the extent the Limited Partner’s cumulative share of profits through the current period exceeds the highest level of profits allocated to it for all prior periods. If a Limited Partner withdraws or is distributed capital from the Fund, that Limited Partner’s Unrecouped Losses are reduced proportionately based on the amount withdrawn or distributed. Expenses. The Fund will pay or reimburse SCM for certain costs and expenses incurred by or on behalf of the Fund, or for the Fund’s benefit, including without limitation:


Southland Capital Management, LLC

www.southlandcapitalmanagement.com


Organizational and Offering Expenses Organizational expenses include, legal, accounting and government filing fees.

Operating Expenses

Operating expenses include, (A) the Fund’s ongoing accounting, auditing,bookkeeping, tax preparation, administration, legal, consulting and other professional fees and expenses; (B) all costs of communications with Limited Partners; (C) investment and research-related expenses including all commissions, bid-ask spreads, markups, interest on margin borrowing, costs relating to short sales, transfer taxes, custodian fees, etc.

OverheadThe General Partner will pay, and shall not be reimbursed by the Partnership, for its own overhead expenses. These include: rent, employee salaries and benefits insurance.

“This Presentation is not an offer to sell or a solicitation of an offer to buy an interest in BDC Fund II, LP (the “Fund”). This presentation is intended merely to determine expressions of interest in the Fund. Any offer or solicitation may only be made after delivery of the Fund’s Confidential Offering Memorandum. This presentation does not include certain information that should be considered relevant to any future investment in the Fund, including, but not limited to, significant risk factors and complex tax considerations”.


For More Informa8on Please Contact:

Bill Hansen Tel: 800.579.1651 eMail: [email protected]

southland capital management - executive summary

Documents

debt capital

general partner of bdc

management performance

equity capital

past performance

llc scm

private partnerships