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First Trust Merger Arbitrage Fund (VARBX)
First Trust Capital Management L.P. is the Investment Manager for this fund. For more information visit www.firsttrustcapital.com.
Investment Objective/Strategy - The First Trust Merger Arbitrage Fund (the "Fund") seeks returns that are largely uncorrelated with the returns of the general stock market, and capital appreciation. The strategy seeks to take advantage of the return opportunity presented by the natural deal spread that emerges after the announcement of companies undergoing a merger or acquisition. The Fund's investment process is research driven and focused on predominantly North American transactions. The primary goal is to look for the best risk-adjusted deals for the portfolio, emphasizing on strategic combinations of solidly performing targets by well-financed acquirers. The strategy seeks to run concentrated in the best ideas with a preference for short-dated transactions. The portfolio managers continuously analyze and monitor pending transactions for potential risks, including antitrust, deal terms, financing and shareholder approval.
There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Fund Overview
Ticker VARBX
Investment Manager First Trust Capital Management L.P.
CUSIP 46141T869
Share Class Class I
Inception Date 4/1/2000
Minimum Investment Amount $500,000
Gross Expense Ratio* 1.91%
Net Expense Ratio* 1.52%
*As of 3/31/2023
First Trust Capital Management has agreed to waive fees and/or pay Fund expenses to prevent the annual net expense ratio from exceeding 1.55% of the average daily net assets until 11/1/2023.
Minimum investment amount is waived in fee based accounts.
Top Long Holdings (as of 3/31/2023)
DCP Midstream LP (DCP) 8.67%
Horizon Therapeutics Plc (HZNP) 2.12%
First Horizon National Corp (FHN) 1.82%
Oak Street Health Inc (OSH) 1.82%
Elliot Opportunity II Corp (EOCW) 1.71%
Top Short Holdings (as of 3/31/2023)
Fund Exposure (as of 3/31/2023)
Long 85.54%
Short 0.00%
Gross 85.54%
Net 85.54%

Fund Performance (as of 3/31/2023)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since Fund
Fund Performance *
Net Asset Value (NAV) 0.56% 0.56% 2.30% 4.93% 4.33% 3.91% 9.02%
Index Performance **
Bloomberg U.S. Aggregate Bond Index 2.96% 2.96% -4.78% -2.77% 0.91% 1.36% 4.02%
S&P 500 Index 7.50% 7.50% -7.73% 18.60% 11.19% 12.24% 6.49%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

NAV represent the Fund's net assets (assets less liabilities) divided by the Fund's outstanding shares. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. The fund's performance reflects fee waivers and expense reimbursements, absent which performance would have been lower.

**Index performance information is for illustrative purposes only. Indexes do not charge management fees or brokerage expenses and no such fees or expenses were deducted from the performance shown. All Index returns assume that dividends are reinvested when they are received. Indexes are unmanaged and an investor cannot invest directly in an index.

On October 1, 2000, the Fund acquired the assets and adopted the performance history of the Highland Capital Management Institutional Fund, LLC, a Delaware limited liability company. The investment goals, strategies and policies of the Fund are substantially similar to those of the predecessor fund. Performance information for periods prior to October 1, 2000 is based on the performance history of the predecessor fund and reflects the operating expenses of the predecessor fund.

Bloomberg U.S. Aggregate Bond Index - The Index covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS, ABS, and CMBS.

S&P 500 Index - The Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance.

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus, or contact First Trust Capital Management at 1-800-988-5196 to request a prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

The Fund is subject to the following risks:

You could lose money by investing in a fund. An investment in a fund is not a deposit of a bank and is not insured or guaranteed. There can be no assurance that a fund's objective(s) will be achieved. Please refer to each fund''s prospectus and SAI for additional details on a fund's risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

A fund's shares will change in value, and you could lose money by investing in a fund. One of the principal risks of investing in a fund is market risk. Market risk is the risk that a particular stock owned by a fund, fund shares or stocks in general may fall in value. There can be no assurance that a fund's investment objective will be achieved. In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain fund investments as well as fund performance. The COVID-19 global pandemic has caused and may continue to cause significant volatility and declines in global financial markets. While the U.S. has resumed "reasonably" normal business activity, many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.

In managing a fund's investment portfolio, the portfolio managers will apply investment techniques and risk analyses that may not have the desired result.

Investments in companies that are the subject of a publicly announced transaction carry the risk the transaction is renegotiated, takes longer to complete than originally planned and that the transaction is never completed. Any such event could cause a fund to incur a loss. The risk/reward payout of merger arbitrage strategies typically is asymmetric, with the losses in failed transactions often far exceeding the gains in successful transactions.

An investment in SPACs, which are typically traded in the over-the-counter market, may also have little or no liquidity and may be subject to restrictions on resale.

Any decrease in negative correlation or increase in positive correlation between hedging positions the Advisor anticipated would be offsetting (such as short and long positions in securities or currencies held by the Fund) could result in significant losses for the Fund.

Leverage may result in losses that exceed the amount originally invested and may accelerate the rates of losses.

Short selling creates special risks which could result in increased gains or losses and volatility of returns. Because losses on short sales arise from increases in the value of the security sold short, such losses are theoretically unlimited.

The use of derivatives, including options, can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives.

The Fund must segregate liquid assets or engage in other measures to “cover” open positions with respect to certain kinds of derivatives and short sales.

Certain fund investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Illiquid securities may trade at a discount and may be subject to wide fluctuations in market value.

High portfolio turnover may result in higher levels of transaction costs and may generate greater tax liabilities for shareholders.

A fund classified as "non-diversified" may invest a relatively high percentage of its assets in a limited number of issuers. As a result, a fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.

The prices of fixed income securities respond to economic developments, particularly interest rate changes, changes to an issuer's credit rating or market perceptions about the creditworthiness of an issuer.

There is no guarantee that a fund will provide a fixed or stable level of distributions at any time or over any period of time.

High yield securities, or "junk" bonds, are less liquid and are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, are considered to be highly speculative.

Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred stocks are typically subordinated to other debt instruments in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments.

Securities of micro-, small- and mid-capitalization companies may be more vulnerable to adverse general market or economic developments, may be less liquid, and may experience greater price volatility than larger, more established companies.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

Changes in currency exchange rates and the relative value of non-US currencies may affect the value of a funds investments and the value of a fund's shares.

First Trust Capital Management L.P. is the adviser to the Fund. The Fund's distributor is First Trust Portfolios L.P.
Not FDIC Insured • Not Bank Guaranteed • May Lose Value
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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