MERGER FUND

Our Merger Fund seeks to provide attractive risk-adjusted returns in virtually all market environments while preserving investor capital and minimizing volatility based risk.

Overview

Daily NAV as of 12/8/2017
Inception Date Ticker CUSIP NAV Change ($) YTD Return (%)
1/31/1989 MERFX 589509108 $15.99 $-0.01 2.11%
8/1/2013 MERIX 589509207 $15.94 $-0.01 2.44%

The performance data quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original costs. Current performance may be lower or higher than the performance quoted.

The performance shown above for the Institutional Shares for periods prior to August 2, 2013 represents the performance for the original share class of the Fund, the Investor Shares. The Investor Shares were first offered on January 31, 1989, while the Institutional Shares were first offered on August 2, 2013. Annual returns would differ only to the extent that Institutional Class shares do not have the same expenses as Investor Class Shares.

Investment Objective

The Fund seeks to provide attractive risk-adjusted returns in virtually all market environments while preserving investor capital and minimizing volatility based risk.

Investment Strategy

The Fund typically attempts to profit from the "spread" between the purchase value and the value of a stock at the completion of a merger, takeover or other reorganization. We seek to accomplish this by investing primarily in companies involved in publicly announced mergers, takeovers, tender offers, leveraged buyouts, spin-offs, liquidations and other corporate reorganizations. Because the Fund seeks to profit from the "spread" rather the performance of the market overall or any one issuer, the Adviser believes that it has the potential to provide performance with low correlation to stock market performance.

Advantages of Investing in The Merger Fund®

  • Returns have historically had low correlation (beta) with those of the stock or bond market
  • Returns have historically been less volatile than equity markets as represented by our standard deviation
  • Merger arbitrage strategies have historically been positively correlated with interest rates, or the cost of capital; therefore if interest rates rise, the Fund may provide a hedge to the decreased value of bonds.
At a Glance
MERFX MERIX
Inception Date: January 31, 1989 August 1, 2013
Investment Minimum: $2,000 $1,000,000
Ticker: MERFX MERIX
CUSIP: 589509108 589509207
Management Fee:(1), (2) 1.00% 1.00%
Net Expenses(2), (3) 2.01% 1.68%
Total Operating Expense:(2) 2.12% 1.79%
Total Fund Assets as of 10/31/17: $2.5 billion $2.5 billion
Total Strategy Assets as of 10/31/17: $2.7 billion $2.7 billion

(1) The fund's management fee rate is 1.00%. The Advisor has agreed to reduce its management fee to 1.00% on net assets up to $1.5 billion, 0.9% on net assets between $1.5 billion and $2.0 billion, 0.8% on net assets between $2.0 billion and $5.0 billion and 0.75% on net assets over $5.0 billion. The waiver is expected to apply until April 30, 2016, except that it may be terminated by the Board of Trustees at any time.

(2)As of prospectus dated 4/27/2017.

(3)Expense ratios are as of the April 27, 2017 prospectus. The total annual operating expense ratio of the funds Investor class shares was 2.12%. The Advisor has contractually agreed to waive a portion of its management fee until April 30th, 2018 if its assets exceed certain thresholds, beginning at $1.5 billion. Total annual operating expenses of the Fund's Investor Class shares of 2.01% were applicable to investors. After applicable fee waivers and before certain investment-related expenses (including acquired fund fees and expenses of 0.09% and short interest and dividend expenses of 0.52%), total annual operating expenses of the Fund's Investor Class shares were 1.40%. The net expense ratio is what an investor would pay.

Portfolio Composition

Portfolio Composition as of 10/31/2017

Position Summary

Top five positions as % of net assets: 40.69%
Average position size: 1.89%
Number of long positions:(1) 58
Number of short positions:(1) 16
Percent Invested: 109.59%
Short positions as a % of net assets: -29.00%

(1)It is important to note that long positions, net of short positions ("Net Exposure"), is not an accurate indicator of the Fund's directional exposure and has limited informational value. The Fund's Net Exposure is dependent upon the structure and consideration paid to the target company in each of our investments. A portfolio with a greater concentration of cash deals, for example, will have a higher Net Exposure calculation than a portfolio composed primarily of stock - for - stock transactions, yet both portfolios will have the same level of market correlation, or directional exposure. Our positions are typically fully hedged to neutralize such exposure, in order to minimize equity market correlation and volatility.

By Deal Terms

*The compensation is undetermined because the compensation to be received (e.g. stock, cash, escrow notes, other) will be determined at a later date, potentially at the option of the Fund's investment advisor.

Regional Exposure

Sector Exposure

Sector Exposure

Performance

As of Month-End: November 30, 2017

YTD 3-month 1-year 3-year 5-year 10-year Since Inception
The Merger Fund® Investor Class 1.66% -0.56% 2.31% 1.22% 1.97% 2.20% 6.04%
BofAML US Treasury Bill 3 Mon TR USD 0.74% 0.26% 0.79% 0.37% 0.25% 0.41% 3.18%
Wilshire Liq Alt Event Driven TR USD 2.34% 0.36% 2.34% 0.25% 0.93% 2.08% -------

*Inception date: 1/31/1989

As of Quarter-End: September 30, 2017

YTD 3-month 1-year 3-year 5-year 10-year Since Inception
The Merger Fund® Investor Class 2.43% 0.31% 3.55% 1.20% 2.11% 2.09% 6.10%
BofAML US Treasury Bill 3 Mon TR USD 0.57% 0.26% 0.66% 0.32% 0.22% 0.47% 3.19%
Wilshire Liq Alt Event Driven TR USD 2.48% 0.45% 3.18% 0.04% 0.99% 2.05% -------

*Inception date: 1/31/1989

Expense ratios are as of the April 27, 2017 prospectus. The total annual operating expense ratio of the Funds Investor class shares was 2.12%. The Advisor has contractually agreed to waive a portion of its management fee until April 30th, 2018 if its assets exceed certain thresholds, beginning at $1.5 billion. Total annual operating expenses of the Fund's Investor class shares of 2.01% were applicable to investors. After applicable fee waivers and before certain investment-related expenses (including acquired fund fees and expenses of 0.09% and short interest and dividend expenses of 0.52%), total annual operating expenses of the Fund's Investor Class shares were 1.40%.

The performance data quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original costs. Current performance may be lower or higher than the performance quoted. Returns shown above are averaged annually for periods over one year.

The BofA Merrill Lynch US 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. Indices are unavailable for direct investment. The Wilshire Liquid Alternative Event Driven Index measures the performance of the event driven strategy component of the Wilshire Liquid Alternative Index. Event driven strategies predominantly invest in companies involved in corporate transactions such as mergers, restructuring, distressed, buy backs, or other capital structure changes.

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