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Monthly Archives: August 2015

The Merger Fund: Steady Returns From Arbitrage – Barron’s

Posted: August 22, 2015

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©2017 Westchester Capital Funds. All Rights Reserved.

An investor should consider the investment objectives, risks, charges, and expenses of the Funds carefully before investing. The current prospectuses contain this and other information about the Funds. To obtain a prospectus, please visit the Documents page of this website or call (800) 343-8959. Please read the prospectus carefully before investing. The funds are distributed by Compass Distributors, LLC, which is not affiliated with the advisor or any of its affiliates.

WESTCHESTER CAPITAL MANAGEMENT, LLC 100 Summit Lake Drive Valhalla, NY 10595

For more information, consult with your financial professional, or contact us at 914-741-5600 or info@mergerfund.com. The Merger Fund®, WCM Alternatives: Event-Driven Fund and WCM Alternatives: Credit Event Fund are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this website should be considered a solicitation to buy nor an offer to sell shares of the funds in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction.

Mutual fund investing involves risk. Principal loss is possible. Merger‐arbitrage and event‐driven investing involves the risk that the adviser's evaluation of the outcome of a proposed event, whether it be a merger, reorganization, regulatory issue or other event, will prove incorrect and that the Fund's return on the investment will be negative. Investments in foreign companies may entail political, cultural, regulatory, legal, and tax risks different from those associated with comparable transactions in the United States. The frequency of the Fund's transactions will vary from year to year, though merger arbitrage portfolios typically have higher turnover rates than portfolios of typical long‐only funds. Increased portfolio turnover may result in higher brokerage commissions, dealer mark‐ups and other transaction costs. The higher costs associated with increased portfolio turnover may offset gains in the Fund's performance. The Fund may enter into short sale transactions for, among other reasons, purposes of protecting against a decline in the market value of the acquiring company's shares prior to the acquisition completion. If the price of a security sold short increases between the time of the short sale and the time the Fund covers its short position, the Fund will incur a loss. The amount of a potential loss on an uncovered short sale transaction is theoretically unlimited. Debt securities may fluctuate in value due to, among other things, changes in interest rates, general economic conditions, industry fundamentals, market sentiment and the financial condition of the issuer, including the issuer's credit rating or financial performance. Derivatives may create leverage which will amplify the effect of the performance of those instruments on the Fund and may produce significant losses. The Fund's hedging strategy will be subject to the Fund's investment adviser's ability to assess correctly the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the investments in the portfolio being hedged.
Absolute return funds may not achieve their goals and are not intended to outperform stocks and bonds during strong market rallies and may underperform during periods of strong positive market performance.

Higher Sharpe ratios typically indicate better historical risk-adjusted performance. The Sharpe ratio is calculated by using standard deviation and excess return to determine reward per unit of risk. It is calculated by dividing a fund's annualized excess returns over the risk-free rate by its annualized standard deviation for the same period. The Merger Fund Investor Class 3 year Sharpe ratio as of 12/31/2018 is 1.19 versus the S&P Sharpe Ratio of 0.76 over the same time period.

The Morningstar rating is for The Merger Fund – Investor Share Class. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) As of December 31, 2018 The Merger Fund® was rated against the following numbers of U.S.-domiciled Market Neutral funds over the following time periods: 121 funds overall, 121 funds in the last three years, 97 funds in the last five years, and 31 funds in the last ten years. With respect to these Market Neutral funds, The Merger Fund® received a Morningstar Rating of 4 stars, 4 stars, 4 stars and 4 stars for the Overall, three-, five- and ten-year periods, respectively. © 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Merger Fund®, The WCM Alternatives: Event-Driven Fund and The WCM Alternatives: Credit Event Fund are distributed by Compass Distributors, LLC. Telephone: 914-741-5600 Fax: 914-741-2950 Email: info@mergerfund.com