Fund
will be required to maintain specified asset coverage of at least 300% with
respect to any bank borrowing immediately following such
borrowing and at all times thereafter. The Fund may be required to dispose of
assets on unfavorable terms if market fluctuations or other factors reduce the
Fund’s asset coverage to less than the prescribed amount.
DEPENDENCE
ON KEY PERSONNEL RISK. The Sub-Advisor is
dependent upon the experience and expertise of the Fund's portfolio managers in
providing advisory services with respect to the Fund's investments. If the
Sub-Advisor were to lose the services of any of these portfolio managers, its
ability to service the Fund could be adversely affected. There can be no
assurance that a suitable replacement could be found for any of the portfolio
managers in the event of their death, resignation, retirement or inability to
act on behalf of the Sub-Advisor.
FAILURE
TO QUALIFY AS A REGULATED INVESTMENT COMPANY RISK. If, in any year, the
Fund fails to qualify as a regulated investment company under the applicable tax
laws, the Fund would be taxed as an ordinary corporation. In such circumstances,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax
treatment.
Fund
Organization
The Fund is a series
of the Trust, an investment company registered under the 1940 Act. The Fund is
treated as a separate fund with its own investment
objective and policies. The Trust is organized as a Massachusetts business
trust. The Board is responsible for the overall management and direction of the
Trust. The Board elects the Trust’s officers and approves all significant
agreements, including those with the Advisor, Sub-Advisor, distributor,
custodian and fund administrative and accounting agent.
Management
of the Fund
First
Trust Advisors L.P., 120 East Liberty Drive, Wheaton, Illinois 60187, is the
investment advisor to the Fund. In this capacity, First Trust is
responsible for overseeing the Sub-Advisor in the selection and ongoing
monitoring of the securities in the Fund's portfolio and certain other services
necessary for the management of the portfolio.
First Trust is a
limited partnership with one limited partner, Grace Partners of DuPage L.P., and
one general partner, The Charger Corporation. Grace Partners of DuPage
L.P. is a limited partnership with one general partner, The Charger Corporation,
and a number of limited partners. The Charger Corporation is an Illinois
corporation controlled by James A. Bowen, the Chief Executive Officer of First
Trust. First Trust discharges its responsibilities subject to the policies of
the Fund.
First Trust serves
as advisor or sub-advisor for 9 mutual fund portfolios, 10
exchange-traded funds consisting of 199 series and 15 closed-end funds. It is
also the portfolio supervisor of certain unit investment trusts sponsored by
First Trust Portfolios L.P. (“FTP”), an affiliate of First Trust, 120
East Liberty Drive, Wheaton, Illinois 60187. FTP specializes in the
underwriting, trading and distribution of unit investment trusts and other
securities. FTP is the principal underwriter of the shares of the
Fund.
The Trust, on behalf
of the Fund, and First Trust have retained Cboe VestSM Financial LLC ("Cboe
Vest" or the
"Sub-Advisor") to serve as investment sub-advisor
pursuant to a sub-advisory agreement (the "Sub-Advisory
Agreement"). In this
capacity, Cboe Vest is responsible for the selection and ongoing monitoring of
the securities in the Fund’s investment portfolio. Cboe Vest, with principal
offices at 8350 Broad St., Suite 240, McLean, Virginia 22102, was founded in
2012, and is a Delaware LLC. Cboe Vest had approximately $9.957 billion under
management or committed to management as of December 1, 2022.
The Sub-Advisor is a
subsidiary of Cboe Vest Group, Inc. (“Cboe
VG”). First Trust
Capital Partners, LLC (“FTCP”), an affiliate of First Trust, is
the largest single holder of voting shares in Cboe VG. The remaining voting
shares of Cboe VG are owned by Cboe Vest, LLC, a wholly-owned subsidiary of Cboe
Global Markets, Inc., and certain individuals who operate Cboe VG and the
Sub-Advisor. Cboe VG was organized in 2012. Cboe® is a registered trademark of Cboe
Global Markets, Inc. VestSM is a service mark of Cboe
VG.
Karan Sood and
Howard Rubin are the Fund’s portfolio managers and are jointly and primarily
responsible for the day-to-day management of the Fund’s investment
portfolio.
•
Mr. Sood has over 10 years of
experience in derivative based investment strategy design and trading. Mr. Sood
joined Cboe Vest in 2012. Prior to joining Cboe Vest Mr. Sood worked at ProShare
Advisors LLC. Prior to ProShare, Mr. Sood worked as a Vice President at Barclays
Capital. Last based in New York, he was responsible for using derivatives to
design structured investment strategies and solutions for the firm’s
institutional clients