Tickers: FTPCX (I SHARE), FTCAX (A SHARE)

FUND OBJECTIVES

First Trust Private Credit Fund aims to produce current income by utilizing a dynamic asset allocation strategy among multiple fixed income sectors in the global private and public credit markets.

THE FUND AIMS TO PROVIDE:

Current Income

Focused on high-yield direct and private credit opportunities, intending to make monthly distributions equal to 5% annually of the Funds NAV per share

Accessibility

Lower dollar entry compared to traditional private investments, with no accreditation requirements to access private credit

Capital Preservation

Exposure to senior secured private assets which have the potential to provide a level of protection throughout the business cycle

Low Interest Rate Risk

Dynamic allocation of fixed and floating rate assets that have the potential to respond to interest rate movements

Diversification

Diverse allocation of private credit products, sectors, and investment types under one ticker

Low Beta

The Fund will seek to acheive low to moderate beta relative to broader equity and bond indices

HIGHLIGHTS

FUND HIGHLIGHTS (as of 6/30/22)

  • 5% targeted distribution rate paid monthly 1
  • Instant access to institutional managers
  • Instant exposure to current income producing instruments
  • Instant diversified exposure to private credit

PORTFOLIO

POTENTIAL BENEFITS OF PRIVATE CREDIT

Private Market Access

  • Invest where public fund managers cannot – in assets with potential yield and return premiums with a focus on attractive current income generation

Direct Co-Investments

  • Carrying an emphasis on capturing windows of opportunity and ability to deploy capital quickly by utilizing access to deep relationships with co-investor sponsorships that are traditionally difficult to access

Low Investment Requirements

  • Lower dollar entry compared to traditional private investments, including no accreditation requirements to niche private credit opportunities

Customized Mandates

  • Access to Sub-Advisors to manage custom SMAs seeking to provide liquidity in all market conditions, while also providing accretion to the Fund through dedicated teams and negotiated terms

DEFINING FIRST TRUST PRIVATE CREDIT

Bank Loans

Allocate to floating rate instruments, typically providing attractive credit spread through credit ratings, while also allowing capital appreciation when purchased below par value

Distressed Securities

Seek to identify situations with structural complexities to earn a potential premium over more traditional debt obligations

Real Estate Mortgages

Assets that provide historic attractive yields with low volatility, acting as a complimentary diversifier to lower overall portfolio risk

Debentures

Investing in bonds, bills, or notes to provide a safety net to maintain capital while also providing some level of income and potential capital appreciation

Direct Co-Investments

Available through strategic partnerships that have the potential to create structural alpha by utilizing rapid capital deployment and negotiated fees

Liquidity Sleeve

Designed to generate positive returns via daily liquid investments that exhibit low risk and minimal volatility

PERFORMANCE

Private Credit During Rising Interest Rate Periods 2

  Total Return Performance 
Period6/30/05-6/30/069/30/17-12/31/189/30/20-3/31/219/30/21-3/31/22
Private Credit12.39%10.25%7.04%4.14%
Leveraged Loans7.36%2.18%6.45%1.26%
High- Yield Bonds6.78%-2.58%6.95%-6.45%
Investment Grade-1.15%-0.39%-0.72%-9.52%
3 Year Treasury1.77%1.02%-0.01%-3.05%

^Source: First Trust, Morningstar. Private Credit: Cliffwater Direct Lending Index, Leveraged Loans: Credit Suisse Leveraged Loan Index, High Yield: Bloomberg Global High Yield Index, , Investment Grade: Bloomberg 144A Investment Grade Index, 3 Year Treasury: Bloomberg 1-3 Yr US Treasury Bill Index. 

Private Credit Vs. Common Fixed Income Benchmarks

 Private Credit1 Month Treasury3 Year TreasuryHigh YieldMunicipalInvestment Grade
2022 Q1 YTD1.76%0.01%-2.51%-5.69%-6.23%-9.53%
202112.79%0.04%-0.60%4.48%1.52%-0.29%
20205.46%0.45%3.16%4.66%5.21%8.96%
20199.00%2.08%3.59%14.65%7.54%12.96%
20188.07%1.80%1.56%-1.51%1.28%-1.10%
20178.62%0.79%0.42%6.34%5.45%6.07%
201611.24%0.21%0.86%15.33%0.25%5.54%
20155.54%0.02%0.56%-5.03%3.30%0.47%
20149.57%0.02%0.63%2.13%9.05%5.92%
201312.68%0.03%0.36%5.93%-2.55%-1.12%
201214.03%0.06%0.43%14.15%6.78%12.07%
20119.75%0.05%1.55%5.95%10.70%4.84%
201015.79%0.12%2.40%12.58%2.38%8.82%
200913.18%0.10%0.80%44.46%12.91%22.42%
2008-6.50%1.48%6.67%-23.87%-2.47%-15.91%
200710.23%4.68%7.31%2.33%3.36%4.07%
200613.70%4.82%3.93%7.92%4.84%4.58%
200510.10%2.98%1.62%2.05%3.51%4.33%

^Source: First Trust, Morningstar. Private Credit: Cliffwater Direct Lending Index, 1 Month Treasury: ICE BofA 1 Month US Treasury Bill Index, 3 Year Treasury: Bloomberg 1-3 Yr US Treasury Bill Index, High Yield: Bloomberg Global High Yield Index, Municipal: Bloomberg Municipal Index, Investment Grade: Bloomberg 144A Investment Grade Index. 

1The Fund intends to make quarterly distributions to its shareholders equal to 5% annually of the Fund’s NAV per Share (the “Distribution Policy”). This predetermined dividend rate may be modified by the Fund’s Board from time to time, and increased to the extent of the Fund’s investment company taxable income that it is required to distribute in order to maintain its status as a regulated investment company. If, for any distribution, available cash is less than the amount of this predetermined dividend rate, then assets of the Fund will be sold and such disposition may generate additional taxable income. The Fund’s final distribution for each calendar year will include any remaining investment company taxable income and net tax-exempt income undistributed during the year, as well as the net capital gain realized during the year. Shareholders should not assume that the source of any payment from the Fund is net profit.

2We define “rising rate environments” as periods when the yield on the benchmark 10-year US Treasury Note rose by 1.00% or more, without falling by 0.50%

 

You should consider a fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust  Capital Management at 1-800-988-5196 or visit www.firsttrustcapital.com to obtain a prospectus or summary prospectus which contains  this and other information about a fund. The prospectus or summary prospectus should be read carefully before investing.

 

Risk Considerations

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. Investors buying or selling shares on the secondary market may incur customary brokerage commissions. 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.

The Fund invests in securities with limited or no secondary market and are deemed to be illiquid. Valuation of illiquid securities is extremely limited. Portfolio holdings are priced either on a daily, monthly, and/or quarterly basis utilizing a variety of valuation methods such as proxy, matrix and third-party pricing. The accuracy of these valuations will vary, and actual tender price of the fund may be materially lower than any past valuation.