UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
File No. 812-_______
In the matter of:
First Trust Exchange-Traded Fund
First Trust Exchange-Traded Fund II
First Trust Exchange-Traded Fund III
First Trust Exchange-Traded Fund IV
First Trust Exchange-Traded Fund V
First Trust Exchange-Traded Fund VI
First Trust Exchange-Traded Fund VII
First Trust Exchange-Traded AlphaDEX(R) Fund
First Trust Exchange-Traded AlphaDEX(R) Fund II
First Trust Advisors L.P.
First Trust Portfolios L.P.
Application to amend an Order under Section 6(c) of the Investment Company Act
of 1940, as amended (the "Act"), for an exemption from Sections 2(a)(32),
5(a)(1), 22(d), and 22(e) of the Act and Rule 22c-1 under the Act and under
Sections 6(c) and 17(b) of the Act for an exemption from Section 17(a) of the
Act.
All communications, notices and orders to:
First Trust Exchange-Traded Fund Eric F. Fess
First Trust Exchange-Traded Fund II Felice R. Foundos
First Trust Exchange-Traded Fund III Suzanne M. Russell
First Trust Exchange-Traded Fund IV Chapman and Cutler LLP
First Trust Exchange-Traded Fund V 111 West Monroe
First Trust Exchange-Traded Fund VI Chicago, IL 60603
First Trust Exchange-Traded Fund VII
First Trust Exchange-Traded AlphaDEX(R) Fund
First Trust Exchange-Traded AlphaDEX(R) Fund II
First Trust Advisors L.P.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
Attention: W. Scott Jardine
|
Page 1 of 29 sequentially numbered pages (including exhibits)
I. INTRODUCTION
In this application ("Application"), the undersigned applicants, First
Trust Exchange-Traded Fund (the "Initial Trust"), First Trust Exchange-Traded
Fund II ("Trust II"), First Trust Exchange-Traded Fund III ("Trust III"), First
Trust Exchange-Traded Fund IV ("Trust IV"), First Trust Exchange-Traded Fund V
("Trust V"), First Trust Exchange-Traded Fund VI ("Trust VI"), First Trust
Exchange-Traded Fund VII ("Trust VII"), First Trust Exchange-Traded AlphaDEX(R)
Fund (the "AlphaDEX(R) Trust"), First Trust Exchange-Traded AlphaDEX(R) Fund II
(the "AlphaDEX(R) Trust II" and, together with the Initial Trust, Trust II,
Trust III, Trust IV, Trust V, Trust VI, Trust VII and the AlphaDEX(R) Trust, the
"Existing Trusts" and each, an "Existing Trust"), First Trust Advisors L.P.
("First Trust Advisors"), and First Trust Portfolios L.P. ("First Trust
Portfolios" or the "Distributor" and, together with the Existing Trusts and
First Trust Advisors, the "Applicants"), apply for and request an order
("Order") from the U.S. Securities and Exchange Commission ("Commission") to
amend a prior order (i) under Section 6(c) of the Act, for an exemption from
Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and Rule 22c-1 thereunder
and (ii) under Sections 6(c) and 17(b) of the Act, for an exemption from
Sections 17(a)(1) and 17(a)(2) of the Act (referred to herein as the "Prior
Order").(1) As set forth in the Prior Application, the Prior Order applies to
the Existing Trusts, the "Initial Fund" described in the Prior Application and
also to any other open-end management investment company existing or created in
the future (together with the Existing Trusts, the "Trusts" and each, a "Trust")
and any existing or future series of the Trusts advised by First Trust Advisors
or an entity controlling, controlled by, or under common control with First
Trust Advisors (each such entity, an "Adviser"), that operate in accordance with
the terms and conditions stated in the Prior Application (referred to as "Future
Funds"). In both the Prior Application and this Application, the Initial Fund
and the Future Funds together are each referred to as a "Fund" and collectively
as the "Funds." Applicants request that the Order apply to any Funds offered
subsequent to the issuance of the Order that are advised by an Adviser(2) and
operate pursuant to the terms and conditions stated in the Prior Application, as
amended by this Application.(3)
The Prior Order permits, among other things: (a) the Funds to issue shares
("Shares") in large aggregations only; (b) secondary market transactions in
Shares to be effected at negotiated market prices rather than at net asset value
("NAV") per Share on a national securities exchange as defined in Section
(1) Applicants previously submitted an application with the Commission (File
No. 812-14088) on July 11, 2013 (the "Prior Application"), requesting
relief with respect to the offering of certain exchange-traded funds based
on specified indexes. The Prior Application was noticed in Investment
Company Act Release No. 30582 dated June 26, 2013 and the Prior Order
granting the relief requested was set forth in Investment Company Act
Release No. 30610 dated July 23, 2013.
(2) All references herein to "First Trust Advisors" include any successor to
First Trust Advisors. For purposes of the requested Order, a "successor"
is limited to an entity or entities that result from a reorganization into
another jurisdiction or a change in the type of business organization.
(3) As of the date of filing of this Application, no Funds have been offered
in reliance on the Prior Order. All existing entities that currently
intend to rely on the Order have been named as Applicants. Any other
existing or future entity that subsequently relies on the Order will
comply with the terms and conditions of this Application.
2 of 29
2(a)(26) of the Act ("Exchange"); (c) certain affiliated persons of the Funds to
deposit securities into, and receive securities from, the Funds in connection
with the purchase and redemption of aggregations of Shares of such Funds
("Creation Units"); and (d) relief from the seven (7) calendar day redemption
requirement for certain Funds under specified limited circumstances.
As described in the Prior Application, the Funds will seek to provide
investment returns that correspond, before fees and expenses, generally to the
performance of a specified securities index (each an "Underlying Index" and
collectively, "Underlying Indexes"). Certain Underlying Indexes may consist of
sub-indexes. The component securities of an Underlying Index are referred to as
the "Component Securities" and an entity that compiles, creates, sponsors or
maintains an Underlying Index is referred to as an "Index Provider." Each Fund
will hold certain securities and other assets and positions ("Portfolio
Positions") selected to correspond to the performance of its Underlying Index.
Under the Prior Order, Applicants may create and operate Funds that
operate as index-based exchange-traded funds (referred to as "Index-Based
Funds"), for which the Index Provider is not an "affiliated person," as defined
in Section 2(a)(3) of the Act, or an affiliated person of an affiliated person,
of a Trust, the Adviser, any Sub-Adviser (as defined herein), the Distributor or
a promoter of the Fund (an "Unaffiliated Index Provider").(4) In addition, under
the Prior Order, Applicants may create and operate Funds that operate as
index-based exchange-traded funds for which the Adviser or an "affiliated
person," as defined in Section 2(a)(3) of the Act, or an affiliated person of an
affiliated person, of a Trust or a Fund, the Adviser, any Sub-Adviser (as
defined below), the Distributor or a promoter of the Fund (each, other than the
Adviser, an "Affiliated Person") serves as the Index Provider (each such Fund,
an "Affiliated Index Fund").
Applicants are seeking the Order primarily to supercede certain terms and
conditions pertaining to Affiliated Index Funds that are included in the Prior
Application. In addition, Applicants also seek to supercede certain terms and
conditions pertaining to Index-Based Funds to the extent provided herein. The
requested relief is substantially the same as the relief granted by the
Commission to the exchange-traded funds ("ETFs") advised by Transparent Value
Advisors, LLC, Sigma Investment Advisors, LLC and Guggenheim Funds Investment
Advisors, LLC.(5)
(4) As indicated in the Prior Application, Applicants intend to continue to
rely on a previously obtained order for purposes of creating and operating
index-based portfolios that hold equity securities selected to correspond
generally to the price and yield performance of a specified domestic or
international equity securities index for which the Index Provider is an
Unaffiliated Index Provider. In the Matter of First Trust Exchange-Traded
Fund, et al., Investment Company Act Release Nos. 27051 (Aug. 26, 2005)
(notice) and 27068 (Sept. 20, 2005) (order), as amended by In the Matter
of First Trust Exchange-Traded Fund, et al., Investment Company Act
Release Nos. 27772 (Mar. 30, 2007) (notice) and 27784 (Apr. 25, 2007)
(order).
(5) In the Matter of Transparent Value Trust, et al., Investment Company Act
Release Nos. 30558 (June 14, 2013) (notice) and 30596 (July 10, 2013)
(order); In the Matter of Sigma Investment Advisors, LLC, et al.,
Investment Company Act Release Nos. 30559 (June 14, 2013) (notice) and
30597 (July 10, 2013) (order); In the Matter of Guggenheim Funds
Investment Advisors, LLC, et al., Investment Company Act Release Nos.
3 of 29
Except as specifically noted herein, all representations and conditions
contained in the Prior Application relating to the operation of the Funds remain
applicable. All capitalized terms not otherwise defined in this Application have
the meanings ascribed to them in the Prior Application.
Applicants believe that (i) with respect to the relief requested pursuant
to Section 6(c) of the Act, the requested exemption for the proposed
transactions is appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the Act and (ii) with respect to the relief requested pursuant to
Section 17(b) of the Act, the proposed transactions are reasonable and fair and
do not involve overreaching on the part of any person concerned; the proposed
transactions are or will be consistent with the policy of each Fund; and the
proposed transactions are consistent with the general purposes of the Act.
No form having been specifically prescribed for this Application,
Applicants proceed under Rule 0-2 of the General Rules and Regulations of the
Commission.
II. BACKGROUND
A. APPLICANTS
1. The Existing Trusts and the Initial Fund
Each Existing Trust is a Massachusetts business trust and is registered
under the Act with the Commission as an open-end management investment company.
Each Existing Trust offers and sells its Shares pursuant to registration
statements filed with the Commission under the Act and the Securities Act of
1933. The Initial Fund is described in the Prior Application.
2. The Adviser
First Trust Advisors is an Illinois limited partnership, with its
principal office in Wheaton, Illinois. Any Adviser is or will be registered as
an investment adviser under Section 203 of the Investment Advisers Act of 1940,
as amended (the "Advisers Act").
The Adviser, subject to the oversight and authority of the Board of
Trustees of the Trusts ("Board"), will develop the overall investment program
for each Fund.(6) If approved by the Board, the Adviser may enter into
sub-advisory agreements with one or more investment advisers to act as
"sub-advisers" with respect to particular Funds (each, a "Sub-Adviser" and
collectively, the "Sub-Advisers"). The Sub-Advisers, if any, will serve as the
portfolio managers for the Funds. Under the Adviser's supervision, each
Sub-Adviser will manage the investment and reinvestment of each applicable
Fund's assets in accordance with the applicable Fund's investment objective. Any
30560 (June 14, 2013) (notice) and 30598 (July 10, 2013) (order)
(collectively, the "New Self-Indexing Orders").
(6) The term "Board" includes any board of trustees of any Existing Trust or
future Trust.
4 of 29
Sub-Adviser for a Fund either will be registered or not subject to registration
under the Advisers Act.
3. The Distributor
The Distributor, an Illinois limited partnership, is a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange Act"). The
Distributor is an affiliate of First Trust Advisors and will act as distributor
and principal underwriter of the Funds. Applicants request that the Order apply
to the Distributor, any successor to the Distributor, and to any other entity
hired by a Fund as a future distributor (each, a "Future Distributor") that
complies with the terms and conditions of this Application. Neither the
Distributor nor any Future Distributor is or will be affiliated with any
Exchange.
4. Other Service Providers
Each Fund will have an administrator ("Administrator"), custodian
("Custodian"), fund accountant ("Fund Accountant"), transfer agent ("Transfer
Agent"), and dividend disbursing agent ("Dividend Disbursing Agent"), and may
have a securities lending agent ("Securities Lending Agent"). The Trusts and any
Securities Lending Agent will comply with guidelines of the Commission staff
regarding the lending of portfolio securities of an open-end investment company.
As discussed below, subject to the approval of the Board, the Adviser, a
Sub-Adviser or an affiliate of the Adviser and/or any Sub-Adviser may provide
administration, custody, fund accounting, transfer agency, dividend disbursement
and/or securities lending services to the Funds.
B. THE AFFILIATED INDEX FUNDS AND REASONS FOR REQUESTING THE ORDER
Since 2006, the Commission has issued various exemptive orders permitting
applicants to create and operate ETFs that track indexes created and maintained
by their affiliates (referred to as "Self-Indexing Funds").(7) These orders are
subject to certain terms and conditions designed to address potential conflicts
of interest that arise in an affiliated relationship. Until recently,
Self-Indexing Funds were typically required, among other things, to make the
composition of the index available to the public, provide advance notice of
changes to the index methodology, use a third party to calculate the index and
adopt various policies and procedures, including those intended to separate
index and advisory personnel (collectively, the "Prior Approach"). The Prior
Order was issued subject to this long-standing approach to address conflicts of
interest for Self-Indexing Funds and the Prior Application reflects the Prior
Approach. On July 10, 2013, however, the Commission issued the New Self-Indexing
Orders, which reflected an alternative approach to address potential conflicts
of interest (the "Alternative Approach"). Applicants wish to create and operate
Affiliated Index Funds subject to the Alternative Approach and, in that regard,
are seeking the Order to replace the Prior Approach set forth in the Prior
Application with the Alternative Approach set forth in this Application. Except
as described in this Application, the Funds will operate in the manner described
in the Prior Application.
(7) See Division of Investment Management, IM Information Update, August 2013
(IM-INFO-2013-09).
5 of 29
C. SPECIFIC AMENDMENTS TO PRIOR APPLICATION
1. Amendment to Replace Discussion of Underlying Indexes and Licensing
Arrangements.
Applicants seek to amend the Prior Application by deleting Section II.F.
thereof in its entirety and replacing it with the following text:
F. Underlying Indexes and Licensing Arrangements
Except with respect to the Affiliated Index Funds, no Index
Provider(8) is or will be an "affiliated person," as defined in Section
2(a)(3) of the Act, or an affiliated person of an affiliated person, of a
Trust or a Fund, of the Adviser, of any Sub-Adviser to or promoter of a
Fund or of the Distributor. The Adviser, if it is the Affiliated Index
Provider (as defined below), will be the owner of the Affiliated Indexes
(as defined below) and all related intellectual property. Otherwise, the
Adviser will enter into a license agreement with any Affiliated Person
that is an Affiliated Index Provider for the use of the Affiliated Indexes
and related intellectual property in connection with a Trust and its
Affiliated Index Funds. In either case, the Adviser will provide the
Affiliated Indexes and related intellectual property at no cost to the
applicable Trust and Affiliated Index Funds.
2. Amendment to Replace Discussion of Special Considerations Applicable to
Affiliated Index Funds.
Applicants seek to amend the Prior Application by deleting Section II.G.
thereof in its entirety and replacing it with the following text:
G. Special Considerations Applicable to Affiliated Index Funds
The Index Provider to an Affiliated Index Fund ("Affiliated Index
Provider")(9) will create a proprietary, rules-based methodology to create
Underlying Indexes (each an "Affiliated Index" and collectively, the
"Affiliated Indexes").(10) For
(8) An Index Provider (or, if the Adviser is the Index Provider, the personnel
with responsibility for the Affiliated Indexes (as defined below)) will
not provide recommendations to a Fund regarding the purchase or sale of
specific securities. In addition, except as described herein, an Index
Provider will not provide any information relating to changes to an
Underlying Index's methodology for the inclusion of Component Securities,
the inclusion or exclusion of specific Component Securities, or the
methodology for the calculation of the return of Component Securities, in
advance of a public announcement of such changes by the Index Provider.
(9) It is currently expected that First Trust Advisors will be the Affiliated
Index Provider. Any future entity that acts as an Affiliated Index
Provider will comply with the terms and conditions of this Application.
(10) The Affiliated Indexes may be made available to registered investment
companies, as well as separately managed accounts of institutional
investors and privately offered funds that are not deemed to be
"investment companies" in reliance on Section 3(c)(1) or 3(c)(7) of the
Act for which the Adviser acts as adviser and/or sub-adviser ("Affiliated
Accounts"), as well as other such registered investment companies,
6 of 29
the reasons discussed herein, the portfolios of the Affiliated Index Funds
will be fully "transparent," meaning that each Affiliated Index Fund will
post on its website ("Website") on each Business Day (as defined below),
before commencement of trading of Shares on the Exchange, the identities
and quantities of the Portfolio Positions held by the Fund that will form
the basis for the Fund's calculation of NAV at the end of the Business
Day.(11)
Applicants recognize that Affiliated Index Funds could raise
concerns regarding the potential ability of an affiliated person to
manipulate the Underlying Index to the benefit or detriment of an
Affiliated Index Fund. Applicants further recognize the potential for
conflicts that may arise with respect to the personal trading activity of
personnel of the affiliated person who may have access to or knowledge of
changes to an Underlying Index's composition methodology or the
constituent securities in an Underlying Index prior to the time that
information is publicly disseminated. In order to address these potential
conflicts of interest, the Prior Self-Indexing ETF Orders have established
a framework that requires: (i) transparency of the Underlying Indexes;
(ii) the adoption of policies and procedures not otherwise required under
the Act or the rules under the Act designed to mitigate such conflicts of
interest; (iii) limitations on the ability to change the rules for index
compilation and the component securities of the index; (iv) that the index
provider enter into an agreement with an unaffiliated third party to act
as "Calculation Agent"; and (v) certain limitations designed to separate
employees of the index provider, adviser and Calculation Agent (clauses
(ii) through (v) are hereinafter referred to as "Policies and
Procedures").
Instead of adopting the same or similar Policies and Procedures,
Applicants propose to fully disclose the Portfolio Positions of each
Affiliated Index Fund to address the potential conflicts of interest noted
above. For the reasons set forth below, Applicants believe that requiring
Affiliated Index Funds to maintain full portfolio transparency will
provide an effective alternative mechanism for addressing any such
potential conflicts of interest.
The framework set forth in the Prior Self-Indexing ETF Orders
discussed above was established before the Commission approved a framework
to allow actively managed ETFs to operate. Subsequently, however, the
Commission began issuing exemptive relief to allow the offering of
actively managed ETFs.(12) Unlike conventional passively managed ETFs,
separately managed accounts and privately offered funds for which it does
not act either as adviser and/or sub-adviser ("Unaffiliated Accounts").
The Affiliated Accounts and the Unaffiliated Accounts (collectively
referred to herein as "Accounts"), like the Funds, would seek to track the
performance of one or more Underlying Index(es) by investing in the
constituents of such index(es) or a representative sample of such
constituents of the index(es). Consistent with the relief requested from
Section 17(a) herein, the Affiliated Accounts will not engage in Creation
Unit transactions with a Fund.
(11) Under accounting procedures followed by each Fund, trades made on the
prior Business Day ("T") will be booked and reflected in NAV on the
current Business Day ("T+1"). Accordingly, the Funds will be able to
disclose at the beginning of the Business Day the portfolio that will form
the basis for the NAV calculation at the end of the Business Day.
(12) See, e.g., In the Matter of Pyxis Capital, L.P., et al., Investment
Company Act Release Nos. 30316 (Dec. 21, 2012) (notice) and 30352 (Jan.
16, 2013) (order) ("Pyxis Order"); In the Matter of Franklin Advisers,
7 of 29
actively managed ETFs do not seek to replicate the performance of a
specified index, but rather seek to achieve their investment objectives by
using an "active" management strategy to invest in portfolio securities.
Notably, the structure of actively managed ETFs presents potential
conflicts of interest that are the same as, or more acute than, those
presented by Affiliated Index Funds: the portfolio managers of an actively
managed ETF by definition have advance knowledge of pending portfolio
changes. However, rather than requiring Policies and Procedures similar to
those required under the Prior Self-Indexing ETF Orders, the Commission
instead determined that for actively managed ETFs, any conflicts of
interest could be addressed appropriately through full portfolio
transparency (i.e., requiring each actively managed ETF to post on its
website on each Business Day, before commencement of trading of shares on
the Exchange, the identities and quantities of the portfolio securities
and other assets held by the actively managed ETF that will form the basis
for such ETF's calculation of NAV at the end of the Business Day).
Accordingly, each such Prior Active ETF Order required full portfolio
transparency as a condition of the relief granted therein.(13)
In addition, Applicants do not believe the potential for conflicts
of interest raised by the Adviser's use of the Underlying Indexes in
connection with the management of the Affiliated Index Funds and the
Affiliated Accounts will be substantially different from the potential
conflicts presented by an adviser managing two or more registered funds.
More specifically, Applicants do not believe the potential for conflicts
presented by the Adviser's use of the Underlying Indexes in connection
with the management of the Funds and the Affiliated Accounts is
substantially different from the potential for conflicts presented by the
side-by-side management of ETFs which track the performance of an index
that also serves as the benchmark for a traditional mutual fund or
unregistered account managed by the same adviser. Both the Act and the
Advisers Act contain various protections to address conflicts of interest
where an adviser is managing two or more registered funds, and these
protections will also help address these conflicts with respect to the
Affiliated Index Funds.(14) Therefore, although the use of portfolio
transparency instead of Policies and Procedures relating to Affiliated
Index Funds in the manner discussed in this Application has not yet been
the subject of many prior orders by the Commission, Applicants do not
Inc., et al., Investment Company Act Release Nos. 30312 (Dec. 19, 2012)
(notice) and 30350 (Jan. 15, 2013) (order); In the Matter of
AllianceBernstein Active ETFs, Inc., et al., Investment Company Act
Release Nos. 30305 (Dec. 13, 2012) (notice) and 30343 (Jan. 8, 2013)
(order); In the Matter of Cambria Investment Management, L.P. and Cambria
ETF Trust, Investment Company Act Release Nos. 30286 (Nov. 30, 2012),
30302 (Dec. 12, 2012) (notices) and 30340 (Jan. 4, 2013) (order); In the
Matter of T. Rowe Price Associates, Inc., et al., Investment Company Act
Release Nos. 30299 (Dec. 7, 2012) (notice) and 30336 (Jan. 2, 2013)
(order); and In the Matter of Salient Advisors, L.P. and MarketShares ETF
Trust, Investment Company Act Release Nos. 30254 (Oct. 31, 2012) (notice)
and 30281 (Nov. 27, 2012) (order) (collectively, the "Prior Active ETF
Orders").
(13) See, e.g., Pyxis Order, at Representation 14 and Condition 4.
(14) See, e.g., Rule 17j-1 under the Act and Section 204A under the Advisers
Act; see also Rules 204A-1 and 206(4)-7 under the Advisers Act, the
requirements of which, with respect to the Adviser and any Sub-Adviser,
are discussed below.
8 of 29
believe their request for Relief presents any novel legal issues that are
materially different from those the Commission has already considered.
In light of the foregoing, Applicants believe it is appropriate to
allow the Affiliated Index Funds to be fully transparent in lieu of
adopting Policies and Procedures from the Prior Self-Indexing ETF Orders
discussed above. Applicants assert that each Affiliated Index Fund's
Portfolio Positions will be as transparent as the portfolio holdings of
existing actively managed ETFs (i.e., those relying on the Prior Active
ETF Orders), and that each Affiliated Index Fund will provide the same
level of transparency with respect to its Underlying Index as the
underlying indexes of existing ETFs which track indexes provided by
unaffiliated parties. Applicants also assert that, notwithstanding the
fact that the Affiliated Index Funds' Underlying Indexes will not be
formally required to maintain the full transparency that was required
under the Prior Self-Indexing ETF Orders, such Underlying Indexes will
nonetheless maintain a level of public disclosure regarding components,
weightings, additions and deletions (including prior announcements of any
changes thereto) which will be similar to that of other underlying indexes
used by other ETFs.(15)
Each Adviser and any Sub-Adviser has adopted or will adopt, pursuant
to Rule 206(4)-7 under the Advisers Act, written policies and procedures
designed to prevent violations of the Advisers Act and the rules
thereunder. These include policies and procedures designed to minimize
potential conflicts of interest among the Affiliated Index Funds and the
Affiliated Accounts, such as cross trading policies, as well as those
designed to ensure the equitable allocation of portfolio transactions and
brokerage commissions.(16) In addition, First Trust Advisors has adopted
policies and procedures as required under Section 204A of the Advisers
Act, which are reasonably designed in light of the nature of its business
to prevent the misuse, in violation of the Advisers Act or the Exchange
Act or the rules thereunder, of material non-public information by First
Trust Advisors or an associated person ("Inside Information Policy"). Any
(15) The Affiliated Index Funds' full portfolio transparency will also
typically result in full transparency of an Affiliated Index Fund's
Underlying Index by virtue of an Affiliated Index Fund's replication of
its Underlying Index. While an Affiliated Index Fund which uses a
representative sampling approach to track its Underlying Index may not
thus provide full transparency of its Underlying Index and accordingly,
may give rise to conflicts of interest to the extent that an Adviser or
Sub-Adviser has discretion to designate the securities to be included in
the Portfolio Deposit (defined below), Applicants believe any such
conflicts are appropriately addressed by the existing protections against
conflicts of interest that are provided for in the Prior Active ETF
Orders, the Act and the Advisers Act, as discussed herein. Applicants
further note that even such Affiliated Index Funds that use representative
sampling to track their Underlying Indexes will provide the same amount of
transparency with respect to their Underlying Indexes as is currently
required with respect to Prior Index-Based ETFs in that their Deposit
Instruments and Redemption Instruments (as such terms are defined below)
are required to correspond pro rata to the positions of the Fund's
portfolio, subject to limited exceptions. See Section II.K, infra.
(16) If the requested Order is granted, the Adviser will include under Item
10.C. of Part 2 of its Form ADV a discussion of its relationship to any
Affiliated Index Provider (unless the Affiliated Index Provider is the
Adviser) and any material conflicts of interest resulting therefrom,
regardless of whether the Affiliated Index Provider is a type of affiliate
specified in Item 10.
9 of 29
other Adviser and/or Sub-Adviser will be required to adopt and maintain a
similar Inside Information Policy. In accordance with the Code of Ethics
(discussed below) and Inside Information Policy of the Adviser and any
Sub-Adviser, personnel of those entities with knowledge about the
composition of a Portfolio Deposit (as defined below) will be prohibited
from disclosing such information to any other person, except as authorized
in the course of their employment, until such information is made public.
Each Trust will execute confidentiality agreements with any of its service
providers which are provided information regarding a Portfolio Deposit.
The structure of the Affiliated Index Funds, as well as those of the
Affiliated Accounts, as index funds minimizes the potential for conflicts,
as the investment strategies of each Affiliated Index Fund and the
Affiliated Accounts will be constrained by their objective to track the
performance of their respective Underlying Index (before fees and
expenses).
The portfolio managers responsible for day-to-day portfolio
management of the Affiliated Index Funds and Affiliated Accounts will be
employees of an Adviser or a Sub-Adviser. The personnel responsible for
overseeing the activities of any Sub-Adviser in connection with the
management of the Affiliated Index Funds and Affiliated Accounts will be
employees of the Adviser. First Trust Advisors has also adopted (and any
other Adviser has adopted or will adopt) a Code of Ethics pursuant to Rule
17j-1 under the Act and Rule 204A-1 under the Advisers Act, which contains
provisions reasonably necessary to prevent Access Persons (as defined in
Rule 17j-1) from engaging in any conduct prohibited in Rule 17j-1 ("Code
of Ethics"). Any Sub-Adviser will be required to confirm to the applicable
Adviser and the applicable Trust that it has adopted policies and
procedures to monitor and restrict securities trading by certain of its
employees. Also, any Sub-Adviser will be required to adopt a Code of
Ethics pursuant to Rule 17j-1 under the Act and Rule 204A-1 under the
Advisers Act, and to provide the applicable Trust with the certification
required by Rule 17j-1 under the Act. Neither any Adviser nor any
Sub-Adviser will receive incentive fees for outperforming the Underlying
Index of any Affiliated Index Fund or Affiliated Account. In fact, any
material outperformance or underperformance would be viewed negatively by
investors in such investments.
To the extent the Affiliated Index Funds transact with an affiliated
person of the Adviser or any Sub-Adviser, such transactions will comply
with the Act, the rules thereunder and the terms and conditions of the
Order. Each Affiliated Index Fund's Board will periodically review the
Affiliated Index Fund's use of an Affiliated Index Provider. Subject to
the approval of the Board overseeing any Affiliated Index Fund, the
Adviser, affiliated persons of the Adviser ("Adviser Affiliates") and
those of any Sub-Adviser ("Sub-Adviser Affiliates") may be authorized to
provide administration, custody, fund accounting, transfer agency,
dividend disbursement and/or securities lending services to the Affiliated
Index Funds. Any services provided by an Adviser, Adviser Affiliates,
Sub-Adviser and Sub-Adviser Affiliates will be performed in accordance
with the provisions of the Act, the rules under the Act and any relevant
guidelines from the staff of the Commission.
10 of 29
3. Amendment to Replace Discussion of Availability of Information
Regarding Shares and Underlying Indexes.
Applicants seek to amend the Prior Application by deleting Section II.Q.
thereof in its entirety and replacing it with the following text:
Q. Availability of Information Regarding Shares and Underlying
Indexes
On each Business Day, the Deposit Instruments, the Redemption
Instruments, and the Balancing Amount effective as of the previous
Business Day, per individual outstanding Share of each Fund, will be made
available on the Website. As noted above, before commencement of trading
on the Exchange on each Business Day, the identities and quantities of the
portfolio securities and other assets held by the Affiliated Index Fund
that will form the basis for the Affiliated Index Fund's calculation of
NAV at the end of the Business Day will also be made available on the
Website. Similarly, for each Long/Short Fund and 130/30 Fund, the Adviser
will provide full portfolio transparency on the Fund's Website by making
available the identities and quantities of the Portfolio Positions that
will form the basis for the Fund's calculation of NAV at the end of the
Business Day. The information provided on the Website will be formatted to
be reader-friendly.
The Funds' Administrator will provide an estimated Balancing Amount,
adjusted through the close of the trading day, to the relevant Listing
Exchange. Each Listing Exchange or other major market data provider will
disseminate, every fifteen (15) seconds during regular Exchange trading
hours, through the facilities of the Consolidated Tape Association or
other widely disseminated means, an amount for each Fund stated on a per
individual Share basis representing the sum of (i) the estimated Balancing
Amount, and (ii) the current value of the Deposit Instruments (such
intra-day indicative value, the "IIV"). The Listing Exchange will not be
involved in, or be responsible for, the calculation of the estimated
Balancing Amount nor will it guarantee the accuracy or completeness of the
estimated Balancing Amount. No Fund will be involved in, or responsible
for, the calculation or dissemination of the IIV, and no Fund will make
any warranty as to its accuracy.
Applicants expect that the value of the Underlying Indexes will be
disseminated by the relevant Listing Exchange or such other organization
authorized by the Index Provider in accordance with Commission and
Exchange requirements. Applicants expect the same from the Index Providers
of future Underlying Indexes and future primary Listing Exchanges. In
addition, these organizations will disseminate values for each Underlying
Index once each trading day, based on closing prices in the relevant
exchange market. Each Fund will make available on a daily basis the names
and required numbers of each of the Deposit Instruments in a Creation Unit
as well as information regarding the Balancing Amount.
At the end of each Business Day, the Trust will prepare the next
day's Deposit Instruments and Redemption Instruments for the Funds and
send this information to the Transfer Agent, Custodian or index receipt
11 of 29
agent, as applicable. The same evening, that party will add to this
information the Balancing Amount effective as of the close of business on
that Business Day and create a portfolio composition file ("PCF")(17) for
each Fund, which it will transmit to NSCC before the start of the next
Business Day. The PCF will include information on the cash and money
market instruments in the Fund's portfolio and be available to all NSCC
members, as well as through third-party data vendors. Except as discussed
below, the PCF will provide information sufficient to calculate the IIV
for the Funds during the next Business Day and disclose the full portfolio
that will be the basis for the next day's NAV calculation.(18) The
portfolio holdings disclosure on the Website will contain information
sufficient by itself for market participants to calculate a Fund's IIV
during the next Business Day and effectively arbitrage the Fund.
Because bonds typically trade through "over-the-counter" or "OTC"
transactions, information about the intraday prices of such bonds comes
from a variety of sources. With respect to Fixed Income Funds, this
information includes: (i) executed bond transactions as reported on
FINRA's Trace Reporting and Compliance System ("TRACE" or the "TRACE
system"); (ii) intraday prices obtained directly from broker-dealers;
and/or (iii) intraday prices obtained from subscription services, such as
Bloomberg. For these purposes, "intraday prices" may include executed
transaction prices, executable prices or indicative prices, all of which
are available to Authorized Participants and other investors from major
broker-dealers. "Executed transaction prices," as the term suggests, are
the prices at which completed bond transactions actually occurred, such as
those executed transactions reported on TRACE or other transaction
reporting systems. "Executable quotations" are price quotations provided
by broker-dealers that indicate the price at which such broker-dealer
would buy or sell a specified amount of securities. "Indicative
quotations" are price quotations provided by broker-dealers that, while
not necessarily executable, provide an indication of the price at which
such broker-dealer would buy or sell a specified amount of securities.
As previously noted, one source of intraday U.S. bond prices is the
TRACE system. The TRACE system reports executed prices on corporate bonds.
The development of the TRACE system provides evidence that transparency in
the U.S. bond market is increasing. TRACE reported prices are available
without charge on FINRA's website on a "real time" basis (subject to a
fifteen (15)-minute delay as of July 1, 2005) and also are available by
subscription from various information providers (e.g., Bloomberg). In
addition, Authorized Participants and other market participants,
particularly those that regularly deal or trade in bonds, have access to
(17) A PCF consists of the Deposit Instruments and Redemption Instruments that
would be required to effect a creation or redemption on the next trading
day and the Balancing Amount effective as of the close of business on that
Business Day.
(18) The NSCC's system for the receipt and dissemination to its participants of
the PCF was designed for portfolios consisting entirely of equity or fixed
income securities, cash and money market instruments. As a result, it is
not currently capable of processing information with respect to Short
Positions and financial instruments.
12 of 29
intraday bond prices from a variety of sources other than TRACE. One
obvious source of information for Authorized Participants is their own
trading desks. Applicants understand that many Authorized Participants
already make markets in the bonds included in the Underlying Indexes and
that, when acting as such, they have access to intraday bond prices
through their own trading desks and will be able to assess the intraday
value of each Fund's Deposit Instruments using this information. Market
participants, particularly large institutional investors, regularly
receive executable and indicative quotations on bonds from broker-dealers.
Authorized Participants and other market participants also can obtain bond
prices by subscription from third parties through on-line client-based
services.(19)
As discussed herein, the Website, accessible to all investors at no
charge, will publish the current version of the Prospectus and Statement
of Additional Information ("SAI"), the Portfolio Positions and relevant
Underlying Index for each Fund, the prior Business Day's NAV and the
market closing price or the midpoint of the bid/ask spread at the time of
calculation of the relevant Fund's NAV ("Bid/Ask Price"), and a
calculation of the premium or discount of the market closing price or
Bid/Ask Price against such NAV and, each Business Day before the
commencement of trading of Shares on the Exchange, the identities and
quantities of the portfolio securities and other assets held by each
Affiliated Index Fund that will form the basis for the Affiliated Index
Fund's calculation of NAV at the end of the Business Day. The Website will
be publicly available prior to the public offering of Shares. The Exchange
also will disseminate a variety of data such as Total Balancing Amount Per
Creation Unit, Shares Outstanding and NAV with respect to each Fund on a
daily basis by means of CTA and CQ High Speed Lines.
The closing prices of each Fund's Deposit Instruments and Short
Positions will be readily available from, as applicable, the relevant
Listing Exchange, automated quotation systems, published or other public
sources, such as TRACE, or on-line information services such as Quotron,
Bloomberg or Reuters. Similarly, information regarding market prices and
volume of Shares will be broadly available on a real time basis throughout
the trading day. In addition, given the past history of other Prior ETFs,
Applicants expect that Shares will be followed closely by stock market and
mutual fund professionals as well as investment advisers, who will offer
their analysis of why investors should purchase, hold, sell or avoid
Shares. In conclusion, Exchange listing of Shares should help ensure that
there is a substantial amount of raw data available, and that such data is
packaged, analyzed and widely disseminated to the investing public.
(19) "[M]ost professional market participants, dealers, investors and issuers
have access to reliable bond price data through commercial vendors."
Statement of William H. James of the Bond Market Association before the
House Committee on Commerce Subcommittee on Finance and Hazardous
Materials, September 29, 1998, reported in The Bond Market
Association--Legislative Issues (discussing the increasing availability of
pricing information in all sectors of the bond market).
13 of 29
4. Amendment to Discussion of Sales and Marketing Materials.
Applicants seek to amend the Prior Application by deleting Section II.R.
thereof in its entirety and replacing it with the following text:
R. Public Representations
Applicants will take such steps as may be necessary to avoid
confusion in the public's mind between the Funds and a traditional
"open-end investment company" or "mutual fund." For example, with respect
to disclosure in the Fund's Prospectus concerning the description of a
Fund and the non-redeemability of Shares, the Funds will observe the
following policies: (1) the term "mutual fund" will not be used except to
compare and contrast a Fund with conventional mutual funds; and (2) the
term "open-end management investment company" will be used in the Fund's
Prospectus only to the extent required by Form N-1A or other securities
law requirements, and this phrase will not be included on the Fund's
Prospectus cover page or in the summary.
Although each Trust will be classified and registered under the Act
as an open-end management investment company, neither a Trust nor any of
its individual Funds will be advertised or marketed or otherwise "held
out" as a traditional open-end investment company or a mutual fund.
Instead, each Fund will be marketed as an "ETF." To that end, the
designation of the Funds in all marketing materials will be limited to the
terms "ETF," "investment company," "fund" and "trust" without reference to
an "open-end fund" or a "mutual fund," except to compare and contrast the
Funds with traditional open-end management investment companies (which may
be referred to as "mutual funds"). All marketing materials that describe
the features or method of obtaining, buying or selling Creation Units, or
Shares traded on an Exchange, or refer to redeemability, will prominently
disclose that Shares are not individually redeemable and will disclose
that the owners of Shares may acquire those Shares from the Fund, or
tender such Shares for redemption to the Fund, in Creation Units only. The
same approach will be followed in connection with investor educational
materials issued or circulated in connection with the Shares. After a Fund
has traded for twelve (12) months or more, any advertising or sales
literature will provide supplementary information on market premiums or
discounts relative to the NAV to enable present and prospective
shareholders to evaluate the relative desirability of Shares' intraday
marketability versus a conventional mutual fund's redeemability at NAV at
every trading day's closing NAV.
The primary disclosure document with respect to Shares will be the
Fund's Prospectus. As with all investment company securities, the purchase
of Shares in Creation Units will be accompanied or preceded by a statutory
prospectus or Summary Prospectus.(20)
(20) Pursuant to Rule 498 of the Securities Act, to the extent that a Summary
Prospectus is delivered, the statutory prospectus will be provided online,
and will be sent upon request.
14 of 29
The Funds will provide copies of their annual and semi-annual
shareholder reports to DTC Participants for distribution to shareholders.
The above policies and format will also be followed in all reports to
shareholders.
The Prospectus for each Affiliated Index Fund will prominently
disclose that the Affiliated Indexes are created and sponsored by the
Adviser or an affiliated person of the Adviser.
5. Amendment to Discussion of Relief Requested.
To reflect the amendments above, Applicants seek to amend the Prior
Application by deleting Section III.D. thereof in its entirety and replacing it
with the following text:
D. The Trusts and the Funds Do Not Raise Concerns
1. Structure and Operation of the Trusts and the Funds Compared to
Prior ETFs.
Applicants believe that the structure and operation of the Trusts
and the Funds will be extremely similar to those of the Prior ETFs
discussed in this Application. As discussed below, the liquidity of each
Fund's portfolio securities, the portfolio transparency of each Fund's
Portfolio Positions, the arbitrage mechanism, and the level and detail of
information contained in the Prospectus for each Fund, as well as that
displayed on the Website, will be extremely familiar to investors in Prior
ETFs. Consequently, Applicants have every expectation that the Funds will
operate very similarly to the domestic and international ETFs trading now
in the secondary market.
(a) Portfolio Transparency, "Front Running" and "Free Riding."
As discussed throughout this Application, Applicants believe that
the information about each Fund's Portfolio Positions will be both public
and as extensive as that information now provided by actively managed ETFs
currently listed and traded. In addition, each Fund's IIV will be
disseminated at fifteen (15) second intervals throughout the day and the
current total aggregate market value of each Underlying Index will be
disseminated in accordance with Commission and Exchange requirements.
Further, the identity of Deposit Instruments, and Redemption Instruments,
if different, will be made available to market participants in the same
manner and to the same extent as is provided in connection with current
ETFs.
Applicants believe that the disclosure of Portfolio Positions would
be unlikely to lead to "front running" (where other persons would trade
ahead of the Fund and the investors assembling the Deposit Instruments for
Creation Units) any more than is the case with the ETFs now trading.
Similarly, Applicants assert that the frequent disclosures of Portfolio
Positions would not lead to "free riding" (where other persons mirror the
Fund's investment strategies without paying the Fund's advisory fees) any
15 of 29
more than such disclosures cause this problem in connection with the ETFs
now trading.
(b) Arbitrage Mechanism.
Applicants assert that the arbitrage opportunities offered by the
Trusts and the Funds will be the same as those offered by existing ETFs.
Therefore, Applicants believe that the secondary market prices of Shares
will closely track their respective NAVs or otherwise correspond to the
fair value of their underlying portfolios. The Commission has granted
exemptive relief to existing ETFs in large part because their structures
enable efficient arbitrage, thereby minimizing the premium or discount
relative to such ETFs' NAV. Portfolio transparency has been recognized by
market commentators and analysts, as well as by the Commission itself, to
be a fundamental characteristic of current ETFs. This transparency is
acknowledged to facilitate the arbitrage mechanism described in many of
the applications for relief submitted by existing ETFs.
Although Fund Shares are not yet listed on a Listing Exchange and
therefore do not trade in the secondary market, Applicants have every
reason to believe that the design, structure and transparency of the Funds
will result in an arbitrage mechanism as efficient and robust as that
which now exists for current ETFs. Applicants expect that the spread
between offer and bid prices for Shares will be very similar to such
spreads experienced for shares of existing ETFs. Therefore, in light of
the portfolio transparency and efficient arbitrage mechanism inherent in
each Fund's structure, Applicants submit that the secondary market prices
for Shares of such Funds should be close to NAV and should reflect the
value of each Fund's portfolio.
2. Investor Uses and Benefits of Products.
Applicants believe that the Trusts and the Funds will offer a
variety of benefits that will appeal to individual and institutional
investors alike. Applicants assert that these will be identical or
substantially similar to the benefits offered by current ETFs. These
benefits include flexibility, tradability, availability, certainty of
purchase price, and tax efficiencies. Equally of interest to investors
will be the relatively low expense ratios of the Funds, as compared to
those of their directly competitive traditional mutual funds, due to their
in-kind efficiencies in portfolio management as well as other reduced
infrastructure costs. Reductions in the cost of trading, clearing, custody
processes, shareholder reporting and accounting experienced by ETFs
currently trading should be similarly experienced by the Trusts and their
Funds. The last, but by no means least important, benefit is that
investors will have access to extensive information regarding the
Portfolio Positions of each Fund, and Deposit/Redemption Instruments.
Applicants believe that this updated information will be used also by fund
analysts, fund evaluation services, financial planners and advisers and
broker-dealers, among others, and will enhance general market knowledge
about each Fund's holdings as well as the performance of its Adviser
and/or Sub-Adviser.
16 of 29
Applicants have made every effort to structure the Funds in a way
that would not favor creators, redeemers and arbitrageurs over retail
investors buying and selling in the secondary market. Given that each Fund
will be managed to replicate or closely track its Underlying Index,
neither the Adviser nor Sub-Adviser will have latitude to change or
specify certain Deposit Instruments or Redemption Instruments to favor an
affiliate.
3. The Commission Should Grant the Exemptive Relief Requested in
This Application.
In summary, Applicants believe that the Trusts and the Funds will
operate in the same manner as existing ETFs, provide necessary safeguards
against shareholder discrimination and potential conflicts of interest,
and create no new regulatory concerns. Applicants submit that the benefits
offered to potential investors are varied and useful, and that the Trusts
and the Funds are appropriate candidates for the requested Relief.
Based on the foregoing, Applicants respectfully request the Relief
as set forth below.
III. IN SUPPORT OF THE APPLICATION
Except as noted herein, the Funds will operate in a manner identical to
that described in the Prior Application. The requested relief would amend the
Prior Order, primarily with respect to the Affiliated Index Funds, to adopt the
Alternative Approach which the Commission has recently approved. The Funds will
comply with the terms and conditions of the Prior Order, except as described in
this Application.
Based on the above, Applicants believe that (i) with respect to the relief
requested pursuant to Section 6(c) of the Act, the requested exemption for the
proposed transactions is appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the policy and
provisions of the Act and (ii) with respect to the relief requested pursuant to
Section 17(b) of the Act, the proposed transactions are reasonable and fair and
do not involve overreaching on the part of any person concerned; the proposed
transactions are or will be consistent with the policy of each Fund; and the
proposed transactions are consistent with the general purposes of the Act.
IV. PRECEDENT
Applicants' requested relief is substantially the same as that granted in
the New Self-Indexing Orders.(21)
(21) See note 5, supra.
17 of 29
V. REQUEST FOR AMENDED ORDER
Applicants respectfully request that the Commission grant an Order
amending the Prior Order.
VI. CONDITIONS TO THE APPLICATION
Applicants agree that the Order will be subject to the conditions set
forth in the Prior Application and, in addition, the following two new
conditions:
1. Each Affiliated Index Fund, Long/Short Fund and 130/30 Fund will post
on the Website on each Business Day, before commencement of trading of
Shares on the Exchange, the Fund's Portfolio Positions.
2. No Adviser or any Sub-Adviser to an Affiliated Index Fund, directly or
indirectly, will cause any Authorized Participant (or any investor on whose
behalf an Authorized Participant may transact with the Affiliated Index
Fund) to acquire any Deposit Instrument for an Affiliated Index Fund
through a transaction in which the Affiliated Index Fund could not engage
directly.
VII. NAMES AND ADDRESSES
Pursuant to Rule 0-2(f) under the Act, the following are the names and
addresses of Applicants:
First Trust Advisors L.P.
First Trust Portfolios L.P.
First Trust Exchange-Traded Fund
First Trust Exchange-Traded Fund II
First Trust Exchange-Traded Fund III
First Trust Exchange-Traded Fund IV
First Trust Exchange-Traded Fund V
First Trust Exchange-Traded Fund VI
First Trust Exchange-Traded Fund VII
First Trust Exchange-Traded AlphaDEX(R) Fund
First Trust Exchange-Traded AlphaDEX(R) Fund II
120 East Liberty Drive
Suite 400
Wheaton, Illinois 60187
18 of 29
All questions concerning this Application should be directed to the
persons listed on the facing page of this Application.
FIRST TRUST EXCHANGE-TRADED FUND
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED FUND II
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED FUND III
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED FUND IV
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED FUND V
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED FUND VI
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
19 of 29
FIRST TRUST EXCHANGE-TRADED FUND VII
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED AlphaDEX(R)
FUND
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST EXCHANGE-TRADED AlphaDEX(R)
FUND II
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
|
FIRST TRUST ADVISORS L.P.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
Title: Chief Executive Officer
|
FIRST TRUST PORTFOLIOS L.P.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
Title: Chief Executive Officer
Dated: November 13, 2013
|
20 of 29
VIII. AUTHORIZATION AND SIGNATURES
In accordance with Rule 0-2(c) under the Act, the Applicant states that
all actions necessary to authorize the execution and filing of this Application
have been taken, and the persons signing and filing this document are authorized
to do so on behalf of First Trust Advisors L.P. James A. Bowen is authorized to
sign and file this document on behalf of First Trust Advisors L.P., pursuant to
the general authority vested in him as Chief Executive Officer.
FIRST TRUST ADVISORS L.P.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
Title: Chief Executive Officer
Dated: November 13, 2013
|
21 of 29
IX. AUTHORIZATION AND SIGNATURES
In accordance with Rule 0-2(c) under the Act, the Applicants state that
all actions necessary to authorize the execution and filing of this Application
have been taken, and the persons signing and filing this document are authorized
to do so on behalf of each Existing Trust. Mark R. Bradley is authorized to sign
and file this document on behalf of the Existing Trusts, pursuant to the general
authority vested in him as President and pursuant to resolutions adopted by the
respective Boards of Trustees which are attached as Appendix A-1 Such
resolutions continue to be in force and have not been revoked through the date
hereof.
FIRST TRUST EXCHANGE-TRADED FUND
FIRST TRUST EXCHANGE-TRADED FUND II
FIRST TRUST EXCHANGE-TRADED FUND III
FIRST TRUST EXCHANGE-TRADED FUND IV
FIRST TRUST EXCHANGE-TRADED FUND V
FIRST TRUST EXCHANGE-TRADED FUND VI
FIRST TRUST EXCHANGE-TRADED FUND VII
FIRST TRUST EXCHANGE-TRADED AlphaDEX(R)
FUND
FIRST TRUST EXCHANGE-TRADED AlphaDEX(R)
FUND II
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
Title: President
Dated: November 13, 2013
|
22 of 29
X. AUTHORIZATION AND SIGNATURES
In accordance with Rule 0-2(c) under the Act, the Applicant states that
all actions necessary to authorize the execution and filing of this Application
have been taken, and the persons signing and filing this document are authorized
to do so on behalf of First Trust Portfolios L.P. James A. Bowen is authorized
to sign and file this document on behalf of First Trust Portfolios L.P.,
pursuant to the general authority vested in him as Chief Executive Officer.
FIRST TRUST PORTFOLIOS L.P.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
Title: Chief Executive Officer
Dated: November 13, 2013
|
23 of 29
VERIFICATION OF APPLICATION AND STATEMENT OF FACT
In accordance with Rule 0-2(d) under the Act, the undersigned states that
he has duly executed the attached Application for an order, for and on behalf of
FIRST TRUST ADVISORS L.P.; that he is Chief Executive Officer of such company;
and that all actions taken by the stockholders, directors and other bodies
necessary to authorize the undersigned to execute and file such instrument have
been taken. The undersigned further states that he is familiar with such
instrument, and the contents thereof, and that the facts therein set forth are
true to the best of his knowledge, information and belief.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
|
24 of 29
VERIFICATION OF APPLICATION AND STATEMENT OF FACT
In accordance with Rule 0-2(d) under the Act, the undersigned states that
he has duly executed the attached Application for an order, for and on behalf of
FIRST TRUST EXCHANGE-TRADED FUND, FIRST TRUST EXCHANGE-TRADED FUND II, FIRST
TRUST EXCHANGE-TRADED FUND III, FIRST TRUST EXCHANGE-TRADED FUND IV, FIRST TRUST
EXCHANGE-TRADED FUND V, FIRST TRUST EXCHANGE-TRADED FUND VI, FIRST TRUST
EXCHANGE-TRADED FUND VII, FIRST TRUST EXCHANGE-TRADED AlphaDEX(R) FUND and FIRST
TRUST EXCHANGE-TRADED AlphaDEX(R) FUND II; that he is President of such
companies; and that all actions taken by the stockholders, directors and other
bodies necessary to authorize the undersigned to execute and file such
instrument have been taken. The undersigned further states that he is familiar
with such instrument, and the contents thereof, and that the facts therein set
forth are true to the best of his knowledge, information and belief.
By: /s/ Mark R. Bradley
---------------------------------
Name: Mark R. Bradley
|
25 of 29
VERIFICATION OF APPLICATION AND STATEMENT OF FACT
In accordance with Rule 0-2(d) under the Act, the undersigned states that
he has duly executed the attached Application for an order, for and on behalf of
FIRST TRUST PORTFOLIOS L.P.; that he is Chief Executive Officer of such company;
and that all actions taken by the stockholders, directors and other bodies
necessary to authorize the undersigned to execute and file such instrument have
been taken. The undersigned further states that he is familiar with such
instrument, and the contents thereof, and that the facts therein set forth are
true to the best of his knowledge, information and belief.
By: /s/ James A. Bowen
---------------------------------
Name: James A. Bowen
|
26 of 29
XII. APPENDIX A-1
THE BOARDS OF TRUSTEES OF EACH OF THE FIRST TRUST FUNDS LISTED ON SCHEDULE I
HERETO (COLLECTIVELY, THE "TRUSTS") EACH ADOPTED THE FOLLOWING RESOLUTIONS
WHEREAS, the Trusts, First Trust Advisors L.P. ("First Trust
Advisors") and First Trust Portfolios L.P. ("First Trust
Portfolios") previously received an order (Investment Company Act
Release No. 30610 (July 23, 2013)) (the "Original Order") from the
Securities and Exchange Commission (the "Commission") granting an
exemption from various provisions of the Investment Company Act of
1940 (the "1940 Act") to permit, among other things (a) series of
certain open-end management investment companies (each, a "Fund") to
issue shares ("Fund Shares") redeemable in large aggregations only
("Creation Unit Aggregations"); (b) secondary market transactions in
Fund Shares to occur at negotiated market prices; and (c) certain
affiliated persons of the Funds to deposit securities into, and
receive securities from, the Funds in connection with the purchase
and redemption of Creation Unit Aggregations; and
WHEREAS, subject to various terms and conditions set forth in
the exemptive application submitted to the Commission for the
Original Order (the "Affiliated Index Requirements"), the Original
Order permits, among other things, the Funds to track an underlying
index that is created, compiled, sponsored or maintained by (a)
First Trust Advisors or (b) an "affiliated person," as defined in
the 1940 Act, or an affiliated person of an affiliated person, of a
Trust, a Fund, First Trust Advisors, First Trust Portfolios, or a
sub-advisor or promoter of a Fund (an "Affiliated Index"); and
WHEREAS, the Trusts wish to modify or supercede the Original
Order, among other things, to replace the Affiliated Index
Requirements with alternative terms and conditions that the
Commission has permitted in connection with granting exemptive
relief to permit exchange-traded funds that track Affiliated Indexes
(the "New Affiliated Index Relief");
NOW THEREFORE BE IT
RESOLVED, that Mark R. Bradley, President of each Trust, and
any other appropriate officer of each Trust be, and each hereby is,
authorized to prepare, execute and submit to the Commission, on
behalf of the respective Trust and in its name, an Application or
Applications in such form as such officers, or any one of them,
27 of 29
deems necessary or appropriate to obtain the New Affiliated Index
Relief; and it is further
RESOLVED, that Mark R. Bradley and any other appropriate
officer of the respective Trust be, and each hereby is, authorized
and directed to take such additional actions and to execute and
deliver on behalf of the respective Trust such other documents or
instruments as he or she deems necessary or appropriate in
furtherance of the above resolution, including, without limitation,
the preparation, execution and filing of any necessary or
appropriate amendment(s) or supplement(s) to the above-described
Application or Applications, his or her authority therefor to be
conclusively evidenced by the taking of any such actions or the
execution or delivery of any such document; and it is further
RESOLVED, that upon issuance of an Order of Exemption by the
Commission in accordance with the terms and conditions of any
Application described above, the respective Trust is authorized to
act in accordance with the provisions of such Application and the
related Order of Exemption.
28 of 29
SCHEDULE I
First Trust Exchange-Traded Fund
First Trust Exchange-Traded Fund II
First Trust Exchange-Traded Fund III
First Trust Exchange-Traded Fund IV
First Trust Exchange-Traded Fund V
First Trust Exchange-Traded Fund VI
First Trust Exchange-Traded Fund VII
First Trust Exchange-Traded AlphaDEX(R) Fund
First Trust Exchange-Traded AlphaDEX(R) Fund II
29 of 29
Green Vision Biotechnology (PK) (USOTC:GVBT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Green Vision Biotechnology (PK) (USOTC:GVBT)
Historical Stock Chart
From Apr 2023 to Apr 2024
