As filed with the Securities and Exchange Commission on October 19, 2010.
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1933 Act File No. 333-143964
1940 Act File No. 811-21944
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
FIRST TRUST EXCHANGE-TRADED FUND II
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
FIRST TRUST EXCHANGE-TRADED FUND
FIRST TRUST EXCHANGE-TRADED FUND II
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
October 19, 2010
Dear Shareholder:
The accompanying materials relate to the Joint Special Meetings of
Shareholders (collectively referred to as the "Meeting") of each portfolio
(each, a "Fund" and, together, the "Funds") of the First Trust Exchange-Traded
Fund, First Trust Exchange-Traded Fund II and First Trust Exchange-Traded
AlphaDEX(R) Fund (each, a "Trust" and collectively, the "Trusts"). The Meeting
will be held at the offices of First Trust Advisors, L.P., 120 East Liberty
Drive, Suite 400, Wheaton, Illinois 60187, on Monday, December 6, 2010, at 4:00
p.m. Central time.
Upon the closing on October 12, 2010 of a transaction (the "Transaction"),
which, as described in the accompanying Joint Proxy Statement, resulted in a
"change in control" of First Trust Advisors L.P. ("First Trust Advisors" or the
"Advisor"), the investment advisor to each of the Funds, the investment
management agreements between each Trust (with respect to the applicable Funds)
and the Advisor automatically terminated in accordance with their respective
terms. The Advisor continues to provide investment advisory services to the
Funds on an interim basis as permitted by the Investment Company Act of 1940.
However, in order for the Advisor to continue to provide investment advisory
services to the Funds beyond the interim period, shareholders of each Fund will
be asked at the Meeting to vote to approve a new investment management agreement
between the Advisor and the applicable Trust with respect to their Fund. The
Board of Trustees of each Trust is recommending that shareholders approve the
new investment management agreements for their Funds.
Some important facts to note about the Transaction are:
o The Transaction had no effect on the number of Fund shares you own
or the value of those Fund shares.
o Subject to shareholder approval, First Trust Advisors will continue
to provide investment advisory services to the Funds.
o Your Fund's contractual advisory fee rate will not increase.
o The Transaction is not expected to result in a change in the persons
responsible for the management of the Funds or in the operations of
the Funds, or in any changes in the investment approach of the
Funds.
YOUR VOTE IS IMPORTANT. Please take a moment now to vote, either by
completing and returning your proxy card(s) in the enclosed postage-paid return
envelope, by telephone or through the Internet. Your prompt response will be
much appreciated.
We appreciate your participation in this important Meeting.
Thank you.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of each Board of Trustees
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IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSAL
OR HOW TO VOTE YOUR SHARES, CALL THE TRUSTS' PROXY SOLICITOR, THE ALTMAN GROUP,
INC., AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
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FIRST TRUST EXCHANGE-TRADED FUND
FIRST TRUST EXCHANGE-TRADED FUND II
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
NOTICE OF JOINT SPECIAL MEETINGS OF SHAREHOLDERS
to be held on December 6, 2010
October 19, 2010
To the Shareholders of:
Each Series of First Trust Exchange-Traded Fund
First Trust Dow Jones Select MicroCap Index(SM) Fund
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund
First Trust NASDAQ-100-Technology Sector Index(SM) Fund
First Trust US IPO Index Fund
First Trust NYSE Arca Biotechnology Index Fund
First Trust Strategic Value Index Fund
First Trust Dow Jones Internet Index(SM) Fund
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund
First Trust Value Line(R) Equity Allocation Index Fund
First Trust Value Line(R) Dividend Index Fund
First Trust S&P REIT Index Fund
First Trust ISE-Revere Natural Gas Index Fund
First Trust ISE Water Index Fund
First Trust ISE Chindia Index Fund
First Trust Value Line(R) 100 Exchange-Traded Fund
First Trust NASDAQ(R) ABA Community Bank Index Fund
Each Series of First Trust Exchange-Traded Fund II
First Trust STOXX(R) European Select Dividend Index Fund (formerly known
as First Trust Dow Jones STOXX(R) European Select Dividend Index Fund)
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund
First Trust Dow Jones Global Select Dividend Index Fund
First Trust ISE Global Wind Energy Index Fund
First Trust ISE Global Engineering and Construction Index Fund
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
First Trust ISE Global Copper Index Fund
First Trust ISE Global Platinum Index Fund
First Trust BICK Index Fund
Each Series of First Trust Exchange-Traded AlphaDEX(R) Fund
First Trust Consumer Discretionary AlphaDEX(R) Fund
First Trust Consumer Staples AlphaDEX(R) Fund
First Trust Energy AlphaDEX(R) Fund
First Trust Financials AlphaDEX(R) Fund
First Trust Health Care AlphaDEX(R) Fund
First Trust Industrials/Producer Durables AlphaDEX(R) Fund
First Trust Materials AlphaDEX(R) Fund
First Trust Technology AlphaDEX(R) Fund
First Trust Utilities AlphaDEX(R) Fund
First Trust Large Cap Core AlphaDEX(R) Fund
First Trust Mid Cap Core AlphaDEX(R) Fund
First Trust Small Cap Core AlphaDEX(R) Fund
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund
First Trust Multi Cap Value AlphaDEX(R) Fund
First Trust Multi Cap Growth AlphaDEX(R) Fund
Notice is hereby given that the Joint Special Meetings of Shareholders
(the "Meeting") of each portfolio (each, a "Fund" and, together, the "Funds") of
the First Trust Exchange-Traded Fund, First Trust Exchange-Traded Fund II and
First Trust Exchange-Traded AlphaDEX(R) Fund, each a Massachusetts business
trust (each, a "Trust") will be held on Monday, December 6, 2010, at the offices
of First Trust Advisors L.P., 120 East Liberty Drive, Suite 400, Wheaton,
Illinois 60187 at 4:00 p.m. Central time, for the following purposes:
1. For each Fund, to approve a new investment management agreement
between the applicable Trust, on behalf of the Fund, and First Trust
Advisors L.P., the investment advisor to the Fund.
2. To transact any other business as may properly come before the
Meeting (including any adjournments or postponements thereof).
The close of business on September 30, 2010 has been fixed as the record
date for the determination of Shareholders entitled to notice of, and to vote
at, the Meeting and any adjournments or postponements thereof.
By Order of the Boards of Trustees,
/s/ W. Scott Jardine
W. Scott Jardine
Secretary
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IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. IN ORDER
TO AVOID DELAY AND TO ENSURE THAT YOUR SHARES ARE REPRESENTED, PLEASE VOTE AS
PROMPTLY AS POSSIBLE. YOU MAY VOTE EASILY AND QUICKLY BY MAIL, TELEPHONE OR
THROUGH THE INTERNET. TO VOTE BY MAIL, PLEASE COMPLETE AND MAIL YOUR PROXY
CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. ALTERNATIVELY,
SHAREHOLDERS MAY VOTE BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE PROXY CARD. IF YOU NEED ANY ASSISTANCE, OR HAVE ANY
QUESTIONS REGARDING THE PROPOSAL OR HOW TO VOTE YOUR SHARES, CALL THE TRUSTS'
PROXY SOLICITOR, THE ALTMAN GROUP, INC., AT (866) 530-8634 WEEKDAYS FROM 9:00
A.M. TO 10:00 P.M. EASTERN TIME.
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FIRST TRUST EXCHANGE-TRADED FUND
FIRST TRUST EXCHANGE-TRADED FUND II
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
JOINT SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON DECEMBER 6, 2010
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
JOINT PROXY STATEMENT
October 19, 2010
THIS JOINT PROXY STATEMENT AND THE ENCLOSED PROXY CARD WILL FIRST BE
MAILED TO SHAREHOLDERS ON OR ABOUT OCTOBER 19, 2010.
This Joint Proxy Statement is furnished by the Boards of Trustees
(each, a "Board") of the First Trust Exchange-Traded Fund (the "ETF
Fund"), First Trust Exchange-Traded Fund II (the "ETF Fund II") and First
Trust Exchange-Traded AlphaDEX(R) Fund (the "AlphaDEX(R) Fund"; the ETF
Fund, ETF Fund II and AlphaDEX(R) Fund are each, a "Trust" and
collectively, the "Trusts"), each a Massachusetts business trust, in
connection with the solicitation by each Board of proxies to be voted at
the Joint Special Meetings of Shareholders of each portfolio (each, a
"Fund" and, together, the "Funds") of the Trusts to be held on Monday,
December 6, 2010 at the offices of First Trust Advisors L.P., located at
120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, at 4:00 p.m.
Central time and at any and all adjournments or postponements thereof
(referred to collectively as the "Meeting"). A Notice of Joint Special
Meetings of Shareholders and a proxy card accompany this Joint Proxy
Statement. In light of the proposal being considered, which applies to
all of the Trusts and Funds, the Boards of Trustees of the Trusts have
determined that the use of this Joint Proxy Statement is in the best
interests of each Trust and Fund.
The Boards have fixed the close of business on September 30, 2010 as the
record date (the "Record Date") for the determination of shareholders of each
Fund entitled to notice of, and to vote at, the Meeting.
As discussed more fully below, shareholders of each Fund are being asked:
1. To approve a new investment management agreement (each, a "New
Advisory Agreement"), between the applicable Trust, with respect to its
Funds, and First Trust Advisors L.P. ("First Trust Advisors" or the
"Advisor"), as investment advisor (the "Proposal").
2. To transact such other business as may properly come before the
Meeting (including any adjournments or postponements).
The number of shares of beneficial interest ("Shares") of each Fund of
each Trust outstanding and entitled to vote at the Meeting as of the Record Date
is set forth in Appendix A. Each shareholder will be entitled to one vote for
each Share owned by the shareholder, and each fractional Share will be entitled
to a proportionate fractional vote. Shareholders of each Fund will vote
separately on the Proposal. The failure to approve the Proposal by one Fund will
not affect the approval by any other Fund.
For shareholders voting by mail, if the enclosed proxy card is properly
executed and returned in time to be voted at the Meeting, the Fund Shares
represented thereby will be voted in accordance with the instructions marked
thereon, or, if no instructions are marked thereon, will be voted at the
discretion of the persons named on the proxy card. Accordingly, unless
instructions to the contrary are marked thereon, a properly executed and
returned proxy will be voted FOR the Proposal, and at the discretion of the
named proxies on any other matters that may properly come before the Meeting, as
deemed appropriate. Any shareholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the Meeting and
voting his or her or its Shares in person, or by timely submitting a letter of
revocation or a later-dated proxy to the applicable Trust at the above address.
A list of shareholders entitled to notice of and to be present and to vote at
the Meeting will be available at the offices of the Trusts, 120 East Liberty
Drive, Suite 400, Wheaton, Illinois 60187, for inspection by any shareholder
during regular business hours prior to the Meeting. Shareholders will need to
show valid identification and proof of Share ownership to be admitted to the
Meeting or to inspect the list of shareholders.
Broker-dealer firms holding Shares in "street name" for the benefit of
their customers and clients may request voting instructions from such customers
and clients. Because broker-dealers may be subject to rules which will not
permit them to vote your Shares without instructions, you are encouraged to
contact your broker-dealer and record your voting instructions.
Under each Trust's By-Laws, the holders of Shares representing
thirty-three and a third percent (33-1/3%) of the voting power of the
outstanding Shares entitled to vote present in person or by proxy will generally
constitute a quorum at any meeting of shareholders; however, where a vote is to
be taken by individual Funds (as in the case of the Proposal), then Shares
representing thirty-three and a third percent (33-1/3%) of the voting power of
the aggregate number of Shares of that Fund will be necessary to constitute a
quorum for the transaction of business by that Fund. For the purposes of
establishing whether a quorum is present, all Shares present and entitled to
vote, including abstentions and broker non-votes (i.e., Shares held by brokers
or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power), shall be counted. Any meeting of
shareholders may be postponed prior to the meeting with notice to the
shareholders entitled to vote at that meeting. Any meeting of shareholders may,
by action of the person presiding thereat, be adjourned without further notice
with respect to one or more matters to be considered at such meeting to a
designated time and place, if a quorum is not present with respect to such
matter. Any meeting of shareholders may, by motion of the person presiding
thereat, be adjourned with respect to one or matters to be considered at such
meeting, even if a quorum is present with respect to such matters, to a
designated time and place, when such adjournment is approved by the vote of
holders of Shares representing a majority of the voting power of the Shares
present and entitled to vote with respect to the matter or matters adjourned,
and voting on the adjournment, without further notice. Unless a proxy is
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otherwise limited in this regard, any Shares present and entitled to vote at a
meeting, including broker non-votes, may, at the discretion of the proxies named
therein, be voted in favor of such an adjournment.
The expense of preparing, printing and mailing the enclosed proxy,
accompanying notice and this Joint Proxy Statement, and all other costs
in connection with the solicitation of proxies to be voted at the
Meeting, will be borne by the Advisor. The Advisor will also reimburse
brokerage firms and others for their expenses in forwarding proxy
solicitation materials to the person(s) for whom they hold Shares of the
Funds. The solicitation of proxies will begin on or about October 19,
2010 and will be largely by mail, but may include telephonic, electronic
or oral communication by officers and service providers of each Trust, as
well as affiliates of such service providers. A proxy solicitation firm,
The Altman Group, Inc., has also been engaged to solicit proxies at a
cost which is expected to be a total of approximately $252,200 for the
Funds of the ETF Fund; $47,405 for the Funds of the ETF II Fund; and
$174,590 for the Funds of the AlphaDEX(R) Fund. As indicated above, this
cost will be borne by the Advisor.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
JOINT SHAREHOLDER MEETINGS TO BE HELD ON DECEMBER 6, 2010. This Joint Proxy
Statement is available on the Internet at:
http://www.ftportfolios.com/LoadContent/ghhugqj1.
The Trusts' most recent annual and semi-annual reports are also available
on the Internet at: http://www.ftportfolios.com/Retail/etf/etflist.aspx. From
this website, shareholders can "click" on the name of a Fund and then the "News
& Literature" link in order to access the most recent annual and semi-annual
reports of that Fund. The Trusts will furnish, without charge, copies of their
most recent annual and semi-annual reports to any shareholder upon request. To
request a copy, please write to the Advisor at 120 East Liberty Drive, Suite
400, Wheaton, Illinois 60187, or call (800) 621-1675.
You may call (800) 621-1675 for information on how to obtain directions to
be able to attend the Meeting and vote in person.
In order that your Shares may be represented at the Meeting, please vote
your proxy as soon as possible either by mail or by telephone or through the
Internet, as indicated on the enclosed proxy card. If voting by mail, you are
requested to:
o indicate your instructions on the proxy card;
o date and sign the proxy card;
o mail the proxy card promptly in the enclosed envelope which requires
no postage if mailed in the continental United States; and
o allow sufficient time for the proxy card to be received BY 4:00 P.M.
CENTRAL TIME, on MONDAY, DECEMBER 6, 2010. (However, proxies
received after this date may still be voted in the event of an
adjournment or postponement of the Meeting to a later date.)
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PROPOSAL: APPROVAL OF NEW ADVISORY AGREEMENTS
BACKGROUND AND REASON FOR VOTE
Each Trust is a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), that consists of
separate exchange-traded funds (i.e., the applicable Funds). The Advisor has
served as investment advisor to each Fund since its inception, initially
pursuant to an investment management agreement (each, an "Original Advisory
Agreement"), between the Advisor and the applicable Trust, on behalf of the
Fund, and currently, as described below, pursuant to an interim investment
management agreement (each, an "Interim Advisory Agreement"), also between the
Advisor and the applicable Trust, on behalf of the Fund.
The Advisor is an Illinois limited partnership formed in 1991 and an
investment advisor registered with the Securities and Exchange Commission
("SEC") under the Investment Advisers Act of 1940. The Advisor has one limited
partner, Grace Partners of DuPage L.P. ("Grace Partners"), and one general
partner, The Charger Corporation, and is controlled by Grace Partners and The
Charger Corporation. Grace Partners is a limited partnership that is controlled
by its general partner, The Charger Corporation, and has a number of limited
partners. The Charger Corporation is an Illinois corporation that was previously
controlled by the Robert Donald Van Kampen family. Grace Partners and The
Charger Corporation are each located at 120 East Liberty Drive, Suite 400,
Wheaton, Illinois 60187, and have a primary business that consists of
investment advisory and broker/dealer services through their ownership interests
in various entities. In this regard, in addition to their interests in the
Advisor, Grace Partners is the sole limited partner, and The Charger Corporation
is the sole general partner, of First Trust Portfolios L.P. ("First Trust
Portfolios"), a broker-dealer registered under the Securities Exchange Act of
1934, as amended (the "1934 Act").
On August 24, 2010, members of the Robert Donald Van Kampen family entered
into a stock purchase agreement with James A. Bowen, the President of the
Advisor, to sell 100% of the common stock of The Charger Corporation to Mr.
Bowen (who will hold the interest through a limited liability company of which
he is the sole member) (the "Transaction") for $3,000,000 payable at the
Transaction closing. The Transaction was completed in accordance with its terms
on October 12, 2010 (the "Transaction Closing Date"). The Transaction is not
anticipated to result in any changes in the personnel or operations of the
Advisor. Mr. Bowen is a Trustee who is an "interested person" (as defined in the
1940 Act) of the Trusts (an "Interested Trustee"), the Chairman of the Board and
the President of each Trust, the President of the Advisor and of First Trust
Portfolios and a limited partner of Grace Partners. In light of the Transaction
and his interest in and role with the Advisor, Mr. Bowen has an interest in this
Proposal.
As required by the 1940 Act, each Original Advisory Agreement provided for
its automatic termination in the event of its assignment. The consummation of
the Transaction resulted in a change in control of the Advisor and constituted
an "assignment," as that term is defined in the 1940 Act, of each Original
Advisory Agreement, thus having the effect of automatically terminating the
Original Advisory Agreement with respect to each Fund on the Transaction Closing
Date. Since that date, the Advisor has been providing services to the Funds
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pursuant to the Interim Advisory Agreements. Shareholders of each Fund are being
asked to approve, with respect to their Fund, the respective New Advisory
Agreement between the applicable Trust and the Advisor. Shareholders should be
aware of the following:
o The Transaction had no effect on the number of Fund shares you own
or the value of those Fund shares.
o Subject to shareholder approval, the Advisor will continue to
provide investment advisory services to each Fund.
o The advisory fee rates paid by each Fund to the Advisor will not
increase.
o The Transaction is not expected to result in a change in the persons
responsible for the management of the Funds or in the operations of
the Funds, or in any changes in the investment approach of the
Funds.
In anticipation of the completion of the Transaction and the termination
of the Original Advisory Agreements, the Board of each Trust held a meeting on
September 20, 2010 (the "Board Meeting"), at which, after careful consideration
(see "BOARD CONSIDERATIONS" below), the Trustees determined that, following the
Transaction, it would be in the best interests of the respective Trust and Funds
for First Trust Advisors to continue to act as investment advisor to the
applicable Funds. Accordingly, as permitted under the 1940 Act and Rule 15a-4
thereunder ("Rule 15a-4"), the Board of Trustees of each Trust, including all of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trusts (the "Independent Trustees"), approved each applicable Interim
Advisory Agreement to ensure the continuation of investment advisory and
portfolio management services to the Funds. As indicated above, each Interim
Advisory Agreement has been in effect since the Transaction Closing Date and,
pursuant to Rule 15a-4, will be in effect no longer than through March 11, 2011
(the "Interim Termination Date"), which is 150 days after the termination of the
Original Advisory Agreements (see "THE INTERIM ADVISORY AGREEMENTS" below). In
addition, at the Board Meeting, each Board approved, subject to shareholder
approval, the New Advisory Agreements. If shareholders of a Fund do not approve
the applicable New Advisory Agreement, the Board will take such action as it
deems to be in the best interests of that Fund.
THE ORIGINAL ADVISORY AGREEMENTS
As indicated above, the Advisor previously served as the investment
advisor to each Fund under the applicable Original Advisory Agreement. The chart
set forth in Appendix B includes, for each Fund, the date of the applicable
Original Advisory Agreement, the effective date of such Agreement for the Fund,
the date on which the initial shareholder of the Fund approved such Agreement,
and the date(s) on which the applicable Board, including a majority of the
Independent Trustees, approved, or approved the continuation of, such Agreement
since the beginning of the Fund's last fiscal year.
Under each Original Advisory Agreement, the Advisor was entitled to
receive from each Fund an annual fee equal to a specified annual rate of the
Fund's average daily net assets (each, a "Fee Rate"), as set forth in Appendix
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C. In addition, for each Fund other than the First Trust ISE Global Copper Index
Fund, the First Trust ISE Global Platinum Index Fund and the First Trust BICK
Index Fund (such Funds, the "Unitary Fee Funds"), although the Fund is generally
responsible for all its expenses, under the terms of an expense reimbursement,
fee waiver and recovery agreement between the Advisor and the applicable Trust
(each, an "Original Expense Agreement"), the Advisor previously agreed, in
general terms, to waive fees and/or reimburse Fund expenses for a specified term
to the extent necessary to prevent the annual investment management fees and
expenses of the Fund (excluding taxes, interest, all brokerage commissions,
other normal charges incident to the purchase and sale of portfolio securities,
and extraordinary expenses) from exceeding a specified percentage, also set
forth in Appendix C, of the Fund's average daily net assets (each, an "Annual
Expense Cap"); however, expenses borne and fees waived by the Advisor were
subject to recovery by the Advisor from the Fund as provided in the applicable
Original Expense Agreement. Upon the termination of the Original Advisory
Agreements, the corresponding Original Expense Agreements also terminated in
accordance with their terms. The Advisor has entered into new, substantially
similar expense reimbursement, fee waiver and recovery agreements with the
Trusts (each, a "New Expense Agreement") which include the same Annual Expense
Caps for the Funds as those set forth in the Original Expense Agreements, and
which will expire on October 12, 2012. In addition, under each New Expense
Agreement, the Advisor has retained the ability to recover eligible amounts
waived or reimbursed under the corresponding Original Expense Agreement.
The Unitary Fee Funds have generally not been responsible for all of their
own expenses; rather, the Advisor, in the applicable Original Advisory
Agreement, agreed to pay substantially all expenses of the Fund, including the
cost of transfer agency, custody, fund administration, legal, audit and other
services and license fees, but excluding the advisory fee, interest, taxes,
brokerage commissions and other expenses connected with the execution of
portfolio transactions, distribution and service fees payable pursuant to a Rule
12b-1 plan, if any, and extraordinary expenses. In addition, the applicable
Original Advisory Agreement for the Unitary Fee Funds provided for the ability
of the Advisor to waive all or a portion of its compensation thereunder. (The
provisions described in this paragraph are referred to as the "Unitary Fund Fee
Provisions.")
Set forth on Appendix C are, for each Fund, its Fee Rate and, if
applicable, its Annual Expense Cap (as noted above), as well as its approximate
net assets as of September 10, 2010.
THE INTERIM ADVISORY AGREEMENTS
Many of the terms of the Interim Advisory Agreements are the same as those
of the corresponding Original Advisory Agreements; however, there are, among
other differences, differences in provisions relating to the effective date and,
consistent with the requirements of Rule 15a-4, termination and compensation.
Unless terminated sooner in accordance with its terms, for each Fund, the
applicable Interim Advisory Agreement will continue to be in effect through the
Interim Termination Date or until shareholders of the Fund approve the
applicable New Advisory Agreement, whichever occurs first. In addition, each
Interim Advisory Agreement may be terminated on behalf of a Fund by action of
its applicable Board or by a vote of a majority of the outstanding voting
securities (as defined in the 1940 Act and the rules and regulations thereunder)
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of the Fund upon 10 calendar days' written notice to the Advisor, without
payment of any penalty.
For each Fund, the rate of compensation paid to the Advisor is the same
under the applicable Interim Advisory Agreement, Original Advisory Agreement and
New Advisory Agreement, and the Interim Advisory Agreement for the Unitary Fee
Funds includes the Unitary Fund Fee Provisions. The compensation accrued under
each Interim Advisory Agreement, however, is to be held in an interest-bearing
escrow account with the Fund's custodian or another bank designated by the
applicable Trust. If the New Advisory Agreement is approved by shareholders of a
Fund by the Interim Termination Date, the amount in the escrow account for the
Fund (including the interest earned) will be paid to the Advisor. However, if
shareholders of the Fund do not approve the New Advisory Agreement by such date,
the Advisor will be paid, out of the escrow account, the lesser of: (i) any
costs incurred by the Advisor in performing services under the Interim Advisory
Agreement for that Fund (plus interest earned on that amount while in escrow);
or (ii) the total amount in the escrow account for that Fund (plus interest
earned).
COMPARISON OF CERTAIN TERMS OF THE NEW ADVISORY AGREEMENTS AND ORIGINAL ADVISORY
AGREEMENTS
Below is a brief comparison of certain terms of the Original Advisory
Agreements to the corresponding terms of the New Advisory Agreements. Many of
the terms of the New Advisory Agreements, including fees payable to the Advisor
by the applicable Fund thereunder, are substantially the same in all material
respects to the terms of the corresponding Original Advisory Agreements; however
the New Advisory Agreements include new effective dates and have been updated in
certain other respects. The forms of the New Advisory Agreements for each Trust
and the applicable Funds are attached to this Joint Proxy Statement as Exhibits
A-1 through A-4 (as set forth below), and the description of the New Advisory
Agreements is qualified in its entirety by reference to such Exhibits.
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TRUST FUNDS OF TRUST TO WHICH NEW ADVISORY AGREEMENT EXHIBIT
APPLIES
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ETF Fund All A-1
- ------------------ --------------------------------------------------- ---------
ETF Fund II All except: A-2
First Trust ISE Global Copper Index Fund
First Trust ISE Global Platinum Index Fund
First Trust BICK Index Fund
- ------------------ --------------------------------------------------- ---------
ETF Fund II First Trust ISE Global Copper Index Fund A-3
First Trust ISE Global Platinum Index Fund
First Trust BICK Index Fund
- ------------------ --------------------------------------------------- ---------
AlphaDEX(R) Fund All A-4
- --------------------------------------------------------------------------------
Advisory Services. As was the case under each Original Advisory Agreement,
under each corresponding New Advisory Agreement, the Advisor will agree to act
as the investment advisor for, and to manage the investment and reinvestment of
the assets of, the applicable Funds in accordance with their respective
- 7 -
investment objectives and policies and limitations, and will administer the
Funds' affairs to the extent requested by and subject to the supervision of the
Board of Trustees of the applicable Trust. Moreover, each New Advisory Agreement
provides, and each corresponding Original Advisory Agreement also provided, that
the investment of each applicable Fund's assets will be subject to the Fund's
policies, restrictions and limitations with respect to securities investments as
set forth in the Fund's then current registration statement under the 1940 Act.
In addition, the Advisor agreed under the Original Advisory Agreement, and will
agree under the New Advisory Agreement, to furnish office facilities and
equipment as well as certain clerical, bookkeeping and administrative services.
Compensation. As compensation for its services and facilities furnished to
a Fund under each New Advisory Agreement, the Advisor will be entitled to
receive fees calculated at the same Fee Rate as that to which it was entitled
under the corresponding Original Advisory Agreement. In addition, the New
Advisory Agreement for the Unitary Fee Funds includes the Unitary Fund Fee
Provisions. The amounts of each Fund's advisory fee, as well as fees waived and
expenses reimbursed by the Advisor (if any) for its last fiscal year are set
forth in Appendix D.
Continuance. The Original Advisory Agreement was originally in effect with
respect to each applicable Fund for an initial term of two years and could be
continued thereafter for successive one-year periods if such continuance was
specifically approved, at least annually, in the manner required by the 1940
Act. If the shareholders of the Funds approve the New Advisory Agreements, if
not terminated earlier, each New Advisory Agreement will expire with respect to
each such Fund on the two-year anniversary of the date of its effectiveness
unless continued. Thereafter, the New Advisory Agreements may be continued for
successive one-year periods if such continuance is specifically approved, at
least annually, in the manner required by the 1940 Act.
Termination. As was the case under each Original Advisory Agreement, the
corresponding New Advisory Agreement provides that it (a) will automatically
terminate in the event of its assignment (as defined in the 1940 Act and the
rules and regulations thereunder) and (b) may be terminated with respect to a
Fund at any time without the payment of any penalty by the Fund or by the
Advisor upon 60 days' written notice to the other party. Each Fund may effect
termination by action of the applicable Board or by a vote of a majority of the
outstanding voting securities (as defined in the 1940 Act and the rules and
regulations thereunder) of the Fund, accompanied by appropriate notice.
Limitation of Liability. As was the case under each Original Advisory
Agreement, each New Advisory Agreement provides that the Advisor will not be
liable for any loss sustained by reason of the purchase, sale or retention of
any security, whether or not such purchase, sale or retention has been based
upon the investigation and research made by any other individual, firm or
corporation, if such recommendation has been selected with due care and in good
faith, except loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Advisor in the performance of its obligations and
duties, or by reason of its reckless disregard of its obligations and duties
under the Agreement.
- 8 -
SECTION 15(f) OF THE 1940 ACT
Section 15(f) of the 1940 Act is a safe harbor that provides in substance
that, when a sale of a controlling interest in an investment advisor occurs, the
investment advisor or any of its affiliated persons may receive any amount or
benefit in connection with the sale as long as two conditions are met. The first
condition specifies that, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's board
of directors/trustees must not be "interested persons" (as defined in the 1940
Act) of the investment advisor or predecessor advisor. The second condition
specifies that no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the sale of such interest, or any express
or implied terms, conditions or understandings applicable thereto. The term
"unfair burden," as defined in the 1940 Act, includes any arrangement during the
two-year period after the transaction whereby the investment advisor (or
predecessor or successor advisor), or any interested person of any such
investment advisor, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services) or from
any person in connection with the purchase or sale of securities or other
property, to, from or on behalf of the investment company (other than bona fide
ordinary compensation as principal underwriter for the investment company). If
either condition of Section 15(f) is not met, the safe harbor is not available.
The Board has not been advised of any circumstances arising under the
Transaction that might result in the imposition of an "unfair burden" being
imposed on the Trusts. In addition, the Trusts have adopted procedures which
include steps intended to cause the conditions of Section 15(f) to be met.
BOARD CONSIDERATIONS
ETF FUND
The Board of ETF Fund, including the Independent Trustees, approved the
Interim Advisory Agreement and the New Advisory Agreement (collectively, the
"Agreements") at the Board Meeting. The Board determined that the terms of the
Agreements are fair and reasonable and that the Agreements are in the best
interests of the Trust and each Fund. The Board also determined that it believes
that the scope and quality of services to be provided to the Trust and each Fund
under the Agreements will be at least equivalent to the scope and quality of
services provided under the Original Advisory Agreement.
On August 25, 2010, the Independent Trustees were informed about the
Transaction, including that the consummation of the Transaction would constitute
a change of control of the Advisor and would result in the "assignment" and
termination of the Original Advisory Agreement under its terms and in accordance
with Section 15 of the 1940 Act. On August 31, 2010, counsel to the Independent
Trustees forwarded to Mr. Bowen and the Advisor a request for information
regarding the Transaction. At the Board Meeting, the Board considered the
information provided by Mr. Bowen and the Advisor in response to the Independent
Trustees' request for information and considered the approval of the Agreements.
- 9 -
To reach its determination, the Board considered its duties under the 1940
Act, as well as under the general principles of state law in reviewing and
approving advisory contracts; the requirements of the 1940 Act in such matters;
the fiduciary duty of investment advisors with respect to advisory agreements
and compensation; the standards used by courts in determining whether investment
company boards have fulfilled their duties; and the factors to be considered by
the Board in voting on such agreements. In connection with its deliberations
regarding the Agreements, the Board noted the Advisor's representation that
apart from their effective and termination dates and any provisions of the
Interim Advisory Agreement required by Rule 15a-4, the Agreements were the same
in all material respects as the Original Advisory Agreement. The Board noted
that it had recently considered the Advisor's capabilities and the terms of the
Original Advisory Agreement at a meeting held on March 21-22, 2010 and had
determined to renew the Original Advisory Agreement on behalf of each Fund,
except for First Trust NASDAQ(R) ABA Community Bank Index Fund, for an
additional one-year term (the "2010 Renewal"). The Board noted that it had
approved the Original Advisory Agreement on behalf of First Trust NASDAQ(R) ABA
Community Bank Index Fund for an initial two-year term ending July 1, 2011. The
Board considered that in connection with the 2010 Renewal, it had received a
report from the Advisor that, among other things, outlined the services provided
by the Advisor to each Fund (including the relevant personnel responsible for
these services and their experience); the advisory fee for each Fund as compared
to fees charged by investment advisors to comparable funds and as compared to
fees charged to other clients of the Advisor; expenses of each Fund compared to
expense ratios of comparable funds; the nature of expenses incurred in providing
services to each Fund and the potential for economies of scale, if any;
financial data on the Advisor; any fall-out benefits to the Advisor and its
affiliate, First Trust Portfolios L.P.; and information on the Advisor's
compliance program. Prior to the Board Meeting, the Advisor represented to the
Board that there had been no material changes to the information provided in
March 2010 in connection with the 2010 Renewal and that the Board could continue
to rely on such information.
Because the Board determined that any differences between the Original
Advisory Agreement and the Agreements were immaterial, the Board determined that
much of its previous analysis in connection with the 2010 Renewal applied to its
review and consideration of the Agreements. The Board considered that the
information presented in connection with the 2010 Renewal was also relevant to
First Trust NASDAQ(R) ABA Community Bank Index Fund. Accordingly, the Board took
note of such prior analysis and supplemented it with the additional
considerations noted below. The Independent Trustees also met separately with
their independent legal counsel to discuss the Transaction and their
consideration of the Agreements.
In reviewing the Agreements for each Fund, the Board considered the
nature, quality and extent of services to be provided by the Advisor under the
Agreements. The Board noted that the Transaction was not expected to result in
any changes to the personnel of the Advisor responsible for providing services
to the Trust and each Fund. The Board also considered the representations of the
Advisor that there will be no diminution in services provided under the
Agreements. In light of the information presented and the considerations made at
the Board Meeting, including the considerations made in connection with the 2010
Renewal, the Board concluded that the nature, quality and extent of services to
be provided to the Trust and each Fund by the Advisor under the Agreements are
expected to be satisfactory.
- 10 -
The Board considered the advisory fees payable by each Fund under the
Agreements, noting that they would be the same as the fees payable by each Fund
under the Original Advisory Agreement. The Board considered that the Advisor
agreed to extend the expense cap for each Fund for a two-year period in
connection with the approval of the Agreements. For each Fund, the Board noted
that expenses borne by the Advisor are proposed to be subject to reimbursement
by the Fund for up to three years from the date the fee or expense was incurred,
but no reimbursement payment would be made by the Fund if it would result in the
Fund exceeding an expense ratio equal to the expense cap in place at the time
the expenses were borne by the Advisor. The Board considered that in connection
with the 2010 Renewal it had reviewed the fees charged by the Advisor to other
exchange-traded funds ("ETFs") and other advisory clients with investment
objectives and policies similar to the Funds', noting that those fees generally
were similar to the fees charged to the Funds. The Board also considered
performance information for each Fund, including each Fund's quarterly
performance report, which is part of the process that the Board has established
for monitoring each Fund's performance and portfolio risk on an ongoing basis.
In light of the information presented on the fees and performance of each Fund
and the considerations made at the Board Meeting, including the considerations
made in connection with the 2010 Renewal, the Board concluded that the advisory
fees for each Fund were reasonable and appropriate in light of the nature,
quality and extent of services expected to be provided by the Advisor to each
Fund under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee for
each Fund continues to reflect an appropriate level of sharing of any economies
of scale at current asset levels. The Board noted that in connection with the
2010 Renewal it had reviewed the costs of the services provided and profits
realized by the Advisor from serving as investment advisor to each Fund other
than First Trust NASDAQ(R) ABA Community Bank Index Fund for the twelve months
ended December 31, 2009 and had noted that the Advisor estimated that it
incurred a loss in providing services to each such Fund in 2009 except for First
Trust Value Line(R) Dividend Index Fund. The Board considered that the Advisor
had identified as a fall-out benefit to the Advisor and First Trust Portfolios
L.P. their exposure to investors and brokers who, in the absence of the Funds,
may have had no dealings with the Advisor, and noted that the Advisor does not
utilize soft dollars in connection with its management of the Funds' portfolios.
Based on all of the information considered and the conclusions reached,
the Board, including the Independent Trustees, determined that the terms of the
Agreements are fair and reasonable and that approval of the Agreements is in the
best interests of the Trust and each Fund. No single factor was determinative in
the Board's analysis.
Accordingly, the Board recommends that shareholders of ETF Fund vote to
approve the New Advisory Agreement for their applicable Fund.
ETF FUND II
The Board of ETF Fund II, including the Independent Trustees, approved the
Interim Advisory Agreement and the New Advisory Agreement (collectively, the
- 11 -
"Non-Unitary Fee Agreements") with the Advisor on behalf of the following Funds
(each a "Non-Unitary Fee Fund" and collectively, the "Non-Unitary Fee Funds"):
First Trust STOXX(R) European Select Dividend Index Fund
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund
First Trust Dow Jones Global Select Dividend Index Fund
First Trust ISE Global Engineering and Construction Index Fund
First Trust ISE Global Wind Energy Index Fund
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
The Board of ETF Fund II, including the Independent Trustees, also
approved the Interim Advisory Agreement and the New Advisory Agreement
(collectively, the "Unitary Fee Agreements" and together with the Non-Unitary
Fee Agreements, the "Agreements") with the Advisor on behalf of the following
Funds (each a "Unitary Fee Fund" and collectively, the "Unitary Fee Funds"):
First Trust ISE Global Copper Index Fund
First Trust ISE Global Platinum Index Fund
First Trust BICK Index Fund
The Board approved the Agreements at the Board Meeting. The Board
determined that the terms of the Agreements are fair and reasonable and that the
Agreements are in the best interests of the Trust and each Fund. The Board also
determined that it believes that the scope and quality of services to be
provided to the Trust and each Fund under the Agreements will be at least
equivalent to the scope and quality of services provided under the Original
Advisory Agreement for the Non-Unitary Fee Funds (the "Original Non-Unitary Fee
Agreement") and the Original Advisory Agreement for the Unitary Fee Funds (the
"Original Unitary Fee Agreement" and together with the Original Non-Unitary Fee
Agreements, the "Original Agreements").
On August 25, 2010, the Independent Trustees were informed about the
Transaction, including that the consummation of the Transaction would constitute
a change of control of the Advisor and would result in the "assignment" and
termination of the Original Agreements under their terms and in accordance with
Section 15 of the 1940 Act. On August 31, 2010, counsel to the Independent
Trustees forwarded to Mr. Bowen and the Advisor a request for information
regarding the Transaction. At the Board Meeting, the Board considered the
information provided by Mr. Bowen and the Advisor in response to the Independent
Trustees' request for information and considered the approval of the Agreements.
To reach its determination, the Board considered its duties under the 1940
Act, as well as under the general principles of state law in reviewing and
approving advisory contracts; the requirements of the 1940 Act in such matters;
the fiduciary duty of investment advisors with respect to advisory agreements
and compensation; the standards used by courts in determining whether investment
company boards have fulfilled their duties; and the factors to be considered by
the Board in voting on such agreements. In connection with its deliberations
regarding the Agreements, the Board noted the Advisor's representation that
apart from their effective and termination dates and any provisions of the
Interim Advisory Agreements required by Rule 15a-4, the Agreements were the same
- 12 -
in all material respects as the Original Agreements. The Board noted that it had
recently considered the Advisor's capabilities and the terms of the Original
Non-Unitary Fee Agreement at a meeting held on March 21-22, 2010 and had
determined to renew the Original Non-Unitary Fee Agreement on behalf of each
Non-Unitary Fee Fund, except for First Trust NASDAQ(R) Clean Edge(R) Smart Grid
Infrastructure Index Fund, for an additional one-year term (the "2010 Renewal").
The Board noted that it had approved the Original Non-Unitary Fee Agreement on
behalf of First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index
Fund for an initial two-year term ending November 9, 2011. The Board considered
that in connection with the 2010 Renewal, it had received a report from the
Advisor that, among other things, outlined the services provided by the Advisor
to each Fund (including the relevant personnel responsible for these services
and their experience); the advisory fee for each Fund as compared to fees
charged by investment advisors to comparable funds and as compared to fees
charged to other clients of the Advisor; expenses of each Fund compared to
expense ratios of comparable funds; the nature of expenses incurred in providing
services to each Fund and the potential for economies of scale, if any;
financial data on the Advisor; any fall-out benefits to the Advisor and its
affiliate, First Trust Portfolios L.P.; and information on the Advisor's
compliance program. Prior to the Board Meeting, the Advisor represented to the
Board that there had been no material changes to the information provided in
March 2010 in connection with the 2010 Renewal and that the Board could continue
to rely on such information. With respect to the Unitary Fee Funds, the Board
considered that it had approved the Original Unitary Fee Agreement on behalf of
each Fund for an initial two-year term in January 2010 (the "2010 Unitary Fee
Approval"). The Board considered that in connection with the 2010 Unitary Fee
Approval, it had received a report from the Advisor that, among other things,
outlined the services to be provided by the Advisor to each Unitary Fee Fund
(including the relevant personnel responsible for these services and their
experience); the proposed unitary fee structure for each Unitary Fee Fund as
compared to fees charged by investment advisors to comparable exchange-traded
funds ("ETFs"), and as compared to fees charged to other Advisor clients with
similar investment objectives, and to other ETFs managed by the Advisor; the
estimated expenses to be incurred in providing services to each Unitary Fee Fund
and the potential for economies of scale, if any; financial data on the Advisor;
fall-out benefits to the Advisor and First Trust Portfolios L.P.; and a summary
of the Advisor's compliance program.
Because the Board determined that any differences between the Original
Agreements and the Agreements were immaterial, the Board determined that much of
its previous analysis in connection with the 2010 Renewal and 2010 Unitary Fee
Approval applied to its review and consideration of the Agreements. Accordingly,
the Board took note of such prior analysis and supplemented it with the
additional considerations noted below. The Independent Trustees also met
separately with their independent legal counsel to discuss the Transaction and
their consideration of the Agreements.
In reviewing the Agreements for each Fund, the Board considered the
nature, quality and extent of services to be provided by the Advisor under the
Agreements. The Board noted that the Transaction was not expected to result in
any changes to the personnel of the Advisor responsible for providing services
to the Trust and each Fund. The Board also considered the representations of the
Advisor that there will be no diminution in services provided under the
- 13 -
Agreements. In light of the information presented and the considerations made at
the Board Meeting, including the considerations made in connection with the 2010
Renewal and 2010 Unitary Fee Approval, the Board concluded that the nature,
quality and extent of services to be provided to the Trust and each Fund by the
Advisor under the Agreements are expected to be satisfactory.
The Board considered the advisory fees payable by each Fund under the
Agreements, noting that they would be the same as the fees payable by each Fund,
except for First Trust BICK Index Fund, under the Original Agreements. The Board
considered that for First Trust BICK Index Fund, the Advisor proposed to reduce
the Fund's unitary fee from 0.70% of average daily net assets to 0.64% of
average daily net assets. The Board noted the Advisor's statement that the
reduction of the unitary fee for First Trust BICK Index Fund would not reduce
the quality or quantity of services provided by the Advisor to the Fund and that
the Advisor's obligations to the Fund would remain the same in all respects. At
the Board Meeting, prior to considering the Agreements, the Board approved the
amendment to the Original Unitary Fee Agreement with respect to First Trust BICK
Index Fund's unitary fee. The Board considered that the Advisor agreed to extend
the expense cap for each Non-Unitary Fee Fund for a two-year period in
connection with the approval of the Non-Unitary Fee Agreements. For each
Non-Unitary Fee Fund, the Board noted that expenses borne by the Advisor are
proposed to be subject to reimbursement by the Non-Unitary Fee Fund for up to
three years from the date the fee or expense was incurred, but no reimbursement
payment would be made by the Non-Unitary Fee Fund if it would result in the
Non-Unitary Fee Fund exceeding an expense ratio equal to the expense cap in
place at the time the expenses were borne by the Advisor. With respect to the
Unitary Fee Funds, the Board noted that, under the Unitary Fee Agreements, the
Advisor would be responsible for each Fund's expenses, including the cost of
transfer agency, custody, fund administration, legal, audit, licensing and other
services, but excluding interest, taxes, brokerage commissions and other
expenses connected with the execution of portfolio transactions, service fees
and distribution fees pursuant to a Rule 12b-1 plan, if any, and extraordinary
expenses. The Board considered that in connection with the 2010 Renewal it had
reviewed the fees charged by the Advisor to other ETFs and other advisory
clients with investment objectives and policies similar to the Funds', noting
that those fees generally were similar to the fees charged to the Funds. The
Board also considered performance information for each Fund, including each
Fund's quarterly performance report, which is part of the process that the Board
has established for monitoring each Fund's performance and portfolio risk on an
ongoing basis. In light of the information presented on the fees and performance
of each Fund and the considerations made at the Board Meeting, including the
considerations made in connection with the 2010 Renewal and the 2010 Unitary Fee
Approval, the Board concluded that the advisory fees for each Fund were
reasonable and appropriate in light of the nature, quality and extent of
services expected to be provided by the Advisor to each Fund under the
Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee for
each Fund continues to reflect an appropriate level of sharing of any economies
of scale at current asset levels. The Board noted that in connection with the
2010 Renewal it had reviewed the costs of the services provided and profits
realized by the Advisor from serving as investment advisor to each Fund other
than First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
- 14 -
and the Unitary Fee Funds for the twelve months ended December 31, 2009 and had
noted that the Advisor estimated that it incurred a loss in providing services
to each such Fund in 2009. The Board considered that the Advisor had identified
as a fall-out benefit to the Advisor and First Trust Portfolios L.P. their
exposure to investors and brokers who, in the absence of the Funds, may have had
no dealings with the Advisor, and noted that the Advisor does not utilize soft
dollars in connection with its management of the Funds' portfolios.
Based on all of the information considered and the conclusions reached,
the Board, including the Independent Trustees, determined that the terms of the
Agreements are fair and reasonable and that approval of the Agreements is in the
best interests of the Trust and each Fund. No single factor was determinative in
the Board's analysis.
Accordingly, the Board recommends that shareholders of ETF Fund II vote to
approve the New Advisory Agreement for their applicable Fund.
ALPHADEX(R) FUND
The Board of AlphaDEX(R) Fund, including the Independent Trustees,
approved the Interim Advisory Agreement and the New Advisory Agreement
(collectively, the "Agreements") at the Board Meeting. The Board determined that
the terms of the Agreements are fair and reasonable and that the Agreements are
in the best interests of the Trust and each Fund. The Board also determined that
it believes that the scope and quality of services to be provided to the Trust
and each Fund under the Agreements will be at least equivalent to the scope and
quality of services provided under the Original Advisory Agreement.
On August 25, 2010, the Independent Trustees were informed about the
Transaction, including that the consummation of the Transaction would constitute
a change of control of the Advisor and would result in the "assignment" and
termination of the Original Advisory Agreement under its terms and in accordance
with Section 15 of the 1940 Act. On August 31, 2010, counsel to the Independent
Trustees forwarded to Mr. Bowen and the Advisor a request for information
regarding the Transaction. At the Board Meeting, the Board considered the
information provided by Mr. Bowen and the Advisor in response to the Independent
Trustees' request for information and considered the approval of the Agreements.
To reach its determination, the Board considered its duties under the 1940
Act, as well as under the general principles of state law in reviewing and
approving advisory contracts; the requirements of the 1940 Act in such matters;
the fiduciary duty of investment advisors with respect to advisory agreements
and compensation; the standards used by courts in determining whether investment
company boards have fulfilled their duties; and the factors to be considered by
the Board in voting on such agreements. In connection with its deliberations
regarding the Agreements, the Board noted the Advisor's representation that
apart from their effective and termination dates and any provisions of the
Interim Advisory Agreement required by Rule 15a-4, the Agreements were the same
in all material respects as the Original Advisory Agreement. The Board noted
that it had recently considered the Advisor's capabilities and the terms of the
Original Advisory Agreement at a meeting held on March 21-22, 2010 and had
- 15 -
determined to renew the Original Advisory Agreement on behalf of each Fund for
an additional one-year term (the "2010 Renewal"). The Board considered that in
connection with the 2010 Renewal, it had received a report from the Advisor
that, among other things, outlined the services provided by the Advisor to each
Fund (including the relevant personnel responsible for these services and their
experience); the advisory fee for each Fund as compared to fees charged by
investment advisors to comparable funds and as compared to fees charged to other
clients of the Advisor; expenses of each Fund compared to expense ratios of
comparable funds; the nature of expenses incurred in providing services to each
Fund and the potential for economies of scale, if any; financial data on the
Advisor; any fall-out benefits to the Advisor and its affiliate, First Trust
Portfolios L.P.; and information on the Advisor's compliance program. Prior to
the Board Meeting, the Advisor represented to the Board that there had been no
material changes to the information provided in March 2010 in connection with
the 2010 Renewal and that the Board could continue to rely on such information.
Because the Board determined that any differences between the Original
Advisory Agreement and the Agreements were immaterial, the Board determined that
much of its previous analysis in connection with the 2010 Renewal applied to its
review and consideration of the Agreements. Accordingly, the Board took note of
such prior analysis and supplemented it with the additional considerations noted
below. The Independent Trustees also met separately with their independent legal
counsel to discuss the Transaction and their consideration of the Agreements.
In reviewing the Agreements for each Fund, the Board considered the
nature, quality and extent of services to be provided by the Advisor under the
Agreements. The Board noted that the Transaction was not expected to result in
any changes to the personnel of the Advisor responsible for providing services
to the Trust and each Fund. The Board also considered the representations of the
Advisor that there will be no diminution in services provided under the
Agreements. In light of the information presented and the considerations made at
the Board Meeting, including the considerations made in connection with the 2010
Renewal, the Board concluded that the nature, quality and extent of services to
be provided to the Trust and each Fund by the Advisor under the Agreements are
expected to be satisfactory.
The Board considered the advisory fees payable by each Fund under the
Agreements, noting that they would be the same as the fees payable by each Fund
under the Original Advisory Agreement. The Board considered that the Advisor
agreed to extend the expense cap for each Fund for a two-year period in
connection with the approval of the Agreements. For each Fund, the Board noted
that expenses borne by the Advisor are proposed to be subject to reimbursement
by the Fund for up to three years from the date the fee or expense was incurred,
but no reimbursement payment would be made by the Fund if it would result in the
Fund exceeding an expense ratio equal to the expense cap in place at the time
the expenses were borne by the Advisor. The Board considered that in connection
with the 2010 Renewal it had reviewed the fees charged by the Advisor to other
exchange-traded funds ("ETFs") and other advisory clients with investment
objectives and policies similar to the Funds', noting that those fees generally
were similar to the fees charged to the Funds. The Board also considered
performance information for each Fund, including each Fund's quarterly
performance report, which is part of the process that the Board has established
for monitoring each Fund's performance and portfolio risk on an ongoing basis.
- 16 -
In light of the information presented on the fees and performance of each Fund
and the considerations made at the Board Meeting, including the considerations
made in connection with the 2010 Renewal, the Board concluded that the advisory
fees for each Fund were reasonable and appropriate in light of the nature,
quality and extent of services expected to be provided by the Advisor to each
Fund under the Agreements.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee for
each Fund continues to reflect an appropriate level of sharing of any economies
of scale at current asset levels. The Board noted that in connection with the
2010 Renewal it had reviewed the costs of the services provided and profits
realized by the Advisor from serving as investment advisor to each Fund for the
twelve months ended December 31, 2009 and had noted that the Advisor estimated
that it incurred a loss in providing services to each Fund in 2009. The Board
considered that the Advisor had identified as a fall-out benefit to the Advisor
and First Trust Portfolios L.P. their exposure to investors and brokers who, in
the absence of the Funds, may have had no dealings with the Advisor, and noted
that the Advisor does not utilize soft dollars in connection with its management
of the Funds' portfolios.
Based on all of the information considered and the conclusions reached,
the Board, including the Independent Trustees, determined that the terms of the
Agreements are fair and reasonable and that approval of the Agreements is in the
best interests of the Trust and each Fund. No single factor was determinative in
the Board's analysis.
Accordingly the Board recommends that shareholders of AlphaDEX(R) Fund
vote to approve the New Advisory Agreement for their applicable Fund.
ADDITIONAL INFORMATION ABOUT THE TRUSTS AND THE ADVISOR
A list of the officers of the Trusts and the managing directors and
principal officers of the Advisor, their positions with the Trusts and/or the
Advisor, and their principal occupations are set forth below. Certain officers
of the Trusts have a minority equity interest in the limited partner of the
Advisor.
POSITION WITH THE POSITION WITH THE
NAME TRUSTS ADVISOR PRINCIPAL OCCUPATION
James A. Bowen President, Chairman Managing Director; President, First Trust Advisors L.P. and
of the Board, Chief President First Trust Portfolios L.P.; Chairman of
Executive Officer the Board of Directors, BondWave LLC and
and Trustee Stonebridge Advisors LLC
Mark R. Bradley Treasurer, Chief Managing Director; Chief Financial Officer, First Trust
Financial Officer Chief Financial Advisors L.P. and First Trust Portfolios
and Chief Officer L.P.; Chief Financial Officer, BondWave LLC
Accounting Officer and Stonebridge Advisors LLC
- 17 -
POSITION WITH THE POSITION WITH THE
NAME TRUSTS ADVISOR PRINCIPAL OCCUPATION
Kathleen W. Brown None Chief Compliance Chief Compliance Officer, First Trust
Officer Advisors L.P. and First Trust Portfolios, L.P.
Robert F. Carey None Chief Investment Chief Investment Officer, First Trust
Officer Advisors L.P. and First Trust Portfolios L.P.
Erin E. Chapman Assistant Secretary Assistant General Assistant General Counsel, First Trust
Counsel Advisors L.P. and First Trust Portfolios L.P.
James M. Dykas Assistant Treasurer Senior Vice President Senior Vice President, First Trust
Advisors L.P. and First Trust Portfolios L.P.
R. Scott Hall None Managing Director Managing Director, First Trust Advisors
L.P. and First Trust Portfolios L.P.
W. Scott Jardine Secretary and Chief General Counsel General Counsel, First Trust Advisors
Compliance Officer L.P., First Trust Portfolios L.P. and BondWave
LLC; Secretary, Stonebridge Advisors LLC
Daniel J. Lindquist Vice President Senior Vice President Senior Vice President, First Trust
Advisors L.P. and First Trust Portfolios L.P.
Coleen D. Lynch Assistant Vice Assistant Vice Assistant Vice President, First Trust
President President Advisors L.P. and First Trust Portfolios L.P.
Kristi A. Maher Assistant Secretary Deputy General Deputy General Counsel, First Trust
and Deputy Chief Counsel Advisors L.P. and First Trust Portfolios L.P.
Compliance Officer
Ronald D. McAlister None Managing Director Managing Director, First Trust Advisors
L.P. and First Trust Portfolios L.P.
Andrew S. Roggensack None Managing Director Managing Director, First Trust Advisors
L.P. and First Trust Portfolios L.P.
Roger F. Testin Vice President Senior Vice President Senior Vice President, First Trust
Advisors L.P. and First Trust Portfolios L.P.
Stan Ueland Vice President Vice President Vice President, First Trust Advisors L.P.
and First Trust Portfolios L.P.
The business address of the Advisor and each officer and managing director
of the Advisor is 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187.
SHAREHOLDER APPROVAL AND REQUIRED VOTE
To become effective for a Fund, the applicable New Advisory Agreement must
be approved by a vote of a majority of the outstanding voting securities of such
Fund. The "vote of a majority of the outstanding voting securities" of a Fund
for this purpose, as defined in the 1940 Act, means the vote of the lesser of
- 18 -
(i) 67% or more of the Shares of such Fund present at the Meeting if the holders
of more than 50% of the outstanding Shares of such Fund are present in person or
represented by proxy; or (ii) more than 50% of the outstanding Shares of such
Fund. For purposes of determining the approval of the New Advisory Agreements,
abstentions and broker non-votes will have the effect of a vote against this
Proposal.
IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THIS PROPOSAL
OR HOW TO VOTE YOUR SHARES, CALL THE FUND'S PROXY SOLICITOR, THE ALTMAN GROUP,
INC., AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
THE BOARD OF TRUSTEES OF EACH TRUST RECOMMENDS THAT SHAREHOLDERS VOTE TO
APPROVE THE NEW ADVISORY AGREEMENTS.
- 19 -
ADDITIONAL INFORMATION
INFORMATION ABOUT THE ADMINISTRATOR AND DISTRIBUTOR
The Bank of New York Mellon Corporation, the Funds' administrator, is
located at 101 Barclay St., New York, New York 10286. In addition, BNY Mellon
Investment Servicing (US) Inc., located at 301 Bellevue Parkway, Wilmington,
Delaware 19809, provides certain board administrative services to each Trust in
connection with the Boards' meetings and other related matters. First Trust
Portfolios L.P., the distributor of each Fund's Shares, is located at 120 East
Liberty Drive, Suite 400, Wheaton, Illinois 60187.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the Record Date, no person is known by the Trusts to have
beneficially owned more than 5% of the Shares of any Fund, except as set forth
in Appendix E. A control person is one who owns, either directly or indirectly,
more than 25% of the voting securities of a Fund or acknowledges the existence
of control. A party that controls a Fund may be able to significantly influence
the outcome of any item presented to shareholders for approval. Information as
to beneficial ownership is based on securities position listing reports as of
the Record Date and reports filed with the SEC by shareholders. The Funds do not
have any knowledge of who the ultimate beneficiaries are of the Shares.
TRUSTEE AND OFFICER FUND OWNERSHIP
The number of Shares of the Funds beneficially owned as of July 31, 2010
by (a) the Trustees and (b) the Trustees and officers of each Trust as a group,
is set forth in Appendix F.
As of July 31, 2010, (a) the Trustees and (b) the Trustees and officers of
each Trust as a group, beneficially owned less than 1% of the total outstanding
Shares of each applicable Fund. The information as to beneficial ownership is
based on statements furnished by each Trustee and officer.
SUBMISSION OF SHAREHOLDER PROPOSALS
Each Trust is organized as a business trust under the laws of The
Commonwealth of Massachusetts. The Trusts are not required to, and do not, hold
annual meetings. However, special meetings of shareholders of the Funds may be
called as required by the 1940 Act, or as required or permitted by the Trust's
Declaration of Trust and By-Laws.
Because each Fund does not hold annual shareholders' meetings, the
anticipated date of the next shareholders' meeting (if any) cannot be provided.
Shareholders who wish to present a proposal for inclusion in a future proxy
statement for a subsequent shareholders' meeting should send written proposals
to the applicable Trust's Secretary at 120 East Liberty Drive, Suite 400,
Wheaton, Illinois 60187. Proposals must be received by a reasonable time before
a Fund begins to print and send its proxy materials for the meeting. The timely
submission of a proposal does not guarantee inclusion.
- 20 -
SHAREHOLDER COMMUNICATIONS
Shareholders of the Funds who want to communicate with the Board of
Trustees or any individual Trustee should write the applicable Trust to the
attention of the Trust Secretary, W. Scott Jardine. The letter should indicate
that you are a Fund shareholder. If the communication is intended for a specific
Trustee and so indicates, it will be sent only to that Trustee. If a
communication does not indicate a specific Trustee, it will be sent to the
chairman of the Nominating and Governance Committee of the Board and the
independent legal counsel to the Independent Trustees for further distribution
as deemed appropriate by such persons.
DELIVERY OF CERTAIN DOCUMENTS
Annual reports will be sent to shareholders of record of the Funds. Each
Trust will furnish, without charge, a copy of its annual report and/or
semi-annual report as available upon request. Such written or oral requests
should be directed to the applicable Trust at 120 East Liberty Drive, Suite 400,
Wheaton, Illinois 60187 or by calling (800) 621-1675.
Please note that only one annual or semi-annual report, proxy statement or
Notice of Availability of Proxy Materials, as applicable, may be delivered to
two or more shareholders of a Fund who share an address, unless the applicable
Trust has received instructions to the contrary. To request a separate copy of
an annual or semi-annual report, proxy statement or Notice of Availability of
Proxy Materials, as applicable, or for instructions as to how to request a
separate copy of such documents or as to how to request a single copy if
multiple copies of such documents are received, shareholders should contact the
applicable Trust at the address and phone number set forth above. Pursuant to a
request, a separate copy will be delivered promptly.
OTHER MATTERS TO COME BEFORE THE MEETING
No business other than the matter described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote thereon
according to their best judgment in the interests of the applicable Fund(s).
Dated: October 19, 2010
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS ARE THEREFORE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN
THE ENCLOSED POSTAGE-PAID ENVELOPE OR ALTERNATIVELY, TO VOTE BY TELEPHONE OR
INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD.
IF YOU NEED ANY ASSISTANCE, OR HAVE ANY QUESTIONS REGARDING THE PROPOSAL OR HOW
TO VOTE YOUR SHARES, CALL THE TRUSTS' PROXY SOLICITOR, THE ALTMAN GROUP, INC.,
AT (866) 530-8634 WEEKDAYS FROM 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
- --------------------------------------------------------------------------------
- 21 -
APPENDIX A
The number of Shares of beneficial interest of each Fund of the Trusts
outstanding and entitled to vote at the Meeting as of the close of business on
the Record Date is set forth in the chart below:
TICKER SHARES
FIRST TRUST EXCHANGE-TRADED FUND SYMBOL* OUTSTANDING
-------------------------------- ------- -----------
First Trust Strategic Value Index Fund FDV 1,650,002
First Trust Dow Jones Internet Index(SM) Fund FDN 11,000,002
First Trust Dow Jones Select MicroCap Index(SM) Fund FDM 2,955,000
First Trust ISE Chindia Index Fund FNI 5,950,002
First Trust ISE-Revere Natural Gas Index Fund FCG 21,000,002
First Trust ISE Water Index Fund FIW 2,200,002
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund FDL 5,200,002
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund QQEW** 2,550,002
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund QQXT** 900,002
First Trust NASDAQ-100-Technology Sector Index(SM) Fund QTEC** 12,050,002
First Trust NASDAQ(R) ABA Community Bank Index Fund QABA** 400,002
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund QCLN** 2,300,002
First Trust NYSE Arca Biotechnology Index Fund FBT 4,600,002
First Trust S&P REIT Index Fund FRI 4,450,002
First Trust US IPO Index Fund FPX 550,002
First Trust Value Line(R) 100 Exchange-Traded Fund FVL 5,139,982
First Trust Value Line(R) Dividend Index Fund FVD 12,487,986
First Trust Value Line(R) Equity Allocation Index Fund FVI 350,002
TICKER SHARES
FIRST TRUST EXCHANGE-TRADED FUND II SYMBOL* OUTSTANDING
----------------------------------- ------- -----------
First Trust BICK Index Fund BICK** 900,002
First Trust Dow Jones Global Select Dividend Index Fund FGD 1,650,002
First Trust STOXX(R) European Select Dividend Index Fund FDD 503,334
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund FFR 1,350,002
First Trust ISE Global Copper Index Fund CU** 650,002
First Trust ISE Global Engineering and Construction Index Fund FLM 800,002
First Trust ISE Global Platinum Index Fund PLTM** 250,002
First Trust ISE Global Wind Energy Index Fund FAN 5,400,002
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund GRID** 1,050,002
TICKER SHARES
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND SYMBOL* OUTSTANDING
-------------------------------------------- ------- -----------
First Trust Consumer Discretionary AlphaDEX(R) Fund FXD 12,550,002
First Trust Consumer Staples AlphaDEX(R) Fund FXG 1,500,002
First Trust Energy AlphaDEX(R) Fund FXN 2,700,002
First Trust Financials AlphaDEX(R) Fund FXO 14,550,002
First Trust Health Care AlphaDEX(R) Fund FXH 2,200,002
First Trust Industrials/Producer Durables AlphaDEX(R) Fund FXR 2,050,002
First Trust Materials AlphaDEX(R) Fund FXZ 11,550,002
First Trust Technology AlphaDEX(R) Fund FXL 3,605,000
First Trust Utilities AlphaDEX(R) Fund FXU 2,350,002
First Trust Large Cap Core AlphaDEX(R) Fund FEX 3,100,002
First Trust Mid Cap Core AlphaDEX(R) Fund FNX 2,550,002
First Trust Small Cap Core AlphaDEX(R) Fund FYX 1,550,002
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund FTA 2,500,002
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund FTC 1,900,002
First Trust Multi Cap Value AlphaDEX(R) Fund FAB 900,002
First Trust Multi Cap Growth AlphaDEX(R) Fund FAD 300,002
- ------------------------
* Except as noted, the Shares of each Fund are listed on NYSE Arca, Inc., an
affiliate of NYSE Euronext(SM).
** The Shares of this Fund are listed on The NASDAQ(R) Stock Market, Inc.
A-2
APPENDIX B
DATE INITIAL DATE(S) BOARD APPROVED,
SHAREHOLDER OR APPROVED
EFFECTIVE DATE APPROVED THE CONTINUATION OF, THE
OF ORIGINAL ORIGINAL ORIGINAL ADVISORY
ADVISORY ADVISORY AGREEMENT SINCE BEGINNING OF
FIRST TRUST EXCHANGE-TRADED FUND* AGREEMENT AGREEMENT LAST FISCAL YEAR
-------------------------------- --------- --------- ----------------
First Trust Strategic Value Index Fund 7/11/2006 3/13/2006 3/21-22/2010; 3/1-2/2009
First Trust Dow Jones Internet Index(SM) Fund 6/23/2006 3/13/2006 3/21-22/2010; 3/1-2/2009
First Trust Dow Jones Select MicroCap Index(SM) Fund 9/24/2005 6/13/2005 3/21-22/2010; 3/1-2/2009
First Trust ISE Chindia Index Fund 5/7/2007 1/17/2007 3/21-22/2010; 3/1-2/2009
First Trust ISE-Revere Natural Gas Index Fund 5/7/2007 1/17/2007 3/21-22/2010; 3/1-2/2009
First Trust ISE Water Index Fund 5/7/2007 1/17/2007 3/21-22/2010; 3/1-2/2009
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund 3/15/2006 12/12/2005 3/21-22/2010; 3/1-2/2009
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund 4/25/2006 1/23/2006 3/21-22/2010; 3/1-2/2009
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund 2/14/2007 6/12/2006 3/21-22/2010; 3/1-2/2009
First Trust NASDAQ-100-Technology Sector Index(SM) Fund 4/25/2006 1/23/2006 3/21-22/2010; 3/1-2/2009
First Trust NASDAQ(R) ABA Community Bank Index Fund 7/1/2009 5/11/2009 5/11/2009
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 2/14/2007 7/26/2006 3/21-22/2010; 3/1-2/2009
First Trust NYSE Arca Biotechnology Index Fund 6/23/2006 3/13/2006 3/21-22/2010; 3/1-2/2009
First Trust S&P REIT Index Fund 5/4/2007 12/11/2006 3/21-22/2010; 3/1-2/2009
First Trust US IPO Index Fund 4/13/2006 1/23/2006 3/21-22/2010; 3/1-2/2009
First Trust Value Line(R) 100 Exchange-Traded Fund 3/21/2007 1/17/2007 3/21-22/2010; 3/1-2/2009
First Trust Value Line(R) Dividend Index Fund 10/13/2006 7/26/2006 3/21-22/2010; 3/1-2/2009
First Trust Value Line(R) Equity Allocation Index Fund 10/13/2006 7/26/2006 3/21-22/2010; 3/1-2/2009
* The Original Advisory Agreement is dated September 24, 2005.
DATE INITIAL DATE(S) BOARD APPROVED,
SHAREHOLDER OR APPROVED
EFFECTIVE DATE APPROVED THE CONTINUATION OF, THE
OF ORIGINAL ORIGINAL ORIGINAL ADVISORY
ADVISORY ADVISORY AGREEMENT SINCE BEGINNING
FIRST TRUST EXCHANGE-TRADED FUND II* AGREEMENT AGREEMENT OF LAST FISCAL YEAR
----------------------------------- --------- --------- -------------------
First Trust BICK Index Fund 4/1/2010 1/21/2010 1/21/2010
First Trust Dow Jones Global Select Dividend Index Fund 11/20/2007 7/18/2007 3/21-22/2010
First Trust STOXX(R) European Select Dividend Index Fund 8/30/2007 4/16/2007 3/21-22/2010
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 8/30/2007 4/16/2007 3/21-22/2010
First Trust ISE Global Copper Index Fund 3/8/2010 1/21/2010 1/21/2010
First Trust ISE Global Engineering and Construction Index Fund 10/15/2008 9/15/2008 3/21-22/2010
First Trust ISE Global Platinum Index Fund 3/8/2010 1/21/2010 1/21/2010
First Trust ISE Global Wind Energy Index Fund 6/18/2008 5/22/2008 3/21-22/2010
First Trust NASDAQ(R) Clean Edge(R) Smart Grid 11/16/2009 8/24/2009 8/24/2009**
Infrastructure Index Fund
* The Original Advisory Agreement for the Unitary Fee Funds is dated March 8,
2010. The Original Advisory Agreement for the Funds other than the Unitary
Fee Funds is dated August 30, 2007.
** Date of initial approval (prior to beginning of last fiscal year).
DATE INITIAL DATE(S) BOARD APPROVED,
SHAREHOLDER OR APPROVED
EFFECTIVE DATE APPROVED THE CONTINUATION OF, THE
OF ORIGINAL ORIGINAL ORIGINAL ADVISORY
ADVISORY ADVISORY AGREEMENT SINCE BEGINNING
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND* AGREEMENT AGREEMENT OF LAST FISCAL YEAR
-------------------------------------------- --------- --------- -------------------
First Trust Consumer Discretionary AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Consumer Staples AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Energy AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Financials AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Health Care AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Industrials/Producer Durables AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Materials AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Technology AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Utilities AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Large Cap Core AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Mid Cap Core AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Small Cap Core AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Multi Cap Value AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
First Trust Multi Cap Growth AlphaDEX(R) Fund 5/10/2007 12/11/2006 3/21-22/2010
* The Original Advisory Agreement is dated April 26, 2007.
B-2
APPENDIX C
ANNUAL RATE OF ANNUAL
COMPENSATION OF EXPENSE CAP AS
ADVISOR AS A A PERCENTAGE APPROXIMATE
PERCENTAGE OF OF AVERAGE NET ASSETS
AVERAGE DAILY NET DAILY NET AS OF
FIRST TRUST EXCHANGE-TRADED FUND ASSETS ASSETS SEPTEMBER 10, 2010
-------------------------------- ------ ------ ------------------
First Trust Strategic Value Index Fund 0.50% 0.65% $ 34,407,411
First Trust Dow Jones Internet Index(SM) Fund 0.40% 0.60% $224,664,451
First Trust Dow Jones Select MicroCap Index(SM) Fund 0.50% 0.60% $ 50,151,811
First Trust ISE Chindia Index Fund 0.40% 0.60% $132,267,163
First Trust ISE-Revere Natural Gas Index Fund 0.40% 0.60% $344,975,923
First Trust ISE Water Index Fund 0.40% 0.60% $ 40,012,356
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund 0.30% 0.45% $ 67,059,251
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund 0.40% 0.60% $ 46,865,087
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund 0.40% 0.60% $ 16,800,373
First Trust NASDAQ-100-Technology Sector Index(SM) Fund 0.40% 0.60% $192,604,458
First Trust NASDAQ(R) ABA Community Bank Index Fund 0.40% 0.60% $ 8,607,912
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.40% 0.60% $ 32,373,629
First Trust NYSE Arca Biotechnology Index Fund 0.40% 0.60% $153,056,645
First Trust S&P REIT Index Fund 0.30% 0.50% $ 55,908,224
First Trust US IPO Index Fund 0.40% 0.60% $ 10,088,807
First Trust Value Line(R) 100 Exchange-Traded Fund 0.50% 0.70% $ 57,956,955
First Trust Value Line(R) Dividend Index Fund 0.50% 0.70% $170,923,532
First Trust Value Line(R) Equity Allocation Index Fund 0.50% 0.70% $ 6,271,307
ANNUAL RATE OF ANNUAL
COMPENSATION OF EXPENSE CAP AS
ADVISOR AS A A PERCENTAGE APPROXIMATE
PERCENTAGE OF OF AVERAGE NET ASSETS
AVERAGE DAILY NET DAILY NET AS OF
FIRST TRUST EXCHANGE-TRADED FUND II ASSETS ASSETS SEPTEMBER 10, 2010
----------------------------------- ------ ------ ------------------
First Trust BICK Index Fund 0.64%* N/A $20,561,601
First Trust Dow Jones Global Select Dividend Index Fund 0.40% 0.60% $33,624,956
First Trust STOXX(R) European Select Dividend Index Fund 0.40% 0.60% $ 6,518,548
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 0.40% 0.60% $43,969,356
First Trust ISE Global Copper Index Fund 0.70% N/A $ 5,902,437
First Trust ISE Global Engineering and Construction Index Fund 0.40% 0.70% $29,883,956
First Trust ISE Global Platinum Index Fund 0.70% N/A $ 6,767,889
First Trust ISE Global Wind Energy Index Fund 0.40% 0.60% $54,098,138
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 0.40% 0.70% $30,747,709
* On September 20, 2010, the Board approved a reduction in the fee rate
from 0.70% to 0.64%, effective October 1, 2010.
ANNUAL RATE OF ANNUAL
COMPENSATION OF EXPENSE CAP AS
ADVISOR AS A A PERCENTAGE APPROXIMATE
PERCENTAGE OF OF AVERAGE NET ASSETS
AVERAGE DAILY NET DAILY NET AS OF
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND ASSETS ASSETS SEPTEMBER 10, 2010
-------------------------------------------- ------ ------ ------------------
First Trust Consumer Discretionary AlphaDEX(R) Fund 0.50% 0.70% $146,776,963
First Trust Consumer Staples AlphaDEX(R) Fund 0.50% 0.70% $ 27,469,357
First Trust Energy AlphaDEX(R) Fund 0.50% 0.70% $ 44,000,661
First Trust Financials AlphaDEX(R) Fund 0.50% 0.70% $138,900,340
First Trust Health Care AlphaDEX(R) Fund 0.50% 0.70% $ 49,130,179
First Trust Industrials/Producer Durables AlphaDEX(R) Fund 0.50% 0.70% $ 30,774,476
First Trust Materials AlphaDEX(R) Fund 0.50% 0.70% $167,269,505
First Trust Technology AlphaDEX(R) Fund 0.50% 0.70% $ 63,593,227
First Trust Utilities AlphaDEX(R) Fund 0.50% 0.70% $ 33,245,052
First Trust Large Cap Core AlphaDEX(R) Fund 0.50% 0.70% $ 64,025,091
First Trust Mid Cap Core AlphaDEX(R) Fund 0.50% 0.70% $ 65,255,508
First Trust Small Cap Core AlphaDEX(R) Fund 0.50% 0.70% $ 37,617,036
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund 0.50% 0.70% $ 51,713,271
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund 0.50% 0.70% $ 42,897,776
First Trust Multi Cap Value AlphaDEX(R) Fund 0.50% 0.70% $ 20,884,529
First Trust Multi Cap Growth AlphaDEX(R) Fund 0.50% 0.70% $ 7,604,350
C-2
APPENDIX D
AMOUNT OF FEES
GROSS ADVISORY NET ADVISORY WAIVED/
FEES FOR YEAR FEES FOR YEAR REIMBURSEMENTS FOR
FIRST TRUST EXCHANGE-TRADED FUND ENDED 12/31/09 ENDED 12/31/09 YEAR ENDED 12/31/09
-------------------------------- -------------- -------------- -------------------
First Trust Strategic Value Index Fund $195,107 $108,371 $86,736/$0
First Trust Dow Jones Internet Index(SM) Fund $145,507 $99,247 $46,260/$0
First Trust Dow Jones Select MicroCap Index(SM) Fund $72,632 $23,715 $48,917/$0
First Trust ISE Chindia Index Fund $272,412 $181,998 $90,414/$0
First Trust ISE-Revere Natural Gas Index Fund $666,814 $471,415 $195,399/$0
First Trust ISE Water Index Fund $132,762 $92,448 $40,314/$0
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund $120,419 $0 $120,419/$16,647
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund $97,361 $81,097 $16,264/$0
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund $27,685 $0 $27,685/$19,062
First Trust NASDAQ-100-Technology Sector Index(SM) Fund $115,308 $94,621 $20,687/$0
First Trust NASDAQ(R) ABA Community Bank Index Fund $8,611 $0 $8,611/$35,683
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund $140,771 $66,344 $74,427/$0
First Trust NYSE Arca Biotechnology Index Fund $244,423 $173,457 $70,966/$0
First Trust S&P REIT Index Fund $22,199 $0 $22,199/$84,959
First Trust US IPO Index Fund $36,420 $0 $36,420/$30,870
First Trust Value Line(R) 100 Exchange-Traded Fund $327,894 $230,503 $97,391/$0
First Trust Value Line(R) Dividend Index Fund $631,411 $506,330 $125,081/$0
First Trust Value Line(R) Equity Allocation Index Fund $28,919 $0 $28,919/$2,357
AMOUNT OF FEES
GROSS ADVISORY NET ADVISORY WAIVED/
FEES FOR YEAR FEES FOR YEAR REIMBURSEMENTS FOR
FIRST TRUST EXCHANGE-TRADED FUND II ENDED 9/30/10 ENDED 9/30/10 YEAR ENDED 9/30/10
----------------------------------- ------------- ------------- ------------------
First Trust BICK Index Fund $39,419 $39,419 $0/$0
First Trust Dow Jones Global Select Dividend Index Fund $127,533 $9,266 $118,267/$0
First Trust Dow Jones STOXX(R) European Select Dividend Index Fund $30,256 $0 $30,256/$102,295
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund $121,434 $0 $121,434/$29,350
First Trust ISE Global Copper Index Fund $21,278 $21,278 $0/$0
First Trust ISE Global Engineering and Construction Index Fund $137,815 $61,090 $76,725/$0
First Trust ISE Global Platinum Index Fund $23,404 $23,404 $0/$0
First Trust ISE Global Wind Energy Index Fund $299,916 $144,337 $155,579/$0
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund $95,490 $27,441 $68,049/$0
AMOUNT OF FEES
GROSS ADVISORY NET ADVISORY WAIVED/
FEES FOR YEAR FEES FOR YEAR REIMBURSEMENTS FOR
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND ENDED 7/31/10 ENDED 7/31/10 YEAR ENDED 7/31/10
-------------------------------------------- ------------- ------------- ------------------
First Trust Consumer Discretionary AlphaDEX(R) Fund $344,484 $234,388 $110,096/$0
First Trust Consumer Staples AlphaDEX(R) Fund $92,850 $41,702 $51,148/$0
First Trust Energy AlphaDEX(R) Fund $177,308 $109,639 $67,669/$0
First Trust Financials AlphaDEX(R) Fund $313,206 $209,066 $104,140/$0
First Trust Health Care AlphaDEX(R) Fund $189,584 $123,532 $66,052/$0
First Trust Industrials/Producer Durables AlphaDEX(R) Fund $92,852 $39,872 $52,980/$0
First Trust Materials AlphaDEX(R) Fund $407,200 $292,521 $114,679/$0
First Trust Technology AlphaDEX(R) Fund $167,063 $99,924 $67,139/$0
First Trust Utilities AlphaDEX(R) Fund $122,466 $69,046 $53,420/$0
First Trust Large Cap Core AlphaDEX(R) Fund $188,123 $114,690 $73,433/$0
First Trust Mid Cap Core AlphaDEX(R) Fund $180,587 $106,983 $73,604/$0
First Trust Small Cap Core AlphaDEX(R) Fund $123,240 $57,239 $66,001/$0
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund $176,002 $111,600 $64,402/$0
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund $124,609 $71,799 $52,810/$0
First Trust Multi Cap Value AlphaDEX(R) Fund $85,157 $44,076 $41,081/$0
First Trust Multi Cap Growth AlphaDEX(R) Fund $35,406 $0 $35,406/$14,021
D-2
APPENDIX E
- -------------------------------------------------------------- ------------------------ ------------------------
% OUTSTANDING
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED
- -------------------------------------------------------------- ------------------------ ------------------------
FIRST TRUST EXCHANGE-TRADED FUND
- ----------------------------------------------------------------------------------------------------------------
First Trust Dow Jones Select MicroCap Index(SM) Fund
- ----------------------------------------------------------------------------------------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway 489,039 16.55%
P.O. Box 12749
St. Petersburg, Florida 33716
- -------------------------------------------------------------- ------------------------ ------------------------
Robert W. Baird & Co. Incorporated
777 East Wisconsin Avenue 402,207 13.61%
Milwaukee, Wisconsin 53202
- -------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 282,575 9.56%
St. Louis, Missouri 63103
- -------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 233,140 7.89%
Phoenix, Arizona 85016
- -------------------------------------------------------------- ------------------------ ------------------------
U.S. Bank N.A.
1555 N. Rivercenter Drive, Suite 302 215,000 7.28%
Milwaukee, Wisconsin 53212
- -------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 175,893 5.95%
New York, New York 10281
- -------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 171,552 5.81%
Purchase, New York 10577
- -------------------------------------------------------------- ------------------------ ------------------------
TD Ameritrade Clearing, Inc.
1005 Ameritrade Place 167,484 5.67%
Bellevue, Nebraska 68005
- ----------------------------------------------------------------------------------------------------------------
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund
- ----------------------------------------------------------------------------------------------------------------
National Financial Services Corporation
200 Liberty Street 860,950 16.56%
New York, New York 10281
- -------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 656,283 12.62%
Phoenix, Arizona 85016
- -------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 600,734 11.55%
St. Louis, Missouri 63103
- -------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 395,597 7.61%
Jersey City, New Jersey 07302
- -------------------------------------------------------------- ------------------------ ------------------------
- ----------------------------------------------------------------------------------------------------------------
Pershing, L.L.C.
1 Pershing Plaza 349,870 6.73%
Jersey City, New Jersey 07399
- -------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 265,580 5.11%
Owings Mills, Maryland 2117
- ----------------------------------------------------------------------------------------------------------------
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund*
- ----------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 313,542 12.30%
St. Louis, Missouri 63103
- -------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 310,962 12.19%
Purchase, New York 10577
- -------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 270,943 10.63%
Phoenix, Arizona 85016
- -------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 249,120 9.77%
St. Petersburg, Florida 33716
- -------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 238,761 9.36%
Owings Mills, Maryland 2117
- -------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 195,896 7.68%
Jersey City, New Jersey 07310
- -------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 148,985 5.84%
New York, New York 10281
- ----------------------------------------------------------------------------------------------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 154,021 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 153,821 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ----------------------------------------------------------------------------------------------------------------
First Trust NASDAQ-100-Technology Sector Index(SM) Fund*
- ----------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 2,354,978 19.54%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 1,929,496 16.01%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ---------------------- ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,315,284 10.92%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 960,999 7.98%
New York, New York 10281
- --------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 765,324 6.35%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
E-2
- ------------------------------------------------------------------------------------------------------------------
UBS Financial Services Inc.
480 Washington Boulevard 760,982 6.32%
Jersey City, New Jersey 07310
- ------------------------------------------------------------------------------------------------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 502,219 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 489,661 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust US IPO Index Fund
- ------------------------------------------------------------------------------------------------------------------
National Financial Services Corporation
200 Liberty Street 76,404 13.89%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 58,469 10.63%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 40,845 7.43%
St. Louis, MO 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 34,328 6.24%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Goldman, Sachs & Co.
30 Hudson Street 32,278 5.87%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 30,984 5.63%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
TD Ameritrade Clearing, Inc.
1005 Ameritrade Place 27,636 5.02%
Bellevue, Nebraska 68005
- ------------------------------------------------------------------------------------------------------------------
First Trust NYSE Arca Biotechnology Index Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 574,326 12.49%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 499,928 10.87%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
Brown Brothers Harriman & Co.
525 Washington Tower
Newport Tower 485,004 10.54%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 405,306 8.81%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 397,455 8.64%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 309,578 6.73%
Jersey City, New Jersey 07399
- ------------------------------------------------------------------------------------------------------------------
E-3
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 260,509 5.66%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
First Trust Strategic Value Index Fund
- ------------------------------------------------------------------------------------------------------------------
Pershing, L.L.C.
1 Pershing Plaza 344,980 20.91%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 177,953 10.79%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 117,750 7.14%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 111,815 6.78%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 111,656 6.77%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 106,075 6.43%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 105,100 6.37%
Phoenix, Arizona 85016
- ------------------------------------------------------------------------------------------------------------------
First Trust Dow Jones Internet Index(SM) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 2,310,669 21.01%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 1,826,649 16.61%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,106,690 10.06%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 891,615 8.11%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 620,537 5.64%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 620,220 5.64%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 556,009 5.05%
Phoenix, Arizona 85016
- ------------------------------------------------------------------------------------------------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 510,886 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 500,626 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
E-4
- ------------------------------------------------------------------------------------------------------------------
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 290,035 32.23%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 227,372 25.26%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Inc.
101 Hudson Street, 9th Floor 77,401 8.60%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 73,434 8.16%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 46,729 5.19%
Purchase, New York 10577
- ------------------------------------------------------------------------------------------------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco,
California 94104, beneficially owned 102,963 Shares of the Fund as of
December 31, 2009 according to Schedule 13G filed with the SEC; Wells
Fargo Advisors, LLC, One North Jefferson Avenue, St. Louis, Missouri
63103, beneficially owned 90,579 Shares of the Fund as of December
31, 2009 according to Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund
- ------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 352,902 15.34%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 255,072 11.09%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 115,208 5.01%
St. Louis, Missouri 63103
- ------------------------------------------------------------------------------------------------------------------
First Trust Value Line(R) Equity Allocation Index Fund
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 101,011 28.86%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Goldman, Sachs & Co.
30 Hudson Street 46,996 13.43%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 37,398 10.69%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 25,726 7.35%
Jersey City, New Jersey 07399
- ------------------------------------------------------------------------------------------------------------------
E-5
- ------------------------------------------------------------------------------------------------------------------
First Trust Value Line(R) Dividend Index Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 1,629,172 13.05%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 1,422,747 11.40%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 1,229,612 9.85%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 1,028,611 8.24%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 925,697 7.41%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 749,217 6.00%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 650,890 5.21%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 628,498 5.03%
Minneapolis, Minnesota 55474
- ------------------------------------------------------------------------------------------------------------------
First Trust S&P REIT Index Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 1,214,337 27.29%
St. Louis, Missouri 63103
- ----------------------------------------------------------------------------------------- ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 980,911 22.04%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 428,378 9.63%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 295,668 6.64%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 266,328 5.98%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 225,589 5.07%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 230,897 Shares of the Fund as of December 31, 2009
according to Schedule 13G filed with the SEC; Wells Fargo Advisors, LLC,
One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially owned
210,299 Shares of the Fund as of December 31, 2009 according to Schedule 13G
filed with the SEC.
E-6
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE-Revere Natural Gas Index Fund
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 2,086,634 9.94%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 1,962,210 9.34%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 1,944,396 9.26%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 1,749,645 8.33%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 1,472,222 7.01%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,286,934 6.13%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 1,083,314 5.16%
Jersey City, New Jersey 07399
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Water Index Fund
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 328,628 14.94%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 301,995 13.73%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 199,699 9.08%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 166,908 7.59%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Goldman, Sachs & Co.
30 Hudson Street 114,682 5.21%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Chindia Index Fund
- ------------------------------------------------------------------------------------------------------------------
TD Ameritrade Clearing, Inc.
1005 Ameritrade Place 699,868 11.76%
Bellevue, Nebraska 68005
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 640,139 10.76%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 627,046 10.54%
New York, New York 10281
- ------------------------------------------------------------------------------------------------------------------
E-7
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 510,078 8.57%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 443,629 7.46%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
RBC Capital Markets Corporation
510 Marquette Avenue South 342,135 5.75%
Minneapolis, Minnesota 55402
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 318,926 5.36%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
First Trust Value Line(R) 100 Exchange-Traded Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 671,978 13.08%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 458,798 8.93%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
TD Ameritrade Clearing, Inc.
1005 Ameritrade Place 437,311 8.51%
Bellevue, Nebraska 68005
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 413,700 8.05%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 383,803 7.47%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 325,230 6.33%
Jersey City, New Jersey 07399
- ------------------------------------------------------------------------------------------------------------------
First Trust NASDAQ(R) ABA Community Bank Index Fund
- ------------------------------------------------------------------------------------------------------------------
Morgan Keegan & Company, Inc.
50 North Front Street 185,413 46.35%
Memphis, Tennessee 38103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 47,031 11.76%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 37,194 9.30%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Inc.
101 Hudson Street, 9th Floor 20,177 5.04%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
E-8
- ------------------------------------------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED FUND II
- ------------------------------------------------------------------------------------------------------------------
First Trust STOXX(R) European Select Dividend Index Fund
- ------------------------------------------------------------------------------------------------------------------
Scotia Capital Inc.
P.O. Box 4085 234,808 46.65%
Station "A"
Toronto, Ontario Canada M5W 2X6
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 34,651 6.88%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 26,984 5.36%
New York, New York 10281
- ------------------------------------------------------------------------------------------------------------------
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 205,459 15.22%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 172,797 12.80%
St. Louis, 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Janney Montgomery Scott L.L.C.
1801 Market Street, 9th Floor 150,278 11.13%
Philadelphia, Pennsylvania 19103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 132,078 9.78%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 124,838 9.25%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 100,715 7.46%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 96,706 7.16%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
First Trust Dow Jones Global Select Dividend Index Fund
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 268,887 16.30%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 179,683 10.89%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 147,661 8.95%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 123,198 7.47%
New York, New York 10281
- ------------------------------------------------------------------------------------------------------------------
E-9
- ------------------------------------------------------------------------------------------------------------------
Pershing, L.L.C.
1 Pershing Plaza 122,618 7.43%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 105,978 6.42%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
Linsco/Private Ledger Corp.
9785 Towne Center Drive 94,360 5.72%
San Diego, California 92121
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 92,383 5.60%
St. Louis, Missouri 63103
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Global Wind Energy Index Fund
- ------------------------------------------------------------------------------------------------------------------
National Financial Services Corporation
200 Liberty Street 512,508 9.49%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 467,894 8.66%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 456,133 8.45%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 443,899 8.22%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Brown Brothers Harriman & Co.
525 Washington Tower
Newport Tower 354,864 6.57%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 280,932 5.20%
Owings Mills, Maryland 2117
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Global Engineering and Construction Index Fund
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 140,401 17.55%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 131,652 16.46%
St. Louis, 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 58,143 7.27%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 51,800 6.48%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Goldman, Sachs & Co.
30 Hudson Street 48,428 6.05%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
The Bank of New York Mellon
525 William Penn Place 47,549 5.94%
Pittsburgh, Pennsylvania 15259
- ------------------------------------------------------------------------------------------------------------------
E-10
- ------------------------------------------------------------------------------------------------------------------
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund
- ------------------------------------------------------------------------------------------------------------------
Brown Brothers Harriman & Co.
525 Washington Tower 147,984 14.09%
Newport Tower
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 137,471 13.09%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 95,195 9.07%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 60,645 5.78%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 57,052 5.43%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
J.P. Morgan Clearing Corp.
3 Chase Metrotech Center 54,240 5.17%
Brooklyn, New York 11245
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Global Copper Index Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 208,973 32.15%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 143,938 22.14%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 44,370 6.83%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 37,241 5.73%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 36,578 5.63%
Phoenix, Arizona 85016
- ------------------------------------------------------------------------------------------------------------------
First Trust ISE Global Platinum Index Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 35,742 14.30%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Goldman, Sachs & Co.
30 Hudson Street 29,216 11.69%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 25,756 10.30%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 19,787 7.91%
New York, New York 10281
- ------------------------------------------------------------------------------------------------------------------
E-11
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 18,698 7.48%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Charles Schwab & Co., Inc.
2423 East Lincoln Drive 17,985 7.19%
Phoenix, Arizona 85016
- ---------------------------------------------------------------- ------------------------ ------------------------
The Bank of New York Mellon
525 William Penn Place 12,500 5.00%
Pittsburgh, Pennsylvania 15259
- ------------------------------------------------------------------------------------------------------------------
First Trust BICK Index Fund
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 128,103 14.23%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 122,422 13.60%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 106,692 11.85%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 105,575 11.73%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 82,171 9.13%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 74,191 8.24%
Jersey City, New Jersey 07399
- ------------------------------------------------------------------------------------------------------------------
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
- ------------------------------------------------------------------------------------------------------------------
First Trust Consumer Discretionary AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 2,784,929 22.19%
St. Louis, 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 2,513,784 20.03%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,555,427 12.39%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 1,069,673 8.52%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 794,271 6.33%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 743,366 5.92%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
E-12
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 604,693 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 585,736 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Consumer Staples AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 272,785 22.19%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 261,083 20.03%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 215,159 12.39%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 171,855 8.52%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 93,219 6.33%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 129,820 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 83,708 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC; Wells Fargo Advisors Financial Network,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 46,112 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Energy AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc. 484,599 17.95%
700 Red Brook Boulevard, Suite 300
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 428,683 15.88%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 369,777 13.70%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
RBC Capital Markets Corporation
510 Marquette Avenue South 210,024 7.78%
Minneapolis, Minnesota 55402
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 208,401 7.72%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 155,164 5.75%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 213,505 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 200,724 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
E-13
- ------------------------------------------------------------------------------------------------------------------
First Trust Financials AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 3,336,550 22.93%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 2,975,626 20.45%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,815,143 12.48%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 1,118,428 7.69%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 1,014,726 6.97%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 781,454 5.37%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 714,165 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 691,256 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Health Care AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 373,297 16.97%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 276,941 12.59%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 246,569 11.21%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 244,409 11.11%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 162,332 7.38%
Jersey City, New Jersey 07310
- ------------------------------------------------------------------------------------------------------------------
First Trust Industrials/Producer Durables AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C. 621,566 30.32%
One North Jefferson Street
St. Louis, Missouri 63103
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 351,166 17.13%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
E-14
- ------------------------------------------------------------------------------------------------------------------
Morgan Keegan & Company, Inc.
50 North Front Street 193,310 9.43%
Memphis, Tennessee 38103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 185,679 9.06%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 169,255 8.26%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 291,411 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 276,392 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Materials AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 2,744,127 23.76%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 2,335,972 20.22%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,404,788 12.16%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 888,893 7.70%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 739,470 6.40%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 647,016 5.60%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 449,404 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 433,882 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Technology AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 640,636 17.77%
St. Louis, Missouri 63103
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 563,972 15.64%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
E-15
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 418,083 11.60%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 309,337 8.58%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 301,438 8.36%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
RBC Capital Markets Corporation
510 Marquette Avenue South 290,204 8.05%
Minneapolis, Minnesota 55402
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 207,825 5.76%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 195,921 5.43%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 138,161 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 123,414 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Utilities AlphaDEX(R) Fund*
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 866,814 36.89%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 383,645 16.33%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 243,900 10.38%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 155,816 6.63%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
* Wells Fargo and Company, 420 Montgomery Street, San Francisco, California
94104, beneficially owned 217,059 Shares of the Fund as of December 31,
2009 according to Schedule 13G filed with the SEC; Wells Fargo Advisors,
LLC, One North Jefferson Avenue, St. Louis, Missouri 63103, beneficially
owned 202,624 Shares of the Fund as of December 31, 2009 according to
Schedule 13G filed with the SEC.
- ------------------------------------------------------------------------------------------------------------------
First Trust Large Cap Core AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 695,237 22.43%
Minneapolis, Minnesota 55474
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 389,150 12.55%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
E-16
- ------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 364,876 11.77%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 276,759 8.93%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 235,637 7.60%
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
Linsco/Private Ledger Corp.
9785 Towne Center Drive 191,359 6.17%
San Diego, California 92121
- ------------------------------------------------------------------------------------------------------------------
First Trust Mid Cap Core AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 478,141 18.75%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 403,425 15.82%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 308,936 12.12%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 257,688 10.11%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 168,800 6.62%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 153,969 6.04%
Jersey City, New Jersey 07310
- ---------------------------------------------------------------- ------------------------ ------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 147,424 5.78%
Jersey City, New Jersey 07302
- ------------------------------------------------------------------------------------------------------------------
First Trust Small Cap Core AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 334,000 21.55%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 183,595 11.84%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 166,322 10.73%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 164,714 10.63%
Owings Mills, Maryland 2117
- ------------------------------------------------------------------------------------------------------------------
Linsco/Private Ledger Corp.
9785 Towne Center Drive 102,205 6.59%
San Diego, California 92121
- ---------------------------------------------------------------- ------------------------ ------------------------
E-17
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Safekeeping
101 Hudson Street, 8th Floor 90,614 5.85%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 79,422 5.12%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 78,921 5.09%
New York, New York 10281
- ------------------------------------------------------------------------------------------------------------------
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 1,043,011 41.72%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 314,069 12.56%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 227,029 9.08%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 155,733 6.23%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
Linsco/Private Ledger Corp.
9785 Towne Center Drive 135,563 5.42%
San Diego, California 92121
- ------------------------------------------------------------------------------------------------------------------
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 677,815 35.67%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 347,843 18.31%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 169,566 8.92%
Minneapolis, Minnesota 55474
-------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 115,297 6.07%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
UBS Financial Services Inc.
480 Washington Boulevard 97,241 5.12%
Jersey City, New Jersey 07310
- ------------------------------------------------------------------------------------------------------------------
First Trust Multi Cap Value AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
First Clearing L.L.C.
One North Jefferson Street 170,640 18.96%
St. Louis, Missouri 63103
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch, Pierce Fenner & Smith Inc.
101 Hudson Street, 9th Floor 158,246 17.58%
Jersey City, New Jersey 07302
- ---------------------------------------------------------------- ------------------------ ------------------------
E-18
- ------------------------------------------------------------------------------------------------------------------
Pershing, L.L.C.
1 Pershing Plaza 142,864 15.87%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Citigroup Global Markets, Inc.
700 Red Brook Boulevard, Suite 300 94,816 10.54%
Owings Mills, Maryland 2117
- ---------------------------------------------------------------- ------------------------ ------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway
P.O. Box 12749 81,722 9.08%
St. Petersburg, Florida 33716
- ------------------------------------------------------------------------------------------------------------------
First Trust Multi Cap Growth AlphaDEX(R) Fund
- ------------------------------------------------------------------------------------------------------------------
Raymond James & Associates, Inc.
880 Carilion Parkway 71,075 23.69%
P.O. Box 12749
St. Petersburg, Florida 33716
- ---------------------------------------------------------------- ------------------------ ------------------------
American Enterprise Investment Services Inc.
2178 AXP Financial Center 33,095 11.03%
Minneapolis, Minnesota 55474
- ---------------------------------------------------------------- ------------------------ ------------------------
Pershing, L.L.C.
1 Pershing Plaza 27,051 9.02%
Jersey City, New Jersey 07399
- ---------------------------------------------------------------- ------------------------ ------------------------
Morgan Stanley Smith Barney LLC
200 Westchester Avenue 21,792 7.26%
Purchase, New York 10577
- ---------------------------------------------------------------- ------------------------ ------------------------
National Financial Services Corporation
200 Liberty Street 20,892 6.96%
New York, New York 10281
- ---------------------------------------------------------------- ------------------------ ------------------------
First Clearing L.L.C.
One North Jefferson Street 19,519 6.51%
St. Louis, Missouri 63103
- ---------------------------------------------------------------- ------------------------ ------------------------
TD Ameritrade Clearing, Inc.
1005 Ameritrade Place 17,095 5.70%
Bellevue, Nebraska 68005
- ---------------------------------------------------------------- ------------------------ ------------------------
E-19
APPENDIX F
FIRST TRUST EXCHANGE-TRADED FUND
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
--------------------------------------------------------------------------------------------
First Trust First Trust Dow First Trust
First Trust Dow Jones Jones Select First Trust ISE ISE-Revere
Strategic Value Internet MicroCap Index(SM) Chindia Index Natural Gas Index
TRUSTEES/OFFICERS Index Fund Index(SM) Fund Fund Fund Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 1,130 0 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 750 431 0
Niel B. Nielson 200 0 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 1,330 300 750 431 0
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
--------------------------------------------------------------------------------------------
First Trust First Trust
Morningstar(R) First Trust NASDAQ-100 First Trust
Dividend NASDAQ-100 Equal Ex-Technology NASDAQ-100-Technology
First Trust ISE Leaders(SM) Index Weighted Index(SM) Sector Index(SM) Sector Index(SM)
TRUSTEES/OFFICERS Water Index Fund Fund Fund Fund Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 580 302 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 200 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 580 502 0 0 0
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
---------------------------------------------------------------------------------------------
First Trust First Trust
NASDAQ(R) ABA NASDAQ(R) Clean First Trust NYSE First Trust
Community Bank Edge(R) Green Arca Biotechnology S&P REIT Index First Trust US IPO
TRUSTEES/OFFICERS Index Fund Energy Index Fund Index Fund Fund Index Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 600 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 0 0 0 200
ALL TRUSTEES AND
OFFICERS AS A
GROUP 0 600 250 0 200
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
-----------------------------------------------------------------
First Trust Value First Trust First Trust Value
Line(R) 100 Value Line(R) Line(R) Equity
Exchange-Traded Dividend Index Allocation Index
TRUSTEES/OFFICERS Fund Fund Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 1,250
INDEPENDENT TRUSTEES
Richard E. Erickson 2,236 1,019 0
Thomas R. Kadlec 1,971 2,256 0
Robert F. Keith 1,425 0 0
Niel B. Nielson 273 252 200
ALL TRUSTEES AND
OFFICERS AS A
GROUP 6,055 3,677 1,450
F-2
FIRST TRUST EXCHANGE-TRADED FUND II
- -----------------------------------
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
-------------------------------------------------------------------------------------------
First Trust FTSE
First Trust Dow First Trust EPRA/NAREIT
Jones Global STOXX(R) European Developed Markets First Trust ISE
First Trust BICK Select Dividend Select Dividend Real Estate Index Global Copper
TRUSTEES/OFFICERS Index Fund Index Fund Index Fund Fund Index Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 175 175 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 219 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 0 394 175 0 0
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
------------------------------------------------------------------------------------------
First Trust First Trust
ISE Global NASDAQ(R) Clean
Engineering Edge(R) Smart
and First Trust ISE First Trust ISE Grid
Construction Global Platinum Global Wind Energy Infrastructure
TRUSTEES/OFFICERS Index Fund Index Fund Index Fund Index Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 0 700 250
Thomas R. Kadlec 0 0 0 0
Robert F. Keith 0 0 0 0
Niel B. Nielson 119 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 119 0 700 250
F-3
FIRST TRUST EXCHANGE-TRADED AlphaDEX(R) FUND
- ------------------------------------------
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
----------------------------------------------------------------------------------------------
First Trust First Trust
Consumer Consumer First Trust First Trust
Discretionary Staples First Trust Energy Financials Health Care
TRUSTEES/OFFICERS AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 0 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 0 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 0 0 0 200 425
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
----------------------------------------------------------------------------------------------
First Trust
Industrials/Producer First Trust First Trust First Trust First Trust
Durables AlphaDEX(R) Materials Technology Utilities Large Cap Core
TRUSTEES/OFFICERS Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 0 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 230 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 0 230 500 0 0
F-4
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
---------------------------------------------------------------------------------------------
First Trust
First Trust Large Large Cap
First Trust First Trust Small Cap Value Growth First Trust Multi
Mid Cap Core Cap Core Opportunities Opportunities Cap Value
TRUSTEES/OFFICERS AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund AlphaDEX(R) Fund
INTERESTED TRUSTEE
James A. Bowen 0 0 0 0 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0 0 0 0 0
Thomas R. Kadlec 0 0 0 0 0
Robert F. Keith 0 0 0 0 0
Niel B. Nielson 0 0 0 0 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 100 300 0 0 0
FUND SHARES OWNED BY TRUSTEES AND OFFICERS AS OF JULY 31, 2010
---------------------------------------------------------------------------------------------
First Trust
Multi Cap
Growth
TRUSTEES/OFFICERS AlphaDEX(R)
- -------------- Fund
INTERESTED TRUSTEE
James A. Bowen 0
INDEPENDENT TRUSTEES
Richard E. Erickson 0
Thomas R. Kadlec 0
Robert F. Keith 0
Niel B. Nielson 0
ALL TRUSTEES AND
OFFICERS AS A
GROUP 0
F-5
EXHIBIT A-1
FORM OF
NEW ADVISORY AGREEMENT
FOR
FIRST TRUST EXCHANGE-TRADED FUND
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this ___ day of _______, ______, by
and between FIRST TRUST EXCHANGE-TRADED FUND, a Massachusetts business trust
(the "Trust"), and FIRST TRUST ADVISORS L.P., an Illinois limited partnership
(the "Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust offers shares in the series set forth on Schedule A
attached hereto, and any other series as to which this Agreement may hereafter
be made applicable and set forth on Schedule A hereto which may be amended from
time to time (each such series being herein referred to as a "Fund," and
collectively as the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser as investment adviser, to
furnish certain investment advisory and portfolio management services to the
Trust with respect to the Funds, and the Adviser is willing to furnish such
services.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Trust hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of, each Fund
in accordance with each Fund's investment objective and policies and
limitations, and to administer each Fund's affairs to the extent requested by
and subject to the supervision of the Board of Trustees of the Trust for the
period and upon the terms herein set forth. The investment of each Fund's assets
shall be subject to the Fund's policies, restrictions and limitations with
respect to securities investments as set forth in the Fund's then current
registration statement under the l940 Act, and all applicable laws and the
regulations of the Securities and Exchange Commission relating to the management
of registered open-end management investment companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Funds' transfer agent, administrator or other service providers)
for the Funds, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to render the investment
management and administrative services set forth in this Agreement. In the event
that the Adviser pays or assumes any expenses of a Fund not required to be paid
or assumed by the Adviser under this Agreement, the Adviser shall not be
obligated hereby to pay or assume the same or similar expense in the future;
provided, that nothing contained herein shall be deemed to relieve the Adviser
of any obligation to a Fund under any separate agreement or arrangement between
the parties.
2. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall neither have the authority to act for nor represent the Trust
in any way, nor otherwise be deemed an agent of the Trust.
3. For the services and facilities described in Section 1, each Fund will
pay to the Adviser, at the end of each calendar month, and the Adviser agrees to
accept as full compensation therefor, an investment management fee equal to the
annual rate of each Fund's average daily net assets as set forth on Schedule A.
For the month and year in which this Agreement becomes effective, or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement shall have been in effect during the month and year,
respectively. The services of the Adviser to the Trust under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
4. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Trust, as trustees,
officers or agents of the Trust, if duly elected or appointed to such positions,
and subject to their individual consent and to any limitations imposed by law.
5. For purposes of this Agreement, brokerage commissions paid by a Fund
upon the purchase or sale of a Fund's portfolio securities shall be considered a
cost of securities of the Fund and shall be paid by the Fund.
6. The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of a Fund's securities on behalf of the Fund,
and is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the Fund's
orders, taking into account all appropriate factors, including price, dealer
spread or commission, size and difficulty of the transaction and research or
other services provided. Subject to approval by the Trust's Board of Trustees
and to the extent permitted by and in conformance with applicable law (including
Rule 17e-1 of the 1940 Act), the Adviser may select brokers or dealers
affiliated with the Adviser. It is understood that the Adviser will not be
- 2 -
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust, or be in breach of any obligation owing to the Trust under this
Agreement, or otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Adviser's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, the Adviser may, to the extent permitted by applicable law,
aggregate purchase and sale orders of securities with similar orders being made
simultaneously for other accounts managed by the Adviser or its affiliates, if
in the Adviser's reasonable judgment such aggregation shall result in an overall
economic benefit to a Fund, taking into consideration the selling or purchase
price, brokerage commissions and other expenses. In the event that a purchase or
sale of an asset of a Fund occurs as part of any aggregate sale or purchase
orders, the objective of the Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in an
equitable manner. Nevertheless, each Fund acknowledges that under some
circumstances, such allocation may adversely affect the Fund with respect to the
price or size of the securities positions obtainable or salable. Whenever a Fund
and one or more other investment advisory clients of the Adviser have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed by the Adviser to be equitable to each, although
such allocation may result in a delay in one or more client accounts being fully
invested that would not occur if such an allocation were not made. Moreover, it
is possible that due to differing investment objectives or for other reasons,
the Adviser and its affiliates may purchase securities of an issuer for one
client and at approximately the same time recommend selling or sell the same or
similar types of securities for another client.
The Adviser will not arrange purchases or sales of securities between a
Fund and other accounts advised by the Adviser or its affiliates unless (a) such
purchases or sales are in accordance with applicable law (including Rule 17a-7
of the 1940 Act) and the Trust's policies and procedures, (b) the Adviser
determines the purchase or sale is in the best interests of each Fund, and (c)
the Trust's Board of Trustees have approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use reasonable commercial efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees of the Trust
such information relating to transactions for the Funds as they may reasonably
request. In no instance will portfolio securities be purchased by or sold to the
Adviser or any affiliated person of either the Trust or the Adviser, except as
may be permitted under the 1940 Act.
- 3 -
The Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform in all material respects to all applicable rules
and regulations of the Securities and Exchange Commission and comply in
all material respects with all policies and procedures adopted by the
Board of Trustees for the Trust and communicated to the Adviser and, in
addition, will conduct its activities under this Agreement in all material
respects in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees of the Trust
(generally on a quarterly basis) and will make appropriate persons
available for the purpose of reviewing with representatives of the Board
of Trustees on a regular basis at reasonable times the management of each
Fund, including, without limitation, review of the general investment
strategies of each Fund, the performance of each Fund's investment
portfolio in relation to relevant standard industry indices and general
conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Board of Trustees
of the Trust; and
(d) will prepare and maintain such books and records with respect
to each Fund's securities and other transactions as required under
applicable law and will prepare and furnish the Trust's Board of Trustees
such periodic and special reports as the Board of Trustees may reasonably
request. The Adviser further agrees that all records which it maintains
for each Fund are the property of the Fund and the Adviser will surrender
promptly to the Fund any such records upon the request of the Fund
(provided, however, that Adviser shall be permitted to retain copies
thereof); and shall be permitted to retain originals (with copies to the
Fund) to the extent required under Rule 204-2 of the Investment Advisers
Act of 1940 or other applicable law.
7. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Trust are, or may be, interested persons
(as such term is defined in the 1940 Act and rules and regulations thereunder)
of the Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Trust otherwise than as trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained by reason of
the purchase, sale or retention of any security, whether or not such purchase,
sale or retention shall have been based upon the investigation and research made
by any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
- 4 -
9. Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, the Adviser may retain one or more sub-advisers at
the Adviser's own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to a Fund. Retention of
a sub-adviser shall in no way reduce the responsibilities or obligations of the
Adviser under this Agreement and the Adviser shall be responsible to a Fund for
all acts or omissions of any sub-adviser in connection with the performance of
the Adviser's duties hereunder.
10. The Trust acknowledges that the Adviser now acts, and intends in the
future to act, as an investment adviser to other managed accounts and as
investment adviser or investment sub-adviser to one or more other investment
companies that are not a series of the Trust. In addition, the Trust
acknowledges that the persons employed by the Adviser to assist in the Adviser's
duties under this Agreement will not devote their full time to such efforts. It
is also agreed that the Adviser may use any supplemental research obtained for
the benefit of the Trust in providing investment advice to its other investment
advisory accounts and for managing its own accounts.
11. This Agreement shall be effective on the date provided on Schedule A
for each respective Fund, provided it has been approved by a vote of a majority
of the outstanding voting securities held by shareholders of the respective Fund
in accordance with the requirements of the 1940 Act. This Agreement shall
continue in effect as to a Fund until the two-year anniversary of the date of
its effectiveness, unless and until terminated by either party as hereinafter
provided, and shall continue in force from year to year thereafter, but only as
long as such continuance is specifically approved, at least annually, in the
manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any penalty
by a Fund or by the Adviser upon sixty (60) days' written notice to the other
party. Each Fund may effect termination by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, accompanied
by appropriate notice. This Agreement may be terminated, at any time, without
the payment of any penalty, by the Board of Trustees of the Trust, or by vote of
a majority of the outstanding voting securities of the applicable Fund, in the
event that it shall have been established by a court of competent jurisdiction
that the Adviser, or any officer or director of the Adviser, has taken any
action which results in a breach of the material covenants of the Adviser set
forth herein. Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation, described
in Section 3, earned prior to such termination and for any additional period
during which the Adviser serves as such for the Fund, subject to applicable law.
The terms "assignment" and "vote of the majority of outstanding voting
securities" shall have the same meanings set forth in the 1940 Act and the rules
and regulations thereunder.
12. This Agreement may be amended or modified only by a written instrument
executed by both parties.
13. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
- 5 -
14. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
15. All parties hereto are expressly put on notice of the Trust's
Declaration of Trust and all amendments thereto, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts and the limitation of
shareholder and trustee liability contained therein. This Agreement is executed
on behalf of the Trust (and its Funds) by the Trust's officers as officers and
not individually and the obligations imposed upon the Trust (and its Funds) by
this Agreement are not binding upon any of the Trust's Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the applicable Fund, and persons dealing with the Trust or a Fund thereof must
look solely to the assets of the applicable Fund for the enforcement of any
claims.
16. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 15 hereof which shall be construed in
accordance with the laws of Massachusetts) the laws of the State of Illinois.
- 6 -
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement
to be executed on the day and year above written.
FIRST TRUST EXCHANGE-TRADED FUND
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
FIRST TRUST ADVISORS L.P.
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
SCHEDULE A
FUNDS
ANNUAL RATE
OF AVERAGE
DAILY NET EFFECTIVE
NAME OF FUND ASSETS DATE
------------ ------ ----
First Trust Dow Jones Select MicroCap Index(SM) Fund 0.50%
First Trust Morningstar(R) Dividend Leaders(SM) Index Fund 0.30%
First Trust NASDAQ-100 Equal Weighted Index(SM) Fund 0.40%
First Trust NASDAQ-100-Technology Sector Index(SM) Fund 0.40%
First Trust US IPO Index Fund 0.40%
First Trust NYSE Arca Biotechnology Index Fund 0.40%
First Trust Strategic Value Index Fund 0.50%
First Trust Dow Jones Internet Index(SM) Fund 0.40%
First Trust NASDAQ-100 Ex-Technology Sector Index(SM) Fund 0.40%
First Trust NASDAQ(R) Clean Edge(R) Green Energy Index Fund 0.40%
First Trust Value Line(R) Equity Allocation Index Fund 0.50%
First Trust Value Line(R) Dividend Index Fund 0.50%
First Trust S&P REIT Index Fund 0.30%
First Trust ISE-Revere Natural Gas Index Fund 0.40%
First Trust ISE Water Index Fund 0.40%
First Trust ISE Chindia Index Fund 0.40%
First Trust Value Line(R) 100 Exchange-Traded Fund 0.50%
First Trust NASDAQ(R) ABA Community Bank Index Fund 0.40%
EXHIBIT A-2
FORM OF
NEW ADVISORY AGREEMENT
FOR
FIRST TRUST EXCHANGE-TRADED FUND II
(with respect to each of its Funds except First Trust ISE Global Copper
Index Fund, First Trust ISE Global Platinum Index Fund and
Trust BICK Index Fund)
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this ____ day of _____, _____, by and
between FIRST TRUST EXCHANGE-TRADED FUND II, a Massachusetts business trust (the
"Trust"), and FIRST TRUST ADVISORS L.P., an Illinois limited partnership (the
"Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust offers shares in the series set forth on Schedule A
attached hereto and any other series as to which this Agreement may hereafter be
made applicable and set forth on Schedule A, which may be amended from time to
time (each such series being herein referred to as a "Fund," and collectively as
the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser as investment adviser, to
furnish certain investment advisory and portfolio management services to the
Trust with respect to the Funds, and the Adviser is willing to furnish such
services.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Trust hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of, each Fund
in accordance with each Fund's investment objective and policies and
limitations, and to administer each Fund's affairs to the extent requested by
and subject to the supervision of the Board of Trustees of the Trust for the
period and upon the terms herein set forth. The investment of each Fund's assets
shall be subject to the Fund's policies, restrictions and limitations with
respect to securities investments as set forth in the Fund's then current
registration statement under the l940 Act, and all applicable laws and the
regulations of the Securities and Exchange Commission relating to the management
of registered open-end management investment companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Funds' transfer agent, administrator or other service providers)
for the Funds, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to render the investment
management and administrative services set forth in this Agreement. In the event
that the Adviser pays or assumes any expenses of a Fund not required to be paid
or assumed by the Adviser under this Agreement, the Adviser shall not be
obligated hereby to pay or assume the same or similar expense in the future;
provided, that nothing contained herein shall be deemed to relieve the Adviser
of any obligation to a Fund under any separate agreement or arrangement between
the parties.
2. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall neither have the authority to act for nor represent the Trust
in any way, nor otherwise be deemed an agent of the Trust.
3. For the services and facilities described in Section 1, each Fund will
pay to the Adviser, at the end of each calendar month, and the Adviser agrees to
accept as full compensation therefor, an investment management fee equal to the
annual rate of each Fund's average daily net assets as set forth on Schedule A.
For the month and year in which this Agreement becomes effective, or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement shall have been in effect during the month and year,
respectively. The services of the Adviser to the Trust under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
4. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Trust, as trustees,
officers or agents of the Trust, if duly elected or appointed to such positions,
and subject to their individual consent and to any limitations imposed by law.
5. For purposes of this Agreement, brokerage commissions paid by a Fund
upon the purchase or sale of a Fund's portfolio securities shall be considered a
cost of securities of the Fund and shall be paid by the Fund.
6. The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of a Fund's securities on behalf of the Fund,
and is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the Fund's
orders, taking into account all appropriate factors, including price, dealer
spread or commission, size and difficulty of the transaction and research or
other services provided. Subject to approval by the Trust's Board of Trustees
- 2 -
and to the extent permitted by and in conformance with applicable law (including
Rule 17e-1 of the 1940 Act), the Adviser may select brokers or dealers
affiliated with the Adviser. It is understood that the Adviser will not be
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust, or be in breach of any obligation owing to the Trust under this
Agreement, or otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Adviser's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, the Adviser may, to the extent permitted by applicable law,
aggregate purchase and sale orders of securities with similar orders being made
simultaneously for other accounts managed by the Adviser or its affiliates, if
in the Adviser's reasonable judgment such aggregation shall result in an overall
economic benefit to a Fund, taking into consideration the selling or purchase
price, brokerage commissions and other expenses. In the event that a purchase or
sale of an asset of a Fund occurs as part of any aggregate sale or purchase
orders, the objective of the Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in an
equitable manner. Nevertheless, each Fund acknowledges that under some
circumstances, such allocation may adversely affect the Fund with respect to the
price or size of the securities positions obtainable or salable. Whenever a Fund
and one or more other investment advisory clients of the Adviser have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed by the Adviser to be equitable to each, although
such allocation may result in a delay in one or more client accounts being fully
invested that would not occur if such an allocation were not made. Moreover, it
is possible that due to differing investment objectives or for other reasons,
the Adviser and its affiliates may purchase securities of an issuer for one
client and at approximately the same time recommend selling or sell the same or
similar types of securities for another client.
The Adviser will not arrange purchases or sales of securities between a
Fund and other accounts advised by the Adviser or its affiliates unless (a) such
purchases or sales are in accordance with applicable law (including Rule 17a-7
of the 1940 Act) and the Trust's policies and procedures, (b) the Adviser
determines the purchase or sale is in the best interests of each Fund, and (c)
the Trust's Board of Trustees have approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use reasonable commercial efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees of the Trust
such information relating to transactions for the Funds as they may reasonably
request. In no instance will portfolio securities be purchased by or sold to the
- 3 -
Adviser or any affiliated person of either the Trust or the Adviser, except as
may be permitted under the 1940 Act.
The Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform in all material respects to all applicable rules
and regulations of the Securities and Exchange Commission and comply in
all material respects with all policies and procedures adopted by the
Board of Trustees for the Trust and communicated to the Adviser and, in
addition, will conduct its activities under this Agreement in all material
respects in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees of the Trust
(generally on a quarterly basis) and will make appropriate persons
available for the purpose of reviewing with representatives of the Board
of Trustees on a regular basis at reasonable times the management of each
Fund, including, without limitation, review of the general investment
strategies of each Fund, the performance of each Fund's investment
portfolio in relation to relevant standard industry indices and general
conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Board of Trustees
of the Trust; and
(d) will prepare and maintain such books and records with respect
to each Fund's securities and other transactions as required under
applicable law and will prepare and furnish the Trust's Board of Trustees
such periodic and special reports as the Board of Trustees may reasonably
request. The Adviser further agrees that all records which it maintains
for each Fund are the property of the Fund and the Adviser will surrender
promptly to the Fund any such records upon the request of the Fund
(provided, however, that Adviser shall be permitted to retain copies
thereof); and shall be permitted to retain originals (with copies to the
Fund) to the extent required under Rule 204-2 of the Investment Advisers
Act of 1940 or other applicable law.
7. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Trust are, or may be, interested persons
(as such term is defined in the 1940 Act and rules and regulations thereunder)
of the Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Trust otherwise than as trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained by reason of
the purchase, sale or retention of any security, whether or not such purchase,
sale or retention shall have been based upon the investigation and research made
by any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
- 4 -
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
9. Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, the Adviser may retain one or more sub-advisers at
the Adviser's own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to a Fund. Retention of
a sub-adviser shall in no way reduce the responsibilities or obligations of the
Adviser under this Agreement and the Adviser shall be responsible to a Fund for
all acts or omissions of any sub-adviser in connection with the performance of
the Adviser's duties hereunder.
10. The Trust acknowledges that the Adviser now acts, and intends in the
future to act, as an investment adviser to other managed accounts and as
investment adviser or investment sub-adviser to one or more other investment
companies that are not a series of the Trust. In addition, the Trust
acknowledges that the persons employed by the Adviser to assist in the Adviser's
duties under this Agreement will not devote their full time to such efforts. It
is also agreed that the Adviser may use any supplemental research obtained for
the benefit of the Trust in providing investment advice to its other investment
advisory accounts and for managing its own accounts.
11. This Agreement shall be effective on the date provided on Schedule A
for each respective Fund, provided it has been approved by a vote of a majority
of the outstanding voting securities held by shareholders of the respective Fund
in accordance with the requirements of the 1940 Act. This Agreement shall
continue in effect as to a Fund until the two-year anniversary of the date of
its effectiveness, unless and until terminated by either party as hereinafter
provided, and shall continue in force from year to year thereafter, but only as
long as such continuance is specifically approved, at least annually, in the
manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any penalty
by a Fund or by the Adviser upon sixty (60) days' written notice to the other
party. Each Fund may effect termination by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, accompanied
by appropriate notice. This Agreement may be terminated, at any time, without
the payment of any penalty, by the Board of Trustees of the Trust, or by vote of
a majority of the outstanding voting securities of the applicable Fund, in the
event that it shall have been established by a court of competent jurisdiction
that the Adviser, or any officer or director of the Adviser, has taken any
action which results in a breach of the material covenants of the Adviser set
forth herein. Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation, described
in Section 3, earned prior to such termination and for any additional period
during which the Adviser serves as such for the Fund, subject to applicable law.
The terms "assignment" and "vote of the majority of outstanding voting
securities" shall have the same meanings set forth in the 1940 Act and the rules
and regulations thereunder.
12. This Agreement may be amended or modified only by a written instrument
executed by both parties.
- 5 -
13. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
14. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
15. All parties hereto are expressly put on notice of the Trust's
Declaration of Trust and all amendments thereto, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts and the limitation of
shareholder and trustee liability contained therein. This Agreement is executed
on behalf of the Trust (and its Funds) by the Trust's officers as officers and
not individually and the obligations imposed upon the Trust (and its Funds) by
this Agreement are not binding upon any of the Trust's Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the applicable Fund, and persons dealing with the Trust or a Fund thereof must
look solely to the assets of the applicable Fund for the enforcement of any
claims.
16. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 15 hereof which shall be construed in
accordance with the laws of Massachusetts) the laws of the State of Illinois.
- 6 -
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement
to be executed on the day and year above written.
FIRST TRUST EXCHANGE-TRADED FUND II
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
FIRST TRUST ADVISORS L.P.
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
SCHEDULE A
FUNDS
- ------------------------------------------------------------------------------ ------------------- ---------------
ANNUAL RATE OF EFFECTIVE DATE
INDEX SERIES AVERAGE DAILY NET
ASSETS
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust STOXX(R) European Select Dividend Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust FTSE EPRA/NAREIT Developed Markets Real Estate Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust Dow Jones Global Select Dividend Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust ISE Global Wind Energy Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust ISE Global Engineering and Construction Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
First Trust NASDAQ(R) Clean Edge(R) Smart Grid Infrastructure Index Fund 0.40%
- ------------------------------------------------------------------------------ ------------------- ---------------
EXHIBIT A-3
FORM OF
NEW ADVISORY AGREEMENT
FOR
FIRST TRUST EXCHANGE-TRADED FUND II
(with respect to First Trust ISE Global Copper Index Fund, First Trust ISE
Global Platinum Index Fund and First Trust BICK Index Fund only)
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this ____ day of ______, ____, by and
between FIRST TRUST EXCHANGE-TRADED FUND II, a Massachusetts business trust (the
"Trust"), and FIRST TRUST ADVISORS L.P., an Illinois limited partnership (the
"Adviser") registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust offers shares in the series set forth on Schedule A
attached hereto and any other series as to which this Agreement may hereafter be
made applicable and set forth on Schedule A, which may be amended from time to
time (each such series being herein referred to as a "Fund," and collectively as
the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser as investment adviser, to
furnish certain investment advisory and portfolio management services to the
Trust with respect to the Funds, and the Adviser is willing to furnish such
services.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Trust hereby engages the Adviser to act as the investment
adviser for, and to manage the investment and reinvestment of the assets
of, each Fund in accordance with each Fund's investment objective and
policies and limitations, and to administer each Fund's affairs to the
extent requested by and subject to the supervision of the Board of
Trustees of the Trust for the period and upon the terms herein set forth.
The investment of each Fund's assets shall be subject to the Fund's
policies, restrictions and limitations with respect to securities
investments as set forth in the Fund's then current registration statement
under the l940 Act, and all applicable laws and the regulations of the
Securities and Exchange Commission relating to the management of
registered open-end management investment companies.
The Adviser accepts such employment and agrees during such period
to render such services, to furnish office facilities and equipment and
clerical, bookkeeping and administrative services (other than such
services, if any, provided by the Funds' transfer agent, administrator
or other service providers) for the Funds, to permit any of its officers
or employees to serve without compensation as trustees or officers of
the Trust if elected or appointed to such positions, and to assume the
obligations herein set forth for the compensation herein provided. The
Adviser shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to render the
investment management and administrative services set forth in this
Agreement. In the event that the Adviser pays or assumes any expenses of
a Fund not required to be paid or assumed by the Adviser under this
Agreement, the Adviser shall not be obligated hereby to pay or assume
the same or similar expense in the future; provided, that nothing
contained herein shall be deemed to relieve the Adviser of any
obligation to a Fund under any separate agreement or arrangement between
the parties.
2. The Adviser shall, for all purposes herein provided, be deemed
to be an independent contractor and, unless otherwise expressly provided
or authorized, shall neither have the authority to act for nor represent
the Trust in any way, nor otherwise be deemed an agent of the Trust.
3. For the services and facilities described in Section 1, each
Fund will pay to the Adviser, at the end of each calendar month, and the
Adviser agrees to accept as full compensation therefor, a fee equal to the
annual rate of such Fund's average daily net assets as set forth on
Schedule A so long as the Adviser has not waived all or a portion of such
compensation.
For the month and year in which this Agreement becomes effective, or
terminates, there shall be an appropriate proration on the basis of the
number of days that the Agreement shall have been in effect during the
month and year, respectively. The services of the Adviser to the Trust
under this Agreement are not to be deemed exclusive, and the Adviser shall
be free to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
4. During the term of this Agreement, the Adviser shall pay all of
the expenses of each Fund of the Trust (including the cost of transfer
agency, custody, fund administration, legal, audit and other services and
license fees) but excluding the fee payment under this Agreement,
interest, taxes, brokerage commissions and other expenses connected with
the execution of portfolio transactions, distribution and service fees
payable pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses.
5. The Adviser shall arrange for suitably qualified officers or
employees of the Adviser to serve, without compensation from the Trust, as
trustees, officers or agents of the Trust, if duly elected or appointed to
- 2 -
such positions, and subject to their individual consent and to any
limitations imposed by law.
6. For purposes of this Agreement, brokerage commissions paid by a
Fund upon the purchase or sale of a Fund's portfolio securities shall be
considered a cost of securities of the Fund and shall be paid by the Fund.
7. The Adviser is authorized to select the brokers or dealers that
will execute the purchases and sales of a Fund's securities on behalf of
the Fund, and is directed to use its commercially reasonable efforts to
obtain best execution, which includes most favorable net results and
execution of the Fund's orders, taking into account all appropriate
factors, including price, dealer spread or commission, size and difficulty
of the transaction and research or other services provided. Subject to
approval by the Trust's Board of Trustees and to the extent permitted by
and in conformance with applicable law and the rules and regulations
thereunder (including Rule 17e-1 of the 1940 Act), the Adviser may select
brokers or dealers affiliated with the Adviser. It is understood that the
Adviser will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Trust, or be in breach of any obligation owing to
the Trust under this Agreement, or otherwise, solely by reason of its
having caused a Fund to pay a member of a securities exchange, a broker or
a dealer a commission for effecting a securities transaction for the Fund
in excess of the amount of commission another member of an exchange,
broker or dealer would have charged if the Adviser determines in good
faith that the commission paid was reasonable in relation to the brokerage
or research services provided by such member, broker or dealer, viewed in
terms of that particular transaction or the Adviser's overall
responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, the Adviser may, to the extent permitted by applicable
law and the rules and regulations thereunder, aggregate purchase and sale
orders of securities with similar orders being made simultaneously for
other accounts managed by the Adviser or its affiliates, if in the
Adviser's reasonable judgment such aggregation shall result in an overall
economic benefit to the Fund, taking into consideration the selling or
purchase price, brokerage commissions and other expenses. In the event
that a purchase or sale of an asset of a Fund occurs as part of any
aggregate sale or purchase orders, the objective of the Adviser and any of
its affiliates involved in such transaction shall be to allocate the
securities so purchased or sold, as well as expenses incurred in the
transaction, among the Fund and other accounts in an equitable manner.
Nevertheless, each Fund acknowledges that under some circumstances, such
allocation may adversely affect the Fund with respect to the price or size
of the securities positions obtainable or salable. Whenever a Fund and one
or more other investment advisory clients of the Adviser have available
funds for investment, investments suitable and appropriate for each will
be allocated in a manner believed by the Adviser to be equitable to each,
although such allocation may result in a delay in one or more client
accounts being fully invested that would not occur if such an allocation
were not made. Moreover, it is possible that due to differing investment
objectives or for other reasons, the Adviser and its affiliates may
- 3 -
purchase securities of an issuer for one client and at approximately the
same time recommend selling or sell the same or similar types of
securities for another client.
The Adviser will not arrange purchases or sales of securities between a
Fund and other accounts advised by the Adviser or its affiliates unless (a) such
purchases or sales are in accordance with applicable law and the rules and
regulations thereunder (including Rule 17a-7 of the 1940 Act) and the Trust's
policies and procedures, (b) the Adviser determines the purchase or sale is in
the best interests of the applicable Fund, and (c) the Trust's Board of Trustees
has approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts the
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use commercially reasonable efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees of the Trust such
information relating to transactions for the Funds as they may reasonably
request. In no instance will portfolio securities be purchased by or sold to the
Adviser or any affiliated person of either the Trust or the Adviser, except as
may be permitted under the 1940 Act, the rules and regulations thereunder or any
applicable exemptive orders.
The Adviser further agrees that it:
(a) will use the same degree of skill and care in providing
such services as it uses in providing services to other fiduciary
accounts for which it has investment responsibilities;
(b) will (i) conform in all material respects to all
applicable rules and regulations of the Securities and Exchange
Commission, (ii) comply in all material respects with all policies
and procedures adopted by the Board of Trustees for the Trust and
communicated to the Adviser and, (iii) conduct its activities under
this Agreement in all material respects in accordance with any
applicable regulations of any governmental authority pertaining to
its investment advisory activities;
(c) will report regularly to the Board of Trustees of the
Trust (generally on a quarterly basis) and will make appropriate
persons available for the purpose of reviewing with representatives
of the Board of Trustees on a regular basis at reasonable times the
management of each Fund, including, without limitation, review of
the general investment strategies of each Fund, the performance of
each Fund's investment portfolio in relation to relevant standard
industry indices and general conditions affecting the marketplace
and will provide various other reports from time to time as
reasonably requested by the Board of Trustees of the Trust; and
- 4 -
(d) will prepare and maintain such books and records with
respect to each Fund's securities and other transactions as required
under applicable law and will prepare and furnish the Trust's Board
of Trustees such periodic and special reports as the Board of
Trustees may reasonably request. The Adviser further agrees that all
records which it maintains for each Fund are the property of the
Fund and the Adviser will surrender promptly to the Fund any such
records upon the request of the Fund (provided, however, that the
Adviser shall be permitted to retain copies thereof); and shall be
permitted to retain originals (with copies to the Fund) to the
extent required under Rule 204-2 of the Advisers Act or other
applicable law and the rules and regulations thereunder.
8. Subject to applicable statutes and regulations, it is
understood that officers, trustees, or agents of the Trust are, or may be,
interested persons (as such term is defined in the 1940 Act and rules and
regulations thereunder) of the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors, shareholders
and agents of the Adviser may be interested persons of the Trust otherwise
than as trustees, officers or agents.
9. The Adviser shall not be liable for any loss sustained by
reason of the purchase, sale or retention of any security, whether or not
such purchase, sale or retention shall have been based upon the
investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been selected with due care
and in good faith, except loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance
of its obligations and duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement.
10. Subject to obtaining the initial and periodic approvals
required under Section 15 of the 1940 Act, the Adviser may retain one or
more sub-advisers at the Adviser's own cost and expense for the purpose of
furnishing one or more of the services described in Section 1 hereof with
respect to a Fund. Retention of a sub-adviser shall in no way reduce the
responsibilities or obligations of the Adviser under this Agreement and
the Adviser shall be responsible to such Fund for all acts or omissions of
any sub-adviser in connection with the performance of the Adviser's duties
hereunder.
11. The Trust acknowledges that the Adviser now acts, and intends
in the future to act, as an investment adviser to other managed accounts
and as investment adviser or investment sub-adviser to one or more other
investment companies that are not series of the Trust. In addition, the
Trust acknowledges that the persons employed by the Adviser to assist in
the Adviser's duties under this Agreement will not devote their full time
to such efforts. It is also agreed that the Adviser may use any
supplemental research obtained for the benefit of the Trust in providing
investment advice to its other investment advisory accounts and for
managing its own accounts.
12. This Agreement shall be effective on the date provided on
Schedule A for each respective Fund, provided it has been approved in the
manner required by the 1940 Act. This Agreement shall continue in effect
as to a Fund until the two-year anniversary of the date of its
- 5 -
effectiveness, unless and until terminated by either party as hereinafter
provided, and shall continue in force from year to year thereafter, but
only as long as such continuance is specifically approved, at least
annually, in the manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any penalty
as to a Fund by such Fund or by the Adviser upon sixty (60) days' written notice
to the other party. Each Fund may effect termination by action of the Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, accompanied by appropriate notice. This Agreement may be terminated, at
any time, without the payment of any penalty, by the Board of Trustees of the
Trust, or by vote of a majority of the outstanding voting securities of the
applicable Fund, in the event that it shall have been established by a court of
competent jurisdiction that the Adviser, or any officer or director of the
Adviser, has taken any action which results in a breach of the material
covenants of the Adviser set forth herein. Termination of this Agreement shall
not affect the right of the Adviser to receive payments on any unpaid balance of
the compensation, described in Section 3, earned prior to such termination and
for any additional period during which the Adviser serves as such for the Fund,
subject to applicable law. The terms "assignment" and "vote of the majority of
outstanding voting securities" shall have the same meanings set forth in the
1940 Act and the rules and regulations thereunder.
13. This Agreement may be amended or modified only by a written
instrument executed by both parties.
14. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder
shall not be thereby affected.
15. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for receipt of such notice.
16. All parties hereto are expressly put on notice of the Trust's
Declaration of Trust and all amendments thereto, a copy of which is on
file with the Secretary of the Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement is executed on behalf of the Trust (and its Funds) by the
Trust's officers as officers and not individually and the obligations
imposed upon the Trust (and its Funds) by this Agreement are not binding
upon any of the Trust's trustees, officers or shareholders individually
but are binding only upon the assets and property of the applicable Fund,
and persons dealing with the Trust or a Fund thereof must look solely to
the assets of the applicable Fund for the enforcement of any claims.
17. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 16 hereof which shall be construed
in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
- 6 -
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement
to be executed on the day and year above written.
FIRST TRUST EXCHANGE-TRADED FUND II
By:____________________________________
Name:
Title:
ATTEST: ______________________________
Name:
Title:
FIRST TRUST ADVISORS L.P.
By:____________________________________
Name:
Title:
ATTEST: _____________________________
Name:
Title:
- 7 -
SCHEDULE A
(as of ___________, 2010)
FUNDS
ANNUAL RATE OF
AVERAGE DAILY
SERIES NET ASSETS EFFECTIVE DATE
First Trust ISE Global Copper Index Fund 0.70%
First Trust ISE Global Platinum Index Fund 0.70%
First Trust BICK Index Fund 0.64%
First Trust NASDAQ CEA Smartphone Index Fund 0.70%
EXHIBIT A-4
FORM OF
NEW ADVISORY AGREEMENT
FOR
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this ____ day of ______, _____, by
and between FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND, a Massachusetts
business trust (the "Trust"), and FIRST TRUST ADVISORS L.P., an Illinois limited
partnership (the "Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust offers shares in the series set forth on Schedule A
attached hereto and any other series as to which this Agreement may hereafter be
made applicable and set forth on Schedule A, which may be amended from time to
time (each such series being herein referred to as a "Fund," and collectively as
the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser as investment adviser, to
furnish certain investment advisory and portfolio management services to the
Trust with respect to the Funds, and the Adviser is willing to furnish such
services.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Trust hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of, each Fund
in accordance with each Fund's investment objective and policies and
limitations, and to administer each Fund's affairs to the extent requested by
and subject to the supervision of the Board of Trustees of the Trust for the
period and upon the terms herein set forth. The investment of each Fund's assets
shall be subject to the Fund's policies, restrictions and limitations with
respect to securities investments as set forth in the Fund's then current
registration statement under the l940 Act, and all applicable laws and the
regulations of the Securities and Exchange Commission relating to the management
of registered open-end management investment companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Funds' transfer agent, administrator or other service providers)
for the Funds, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected to such positions,
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to render the investment
management and administrative services set forth in this Agreement. In the event
that the Adviser pays or assumes any expenses of a Fund not required to be paid
or assumed by the Adviser under this Agreement, the Adviser shall not be
obligated hereby to pay or assume the same or similar expense in the future;
provided, that nothing contained herein shall be deemed to relieve the Adviser
of any obligation to a Fund under any separate agreement or arrangement between
the parties.
2. The Adviser shall, for all purposes herein provided, be deemed to be
an independent contractor and, unless otherwise expressly provided or
authorized, shall neither have the authority to act for nor represent the Trust
in any way, nor otherwise be deemed an agent of the Trust.
3. For the services and facilities described in Section 1, each Fund will
pay to the Adviser, at the end of each calendar month, and the Adviser agrees to
accept as full compensation therefor, an investment management fee equal to the
annual rate of each Fund's average daily net assets as set forth on Schedule A.
For the month and year in which this Agreement becomes effective, or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement shall have been in effect during the month and year,
respectively. The services of the Adviser to the Trust under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar
services or other services to others so long as its services hereunder are not
impaired thereby.
4. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Trust, as trustees,
officers or agents of the Trust, if duly elected or appointed to such positions,
and subject to their individual consent and to any limitations imposed by law.
5. For purposes of this Agreement, brokerage commissions paid by a Fund
upon the purchase or sale of a Fund's portfolio securities shall be considered a
cost of securities of the Fund and shall be paid by the Fund.
6. The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of a Fund's securities on behalf of the Fund,
and is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the Fund's
orders, taking into account all appropriate factors, including price, dealer
spread or commission, size and difficulty of the transaction and research or
other services provided. Subject to approval by the Trust's Board of Trustees
and to the extent permitted by and in conformance with applicable law (including
Rule 17e-1 of the 1940 Act), the Adviser may select brokers or dealers
affiliated with the Adviser. It is understood that the Adviser will not be
- 2 -
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust, or be in breach of any obligation owing to the Trust under this
Agreement, or otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission for effecting
a securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Adviser determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Adviser's
overall responsibilities with respect to its accounts, including the Fund, as to
which it exercises investment discretion.
In addition, the Adviser may, to the extent permitted by applicable law,
aggregate purchase and sale orders of securities with similar orders being made
simultaneously for other accounts managed by the Adviser or its affiliates, if
in the Adviser's reasonable judgment such aggregation shall result in an overall
economic benefit to a Fund, taking into consideration the selling or purchase
price, brokerage commissions and other expenses. In the event that a purchase or
sale of an asset of a Fund occurs as part of any aggregate sale or purchase
orders, the objective of the Adviser and any of its affiliates involved in such
transaction shall be to allocate the securities so purchased or sold, as well as
expenses incurred in the transaction, among the Fund and other accounts in an
equitable manner. Nevertheless, each Fund acknowledges that under some
circumstances, such allocation may adversely affect the Fund with respect to the
price or size of the securities positions obtainable or salable. Whenever a Fund
and one or more other investment advisory clients of the Adviser have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed by the Adviser to be equitable to each, although
such allocation may result in a delay in one or more client accounts being fully
invested that would not occur if such an allocation were not made. Moreover, it
is possible that due to differing investment objectives or for other reasons,
the Adviser and its affiliates may purchase securities of an issuer for one
client and at approximately the same time recommend selling or sell the same or
similar types of securities for another client.
The Adviser will not arrange purchases or sales of securities between a
Fund and other accounts advised by the Adviser or its affiliates unless (a) such
purchases or sales are in accordance with applicable law (including Rule 17a-7
of the 1940 Act) and the Trust's policies and procedures, (b) the Adviser
determines the purchase or sale is in the best interests of each Fund, and (c)
the Trust's Board of Trustees have approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any objectives,
policies, restrictions or procedures in a manner that modifies or restricts
Adviser's authority regarding the execution of the Fund's portfolio
transactions, the Fund agrees to use reasonable commercial efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees of the Trust
such information relating to transactions for the Funds as they may reasonably
request. In no instance will portfolio securities be purchased by or sold to the
Adviser or any affiliated person of either the Trust or the Adviser, except as
may be permitted under the 1940 Act.
- 3 -
The Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform in all material respects to all applicable rules
and regulations of the Securities and Exchange Commission and comply in
all material respects with all policies and procedures adopted by the
Board of Trustees for the Trust and communicated to the Adviser and, in
addition, will conduct its activities under this Agreement in all material
respects in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees of the Trust
(generally on a quarterly basis) and will make appropriate persons
available for the purpose of reviewing with representatives of the Board
of Trustees on a regular basis at reasonable times the management of each
Fund, including, without limitation, review of the general investment
strategies of each Fund, the performance of each Fund's investment
portfolio in relation to relevant standard industry indices and general
conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Board of Trustees
of the Trust; and
(d) will prepare and maintain such books and records with respect
to each Fund's securities and other transactions as required under
applicable law and will prepare and furnish the Trust's Board of Trustees
such periodic and special reports as the Board of Trustees may reasonably
request. The Adviser further agrees that all records which it maintains
for each Fund are the property of the Fund and the Adviser will surrender
promptly to the Fund any such records upon the request of the Fund
(provided, however, that Adviser shall be permitted to retain copies
thereof); and shall be permitted to retain originals (with copies to the
Fund) to the extent required under Rule 204-2 of the Investment Advisers
Act of 1940 or other applicable law.
7. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Trust are, or may be, interested persons
(as such term is defined in the 1940 Act and rules and regulations thereunder)
of the Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Trust otherwise than as trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained by reason of
the purchase, sale or retention of any security, whether or not such purchase,
sale or retention shall have been based upon the investigation and research made
by any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
- 4 -
9. Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, the Adviser may retain one or more sub-advisers at
the Adviser's own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to a Fund. Retention of
a sub-adviser shall in no way reduce the responsibilities or obligations of the
Adviser under this Agreement and the Adviser shall be responsible to a Fund for
all acts or omissions of any sub-adviser in connection with the performance of
the Adviser's duties hereunder.
10. The Trust acknowledges that the Adviser now acts, and intends in the
future to act, as an investment adviser to other managed accounts and as
investment adviser or investment sub-adviser to one or more other investment
companies that are not a series of the Trust. In addition, the Trust
acknowledges that the persons employed by the Adviser to assist in the Adviser's
duties under this Agreement will not devote their full time to such efforts. It
is also agreed that the Adviser may use any supplemental research obtained for
the benefit of the Trust in providing investment advice to its other investment
advisory accounts and for managing its own accounts.
11. This Agreement shall be effective on the date provided on Schedule A
for each respective Fund, provided it has been approved by a vote of a majority
of the outstanding voting securities held by shareholders of the respective Fund
in accordance with the requirements of the 1940 Act. This Agreement shall
continue in effect as to a Fund until the two-year anniversary of the date of
its effectiveness, unless and until terminated by either party as hereinafter
provided, and shall continue in force from year to year thereafter, but only as
long as such continuance is specifically approved, at least annually, in the
manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any penalty
by a Fund or by the Adviser upon sixty (60) days' written notice to the other
party. Each Fund may effect termination by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, accompanied
by appropriate notice. This Agreement may be terminated, at any time, without
the payment of any penalty, by the Board of Trustees of the Trust, or by vote of
a majority of the outstanding voting securities of the applicable Fund, in the
event that it shall have been established by a court of competent jurisdiction
that the Adviser, or any officer or director of the Adviser, has taken any
action which results in a breach of the material covenants of the Adviser set
forth herein. Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation, described
in Section 3, earned prior to such termination and for any additional period
during which the Adviser serves as such for the Fund, subject to applicable law.
The terms "assignment" and "vote of the majority of outstanding voting
securities" shall have the same meanings set forth in the 1940 Act and the rules
and regulations thereunder.
12. This Agreement may be amended or modified only by a written instrument
executed by both parties.
13. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
- 5 -
14. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
15. All parties hereto are expressly put on notice of the Trust's
Declaration of Trust and all amendments thereto, a copy of which is on file with
the Secretary of the Commonwealth of Massachusetts and the limitation of
shareholder and trustee liability contained therein. This Agreement is executed
on behalf of the Trust (and its Funds) by the Trust's officers as officers and
not individually and the obligations imposed upon the Trust (and its Funds) by
this Agreement are not binding upon any of the Trust's Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the applicable Fund, and persons dealing with the Trust or a Fund thereof must
look solely to the assets of the applicable Fund for the enforcement of any
claims.
16. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 15 hereof which shall be construed in
accordance with the laws of Massachusetts) the laws of the State of Illinois.
- 6 -
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement
to be executed on the day and year above written.
FIRST TRUST EXCHANGE-TRADED ALPHADEX(R)
FUND
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
FIRST TRUST ADVISORS L.P.
By:____________________________________
Name:
Title:
ATTEST: _________________________
Name:
Title:
SCHEDULE A
FUNDS
ANNUAL RATE
OF AVERAGE
DAILY NET
INDEX SERIES ASSETS EFFECTIVE DATE
First Trust Consumer Discretionary AlphaDEX(R) Fund 0.50%
First Trust Consumer Staples AlphaDEX(R) Fund 0.50%
First Trust Energy AlphaDEX(R) Fund 0.50%
First Trust Financials AlphaDEX(R) Fund 0.50%
First Trust Health Care AlphaDEX(R) Fund 0.50%
First Trust Industrials/Producer Durables AlphaDEX(R) Fund 0.50%
First Trust Materials AlphaDEX(R) Fund 0.50%
First Trust Technology AlphaDEX(R) Fund 0.50%
First Trust Utilities AlphaDEX(R) Fund 0.50%
First Trust Large Cap Core AlphaDEX(R) Fund 0.50%
First Trust Mid Cap Core AlphaDEX(R) Fund 0.50%
First Trust Small Cap Core AlphaDEX(R) Fund 0.50%
First Trust Large Cap Value Opportunities AlphaDEX(R) Fund 0.50%
First Trust Large Cap Growth Opportunities AlphaDEX(R) Fund 0.50%
First Trust Multi Cap Value AlphaDEX(R) Fund 0.50%
First Trust Multi Cap Growth AlphaDEX(R) Fund 0.50%
FORM OF PROXY CARD
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[LOGO OMITTED] FIRST TRUST FIRST TRUST EXCHANGE-TRADED FUND II
[INSERT FUND NAME]
Proxy Card for Joint Special Meetings of
Shareholders - December 6, 2010
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF
FIRST TRUST EXCHANGE-TRADED FUND II
The undersigned holder of shares of the [INSERT FUND NAME] (the "Fund"), a
series of First Trust Exchange-Traded Fund II (the "Trust"), a Massachusetts
business trust, hereby appoints W. Scott Jardine, Mark R. Bradley, Kristi A.
Maher, James M. Dykas and Erin E. Chapman as attorneys and proxies for the
undersigned, with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Fund that
the undersigned is entitled to vote at the Joint Special Meetings of
Shareholders (the "Meeting") to be held at the offices of First Trust Advisors
L.P., 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, at 4:00 p.m.
Central time on the date indicated above, and any adjournments or postponements
thereof. The undersigned hereby acknowledges receipt of the Notice of Joint
Special Meetings of Shareholders and Joint Proxy Statement dated October 19,
2010, and hereby instructs said attorneys and proxies to vote said shares as
indicated hereon. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Meeting and any adjournments
or postponements thereof (including, but not limited to, any questions as to
adjournment or postponement of the Meeting). A majority of the proxies present
and acting at the Meeting in person or by substitute (or, if only one shall be
so present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED BY THE
Registration dynamically UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
printed here IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL SET FORTH.
PLEASE VOTE, DATE AND SIGN ON REVERSE
SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE FOLD HERE AND RETURN ENTIRE PROXY CARD - DO NOT DETACH
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[GRAPHIC BY INTERNET
OMITTED] -----------
To vote on the Internet, go to www.proxyonline.com and enter the
12-digit control number found on the reverse side of this Proxy
Card. Follow the instructions provided.
[GRAPHIC BY TELEPHONE
OMITTED] ------------
To cast your vote by phone with a proxy voting representative,
call toll-free 1-866-530-8634 and provide the representative the
control number found on the reverse side of this Proxy Card.
Representatives are available to take your voting instructions
Monday through Friday 9:00 a.m. to 10:00 p.m. Eastern Time.
[GRAPHIC BY MAIL
OMITTED] -------
To vote by mail, mark the appropriate voting box on the reverse
side of this Proxy Card, sign and date the Proxy Card and return
it in the enclosed postage-paid envelope or mail to: FIRST TRUST
FUNDS, P.O. BOX 6500, CARLSTADT, NJ 07072.
PLEASE VOTE, SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
[INSERT FUND NAME]
CONTROL NUMBER
-----------------------------
-----------------------------
PLEASE CAST YOUR VOTE PROMPTLY. EVERY SHAREHOLDER'S VOTE IS IMPORTANT.
THE PROXY CARD MUST BE SIGNED AND DATED FOR YOUR INSTRUCTIONS TO BE COUNTED AND
WILL BE VOTED IN THE MANNER INDICATED. IF NO INSTRUCTIONS HAVE BEEN INDICATED
BELOW, A VOTE WILL BE CAST "FOR" THE PROPOSAL. PLEASE COMPLETE AND RETURN THIS
PROXY CARD PROMPTLY.
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [ ]
FOR AGAINST ABSTAIN
Proposal - The Board of Trustees recommends
a vote FOR the Proposal to approve a new
Investment Management Agreement between the
Trust, on behalf of the Fund, and First
Trust Advisors L.P.
Approval of New Investment Management Agreement [ ] [ ] [ ]
Please be sure to sign and date this Proxy Card. Please sign exactly as your
name(s) appear(s) on this Proxy Card. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by an authorized officer. If a partnership, please sign in
partnership name by an authorized person.
__________________________________________________________
Shareholder sign here
__________________________________________________________
Joint owner sign here
__________________________________________________________
Date:
NON-VOTING ITEMS
MEETING ATTENDANCE - Mark the box to the right if you plan to attend the
Joint Special Meetings [ ]
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CHANGE OF ADDRESS - Please print new address below.
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COMMENTS - Please print your comments below.
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(BARCODE HERE) (TAGID HERE) (CUSIP HERE)