CHAPMAN AND CUTLER LLP
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
October 5, 2012
VIA EDGAR CORRESPONDENCE
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Karen Rossotto
Senior Counsel
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: First Trust Series Fund
File Nos. 333-168727 and 811-22452
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Dear Ms. Rossotto:
This letter responds to your comments regarding the registration statement
filed on Form N-1A for First Trust Series Fund (the "Trust") with the Securities
and Exchange Commission (the "Commission") on July 2, 2012 (the "Registration
Statement"). The Registration Statement is regarding the First Trust Short
Duration High Income Fund (the "Fund"). Your comments regarding the Fund were
communicated to us via telephone on August 24, 2012 and September 5, 2012. This
letter serves to respond to your comments and accompanies Post-Effective
Amendment No. 7 to the Trust's registration statement, filed on October 5, 2012
(the "Amendment").
Please also note that to the extent that your previous comments to
recently filed registration statements for the First Trust family of open-end or
exchange-traded funds were applicable, we have made the corresponding changes to
the prospectus and statement of additional information of this Fund.
PROSPECTUS
COMMENT 1
Confirm in a response letter that the fee waiver and expense reimbursement
agreement will be attached as an exhibit to the filing.
RESPONSE TO COMMENT 1
The Trust's Expense Reimbursement, Fee Waiver and Recovery Agreement was
filed as an exhibit to the trust's registration statement on December 23, 2010
and an amended Exhibit A to such agreement has been filed with the Amendment.
COMMENT 2
Explain how the principal investment strategies are consistent with the
Names Rule. Also, explain the scale of duration.
RESPONSE TO COMMENT 2
Under normal market conditions, the Fund invests at least 80% of its net
assets in high yield debt securities and senior floating rate loans that are
rated below investment grade or unrated. In terms of duration, while there is no
limit on the remaining maturity or duration of any individual security in which
the Fund may invest, the Fund normally will seek to maintain a weighted average
portfolio duration of three years or less. The prospectus has been revised in
accordance with this comment.
COMMENT 3
On page 3 of the prospectus, how are "short-term, medium-term or
long-term maturities" defined?
RESPONSE TO COMMENT 3
The Commission has previously taken the position with respect to rule
35d-1 that "short-term," "intermediate-term" and "long-term" bond funds should
have a dollar-weighted average maturity of, respectively, no more than 3 years,
more than 3 years but less than 10 years, and more than 10 years. The Fund will
follow these ranges with respect to the maturities of the securities in its
portfolio.
COMMENT 4
One page 3 of the prospectus, what does "close to zero" mean?
RESPONSE TO COMMENT 4
Because duration is a mathematical calculation of the sensitivity of the
price of a debt security to changes in interest rates, "close to zero" means
that the interest payments made by issuers of senior loans will change
correspondingly with fluctuations in the reference interest rate. The prospectus
has been revised in accordance with this comment.
COMMENT 5
What percentage of the portfolio will be invested in senior loans?
RESPONSE TO COMMENT 5
The Fund is not limited in its ability to invest in senior loans. The
allocation to senior loans will change over time, by design. The Fund will not
impose a minimum or maximum on the senior loan allocation.
COMMENT 6
The Fund may invest up to 10% of its net assets in non-U.S. securities,
consider whether emerging markets risk and/or currency risk might be required
under Principal Risks and/or whether expanding the current risk language is
required.
RESPONSE TO COMMENT 6
The Fund's investment advisor does not believe that currency risk will be
a principal risk of the Fund and the Fund does not intend to invest principally
in emerging markets.
COMMENT 7
In general, make sure that the principal risks reflect the principal
investment strategies. Consider expanding the Senior Loans Risk to a general,
more inclusive Loans Risk.
RESPONSE TO COMMENT 7
The prospectus has been revised in accordance with this comment.
COMMENT 8
Are there specific derivatives that are considered principal? If so,
consider breaking out the Derivatives Risk for each specific type of derivative.
RESPONSE TO COMMENT 8
The Fund's investment advisor does not believe that there is any specific
type of derivative that will be a principal investment of the Fund.
COMMENT 9
Will mortgage-backed securities be a part of the principal investment
strategies? If not, take out the corresponding risk from Principal Risks.
RESPONSE TO COMMENT 9
Mortgage-backed securities will not be a part of the principal investment
strategies and, therefore, the prospectus has been revised in accordance with
this comment.
COMMENT 10
Will borrowing and leverage be a part of the principal investment
strategies? If not, take out the corresponding risk from Principal Risks.
RESPONSE TO COMMENT 10
The Fund may borrow to meet redemptions, but the investment advisor does
not anticipate that borrowing and leverage will be a principal investment
strategy. The prospectus has been revised in accordance with this comment.
COMMENT 11
Consider including principal risk language regarding the risks associated
with securities received from loans, if appropriate.
RESPONSE TO COMMENT 11
The investment advisor believes that post-restructuring securities will
not be a part of the Fund's principal investments.
COMMENT 12
Consider including other investment companies risk and/or specific risks
for each type of investment company that will be principally represented in the
Fund's portfolio.
RESPONSE TO COMMENT 12
The prospectus has been revised in accordance with this comment.
COMMENT 13
Which of the derivatives listed on page 11 of the prospectus are a part of
the Fund's principal investment strategies?
RESPONSE TO COMMENT 13
None of the specific derivatives listed are a part of the Fund's principal
investment strategies, although the Fund's portfolio may have more than 10% of
its net assets invested in derivatives generally.
COMMENT 14
Determine whether certain of the Additional Risks should more
appropriately be included as Principal Risks.
RESPONSE TO COMMENT 14
The prospectus has been revised in accordance with this comment.
STATEMENT OF ADDITIONAL INFORMATION
COMMENT 15
The page numbers listed in the table of contents need to be verified for
accuracy.
RESPONSE TO COMMENT 15
The page numbers listed in the table of contents will be verified for
accuracy in the Amendment or a subsequent pre-effective amendment to the
registration statement.
COMMENT 16
On page 8, please remove the phrase "currently or in the future."
RESPONSE TO COMMENT 16
The SAI has been revised in accordance with this comment.
COMMENT 17
In Management of the Fund, Board Diversification and Trustee
Qualifications, the discussion of the experiences, qualifications and attributes
of each Trustee that led to the conclusion that the person should serve as a
Trustee for the Fund should be made "in light of the Fund's business and
structure" in accordance with Item 17.b.10 of Form N-1A. Please revise the
discussion as appropriate.
RESPONSE TO COMMENT 17
The following relevant disclosure has been added to the section entitled
"Board Diversification and Trustee Qualifications":
"In concluding that each of the current Trustees is appropriate to
serve on the Board, the Nominating and Governance Committee considered
each Trustee's business and educational experience, as well as each
Trustee's service on a range of other funds in the First Trust Fund
Complex, in light of the Fund's business and structure."
COMMENT 18
In the first column to the compensation table on page 31, please replace
the reference to "Trust" with "Fund," and modify the corresponding footnote
accordingly. See Item 17.(c) of Form N-1A.
RESPONSE TO COMMENT 18
The SAI has been revised in accordance with this comment.
COMMENT 19
Under "Proxy Voting Policies and Procedures," it states that "If First
Trust manages the assets of a company or its pension plan and any of First
Trust's clients hold any securities of that company, First Trust will vote
proxies relating to such company's securities in accordance with the ISS
recommendations to avoid any conflict of interest." Please explain whether this
is the proxy voting procedure for all conflicts of interest.
RESPONSE TO COMMENT 19
This is the general procedure for all proxy voting conflicts of interest.
COMMENT 20
On page 41, it states that the Codes of Ethics adopted by the Fund under
Rule 17j-1 of the 1940 Act "contain policies restricting securities trading in
personal accounts of the officers, Trustees and others who normally come into
possession of information on portfolio transactions." Item 17, paragraph (e), of
Form N-1A requires a brief statement disclosing whether the codes of ethics
adopted by a fund's investment adviser and principal underwriter, "permit
personnel subject to the codes to invest in securities, including securities
that may be purchased or held by the Fund." Please revise the disclosure
concerning the Fund's code of ethics to comply with this requirement.
RESPONSE TO COMMENT 20
The following relevant disclosure has been added to the section entitled
"Codes of Ethics":
"Personnel subject to the Codes of Ethics may invest in securities
that may be purchased or held by the fund; however, the Codes of Ethics
require that each transaction in such securities be reviewed by the Board
or its designee."
* * *
TANDY ACKNOWLEDGMENT
In connection with the Trust's registration statement, the Trust
acknowledges that;
o should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
o the action of the Commission or the staff, acting pursuant to
delegated authority in declaring the filing effective, does not
relieve the Trust from its full responsibility for the adequacy and
accuracy for the disclosure in the filing; and
o the Trust may not assert this action as a defense in any proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
Please call me at (312) 845-3484 if you have any questions or issues you
would like to discuss regarding these matters.
Sincerely yours,
CHAPMAN AND CUTLER LLP
By: /s/ Morrison C. Warren
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Morrison C. Warren