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Name | Symbol | Market | Type |
---|---|---|---|
First Trust Managed Futures Strategy Fund | AMEX:FMF | AMEX | Exchange Traded Fund |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.2557 | 0.52% | 49.30 | 49.42 | 49.03 | 49.17 | 16,289 | 21:06:16 |
As filed with the Securities and Exchange Commission on April 29, 2020
1933 Act Registration No. 333-181507
1940 Act Registration No. 811-22709
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form N-1A
Registration Statement Under the Securities Act of 1933 | [ ] |
Pre-Effective Amendment No. __ | [ ] |
Post-Effective Amendment No. 18 | [X] |
and/or | |
Registration Statement Under the Investment Company Act of 1940 | [ ] |
Amendment No. 22 | [X] |
First Trust Exchange-Traded Fund V
(Exact Name of Registrant as Specified in Charter)
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (800) 621-1675
W. Scott Jardine, Esq., Secretary
First Trust Exchange-Traded Fund V
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
(Name and Address of Agent for Service)
Copy to:
Eric F. Fess, Esq.
Chapman and Cutler LLP
111 West Monroe Street
Chicago, Illinois 60603
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2020 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Contents of Post-Effective Amendment No. 18
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Part A - Prospectus for the First Trust Managed Futures Strategy Fund
Part B - Statement of Additional Information for the First Trust Managed Futures Strategy Fund
Part C - Other Information
Signatures
Index to Exhibits
Exhibits
First Trust
Exchange-Traded Fund V |
Ticker Symbol: | FMF |
Exchange: | NYSE Arca |
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) | None |
Management Fees | 0.95% |
Distribution and Service (12b-1) Fees | 0.00% |
Other Expenses | 0.00% |
Total Annual Fund Operating Expenses | 0.95% |
1 Year | 3 Years | 5 Years | 10 Years |
$97 | $303 | $525 | $1,166 |
Best Quarter | Worst Quarter | ||
4.02% | March 31, 2015 | -8.01% | December 31, 2018 |
1 Year | 5 Years |
Since
Inception |
Inception
Date |
|
Return Before Taxes | -4.54% | -2.15% | -1.49% | 8/1/2013 |
Return After Taxes On Distributions | -4.94% | -2.43% | -1.86% | |
Return After Taxes on Distributions and Sale of Fund Shares | -2.69% | -1.73% | -1.27% | |
Morningstar® Diversified Futures IndexSM (reflects no deduction for fees, expenses or taxes) | -0.14% | -0.22% | 0.19% | |
ICE BofA 3-Month U.S. Treasury Bill Index (reflects no deduction for fees, expenses or taxes) | 2.28% | 1.07% | 0.85% | |
S&P 500® Index (reflects no deduction for fees, expenses or taxes) | 31.49% | 11.70% | 12.75% |
• | John Gambla, CFA, FRM, PRM, Senior Portfolio Manager, Alternatives Investment Team of First Trust |
• | Rob A. Guttschow, CFA, Senior Portfolio Manager, Alternatives Investment Team of First Trust |
• | Mr. Gambla, CFA, FRM, PRM, is a senior portfolio manager for the Alternatives Investment Team at First Trust. Prior to joining First Trust in July 2011, Mr. Gambla was co-Chief Investment Officer at the Nuveen HydePark Group LLC where he started in 2007. While at Nuveen HydePark Group LLC, Mr. Gambla co-directed investment activities including research, product development, trading, portfolio management and performance attribution. Mr. Gambla also led the research systems and infrastructure development for Nuveen HydePark Group LLC. Previously, Mr. Gambla was a Senior Trader and Quantitative specialist at Nuveen Asset Management. While there, he was responsible for trading all derivatives for the 120+ municipal mutual funds with Nuveen Asset Management. Mr. Gambla, has served in a variety of roles throughout his career including: portfolio management, research, business development and strategy development. |
• | Mr. Guttschow, CFA, is a senior portfolio manager for the Alternatives Investment Team at First Trust. Prior to joining First Trust in July 2011, Mr. Guttschow was co-Chief Investment Officer at the Nuveen HydePark Group LLC where he started in 2007. While at Nuveen HydePark Group LLC, Mr. Guttschow co-directed investment activities including research, product development, trading, portfolio management and performance attribution. Previously, Mr. Guttschow was an Overlay Manager and Senior Portfolio Manager at Nuveen Asset Management. While there, he developed Nuveen’s buy-side derivative desk for fixed income and equity portfolio hedging. |
0.00%–0.49% | 0.50%–0.99% | 1.00%–1.99% | >=2.00% | |
12 Months Ended 12/31/2019 | 222 | 8 | 0 | 0 |
3 Months Ended 3/31/2020 | 18 | 1 | 1 | 0 |
0.00%–0.49% | 0.50%–0.99% | 1.00%–1.99% | >=2.00% | |
12 Months Ended 12/31/2019 | 21 | 1 | 0 | 0 |
3 Months Ended 3/31/2020 | 38 | 1 | 1 | 2 |
Average Annual | Cumulative | |||||
1 Year | 5 Years |
Inception
(8/1/2013) |
5 Years |
Inception
(8/1/2013) |
||
Fund Performance | ||||||
Net Asset Value | -4.54% | -2.15% | -1.49% | -10.32% | -9.18% | |
Market Price | -5.15% | -2.16% | -1.50% | -10.35% | -9.22% | |
Index Performance | ||||||
Morningstar® Diversified Futures IndexSM | -0.14% | -0.22% | 0.19% | -1.08% | 1.26% | |
ICE BofA 3-month U.S. Treasury Bill Index | 2.28% | 1.07% | 0.85% | 5.49% | 5.55% | |
S&P 500® Index | 31.49% | 11.70% | 12.75% | 73.86% | 116.03% |
Year Ended December 31, | ||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||
Net asset value, beginning of period | $ 45.39 | $47.60 | $47.09 | $49.22 | $49.47 | |
Income from investment operations: | ||||||
Net investment income (loss) | 0.51(a) | 0.29 | (0.12) | (0.36) | (0.49) | |
Net realized and unrealized gain (loss) | (2.58) | (1.79) | 1.02 | (1.77) | 0.24 | |
Total from investment operations | (2.07) | (1.50) | 0.90 | (2.13) | (0.25) | |
Distributions paid to shareholders from: | ||||||
Net investment income | (0.45) | (0.65) | (0.39) | — | — | |
Net realized gain | — | (0.06) | — | — | — | |
Total distributions | (0.45) | (0.71) | (0.39) | — | — | |
Net asset value, end of period | $ 42.87 | $45.39 | $47.60 | $47.09 | $49.22 | |
Total Return (b) | (4.54)% | (3.13)% | 1.91% | (4.33)% | (0.51)% | |
Ratios/supplemental data: | ||||||
Net assets, end of period (in 000’s) | $ 8,660 | $13,706 | $11,996 | $9,512 | $12,403 | |
Ratios to average net assets: | ||||||
Ratio of total expenses to average net assets | 0.95% | 0.95% | 0.95% | 1.02%(c) | 1.00%(c) | |
Ratio of total expenses to average net assets excluding interest expense | 0.95% | 0.95% | 0.95% | 0.95% | 0.95% | |
Ratio of net investment income (loss) to average net assets | 1.14% | 0.70% | (0.31)% | (0.87)% | (0.97)% | |
Portfolio turnover rate (d) | 0% | 0% | 0% | 0% | 0% |
(a) | Based on average shares outstanding. |
(b) | Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
(c) | Ratios reflect interest expenses of 0.07% and 0.05% for the periods ended December 31, 2016 and December 31, 2015, respectively, paid on futures margin accounts which are not covered under the annual unitary management fee. |
(d) | Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions, derivatives and in-kind transactions. |
First Trust
Exchange-Traded Fund V |
FUND NAME | TICKER SYMBOL | EXCHANGE | ||
First Trust Managed Futures Strategy Fund | FMF | NYSE Arca |
|
1 |
|
3 |
|
3 |
|
4 |
|
10 |
|
13 |
|
14 |
|
21 |
|
22 |
|
23 |
|
25 |
|
26 |
|
27 |
|
32 |
|
34 |
|
38 |
|
40 |
|
40 |
|
40 |
|
A-1 |
|
B-1 |
|
C-1 |
(1) | The Fund may not issue senior securities, except as permitted under the 1940 Act. |
(2) | The Fund may not borrow money, except that the Fund may (i) borrow money from banks for temporary or emergency purposes (but not for leverage or the purchase of investments) and (ii) engage in other transactions permissible under the 1940 Act that may involve a borrowing (such as obtaining short-term credits as are necessary for the clearance of transactions, engaging in delayed-delivery transactions, or purchasing certain futures and forward contracts), provided that the combination of (i) and (ii) shall not exceed 33⅓% of the value of the Fund's total assets (including the amount borrowed), less the Fund's liabilities (other than borrowings). |
(3) | The Fund will not underwrite the securities of other issuers except to the extent the Fund may be considered an underwriter under the Securities Act of 1933, as amended (the “1933 Act”), in connection with the purchase and sale of portfolio securities. |
(4) | The Fund will not purchase or sell real estate or interests therein, unless acquired as a result of ownership of securities or other instruments (but this shall not prohibit the Fund from purchasing or selling securities or other instruments backed by real estate or of issuers engaged in real estate activities). |
(5) | The Fund may not make loans to other persons, except through (i) the purchase of debt securities permissible under the Fund's investment policies, (ii) repurchase agreements, or (iii) the lending of portfolio securities, provided that no such loan of portfolio securities may be made by the Fund if, as a result, the aggregate of such loans would exceed 33⅓% of the value of the Fund's total assets. |
(6) | The Fund may only purchase or sell physical commodities through its wholly-owned subsidiary, FT Cayman Subsidiary (the “Subsidiary”). |
(7) | The Fund may not invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries. This restriction does not apply to obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. |
(1) | The Fund may invest in U.S. government securities, including bills, notes and bonds differing as to maturity and rates of interest, which are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities. U.S. government securities include securities that are issued or guaranteed by the U.S. Treasury, by various agencies of the U.S. government, or by various instrumentalities that have been established or sponsored by the U.S. government. U.S. Treasury securities are backed by the “full faith and credit” of the United States. Securities issued or guaranteed by federal agencies and U.S. government-sponsored instrumentalities may or may not be backed by the full faith and credit of the United States. Some of the U.S. government agencies that issue or guarantee securities include the Export-Import Bank of the United States, the Farmers Home Administration, the Federal Housing Administration, the Maritime Administration, the Small Business Administration and The Tennessee Valley Authority. An instrumentality of the U.S. government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, the Federal Home Loan Banks, the Federal Land Banks, the Central Bank for Cooperatives, Federal Intermediate Credit Banks and the Federal National Mortgage Association (“Fannie Mae”). In the case of those U.S. government securities not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the security for ultimate repayment and may not be able to assert a claim against the United States itself in the event that the agency or instrumentality does not meet its commitment. The U.S. government, its agencies and instrumentalities do not guarantee the market value of their securities; consequently, the value of such securities may fluctuate. In addition, the Fund may invest in sovereign debt obligations of non-U.S. countries. A sovereign debtor’s willingness or ability to repay principal and interest in a timely manner may be affected by a number of factors, including its cash flow situation, the extent of its non-U.S. reserves, the availability of sufficient non-U.S. exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy toward principal international lenders and the political constraints to which it may be subject. |
(2) | The Fund may invest in certificates of deposit issued against funds deposited in a bank or savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return and are normally negotiable. If such certificates of deposit are non-negotiable, they will be considered illiquid securities and be subject to the Fund's 15% restriction on investments in illiquid securities. Pursuant to the certificate of deposit, the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $250,000; therefore, certificates of deposit purchased by the Fund may not be fully insured. The Fund may only invest in certificates of deposit issued by U.S. banks with at least $1 billion in assets. |
(3) | The Fund may invest in bankers’ acceptances, which are short-term credit instruments used to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then “accepted” by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the going rate of interest for a specific maturity. |
(4) | The Fund may invest in repurchase agreements, which involve purchases of debt securities with counterparties that are deemed by the Advisor to present acceptable credit risks. In such an action, at the time the Fund purchases the security, it simultaneously agrees to resell and redeliver the security to the seller, who also simultaneously agrees to buy back the security at a fixed price and time. This assures a predetermined yield for the Fund during its holding period since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such actions afford an opportunity for the Fund to invest temporarily available cash. The Fund may enter into repurchase agreements only with respect to obligations of the U.S. government, its agencies or instrumentalities, certificates of deposit or bankers’ acceptances in which the Fund may invest. Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to the Fund is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the Fund is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, however, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Fund could incur a loss of both principal and interest. The portfolio managers monitor the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The portfolio managers does so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to the Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Fund to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws. |
(5) | The Fund may invest in bank time deposits, which are monies kept on deposit with banks or savings and loan associations for a stated period of time at a fixed rate of interest. There may be penalties for the early withdrawal of such time deposits, in which case the yields of these investments will be reduced. |
(6) | The Fund may invest in commercial paper, which are short-term unsecured promissory notes, including variable rate master demand notes issued by corporations to finance their current operations. Master demand notes are direct lending arrangements between the Fund and a corporation. There is no secondary market for the notes. However, they are redeemable by the Fund at any time. The Fund's portfolio managers will consider the financial condition of the corporation (e.g., earning power, cash flow and other liquidity ratios) and will continuously monitor the corporation’s ability to meet all of its financial obligations, because the Fund's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. The Fund may invest in commercial paper only if it has received the highest rating from at least one nationally recognized statistical rating organization or, if unrated, judged by First Trust to be of comparable quality. |
(7) | The Fund may invest in shares of money market funds, as consistent with its investment objective and policies. Shares of money market funds are subject to management fees and other expenses of those funds. Therefore, investments in money market funds will cause the Fund to bear proportionately the costs incurred by the money market funds’ operations. At the same time, the Fund will continue to pay its own management fees and expenses with respect to all of its assets, including any portion invested in the shares of other investment companies. It is possible for the Fund to lose money by investing in money market funds. |
Portfolio Turnover Rate
|
|
Fiscal Year Ended December 31, | |
2019 | 2018 |
0% | 0% |
(1) | Market Risk: Market risk is the risk that the value of the underlying assets may go up or down. Adverse movements in the value of an underlying asset can expose the Fund to losses. Market risk is the primary risk associated with derivative transactions. Futures Instruments may include elements of leverage and, accordingly, fluctuations in the value of the Futures Instruments may be magnified. The successful use of Futures Instruments depends upon a variety of factors, particularly the portfolio manager's ability to predict movements of the securities, currencies, and commodities markets, which may require different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy adopted will succeed. A decision to engage in a futures transaction will reflect the portfolio manager's judgment that the futures transaction will provide value to the Fund and to the Fund’s shareholders and is consistent with the Fund’s and the Subsidiary’s objectives, investment limitations, and operating policies. In making such a judgment, the portfolio managers will analyze the benefits and risks of the Futures Instruments and weigh them in the context of the Fund’s overall investments and investment objective. The prices of the Futures Instruments may move in different directions than investments in traditional equity and debt securities. For example, during periods of rising inflation, historically debt securities have tended to decline in value due to the general increase in prevailing interest rates. Conversely, during those same periods of rising inflation, historically the prices of certain commodities, such as oil and metals, have tended to increase. Of course, there cannot be any guarantee that these investments will perform in that manner in the future, and at certain times the price movements of commodity-linked investments have been parallel to debt and equity securities. |
(2) | Credit Risk/Counterparty Risk: Credit risk is the risk that a loss may be sustained as a result of the failure of a counterparty to comply with the terms of a derivative instrument. In all transactions, the Fund will bear the risk that the counterparty will default, and this could result in a loss of the expected benefit of the Futures Instruments transactions and possibly other losses to the Fund. The Fund and the Subsidiary will enter into transactions in Futures Instruments only with counterparties that the Advisor reasonably believes are capable of performing under the contract. |
(3) | Correlation Risk: Correlation risk is the risk that there might be an imperfect correlation, or even no correlation, between price movements of a Futures Instrument and price movements of investments being hedged. When a futures transaction is used to completely hedge another position, changes in the market value of the combined position (the derivative instrument plus the position being hedged) result from an imperfect correlation between the price movements of the two instruments. With a perfect hedge, the value of the combined position remains unchanged with any change in the price of the underlying asset. With an imperfect hedge, the value of the Futures Instrument and its hedge are not perfectly correlated. For example, if the value of a Futures Instrument |
used in a short hedge (such as writing a call option, buying a put option or selling a Futures Contract) increased by less than the decline in value of the hedged investments, the hedge would not be perfectly correlated. This might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which these instruments are traded. The effectiveness of hedges using instruments on indices will depend, in part, on the degree of correlation between price movements in the index and the price movements in the investments being hedged. |
(4) | Liquidity Risk: Liquidity risk is the risk that a Futures Instrument cannot be sold, closed out, or replaced quickly at or very close to its fundamental value. Generally, exchange contracts are very liquid because the exchange clearinghouse is the counterparty of every contract. The Fund and the Subsidiary might be required by applicable regulatory requirements to maintain assets as “cover,” maintain segregated accounts, and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (i.e., instruments other than purchase options). If theFund or the Subsidiary is unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expires, matures, or is closed out. These requirements might impair theFund's or the Subsidiary’s ability to sell a security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time. TheFund's or the Subsidiary’s ability to sell or close out a position in an instrument prior to expiration or maturity depends upon the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the counterparty to enter into a transaction closing out the position. Due to liquidity risk, there is no assurance that any Futures Instruments position can be sold or closed out at a time and price that is favorable to the Fund. |
(5) | Legal Risk: Legal risk is the risk of loss caused by the unenforceability of a party’s obligations under the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. Despite this voluntary assumption of risk, a counterparty that has lost money in a Futures Instruments transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products. |
(6) | Systemic or “Interconnection” Risk: Systemic or interconnection risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words, a disruption in one market will spill over into other markets, perhaps creating a chain reaction. |
(7) | Leverage Risk: Leverage risk is the risk that the Fund may be more volatile than if it had not been leveraged due to leverage’s tendency to exaggerate the effect of any increase or decrease in the value of the Fund’s portfolio. The use of leverage may also cause the Fund to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. |
(8) | Regulatory Risk: The Dodd-Frank Act Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has initiated a dramatic revision of the U.S. financial regulatory framework and covers a broad range of topics, including (among many others) a reorganization of federal financial regulators; a process intended to improve financial systemic stability and the resolution of potentially insolvent financial firms; and new rules for derivatives trading. Instruments in which the Fund may invest, or the issuers of such instruments, may be affected by the legislation and regulation in ways that are unforeseeable. Many of the implementing regulations have not yet been finalized. Accordingly, the ultimate impact of the Dodd-Frank Act, including on the Futures Instruments in which the Fund and the Subsidiary may invest, is not yet certain. |
(9) | Tax Risk: The Fund intends to treat any income it may derive from commodity-linked derivatives received from the Subsidiary as “qualifying income” under the provisions of the Code applicable to RICs, based on a tax opinion from Fund counsel that was based, in part, on numerous PLRs provided to third parties not associated with the Fund or its affiliates (which only those parties may cite as precedent). Shareholders and potential investors should be aware, however, that, in March 2019 the Internal Revenue Service released final Regulations that, if finalized in the form proposed, would treat income from the Subsidiary to the income distributed in the same year in which the income is required to be included in the income of the Fund under the controlled foreign corporation rules. The Fund intends to distribute the income in the same year as the income is required to be included, but the final Regulations would still treat the income from the Subsidiary as qualifying income so long as the income is related to the Fund’s business of investing in stocks or securities. |
Name and
Year of Birth |
Position
and Offices with Trust |
Term of
Office and Year First Elected or Appointed |
Principal Occupations
During Past 5 Years |
Number of
Portfolios in the First Trust Fund Complex Overseen by Trustee |
Other
Trusteeships or Directorships Held by Trustee During the Past 5 Years |
TRUSTEE WHO IS AN INTERESTED PERSON OF THE TRUST | |||||
James A. Bowen (1)
1955 |
Chairman of the Board and Trustee |
• Indefinite term
• Since August, 2013 |
Chief Executive Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chairman of the Board of Directors, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) | 176 Portfolios | None |
INDEPENDENT TRUSTEES | |||||
Richard E. Erickson
1951 |
Trustee |
• Indefinite term
• Since August, 2013 |
Physician; Officer, Wheaton Orthopedics; Limited Partner, Gundersen Real Estate Limited Partnership (June 1992 to December 2016); Member, Sportsmed LLC (April 2007 to November 2015) | 176 Portfolios | None |
Thomas R. Kadlec
1957 |
Trustee |
• Indefinite term
• Since August, 2013 |
President, ADM Investor Services, Inc. (Futures Commission Merchant) | 176 Portfolios | Director of ADM Investor Services, Inc., ADM Investor Services International, Futures Industry Association, and National Futures Association |
Robert F. Keith
1956 |
Trustee |
• Indefinite term
• Since August, 2013 |
President, Hibs Enterprises (Financial and Management Consulting) | 176 Portfolios | Director of Trust Company of Illinois |
Niel B. Nielson
1954 |
Trustee |
• Indefinite term
• Since August, 2013 |
Senior Advisor (August 2018 to present), Managing Director and Chief Operating Officer (January 2015 to August 2018), Pelita Harapan Educational Foundation (Educational Products and Services); President and Chief Executive Officer (June 2012 to September 2014), Servant Interactive LLC (Educational Products and Services); President and Chief Executive Officer (June 2012 to September 2014), Dew Learning LLC (Educational Products and Services) | 176 Portfolios |
Director of Covenant Transport, Inc.
(May 2003 to May 2014) |
Name and
Year of Birth |
Position and
Offices with Trust |
Term of Office and
Length of Service |
Principal Occupations
During Past 5 Years |
OFFICERS OF THE TRUST | |||
James M. Dykas
1966 |
President and Chief Executive Officer |
• Indefinite term
• Since January 2016 |
Managing Director and Chief Financial Officer (January 2016 to present), Controller (January 2011 to January 2016), Senior Vice President (April 2007 to January 2016), First Trust Advisors L.P. and First Trust Portfolios L.P.; Chief Financial Officer (January 2016 to present), BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) |
W. Scott Jardine
1960 |
Secretary and Chief Legal Officer |
• Indefinite term
• Since August, 2013 |
General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P.; Secretary and General Counsel, BondWave LLC; and Secretary, Stonebridge Advisors LLC |
Daniel J. Lindquist
1970 |
Vice President |
• Indefinite term
• Since August, 2013 |
Managing Director, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Kristi A. Maher
1966 |
Chief Compliance Officer and Assistant Secretary |
• Indefinite term
• Since August, 2013 |
Deputy General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Donald P. Swade
1972 |
Treasurer, Chief Financial Officer and Chief Accounting Officer |
• Indefinite term
• Since January 2016 |
Senior Vice President (July 2016 to Present), Vice President (April 2012 to July 2016), First Trust Advisors L.P. and First Trust Portfolios L.P. |
Roger F. Testin
1966 |
Vice President |
• Indefinite term
• Since August, 2013 |
Senior Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Stan Ueland
1970 |
Vice President |
• Indefinite term
• Since August, 2013 |
Senior Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P. |
(1) | Mr. Bowen is deemed an “interested person” of the Trust due to his position as Chief Executive Officer of First Trust, investment advisor of the Fund. |
Name of Trustee |
Total Compensation from
the Fund (1) |
Total Compensation
from the First Trust Fund Complex (2) |
Richard E. Erickson | $ 4,061 | $458,125 |
Thomas R. Kadlec | $ 4,060 | $451,450 |
Robert F. Keith | $ 4,060 | $454,098 |
Niel B. Nielson | $ 4,059 | $440,930 |
(1) | The compensation paid by the Fund to the Independent Trustees for the fiscal year ended December 31, 2019 for services to the Fund. |
(2) | The total compensation paid to the Independent Trustees for the calendar year ended December 31, 2019 for services to the 171 portfolios existing in 2019, which consisted of 7 open-end mutual funds, 15 closed-end funds and 149 exchange-traded funds. |
Trustee |
Dollar Range of
Equity Securities in the Funds (Number of Shares Held) |
Aggregate Dollar Range of
Equity Securities in All Registered Investment Companies Overseen by Trustee in the First Trust Fund Complex |
Interested Trustee | ||
James A. Bowen | None | Over $100,000 |
Independent Trustees | ||
Richard E. Erickson | None | Over $100,000 |
Thomas R. Kadlec | None | Over $100,000 |
Robert F. Keith | None | Over $100,000 |
Niel B. Nielson | None | Over $100,000 |
Amount of Unitary Fees
|
||
Fiscal Year Ended December 31, | ||
2019 | 2018 | 2017 |
$100,142 | $123,325 | $99,631 |
Name |
Position with
First Trust |
Length of Service
with First Trust |
Principal Occupation
During Past Five Years |
John Gambla | Senior Portfolio Manager | Since 2011 | Senior Portfolio Manager, First Trust Advisors L.P. |
Rob A. Guttschow | Senior Portfolio Manager | Since 2011 | Senior Portfolio Manager, First Trust Advisors L.P. |
Aggregate Amount of Brokerage Commissions
|
||
Fiscal Year Ended December 31, | ||
2019 | 2018 | 2017 |
$0 | $0 | $0 |
Argentina | Australia | Austria | Belgium | Brazil | Canada | Chile |
May 1
June 17 June 20 July 8 July 9 August 17 October 12 November 23 December 8 December 25 January 1 February 15 February 16 March 24 April 1 April 2 |
June 8
December 25 December 28 January 1 January 26 April 2 April 5 |
May 1
June 1 October 26 December 8 December 25 January 1 April 2 April 5 |
May 1
May 21 November 11 December 25 January 1 April 2 April 5 |
May 1
June 11 July 9 September 7 October 12 November 2 November 20 December 24 December 25 December 31 January 1 February 15 February 16 February 17 April 2 April 21 |
May 18
July 1 August 3 September 7 October 12 November 11 December 24 December 25 December 28 January 1 February 15 April 2 |
May 1
May 21 July 16 August 15 September 18 October 12 December 8 December 25 January 1 April 2 |
China | Denmark | Finland | France | Germany | Greece | Hong Kong |
May 1
April 6 June 25 October 1 October 2 October 5 October 6 October 7 January 1 February 11 February 12 February 15 February 16 February 17 |
May 8
May 21 May 22 June 1 June 5 December 24 December 25 December 31 January 1 April 1 April 2 April 5 April 30 |
May 1
May 21 June 19 December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
May 8 May 21 June 1 December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
June 8 October 28 December 24 December 25 December 31 January 1 January 6 March 15 March 25 April 2 April 5 April 30 |
May 1
May 13 June 7 July 1 October 1 October 7 December 25 December 26 January 1 February 12 February 15 April 2 April 5 |
India | Ireland | Israel | Italy | Japan | Malaysia | Mexico |
May 1
July 31 August 20 August 28 October 2 November 16 November 30 December 25 January 26 March 11 March 29 April 2 April 14 April 21 |
May 1
December 24 December 25 December 31 January 1 April 2 April 5 |
May 28
May 29 July 30 September 20 September 27 September 28 October 4 October 5 October 6 October 7 February 26 March 28 April 1 April 2 April 14 April 15 |
May 1
December 24 December 25 December 31 January 1 April 2 April 5 |
May 4
May 5 May 6 July 23 July 24 August 10 September 21 September 22 November 3 November 23 December 31 January 1 January 2 January 3 January 11 February 11 February 23 March 22 April 29 |
May 1
May 7 May 11 May 25 June 6 July 31 August 20 August 31 September 16 October 29 November 14 December 25 January 1 February 1 February 12 |
May 1
September 16 November 16 November 20 December 25 January 1 February 1 February 5 March 15 April 2 April 5 |
New Zealand | Netherlands | Norway | Portugal | Singapore | South Africa | South Korea |
June 1
October 26 December 24 December 25 December 28 December 31 January 1 January 4 February 8 April 2 April 5 April 26 |
May 1
May 21 June 1 August 3 December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
May 21 June 1 June 17 August 3 December 24 December 25 December 31 January 1 April 1 April 2 April 5 |
May 1
December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
May 7 May 25 July 31 August 10 November 14 December 25 January 1 March 22 April 2 |
May 1
June 16 August 9 September 24 December 16 December 25 December 26 January 1 April 2 April 5 April 27 |
May 1
May 5 June 6 September 30 October 1 October 2 October 9 December 25 December 31 January 1 February 11 February 12 March 1 |
Spain | Sweden | Switzerland | Taiwan | Thailand | United Kingdom | United States |
May 1
December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
May 21 June 19 December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
May 21 June 1 December 24 December 25 December 31 January 1 April 2 April 5 |
May 1
June 25 October 1 October 9 October 10 January 1 February 11 February 12 February 15 February 16 April 5 |
May 1
May 4 May 6 June 3 July 6 July 28 August 12 October 13 October 23 December 7 December 10 December 31 January 1 April 6 April 13 April 14 April 15 |
May 8
May 25 August 31 December 24 December 25 December 31 January 1 April 2 April 5 |
May 25
July 3 September 7 November 26 December 25 January 1 January 18 February 15 April 2 |
(1) | Common stocks and other equity securities listed on any national or foreign exchange other than Nasdaq and the London Stock Exchange Alternative Investment Market (“AIM”) will be valued at the last sale price on the exchange on which they are principally traded, or the official closing price for Nasdaq and AIM securities. Portfolio securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, on the Business Day as of which such value is being determined at the close of the exchange representing the principal market for such securities. |
(2) | Shares of open-end funds are valued at fair value which is based on NAV per share. |
(3) | Securities traded in the OTC market are fair valued at the mean of their most recent bid and asked price, if available, and otherwise at their closing bid price. |
(4) | Exchange-traded options and futures contracts are valued at the closing price in the market where such contracts are principally traded. If no closing price is available, they will be fair valued at the mean of their most recent bid and asked price, if available, and otherwise at their closing bid price. OTC options and futures contracts are fair valued at the mean of the most recent bid and asked price, if available, and otherwise at their closing bid price. |
(5) | Forward foreign currency contracts are fair valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s spot rate, and the 30, 60, 90 and 180-day forward rates provided by a pricing service or by certain independent dealers in such contracts. |
(1) | Fixed-income securities, convertible securities, interest rate swaps, credit default swaps, total return swaps, currency swaps, currency-linked notes, credit-linked notes and other similar instruments will be fair valued using a pricing service. |
(2) | Fixed income and other debt securities having a remaining maturity of 60 days or less when purchased are fair valued at cost adjusted for amortization of premiums and accretion of discounts (amortized cost), provided the Advisor’s Pricing Committee has determined that the use of amortized cost is an appropriate reflection of fair value given market and issuer-specific conditions existing at the time of the determination. Factors that may be considered in determining the appropriateness of the use of amortized cost include, but are not limited to, the following: |
(i) | the credit conditions in the relevant market and changes thereto; |
(ii) | the liquidity conditions in the relevant market and changes thereto; |
(iii) | the interest rate conditions in the relevant market and changes thereto (such as significant changes in interest rates); |
(iv) | issuer-specific conditions (such as significant credit deterioration); and |
(v) | any other market-based data the Advisor’s Pricing Committee considers relevant. In this regard, the Advisor’s Pricing Committee may use last-obtained market-based data to assist it when valuing portfolio securities using amortized cost. |
(3) | Repurchase agreements will be valued as follows. Overnight repurchase agreements will be fair valued at amortized cost when it represents the best estimate of fair value. Term repurchase agreements (i.e., those whose maturity exceeds seven days) will be fair valued by the Advisor’s Pricing Committee at the average of the bid quotations obtained daily from at least two recognized dealers. |
NAME OF BENEFICIAL OWNER |
% OF
OUTSTANDING SHARES OWNED |
FIRST TRUST MANAGED FUTURES STRATEGY FUND | |
BOFA Securities, Inc. | 24.46% |
National Bank Financial Inc./CDS | 21.60% |
TD Ameritrade Clearing, Inc. | 12.75% |
Charles Schwab & Co., Inc. | 9.78% |
National Financial Services LLC | 9.25% |
Pershing LLC | 7.58% |
LPL Financial Corporation | 5.38% |
➤ | General Recommendation: Generally vote for director nominees, except under the following circumstances (with new nominees1 considered on case-by-case basis): |
➤ | Independent directors comprise 50 percent or less of the board; |
➤ | The non-independent director serves on the audit, compensation, or nominating committee; |
➤ | The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee; or |
➤ | The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee. |
➤ | Medical issues/illness; |
➤ | Family emergencies; and |
➤ | Missing only one meeting (when the total of all meetings is three or fewer). |
1 | A "new nominee" is a director who is being presented for election by shareholders for the first time. Recommendations on new nominees who have served for less than one year are made on a case-by-case basis depending on the timing of their appointment and the problematic governance issue in question. |
2 | In general, companies with a plurality vote standard use “Withhold” as the contrary vote option in director elections; companies with a majority vote standard use “Against”. However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company. |
3 | Nominees who served for only part of the fiscal year are generally exempted from the attendance policy. |
➤ | Sit on more than five public company boards; or |
➤ | Are CEOs of public companies who sit on the boards of more than two public companies besides their own— withhold only at their outside boards4. |
➤ | Until Feb. 1, 2021, a firm commitment, as stated in the proxy statement, to appoint at least one woman to the board within a year; |
➤ | The presence of a woman on the board at the preceding annual meeting and a firm commitment to appoint at least one woman to the board within a year; or |
➤ | Other relevant factors as applicable. |
➤ | The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are: |
➤ | Disclosed outreach efforts by the board to shareholders in the wake of the vote; |
➤ | Rationale provided in the proxy statement for the level of implementation; |
➤ | The subject matter of the proposal; |
➤ | The level of support for and opposition to the resolution in past meetings; |
➤ | Actions taken by the board in response to the majority vote and its engagement with shareholders; |
➤ | The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals); and |
➤ | Other factors as appropriate. |
➤ | The board failed to act on takeover offers where the majority of shares are tendered; |
➤ | At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote. |
➤ | The company’s previous say-on-pay received the support of less than 70 percent of votes cast. Factors that will be considered are: |
➤ | The company's response, including: |
➤ | Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated); |
➤ | Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; |
➤ | Disclosure of specific and meaningful actions taken to address shareholders' concerns; |
➤ | Other recent compensation actions taken by the company; |
➤ | Whether the issues raised are recurring or isolated; |
4 | Although all of a CEO’s subsidiary boards with publicly-traded common stock will be counted as separate boards, ISS will not recommend a withhold vote for the CEO of a parent company board or any of the controlled (>50 percent ownership) subsidiaries of that parent but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships. |
➤ | The company's ownership structure; and |
➤ | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness. |
➤ | The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the plurality of votes cast. |
➤ | The company has a poison pill that was not approved by shareholders5. However, vote case-by-case on nominees if the board adopts an initial pill with a term of one year or less, depending on the disclosed rationale for the adoption, and other factors as relevant (such as a commitment to put any renewal to a shareholder vote). |
➤ | The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval. |
➤ | A classified board structure; |
➤ | A supermajority vote requirement; |
➤ | Either a plurality vote standard in uncontested director elections, or a majority vote standard in contested elections; |
➤ | The inability of shareholders to call special meetings; |
➤ | The inability of shareholders to act by written consent; |
➤ | A multi-class capital structure; and/or |
➤ | A non-shareholder-approved poison pill. |
➤ | The board's rationale for adopting the bylaw/charter amendment without shareholder ratification; |
➤ | Disclosure by the company of any significant engagement with shareholders regarding the amendment; |
➤ | The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter; |
➤ | The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions; |
➤ | The company's ownership structure; |
5 | Public shareholders only, approval prior to a company’s becoming public is insufficient. |
➤ | The company's existing governance provisions; |
➤ | The timing of the board's amendment to the bylaws/charter in connection with a significant business development; and, |
➤ | Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders. |
➤ | Classified the board; |
➤ | Adopted supermajority vote requirements to amend the bylaws or charter; or |
➤ | Eliminated shareholders' ability to amend bylaws. |
➤ | Supermajority vote requirements to amend the bylaws or charter; |
➤ | A classified board structure; or |
➤ | Other egregious provisions. |
➤ | The presence of a shareholder proposal addressing the same issue on the same ballot; |
➤ | The board's rationale for seeking ratification; |
➤ | Disclosure of actions to be taken by the board should the ratification proposal fail; |
➤ | Disclosure of shareholder engagement regarding the board’s ratification request; |
➤ | The level of impairment to shareholders' rights caused by the existing provision; |
➤ | The history of management and shareholder proposals on the provision at the company’s past meetings; |
➤ | Whether the current provision was adopted in response to the shareholder proposal; |
➤ | The company's ownership structure; and |
➤ | Previous use of ratification proposals to exclude shareholder proposals. |
➤ | The company’s governing documents impose undue restrictions on shareholders’ ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis. |
➤ | The non-audit fees paid to the auditor are excessive; |
➤ | The company receives an adverse opinion on the company’s financial statements from its auditor; or |
➤ | There is persuasive evidence that the Audit Committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm. |
➤ | Poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence, and duration, as well as the company’s efforts at remediation or corrective actions, in determining whether withhold/against votes are warranted. |
➤ | There is an unmitigated misalignment between CEO pay and company performance (pay for performance); |
➤ | The company maintains significant problematic pay practices; or |
➤ | The board exhibits a significant level of poor communication and responsiveness to shareholders. |
➤ | The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company’s declared frequency of say on pay; or |
➤ | The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions. |
➤ | The presence of an anti-pledging policy, disclosed in the proxy statement, that prohibits future pledging activity; |
➤ | The magnitude of aggregate pledged shares in terms of total common shares outstanding, market value, and trading volume; |
➤ | Disclosure of progress or lack thereof in reducing the magnitude of aggregate pledged shares over time; |
➤ | Disclosure in the proxy statement that shares subject to stock ownership and holding requirements do not include pledged company stock; and |
➤ | Any other relevant factors. |
➤ | Material failures of governance, stewardship, risk oversight7, or fiduciary responsibilities at the company; |
➤ | Failure to replace management as appropriate; or |
➤ | Egregious actions related to a director’s service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company. |
➤ | General Recommendation: In cases where companies are targeted in connection with public “vote-no” campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information. |
➤ | General Recommendation: Vote case-by-case on the election of directors in contested elections, considering the following factors: |
➤ | Long-term financial performance of the company relative to its industry; |
➤ | Management’s track record; |
➤ | Background to the contested election; |
➤ | Nominee qualifications and any compensatory arrangements; |
➤ | Strategic plan of dissident slate and quality of the critique against management; |
➤ | Likelihood that the proposed goals and objectives can be achieved (both slates); and |
➤ | Stock ownership positions. |
7 | Examples of failure of risk oversight include but are not limited to: bribery; large or serial fines or sanctions from regulatory bodies; significant adverse legal judgments or settlement; or hedging of company stock. |
➤ | General Recommendation: Generally vote for shareholder proposals requiring that the chair position be filled by an independent director, taking into consideration the following: |
➤ | The scope and rationale of the proposal; |
➤ | The company's current board leadership structure; |
➤ | The company's governance structure and practices; |
➤ | Company performance; and |
➤ | Any other relevant factors that may be applicable. |
➤ | A majority non-independent board and/or the presence of non-independent directors on key board committees; |
➤ | A weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role; |
➤ | The presence of an executive or non-independent chair in addition to the CEO, a recent recombination of the role of CEO and chair, and/or departure from a structure with an independent chair; |
➤ | Evidence that the board has failed to oversee and address material risks facing the company; |
➤ | A material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or |
➤ | Evidence that the board has failed to intervene when management’s interests are contrary to shareholders' interests. |
➤ | General Recommendation: Generally vote for management and shareholder proposals for proxy access with the following provisions: |
➤ | Ownership threshold: maximum requirement not more than three percent (3%) of the voting power; |
➤ | Ownership duration: maximum requirement not longer than three (3) years of continuous ownership for each member of the nominating group; |
➤ | Aggregation: minimal or no limits on the number of shareholders permitted to form a nominating group; |
➤ | Cap: cap on nominees of generally twenty-five percent (25%) of the board. |
➤ | General Recommendation: Generally vote against management proposals to ratify provisions of the company’s existing charter or bylaws, unless these governance provisions align with best practice. |
➤ | The presence of a shareholder proposal addressing the same issue on the same ballot; |
➤ | The board's rationale for seeking ratification; |
➤ | Disclosure of actions to be taken by the board should the ratification proposal fail; |
➤ | Disclosure of shareholder engagement regarding the board’s ratification request; |
➤ | The level of impairment to shareholders' rights caused by the existing provision; |
➤ | The history of management and shareholder proposals on the provision at the company’s past meetings; |
➤ | Whether the current provision was adopted in response to the shareholder proposal; |
➤ | The company's ownership structure; and |
➤ | Previous use of ratification proposals to exclude shareholder proposals. |
➤ | General Recommendation: Vote for proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with a transaction on the same ballot that warrants support. |
➤ | Past Board Performance: |
➤ | The company's use of authorized shares during the last three years |
➤ | The Current Request: |
➤ | Disclosure in the proxy statement of the specific purposes of the proposed increase; |
➤ | Disclosure in the proxy statement of specific and severe risks to shareholders of not approving the request; and |
➤ | The dilutive impact of the request as determined relative to an allowable increase calculated by ISS (typically 100 percent of existing authorized shares) that reflects the company's need for shares and total shareholder returns. |
A. | Most companies: 100 percent of existing authorized shares. |
B. | Companies with less than 50 percent of existing authorized shares either outstanding or reserved for issuance: 50 percent of existing authorized shares. |
C. | Companies with one- and three-year total shareholder returns (TSRs) in the bottom 10 percent of the U.S. market as of the end of the calendar quarter that is closest to their most recent fiscal year end: 50 percent of existing authorized shares. |
D. | Companies at which both conditions (B and C) above are both present: 25 percent of existing authorized shares. |
➤ | General Recommendation: For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding: |
➤ | Greenmail, |
➤ | The use of buybacks to inappropriately manipulate incentive compensation metrics, |
➤ | Threats to the company's long-term viability, or |
➤ | Other company-specific factors as warranted. |
➤ | General Recommendation: Generally vote against shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote for the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks. |
➤ | Financial issues – company’s financial situation; degree of need of capital; use of proceeds; effect of the financing on the company’s cost of capital; |
➤ | Management efforts to pursue other alternatives; |
➤ | Control issues – change in management; change in control, guaranteed board and committee seats; standstill provisions; voting agreements; veto power over certain corporate actions; and |
➤ | Conflict of interest – arm’s length transaction, managerial incentives. |
➤ | General Recommendation: Vote case-by-case on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including: |
➤ | Valuation - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction, and strategic rationale. |
➤ | Market reaction - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal. |
➤ | Strategic rationale - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions. |
➤ | Negotiations and process - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value. |
➤ | Conflicts of interest - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary" section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a potential conflict exists. |
➤ | Governance - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance. |
1. | Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs; |
2. | Avoid arrangements that risk “pay for failure”: This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation; |
3. | Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed); |
4. | Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly; |
5. | Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors is reasonable and does not compromise their independence and ability to make appropriate judgments in overseeing managers’ pay and performance. At the market level, it may incorporate a variety of generally accepted best practices. |
➤ | General Recommendation: Vote case-by-case on ballot items related to executive pay and practices, as well as certain aspects of outside director compensation. |
Vote against Advisory Votes on Executive Compensation (Say-on-Pay or “SOP”) if: |
➤ | There is an unmitigated misalignment between CEO pay and company performance (pay for performance); |
➤ | The company maintains significant problematic pay practices; |
➤ | The board exhibits a significant level of poor communication and responsiveness to shareholders. |
➤ | There is no SOP on the ballot, and an against vote on an SOP would otherwise be warranted due to pay-for-performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof; |
➤ | The board fails to respond adequately to a previous SOP proposal that received less than 70 percent support of votes cast; |
➤ | The company has recently practiced or approved problematic pay practices, such as option repricing or option backdating; or |
➤ | The situation is egregious. |
1. | Peer Group9 Alignment: |
➤ | The degree of alignment between the company's annualized TSR rank and the CEO's annualized total pay rank within a peer group, each measured over a three-year period. |
➤ | The rankings of CEO total pay and company financial performance within a peer group, each measured over a three-year period. |
➤ | The multiple of the CEO's total pay relative to the peer group median in the most recent fiscal year. |
2. | Absolute Alignment10– the absolute alignment between the trend in CEO pay and company TSR over the prior five fiscal years – i.e., the difference between the trend in annual pay changes and the trend in annualized TSR during the period. |
➤ | The ratio of performance- to time-based incentive awards; |
➤ | The overall ratio of performance-based compensation to fixed or discretionary pay; |
➤ | The rigor of performance goals; |
➤ | The complexity and risks around pay program design; |
➤ | The transparency and clarity of disclosure; |
➤ | The company's peer group benchmarking practices; |
➤ | Financial/operational results, both absolute and relative to peers; |
➤ | Special circumstances related to, for example, a new CEO in the prior FY or anomalous equity grant practices (e.g., bi-annual awards); |
8 | The Russell 3000E Index includes approximately 4,000 of the largest U.S. equity securities. |
9 | The revised peer group is generally comprised of 14-24 companies that are selected using market cap, revenue (or assets for certain financial firms), GICS industry group, and company's selected peers' GICS industry group, with size constraints, via a process designed to select peers that are comparable to the subject company in terms of revenue/assets and industry, and also within a market-cap bucket that is reflective of the company's. For Oil, Gas & Consumable Fuels companies, market cap is the only size determinant. |
10 | Only Russell 3000 Index companies are subject to the Absolute Alignment analysis. |
➤ | Realizable pay11 compared to grant pay; and |
➤ | Any other factors deemed relevant. |
➤ | Any other factors deemed relevant. |
➤ | Problematic practices related to non-performance-based compensation elements; |
➤ | Incentives that may motivate excessive risk-taking or present a windfall risk; and |
➤ | Pay decisions that circumvent pay-for-performance, such as options backdating or waiving performance requirements. |
➤ | Repricing or replacing of underwater stock options/SARS without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options); |
➤ | Extraordinary perquisites or tax gross-ups; |
➤ | New or materially amended agreements that provide for: |
➤ | Excessive termination or CIC severance payments (generally exceeding 3 times base salary and average/target/most recent bonus); |
➤ | CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers) or in connection with a problematic Good Reason definition; |
➤ | CIC excise tax gross-up entitlements (including "modified" gross-ups); |
➤ | Multi-year guaranteed awards that are not at risk due to rigorous performance conditions; |
➤ | Liberal CIC definition combined with any single-trigger CIC benefits; |
➤ | Insufficient executive compensation disclosure by externally-managed issuers (EMIs) such that a reasonable assessment of pay programs and practices applicable to the EMI's executives is not possible; |
➤ | Any other provision or practice deemed to be egregious and present a significant risk to investors. |
➤ | Failure to respond to majority-supported shareholder proposals on executive pay topics; or |
➤ | Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account: |
➤ | Disclosure of engagement efforts with major institutional investors, including the frequency and timing of engagements and the company participants (including whether independent directors participated); |
➤ | Disclosure of the specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition; |
➤ | Disclosure of specific and meaningful actions taken to address shareholders’ concerns; |
➤ | Other recent compensation actions taken by the company; |
11 | ISS research reports include realizable pay for S&P1500 companies. |
➤ | Whether the issues raised are recurring or isolated; |
➤ | The company's ownership structure; and |
➤ | Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness. |
➤ | General Recommendation: Vote case-by-case on certain equity-based compensation plans12 depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "Equity Plan Scorecard" (EPSC) approach with three pillars: |
➤ | Plan Cost: The total estimated cost of the company’s equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both: |
➤ | SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants; and |
➤ | SVT based only on new shares requested plus shares remaining for future grants. |
➤ | Plan Features: |
➤ | Quality of disclosure around vesting upon a change in control (CIC); |
➤ | Discretionary vesting authority; |
➤ | Liberal share recycling on various award types; |
➤ | Lack of minimum vesting period for grants made under the plan; |
➤ | Dividends payable prior to award vesting. |
➤ | Grant Practices: |
➤ | The company’s three-year burn rate relative to its industry/market cap peers; |
➤ | Vesting requirements in CEO's recent equity grants (3-year look-back); |
➤ | The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years); |
➤ | The proportion of the CEO's most recent equity grants/awards subject to performance conditions; |
➤ | Whether the company maintains a sufficient claw-back policy; |
➤ | Whether the company maintains sufficient post-exercise/vesting share-holding requirements. |
➤ | Awards may vest in connection with a liberal change-of-control definition; |
➤ | The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it—for NYSE and Nasdaq listed companies—or by not prohibiting it when the company has a history of repricing—for non-listed companies); |
➤ | The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances; |
➤ | The plan is excessively dilutive to shareholders' holdings; |
➤ | The plan contains an evergreen (automatic share replenishment) feature; or |
➤ | Any other plan features are determined to have a significant negative impact on shareholder interests. |
21 | Proposals evaluated under the EPSC policy generally include those to approve or amend (1) stock option plans for employees and/or employees and directors, (2) restricted stock plans for employees and/or employees and directors, and (3) omnibus stock incentive plans for employees and/or employees and directors; amended plans will be further evaluated case-by-case. |
➤ | General Recommendation: Generally vote case-by-case, examining primarily whether implementation of the proposal is likely to enhance or protect shareholder value. The following factors will be considered: |
➤ | If the issues presented in the proposal are more appropriately or effectively dealt with through legislation or government regulation; |
➤ | If the company has already responded in an appropriate and sufficient manner to the issue(s) raised in the proposal; |
➤ | Whether the proposal's request is unduly burdensome (scope or timeframe) or overly prescriptive; |
➤ | The company's approach compared with any industry standard practices for addressing the issue(s) raised by the proposal; |
➤ | Whether there are significant controversies, fines, penalties, or litigation associated with the company's environmental or social practices; |
➤ | If the proposal requests increased disclosure or greater transparency, whether reasonable and sufficient information is currently available to shareholders from the company or from other publicly available sources; and |
➤ | If the proposal requests increased disclosure or greater transparency, whether implementation would reveal proprietary or confidential information that could place the company at a competitive disadvantage. |
➤ | General Recommendation: Generally vote for resolutions requesting that a company disclose information on the financial, physical, or regulatory risks it faces related to climate change on its operations and investments or on how the company identifies, measures, and manages such risks, considering: |
➤ | Whether the company already provides current, publicly-available information on the impact that climate change may have on the company as well as associated company policies and procedures to address related risks and/or opportunities; |
➤ | The company’s level of disclosure compared to industry peers; and |
➤ | Whether there are significant controversies, fines, penalties, or litigation associated with the company’s climate change-related performance. |
➤ | The company already discloses current, publicly-available information on the impacts that GHG emissions may have on the company as well as associated company policies and procedures to address related risks and/or opportunities; |
➤ | The company's level of disclosure is comparable to that of industry peers; and |
➤ | There are no significant, controversies, fines, penalties, or litigation associated with the company's GHG emissions. |
➤ | Whether the company provides disclosure of year-over-year GHG emissions performance data; |
➤ | Whether company disclosure lags behind industry peers; |
➤ | The company's actual GHG emissions performance; |
➤ | The company's current GHG emission policies, oversight mechanisms, and related initiatives; and |
➤ | Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to GHG emissions. |
➤ | General Recommendation: Generally vote for requests for reports on a company's efforts to diversify the board, unless: |
➤ | The gender and racial minority representation of the company’s board is reasonably inclusive in relation to companies of similar size and business; and |
➤ | The board already reports on its nominating procedures and gender and racial minority initiatives on the board and within the company. |
➤ | The degree of existing gender and racial minority diversity on the company’s board and among its executive officers; |
➤ | The level of gender and racial minority representation that exists at the company’s industry peers; |
➤ | The company’s established process for addressing gender and racial minority board representation; |
➤ | Whether the proposal includes an overly prescriptive request to amend nominating committee charter language; |
➤ | The independence of the company’s nominating committee; |
➤ | Whether the company uses an outside search firm to identify potential director nominees; and |
➤ | Whether the company has had recent controversies, fines, or litigation regarding equal employment practices. |
➤ | General Recommendation: Generally vote case-by-case on requests for reports on a company's pay data by gender, race, or ethnicity, or a report on a company’s policies and goals to reduce any gender, race, or ethnicity pay gap, taking into account: |
➤ | The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy and fair and equitable compensation practices; |
➤ | Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race, or ethnicity pay gap issues; and |
➤ | Whether the company's reporting regarding gender, race, or ethnicity pay gap policies or initiatives is lagging its peers. |
➤ | General Recommendation: Generally vote for proposals requesting that a company report on its policies, initiatives, and oversight mechanisms related to social, economic, and environmental sustainability, unless: |
➤ | The company already discloses similar information through existing reports or policies such as an environment, health, and safety (EHS) report; a comprehensive code of corporate conduct; and/or a diversity report; or |
➤ | The company has formally committed to the implementation of a reporting program based on Global Reporting Initiative (GRI) guidelines or a similar standard within a specified time frame. |
➤ | General Recommendation: Vote case-by-case on proposals requesting information on a company’s lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering: |
➤ | The company’s current disclosure of relevant lobbying policies, and management and board oversight; |
➤ | The company’s disclosure regarding trade associations or other groups that it supports, or is a member of, that engage in lobbying activities; and |
➤ | Recent significant controversies, fines, or litigation regarding the company’s lobbying-related activities. |
➤ | General Recommendation: Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering: |
➤ | The company's policies, and management and board oversight related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes; |
➤ | The company's disclosure regarding its support of, and participation in, trade associations or other groups that may make political contributions; and |
➤ | Recent significant controversies, fines, or litigation related to the company's political contributions or political activities. |
1. | Likelihood of payment: capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation; |
2. | Nature of and provisions of the obligation and the promise S&P imputes; |
3. | Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights. |
AAA | An obligation rated “AAA” has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. |
AA | An obligation rated “AA” differs from the highest rated obligations only in small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong. |
A | An obligation rated “A” is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong. |
BBB | An obligation rated “BBB” exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. |
BB | An obligation rated “BB” is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. |
B | An obligation rated “B” is more vulnerable to nonpayment than obligations rated “BB,” but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation. |
CCC | An obligation rated “CCC” is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. |
CC | An obligation rated “CC” is currently highly vulnerable to nonpayment. The “CC” rating is used when a default has not yet occurred but S&P expects default to be a virtual certainty regardless of the anticipated time to default. |
C | An obligation rated “C” is currently highly vulnerable to nonpayment and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher. |
D | An obligation rated “D” is in default or in breach of an imputed promise. For non-hybrid capital instruments, the “D” rating category is used when payments on an obligation are not made on the date due unless S&P believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The “D” rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer. |
Aaa | Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. |
Aa | Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. |
A | Obligations rated A are judged to be upper-medium grade and are subject to low credit risk. |
Baa | Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. |
Ba | Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. |
B | Obligations rated B are considered speculative and are subject to high credit risk. |
Caa | Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. |
Ca | Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. |
C | Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest. |
AAA | Highest credit quality. ‘AAA’ ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. |
AA | Very high credit quality. ‘AA’ ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. |
A | High credit quality. ‘A’ ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings. |
BBB | Good credit quality. ‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity. |
BB | Speculative. ‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments. |
B | Highly speculative. ‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment. |
CCC | Substantial credit risk. Default is a real possibility. |
CC | Very high levels of credit risk. Default of some kind appears probable. |
C |
Exceptionally high levels of credit risk. Default is imminent or inevitable, or the issuer is in standstill. Conditions that
are indicative of a ‘C’ category rating for an issuer include:
• the issuer has entered into a grace or cure period following non-payment of a material financial obligation; • the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation; or • Fitch otherwise believes a condition of ‘RD’ or ‘D’ to be imminent or inevitable, including through the formal announcement of a distressed debt exchange. |
RD |
Restricted default. ‘RD’ ratings indicate an issuer that in Fitch’s opinion has experienced an uncured payment default on a
bond, loan or other material financial obligation but which has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and which has not otherwise ceased
operating. This would include:
• the selective payment default on a specific class or currency of debt; • the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation; • the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; or • execution of a distressed debt exchange on one or more material financial obligations. |
D | Default. ‘D’ ratings indicate an issuer that in Fitch’s opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, or which has otherwise ceased business. |
First Trust Exchange-Traded Fund V
Part C – Other Information
Item 28. | Exhibits |
Exhibit No. Description
(a) | (1) Declaration of Trust of the Registrant is incorporated by reference to the initial Registration Statement filed on Form N-1A (File No. 333-181507) for Registrant on May 18, 2012. |
(b) | By-Laws of the Registrant is incorporated by reference to the initial Registration Statement filed on Form N-1A (File No. 333-181507) for Registrant on May 18, 2012. |
(d) | (1) Investment Management Agreement is incorporated by reference to the Pre-Effective Amendment No. 4 filed on Form N-1A (File No. 333-181507) for Registrant on July 23, 2013. |
(e) | Distribution Agreement is incorporated by reference to the Pre-Effective Amendment No. 4 filed on Form N-1A (File No. 333-181507) for Registrant on July 23, 2013. |
(f) | Not Applicable. |
(i) | Not Applicable. |
(j) | Consent of Independent Registered Public Accounting Firm is filed herewith. |
(k) | Not Applicable. |
(l) | Not Applicable. |
(m) | (1) 12b-1 Distribution and Service Plan is incorporated by reference to the Pre-Effective Amendment No. 4 filed on Form N-1A (File No. 333-181507) for Registrant on July 23, 2013. |
(2) 12b-1 Plan Extension Letter, dated October 21, 2019, is filed herewith.
(n) | Not Applicable. |
(o) | Not Applicable. |
Item 29. | Persons Controlled By or Under Common Control with Registrant |
Not Applicable.
Item 30. | Indemnification |
Section 9.5 of the Registrant’s Declaration of Trust provides as follows:
Section 9.5. Indemnification and Advancement of Expenses. Subject to the exceptions and limitations contained in this Section 9.5, every person who is, or has been, a Trustee, officer, or employee of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person"), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him or in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person to the extent such indemnification is prohibited by applicable federal law.
The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such a Covered Person and shall inure to the benefit of the heirs, executors and administrators of such a person.
Subject to applicable federal law, expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under this Section 9.5 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he is not entitled to indemnification under this Section 9.5.
To the extent that any determination is required to be made as to whether a Covered Person engaged in conduct for which indemnification is not provided as described herein, or as to whether there is reason to believe that a Covered Person ultimately will be found entitled to indemnification, the Person or Persons making the determination shall afford the Covered Person a rebuttable presumption that the Covered Person has not engaged in such conduct and that there is reason to believe that the Covered Person ultimately will be found entitled to indemnification.
As used in this Section 9.5, the words "claim," "action," "suit" or "proceeding" shall apply to all claims, demands, actions, suits, investigations, regulatory inquiries, proceedings or any other occurrence of a similar nature, whether actual or threatened and whether civil, criminal, administrative or other, including appeals, and the words "liability" and "expenses" shall include without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.
Item 31. | Business and Other Connections of the Investment Adviser |
First Trust Advisors L.P. (“First Trust”), investment adviser to the Registrant, serves as adviser or sub-adviser to various other open-end and closed-end management investment companies and is the portfolio supervisor of certain unit investment trusts. The principal business of certain of First Trust’s principal executive officers involves various activities in connection with the family of unit investment trusts sponsored by First Trust Portfolios L.P. (“FTP”). The principal address for all these investment companies, First Trust, FTP and the persons below is 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187.
A description of any business, profession, vocation or employment of a substantial nature in which the officers of First Trust who serve as officers or trustees of the Registrant have engaged during the last two years for his or her account or in the capacity of director, officer, employee, partner or trustee appears under “Management of the Fund” in the Statement of Additional Information. Such information for the remaining senior officers of First Trust appears below:
Name and Position with First Trust | Employment During Past Two Years |
Andrew S. Roggensack, President | Managing Director and President, First Trust |
R. Scott Hall, Managing Director | Managing Director, First Trust |
Ronald D. McAlister, Managing Director | Managing Director, First Trust |
David G. McGarel, Chief Investment Officer, Chief Operating Officer and Managing Director | Managing Director; Senior Vice President, First Trust |
Kathleen Brown, Chief Compliance Officer and Senior Vice President | Chief Compliance Officer and Senior Vice President, First Trust |
Brian Wesbury, Chief Economist and Senior Vice President | Chief Economist and Senior Vice President, First Trust |
Item 32. | Principal Underwriter |
(a) FTP serves as principal underwriter of the shares of the Registrant, First Trust Exchange-Traded Fund, First Trust Exchange-Traded Fund II, First Trust Exchange-Traded Fund III, First Trust Exchange-Traded Fund IV, First Trust Exchange Traded Fund VI, First Trust Exchange-Traded Fund VII, First Trust Exchange-Traded Fund VIII, First Trust Exchange-Traded AlphaDEX® Fund, First Trust Exchange-Traded AlphaDEX® Fund II, First Trust Variable Insurance Trust and First Trust Series Fund. FTP serves as principal underwriter and depositor of the following investment companies registered as unit investment trusts: the First Trust Combined Series, FT Series (formerly known as the First Trust Special Situations Trust), the First Trust Insured Corporate Trust, the First Trust of Insured Municipal Bonds and the First Trust GNMA.
(b) Positions and Offices with Underwriter
(c) Not Applicable
Item 33. | Location of Accounts and Records |
First Trust, 120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187, maintains the Registrant’s organizational documents, minutes of meetings, contracts of the Registrant and all advisory material of the investment adviser.
The Bank of New York Mellon Corporation (“BNYM”) maintains all general and subsidiary ledgers, journals, trial balances, records of all portfolio purchases and sales, and all other requirement records not maintained by First Trust.
BNYM also maintains all the required records in its capacity as transfer, accounting, dividend payment and interest holder service agent for the Registrant.
Item 34. | Management Services |
Not Applicable.
Item 35. | Undertakings |
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized in the City of Wheaton, and State of Illinois, on the 29th day of April, 2020.
First Trust Exchange-Traded Fund V | ||
By: | /s/ James M. Dykas | |
James M. Dykas, President and
Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated:
Signature | Title | Date | |
/s/ James M. Dykas |
President and Chief Executive
Officer |
April 29, 2020 | |
James M. Dykas | |||
/s/ Donald P. Swade |
Treasurer, Chief Financial Officer
and Chief Accounting Officer |
April 29, 2020 | |
Donald P. Swade | |||
James A. Bowen* |
)
Trustee ) |
||
) | |||
Richard E. Erickson* |
)
Trustee ) |
||
) | |||
Thomas R. Kadlec* |
)
Trustee ) |
||
) | By: | /s/ W. Scott Jardine | |
Robert F. Keith* |
)
Trustee ) |
W. Scott Jardine
Attorney-In-Fact |
|
) | April 29, 2020 | ||
Niel B. Nielson * |
)
Trustee ) |
||
) |
* | Original powers of attorney authorizing James A. Bowen, W. Scott Jardine, James M. Dykas, Eric F. Fess and Kristi A. Maher to execute Registrant's Registration Statement, and Amendments thereto, for each of the trustees of the Registrant on whose behalf this Registration Statement is filed, were previously executed, and are filed herewith. |
Index to Exhibits
(j) | Consent of Independent Registered Public Accounting Firm. |
(m)(2) | 12b-1 Plan Extension Letter, dated October 21, 2019. |
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