ITEM 5 – FEES AND COMPENSATION
Item 5.A. - FTA is compensated for its Advisory and Sub-Advisory Services with Advisory, Sub-Advisory and
Model Fees, as applicable, which are described in the Fund Documents, PPM, FTMIX documents or the FTA Fee
Schedule included as an exhibit in this Brochure.
Item 5.B. - Fund Clients, the Private Funds and FTMIX pay the Advisory Fee to FTA through their custodian or
administrator as disclosed in the Fund Documents, the PPM and FTMIX documents, respectively. FTA generally
has the ability to have Advisory and Sub-Advisory Fees for SMAs of Direct Clients and Managed Clients deducted
directly from the SMA account by the account custodian and paid directly to FTA. Certain SMA Client accounts
are invoiced by FTA through the custodian and other SMA Client custodians send FTA the Advisory or Sub-
Advisory Fee without receipt of an invoice.
Item 5.C.
FTP-Sponsored UITs
The UITs (and therefore indirectly, unit holders) are responsible for all of their expenses, including costs of
transfer agency, custody, fund administration, legal, audit and other services, interest, taxes, brokerage
commissions and other expenses related to the execution of portfolio transactions, sublicensing fees related to the
tracking index, where applicable, any distribution fees or expenses, and extraordinary expenses, as well as the fee
paid to FTA for Portfolio Services. This is further described in the UIT prospectus.
Fund Clients
Fund Clients pay FTA an Advisory Fee which is either:
an annual unitary fee (“Unitary Fee”) at a rate set forth in the Fund Documents. Under the Unitary Fee
structure, FTA is responsible for payment of the expenses of each Unitary Fee Fund Client, including the
cost of transfer agency, custody, fund administration, legal, audit and other services, and licensing, but
excluding fee payments under the Unitary Fee Advisory Agreement, interest, taxes, brokerage
commissions (see Item 12 for more information on brokerage) and other expenses connected with the
execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan,
if any, and extraordinary expenses;
an annual non-Unitary Fee at a rate set forth in the Fund Documents. Under the non-Unitary Fee structure,
each Fund is responsible for payment of all of its expenses, including Advisory Fees, costs of transfer
agency, custody, fund administration, legal, audit and other services, interest, taxes, brokerage
commissions (see Item 12 for more information on brokerage) and other expenses related to the execution
of portfolio transactions, sublicensing fees related to each Fund’s tracking index, where applicable, any
distribution fees or expenses, and extraordinary expenses.
FTA has entered into agreements with certain Fund Clients under which its Advisory Fee may be waived and it
may reimburse certain expenses to prevent a Fund’s expense ratio from exceeding a designated expense cap.
Such arrangements are disclosed, where applicable, in the Fund Documents.
The Advisory Fees paid by Fund Clients are not negotiable.
SMAs
The Advisory or Sub-Advisory Fee paid by SMA Clients does not include fees associated with custody, trade
execution (see Item 12 for more information on brokerage) or other account services, which are described in the
(i) Participant’s agreement with, and the materials available from, the Program Sponsor, (ii) the advisory
agreement between an Intermediary and Managed Client or (ii) in the Advisory Agreement between the Direct
Client and FTA. SMA Clients are responsible for these and other non-Advisory or Sub-Advisory Fee costs, such
as transaction charges, transfer fees, wire transfer fees and any margin interest, associated with their investments
or accounts.
Certain taxable SMA portfolios invest some or all of their assets in CEFs and/or ETFs, including ETFs managed
by FTA. In addition to FTA’s Advisory or Sub-Advisory Fee, these taxable SMA Clients invested in these portfolios
also indirectly bear the expenses of the applicable CEFs and/or ETFs, including the Advisory Fee paid by
shareholders in such Funds. These strategies do not hold FTA-managed CEFs.
FTA’s Advisory or Sub-Advisory Fee is waived for SMAs of ERISA plans or IRAs that invest in FTA strategies
that hold one or more First Trust ETFs as FTA receives an Advisory Fee for providing Advisory Services to the
First Trust ETFs.
Advisory and Sub-Advisory Fees are assessed on a quarterly basis, generally in advance; however, in the case of
certain SMA Clients, an Advisory or Sub-Advisory Fee may be assessed in arrears. Any Advisory or Sub-
Advisory Fee change made during the quarter will be reflected in the next billing period.
Generally, deposits and withdrawals during the quarter are billed, or credited, on a pro-rata basis at the end of the
quarter. For SMA Clients that are Participants, additional billings or credits in connection with deposits or
withdrawals are governed by the advisory agreement between the Program Sponsor and Participant. If the SMA
is closed before the end of a quarter, generally a prorated amount of the Advisory or Sub-Advisory Fee will be
refunded to the Participant. However, if an SMA is closed in the last 30 days of a quarter, generally no such
refund of the Advisory or Sub-Advisory Fee will be made unless the Advisory or Sub-Advisory Agreement
between FTA and the Participant specifies otherwise. Refunds are governed by the agreement between the
Program Sponsor and the Participant.
Private Funds
The Private Funds bear all of their own trade costs (see Item 12 for more information on brokerage),
organizational, offering and operating expenses as outlined in the PPM of each Private Fund. This includes an
Incentive Fee (defined below) which is further described in Item 6 below.
FTMIX
...