INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this 23rd day of July, 2013, by and
between FT CAYMAN SUBSIDIARY, a Cayman Islands exempted company (the "Company"),
and FIRST TRUST ADVISORS L.P., an Illinois limited partnership (the "Adviser").
WHEREAS, the Company is a wholly-owned subsidiary of the First Trust
Morningstar Managed Futures Strategy Fund (the "Fund"), a series of First Trust
Exchange-Traded Fund V (the "Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act");
WHEREAS, the purpose of the Company is to facilitate the implementation of
the Fund's investment strategies, particularly with respect to commodity futures
and other commodity-related derivative instruments; and
WHEREAS, the Company desires to retain the Adviser as investment adviser,
to furnish certain investment advisory, portfolio management and administrative
services to the Company, and the Adviser is willing to furnish such services.
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Company hereby engages the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the portfolio assets of
the Company and to administer the Company's affairs to the extent requested by
and subject to the supervision of the Board of Directors of the Company for the
period and upon the terms herein set forth. The investment and reinvestment of
the Company's assets shall be subject to (i) the policies, restrictions and
limitations as set forth in the Fund's then current registration statement under
the l940 Act, as such may be amended from time to time (the "Registration
Statement"), (ii) the Company's Memorandum of Association and Articles of
Association, as such may be amended from time to time (the "Charter Document"),
(iii) directions from the Company's Board of Directors and (iv) all applicable
laws and the regulations, including the applicable provisions of the laws of the
Cayman Islands and the United States, including the Investment Advisers Act of
1940, as amended, and to the extent required, the 1940 Act, the Commodity
Exchange Act, as amended, and the Internal Revenue Code of 1986, as amended.
The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment (if the Company maintains
an office) and clerical, bookkeeping and administrative services (other than
such services, if any, provided by the Company's transfer agent, administrator
or other service providers) for the Company, to permit any of its officers or
employees to serve without compensation as directors or officers of the Company
if elected to such positions, and to assume the obligations herein set forth for
the compensation herein provided. The Adviser shall at its own expense furnish
all executive and other personnel and office space and office facilities (if
any) required to render the investment management and administrative services
set forth in this Agreement. In the event that the Adviser pays or assumes any
expenses of the Company not required to be paid or assumed by the Adviser under
this Agreement, the Adviser shall not be obligated hereby to pay or assume the
same or similar expense in the future; provided, that nothing contained herein
shall be deemed to relieve the Adviser of any obligation to the Company under
any separate agreement or arrangement between the parties.
2. Except as otherwise provided herein or authorized by the Board of
Directors of the Company from time to time, the Adviser shall for all purposes
herein provided be deemed to be an independent contractor and shall neither have
the authority to act for nor represent the Company in any way, nor otherwise be
deemed an agent of the Company.
3. For the services and facilities described in Section 1, the Company
shall not pay compensation to the Adviser; rather, the Adviser will be
compensated by the Fund in accordance with the fee schedule set forth in
Schedule A to the investment management agreement between the Adviser and the
Trust on behalf of the Fund dated July 23, 2013 (the "Fund Management
Agreement").
The services of the Adviser to the Company under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.
4. During the term of this Agreement, the Adviser shall pay all of the
expenses of the Company (including the cost of transfer agency, custody, fund
administration, legal, audit and other services and license fees, if any) but
excluding interest, taxes, brokerage commissions and other expenses connected
with the execution of portfolio transactions, and extraordinary expenses.
5. The Adviser shall arrange for suitably qualified officers or employees
of the Adviser to serve, without compensation from the Company, as directors,
officers or agents of the Company, if duly elected or appointed to such
positions, and subject to their individual consent and to any limitations
imposed by law.
6. For purposes of this Agreement, brokerage and other commissions paid by
the Company upon the purchase or sale of securities or other assets for the
Company shall be considered a cost of securities or assets of the Company and
shall be paid by the Company.
7. Notwithstanding anything to the contrary in this Agreement, and subject
to the Company's Charter Document, and unless otherwise specified by notice from
the Company to the Adviser, the Adviser may, in the name of the Company, place
orders for the execution of transactions hereunder with or through any broker,
dealer, futures commission merchant, bank or any other agent or counterparty
that the Adviser may select in its own discretion. Adviser shall negotiate and
may execute all futures agreements, options agreements, ISDA Master Agreements,
Credit Support Annexes and other contracts and agreements related to derivatives
transactions and holdings of the Company. The Company shall cooperate with the
Adviser in setting up and maintaining brokerage accounts, futures accounts, and
other accounts the Adviser deems advisable to allow for the purchase or sale of
various forms of securities and other instruments pursuant to this Agreement.
8. In selecting the persons, brokers, dealers or futures commission
merchants to execute the portfolio transactions on behalf of the Company, the
Adviser is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the
Company's orders, taking into account all appropriate factors, including price,
dealer spread or commission, size and difficulty of the transaction and research
or other services provided. Subject to approval by the Company's Board of
Directors and to the extent permitted by and in conformance with applicable law
(including Rule 17e-1 under the 1940 Act), the Adviser may select brokers,
dealers, futures commission merchants or other persons affiliated with the
Adviser. It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Company, or be in breach
of any obligation owing to the Company under this Agreement or otherwise, solely
by reason of its having caused the Company to pay a member of a securities
exchange, a broker or a dealer a commission for effecting a portfolio
transaction for the Company in excess of the amount of commission another member
of an exchange, broker or dealer would have charged if the Adviser determined in
good faith that the commission paid was reasonable in relation to the brokerage
or research services provided by such member, broker or dealer, viewed in terms
of that particular transaction or the Adviser's overall responsibilities with
respect to its accounts, including the Company, as to which it exercises
investment discretion.
In addition, the Adviser may, to the extent permitted by applicable law,
aggregate purchase and sale orders of portfolio investments with similar orders
being made simultaneously for other accounts managed by the Adviser or its
affiliates, if in the Adviser's reasonable judgment such aggregation shall
result in an overall economic benefit to the Company, taking into consideration
the selling or purchase price, brokerage commissions and other expenses. In the
event that a purchase or sale of an asset of the Company occurs as part of any
aggregate sale or purchase orders, the objective of the Adviser and any of its
affiliates involved in such transaction shall be to allocate the portfolio
investment so purchased or sold, as well as expenses incurred in the
transaction, among the Company and other accounts in an equitable manner.
Nevertheless, the Company acknowledges that under some circumstances, such
allocation may adversely affect the Company with respect to the price or size of
the portfolio investments obtainable or salable. Whenever the Company and one or
more other clients of the Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed by the Adviser to be equitable to each, although such allocation may
result in a delay in one or more client accounts being fully invested that would
not occur if such an allocation were not made. Moreover, it is possible that due
to differing investment objectives or for other reasons, the Adviser and its
affiliates may purchase securities or other instruments of an issuer for one
client and at approximately the same time recommend selling or sell the same or
similar types of securities or instruments for another client.
The Adviser will not arrange purchases or sales of portfolio investments
between the Company and other accounts advised by the Adviser or its affiliates
unless (a) such purchases or sales are in accordance with applicable law
(including Rule 17a-7 under the 0000 Xxx) and the policies and procedures of the
Fund and Company, (b) the Adviser determines the purchase or sale is in the best
interests of the Company, and (c) the Company's Board of Directors has approved
these types of transactions.
To the extent the Company seeks to adopt, amend or eliminate any
objectives, policies, restrictions or procedures in a manner that modifies or
restricts Adviser's authority regarding the execution of the Company's portfolio
transactions, the Company agrees to use reasonable commercial efforts to consult
with the Adviser regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and directors of the Company
and/or the Fund such information relating to transactions for the Company as
they may reasonably request. In no instance will portfolio investments be
purchased by or sold to the Adviser or any affiliated person of either the
Company or the Adviser, except as may be permitted under the 1940 Act.
The Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform in all material respects to all applicable rules
and regulations of the Securities and Exchange Commission (including to the
extent required, the 0000 Xxx) and Commodity Futures Trading Commission
("CFTC"), applicable provisions of Cayman Islands law and will comply in
all material respects with all policies and procedures adopted by the Board
of Directors for the Company and communicated to the Adviser and, in
addition, will conduct its activities under this Agreement in all material
respects in accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory, commodity pool operator
and commodity trading advisory activities;
(c) will report regularly to the Board of Directors of the Company
and the Board of Trustees of the Trust (generally on a quarterly basis) and
will make appropriate persons available for the purpose of reviewing with
representatives of the Board of Directors of the Company and Board of
Trustees of the Trust on a regular basis at reasonable times the management
of the Company, including, without limitation, review of the general
investment strategies of the Company, the performance of the Company's
investment portfolio in relation to relevant standard industry indices and
general conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Board of Directors
of the Company or Board of Trustees of the Trust; and
(d) will prepare and maintain such books and records with respect to
the Company's securities and other transactions as required under
applicable law (including the 1940 Act and rules thereunder as if the
Company were required to be registered under the 0000 Xxx) and will prepare
and furnish the Company's Board of Directors and the Trust's Board of
Trustees such periodic and special reports as the Board of Directors or
Board of Trustees, respectively, may reasonably request. The Adviser
further agrees that all records which it maintains for the Company are the
property of the Company, and the Adviser will surrender promptly to the
Company any such records upon the request of the Company (provided,
however, that Adviser shall be permitted to retain copies thereof); and
shall be permitted to retain originals (with copies to the Company) to the
extent required under Rule 204-2 of the Investment Advisers Act of 1940 or
other applicable law.
9. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Company are, or may be, interested persons
(as such term is defined in the 1940 Act and rules and regulations thereunder)
of the Adviser as officers, directors, agents, shareholders or otherwise, and
that the officers, directors, shareholders and agents of the Adviser may be
interested persons of the Company otherwise than as trustees, officers or
agents.
10. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, futures contract or other
instrument, whether or not such purchase, sale or retention shall have been
based upon the investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been selected with due care and
in good faith, except loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Adviser in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
11. Subject to approval by the Board of Trustees of the Trust, including by
the vote of a majority of the Trustees of the Trust who are not parties to the
Fund Management Agreement or "interested persons" of the Trust or Adviser (as
such term is defined in the 1940 Act) (the "Disinterested Trustees") cast in
person at a meeting called for the purpose of voting on such approval, the
Directors of the Company and any other approvals as required by applicable law
(after taking into effect any exemptive order, no-action assurances or other
relief upon which the Company may rely), the Adviser may retain one or more
sub-advisers at the Adviser's own cost and expense for the purpose of furnishing
one or more of the services described in Section 1 hereof with respect to the
Company. In addition, the Adviser may adjust from time to time the duties
delegated to any sub-adviser, the portion of portfolio assets of the Company
that the sub-adviser shall manage and the fees to be paid to the sub-adviser
pursuant to any sub-advisory agreement or other arrangement entered into in
accordance with this Agreement, subject to the approvals of the Board of
Trustees of the Trust, including by the vote of a majority of the Disinterested
Trustees cast in person at a meeting called for the purpose of voting on such
approval, the Directors of the Company, and any other approvals as required
under applicable law (after taking into account any exemptive order, no-action
assurances or other relief upon which the Company may rely). Retention of a
sub-adviser shall in no way reduce the responsibilities or obligations of the
Adviser under this Agreement and the Adviser shall be responsible to the Company
for all acts or omissions of any sub-adviser in connection with the performance
of the Adviser's duties hereunder.
12. The Trust acknowledges that the Adviser now acts, and intends in the
future to act, as an investment adviser to other managed accounts and as
investment adviser or sub-investment adviser to one or more other investment
companies or series of investment companies. In addition, the Company
acknowledges that the persons employed by the Adviser to assist in the Adviser's
duties under this Agreement will not devote their full time to such efforts. It
is also agreed that the Adviser may use any supplemental research obtained for
the benefit of the Company in providing investment advice to its other
investment advisory accounts and for managing its own accounts.
13. This Agreement shall be effective on the date set forth above, provided
it has been approved by (i) the Board of Directors of the Company, (ii) the
Board of Trustees of the Trust, including the vote of a majority of the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on such approval and (iii) a vote of a majority of the
outstanding voting securities of the Fund. This Agreement shall continue in
effect until the two-year anniversary of the date of its effectiveness, unless
and until terminated as hereinafter provided, and shall continue in force from
year to year thereafter, but only as long as such continuance is specifically
approved by (i) the Board of the Company, (ii) the vote of the holders of a
majority of the outstanding voting securities of the Fund or the Board of
Trustees of the Trust and (iii) the vote of a majority of the Disinterested
Trustees of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without payment of any penalty by
the Board of Trustees of the Trust, by the Company or by the Adviser upon sixty
(60) days' written notice to the other parties. The Company may effect
termination by action of the Board of Directors or by vote of a majority of the
outstanding voting securities of the Company, accompanied by appropriate notice.
This Agreement shall also terminate automatically and immediately upon the
termination of the Fund Management Agreement. The shareholders of the Fund may
therefore terminate this Agreement by terminating the Fund Management Agreement.
This Agreement may be terminated, at any time, without the payment of any
penalty, by the Board of Directors of the Company, by the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
Company, in the event that it shall have been established by a court of
competent jurisdiction that the Adviser, or any officer or director of the
Adviser, has taken any action which results in a breach of the material
covenants of the Adviser set forth herein. Termination of this Agreement shall
not affect the right of the Adviser to receive payments on any unpaid balance of
the compensation, described in Section 3, earned prior to such termination and
for any additional period during which the Adviser serves as such for the
Company, subject to applicable law. The terms "assignment" and "vote of the
majority of outstanding voting securities" herein shall have the same meanings
set forth in the 1940 Act and the rules and regulations thereunder.
14. This Agreement may be amended or modified only by a written instrument
executed by both parties, subject to consent by the Company's Board of
Directors, the Trust's Board of Trustees (including by the vote of a majority of
the Disinterested Trustees of the Trust) and if required by applicable law
(including applicable Securities and Exchange Commission rules, regulations or
orders), the vote of a majority of the outstanding voting securities of the
Fund.
15. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.
16. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for receipt of such notice.
17. This Agreement shall be construed in accordance with applicable federal
law of the United States and the laws of the State of Illinois.
18. The Adviser will commence managing the account of the Company as an
exempt account under CFTC Rule 4.7 and provides the following advisory in
connection therewith:
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR
ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON
THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR
ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE
COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS
TRADING PROGRAM OR THIS BROCHURE OR THIS ACCOUNT DOCUMENT.
The Company consents to its account being an exempt account under CFTC Rule
4.7.
IN WITNESS WHEREOF, the Company and the Adviser have caused this Agreement
to be executed on the day and year above written.
FT Cayman Subsidiary
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name:
Title:
ATTEST: /s/ Xxxxxx Xxxxx
------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
FIRST TRUST ADVISORS L.P.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name:
Title:
ATTEST: /s/ Xxxxxx Xxxxx
-------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
