SEC Company Response from FIRST TRUST EXCHANGE-TRADED FUND II (CIK 0001364608) — Mar 4, 2022
FIRST TRUST EXCHANGE-TRADED FUND II (CIK 0001364608)
Date: March 4, 2022 · CIK: 0001364608 · Accession: 0001445546-22-001903
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File numbers found in text: 333-143964, 811-21944
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CORRESP
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Chapman and Cutler LLP
320 South Canal Street, 27th Floor
Chicago, Illinois 60606
T 312.845.3000
F 312.701.2361
www.chapman.com
March 4, 2022
VIA EDGAR
CORRESPONDENCE
Alberto Zapata
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
First Trust Exchange-Traded Fund II (the “Trust”)
File Nos. 333-143964; 811-21944
Dear Mr. Zapata:
This letter responds
to your additional comments regarding the registration statement filed on Form N-1A for First Trust Exchange-Traded Fund II (the
“Trust”) with the Staff of the Securities and Exchange Commission (the “Staff”) on December 7, 2021
(the “Registration Statement”). The Registration Statement relates to the First Trust Indxx Metaverse ETF (the “Fund”),
a series of the Trust. Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Registration
Statement.
Comment
1 – General
Please provide an
80% test that is not tied to the Index, which defines Metaverse. Given that the index methodology may change, the Staff is of the view
that the Fund needs to comply with the Names Rule regardless of the Index.
Response
to Comment 1
In accordance with
the Staff’s comment, and consistent with the existing Subversive Metaverse ETF (PUNK), the following disclosure has been added to
the section entitled “Principal Investment Strategies”:
Under normal market conditions, the
Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in companies that provide services and products
that support the infrastructure and applications of the Metaverse (“Metaverse Companies”). “Metaverse” is a term
used to describe the next generation of the Internet, which has the potential to allow creators to build the next chapter of human interaction
through immersive experiences in three-dimensional virtual spaces.
Comment
2 – Principal Investment Strategies
At the beginning of
the section entitled “Principal Investment Strategies,” please add disclosure stating that the Index Provider is not affiliated
with the Fund.
Response
to Comment 2
The prospectus has
been revised in accordance with this comment.
Comment
3 – Principal Investment Strategies
With respect to the
disclosure that states that “the Index Provider reserves the right to use qualitative judgment to include, exclude, adjust, or postpone
the inclusion of a stock in the Index,” please provide further detail regarding whether the Index Provider can change the index
methodology at any time or whether such discretion is limited to exceptional or circumscribed situations.
Response
to Comment 3
The Fund notes that
the referenced disclosure is intended to inform investors that although the Index is rules-based, the Index Provider has the ability to
adapt the Index’s methodology as necessary to appropriately capture relevant constituent companies. Accordingly, the disclosure
has been revised to state:
The Index is a rules-based index, however,
the Index Provider reserves the right to use qualitative judgment to include, exclude, adjust, or postpone the inclusion of a stock in
the Index.
Comment
4 – Principal Investment Strategies
The Staff notes that
certain constituents in the Index do not appear within the definition of “Primary Companies.” These constituents include Adobe,
Nintendo, Netflix and Texas Instruments, which according to the constituent list, are deemed to be Primary Companies. Please explain how
these particular companies meet the Primary Company test.
Response
to Comment 4
In accordance with
the Index’s methodology, each of the above referenced companies derives at least 50% of its revenues from one of the identified
Metaverse sub-themes. The disclosure under “Principal Investment Strategies – Primary Companies” has been revised to
clarify the eligibility criteria as described above.
Comment
5 – Principal Investment Strategies
Under “IP &
Contents,” please provide further detail regarding what is meant by “media content.”
Response
to Comment 5
The prospectus has
been revised in accordance with this comment.
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Comment
6 – Principal Investment Strategies
Under “Payment,”
please rephrase “integrating payment gateways” in plain English or provide additional detail.
Response
to Comment 6
The prospectus has
been revised in accordance with this comment.
Comment
7 – Principal Investment Strategies
Under “Secondary
companies,” please provide further detail regarding what is meant by “significant investment.” Additionally, please
clarify whether the reference to “strong growth prospects” refers to strong growth prospects within the Metaverse realm, or
in general.
Response
to Comment 7
The prospectus has
been revised in accordance with this comment.
Comment
8 – Principal Investment Strategies
Please revise the
word “tranche” in plain English.
Response
to Comment 8
The prospectus has
been revised in accordance with this comment.
********
Please call me at
(312) 845-3484 if you have any questions or issues you would like to discuss regarding these matters.
Sincerely yours,
Chapman and Cutler
llp
By:
/s/ Morrison C. Warren
Morrison C. Warren
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