SEC Company Response from FIRST TRUST EXCHANGE-TRADED FUND VII (CIK 0001561785) — Oct 29, 2025
FIRST TRUST EXCHANGE-TRADED FUND VII (CIK 0001561785)
Date: Oct. 29, 2025 · CIK: 0001561785 · Accession: 0001445546-25-007187
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File numbers found in text: 333-184918, 811-22767
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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
October 29, 2025
VIA EDGAR CORRESPONDENCE
Yoon Choo
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
First
Trust Exchange-Traded Fund VII (the “Trust”)
File
Nos. 333-184918; 811-22767
Dear Ms. Choo:
This letter responds
to your comments regarding the registration statement filed on Form N-1A for First Trust Exchange-Traded Fund VII (the “Registrant”
or “Trust”) with the staff of the Securities and Exchange Commission (the “Staff”) on August 22,
2025 (the “Registration Statement”). The Registration Statement relates to the First Trust Enhanced Stocks, Bonds &
Gold 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
The Staff reminds
the Registrant and its management that they are responsible for the accuracy and adequacy of the disclosures, notwithstanding any review,
comment, action or absence of action by the Staff. Where a comment is made in one location, it is applicable to all similar disclosures
appearing elsewhere in the Registration Statement. Please ensure that corresponding changes are made to all similar disclosure.
Response
to Comment 1
The Registrant confirms
that corresponding changes made in response to the Staff’s comments have been made to any similar disclosure throughout the Registration
Statement.
Comment
2 – General
Please
provide your responses to Staff comments at least five business days in advance of the effective date. Please include an exhibit to your
response letter with the marked document showing changes from the initial filing. Please also send a notice of the filing of the response
letter by email and include a blackline copy showing changes from the initial filing.
Response
to Comment 2
The Registrant confirms
it will endeavor to provide the Staff with responses sufficiently in advance of effectiveness for its review.
Comment
3 – Principal Investment Strategies
The Staff notes the
disclosure states, “Under normal market conditions, the Fund will invest at least 80% of its net assets (plus any borrowings for
investment purposes) in investments that provide exposure to common stocks, bonds and/or gold.” The disclosure states that the exposure
is divided equally among the three sectors. For purposes of this policy, the Fund should invest in “common stocks, bonds and gold.”
Please revise throughout.
Response
to Comment 3
The disclosure has
been revised in accordance with the Staff’s comment.
Comment
4 – Principal Investment Strategies
The Staff notes the
disclosure states, “Under certain market conditions, the Fund may reduce the notional exposure to gold it derives from its derivatives
positions to mitigate against risk.” Please disclose the specific risk that the Fund is seeking to mitigate. Additionally, please
reconcile this disclosure with the statement above that states, “it is the expectation that on a monthly basis the Fund will allocate
its exposure approximately equally between the three asset classes.” Does this mean that the Fund may underweight exposure to gold
only between monthly rebalances? Please revise the disclosure to make this aspect of the strategy clear.
Response
to Comment 4
The Registrant notes
the Fund intends to rebalance its notional exposure on a monthly basis, and it is the expectation that the Fund will allocate its exposure
approximately equally between the three asset classes. However, as the disclosure states, the Fund reserves flexibility to adjust its
exposure more frequently based on market conditions or as necessary to comply with any applicable regulatory requirements. The above-referenced
disclosure has been revised as follows:
“Before a scheduled
monthly rebalance, the Fund may reduce its notional exposure to gold that it derives from the derivatives positions based on market conditions
or to comply with applicable regulatory requirements.”
Comment
5 – Principal Risks
The
Staff notes the Fund invests in U.S. Treasuries and cash equivalents. These debt securities do not have call or extension risk that some
corporate or mortgage-backed securities might. Please delete “Call Risk” and “Extension Risk” from the risk factors
or supplementally explain why it would not be appropriate to do so. Please also consider deleting discussions of these risks from the
other risk factors where they are discussed.
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Response
to Comment 5
The above-referenced
risk factors, in addition to “Prepayment Risk”, have been removed in accordance with the Staff’s comment.
Comment
6 – Principal Risks
The Staff notes the
Fund transacts in futures contracts that are exchange-traded. It is the Staff’s understanding these are guaranteed by the relevant
clearinghouse. Please consider whether “Counterparty Risk” is a principal risk of the Fund.
Response
to Comment 6
The Registrant has
considered the Staff’s comment and respectfully declines to make any changes. The Registrant believes that the disclosure, as currently
presented, is appropriate for investor comprehension. While derivatives cleared through a clearinghouse are generally considered to have
reduced counterparty risk, the Registrant believes it is important to disclose the residual risks stemming from derivatives, including
default risk, systemic and market events risk or operational risks, in order to provide transparency to investors.
Comment
7 – Principal Risks
The Staff notes that
the risk factors are very extensive, even though the Fund invests only in futures contracts providing exposure to common stocks, U.S.
Treasuries and gold. Please consider consolidating risk factors that largely duplicate risk disclosure. Please consider whether some of
the risk factors relating to the Fund’s general operations of an ETF could be moved to the end of the risk factors or, if appropriate,
to the “Non-Principal Risks” section so that investors may better focus on the risks related to the Fund’s principal
investment strategies.
Response
to Comment 7
The Registrant has
considered the Staff’s comment and respectfully declines to make any changes. The Registrant believes that the disclosure, as currently
presented, is appropriate for investor comprehension.
Comment
8 – Principal Risks
The
Staff notes the “Subsidiary Investment Risk states, “The Subsidiary is not registered under the 1940 Act and is not subject
to all the investor protections of the 1940 Act. Thus, the Fund, as an investor in the Subsidiary, will not have all the protections
offered to investors in registered investment companies.” Please delete “all” from both sentences.
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Response
to Comment 8
The Registrant has
removed the term “all” from the first sentence of the above-referenced disclosure. However, the Registrant does not believe
it would be appropriate to delete from the second sentence because it highlights to investors that, as a result of the Fund investing
through the Subsidiary, they may not receive the full suite of protections they would otherwise expect from the 1940 Act. Nevertheless,
the Fund itself remains subject to the requirements and investor protections of the 1940 Act and removing “all” from the sentence
would be an inaccurate statement.
Comment
9 – Principal Risks
The Staff notes the
disclosure states, “The Fund may invest a portion of its assets in equity repurchase agreements.” Please specify in the “Tax
Risk” and in Item 9 the types of repurchase agreements that the Fund expects to invest in.
Response
to Comment 9
The Registrant has
removed all references to repurchase agreements from the prospectus.
Comment
10 – Principal Risks
The Staff notes the
“Principal Investment Strategies” section discusses only short- and medium-term U.S. Treasuries that are backed by the full
faith and credit of the U.S. government. Please tailor the “U.S. Government Securities Risk” to discuss such investments.
Response
to Comment 10
The Registrant has
considered the Staff’s comment and respectfully declines to make any changes. The Registrant believes that the disclosure, as currently
presented, is appropriate for investor comprehension, as the risk disclosure is sufficiently tailored and provides investors with a clear
and accurate understanding of the risks associated with the Fund’s investments in U.S. government securities.
Comment
11 – Fund Investments
The Staff notes the
disclosure states, “However, the Fund would presumably have sustained comparable losses if, instead of investing in the futures
contract, it had invested in the underlying financial instrument and sold it after the decline.” The Staff further notes that the
use of leverage through futures contracts may inherently result in losses that exceed the amount invested. Please revise or supplementally
explain to the Staff how this statement is accurate.
Response
to Comment 11
The Registrant has
deleted the above-referenced sentence.
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Comment
12 – Fund Investments
Please reconcile the
first paragraph of “Fixed Income Investments and Cash Equivalents” with the Item 4 summary section which states that the Fund
may invest in U.S. Treasuries, cash and cash equivalents. If fixed income instruments, other than cash equivalents, are limited to U.S.
Treasuries, please revise the disclosure accordingly.
Response
to Comment 12
In accordance with
the Staff’s comment, the above-referenced disclosure has been deleted and replaced in its entirety with the following:
“Cash Equivalents
and Short-Term Investments
The Fund may invest
in securities with maturities of less than two years or cash equivalents, or it may hold cash, in order to collateralize its (or the Subsidiary’s)
investments or for temporary defensive purposes. The percentage of the Fund invested in such holdings varies and depends on several factors,
including market conditions. For temporary defensive purposes and during periods of high cash inflows or outflows, the Fund may depart
from its principal investment strategies and invest part or all of its assets in these securities or it may hold cash. During such periods,
the Fund may not be able to achieve its investment objective. The Fund may adopt a defensive strategy when the portfolio managers believe
instruments in which the Fund normally invests have elevated risks due to political or economic factors and in other extraordinary circumstances.
In addition, the Fund may invest in money market instruments. Money market instruments include short-term, high-quality securities issued
or guaranteed by non-U.S. governments, agencies and instrumentalities; non-convertible high-quality corporate debt securities with remaining
maturities of 397 days or less; money market mutual funds; commercial paper; certificates of deposit, bank time deposits, bankers’
acceptances and short-term negotiable obligations of U.S. and non-U.S. banks and financial institutions. For more information on eligible
short-term investments, see the SAI.”
Comment
13 – Fund Investments
The Staff notes the
“Principal Investment Strategies” section discusses only investments in short- and medium-term U.S. Treasuries which are backed
by the full faith and credit of the U.S. government. Please reconcile the disclosure in “U.S. Government Securities.”
Response
to Comment 13
In accordance with
the Staff’s comment, the first sentence of “U.S. Government Securities” has been revised to state, “The Fund may
invest in intermediate-term U.S. government securities.”
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Comment
14 – Fund Investments
The Staff notes the
disclosure states, “In addition, the Fund may invest in sovereign debt obligations of non-U.S. countries.” Please reconcile
this disclosure with the “Principal Investment Strategies” section.
Response
to Comment 14
The Registrant has
deleted the above-referenced sentence.
Comment
15 – Risks of Investing in the Fund
The Staff notes the
“Brokerage Firms Risk” is identified as a non-principal risk and that “Clearing Broker Risk” is a principal risk
of the Fund. Please consolidate this risk disclosure or supplementally explain to the Staff why it would not be appropriate to do so.
Response
to Comment 15
The Registrant has
deleted “Brokerage Firms Risk” from the Registration Statement.
Comment
16 – Management of the Fund
Please address the following
comments:
(a) Supplementally confirm that the Subsidiary is the only subsidiary the Fund plans to use;
(b) Disclose that any investment advisor to the Subsidiary complies with provisions of the Investment Company
Act of 1940 relating to investment advisory contracts (see Section 15) as if it were an investment advisor of the Fund;
(c) Disclose that the Subsidiary complies with provisions related to affiliated transactions and custody (see
Section 17);
(d) Identify the custodian of the Subsidiary, if any, in the disclosure;
(e) Supplementally confirm that the financial statements of the Subsidiary will be consolidated with those
of the Fund;
(f) Supplementally confirm that: (i) the Subsidiary and any board of directors it has will agree to inspection
by the Staff of the Subsidiary’s books and records, which will be maintained in accordance with Section 31 of the 1940 Act and the
rules thereunder; and (ii) the Subsidiary and any board of directors it has will agree to designate an agent for service of process in
the United States.
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Response
to Comment 16
Please see below for
the Registrant’s responses to the Staff’s comments:
(a) The Registrant confirms the Subsidiary is the only subsidiary the Fund plans to use.
(b) In response to the Staff’s comment, the Registrant notes its position that because the Subsidiary
is not a registered investment company, the provisions of Section 15 of the 1940 Act do not apply to the Subsidiary pursuant to the terms
of the statute. The Registrant further notes that the Board, including a majority of the disinterested trustees, has undertaken to consider
and approve the investment advisory agreement of the Subsidiary. As such, the Registrant has added the following disclosure to the section
entitled “Management of the Fund—Management of the Subsidiary” in the Fund’s prospectus:
“First Trust
serves as the investment advisor of the Subsidiary and manages the investment of the Subsidiary’s assets on a discretionary basis.
The Fund’s Board, including a majority of the disinterested Trustees, considered and approved the investment advisory agreement
between First Trust and the Subsidiary. The Subsidiary does not pay First Trust a management fee for its services. The Bank of New York
Mellon serves as the custodian of the Subsidiary. While the subsidiary has also entered into separate contracts for the provision of custody,
transfer agency and audit services, the Advisor will pay for these expenses. The Subsidiary will comply with Sections 17 and 18 of the
1940 Act, as applicable, and the Fund does not intend to create or acquire primary control of any entity which primarily engages in investment
activities and securities or other assets other than entities wholly owned by the Fund.”
(c) The disclosure has been revised in accordance with the Staff’s comment. Please refer to the Registrant’s
response to Comment 16(b) above.
(d) The disclosure has been revised in accordance with the Staff’s comment. Please refer to the Registrant’s
response to Comment 16(b) above.
(e) The Registrant confirms the financial statements of the Subsidiary will be consolidated with those of
the Fund after the Subsidiary is operational.
(f) The Registrant confirms that: (i) the Subsidiary and its board of directors agree to inspection by the
Staff of the Subsidiary’s books and records, which will be maintained in accordance with Section 31 of the 1940 Act and the rules
thereunder; and (ii) the