UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                                              File No. 812-13795
---------------------------------------------
In the matter of

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 AlphaDEX(R) Fund
First Trust Exchange-Traded AlphaDEX(R) Fund II
First Trust Advisors L.P.
and First Trust Portfolios L.P.
---------------------------------------------

Amendment No. 2 to an Application for an Order under Section 6(c) of the
Investment Company Act of 1940, as amended (the "1940 Act"), for an exemption
from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the 1940 Act and Rule 22c-1
under the 1940 Act and under Sections 6(c) and 17(b) of the 1940 Act for an
exemption from Section 17(a) of the 1940 Act.

All communications, notices and orders to:

First Trust Exchange-Traded Fund                   Eric F. Fess
First Trust Exchange-Traded Fund II                Felice R. Foundos
First Trust Exchange-Traded Fund III               Suzanne M. Russell
First Trust Exchange Traded Fund IV                Chapman and Cutler LLP
First Trust Exchange-Traded AlphaDEX(R) Fund       111 West Monroe
First Trust Exchange-Traded AlphaDEX(R) Fund II    Chicago, IL 60603
First Trust Advisors L.P.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL  60187
Attn:  W. Scott Jardine


                    PAGE 1 OF 44 SEQUENTIALLY NUMBERED PAGES

   As filed with the Securities and Exchange Commission on September 9, 2011



                               TABLE OF CONTENTS



SECTION                             HEADING                                      PAGE
                                                                               

I.   INTRODUCTION...................................................................3


II.  THE APPLICANTS.................................................................5

       A.   The Existing Trusts.....................................................5
       B.   The Advisor and Fund Subadvisors........................................5
       C.   The Distributor.........................................................5
       D.   Other Service Providers.................................................6

III. APPLICANTS' PROPOSAL...........................................................6

       A.   The Initial Fund........................................................6
       B.   Benefits of Funds to Investors..........................................6
       C.   Procedures to Address Potential Conflicts of Interest...................7
       D.   Capital Structure and Voting Rights; Book Entry.........................8
       E.   Exchange Listing........................................................8
       F.   Sales of Shares.........................................................9
       G.   Pricing................................................................14
       H.   Redemption.............................................................14
       I.   Settlement and Clearing Outside the Shares Clearing Process............17
       J.   Depositary Receipts....................................................19
       K.   Dividends, Distributions and Taxes.....................................19
       L.   Shareholder Transaction and Operational Fees and Expenses..............20
       M.   Dividend Reinvestment Service..........................................20
       N.   Availability of Information............................................20
       O.   Sales and Marketing Materials..........................................22
       P.   Third-Party Broker-Dealer Issues.......................................22
       Q.   Qualification as a Regulated Investment Company........................22

IV.  REQUEST FOR EXEMPTIVE RELIEF AND LEGAL ANALYSIS...............................23

       A.   Sections 2(a)(32) and 5(a)(1) of the 1940 Act..........................23
       B.   Section 22(d) of the 1940 Act and Rule 22c-1 Under the 1940 Act........24
       C.   Section 22(e) of the 1940 Act..........................................25
       D.   Section 17(a) of the 1940 Act..........................................27

V.   CONDITIONS....................................................................29


VI.  NAMES AND ADDRESSES...........................................................29


VII. AUTHORIZATION AND SIGNATURES..................................................33



                                  Page 2 of 44



I.    INTRODUCTION

      In this amended application (this "Application"), First Trust
Exchange-Traded Fund (the "Initial Trust"), First Trust Exchange-Traded Fund II
("Trust II"), First Trust Exchange-Traded Fund III ("Trust III"), First Trust
Exchange-Traded Fund IV ("Trust IV"), First Trust Exchange-Traded AlphaDEX(R)
Fund (the "AlphaDEX Trust"), First Trust Exchange-Traded AlphaDEX(R) Fund II
(the "AlphaDEX Trust II" and, together with the Initial Trust, Trust II, Trust
III, Trust IV and the AlphaDEX Trust, the "Existing Trusts"), First Trust
Advisors L.P. (the "Advisor"), and First Trust Portfolios L.P. (the
"Distributor" and, together with the Existing Trusts and the Advisor, the
"Applicants") apply for and request an order (the "Order") of the Securities and
Exchange Commission (the "Commission") under Section 6(c) of the Investment
Company Act of 1940, as amended (the "1940 Act") for an exemption from Sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the 1940 Act and Rule 22c-1 under the 1940
Act and under Sections 6(c) and 17(b) of the 1940 Act for an exemption from
Section 17(a) of the 1940 Act.(1)

      Applicants are seeking the Order to permit Trust IV to create and operate
one series, which will be a Fixed Income Fund as defined below (the "Initial
Fund") that offers exchange-traded shares ("Shares") with limited redeemability.
The Initial Fund is described in Section III.A below.

      Applicants request that the Order requested herein apply not only to the
Existing Trusts and the Initial Fund, but also to any other open-end management
investment company existing or created in the future (together with the Existing
Trusts, the "Trusts" and each a "Trust") and any existing(2) or future series of
the Trusts that may utilize active management investment strategies and invest
(i) in fixed income securities (including without limitation exchange-traded
notes and senior loans) listed or traded in the U.S. or non-U.S. markets (such
securities, "Fixed Income Securities" and each such series, a "Fixed Income
Fund") or (ii) in a combination of equity securities (which may include shares
of other exchange-traded funds, money market mutual funds or other investment

-----------------------

(1)   Pursuant to relief previously obtained, the Applicants may, in general
      terms, operate actively managed exchange-traded funds that invest
      primarily in equity securities ("Active Equity Funds"). In the Matter of
      First Trust Advisors L.P., et al., Investment Company Act Release Nos.
      28421 (September 29, 2008) (notice) and 28468 (October 27, 2008) (order).
      In addition, pursuant to relief previously obtained, the Applicants may,
      in general terms, operate exchange-traded funds that invest primarily in
      equity securities selected to correspond generally to the price and yield
      performance of a specified domestic or international equity securities
      index ("Index ETFs"). In the Matter of First Trust Exchange-Traded Fund,
      et al., Investment Company Act Release Nos. 27051 (August 26, 2005)
      (notice) and 27068 (September 20, 2005) (order) (the "Original Index ETF
      Order"), as amended by In the Matter of First Trust Exchange-Traded Fund,
      et al., Investment Company Act Release Nos. 27772 (March 30, 2007)
      (notice) and 27784 (April 25, 2007) (order) (the "International Index ETF
      Order;" the Original Index ETF Order and the International Index ETF Order
      are collectively referred to as the "Prior Index ETF Orders").

(2)   Applicants intend that any existing series (including any existing series
      that, as of the date of the filing of this Application, is operating as an
      Index ETF pursuant to the Prior Index ETF Orders) of the Trusts that may
      seek to operate as a Fund (as defined below) also would be permitted to
      rely on the Order.


                                  Page 3 of 44



companies)(3) and Fixed Income Securities (each such series, a "Balanced Fund").
The Initial Fund, together with the other series described in the preceding
sentence, are collectively referred to as the "Funds"; the Funds other than the
Initial Fund are collectively referred to as the "Future Funds." Fixed Income
Funds that invest all or a portion of their assets in securities listed or
traded in international markets are referred to as "International Fixed Income
Funds." International Fixed Income Funds and Balanced Funds that invest all or a
portion of their assets in securities listed or traded in international markets
are referred to as "International Funds." The Funds may also invest in various
other instruments, including but not limited to currencies, commodities, U.S.
money market securities and non-U.S. money market securities, and may engage in
forward commitment transactions,(4) all in accordance with their investment
objectives. International Funds also reserve the ability to invest in Depositary
Receipts (as defined below). No Fund relying on the Order will invest in options
contracts, futures contracts or swap agreements. The securities in which a Fund
will invest are the "Portfolio Securities." Any Future Fund will (a) be advised
by the Advisor or an entity controlling, controlled by, or under common control
with the Advisor, and (b) comply with the terms and conditions of this
Application. Each Fund will operate as an actively managed exchange-traded fund
(each an "ETF").

      Shares of each Fund will be purchased from a Trust only in large
aggregations of a specified number referred to as a "Creation Unit." Creation
Units will be separable upon issue into individual Shares, which will be listed
and traded at negotiated prices on a national securities exchange as defined in
Section 2(a)(26) of the 1940 Act (each a "Stock Exchange").(5)  The
Shares themselves will not be redeemable to a Trust unless combined into a
Creation Unit.(6)

      All entities that currently intend to rely on the order are named as
Applicants. Any other entity that relies on the order in the future will comply
with the terms and conditions of this Application.

-----------------------

(3)   Any investments by a Fund in any other investment company shall be subject
      to the restrictions of Section 12(d)(1) of the 1940 Act except as
      permitted by an exemptive order or other applicable law, rule or
      regulation that permits investment companies to invest in such other
      investment company beyond those limitations.

(4)   In a forward commitment transaction, the buyer/seller enters into a
      contract to purchase/sell, for example, specific securities for a fixed
      price at a future date beyond normal settlement time.

(5)   The foreign equivalent of a Stock Exchange is referred to as a "Foreign
      Exchange."

(6)   The Initial Trust, Trust II, the AlphaDEX Trust, First Trust Advisors L.P.
      and First Trust Portfolios L.P. have received exemptive relief from
      Section 12(d)(1)(A) and (B) and Section 17(a) permitting, in part, certain
      investment companies and unit investment trusts to invest in shares of
      such Existing Trusts beyond the limits of Section 12(d)(1)(A) and (B) of
      the 1940 Act. See Investment Company Act Release Nos. 27812 (April 30,
      2007) (notice) and 27845 (May 30, 2007) (order) (the "Section 12(d)(1)
      Order"). The relief in the Section 12(d)(1) Order extends to any other
      registered open-end investment company created in the future and
      comprising part of the same "group of investment companies" within the
      meaning of Section 12(d)(1)(G)(ii) of the 1940 Act as such Existing Trusts
      and their series. Accordingly, the Funds will rely on the relief granted
      in the Section 12(d)(1) Order.


                                  Page 4 of 44



      No form having been specifically prescribed for this Application, the
Applicants proceed under Rule 0-2 of the General Rules and Regulations of the
Commission.

II.   THE APPLICANTS

      A. The Existing Trusts.

      The Existing Trusts are each open-end management investment companies
organized as Massachusetts business trusts. The Existing Trusts are, and each
future Trust will be, registered under the 1940 Act with the Commission as
open-end management investment companies and will offer and sell their
respective Shares pursuant to registration statements filed with the Commission
under the 1940 Act and the Securities Act of 1933 (the "Securities Act"). The
Existing Trusts are each organized to be able to offer a number of separate
investment portfolios (e.g., Funds). As of the date of the filing of this
Application, Trust III and Trust IV have no series with publicly outstanding
shares. The Initial Trust, Trust II, the AlphaDEX Trust and the AlphaDEX Trust
II all currently have series with publicly outstanding shares; however, pursuant
to relief previously granted by the Commission,(7) all of such series are Index
ETFs as of the date of the filing of this Application.


      B. The Advisor and Fund Subadvisors.

      First Trust Advisors L.P. or an entity controlling, controlled by or under
common control with the Advisor will be the investment adviser to the Funds. The
Advisor is an Illinois limited partnership, with its principal office located at
120 East Liberty Drive, Suite 400, Wheaton, Illinois 60187. The Advisor is
registered as an "investment adviser" under Section 203 of the Investment
Advisers Act of 1940 (the "Advisers Act"). The Advisor has not yet entered, but
may in the future enter, into subadvisory agreements with one or more additional
investment advisers to act as "subadvisors" with respect to particular Funds
(each a "Fund Subadvisor"). Any Fund Subadvisor will be registered under the
Advisers Act.

      C. The Distributor.

      First Trust Portfolios L.P. (the "Distributor"), an Illinois limited
partnership, or another entity (each such other entity, a "Future Distributor")
will serve as the principal underwriter and distributor for each of the Funds.
The Distributor is a member in good standing of the Financial Industry
Regulatory Authority ("FINRA"). The Distributor is and each Future Distributor
will be a broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act"). The Distributor or Future Distributor, as applicable, will
distribute Shares on an agency basis. The Distributor is an affiliated person of
the Advisor within the meaning of Section 2(a)(3)(C) of the 1940 Act. Any Future
Distributor of a Fund may be an affiliated person or an affiliated person of an
affiliated person of that Fund's Advisor and/or Fund Subadvisor (if any). The
Applicants request that the Order requested herein apply to the Distributor and
to any Future Distributor that complies with the terms and conditions of this
Application.

-----------------------

(7)   See the Prior Index ETF Orders, supra note 1.


                                  Page 5 of 44



      D. Other Service Providers.

      Each Trust expects to appoint an entity or entities that are not
affiliated persons of the respective Trust to provide administrative, custodial,
transfer agency, fund accounting, dividend disbursing and securities lending (if
applicable) functions for the Funds. Each Trust and any securities lending agent
will comply with the Commission staff's guidelines regarding the lending of
portfolio securities of an open-end investment company. The entity providing
custodial services is hereafter the "Custodian" and the entity serving as
transfer agent for the respective Funds is hereafter the "Transfer Agent."

III.  APPLICANTS' PROPOSAL

      A. The Initial Fund.

      The Applicants currently intend to name the Initial Fund the First Trust
Senior Loan Fund, although the Applicants may change the name in the future. It
is currently anticipated that the Initial Fund's investment objective will be to
provide high current income. The Initial Fund is expected, under normal market
conditions, to invest at least 80% of its net assets (including investment
borrowings) in senior loans, which may include loan interests that are not
secured by any specific collateral of the borrower, loan interests that have a
lower than first lien priority on collateral of the borrower, loans to foreign
borrowers, loans in foreign currencies and other loans with characteristics that
the Advisor believes qualify as senior loans. The securities in which the
Initial Fund will invest may be represented by forward contracts.

      The Initial Fund may modify its investment objective and policies and the
Advisor may modify its methodology for the Initial Fund as it determines
appropriate or necessary in pursuing the Initial Fund's investment objective.

      B. Benefits of Funds to Investors.

      Applicants expect that there will be several categories of market
participants who are likely to be interested in purchasing Creation Units. One
is the arbitrageur, who stands ready to take advantage of any slight premium or
discount in the market price of Shares on the Stock Exchange versus the cost of
depositing a Portfolio Deposit (defined below) and creating a Creation Unit to
be broken down into individual Shares. As described below, the Applicants
believe that arbitrageurs will purchase or redeem Creation Units in pursuit of
arbitrage profit, and in so doing will enhance the liquidity of the secondary
market. Applicants expect that arbitrage opportunities created by the ability to
continually purchase or redeem Creation Units at their net asset value ("NAV")
should ensure that the Shares will not trade at a material discount or premium
in relation to their NAV. Applicants also expect that the Stock Exchange
specialists or market makers, as applicable (collectively referred to as "Market
Makers"), acting in their unique role to provide a fair and orderly secondary
market for Shares, also may purchase Creation Units for use in their own market
making activities.

      Applicants expect that secondary market purchasers of Shares will include
both institutional and retail investors. Applicants believe that the Funds will


                                  Page 6 of 44



be particularly attractive to institutional and retail investors seeking returns
in excess of the respective Fund's benchmark index.

      As in the case of Index ETFs, the Funds can be bought or sold like stocks
any time throughout each trading day at market prices that should normally be
close to NAV; are relatively tax-efficient investment vehicles for certain Funds
to the extent that such Funds can minimize capital gains by eliminating from
their portfolios low cost basis securities through an in-kind redemption
process; offer relatively low expenses compared to other actively managed
investment companies with similar investment objectives and strategies; publish
the composition of their portfolios every day, giving them largely transparent
investment portfolios; and immediately reinvest dividends and interest, as
applicable, received on Portfolio Securities.

      C. Procedures to Address Potential Conflicts of Interest.

      The Advisor's and any Fund Subadvisor's Code of Ethics or additional
policies and procedures will prohibit them from informing other clients of any
changes in the methodology or Portfolio Securities of a Fund until such
information is made available to the public. As a result, the Advisor's (or a
Fund Subadvisor's) clients will not have access to information which serves as
the basis for management of the Funds and therefore will not have any trading
advantage over other investors.

      Certain investment personnel of the Advisor and the relevant portfolio
management group will be involved in the final preparation and updating of the
methodology and in determining whether to make any changes in Portfolio
Securities. In addition to investment personnel of the Advisor and the relevant
portfolio management group, officers of the respective Trust and certain
technology personnel (such as staff responsible for putting information on the
Fund's website) may have access to information respecting changes to be made in
Portfolio Securities prior to public announcement of such changes. The Advisor's
Code of Ethics or additional policies and procedures, however, will prohibit the
disclosure by its officers and employees of changes in the methodology and in
Portfolio Securities prior to the public announcement of changes in Portfolio
Securities or methodology, as applicable.

      Pursuant to Rule 206(4)-7 under the Advisers Act, the Advisor has, and any
Fund Subadvisor will have, written policies and procedures designed to prevent
violations of the Advisers Act and the rules thereunder. The Advisor and any
Fund Subadvisor have also adopted or will adopt policies and procedures to
detect and prevent insider trading, as required under Section 204A of the
Advisers Act, that, taking into account the nature of their business, are
reasonably designed to prevent the misuse of material non-public information in
violation of the Advisers Act, Exchange Act and rules thereunder. In addition,
like the Advisor, the Distributor has adopted a Code of Ethics as required by
Rule 17j-1 under the 1940 Act that contains provisions reasonably necessary to
prevent Access Persons (as defined in Rule 17j-1) from engaging in any conduct
prohibited by the rule.


                                  Page 7 of 44



      D. Capital Structure and Voting Rights; Book Entry.

      Shareholders of a Fund will have one vote per share with respect to
matters regarding the respective Trust or the respective Fund for which a
shareholder vote is required consistent with the requirements of the 1940 Act,
the rules promulgated thereunder and state laws applicable to Massachusetts
business trusts.

      Shares will be registered in book-entry form only and the Funds will not
issue Share certificates. The Depository Trust Company, a limited purpose trust
company organized under the laws of the State of New York ("DTC"), or its
nominee, will be the record or registered owner of all outstanding Shares.
Beneficial ownership of Shares (owners of such beneficial interests referred to
herein as "Beneficial Owners") will be shown on the records of DTC or DTC
participants ("DTC and DTC Participants"). Shareholders will exercise their
rights in such securities indirectly through the DTC and DTC Participants. The
references herein to owners or holders of such Shares shall reflect the rights
of persons holding an interest in such securities as they may indirectly
exercise such rights through the DTC and DTC Participants, except as otherwise
specified. No shareholder shall have the right to receive a certificate
representing Shares. Delivery of all notices, statements, shareholder reports
and other communications will be at the respective Fund's expense through the
customary practices and facilities of the DTC and DTC Participants.

E. Exchange Listing.

      Shares will be listed on a Stock Exchange and trade in the secondary
market in the same manner as other equity securities. Except as permitted by the
relief requested from Section 17(a), no promoter, principal underwriter (e.g.,
the Distributor) or affiliated person of the Fund or any affiliated person of
such person will be an Authorized Participant, as defined below, or make a
market in Shares. Neither the principal underwriter (e.g., the Distributor) nor
any other affiliated person of the Fund, the Advisor, any Fund Subadvisor, or
its promoter will maintain a secondary market in Shares. One or more Market
Makers will be assigned to the Shares.(8) As long as the Funds operate in
reliance on the requested Order, the Shares will be listed on a Stock Exchange.
None of the Trusts, the Advisor, the Fund Subadvisors or the Distributor is an
affiliate of a Stock Exchange.

-----------------------

(8)   If Shares are listed on The NASDAQ Stock Market LLC ("Nasdaq") or a
      similar electronic Stock Exchange (including NYSE Arca, Inc. ("NYSE
      Arca")), one or more member firms of that Stock Exchange will act as
      Market Maker and maintain a market for Shares trading on that Stock
      Exchange. On Nasdaq, no particular Market Maker would be contractually
      obligated to make a market in Shares. However, the listing requirements on
      Nasdaq, for example, stipulate that at least two Market Makers must be
      registered in Shares to maintain a listing. In addition, on Nasdaq and
      NYSE Arca, registered Market Makers are required to make a continuous
      two-sided market or subject themselves to regulatory sanctions. No Market
      Maker will be an affiliated person, or an affiliated person of an
      affiliated person, of the Funds, except within the meaning of Section
      2(a)(3)(A) or (C) of the 1940 Act due to ownership of Shares, as described
      below.

                                  Page 8 of 44



      F. Sales of Shares.

      Each Fund will sell Shares to investors through Authorized Participants
(as defined below) only in Creation Units through the Distributor on a
continuous basis at the NAV per share next determined after an order in proper
form is received. It is currently contemplated that Creation Units of the
Initial Fund, as well as those of certain Future Funds, will generally be
purchased in exchange for the deposit by the purchaser of an amount of cash
(such deposit, a "Portfolio Deposit" and such amount, an "All-Cash Payment").
However, a Future Fund, or possibly in the future the Initial Fund, may specify
that Shares be purchased utilizing an "in-kind" process in Creation Units in
exchange for the deposit, by the purchaser through Authorized Participants, of a
particular portfolio of securities (the "Deposit Securities" and each a "Deposit
Security") designated by the Advisor, together with the deposit or refund of a
specified cash payment as the case may be ("Cash Component"--collectively with
the Deposit Securities, also a "Portfolio Deposit").(9) The Cash Component will
be equal to the difference, if any, between the NAV per Creation Unit and the
market value of the Deposit Securities.

      A Trust will issue and sell Creation Units of the applicable Fund on any
day that the Trust is open for business, including as required by Section 22(e)
of the 1940 Act (each, a "Business Day"). The NAV of each Fund will normally be
determined as of the close of the regular trading session on the New York Stock
Exchange (ordinarily 4:00 p.m. Eastern Time) on each Business Day.

      For Funds that utilize an in-kind process, the Deposit Securities (and
Fund Securities (as defined below)) will consist of a pro rata basket of a
Fund's portfolio securities.(10)

      In addition to the Cash Component, the Funds may substitute a cash-in-lieu
amount to replace any Deposit Security or Fund Security (as defined below) of a
Fund that is a "to-be-announced transaction" or "TBA Transaction." A TBA
Transaction is a method of trading mortgage-backed securities. In a TBA
Transaction, the buyer and seller agree upon general trade parameters such as
agency, settlement date, par amount and price. The actual pools delivered

-----------------------

(9)   In determining whether a particular Fund will be selling or redeeming
      Creation Units on a cash or in-kind basis, the key considerations will be
      the benefit which would accrue to Fund investors and the availability of
      the Portfolio Securities. In many cases, particularly to the extent the
      Deposit Securities are less liquid, investors may benefit by the use of
      all-cash creations because the Advisor would execute trades rather than
      the Market Makers. The Advisor may be able to obtain better execution in
      transactions in Fixed Income Securities due to the Advisor's size,
      experience and potentially stronger relationships in the fixed income
      markets. Fund costs resulting from selling or redeeming Creation Units on
      a cash basis may be defrayed by imposing Transaction Fees (as defined
      below) on an investor.

(10)  There may be minor differences between a basket of Deposit Securities or
      Fund Securities (as defined below) and a true pro rata slice of a Fund's
      portfolio solely when (A) it is impossible to break up bonds beyond
      certain minimum sizes needed for transfer and settlement or, (B) in the
      case of equity securities, rounding is necessary to eliminate fractional
      shares or lots that are not tradeable round lots. A tradeable round lot
      for an equity security will be the standard unit of trading in that
      particular type of security in its primary market.


                                  Page 9 of 44



generally are determined two days prior to the settlement date. The amount of
the substituted cash-in-lieu amount in the case of TBA Transactions will be
equivalent to the value of the TBA Transaction listed as a Deposit Security or
Fund Security (as defined below).

      For Funds that ordinarily use an "in-kind" process, such an "in-kind"
policy would be utilized to minimize portfolio turnover and brokerage expenses.
However, at times, the Trust may conclude that operating on an exclusively
"in-kind" basis for one or more of such Funds may present operational problems
for such Funds. Those circumstances may include situations when a Deposit
Security may not be available in sufficient quantity for delivery, may not be
eligible for transfer through the Shares Clearing Process (defined below), may
not be eligible for trading by an Authorized Participant (defined below) or the
party for which it is acting (including due to local trading restrictions such
as requirements that securities be traded only for cash in local currency) or
other circumstances. Therefore, each Fund that ordinarily uses an "in-kind"
process may permit or require, under certain circumstances, an in-kind purchaser
to substitute a cash-in-lieu amount in lieu of depositing some or all of the
Deposit Securities.

      In order for the Trusts to preserve maximum efficiency and flexibility,
the Trusts reserve the right to determine in the future that Shares of one or
more of the Funds that ordinarily use an "in-kind" process may be purchased in
Creation Units on a cash-only basis. The decision to permit cash-only purchases
of Creation Units, to the extent made at all in the future, would be made if the
respective Trust and the Advisor or Fund Subadvisor (if any) believed such
method would substantially minimize such Trust's transactional costs or would
enhance such Trust's operational efficiencies. For example, on days when a
rebalancing of a Fund's portfolio is required, the Advisor might prefer to
receive payment for the Creation Units in cash rather than in-kind securities so
that it has the liquid resources at hand for the Trust to make the necessary
purchases. If a Fund were to receive in-kind securities on such a day, it would
have to then sell many of such securities and acquire different securities, thus
incurring transaction costs which could have been avoided (or at least
minimized) if the Fund had received payment for the Creation Units in cash.
Conversely, the Trusts reserve the right to determine in the future that one of
more of the Funds that ordinarily sell Creation Units on a cash-only basis may
use an "in-kind" process.

      In order to defray the transaction expenses, including brokerage and
operational processing costs and part or all of the spread between the expected
bid and offer side of the market related to such Deposit Securities that will be
incurred by a Fund when investors purchase or redeem Creation Units, and other
expenses, such as custody fees, stamp taxes and the like, each Fund will impose
purchase and redemption transaction fees ("Transaction Fees") to be borne only
by such purchasers or redeemers. Where a Fund that ordinarily uses an "in-kind"
process permits an in-kind purchaser to substitute cash in lieu of depositing a
portion of the Deposit Securities, the purchaser may be assessed a higher
Transaction Fee to cover the cost of purchasing those securities. The exact
amounts of such Transaction Fees will be determined separately for each Fund.
The Transaction Fee is designed to protect the continuing shareholders of a Fund
against the dilutive costs associated with the transfer or purchase of Portfolio
Securities in connection with the purchase of Creation Units and with the
transfer or sale of Portfolio Securities in connection with the redemption of
Creation Units. Transaction Fees will be limited to amounts that have been
determined by the Advisor or the Fund Subadvisor (if any) to be appropriate and


                                 Page 10 of 44



will take into account transaction and operational processing costs associated
with the relevant Deposit Securities and Fund Securities (as defined below) of
the Funds. Applicants may determine to increase, decrease or otherwise modify a
Transaction Fee. In all cases, such Transaction Fees will be limited in
accordance with requirements of the Commission applicable to management
investment companies offering redeemable securities.

      Creation Units will be aggregations of at least 25,000 Shares. The
Applicants recognize that each Share is issued by an investment company and,
accordingly, the acquisition of any Shares by an investment company, whether
acquired from the Fund or in the secondary market, shall be subject to the
restrictions of Section 12(d)(1) of the 1940 Act except as permitted by an
exemptive order or other applicable law, rule or regulation that permits
investment companies to invest in a Fund beyond those limitations.(11)

      The Funds' Custodian, in consultation with the Advisor and/or the Fund
Subadvisor (if any), will make available on each Business Day, immediately prior
to the opening of trading on the Stock Exchange, the estimated All-Cash Payment
for the relevant Fund(12) or a list of the names and the required number of
shares of each Deposit Security included in the current Portfolio Deposit (based
on information at the end of the previous Business Day) for the relevant Fund,
as applicable. Such Portfolio Deposit will be applicable, subject to any
adjustments as described below, in order to effect purchases of Creation Units
of a given Fund until such time as the next-announced Portfolio Deposit
composition is made available. In the same manner, as applicable, the Applicants
or the Custodian will make available the previous day's Cash Component as well
as the estimated Cash Component for the current day.

      All orders to purchase Creation Units must be placed with the Distributor
by or through an "Authorized Participant" which is either (1) a "Participating
Party," i.e., a broker-dealer or other participant in the Shares Clearing
Process (defined below) through the Continuous Net Settlement System of the
National Securities Clearing Corporation, a clearing agency that is registered
with the Commission (the "NSCC"), or (2) a DTC Participant, which in either case
has executed an agreement with the Distributor and the Transfer Agent, with
respect to purchases and redemptions of Creation Units (a "Participant
Agreement"). In connection with International Funds, the Distributor and
Transfer Agent will enter into one or more Participant Agreements with DTC
Participants that have international operational capabilities. An investor does
not have to be an Authorized Participant to purchase Creation Units, but must
place an order through, and make appropriate arrangements with, an Authorized
Participant. The Distributor will be responsible for transmitting orders it
receives to the respective Fund's Transfer Agent. Authorized Participants making
payment for Creation Units must either (1) initiate instructions through the
Continuous Net Settlement System of the NSCC as such processes have been
enhanced to effect purchases and redemptions of Creation Units (the "Shares
Clearing Process") or (2) deposit the Portfolio Deposit with the respective
Trust "outside" the Shares Clearing Process through the facilities of DTC,
subject to the following. The Shares Clearing Process is not currently available

-----------------------

(11)  See note 6, supra, regarding the Section 12(d)(1) Order received by First
      Trust Exchange-Traded Fund, et al.

(12)  The estimated All-Cash Payment will be based on the Fund's NAV at the
      close of business on the prior Business Day.


                                 Page 11 of 44



for purchases (or redemptions) of Creation Units of Shares issued by
International Funds or by other Funds with respect to which one or more Deposit
Securities or Fund Securities (as defined below), as applicable, are ineligible
for clearing and settlement through DTC or would otherwise cause the Creation
Unit to be ineligible for the Shares Clearing Process (International Funds,
together with such other Funds, "Ineligible Funds"); hence, an entity purchasing
(or redeeming) such Shares must do so "outside" the Shares Clearing Process.
(See Section III.I below.) Once the Custodian has been notified of an order to
purchase Shares of an International Fund, the Custodian will provide such
information to the relevant sub-custodian(s) of each such International Fund.

      All standard orders to purchase a Creation Unit must be received by a
Fund's Transfer Agent or Distributor, as applicable, no later than the order
cut-off time as described in the Participant Agreement (ordinarily 4:00 p.m.
Eastern Time) (the "Order Cut-Off Time") on the date such order is placed, in
order for the creation of the Creation Units to be effected based on the NAV of
the Shares as next determined on such date. In the case of custom orders,(13)
the purchase order must be received by the Fund's Transfer Agent or Distributor,
as applicable, no later than one hour prior to the Order Cut-Off Time (or at
such other time specified by the Fund). Once a purchase order has been placed
with the Distributor and received by the Transfer Agent, the Distributor shall
cause the Advisor, Fund Subadvisor (if any) and Custodian to be informed. With
respect to International Funds, the Custodian will then inform the appropriate
sub-custodian(s). The Authorized Participant will deliver to appropriate
sub-custodian(s), on behalf of itself or the Beneficial Owner, the relevant
All-Cash Payment or the Deposit Securities (or cash-in-lieu amount and any
substitute securities), as applicable, minus any Transaction Fee. Deposit
Securities must be delivered to the accounts maintained at the applicable
sub-custodians; provided, however, that if a Deposit Security is an ADR (as
defined below) or similar domestic instrument, it may be delivered to the Fund's
Custodian.

      The Distributor may reject any order to purchase Shares that is not
submitted in proper form. In addition, a Fund may reject a purchase order
transmitted to it if: (1) the purchaser or group of related purchasers, upon
obtaining the Shares ordered, would own 80% or more of the outstanding Shares of
such Fund; (2) the required Portfolio Deposit is not delivered; (3) the
acceptance of the Portfolio Deposit would have certain adverse tax consequences,
such as causing the Fund (if it has elected to be treated as a regulated
investment company ("RIC") for U.S. federal income tax purposes) to no longer
meet the requirements of a RIC under the Internal Revenue Code of 1986, as
amended (the "Code"); (4) the acceptance of the Portfolio Deposit would, in the
opinion of the applicable Trust, be unlawful, as in the case of a purchaser who

-----------------------

(13)  A custom order may be placed by an Authorized Participant in the event
      that the applicable Trust permits or requires the substitution of an
      amount of cash to be added to the Cash Component to replace any Deposit
      Security which may not be available in sufficient quantity for delivery or
      which may not be eligible for trading by such Authorized Participant or
      the investor for which it is acting. A Fund may require custom orders for
      the purchase of Creation Units to be placed earlier in the day (for
      example, on days when the generally accepted close of the Stock Exchange
      or the applicable fixed income security market occurs earlier than normal
      (such as the day before a holiday)). In addition, it is possible that
      orders to purchase a Creation Unit of a Fund may not be accepted on any
      day when the applicable fixed income security markets are closed.


                                 Page 12 of 44



was banned from trading in securities; (5) the acceptance of the Portfolio
Deposit would otherwise, in the discretion of the Trust or the Distributor, have
an adverse effect on the applicable Trust, relevant Fund or the rights of
Beneficial Owners of the Fund; or (6) there exist circumstances outside the
control of the Trust or the Fund that make it impossible to process purchases of
Shares for all practical purposes. Examples of such circumstances include: acts
of God or public service or utility problems such as fires, floods, extreme
weather conditions and power outages resulting in telephone, telecopy and
computer failures; market conditions or activities causing trading halts;
systems failures involving computer or other information systems affecting the
Fund, the Advisor, the Distributor, the Custodian, any relevant sub-custodian,
the Transfer Agent, a Fund Subadvisor, NSCC or any other participant in the
purchase process; the imposition by a foreign government or a regulatory body of
controls, or other monetary, currency or trading restrictions which directly
affect an International Fund's Portfolio Securities; and similar extraordinary
events.

      The Distributor will issue or cause the issuance of confirmations of
acceptance, and will be responsible for delivering a prospectus (each, a
"Prospectus")(14) or summary prospectus,(15) if applicable, to those persons
purchasing Creation Units and for maintaining records of both the orders placed
with it and the confirmations of acceptance furnished by it.

      In general, Shares in a Creation Unit will be delivered to the purchaser
upon the deposit of a Portfolio Deposit in payment for a Creation Unit.
Notwithstanding the foregoing, to the extent contemplated by a Participant
Agreement, Creation Units will be issued to an Authorized Participant despite
the fact that the corresponding Portfolio Deposits have not been received in
part or in whole, in reliance on the undertaking of such Authorized Participant
to deliver the missing Deposit Securities or cash payment as soon as possible,
which undertaking shall be secured by such Authorized Participant's delivery and
maintenance of sufficient collateral pending delivery of the missing Deposit
Securities or cash payment, as described in the applicable Participant
Agreement. The Participant Agreement will permit the Fund to buy the missing
Deposit Securities at any time and will subject the Authorized Participant to
liability for any shortfall between the cost to the applicable Trust of
acquiring such Deposit Securities and the value of the collateral.

      1. Creation Procedures Applicable to the Funds. Other than for Ineligible
Funds, an entity purchasing Creation Units may use the Shares Clearing Process
which has been designed to provide trade instructions and the transfer of the
requisite Portfolio Deposit to the respective Trust, along with the appropriate
Transaction Fee. Upon the deposit of such Portfolio Deposit in payment for such
Creation Units placed through the Distributor, such Creation Units will be
delivered to the purchaser thereof.

-----------------------

(14)  Each Fund will comply with the disclosure requirements adopted by the
      Commission in Investment Company Act Release No. 28584 (January 13, 2009)
      (the "Summary Prospectus Rule"), as well as any other applicable
      disclosure requirements.

(15)  As defined in the Summary Prospectus Rule (a "Summary Prospectus").


                                 Page 13 of 44



      An entity purchasing Creation Units outside the Shares Clearing Process
will be using a manual line-by-line position movement of each Deposit Security
and hence may be required to pay a higher Transaction Fee than would have been
charged had the creation been effected through the Shares Clearing Process. Upon
the deposit of the requisite Portfolio Deposit in payment for Creation Units
placed through the Distributor, such Creation Units will be delivered to the
purchasers thereof. (See Section III.I below regarding settlement and clearing
procedures for Ineligible Funds outside of the Shares Clearing Process.)

      Subject to the conditions that (i) a properly completed irrevocable
purchase order has been submitted by the Authorized Participant (either on its
own or on another investor's behalf) not later than the Order Cut-Off Time on
the date such request is submitted, and (ii) arrangements satisfactory to the
applicable Trust are in place for payment of the All-Cash Payment (if
applicable), the Cash Component (if applicable) and any other cash amounts which
may be due, the respective Trust will accept the order, subject to its right
(and the right of the Distributor or Advisor) to reject any order not submitted
in proper form.

      Once the applicable Trust has accepted an order, upon the next
determination of the NAV per Share of the relevant Fund, such Trust will confirm
the issuance, against receipt of payment, of a Creation Unit at such NAV per
Share. The Distributor will then transmit or cause the transmission of a
confirmation of acceptance to the Authorized Participant that placed the order.

      Upon the deposit of a Portfolio Deposit in payment for a Creation Unit,
Shares in a Creation Unit will be delivered to the purchaser.(16) When the
Custodian has confirmed, with respect to a Portfolio Deposit, that the required
All-Cash Payment or the required Deposit Securities (or the cash value thereof)
have been delivered to the Custodian, the Custodian shall notify the
Distributor, and the applicable Trust will issue and cause delivery of the
Creation Unit of the Fund.

      With respect to International Funds, the sub-custodian(s) will confirm to
the Custodian that the required Deposit Securities and/or any required cash
payments have been delivered, and the Custodian will then notify the Advisor and
Distributor. The Custodian will cause the sub-custodian(s) of each International
Fund to maintain an account into which the Authorized Participant shall deliver,
on behalf of itself or the party on whose behalf it is acting, the All-Cash
Payment or the Deposit Securities included in the designated Portfolio Deposit
(or the cash value of all or a part of such Deposit Securities, in the case of a
permitted or required cash purchase or cash-in-lieu amount), as applicable.
Deposit Securities must be maintained at the applicable local sub-custodian(s).

-----------------------

(16)  As indicated above, to the extent contemplated by a Participant Agreement,
      Creation Units will be issued to such Authorized Participant
      notwithstanding the fact that the corresponding Portfolio Deposit has not
      been received in part or in whole, in reliance on the undertaking of the
      Authorized Participant to deliver the missing Deposit Securities or cash
      payment as soon as possible, which undertaking shall be secured by such
      Authorized Participant's delivery and maintenance of collateral.


                                 Page 14 of 44



      G. Pricing.

      The price of Shares trading on the Stock Exchange will be based on a
current bid/offer market. The market price of Shares of any Fund, like the price
of all publicly traded securities, is subject to factors such as supply and
demand, as well as the current value of the Portfolio Securities held by such
Fund. No secondary sales will be made to brokers at a concession by the
Distributor or by a Fund. Transactions involving the sale of Shares on the Stock
Exchange will be subject to customary brokerage commissions and charges.
Although, based on conventional trading ranges, Applicants currently expect that
the initial price per Share of Shares of the Initial Fund will fall in the range
of $20 to $200, Applicants have not yet established the initial value per Share
for the Initial Fund.

      H. Redemption.

      Beneficial Owners of Shares may sell their Shares in the secondary market
but must accumulate enough Shares to constitute a Creation Unit in order to
redeem through a Trust. An order to redeem Creation Units of a Fund may only be
effected by or through an Authorized Participant. Creation Units will be
redeemable at the NAV next determined after receipt of a request for redemption
by a Trust. Similar to purchases of Creation Units, it is currently contemplated
that redemptions of Creation Units of the Initial Fund and certain Future Funds
will be made in exchange for an All-Cash Payment. To the extent, however, that
"in-kind" redemptions are specified for a Fund, including the Initial Fund,
Shares generally will be redeemed in Creation Units in exchange for a particular
portfolio of securities ("Fund Securities" and individually a "Fund
Security").(17) The Trust will redeem Shares of each Fund on any Business Day.
Consistent with the provisions of Section 22(e) of the 1940 Act and Rule 22e-2
under the 1940 Act, the right to redeem will not be suspended, nor payment upon
redemption delayed, except as provided by Section 22(e) of the 1940 Act and as
provided by the relief for certain International Funds requested herein.
Redemption requests must be received by the Order Cut-Off Time (ordinarily 4:00
p.m. Eastern Time) to be redeemed that day. In the case of custom
redemptions(18) the order must be received by the Transfer Agent or Distributor,
as applicable, at such other time specified by the Fund. The applicable Trust's
Custodian, through the NSCC, will make available immediately prior to the
opening of business on the Stock Exchange (currently 9:30 a.m. Eastern Time) on
each Business Day, with respect to Funds that use an "in-kind" redemption
process, the list of Fund Securities (the "Redemption List") that will be
applicable to redemption requests received in proper form on that day.

-----------------------

(17)  A Fund will comply with the federal securities laws in accepting Deposit
      Securities and satisfying redemptions with Fund Securities, including that
      the Deposit Securities and Fund Securities are sold in transactions that
      would be exempt from registration under the Securities Act. In accepting
      Deposit Securities and satisfying redemptions with Fund Securities that
      are restricted securities eligible for resale pursuant to Rule 144A under
      the Securities Act, the Fund will comply with the conditions of Rule 144A,
      including in satisfying redemptions with such Rule 144A eligible
      restricted Fund Securities.

(18)  Custom redemption orders may be placed by an Authorized Participant in the
      event that the applicable Trust permits the substitution of an amount of
      cash to replace any Fund Securities which may not be eligible for trading
      by such Authorized Participant or the investor for which it is effecting
      the transaction or otherwise at the discretion of the applicable Trust.


                                 Page 15 of 44



      Each Fund will have the right to make redemption payments in cash, in-kind
or a combination of each, provided the value of its redemption payments equals
the NAV per Share. At the discretion of the Fund, a Beneficial Owner might also
receive the cash equivalent of a Fund Security upon request because, for
instance, it was restrained by regulation or policy from transacting in the
securities perhaps because of another transaction with or for the issuer of
those securities. A specific example might be the presence of the securities on
an investment banking firm's restricted list. With respect to International
Funds, this could also occur under certain circumstances, such as where it may
not be permissible under current law or foreign stock exchange regulations to
operate on an in-kind basis. In addition, a holder of Shares of certain
International Funds may be subject to unfavorable income tax treatment if he
receives in-kind redemption proceeds, in which case the International Fund may
permit such a holder to redeem Creation Units solely for cash. The Applicants
currently contemplate that to the extent "in-kind" redemptions are specified for
a Fund, the redemption proceeds for a Creation Unit generally will consist of
Fund Securities plus or minus a "Cash Redemption Amount" as the case may be
(collectively a "Fund Redemption"). The Cash Redemption Amount is cash in an
amount equal to the difference between the NAV of the Creation Unit being
redeemed and the market value of the Fund Securities. Accordingly, to the extent
that the Fund Securities on the Redemption List have a value greater than the
NAV of the Shares being redeemed, a cash payment equal to the differential is
required to be paid by the redeeming investor to the respective Fund. A
redeeming investor also will pay a Transaction Fee calculated in the same manner
as a Transaction Fee payable in connection with the purchase of a Creation Unit.
To the extent that any amounts payable to a Fund by the redeeming investor
exceed the amount of the Cash Redemption Amount, the investor will be required
to deliver payment to the Fund.

      To the extent contemplated by a Participant Agreement, in the event the
Authorized Participant has submitted a redemption request in proper form and is
unable to transfer all of part of the Creation Unit to be redeemed to the
Transfer Agent, on behalf of a Fund, at or prior to the Order Cut-Off Time on
the date such redemption request is submitted, the Transfer Agent may
nonetheless accept the redemption request in reliance on the undertaking by the
Authorized Participant to deliver the missing Shares as soon as possible, which
undertaking shall be secured by the Authorized Participant's delivery and
maintenance of collateral pending delivery of the missing Shares. The
Participant Agreement will permit the applicable Trust, on behalf of the Fund,
to purchase the missing Shares at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the applicable
Trust of acquiring such Shares and the value of the collateral.

      1. Redemption Procedures Applicable to the Funds. Other than for
Ineligible Funds, Creation Units may generally be redeemed through the Shares
Clearing Process. Procedures for such redemptions are analogous (in reverse) to
those for purchases of Creation Units through the Shares Clearing Process.
Creation Units may also be redeemed outside the Shares Clearing Process;
however, a higher Transaction Fee may be charged. As noted above, redemptions of
Creation Units of Ineligible Funds will be made only outside the Shares Clearing
Process. (See Section III.I below regarding settlement and clearing procedures
for Ineligible Funds outside of the Shares Clearing Process.) As also discussed
above, a redeemer will pay a Transaction Fee to offset the Fund's trading costs,
operation processing costs, brokerage commissions and other similar costs
incurred in transferring the Fund Securities from its account to the account of


                                 Page 16 of 44



the redeeming investor. An entity redeeming Shares outside the Shares Clearing
Process may be required to pay a higher Transaction Fee than would have been
charged had the redemption been effected through the Shares Clearing Process. A
redeemer receiving cash in lieu of one or more Fund Securities may also be
assessed a higher Transaction Fee on the cash-in-lieu portion to cover the costs
of selling such securities, including all the costs listed above plus all or
part of the spread between the expected bid and offer side of the market
relating to such Fund Securities. This higher Transaction Fee will be assessed
in the same manner as the Transaction Fee incurred in purchasing Creation Units
using a cash-in-lieu portion as described above.

      In the case of Shares of International Funds that ordinarily use an
"in-kind" redemption process, upon redemption of Creation Units and taking
delivery of the Fund Securities into the securities account of the Beneficial
Owner or the Authorized Participant acting on behalf of such Beneficial Owner,
such person must maintain appropriate security arrangements with a
broker-dealer, bank or other custody provider in each jurisdiction in which any
of such Fund Securities are customarily traded. If neither the Beneficial Owner
nor the Authorized Participant acting on behalf of such Beneficial Owner has
appropriate arrangements to take delivery of the Fund Securities in the
applicable jurisdiction(s) and it is not possible to make other such
arrangements, or if it is not possible to effect deliveries of the Fund
Securities in such jurisdiction(s), and in certain other circumstances, the
International Fund may in its discretion exercise its option to redeem such
Shares for cash, and the redeeming Beneficial Owner will be required to receive
its redemption proceeds in cash. In such case, the investor will receive a cash
payment equal to the NAV (next determined after receipt of the redemption
request) times the number of Shares in a Creation Unit of the relevant
International Fund, minus the Transaction Fee.

      A redemption request outside the Shares Clearing Process will be
considered to be in proper form if (i) a duly completed request form is received
by the Transfer Agent from the Authorized Participant on behalf of itself or
another redeeming investor at a time specified by the respective Trust, and (ii)
arrangements satisfactory to the respective Trust are in place for the
Authorized Participant to transfer or cause to be transferred to such Trust the
Creation Unit being redeemed through the book-entry system of the DTC on or
before contractual settlement of the redemption request. As discussed above, in
certain circumstances, a Fund that ordinarily uses an "in-kind" redemption
process may, in its discretion, require or permit cash to be substituted for a
Fund Security.

      Funds that redeem Creation Units in-kind generally will not have to
maintain significant cash reserves for redemptions. This will allow the assets
of such Funds, under normal circumstances, to be as fully invested as possible.
Accordingly, such Funds will be able to be more fully invested than certain
other investment products that must allocate a greater portion of their assets
for cash redemptions.

      I. Settlement and Clearing Outside the Shares Clearing Process.

      It is anticipated that Ineligible Funds settling and clearing outside of
the Shares Clearing Process will generally settle and clear as follows: (i) U.S.
government securities and any cash will clear and settle through the Federal
Reserve System, (ii) Shares of the Ineligible Funds, U.S. equity securities, and


                                 Page 17 of 44



U.S. corporate and non-corporate (other than U.S. government) Fixed Income
Securities will generally clear and settle through DTC and (iii) non-U.S. Fixed
Income Securities, non-U.S. equity securities and non-U.S. money market
securities will generally clear and settle through the Custodian or the
appropriate foreign sub-custodian and Euroclear or another standard clearance
and settlement mechanism of the applicable non-U.S. jurisdiction. The Custodian
will monitor the movement of the Deposit Securities and will instruct the
movement of the Shares only upon validation that the Deposit Securities have
settled correctly or that required collateral is in place. More specifically,
purchases of Creation Units of Ineligible Funds are expected to generally settle
as follows: on the settlement date, an Authorized Participant will transfer
Deposit Securities that are U.S. corporate and non-corporate Fixed Income
Securities (other than U.S. government securities) or U.S. equity securities
through DTC to a DTC account maintained by the Ineligible Funds' Custodian and
Deposit Securities that are U.S. government securities, together with any Cash
Component, to the Custodian through the Federal Reserve System. As noted above,
it is expected that Deposit Securities that are non-U.S. Fixed Income
Securities, non-U.S. equity securities and non-U.S. money market securities will
generally clear and settle through the Custodian or the appropriate foreign
sub-custodian and Euroclear or another standard clearance and settlement
mechanism of the applicable non-U.S. jurisdiction. Once the Custodian has
verified the receipt of all the Deposit Securities (or in the case of failed
delivery of one or more of the missing Deposit Securities, required collateral),
and the receipt of the Cash Component, the Custodian will notify the Distributor
and the Advisor or Fund Subadvisor (if any). The Trust will issue Creation Units
and the Custodian will deliver the Shares representing the Creation Unit to the
Authorized Participant through DTC. DTC will then credit the Authorized
Participant's DTC account. The clearance and settlement of a redemption
transaction essentially reverses the process described above. After an
Ineligible Fund has received a tender for redemption of a Creation Unit in
proper form and the Authorized Participant transfers Shares representing the
Creation Unit to the Custodian through DTC, the Ineligible Fund will cause the
Custodian to initiate procedures to transfer the requisite Fund Securities and
any Cash Redemption Amount. On the settlement date, assuming the Custodian has
verified receipt of the Shares representing the Creation Units, the Custodian
will transfer Fund Securities through the appropriate channels.

      Shares of each Ineligible Fund will be debited or credited by the
Custodian directly to the DTC accounts of the Authorized Participants. Pending
delivery of any missing Deposit Securities, Authorized Participants will be
required to provide collateral to cover the failed delivery of missing Deposit
Securities in connection with an "in-kind" creation of Shares. In case of a
failed delivery of one or more Deposit Securities, the Ineligible Funds will
hold the collateral until the delivery of such Deposit Securities. The
Ineligible Funds will be protected from failure to receive the Deposit
Securities because the Custodian will not effect the Ineligible Fund's side of
the transaction (the issuance of Shares) until the Custodian has received
confirmation of receipt of the Authorized Participant's incoming Deposit
Securities (or has received collateral to cover the failed delivery of missing
Deposit Securities) and the Cash Component. In the case of redemption
transactions, the Ineligible Funds will be protected from failure to receive
Creation Units because the Custodian will not effect the Ineligible Fund's side
of the transaction (the delivery of Fund Securities and the Cash Redemption
Amount) until the Ineligible Fund's Transfer Agent has received confirmation of
receipt of the Authorized Participant's incoming Creation Units. In order to
simplify the transfer agency process and align the settlement of Shares with the


                                 Page 18 of 44



settlement of the Deposit Securities and Fund Securities, the Ineligible Funds
plan to settle transactions in U.S. equity securities, U.S. government
securities, corporate Fixed Income Securities and non-corporate Fixed Income
Securities (other than U.S. government securities) and Shares on the same T+3
(as described below) settlement cycle.

      Applicants do not believe that the clearing and settlement process
described above for Ineligible Funds outside the Shares Clearing Process will
affect the arbitrage of Shares of the Ineligible Funds.(19)

      J. Depositary Receipts.

      Applicants anticipate that certain International Funds may invest in
"Depositary Receipts." Depositary Receipts are typically issued by a financial
institution (a "depositary") and evidence ownership in a security or pool of
securities that have been deposited with the depositary.(20) A Fund will not
invest in any Depositary Receipts that the Advisor or any Fund Subadvisor(s)
deems to be illiquid or for which pricing information is not readily available.

      K. Dividends, Distributions and Taxes.

      Dividends from net investment income will be declared and paid at least
annually by each Fund in the same manner as by other open-end investment
companies. Certain of the Funds may pay dividends, if any, on a quarterly or
more frequent basis. Dividends will be paid to Beneficial Owners of record in
the manner described below. Distributions of realized capital gains, if any,

-----------------------

(19)  The Applicants note that Shares of the Ineligible Funds typically will
      trade and settle on a trade date plus three business days ("T+3") basis.
      Where this occurs, the Applicants believe that Shares of each Ineligible
      Fund will trade in the secondary market at prices that reflect interest
      and coupon payments on Portfolio Securities through the Shares' T+3
      settlement date. As with other investment companies, the 1940 Act requires
      the Ineligible Funds to calculate NAV based on the current market value of
      portfolio investments, and does not permit the Ineligible Funds to reflect
      in NAV interest and coupon payments not due and payable. Therefore, to the
      extent that Shares of the Ineligible Funds may trade in the secondary
      market at a price that reflects interest and coupon payments due on a T+3
      settlement date, the Applicants anticipate that such Shares may trade in
      the secondary market at a slight premium to NAV that reflects these
      interest and coupon payments. The Applicants do not believe that this
      apparent premium will have any impact on arbitrage activity or the
      operations of the Ineligible Funds. The Market Makers and other
      institutional investors who would take advantage of arbitrage activity
      have full access to this information and regularly consider such
      information when buying an individual Fixed Income Security or baskets of
      Fixed Income Securities.

(20)  Depositary Receipts include American Depositary Receipts ("ADRs") and
      Global Depositary Receipts ("GDRs"). With respect to ADRs, the depositary
      is typically a U.S. financial institution and the underlying securities
      are issued by a foreign issuer. The ADR is registered under the Securities
      Act, on Form F-6. ADR trades occur either on a Stock Exchange or
      off-exchange. The Financial Industry Regulatory Authority ("FINRA") Rule
      6620 requires all off-exchange transactions in ADRs to be reported within
      90 seconds and ADR trade reports to be disseminated on a real-time basis.
      With respect to GDRs, the depositary may be foreign or a U.S. entity and
      the underlying securities may have a foreign or a U.S. issuer. All GDRs
      are sponsored and trade on a Foreign Exchange. No affiliated persons of
      Applicants will serve as the depositary bank for any Depositary Receipts
      held by a Fund.


                                 Page 19 of 44



generally will be declared and paid once per year, but a Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent with the
provisions of the 1940 Act. Dividends and other distributions on Shares of each
Fund will be distributed on a pro rata basis to Beneficial Owners of Shares.
Dividend payments will be made through the DTC and the DTC Participants to
Beneficial Owners of record with amounts received from each Fund.

      Each Fund that elects to be treated as a RIC for U.S. federal income tax
purposes intends to make additional distributions to the extent necessary (i) to
distribute the annual investment company taxable income of the Fund, plus any
net capital gains, and (ii) to avoid imposition of the excise tax imposed by
Section 4982 of the Code. The applicable Board of Trustees (the "Board") will
reserve the right to declare special dividends if, in its reasonable discretion,
such action is necessary or advisable to preserve the status of a Fund as a RIC
or to avoid imposition of income or excise taxes on undistributed income.

      L. Shareholder Transaction and Operational Fees and Expenses.

      No sales charges for purchases of Shares of any Fund will be imposed. Each
Fund will charge a Transaction Fee, calculated and imposed as described above,
in connection with purchase and redemption of Creation Units of its Shares. From
time to time and for such periods as the Applicants may determine, the
Transaction Fees for purchase or redemption of Creation Units of any Fund may be
increased, decreased or otherwise modified.

      All other expenses incurred in the operation of a Trust will be borne by
the applicable Trust and allocated among the various Funds, except to the extent
specifically assumed by the Advisor, any Fund Subadvisor, or some other party.
Operational fees and expenses incurred by a Trust that are directly attributable
to a specific Fund will be allocated and charged to that Fund. Such expenses may
include, but will not be limited to, the following: investment advisory fees
(including subadvisory fees), custody fees, brokerage commissions, Commission
registration fees, licensing fees, Stock Exchange listing fees, fees associated
with securities lending, 12b-1 fees(21) and other costs properly payable by each
Fund. Common expenses and expenses which are not readily attributable to a
specific Fund will be allocated on a pro rata basis or in such other manner as
deemed equitable, taking into consideration the nature and type of expense and
the relative sizes of each Fund. Such expenses may include, but will not be
limited to, the following: fees and expenses of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust; legal and audit
fees; certain licensing fees; administration and accounting fees; costs of
preparing, printing and mailing Prospectuses, Summary Prospectuses (if any) and
statements of additional information ("SAIs"); costs of preparing, printing and
mailing semi-annual and annual reports (together, "Shareholder Reports"); costs
of preparing, printing and mailing proxy statements and other documents required
for regulatory purposes and for their distribution to existing shareholders;
Transfer Agent fees; and insurance premiums. All operational fees and expenses

-----------------------

(21)  A Trust may be authorized to implement a plan under Rule 12b-1 under the
      1940 Act on behalf of a Fund and to assess a 12b-1 fee of up to 25 basis
      points, such fee to be calculated on the average daily NAV of the
      respective Fund.


                                 Page 20 of 44



incurred by a Trust will be accrued and allocated to each Fund on a daily basis,
except to the extent expenses are specifically assumed by the Advisor or some
other party.

      M. Dividend Reinvestment Service.

      The Trusts will not make the DTC book entry Dividend Reinvestment Service
available for use by Beneficial Owners for reinvestment of their dividends.
Brokers may, however, offer a dividend reinvestment service which uses dividends
to purchase Shares on the secondary market at market value in which case
brokerage commissions, if any, incurred in purchasing such Shares will be an
expense borne by the individual Beneficial Owners participating in such a
service.

      N. Availability of Information.

      The Applicants believe that a great deal of information will be available
to prospective investors about the Funds. The Distributor's website
(www.ftportfolios.com), which will be publicly available prior to the public
offering of Shares, will include the current Prospectus and Summary Prospectus
(if any) for each Fund that may be downloaded. The website for the Funds, which
is and will be publicly accessible at no charge, will contain, on a per Share
basis for each Fund, the prior Business Day's NAV and the market closing price
or the mid-point of the bid/ask spread at the time of calculation of such NAV
(the "Bid/Ask Price")(22), and a calculation of the premium or discount of the
market closing price or Bid/Ask Price against such NAV. On each Business Day,
before commencement of trading in Shares on the Stock Exchange, the Fund will
disclose on the website the identities and quantities of the Portfolio
Securities and other assets held by the Fund that will form the basis for the
Fund's calculation of NAV at the end of the Business Day. The website and
information will be publicly available at no charge.(23)

      Investors interested in a particular Fund can also obtain the applicable
Trust's SAI, each Fund's Shareholder Reports and its Form N-CSR. The respective
Trust's SAI and Shareholder Reports are available free upon request from the
Trust, and those documents and the Form N-CSR may be viewed on-screen or
downloaded from the Commission's website at http://www.sec.gov.

      In addition, because the Shares are listed on a Stock Exchange,
prospective investors have access to information about the product over and
above what is normally available about a security of an open-end investment
company. Information regarding market price and volume is and will be
continually available on a real-time basis throughout the day on brokers'
computer screens and other electronic services. The Stock Exchange or a major

-----------------------

(22)  The Bid/Ask Price of a Fund is determined using the highest bid and the
      lowest offer on the Stock Exchange as of the time of calculation of such
      Fund's NAV. The records relating to Bid/Ask Prices will be retained by the
      Funds and their service providers.

(23)  Under accounting procedures followed by the Funds, trades made on the
      prior Business Day ("T") will be booked and reflected in NAV on the
      current Business Day ("T+1"). Accordingly, the Funds will be able to
      disclose at the beginning of the Business Day the portfolio that will form
      the basis for the NAV calculation at the end of the Business Day.


                                 Page 21 of 44



market data vendor will disseminate widely every 15 seconds throughout the
trading day an amount representing, on a per Share basis, the sum of the current
value of the Deposit Securities and the estimated Cash Component. The Applicants
are not involved in, or responsible for, the calculation or dissemination of any
such amount and make no warranty as to its accuracy.

      With respect to the foreign securities held by International Funds, to the
extent such securities are listed on a Foreign Exchange, quotations generally
may be accessed for such securities through the website of the relevant Foreign
Exchange. Moreover, U.S. retail investors with access to the Internet generally
may access quotations with respect to foreign securities through financial
websites. In addition, investors with access to certain financial data
publishers, such as Bloomberg, may be able to access quotations and fundamental
data on certain foreign securities. Applicants also understand that the issuers
of foreign securities may file disclosure documents, such as prospectuses, with
their respective regulators. The Applicants are not involved in, or responsible
for, any of the information described in this paragraph and make no warranty as
to its accuracy.

      O. Sales and Marketing Materials.

      The Applicants will take appropriate steps as may be necessary to avoid
confusion in the public's mind between a Fund and a conventional "open-end
investment company" or "mutual fund." Although each Trust is or will be
classified and registered under the 1940 Act as an open-end management
investment company, neither the Trusts nor any Fund will be marketed or
otherwise held out as a "mutual fund" in light of the features, described in
this Application, that make each Fund significantly different from what the
investing public associates with a conventional mutual fund. Instead, each Fund
will be marketed as an "actively managed exchange-traded fund." No Fund
marketing materials (other than as required by Form N-1A) will reference an
"open-end fund" or "mutual fund," except to compare and contrast a Fund with
conventional mutual funds. Further, in all marketing materials where the
features or method of obtaining, buying or selling Shares traded on the Stock
Exchange are described, there will be an appropriate statement or statements to
the effect that Shares are not individually redeemable.

      Neither a Trust nor any of the Funds will be advertised or marketed as
open-end investment companies, i.e., as mutual funds, which offer individually
redeemable securities. Any advertising material in which features of obtaining,
buying or selling Creation Units are described or in which there is reference to
redeemability will prominently disclose that Shares are not individually
redeemable and that owners of Shares may acquire Shares from a Fund and tender
those Shares for redemption to a Fund in Creation Units only.

      P. Third-Party Broker-Dealer Issues.

      Creation Units will be offered continuously to the public. Because new
Shares may be created and issued on an ongoing basis, at any point during the
life of a Fund, a "distribution," as such term is used in the Securities Act,
may be occurring. Depending on the circumstances, some activities on the part of
brokers and other persons may result in their being deemed participants in a
distribution in a manner which could render them statutory underwriters and
subject them to the prospectus delivery and liability provisions of the
Securities Act. For example, a broker-dealer firm and/or its client may be


                                 Page 22 of 44



deemed a statutory underwriter if it takes Creation Units after placing an order
with the Distributor, breaks them down into the constituent Shares and sells the
Shares directly to customers, or if it chooses to couple the purchase of a
supply of new Shares with an active selling effort involving solicitation of
secondary market demand for Shares. Applicants note that Section 24(d) of the
1940 Act provides that the exemption provided by Section 4(3) of the Securities
Act shall not apply to any transaction in a redeemable security issued by an
open-end management investment company.

      Q. Qualification as a Regulated Investment Company.

      If a Fund qualifies for, and elects treatment as, a RIC for U.S. federal
income tax purposes, then such Fund will generally not be subject to U.S.
federal income tax on its income to the extent it distributes substantially all
of its investment company taxable income and net capital gains and satisfies
other applicable requirements of the Code.

IV.   REQUEST FOR EXEMPTIVE RELIEF AND LEGAL ANALYSIS

      The Applicants request a Commission order under Section 6(c) of the 1940
Act, for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the
1940 Act and Rule 22c-1 under the 1940 Act and under Sections 6(c) and 17(b) of
the 1940 Act for an exemption from Section 17(a) of the 1940 Act.

      Section 6(c) of the 1940 Act provides that the Commission may exempt any
person, security, or transaction, or any class of persons, securities, or
transactions, if and to the extent that such exemption is necessary or
appropriate in the public interest and consistent with the protection of
investors and the purposes fairly intended by the policy and provisions of the
1940 Act.

      A. Sections 2(a)(32) and 5(a)(1) of the 1940 Act.

      Section 5(a)(1) of the 1940 Act defines an "open-end company" as a
management investment company that is offering for sale or has outstanding any
redeemable security of which it is the issuer. Section 2(a)(32) of the 1940 Act
defines a redeemable security as any security, other than short-term paper,
under the terms of which the holder, upon its presentation to the issuer, is
entitled to receive approximately his proportionate share of the issuer's
current net assets, or the cash equivalent. Because Shares will not be
individually redeemable, a possible question arises as to whether the
definitional requirements of a "redeemable security" or an "open-end company"
under the 1940 Act would be met if such Shares are viewed as non-redeemable
securities. In light of this possible analysis, the Applicants request an order
under Section 6(c) granting an exemption from Sections 5(a)(1) and 2(a)(32) that
would permit each Trust to register as an open-end management investment company
and redeem Shares in Creation Units only.

      Investors may purchase Shares in Creation Units from each Fund. Creation
Units are always redeemable in accordance with the provisions of the 1940 Act.
Owners of Shares may purchase the requisite number of Shares and tender the
resulting Creation Unit for redemption. Moreover, listing on a Stock Exchange


                                 Page 23 of 44



will afford all holders of Shares the ability to buy and sell Shares throughout
the day in the secondary market. Because the market price of Creation Units will
be disciplined by arbitrage opportunities, investors should be able to sell
Shares in the secondary market at prices that do not vary substantially from
their NAV.

      Applicants believe that the Funds will not present any new issues with
respect to the exemptions which allow for current Index ETFs and actively
managed ETFs to redeem their shares only in Creation Units. While Applicants
recognize that the potential for more significant deviations between market
price and NAV exists with actively managed ETFs, that is not the case here since
each Fund's portfolio holdings will be fully transparent. As noted above, each
Fund intends to disclose on its website on each Business Day, before
commencement of trading of Shares on the Stock Exchange, the identities and
quantities of the Portfolio Securities and other assets held by the Fund that
will form the basis for the Fund's calculation of NAV at the end of the Business
Day. Since market participants will be aware, at all times, of each Fund's
Portfolio Securities and other assets which form the basis for its NAV
calculation, the risk of significant deviations between NAV and market price is
similar to that which exists in the case of Index ETFs. Further, as mentioned
herein, Applicants believe that the current disclosure requirements are
sufficient to safeguard against investor confusion. Thus, the Applicants believe
that a Fund issuing Shares as proposed is appropriate in the public interest and
consistent with the protection of investors and the purposes fairly intended by
the policy and provisions of the 1940 Act.

      B. Section 22(d) of the 1940 Act and Rule 22c-1 under the 1940 Act.

      Section 22(d) of the 1940 Act, among other things, prohibits a dealer from
selling a redeemable security that is being currently offered to the public by
or through an underwriter, except at a current public offering price described
in the prospectus. Rule 22c-1 under the 1940 Act generally requires that a
dealer selling, redeeming, or repurchasing a redeemable security do so only at a
price based on the NAV next computed after receipt of a tender of such security
for redemption or of an order to purchase or sell such security.

      Secondary market trading in Shares will take place at negotiated prices,
not at a current offering price described in the Prospectus, and not at a price
based on NAV. Shares of each Fund will be listed on a Stock Exchange. The Shares
will trade on and away from the Stock Exchange(24) at all times on the basis of
current bid/ask prices. Thus, purchases and sales of Shares in the secondary
market will not comply with Section 22(d) and Rule 22c-1. The Applicants request
an exemption under Section 6(c) from Section 22(d) and Rule 22c-1 to permit the
Shares to trade at negotiated prices.

      The concerns sought to be addressed by Section 22(d) and Rule 22c-1 with
respect to pricing are equally satisfied by the proposed method of pricing
Shares. While there is little legislative history regarding Section 22(d), its
provisions, as well as those of Rule 22c-1, appear to have been designed to (i)

-----------------------

(24)  Consistent with Rule 19c-3 under the Exchange Act, Stock Exchange members
      are not required to effect transactions in Shares through the facilities
      of the Stock Exchange.


                                 Page 24 of 44



prevent dilution caused by certain riskless-trading schemes by principal
underwriters and contract dealers, (ii) prevent unjust discrimination or
preferential treatment among buyers resulting from sales at different prices,
and (iii) assure an orderly distribution of investment company shares by
eliminating price competition from brokers offering Shares at less than the
published sales price and repurchasing Shares at more than the published
redemption price.

      The Applicants believe that none of these purposes will be thwarted by
permitting Shares to trade in the secondary market at negotiated prices.
Secondary market trading in Shares does not involve the Trusts or Funds as
parties and cannot result in dilution of an investment in Shares. To the extent
different prices exist during a given trading day, or from day to day, such
variances occur as a result of third-party market forces, such as supply and
demand, not as a result of unjust or discriminatory manipulation. In light of
these constraints, Applicants do not believe that the Funds could be managed or
manipulated to produce benefits for one group of purchasers or sellers to the
detriment of others. Accordingly, the Applicants believe that secondary market
transactions in Shares will not lead to discrimination or preferential treatment
among purchasers. The Applicants contend that the proposed distribution system
also will be orderly. Shares may be sold or acquired by purchasing them on a
Stock Exchange or by creating or redeeming a Creation Unit. Therefore, no dealer
should have an advantage over another broker or dealer in the sale of Shares. In
addition, as described above, Applicants believe that in light of the fact that
the Funds will be fully transparent, arbitrage activity should ensure that
differences between NAV and market prices remain low.

      Furthermore, the Applicants believe that the ability to execute a
transaction in Shares at an intraday trading price will be a highly attractive
feature to many investors and offers a key advantage to investors over the
once-daily pricing mechanisms of conventional mutual funds. This feature would
be fully disclosed to investors, and the investors would trade in Shares in
reliance on the efficiency of the market.

      Applicants also believe that the Funds will not present any new issues
with respect to the exemptions which allow ETF shares to trade at negotiated
prices. With proper disclosure to all parties, the Funds do not create any new
potential for discrimination or preferential treatment among investors
purchasing and selling Shares in the secondary market and those purchasing and
redeeming Creation Units. The Applicants, therefore, believe that buying and
selling Shares at negotiated prices is appropriate in the public interest and
consistent with the protection of investors and the purposes fairly intended by
the policy and provisions of the 1940 Act.

      C. Section 22(e) of the 1940 Act.

      Section 22(e) of the 1940 Act provides that:

            No registered company shall suspend the right of redemption, or
      postpone the date of payment or satisfaction upon redemption of any
      redeemable security in accordance with its terms for more than seven days
      after the tender of such security to the company or its agent designated
      for that purpose for redemption, except-


                                 Page 25 of 44



                  (1) for any period (A) during which the New York Stock
            Exchange is closed other than customary weekend and holiday closings
            or (B) during which trading on the New York Stock Exchange is
            restricted;

                  (2) for any period during which an emergency exists as a
            result of which (A) disposal by the company of securities owned by
            it is not reasonably practicable or (B) it is not reasonably
            practicable for such company fairly to determine the value of its
            net assets; or

                  (3) for such other periods as the Commission may by order
            permit for the protection of security holders of the company.

      The settlement of redemptions of Creation Units for transferring Portfolio
Securities held by the International Funds is contingent not only on the
settlement cycle of the U.S. securities markets but also on the delivery cycles
present in markets where those International Funds invest. The Applicants are
aware that, under certain circumstances, the delivery cycles for transferring
Fund Securities into the securities accounts of redeeming Authorized
Participants or the Beneficial Owners on whose behalf they are acting, coupled
with local foreign market holiday schedules, will require a delivery process of
up to 15 calendar days, rather than the seven calendar days required by Section
22(e).(25) The Applicants therefore request relief from Section 22(e) in order
to pay in-kind redemption proceeds within the maximum number of calendar days,
up to 15 calendar days, required for such payment or satisfaction in the
principal local foreign markets where transactions in the Portfolio Securities
of each International Fund customarily clear and settle. Applicants are seeking
relief from Section 22(e) only for those International Funds that create and/or
redeem in-kind.

      Based on information available to the Applicants, although certain
holidays may occur on different dates in subsequent years, the number of days
required to deliver redemption proceeds will not exceed 15 calendar days for any
of the Funds requiring relief from Section 22(e). Of course, it is possible that
the introduction of new or special holidays,(26) the treatment by market
participants of certain days as "informal holidays" (e.g., days on which no or
limited securities transactions occur, as a result of substantially shortened
trading hours),(27) or changes in local securities delivery practices(28) could
affect the information set forth herein at some time in the future. Under these

-----------------------

(25)  In the past, settlement in certain countries, including Russia, has
      extended to 15 calendar days.

(26)  Previously unscheduled holidays are sometimes added to a country's
      calendar, and existing holidays are sometimes moved, with little advance
      notice. Any such future changes could increase the number of days
      necessary to satisfy a redemption request.

(27)  A typical "informal holiday" includes a trading day in the relevant market
      that is immediately prior to a regularly scheduled holiday, in which early
      closures of the market or of the offices of key market participants may
      occur with little advance notice. Any shortening of regular trading hours
      on such a day could impact the analysis of the number of days necessary to
      satisfy a redemption request.

(28)  The Applicants observe that the trend internationally in local securities
      delivery practices has been a reduction in each market's standard
      settlement cycles (e.g., the U.S. markets' change to T+3 in 1995). It


                                 Page 26 of 44



circumstances, the Applicants would notify shareholders as soon as reasonably
practicable. Nevertheless, each International Fund will deliver all redemption
proceeds within 15 calendar days from when a redemption request is received. The
SAI for each International Fund will disclose (i) the holidays (over the period
of at least one year following the date of the SAI), if any, that are expected
to prevent the delivery of redemption proceeds in seven calendar days, and (ii)
the maximum number of days, up to a maximum of 15 calendar days, needed to
deliver the proceeds for each such International Fund. The Applicants also
intend to disclose in the SAI that redemption payments will be effected within
the specified number of calendar days up to a maximum of 15 calendar days
following the date on which a request for redemption is made in proper form. The
Applicants expect that each International Fund will deliver redemption proceeds
within seven calendar days, except as otherwise disclosed in such International
Fund's SAI.

      The Applicants propose that allowing redemption payments for Creation
Units of an International Fund to be made within 15 calendar days would not be
inconsistent with the intent of Section 22(e) and would adequately afford
investor protection. Congress adopted Section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the actual payment of redemption proceeds.
Under the Applicants' proposal, the Applicants would disclose in each
International Fund's SAI that redemption payments will be effected within a
certain number of calendar days up to a maximum of 15 calendar days following
the date on which a request for redemption in proper form is made. Given the
facts as described above and the explanation of the reasons for a delay in the
redemption process on certain occasions, the Applicants believe that the
redemption mechanism described above will not lead to unreasonable, undisclosed
or unforeseen delays in the redemption process.

      On the basis of the foregoing, the Applicants believe that (i) the
protections intended to be afforded by Section 22(e) are adequately addressed by
the proposed redemption cycles and (ii) the relief requested is appropriate in
the public interest and consistent with the protection of investors and the
purposes fairly intended by the policies and provisions of the 1940 Act.
Applicants further acknowledge that no relief obtained from the requirements of
Section 22(e) will affect any obligations the Applicants may otherwise have
under Rule 15c6-1 under the Exchange Act. Rule 15c6-1 requires that most
securities transactions be settled within three business days of the trade date.
See Investment Company Act Release No. 23860.

      D. Section 17(a) of the 1940 Act.

      Section 17(a) of the 1940 Act generally prohibits an affiliated person of
a registered investment company, or an affiliated person of such person ("second
tier affiliates"), from selling any security to or purchasing any security from
the company. The definition of "affiliated person" in Section 2(a)(3) of the
1940 Act includes any person that owns or controls 5% or more of an issuer's
outstanding voting securities (Section 2(a)(3)(A)), any person 5% or more of
whose outstanding voting securities are owned or controlled by another person

-----------------------

      remains possible, although unlikely, that a particular market's settlement
      cycles for securities transfers could be lengthened in the future.



                                 Page 27 of 44



(Section 2(a)(3)(B)) and any person controlling, controlled by or under common
control with another person (Section 2(a)(3)(C)). Section 2(a)(9) of the 1940
Act defines "control" as the power to exercise a controlling influence and
provides that any person who owns more than 25% of the voting securities of a
company shall be presumed to control the company. The Funds may be deemed to be
controlled by the Advisor or an entity controlling, controlled by or under
common control with the Advisor and hence affiliated persons of each other. In
addition, the Funds may be deemed to be under common control with any other
registered investment company (or series thereof) advised by the Advisor or an
entity controlling, controlled by or under common control with the Advisor (an
"Affiliated Fund").

      Section 17(a) prohibits persons who are affiliated persons of a Fund under
Section 2(a)(3)(A) or (C) of the 1940 Act, by virtue of owning, respectively, 5%
or more, or more than 25% of a Fund, from purchasing or redeeming Creation Units
through in-kind transactions.

      Applicants request an exemption under Sections 6(c) and 17(b) of the 1940
Act from Section 17(a) of the 1940 Act in order to permit in-kind purchases and
redemptions of Creation Units from the Funds by persons that are affiliated
persons or second tier affiliates of the Funds solely by virtue of one or more
of the following: (i) holding 5% or more, or more than 25% of the Shares of the
respective Trust or one or more Funds; (ii) an affiliation with a person with an
ownership interest described in (i); or (iii) holding 5% or more, or more than
25%, of the shares of one or more Affiliated Funds.

      Section 17(b) authorizes the Commission to exempt a proposed transaction
from Section 17(a) if evidence establishes that the terms of the transaction,
including the consideration to be paid or received, are reasonable and fair and
do not involve overreaching, and the proposed transaction is consistent with the
policies of the registered investment company and the general provisions of the
1940 Act. Because Section 17(b) could be interpreted to exempt only a single
transaction from Section 17(a) and there may be a number of transactions by
persons who may be deemed to be affiliates, the Applicants are also requesting
an exemption from Section 17(a) under Section 6(c). See, e.g., Keystone
Custodian Funds, Inc., 21 S.E.C. 295 (l945). Applicants believe that with
respect to the relief requested pursuant to Section 17(b), the proposed
transactions are reasonable and fair and do not involve overreaching on the part
of any person concerned, the proposed transactions are consistent with the
policy of each Fund concerned, and that the proposed transactions are consistent
with the general purposes of the 1940 Act, and with respect to the relief
requested pursuant to Section 6(c), the requested exemption for the proposed
transactions is appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.

      Section 17(a) is intended to prohibit affiliated persons in a position of
influence or control over an investment company from furthering their own
interests by selling property that they own to an investment company at an
inflated price, purchasing property from an investment company at less than fair
value or selling or purchasing property on terms that involve overreaching. For
the reasons set forth above, the Applicants contend that no useful purpose would
be served by prohibiting the transactions described above. The composition of a
Portfolio Deposit made by a purchaser or Fund Redemption given to a redeeming


                                 Page 28 of 44



investor will be the same (except for permitted cash-in-lieu amounts) regardless
of the investor's identity, and will be valued under the same objective
standards applied to valuing the Portfolio Securities. It is immaterial to the
Trust whether 15 or 1,500 Creation Units exist for a given Fund. The Applicants
believe that in-kind purchases and redemptions will afford no opportunity for an
affiliated person or a second tier affiliate of a Fund described above to effect
a transaction detrimental to the other holders of its Shares. Further, any such
in-kind transactions will be based on the NAV of the relevant Fund.

      The Applicants also note that the ability to take deposits and make
redemptions in-kind could aid in achieving a Fund's objective(s). The Applicants
do not believe that in-kind purchases and redemptions will result in abusive
self-dealing or overreaching but rather assert that such procedures will be
implemented consistently with a Fund's objective(s) and with the general
purposes of the 1940 Act. The method of valuing Portfolio Securities held by a
Fund is the same as that used for calculating in-kind purchase or redemption
values. Therefore, no opportunity is created for the affiliates of the Funds
described above to effect a transaction detrimental to the other holders of
Shares of a Fund.

      The Applicants believe that the Funds will not present any new issues with
respect to the exemptions which allow for in-kind transactions between an ETF
and certain affiliates. All shareholders, regardless of affiliation, will be
given the same opportunities with respect to creations and redemptions in-kind.
As a result, there would not be any increased opportunity for an affiliate of a
Trust to effect a transaction detrimental to a Trust. Consequently, the
Applicants believe that the requested relief meets the standards of Sections
6(c) and 17(b) of the 1940 Act.

V.    CONDITIONS

      The Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:

      1. As long as the Funds operate in reliance on the requested order, the
Shares of the Funds will be listed on a Stock Exchange.

      2. Neither the Trusts nor any Fund will be advertised or marketed as an
open-end investment company or a mutual fund. Any advertising material that
describes the purchase or sale of Creation Units or refers to redeemability will
prominently disclose that the Shares are not individually redeemable and that
owners of the Shares may acquire those Shares from the Fund and tender those
Shares for redemption to the Fund in Creation Units only.

      3. The website for the Funds, which is and will be publicly accessible at
no charge, will contain, on a per Share basis for each Fund, the prior Business
Day's NAV and the market closing price or Bid/Ask Price, and a calculation of
the premium or discount of the market closing price or Bid/Ask Price against
such NAV.

      4. On each Business Day, before commencement of trading in Shares on the
Stock Exchange, the Fund will disclose on its website the identities and


                                 Page 29 of 44



quantities of the Portfolio Securities and other assets held by the Fund that
will form the basis for the Fund's calculation of NAV at the end of the Business
Day.

      5. The Advisor or Fund Subadvisor (if any), directly or indirectly, will
not cause any Authorized Participant (or any investor on whose behalf an
Authorized Participant may transact with the Fund) to acquire any Deposit
Security for the Fund through a transaction in which the Fund could not engage
directly.

      6. The requested order will expire on the effective date of any Commission
rule under the 1940 Act that provides relief permitting the operation of
actively managed exchange-traded funds.

VI.   NAMES AND ADDRESSES

      The following are the names and addresses of the Applicants:

            First Trust Advisors L.P.
            First Trust Portfolios L.P.
            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 AlphaDEX(R) Fund
            First Trust Exchange-Traded AlphaDEX(R) Fund II
            120 East Liberty Drive
            Suite 400
            Wheaton, Illinois 60187

      All questions concerning this Application should be directed to the
persons listed on the facing page of this Application.


                                 Page 30 of 44



                               FIRST TRUST EXCHANGE-TRADED FUND


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                               FIRST TRUST EXCHANGE-TRADED FUND II


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                               FIRST TRUST EXCHANGE-TRADED FUND III


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                               FIRST TRUST EXCHANGE-TRADED FUND IV


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                               FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                               FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: President


                                 Page 31 of 44



                               FIRST TRUST ADVISORS L.P.


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: Chief Executive Officer


                               FIRST TRUST PORTFOLIOS L.P.


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:  James A. Bowen
                                  Title: Chief Executive Officer
Dated:  September 9, 2011


                                 Page 32 of 44



VII.  AUTHORIZATION AND SIGNATURES

      In accordance with Rule 0-2(c) under the 1940 Act, the Applicants state
that all actions necessary to authorize the execution and filing of this
Application have been taken, and the person signing and filing this document is
authorized to do so on behalf of First Trust Advisors L.P. James A. Bowen is
authorized to sign and file this document on behalf of First Trust Advisors L.P.
pursuant to the general authority vested in him as Chief Executive Officer.

                               FIRST TRUST ADVISORS L.P.


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  Chief Executive Officer

Dated as of: September 9, 2011


                                 Page 33 of 44



      In accordance with Rule 0-2(c) under the 1940 Act, the Applicants state
that all actions necessary to authorize the execution and filing of this
Application have been taken, and the person signing and filing this document is
authorized to do so on behalf of the First Trust Exchange-Traded Fund, First
Trust Exchange-Traded Fund II, First Trust Exchange-Traded Fund III ("Trust
III"), First Trust Exchange-Traded Fund IV ("Trust IV"), First Trust
Exchange-Traded AlphaDEX(R) Fund and First Trust Exchange-Traded AlphaDEX(R)
Fund II (the "AlphaDEX Trust II") (collectively, the "Trusts"; the AlphaDEX
Trust II and Trust IV are collectively the "New Trusts"). James A. Bowen is
authorized to sign and file this document on behalf of the Trusts pursuant to
(a) the general authority vested in him as President and (b)(1) for the Trusts
other than Trust III and the New Trusts, resolutions adopted by the respective
Boards of Trustees, which are attached hereto as Appendix A-1, (2) for Trust
III, the written consent of the sole initial trustee, which is attached hereto
as Appendix A-2 and (3) for the New Trusts, resolutions adopted by the
respective Boards of Trustees, which are attached hereto as Appendix A-3.

                               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 ALPHADEX(R) FUND

                               FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  President

Dated as of: September 9, 2011


                                 Page 34 of 44



      In accordance with Rule 0-2(c) under the 1940 Act, the Applicants state
that all actions necessary to authorize the execution and filing of this
Application have been taken, and the person signing and filing this document is
authorized to do so on behalf of First Trust Portfolios L.P. James A. Bowen is
authorized to sign and file this document on behalf of First Trust Portfolios
L.P. pursuant to the general authority vested in him as Chief Executive Officer.

                               FIRST TRUST PORTFOLIOS L.P.


                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  Chief Executive Officer

Dated as of: September 9, 2011


                                 Page 35 of 44



               VERIFICATION OF APPLICATION AND STATEMENT OF FACT

      In accordance with Rule 0-2(d) under the 1940 Act, the undersigned states
that he has duly executed the attached Application for an order, for and on
behalf of FIRST TRUST ADVISORS L.P.; that he is Chief Executive Officer of such
company; and that all actions taken by the stockholders, directors and other
bodies necessary to authorize the undersigned to execute and file such
instrument have been taken. The undersigned further states that he is familiar
with such instrument, and the contents thereof, and that the facts therein set
forth are true to the best of his knowledge, information and belief.

                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  Chief Executive Officer


                                 Page 36 of 44



               VERIFICATION OF APPLICATION AND STATEMENT OF FACT

      In accordance with Rule 0-2(d) under the 1940 Act, the undersigned states
that he has duly executed the attached Application for an order, for and on
behalf of 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 ALPHADEX(R) FUND and FIRST TRUST EXCHANGE-TRADED
ALPHADEX(R) FUND II; that he is President of such companies; and that all
actions taken by the stockholders, directors and other bodies necessary to
authorize the undersigned to execute and file such instrument have been taken.
The undersigned further states that he is familiar with such instrument, and the
contents thereof, and that the facts therein set forth are true to the best of
his knowledge, information and belief.

                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  President


                                 Page 37 of 44



               VERIFICATION OF APPLICATION AND STATEMENT OF FACT

      In accordance with Rule 0-2(d) under the 1940 Act, the undersigned states
that he has duly executed the attached Application for an order, for and on
behalf of FIRST TRUST PORTFOLIOS L.P.; that he is Chief Executive Officer of
such company; and that all actions taken by the stockholders, directors and
other bodies necessary to authorize the undersigned to execute and file such
instrument have been taken. The undersigned further states that he is familiar
with such instrument, and the contents thereof, and that the facts therein set
forth are true to the best of his knowledge, information and belief.

                               By:          /s/ James A. Bowen
                                  ----------------------------------------------
                                  Name:   James A. Bowen
                                  Title:  Chief Executive Officer


                                 Page 38 of 44



                                  APPENDIX A-1

        THE BOARDS OF TRUSTEES OF THE FIRST TRUST EXCHANGE-TRADED FUND,
  THE FIRST TRUST EXCHANGE-TRADED FUND II, AND THE FIRST TRUST EXCHANGE-TRADED
            ALPHADEX(R) FUND EACH ADOPTED THE FOLLOWING RESOLUTIONS

            WHEREAS,   the  First  Trust  Exchange-Traded  Fund  III  (the
      "Initial  Trust")  previously  received an order (the "Prior Order")
      from  the  Securities  and  Exchange  Commission  (the "Commission")
      granting  an  exemption  from  various  provisions of the Investment
      Company  Act  of 1940 (the "1940 Act") to permit, among other things
      (a)  series  of  certain  open-end  management  investment companies
      (each,  a  "Fund")  to  issue  shares ("Shares") redeemable in large
      aggregations   only   ("Creation   Units");   (b)  secondary  market
      transactions  in  Shares  to  occur at negotiated market prices; (c)
      certain   series   to   pay   redemption   proceeds,  under  certain
      circumstances,  more  than seven days after the tender of Shares for
      redemption;  and  (d)  certain  affiliated  persons of the series to
      deposit  securities into, and receive securities from, the series in
      connection with the purchase and redemption of Creation Units; and

            WHEREAS,  the  Prior  Order  granted  relief  not  only to the
      Initial  Trust  and  series  thereof, but also to any other open-end
      management company existing or created in the future and existing or
      future  series  thereof  that  may  use active management investment
      strategies; and

            WHEREAS, the Prior Order requires that the Funds relying on it
      invest  primarily  in  equity securities traded in the United States
      markets  and/or  foreign  equity  securities  (collectively, "Equity
      Securities"); and

            WHEREAS,  the  Initial  Trust, the First Trust Exchange-Traded
      Fund,  the  First Trust Exchange-Traded Fund II, and the First Trust
      Exchange-Traded  AlphaDEX(R)  Fund (collectively, the "Trusts") seek
      additional  exemptive relief to establish Funds that may also invest
      primarily  in  securities  other  than Equity Securities, including,
      without  limitation,  fixed-income securities and investment company
      securities  (collectively,  "Other Securities"), or in a combination
      of Equity Securities and Other Securities;


                                 Page 39 of 44



            NOW THEREFORE BE IT

            RESOLVED,  that  James  A.  Bowen  and  any  other appropriate
      officer of each Trust be, and each hereby is, authorized to prepare,
      execute  and  submit  to  the Securities and Exchange Commission, on
      behalf  of  the  respective Trust and in its name, an Application or
      Applications  in  such  form  as  such officers, or any one of them,
      deems  necessary  or  appropriate  seeking  exemptions  from certain
      provisions  of  the 1940 Act to the extent necessary to, among other
      things, permit Funds to invest primarily in Other Securities or in a
      combination  of Equity Securities and Other Securities (as described
      in such Application or Applications); and it is further

            RESOLVED,  that  James  A.  Bowen  and  any  other appropriate
      officer  of  the respective Trust be, and each hereby is, authorized
      and  directed  to  take  such  additional actions and to execute and
      deliver  on  behalf  of the respective Trust such other documents or
      instruments  as they deem necessary or appropriate in furtherance of
      the   above   resolution,   including,   without   limitation,   the
      preparation,  execution  and  filing of any necessary or appropriate
      amendment(s)  or supplement(s) to the above-described Application or
      Applications,  his  or  her  authority  therefor  to be conclusively
      evidenced  by  the  taking  of  any such actions or the execution or
      delivery of any such document; and it is further

            RESOLVED,  that  upon issuance of an Order of Exemption by the
      Commission  in  accordance  with  the  terms  and  conditions of any
      Application  described  above, the respective Trust is authorized to
      act  in  accordance  with the provisions of such Application and the
      related Order of Exemption.


                                 Page 40 of 44



                                 APPENDIX A-2

        THE SOLE INITIAL TRUSTEE OF FIRST TRUST EXCHANGE-TRADED FUND III
              ADOPTED THE FOLLOWING RESOLUTIONS BY WRITTEN CONSENT

            WHEREAS,  the First Trust Exchange-Traded Fund III ("ETF III")
      previously received an order (the "Prior Order") from the Securities
      and  Exchange  Commission  (the  "Commission") granting an exemption
      from  various  provisions of the Investment Company Act of 1940 (the
      "1940  Act")  to  permit,  among  other things (a) series of certain
      open-end  management  investment companies (each, a "Fund") to issue
      shares  ("Shares")  redeemable in large aggregations only ("Creation
      Units");  (b)  secondary  market  transactions in Shares to occur at
      negotiated  market  prices;  (c)  certain  series  to pay redemption
      proceeds,  under  certain  circumstances, more than seven days after
      the  tender  of  Shares  for  redemption; and (d) certain affiliated
      persons  of  the  series  to  deposit  securities  into, and receive
      securities  from,  the  series  in  connection with the purchase and
      redemption of Creation Units; and

            WHEREAS,  the  Prior  Order granted relief not only to ETF III
      and  series  thereof,  but  also  to  any  other open-end management
      company  existing  or  created  in the future and existing or future
      series thereof that may use active management investment strategies;
      and

            WHEREAS, the Prior Order requires that the Funds relying on it
      invest  primarily  in  equity securities traded in the United States
      markets  and/or  foreign  equity  securities  (collectively, "Equity
      Securities"); and

            WHEREAS,  ETF  III,  the First Trust Exchange-Traded Fund, the
      First   Trust   Exchange-Traded   Fund   II,  and  the  First  Trust
      Exchange-Traded AlphaDEX(R) Fund seek additional exemptive relief to
      establish  Funds  that may also invest primarily in securities other
      than  Equity Securities, including, without limitation, fixed-income
      securities  and  investment company securities (collectively, "Other
      Securities"),  or  in  a  combination of Equity Securities and Other
      Securities;

            NOW  THEREFORE  BE  IT  RESOLVED,  that James A. Bowen and any
      other  appropriate  officer  of  ETF  III  be,  and  each hereby is,
      authorized  to  prepare,  execute  and  submit to the Securities and
      Exchange  Commission,  on  behalf  of  ETF  III  and in its name, an
      Application  or  Applications  in such form as such officers, or any


                                 Page 41 of 44



      one  of them, deems necessary or appropriate seeking exemptions from
      certain provisions of the 1940 Act to the extent necessary to, among
      other  things,  permit Funds to invest primarily in Other Securities
      or  in  a  combination of Equity Securities and Other Securities (as
      described in such Application or Applications); and

            FURTHER   RESOLVED,   that   James  A.  Bowen  and  any  other
      appropriate  officer  of  ETF III be, and each hereby is, authorized
      and  directed  to  take  such  additional actions and to execute and
      deliver  on behalf of ETF III such other documents or instruments as
      they  deem  necessary  or  appropriate  in  furtherance of the above
      resolution,   including,   without   limitation,   the  preparation,
      execution and filing of any necessary or appropriate amendment(s) or
      supplement(s)  to  the  above-described Application or Applications,
      his  or  her  authority therefor to be conclusively evidenced by the
      taking  of any such actions or the execution or delivery of any such
      document; and

            FURTHER  RESOLVED, that upon issuance of an Order of Exemption
      by the Commission in accordance with the terms and conditions of any
      Application  described  above,  ETF  III  is  authorized  to  act in
      accordance  with  the provisions of such Application and the related
      Order of Exemption.


                                 Page 42 of 44



                                  APPENDIX A-3

                           THE BOARDS OF TRUSTEES OF
                    FIRST TRUST EXCHANGE-TRADED FUND IV AND
                FIRST TRUST EXCHANGE-TRADED ALPHADEX(R) FUND II
                          (COLLECTIVELY, THE "TRUSTS")
                     EACH ADOPTED THE FOLLOWING RESOLUTIONS

            WHEREAS,  the  Boards  of  Trustees  of certain other open-end
      management  investment  companies operating as exchange-traded funds
      and  advised by First Trust Advisors L.P. have previously authorized
      the  preparation,  execution  and  submission  to the Securities and
      Exchange Commission (the "Commission"), on behalf of such investment
      companies, of an application or applications seeking exemptions from
      certain  provisions of the Investment Company Act of 1940 (the "1940
      Act"), to the extent necessary to, among other things, permit series
      of   such  investment  companies  to  invest  primarily  in  various
      securities  other than equity securities traded in the United States
      markets and/or foreign equity securities (such equity securities are
      collectively referred to as "Equity Securities"), including, without
      limitation,   fixed-income   securities   and   investment   company
      securities (collectively "Other Securities"), or in a combination of
      Equity  Securities  and  Other  Securities,  as  described  in  such
      application  or  applications,  and  such  an  application  has been
      submitted  to,  and  is currently pending with, the Commission (such
      application is referred to as the "Exemptive Application"); and

            WHEREAS,  the  Board  of Trustees of each Trust has determined
      that  it  is  beneficial for such Trust to receive similar exemptive
      relief as that sought in the Exemptive Application.

            NOW THEREFORE BE IT

            RESOLVED,  that  James  A.  Bowen  and  any  other appropriate
      officer  of  each  Trust  be, and each hereby is, authorized to take
      such  action  as  is  necessary  to  add  the respective Trust as an
      applicant to the Exemptive Application; and

            FURTHER   RESOLVED,   that   James  A.  Bowen  and  any  other
      appropriate officer of each Trust be, and each hereby is, authorized
      and  directed  to  take  such  additional actions and to execute and
      deliver  on  behalf  of the respective Trust such other documents or
      instruments   as  he  or  she  deems  necessary  or  appropriate  in
      furtherance  of the above resolution and in furtherance of obtaining
      the   exemptive  relief  requested  in  the  Exemptive  Application,


                                 Page 43 of 44



      including, without limitation, the preparation, execution and filing
      of any necessary or appropriate amendment(s) or supplement(s) to the
      Exemptive   Application,   his  or  her  authority  therefor  to  be
      conclusively  evidenced  by  the  taking  of any such actions or the
      execution or delivery of any such document; and

            FURTHER  RESOLVED, that upon issuance of an Order of Exemption
      by the Commission in accordance with the terms and conditions of the
      above-described  Exemptive  Application,  the  respective  Trust  is
      authorized  to  act  in  accordance  with  the  provisions  of  such
      Exemptive Application and the related Order of Exemption.


                                 Page 44 of 44