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FT Portfolios to change investment objective of FUD ETF


FT Portfolios Canada Co, the manager of First Trust AlphaDEX US Dividend ETF (CAD-Hedged) (FUD), is planning to change the ETF’s investment objective to seek to replicate the performance of the Value Line Dividend Index on a currency hedged basis, net of expenses and to change the management fee payable by the fund.  

In connection with the proposal, the fund’s will change to the First Trust Value Line Dividend Index (CAD-Hedged).
The fund’s manager believes the index change will create Improved downside protection, and produce a more consistent return profile for unitholders thereby reducing overall portfolio volatility moving forward.
The Value Line Dividend Index universe currently includes approximately 1,700 stocks. The Value Line Dividend Index tracks those that are Safety 1 or 2 rated, have a yield higher than the indicated yield of the S&P 500 and market capitalisation greater than USD1 billion as of the last rebalance. The Value Line Dividend Index includes 201 stocks as of 31 August, 2017.
The change in investment objective will not result in a disposition of units of FUD to unitholders for Canadian income tax purposes.
In addition, the manager believes that the change to the management fee payable by the fund is reasonable in that it is same as the management fee charged to First Trust Value Line Dividend Index Fund (a US ETF which tracks the same index), it reflects additional portfolio management work associated with monthly versus semi-annual rebalancing and that the Manager will pay a license fee to use the index and trademark which FUD currently does not pay.

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