UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21944
| First Trust Exchange-Traded Fund II |
| (Exact name of registrant as specified in charter) |
120 East Liberty Drive, Suite 400
Wheaton, IL 60187 |
| (Address of principal executive offices) |
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187 |
| (Name and address of agent for service) |
Registrant’s telephone number, including area code: (630) 765-8000
Date of fiscal year end: September 30
Date of reporting period: March 31, 2024
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Report to Stockholders.
| (a) | | The registrant's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: |
First Trust Exchange-Traded Fund II
First Trust STOXX® European Select Dividend Index Fund (FDD) |
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE) |
First Trust Dow Jones Global Select Dividend Index Fund (FGD) |
First Trust Global Wind Energy ETF (FAN) |
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD) |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) |
First Trust Indxx Global Natural Resources Income ETF (FTRI) |
First Trust Indxx Global Agriculture ETF (FTAG) |
First Trust Indxx NextG ETF (NXTG) |
First Trust S-Network Future Vehicles & Technology ETF (CARZ) |
First Trust Cloud Computing ETF (SKYY) |
First Trust International Equity Opportunities ETF (FPXI) |
First Trust Nasdaq Cybersecurity ETF (CIBR) |
First Trust IPOX® Europe Equity Opportunities ETF (FPXE) |
First Trust Dow Jones International Internet ETF (FDNI) |
First Trust Bloomberg Emerging Market Democracies ETF (EMDM) |
First Trust Exchange-Traded Fund II
Semi-Annual Report
March 31, 2024
Caution Regarding Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the goals, beliefs, plans or current expectations of First Trust Advisors L.P. (“First Trust” or the “Advisor”) and its representatives, taking into account the information currently available to them. Forward-looking statements include all statements that do not relate solely to current or historical fact. For example, forward-looking statements include the use of words such as “anticipate,” “estimate,” “intend,” “expect,” “believe,” “plan,” “may,” “should,” “would” or other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of any series of First Trust Exchange-Traded Fund II (the “Trust”) described in this report (each such series is referred to as a “Fund” and collectively, as the “Funds”) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. When evaluating the information included in this report, you are cautioned not to place undue reliance on these forward-looking statements, which reflect the judgment of the Advisor and its representatives only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events and circumstances that arise after the date hereof.
Performance and Risk Disclosure
There is no assurance that any Fund described in this report will achieve its investment objective. Each Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund’s shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in a Fund. See “Risk Considerations” in the Additional Information section of this report for a discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.com or speak with your financial advisor. Investment returns, net asset value and share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on each Fund’s webpage at www.ftportfolios.com.
This report contains information that may help you evaluate your investment. It includes details about each Fund and presents data and analysis that provide insight into each Fund’s performance and investment approach.
By reading the market overview by Robert F. Carey, Chief Market Strategist of the Advisor, you may obtain an understanding of how the market environment affected the performance of each Fund. The statistical information that follows may help you understand each Fund’s performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the Advisor are just that: informed opinions. They should not be considered to be promises or advice. The opinions, like the statistics, cover the period through the date on the cover of this report. The material risks of investing in each Fund are spelled out in its prospectus, statement of additional information, and other Fund regulatory filings.
First Trust Exchange-Traded Fund II
Semi-Annual Letter from the Chairman and CEO
March 31, 2024
First Trust is pleased to provide you with the semi-annual report for certain series of the First Trust Exchange-Traded Fund II (the “Funds”), which contains detailed information about the Funds for the six-month period ended March 31, 2024.
On March 21, 2024, the Swiss National Bank (“SNB”) unexpectedly announced a reduction of 25 basis points (“bps”) to its policy interest rate, lowering the metric from 1.75% to 1.50%. The move marked the SNB’s first interest rate cut in nine years and made Switzerland the first member of the so-called “Group of 10” (“G10”) to announce a policy rate reduction since the global battle with inflation began post COVID-19. Notably, the SNB’s announcement stood in stark contrast to the Bank of Japan’s revelation earlier in the same week that it would be raising interest rates for the first time in 17 years. Investors may be wondering why these two nations are undertaking divergent interest rate policies. From our perspective, the answer lies in the data. Despite recent disinflation, just two of the 11 countries that comprise the G10 boast headline inflation that lies below their target rate. Those countries are Denmark and Switzerland, with headline inflation of 0.8% and 1.0%, respectively. By contrast, headline inflation stood at 2.8% in Japan, above the Bank of Japan’s stated policy rate of 2.0%.
In the U.S., the trailing 12-month rate of the Consumer Price Index stood at 3.5% at the end of March 2024, down from its most-recent high of 9.1% at the end of June 2022, but up from its most recent low of 3.0% in June 2023. Continued inflationary pressures, along with better-than-expected economic data, continue to fuel the debate regarding the timing of interest rate cuts in the U.S. In December 2023, the Federal Reserve (the “Fed”) announced that they expected to implement three interest rate cuts for a total of 75 bps in 2024. The announcement was met with exuberance, sending the S&P 500® Index surging by 12.10% on a total return basis between December 13, 2023, the date of the Fed’s announcement, and the end of March 2024. That said, investors may have overestimated the timing of these cuts. On December 29, 2023, the Federal Funds rate futures market projected that the Fed would implement six rate cuts totaling 158 bps in 2024. As of the end of March 2024, that same futures market estimated that just two cuts, totaling 67 bps, were likely to occur by the end of the year.
Attention remains focused on the U.S. consumer, with reports that the current pace of spending may be unsustainable over the long-term. One justification for this view is recent analysis by the Federal Reserve Bank of San Francisco, which revealed that the excess savings consumers built up during the pandemic are likely to be completely drawn down in the first half of 2024. That said, the Fed also reported that U.S. household net worth surged by 3.2% on a quarter-over-quarter basis to a record $156.2 trillion in the fourth quarter of 2023. While it is true that many households are feeling the sting of persistent inflation, the increase in wealth brought on by surging equity valuations and home prices mitigated some of that pain, in our opinion.
Thank you for giving First Trust the opportunity to play a role in your financial future. We value our relationship with you and will report on the Funds again in six months.
Sincerely,
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
First Trust Exchange-Traded Fund II
Semi-Annual Report
March 31, 2024
Robert F. Carey, CFA
Senior Vice President and Chief Market Strategist
First Trust Advisors L.P.
Mr. Carey is responsible for the overall management of research and analysis of the First Trust product line. Mr. Carey has more than 30 years of experience as an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial Analyst (“CFA”) designation. He is a graduate of the University of Illinois at Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been quoted by several publications, including The Wall Street Journal, The Wall Street Reporter, Bloomberg News Service and Registered Rep.
State of the Global Economy/Investing
The latest global growth forecast from the International Monetary Fund (“IMF”) released in April 2024 sees real gross domestic product (“GDP”) rising by 3.2% worldwide in 2024, up from their forecast of 3.1% in January 2024. The IMF is forecasting a 2.7% increase in the U.S. GDP, up from its January 2024 estimate of 2.1%. The GDP in Emerging Market and Developing Economies is expected to grow by 4.2% this year, up from the IMF’s 4.1% estimate in January 2024. The IMF notes that its current global growth forecast remains below the historical average (2000-2019) of 3.8%, reflecting restrictive monetary policies and low productivity growth.
In the U.S., inflation, as measured by the Consumer Price Index (“CPI”), stood at 3.5% on a trailing 12-month basis at the end of March 2024, according to the U.S. Bureau of Labor Statistics. While it is true that the CPI decreased from its most recent high of 9.1% set in June 2022, the rate has increased from its most recent low of 3.0% set in June 2023.
Performance of Global Stocks and Bonds
The major U.S. stock indices were markedly higher over the past six months. The S&P 500® (the “Index”), S&P MidCap 400® and S&P SmallCap 600® Indices posted total returns of 23.48%, 22.78%, and 17.95%, respectively, for the six-month period ended March 31, 2024. Each of the 11 major sectors that comprise the Index were positive on a total return basis. The top performer was the Information Technology sector, up 32.03%, while the worst showing came from the Energy sector, which was up 5.80%.
A Bloomberg survey of twenty-one equity strategists found that their average 2024 year-end price target for the Index was 4,962 as of March 19, 2024. The highest and lowest estimates were 5,400 and 4,200, respectively. Brian Wesbury, Chief Economist at First Trust, announced in December 2023 that he is looking for a year-end price target of 4,500. The Index closed trading on March 28, 2024, at an all-time high of 5,254.35. The outlook for U.S. corporate earnings in 2024 is very strong. Bloomberg’s consensus year-over-year earnings growth rate estimates for the Index for the 2024 and 2025 calendar years stood at 8.99% and 13.34%, respectively, as of March 31, 2024.
The broader foreign stock indices experienced positive total returns over the past six months. For the six-month period ended March 31, 2024, the MSCI World ex USA and MSCI Emerging Markets equity indices posted total returns of 16.57% (USD) and 10.12% (USD), respectively, according to Bloomberg. The major foreign bond indices were also positive over the period. The Bloomberg Global Aggregate Bond Index of higher quality debt posted a total return of 6.17% (USD), while the Bloomberg EM Hard Currency Aggregate Index of emerging markets debt increased by 10.07% (USD), according to Bloomberg. The U.S. Dollar fell 1.59% over the past six months against a basket of major currencies, as measured by the U.S. Dollar Index (DXY).
The U.S. bond market also saw positive total returns. The top performing major debt group we track was long duration municipal bonds. The Bloomberg Municipal Long Bond Index (22+ Years) posted a total return of 10.78% for the six-month period ended March 31, 2024. The worst-performing U.S. debt group that we track was U.S. Treasuries. The Bloomberg U.S. Treasury Intermediate Index posted a total return of 3.69% over the period. The yield on the benchmark 10-Year Treasury Note (“T-Note”) fell by 37 basis points in the period to close at 4.20% on March 28, 2024, according to Bloomberg. For comparative purposes, the average yield on the 10-Year T-Note was 2.35% for the 10-year period ended March 31, 2024.
Fund Performance Overview (Unaudited)
First Trust STOXX® European Select Dividend Index Fund (FDD)
First Trust STOXX® European Select Dividend Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the STOXX® Europe Select Dividend 30 Index (the “STOXX Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “FDD.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the STOXX Index.
The STOXX Index is compiled and maintained by STOXX Limited (the “Index Provider”). According to the Index Provider, the STOXX Index consists of 30 high dividend-yielding securities selected from the STOXX® Europe 600 Index, including secondary lines of those companies (where there are multiple lines of equity capital in a company), which covers 18 European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. In addition, a company must have a non-negative five-year dividend-per-share growth rate and a dividend-to-earnings ratio of 60% or less.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(8/27/07)
to 3/31/24 | | | Inception
(8/27/07)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
STOXX® Europe Select Dividend 30 Index | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(See Notes to Fund Performance Overview on page 36.)
The STOXX® Europe Select Dividend 30 Index (“STOXX Index”) is the intellectual property (including registered trademarks) of STOXX Ltd., Zug, Switzerland (“STOXX”), Deutsche Börse Group or their licensors, which is used under license. The Fund is neither sponsored nor promoted, distributed or in any other manner supported by STOXX Deutsche Börse Group or their licensors, research partners or data providers and STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not give any warranty, and exclude any liability (whether in negligence or otherwise) with respect thereto generally or specifically in relation to any errors, omissions or interruptions in the STOXX Index or its data.
Fund Performance Overview (Unaudited) (Continued)
First Trust STOXX® European Select Dividend Index Fund (FDD) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
Legal & General Group PLC | |
| |
| |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)
First Trust Alerian Disruptive Technology Real Estate ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Alerian Disruptive Technology Real Estate Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “DTRE.” The Fund will normally invest at least 90% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index.
The Index is owned and is developed, maintained and sponsored by VettaFi LLC (the “Index Provider”). According to the Index Provider, the Index includes operating companies and real estate investment trusts (“REITs”) listed on a recognized global securities exchange and included in the Global Industry Classification Standard Real Estate sector within the S-Network Global 5000 Index and the S-Network Global REIT Index that derive at least 50 percent of their revenues from activities in one of the following disruptive technology business segments: (i) Rapid Data Transfer; (ii) Distributed Data Handling; or (iii) E-Commerce Warehousing.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(8/27/07)
to 3/31/24 | | | Inception
(8/27/07)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Alerian Disruptive Technology | | | | | | | | |
FTSE EPRA/NAREIT Developed Index | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| On September 30, 2022, the Fund’s underlying index changed from the FTSE EPRA/NAREIT Developed Index to the Alerian Disruptive Technology Real Estate Index. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. |
| Performance data is not available for all the periods shown in the table for the index because performance data does not exist for some of the entire periods. |
(See Notes to Fund Performance Overview on page 36.)
Alerian and Alerian Disruptive Technology Real Estate Index are service marks of VettaFi LLC and have been licensed for use by First Trust Advisors L.P. The Fund is not issued, sponsored, endorsed, sold or promoted by VettaFi LLC or its affiliates (collectively, “VettaFi”). VettaFi makes no representation or warranty, express or implied, to the purchasers or owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly or the ability of the Index to track general market performance.
Fund Performance Overview (Unaudited) (Continued)
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| % of Total
Long-Term
Investments |
Digital Realty Trust, Inc. | |
| |
| |
| |
| |
| |
DigitalBridge Group, Inc. | |
| |
| |
Rexford Industrial Realty, Inc. | |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
First Trust Dow Jones Global Select Dividend Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Dow Jones Global Select Dividend Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “FGD.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is compiled and maintained by S&P Dow Jones Indices LLC (the “Index Provider”). According to the Index Provider, the Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the S&P Global Broad Market Index. Indicated annual dividend yield is a stock’s unadjusted indicated annual dividend (not including any special dividends) divided by its unadjusted price.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(11/21/07)
to 3/31/24 | | | Inception
(11/21/07)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Dow Jones Global Select Dividend Index | | | | | | | | |
Dow Jones World Developed | | | | | | | | |
| | | | | | | | |
(See Notes to Fund Performance Overview on page 36.)
Dow Jones Global Select Dividend Index (“Index”) is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by First Trust. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Index.
Fund Performance Overview (Unaudited) (Continued)
First Trust Dow Jones Global Select Dividend Index Fund (FGD) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
Phoenix Group Holdings PLC | |
| |
| |
Peyto Exploration & Development Corp. | |
| |
British American Tobacco PLC | |
Sitio Royalties Corp., Class A | |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Global Wind Energy ETF (FAN)
First Trust Global Wind Energy ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the ISE Clean Edge Global Wind EnergyTM Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “FAN.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. (the “Index Provider”). According to the Index Provider, the Index provides a benchmark for investors interested in tracking public companies throughout the world that are active in the wind energy industry. According to the Index Provider, in order to be eligible for inclusion in the Index, a security must be issued by a company that is actively engaged in some aspect of the wind energy industry, such as the development or management of a wind farm, the production or distribution of electricity generated by wind power, or involvement in the design, manufacture or distribution of machinery or materials designed specifically for the wind energy industry. In addition, in order to be eligible for inclusion in the Index a security must meet the size, float and liquidity requirements of the Index, be listed on an Index-eligible global exchange and have seasoned on an Index-eligible global exchange for at least three months.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(6/16/08)
to 3/31/24 | | | Inception
(6/16/08)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
ISE Clean Edge Global Wind EnergyTM Index | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(See Notes to Fund Performance Overview on page 36.)
Nasdaq®, Clean Edge®, and ISE Clean Edge Global Wind EnergyTM Index are registered trademarks and service marks of Nasdaq, Inc. and Clean Edge, Inc., respectively (together with its affiliates hereinafter referred to as the “Corporations”) and are licensed for use by First Trust. The Fund has not been passed on by the Corporations as to its legality or suitability. The Fund is not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Fund Performance Overview (Unaudited) (Continued)
First Trust Global Wind Energy ETF (FAN) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
China Longyuan Power Group Corp., Ltd., Class H | |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)
First Trust Alerian U.S. NextGen Infrastructure ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Alerian U.S. NextGen Infrastructure Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “RBLD.” The Fund will normally invest at least 90% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index.
The Index is owned and is developed, maintained and sponsored by VettaFi LLC (the “Index Provider”). According to the Index Provider, the Index seeks to provide exposure to U.S. infrastructure companies with securities listed on recognized U.S. securities exchanges that build, operate and own infrastructure assets. U.S. infrastructure companies are companies that are domiciled and incorporated in the United States and are included in the Global Industry Classification (“GICS”) sub-industries or custom segments within the S-Network US Equity WR 3000 Index. According to the Index Provider, in addition to comprising one of the GICS
sub-industries or custom segments, in order to be eligible for inclusion in the Index a company’s stock must trade on a recognized U.S. stock exchange and meet the size, float and liquidity standards of the Index.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(10/13/08)
to 3/31/24 | | | Inception
(10/13/08)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Alerian U.S. NextGen Infrastructure Index(1)(2) | | | | | | | | |
MSCI World Industrials Index | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| On July 29, 2022, the Fund’s underlying index changed from the ISE Global Engineering and ConstructionTM Index to Alerian U.S. NextGen Infrastructure Index. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. Since the Fund’s current underlying index had an inception date of April 30, 2021, it was not in existence for all the periods shown. |
| Performance data is not available for all the periods shown in the table for the index because performance data does not exist for some of the entire periods. |
(See Notes to Fund Performance Overview on page 36.)
Alerian and Alerian U.S. NextGen Infrastructure Index (“Index”) are service marks of VettaFi LLC and have been licensed for use by First Trust Advisors L.P. The Fund is not issued, sponsored, endorsed, sold or promoted by VettaFi LLC or its affiliates (collectively, “VettaFi”). VettaFi makes no representation or warranty, express or implied, to the purchasers or owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly or the ability of the Index to track general market performance.
Fund Performance Overview (Unaudited) (Continued)
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
Constellation Energy Corp. | |
Vertiv Holdings Co., Class A | |
| |
| |
| |
Advanced Drainage Systems, Inc. | |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Nasdaq Clean Edge Smart Grid InfrastructureTM Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “GRID.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
Clean Edge, Inc. and Nasdaq, Inc. serve as index providers to the Index (the “Index Providers”). According to the Index Providers, the Index is designed to act as a transparent and liquid benchmark for the grid and electric energy infrastructure sector. The Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(11/16/09)
to 3/31/24 | | | Inception
(11/16/09)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Nasdaq Clean Edge Smart Grid InfrastructureTM Index | | | | | | | | |
| | | | | | | | |
S&P Composite 1500® Industrials Index | | | | | | | | |
MSCI World Industrials Index | | | | | | | | |
(See Notes to Fund Performance Overview on page 36.)
Nasdaq®, Clean Edge®, and Nasdaq Clean Edge Smart Grid InfrastructureTM Index are registered trademarks and service marks of Nasdaq, Inc. and Clean Edge, Inc. respectively (together with its affiliates hereinafter referred to as the “Corporations”) and are licensed for use by First Trust. The Fund has not been passed on by the Corporations as to its legality or suitability. The Fund is not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Fund Performance Overview (Unaudited) (Continued)
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| Amount is less than 0.1%. |
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
Johnson Controls International PLC | |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Global Natural Resources Income ETF (FTRI)
First Trust Indxx Global Natural Resources Income ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Indxx Global Natural Resources Income Index (the “Index”). The shares of the Fund are listed and traded on Nasdaq, Inc. under the ticker symbol “FTRI.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is owned, developed, maintained and sponsored by Indxx, Inc. (the “Index Provider”). According to the Index Provider, the Index is a free float adjusted market capitalization weighted index designed to measure the market performance of the 50 highest dividend yielding companies involved in the upstream (i.e., generally exploration and production) segment of the natural resources sector.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(3/11/10)
to 3/31/24 | | | Inception
(3/11/10)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Indxx Global Natural Resources Income Index(1) | | | | | | | | |
MSCI ACWI Materials Index | | | | | | | | |
| | | | | | | | |
| Effective on the close of business December 18, 2015, the Fund’s underlying index changed from the ISE Global CopperTM Index to the Indxx Global Natural Resources Income Index. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date, are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. Since the Fund’s current underlying index had an inception date of June 1, 2015, it was not in existence for all the periods shown. |
(See Notes to Fund Performance Overview on page 36.)
Indxx and Indxx Global Natural Resources Income Index (“Index”) are trademarks of Indxx, Inc. (“Indxx”) and have been licensed for use for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx, and Indxx makes no representation regarding the advisability of trading in such product. The Index is determined, composed and calculated by Indxx without regard to First Trust or the Fund.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Global Natural Resources Income ETF (FTRI) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
Petroleo Brasileiro S.A., ADR | |
Woodside Energy Group Ltd. | |
Archer-Daniels-Midland Co. | |
| |
| |
| |
| |
Tyson Foods, Inc., Class A | |
CF Industries Holdings, Inc. | |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust Indxx Global Agriculture ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Indxx Global Agriculture Index (the “Index”). The shares of the Fund are listed and traded on Nasdaq, Inc. under the ticker symbol “FTAG.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is owned and is developed, maintained and sponsored by Indxx, Inc. (the “Index Provider”). According to the Index Provider, the Index is a market capitalization weighted index designed to measure the performance of companies that are directly or indirectly engaged in improving agricultural yields. The Index is composed of farmland companies and firms involved in chemicals and fertilizers, seeds, irrigation equipment, and farm machinery.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(3/11/10)
to 3/31/24 | | | Inception
(3/11/10)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
MSCI ACWI Materials Index | | | | | | | | |
| Effective on the close of business December 18, 2015, the Fund’s underlying index changed from the ISE Global PlatinumTM Index to the Indxx Global Agriculture Index. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date, are not necessarily indicative of the performance that the Fund, based on its current Index, would have generated. Since the Fund’s new underlying index had an inception date of June 1, 2015, it was not in existence for all the periods shown. |
(See Notes to Fund Performance Overview on page 36.)
Indxx and Indxx Global Agriculture Index (“Index”) are trademarks of Indxx, Inc. (“Indxx”) and have been licensed for use for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx, and Indxx makes no representation regarding the advisability of trading in such product. The Index is determined, composed and calculated by Indxx without regard to First Trust or the Fund.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Global Agriculture ETF (FTAG) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Wilmar International Ltd. | |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx NextG ETF (NXTG)
The First Trust Indxx NextG ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Indxx 5G & NextG Thematic IndexSM (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “NXTG.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is owned, developed, maintained and sponsored by Indxx, Inc. (the “Index Provider”). According to the Index Provider, the Index is designed to track the performance of companies that have devoted, or have committed to devote, material resources to the research, development and application of fifth generation (5G) and next generation digital cellular technologies as they emerge.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(2/17/11)
to 3/31/24 | | | Inception
(2/17/11)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Indxx 5G & NextG Thematic | | | | | | | | |
MSCI ACWI Information Technology Index | | | | | | | | |
| | | | | | | | |
| On May 30, 2019, the Fund’s underlying index changed from the Nasdaq CTA SmartphoneTM Index to the Indxx 5G & NextG Thematic IndexSM. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. |
| Performance data is not available for all the periods shown in the table for the index because performance data does not exist for some of the entire periods. |
(See Notes to Fund Performance Overview on page 36.)
Indxx and Indxx 5G & NextG Thematic IndexSM (“Index”) are trademarks of Indxx, Inc. (“Indxx”) and have been licensed for use for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx and Indxx makes no representation regarding the advisability of trading in such product. The Index is determined, composed and calculated by Indxx without regard to First Trust or the Fund.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx NextG ETF (NXTG) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
Advanced Micro Devices, Inc. | |
Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust S-Network Future Vehicles & Technology ETF (CARZ)
The First Trust S-Network Future Vehicles & Technology ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the S-Network Electric & Future Vehicle Ecosystem Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “CARZ.” The Fund will normally invest at least 90% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index.
The Index is owned and is developed, maintained and sponsored by VettaFi LLC (the “Index Provider”). According to the Index Provider, to be eligible for inclusion in the Index, a company must be listed on a major recognized stock exchange and engaged in one of the following sectors: (a) electric and autonomous vehicle manufacturing; (b) enabling technologies; or (c) enabling materials.
|
| | | Average Annual Total Returns | |
| | | | | Inception
(5/9/11)
to 3/31/24 | | | Inception
(5/9/11)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
S-Network Electric & Future Vehicle Ecosystem Index(1) | | | | | | | | |
| | | | | | | | |
| On January 26, 2022, the Fund’s underlying index changed from the Nasdaq Global AutoTM Index to the S-Network Electric & Future Vehicle Ecosystem Index. Therefore, the Fund’s performance and historical returns shown for the periods prior to this date are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. Since the Fund’s current underlying index had an inception date of May 11, 2021, it was not in existence for all the periods shown. |
(See Notes to Fund Performance Overview on page 36.)
S-Network and S-Network Electric & Future Vehicle Ecosystem Index (“Index”) are service marks of VettaFi LLC and have been licensed for use by First Trust Advisors L.P. The Fund is not issued, sponsored, endorsed, sold or promoted by VettaFi LLC or its affiliates (collectively, “VettaFi”). VettaFi makes no representation or warranty, express or implied, to the purchasers or owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly or the ability of the Index to track general market performance.
Fund Performance Overview (Unaudited) (Continued)
First Trust S-Network Future Vehicles & Technology ETF (CARZ) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
Advanced Micro Devices, Inc. | |
| |
Samsung Electronics Co., Ltd. | |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the index does not actually hold a portfolio of securities and therefore does not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Cloud Computing ETF (SKYY)
The First Trust Cloud Computing ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the ISE CTA Cloud ComputingTM Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “SKYY.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is developed, maintained and sponsored by Nasdaq, Inc. (the “Index Provider”). According to the Index Provider, the Index is designed to track the performance of companies involved in the cloud computing industry. To be eligible for inclusion in the Index, a security must be issued by a “cloud computing” company, as classified by the Consumer Technology Association (“CTA”). A cloud computing company is a company engaged in one or more of the following activities: Infrastructure-as-a-Service, Platform-as-a-Service or Software-as-a-Service. According to the Index Provider, in order to be eligible for inclusion in the Index, a security’s issuer must not be identified by the U.S. Securities and Exchange Commission as having used to audit its financial statements an accounting firm that has been identified by the Public Company Accounting Oversight Board (“PCAOB”) under the Holding Foreign Companies Accountable Act (“HFCAA”).
|
| | | Average Annual Total Returns | |
| | | | | Inception
(7/5/11)
to 3/31/24 | | | Inception
(7/5/11)
to 3/31/24 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
ISE CTA Cloud ComputingTM | | | | | | | | |
| | | | | | | | |
S&P Composite 1500® Information Technology Index | | | | | | | | |
| On June 24, 2019, the Fund’s underlying index changed its methodology and changed its name from “ISE Cloud ComputingTM Index” to “ISE CTA Cloud ComputingTM Index.” |
(See Notes to Fund Performance Overview on page 36.)
Nasdaq® and ISE CTA Cloud ComputingTM Index are registered trademarks and service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred to as the “Corporations”) and are licensed for use by First Trust. The Fund has not been passed on by the Corporations as to its legality or suitability. The Fund is not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Fund Performance Overview (Unaudited) (Continued)
First Trust Cloud Computing ETF (SKYY) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
International Business Machines Corp. | |
| |
| |
Pure Storage, Inc., Class A | |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust International Equity Opportunities ETF (FPXI)
First Trust International Equity Opportunities ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an index called the IPOX® International Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “FPXI.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is owned and is developed, maintained and sponsored by IPOX® Schuster LLC (the “Index Provider”). According to the Index Provider, the Index is a market-cap weighted portfolio measuring the performance of the top 50 companies domiciled outside the United States ranked quarterly by market capitalization in the IPOX® Global Composite Index (the “Base Index”) and represents, on average, 25% of the total market capitalization of the Base Index, a fully market capitalization-weighted index constructed and managed to provide a broad and objective view of global aftermarket performance of initial public offerings and spin-offs in all world countries (both developed and emerging market countries).
|
| | | Average Annual Total Returns | |
| | | | Inception
(11/4/14)
to 3/31/24 | | Inception
(11/4/14)
to 3/31/24 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
IPOX® International Index | | | | | | |
| | | | | | |
(See Notes to Fund Performance Overview on page 36.)
IPOX® and IPOX® International Index (“Index”) are registered international trademarks and service marks of IPOX® Schuster LLC (“IPOX”) and have been licensed for use by First Trust. The Fund is not sponsored, endorsed, sold or promoted by IPOX, and IPOX makes no representation regarding the advisability of trading in such Fund.
Fund Performance Overview (Unaudited) (Continued)
First Trust International Equity Opportunities ETF (FPXI) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
NU Holdings Ltd., Class A | |
| |
| |
| |
| |
Saudi Aramco Base Oil Co. | |
| |
New Oriental Education & Technology Group, Inc., ADR | |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Nasdaq Cybersecurity ETF (CIBR)
The First Trust Nasdaq Cybersecurity ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Nasdaq CTA CybersecurityTM Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “CIBR.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index.
The Index is owned by Nasdaq, Inc. (the “Index Provider”). The Index Provider and the Consumer Technology Association (“CTA”) have jointly developed the eligibility and selection criteria and rules for the Index. According to the Index Provider and CTA, the Index includes securities of companies classified as “cybersecurity” companies by the CTA. CTA gives the cybersecurity classification to those companies that meet one of three elements: (1) companies focused on developing technologies that are designed and implemented to protect computer and communication networks from attacks and outside unauthorized use; (2) companies involved in the deployment of technologies for cybersecurity industry use including government, private and public corporations, financial institutions and various other industries; or (3) companies focused on the protection of priority data from being accessed and exploited by unauthorized external parties.
|
| | | Average Annual Total Returns | |
| | | | Inception
(7/6/15)
to 3/31/24 | | Inception
(7/6/15)
to 3/31/24 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Nasdaq CTA CybersecurityTM Index | | | | | | |
| | | | | | |
S&P Composite 1500® Information Technology Index | | | | | | |
(See Notes to Fund Performance Overview on page 36.)
Nasdaq® and Nasdaq CTA CybersecurityTM Index are registered trademarks and service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred to as the “Corporations”) and are licensed for use by First Trust. The Fund has not been passed on by the Corporations as to its legality or suitability. The Fund is not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Fund Performance Overview (Unaudited) (Continued)
First Trust Nasdaq Cybersecurity ETF (CIBR) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
Crowdstrike Holdings, Inc., Class A | |
| |
| |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)
The First Trust IPOX® Europe Equity Opportunities ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the IPOX®-100 Europe Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “FPXE.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index. The Index is owned, developed, maintained and sponsored by IPOX® Schuster LLC (the “Index Provider”). According to the Index Provider, the Index seeks to measure the performance of the equity securities of the 100 largest and typically most liquid initial public offerings (“IPOs”) (including spin-offs and equity carve-outs) of companies that are economically tied to Europe.
|
| | | Average Annual Total Returns | |
| | | | Inception
(10/4/18)
to 3/31/24 | | Inception
(10/4/18)
to 3/31/24 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(See Notes to Fund Performance Overview on page 36.)
IPOX® and IPOX®-100 Europe Index (“Index”) are registered international trademarks of IPOX® Schuster LLC (“IPOX”) and have been licensed for use by First Trust. The Fund is not sponsored, endorsed, sold or promoted by IPOX, and IPOX makes no representation regarding the advisability of trading in such Fund. IPOX® is an international trademark of IPOX Schuster LLC. Index of Initial Public Offerings (IPOX) and IPOX Derivatives Patent No. US 7,698,197.
Fund Performance Overview (Unaudited) (Continued)
First Trust IPOX® Europe Equity Opportunities ETF (FPXE) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
Novo Nordisk A/S, Class B | |
| |
| |
| |
Universal Music Group N.V. | |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Dow Jones International Internet ETF (FDNI)
The First Trust Dow Jones International Internet ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Dow Jones International Internet Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “FDNI.” The Fund will normally invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the Index. The Index is developed, maintained and sponsored by S&P Dow Jones Indices LLC (the “Index Provider”). According to the Index Provider, the Index is designed to measure the performance of securities of non-U.S. issuers whose primary business focus is Internet-related.
|
| | | Average Annual Total Returns | |
| | | | Inception
(11/5/18)
to 3/31/24 | | Inception
(11/5/18)
to 3/31/24 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Dow Jones International Internet Index | | | | | | |
MSCI ACWI ex-USA Information Technology Index | | | | | | |
| | | | | | |
(See Notes to Fund Performance Overview on page 36.)
Dow Jones International Internet Index (“Index”) is a product of S&P Dow Jones Indices, LLC or its affiliates (“SPDJI”) and has been licensed for use by First Trust. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Index.
Fund Performance Overview (Unaudited) (Continued)
First Trust Dow Jones International Internet ETF (FDNI) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
Alibaba Group Holding Ltd. | |
| |
| |
| |
| |
| |
| |
Flutter Entertainment PLC | |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)
The First Trust Bloomberg Emerging Market Democracies ETF (the “Fund”) seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the Bloomberg Emerging Market Democracies Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “EMDM.” The Fund will normally invest at least 80% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index. The Index is owned and was developed and sponsored by Bloomberg Index Services Limited (the “Index Provider”). The Index Provider is not affiliated with the Fund, the Fund’s investment advisor or the Fund’s distributor. According to the Index Provider, the Index is constructed to track the performance of companies within emerging market countries, as determined by the Index Provider, that meet minimum political rights and civil liberties standards to qualify as Electoral Democracies according to Freedom House, a non-profit, majority U.S. government funded organization in Washington D.C., that conducts research and advocacy on democracy, political freedom, and human rights. According to the Index Provider, to be eligible for inclusion in the Index, a security must be a constituent of the Bloomberg Emerging Markets Large & Mid Cap universe, meet the market capitalization and liquidity standards of the Index and belong to a country that is classified as an Electoral Democracy according to data from Freedom House.
|
| | | Average Annual Total Returns | |
| | | Inception
(3/2/23)
to 3/31/24 | Inception
(3/2/23)
to 3/31/24 |
| | | | |
| | | | |
| | | | |
| | | | |
Bloomberg Emerging Market Democracies Index | | | | |
MSCI Emerging Markets Index | | | | |
(See Notes to Fund Performance Overview on page 36.)
“Bloomberg®” and Bloomberg Emerging Market Democracies Index licensed herein (the “Indices”) are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by First Trust Advisors L.P. (the “Licensee”). Bloomberg is not affiliated with the Licensee, and Bloomberg does not approve, endorse, review, or recommend the financial products referenced herein (the “Financial Products”). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Indices or the Financial Products.
Fund Performance Overview (Unaudited) (Continued)
First Trust Bloomberg Emerging Market Democracies ETF (EMDM) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
Taiwan Semiconductor Manufacturing Co., Ltd. | |
Samsung Electronics Co., Ltd. | |
| |
Grupo Mexico S.A.B. de C.V. | |
| |
Grupo Financiero Banorte S.A.B. de C.V., Class O | |
Fomento Economico Mexicano S.A.B. de C.V. | |
America Movil S.A.B. de C.V. | |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Notes to Fund Performance Overview (Unaudited)
Total returns for the periods since inception are calculated from the inception date of each Fund. “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated. For certain Funds, the total returns would have been lower if certain fees had not been waived and expenses reimbursed by the Advisor.
Each Fund’s per share net asset value (“NAV”) is the value of one share of the Fund and is computed by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of outstanding shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint of the national best bid and offer price (“NBBO”) as of the time that the Fund’s NAV is calculated. Under Securities and Exchange Commission rules, the NBBO consists of the highest displayed buy and lowest sell prices among the various exchanges trading the Fund at the time the Fund’s NAV is calculated. Prior to January 1, 2019, the price used was the midpoint between the highest bid and the lowest offer on the stock exchange on which shares of the Fund were listed for trading as of the time that the Fund’s NAV was calculated. Since shares of each Fund did not trade in the secondary market until after its inception, for the period from inception to the first day of secondary market trading in shares of the Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns. NAV and market returns assume that all distributions have been reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike each Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by each Fund. These expenses negatively impact the performance of each Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The total returns presented reflect the reinvestment of dividends on securities in the indices. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of each Fund will vary with changes in market conditions. Shares of each Fund may be worth more or less than their original cost when they are redeemed or sold in the market. Each Fund’s past performance is no guarantee of future performance.
First Trust Exchange-Traded Fund IIUnderstanding Your Fund ExpensesMarch 31, 2024 (Unaudited) As a shareholder of First Trust STOXX® European Select Dividend Index Fund, First Trust Alerian Disruptive Technology Real Estate ETF, First Trust Dow Jones Global Select Dividend Index Fund, First Trust Global Wind Energy ETF, First Trust Alerian U.S. NextGen Infrastructure ETF, First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund, First Trust Indxx Global Natural Resources Income ETF, First Trust Indxx Global Agriculture ETF, First Trust Indxx NextG ETF, First Trust S-Network Future Vehicles & Technology ETF, First Trust Cloud Computing ETF, First Trust International Equity Opportunities ETF, First Trust Nasdaq Cybersecurity ETF, First Trust IPOX® Europe Equity Opportunities ETF, First Trust Dow Jones International Internet ETF or First Trust Bloomberg Emerging Market Democracies ETF (each a “Fund” and collectively, the “Funds”), you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. This Example is intended to help you understand your ongoing costs (in U.S. dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held through the six-month period ended March 31, 2024.
The first line in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this six-month period.
Hypothetical Example for Comparison Purposes
The second line in the following table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as brokerage commissions. Therefore, the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
October 1, 2023 | Ending
Account Value
March 31, 2024 | Annualized
Expense Ratio
Based on the
Six-Month
Period (a) | Expenses Paid
During the
Six-Month
Period (b) |
First Trust STOXX® European Select Dividend Index Fund (FDD) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Dow Jones Global Select Dividend Index Fund (FGD) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Global Wind Energy ETF (FAN) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Exchange-Traded Fund IIUnderstanding Your Fund Expenses (Continued)March 31, 2024 (Unaudited) | Beginning Account Value October 1, 2023 | Ending Account Value March 31, 2024 | Annualized Expense Ratio Based on the Six-Month Period (a) | Expenses Paid During the Six-Month Period (b) |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Indxx Global Natural Resources Income ETF (FTRI) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Indxx Global Agriculture ETF (FTAG) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Indxx NextG ETF (NXTG) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust S-Network Future Vehicles & Technology ETF (CARZ) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Cloud Computing ETF (SKYY) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust International Equity Opportunities ETF (FPXI) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Nasdaq Cybersecurity ETF (CIBR) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust IPOX® Europe Equity Opportunities ETF (FPXE) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Dow Jones International Internet ETF (FDNI) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Bloomberg Emerging Market Democracies ETF (EMDM) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
| These expense ratios reflect expense caps for certain Funds. See Note 3 in the Notes to Financial Statements. |
| Expenses are equal to the annualized expense ratio as indicated in the table multiplied by the average account value over the period (October 1, 2023 through March 31, 2024), multiplied by 183/366 (to reflect the six-month period). |
First Trust STOXX® European Select Dividend Index Fund (FDD)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 98.5% |
| | |
| | |
| | |
| AP Moller - Maersk A/S, Class A (DKK) | |
| | |
| | |
| | |
| | |
| Credit Agricole S.A. (EUR) | |
| | |
| | |
| | |
| | |
| | |
| Bayerische Motoren Werke AG (Preference Shares) (EUR) | |
| | |
| Mercedes-Benz Group AG (EUR) | |
| Volkswagen AG (Preference Shares) (EUR) | |
| | |
| | |
| Poste Italiane S.p.A. (EUR) (c) (d) | |
| | |
| | |
| | |
| ABN AMRO Bank N.V. (EUR) (c) (d) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Zurich Insurance Group AG (CHF) | |
| | |
| | |
|
| | |
| | |
| IG Group Holdings PLC (GBP) | |
| Legal & General Group PLC (GBP) | |
| | |
| | |
| | |
| | |
|
|
| Total Investments — 98.5% | |
| | |
| Net Other Assets and Liabilities — 1.5% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust STOXX® European Select Dividend Index Fund (FDD)Portfolio of Investments (Continued)March 31, 2024 (Unaudited)
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.3% |
| | |
| Warehouses De Pauw C.V.A. (EUR) | |
| | |
| Dream Industrial Real Estate Investment Trust (CAD) | |
| | |
| ESR Group Ltd. (HKD) (c) (d) | |
| | |
| Daiwa House REIT Investment Corp. (JPY) | |
| | |
| Nippon Prologis REIT, Inc. (JPY) | |
| | |
| | |
| Frasers Logistics & Commercial Trust (SGD) (d) | |
| | |
| Mapletree Logistics Trust (SGD) | |
| | |
| | |
| LondonMetric Property PLC (GBP) | |
| | |
| Tritax Big Box REIT PLC (GBP) | |
| | |
| | |
| | |
| Americold Realty Trust, Inc. | |
| | |
| Digital Realty Trust, Inc. | |
| DigitalBridge Group, Inc. | |
| EastGroup Properties, Inc. | |
| | |
| First Industrial Realty Trust, Inc. | |
| | |
| Plymouth Industrial REIT, Inc. | |
| | |
| Rexford Industrial Realty, Inc. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.4% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 5.16% (e) | |
| | |
|
|
| Total Investments — 99.7% | |
| | |
| Net Other Assets and Liabilities — 0.3% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)Portfolio of Investments (Continued)March 31, 2024 (Unaudited)
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 98.6% |
| | |
| Bank of Queensland Ltd. (AUD) | |
| | |
| Harvey Norman Holdings Ltd. (AUD) | |
| | |
| Super Retail Group Ltd. (AUD) | |
| | |
| | |
| | |
| | |
| | |
| | |
| CK Infrastructure Holdings Ltd. (HKD) | |
| | |
| | |
| Bank of Nova Scotia (The) (CAD) | |
| | |
| Birchcliff Energy Ltd. (CAD) | |
| Canadian Imperial Bank of Commerce (CAD) | |
| Canadian Utilities Ltd., Class A (CAD) | |
| Great-West Lifeco, Inc. (CAD) | |
| IGM Financial, Inc. (CAD) | |
| Labrador Iron Ore Royalty Corp. (CAD) | |
| Laurentian Bank of Canada (CAD) | |
| Manulife Financial Corp. (CAD) | |
| Peyto Exploration & Development Corp. (CAD) | |
| Power Corp. of Canada (CAD) | |
| | |
| | |
| | |
| | |
| CK Hutchison Holdings Ltd. (HKD) | |
| | |
| AP Moller - Maersk A/S, Class A (DKK) | |
| | |
| | |
| | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Bayerische Motoren Werke AG (Preference Shares) (EUR) | |
| | |
| Hapag-Lloyd AG (EUR) (c) (d) | |
| Mercedes-Benz Group AG (EUR) | |
| Volkswagen AG (Preference Shares) (EUR) | |
| | |
| | |
| BOC Hong Kong Holdings Ltd. (HKD) | |
| Henderson Land Development Co., Ltd. (HKD) | |
| New World Development Co., Ltd. (HKD) | |
| | |
| Sino Land Co., Ltd. (HKD) | |
| Swire Properties Ltd. (HKD) | |
| | |
| | |
| | |
| | |
| | |
| Azimut Holding S.p.A. (EUR) | |
| | |
| Poste Italiane S.p.A. (EUR) (c) (d) | |
| | |
| | |
| Japan Tobacco, Inc. (JPY) | |
| | |
| Janus Henderson Group PLC | |
| | |
| | |
| B&M European Value Retail S.A. (GBP) | |
| | |
| | |
| | |
| LyondellBasell Industries N.V., Class A | |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| | |
| | |
| | |
| | |
| Spark New Zealand Ltd. (NZD) | |
| | |
| BNK Financial Group, Inc. (KRW) | |
| DB Insurance Co., Ltd. (KRW) | |
| DGB Financial Group, Inc. (KRW) | |
| Hana Financial Group, Inc. (KRW) | |
| Hyundai Motor Co. (Preference Shares) (KRW) | |
| Industrial Bank of Korea (KRW) | |
| KB Financial Group, Inc. (KRW) | |
| | |
| | |
| Samsung Fire & Marine Insurance Co., Ltd. (KRW) | |
| Samsung Securities Co., Ltd. (KRW) | |
| Woori Financial Group, Inc. (KRW) | |
| | |
| | |
| ACS Actividades de Construccion y Servicios S.A. (EUR) | |
| | |
| | |
| Cia de Distribucion Integral Logista Holdings S.A. (EUR) | |
| | |
| | |
| Naturgy Energy Group S.A. (EUR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Helvetia Holding AG (CHF) | |
| | |
| Zurich Insurance Group AG (CHF) | |
| | |
| | |
|
| | |
| | |
| British American Tobacco PLC (GBP) | |
| IG Group Holdings PLC (GBP) | |
| Legal & General Group PLC (GBP) | |
| Phoenix Group Holdings PLC (GBP) | |
| | |
| | |
| | |
| | |
| | |
| First Interstate BancSystem, Inc., Class A | |
| | |
| | |
| Northwest Bancshares, Inc. | |
| | |
| Prudential Financial, Inc. | |
| Sitio Royalties Corp., Class A | |
| | |
| Verizon Communications, Inc. | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.0% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 5.16% (e) | |
| | |
|
|
| Total Investments — 98.6% | |
| | |
| Net Other Assets and Liabilities — 1.4% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust Global Wind Energy ETF (FAN)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.6% |
| | |
| Concord New Energy Group Ltd. (HKD) | |
| | |
| Aeris Industria E Comercio De Equipamentos Para Geracao De Energia S.A. (BRL) (c) | |
| Serena Energia S.A. (BRL) (c) | |
| | |
| | |
| Boralex, Inc., Class A (CAD) (d) | |
| Innergex Renewable Energy, Inc. (CAD) | |
| Northland Power, Inc. (CAD) (d) | |
| | |
| | |
| China High Speed Transmission Equipment Group Co., Ltd. (HKD) (c) | |
| | |
| China Datang Corp. Renewable Power Co., Ltd., Class H (HKD) | |
| China Longyuan Power Group Corp., Ltd., Class H (HKD) | |
| China Suntien Green Energy Corp., Ltd., Class H (HKD) | |
| Goldwind Science & Technology Co., Ltd. (HKD) | |
| | |
| | |
| Cadeler A/S (NOK) (c) (d) | |
| Orsted A/S (DKK) (c) (e) (f) | |
| Vestas Wind Systems A/S (DKK) (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| SGL Carbon SE (EUR) (c) (d) | |
| Siemens Energy AG (EUR) (c) | |
| | |
| | |
|
| | |
| | |
| | |
| Enlight Renewable Energy Ltd. (ILS) (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Toray Industries, Inc. (JPY) | |
| | |
| | |
| Aker Horizons ASA (NOK) (c) (d) | |
| | |
| | |
| | |
| CS Bearing Co., Ltd. (KRW) (c) | |
| | |
| Dongkuk Structures & Construction Co., Ltd. (KRW) (c) | |
| | |
| | |
| | |
| EDP Renovaveis S.A. (EUR) | |
| | |
| | |
| | |
| Orron Energy AB (SEK) (c) (d) | |
| | |
| SKF AB, Class B (SEK) (d) | |
| | |
| | |
| | |
| | |
| Century Iron & Steel Industrial Co., Ltd. (TWD) | |
| | |
| ReNew Energy Global PLC, Class A (c) | |
| | |
| | |
| American Superconductor Corp. (c) | |
| | |
| Clearway Energy, Inc., Class C | |
See Notes to Financial Statements
First Trust Global Wind Energy ETF (FAN)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| United States (Continued) | |
| | |
| | |
| | |
| | |
| | |
| TPI Composites, Inc. (c) (d) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.0% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 5.16% (g) | |
| | |
| | |
REPURCHASE AGREEMENTS — 13.1% |
| Bank of America Corp., 5.32% (g), dated 03/28/24, due 04/01/24, with a maturity value of $12,036,666. Collateralized by U.S. Treasury Securities, interest rates of 0.00% to 4.50%, due 10/15/26 to 08/15/35. The value of the collateral including accrued interest is $12,270,146. (h) | |
| JPMorgan Chase & Co., 5.32% (g), dated 03/28/24, due 04/01/24, with a maturity value of $12,527,959. Collateralized by U.S. Treasury Securities, interest rates of 0.25% to 5.00%, due 07/31/24 to 06/30/28. The value of the collateral including accrued interest is $12,770,969. (h) | |
| Total Repurchase Agreements | |
| | |
|
|
| Total Investments — 112.7% | |
| | |
| Net Other Assets and Liabilities — (12.7)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $22,879,153 and the total value of the collateral held by the Fund is $24,550,113. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Global Wind Energy ETF (FAN)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
|
| Building Products — 10.5% | |
| Advanced Drainage Systems, Inc. | |
| | |
| Builders FirstSource, Inc. (a) | |
| | |
| | |
| Johnson Controls International PLC | |
| Lennox International, Inc. | |
| | |
| | |
| | |
| | |
| Construction & Engineering | |
| | |
| | |
| | |
| | |
| Martin Marietta Materials, Inc. | |
| | |
| | |
| Electric Utilities — 15.3% | |
| | |
| American Electric Power Co., Inc. | |
| Constellation Energy Corp. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Electrical Equipment — 6.7% | |
| | |
| | |
| | |
| | |
| | |
|
| Electrical Equipment (Continued) | |
| Rockwell Automation, Inc. | |
| Vertiv Holdings Co., Class A | |
| | |
| Energy Equipment & Services | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Independent Power and Renewable Electricity | |
| | |
| | |
| | |
| Industrial Conglomerates — | |
| | |
| | |
| Honeywell International, Inc. | |
| | |
| | |
| Akamai Technologies, Inc. (a) | |
| Cloudflare, Inc., Class A (a) | |
| GoDaddy, Inc., Class A (a) | |
| | |
| | |
| Snowflake, Inc., Class A (a) | |
| Twilio, Inc., Class A (a) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Illinois Tool Works, Inc. | |
| | |
| Lincoln Electric Holdings, Inc. | |
See Notes to Financial Statements
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (Continued) |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Stanley Black & Decker, Inc. | |
| Westinghouse Air Brake Technologies Corp. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| United States Steel Corp. | |
| | |
| | |
| | |
| | |
| | |
| Consolidated Edison, Inc. | |
| | |
| | |
| | |
| Public Service Enterprise Group, Inc. | |
| | |
| | |
| | |
| Oil, Gas & Consumable Fuels | |
| | |
| | |
| | |
| | |
| Williams (The) Cos., Inc. | |
| | |
| | |
| | |
| | |
| Digital Realty Trust, Inc. | |
| | |
| | |
| | |
| | |
|
| | |
| American Water Works Co., Inc. | |
| | |
| | |
|
| Construction & Engineering | |
| Webuild S.p.A., expiring 8/31/30 (EUR) (a) (c) (d) (e) | |
| | |
MONEY MARKET FUNDS — 0.1% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (f) | |
| | |
|
|
| Total Investments — 99.9% | |
| | |
| Net Other Assets and Liabilities — 0.1% | |
| | |
| Non-income producing security. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $3 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| |
| – Real Estate Investment Trusts |
See Notes to Financial Statements
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)Portfolio of Investments (Continued)March 31, 2024 (Unaudited)
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for industry breakout. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
See Notes to Financial Statements
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.7% |
| | |
| | |
| | |
| Elia Group S.A./N.V. (EUR) | |
| | |
| Alupar Investimento S.A. (BRL) | |
| Centrais Eletricas Brasileiras S.A., ADR | |
| Cia de Transmissao de Energia Eletrica Paulista (Preference Shares) (BRL) | |
| Companhia Paranaense de Energia, Class B (Preference Shares) (BRL) | |
| | |
| Equatorial Energia S.A. (BRL) | |
| Transmissora Alianca de Energia Eletrica S.A. (BRL) | |
| | |
| | |
| | |
| | |
| Hammond Power Solutions (CAD) (c) | |
| Hydro One Ltd. (CAD) (d) (e) | |
| | |
| | |
| | |
| Wasion Group Holdings, Ltd. (HKD) | |
| | |
| BYD Co., Ltd., Class H (HKD) | |
| | |
| | |
| | |
| | |
| | |
| Schneider Electric SE (EUR) | |
| | |
| | |
| | |
| | |
| Infineon Technologies AG (EUR) | |
| | |
| SMA Solar Technology AG (EUR) (f) | |
| | |
| | |
| | |
| | |
|
| | |
| Johnson Controls International PLC | |
| | |
| | |
| | |
| | |
| | |
| Terna-Rete Elettrica Nazionale (EUR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| NGK Insulators Ltd. (JPY) | |
| | |
| Panasonic Holdings Corp. (JPY) | |
| Renesas Electronics Corp. (JPY) | |
| Sumitomo Electric Industries Ltd. (JPY) | |
| Takaoka Toko Co., Ltd. (JPY) | |
| | |
| | |
| | |
| | |
| Alfen N.V. (EUR) (c) (d) (e) (f) | |
| | |
| | |
| | |
| | |
| EDP - Energias de Portugal S.A. (EUR) | |
| REN - Redes Energeticas Nacionais SGPS S.A. (EUR) | |
| | |
| | |
| HD Hyundai Electric Co., Ltd. (KRW) | |
| Hyosung Heavy Industries Corp. (KRW) | |
| Iljin Electric Co., Ltd. (KRW) | |
| LS Electric Co., Ltd. (KRW) | |
| Samsung SDI Co., Ltd. (KRW) | |
| Taihan Electric Wire Co., Ltd. (KRW) (f) | |
| | |
See Notes to Financial Statements
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| | |
| | |
| | |
| | |
| | |
| Landis+Gyr Group AG (CHF) | |
| | |
| | |
| Advantech Co., Ltd. (TWD) | |
| Allis Electric Co., Ltd. (TWD) | |
| Chung-Hsin Electric & Machinery Manufacturing Corp. (TWD) | |
| Fortune Electric Co., Ltd. (TWD) | |
| Ta Ya Electric Wire & Cable (TWD) | |
| Voltronic Power Technology Corp. (TWD) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Advanced Energy Industries, Inc. | |
| | |
| American Superconductor Corp. (f) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Digi International, Inc. (f) | |
| | |
| | |
| | |
| | |
| | |
| Generac Holdings, Inc. (f) | |
| | |
| Honeywell International, Inc. | |
| | |
| International Business Machines Corp. | |
| | |
| | |
| | |
|
| United States (Continued) | |
| | |
| | |
| | |
| | |
| Preformed Line Products Co. | |
| | |
| | |
| SolarEdge Technologies, Inc. (f) | |
| | |
| | |
| | |
| | |
| WESCO International, Inc. | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.1% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (g) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (g) (h) | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 0.4% |
| Royal Bank of Canada, 5.29% (g), dated 03/28/24, due 04/01/24, with a maturity value of $3,767,376. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $3,879,346. (h) | |
| | |
|
|
| Total Investments — 100.2% | |
| | |
| Net Other Assets and Liabilities — (0.2)% | |
| | |
See Notes to Financial Statements
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $4,471,884 and the total value of the collateral held by the Fund is $4,523,519. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Non-income producing security. |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
See Notes to Financial Statements
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Indxx Global Natural Resources Income ETF (FTRI)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.7% |
| | |
| | |
| GrainCorp Ltd., Class A (AUD) | |
| Mineral Resources Ltd. (AUD) | |
| Northern Star Resources Ltd. (AUD) | |
| Whitehaven Coal Ltd. (AUD) | |
| Woodside Energy Group Ltd. (AUD) | |
| | |
| | |
| Cia de Saneamento de Minas Gerais Copasa MG (BRL) | |
| Petroleo Brasileiro S.A., ADR | |
| | |
| | |
| | |
| | |
| | |
| Dundee Precious Metals, Inc. (CAD) | |
| | |
| West Fraser Timber Co., Ltd. (CAD) | |
| | |
| | |
| | |
| | |
| China Petroleum & Chemical Corp., Class H (HKD) | |
| China Shenhua Energy Co., Ltd., Class H (HKD) | |
| Jiangxi Copper Co., Ltd., Class H (HKD) | |
| Zijin Mining Group Co., Ltd., Class H (HKD) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Guangdong Investment Ltd. (HKD) | |
| | |
| | |
| | |
| Adaro Energy Indonesia Tbk PT (IDR) | |
| | |
|
| | |
| | |
| | |
| Japan Petroleum Exploration Co., Ltd. (JPY) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| KGHM Polska Miedz S.A. (PLN) | |
| | |
| Navigator (The) Co., S.A. (EUR) | |
| | |
| | |
| | |
| | |
| | |
| Alliance Resource Partners, L.P. (d) | |
| | |
| Archer-Daniels-Midland Co. | |
| California Water Service Group | |
| CF Industries Holdings, Inc. | |
| | |
| | |
| | |
| | |
| | |
| Tyson Foods, Inc., Class A | |
| | |
| Watts Water Technologies, Inc., Class A | |
| | |
| | |
| | |
See Notes to Financial Statements
First Trust Indxx Global Natural Resources Income ETF (FTRI)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
MONEY MARKET FUNDS — 0.7% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (e) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (e) (f) | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 2.4% |
| Royal Bank of Canada, 5.29% (e), dated 03/28/24, due 04/01/24, with a maturity value of $4,628,569. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $4,766,134. (f) | |
| | |
|
|
| Total Investments — 102.8% | |
| | |
| Net Other Assets and Liabilities — (2.8)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $5,672,544 and the total value of the collateral held by the Fund is $5,557,560. |
| Security is a Master Limited Partnership (“MLP”). |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust Indxx Global Natural Resources Income ETF (FTRI)Portfolio of Investments (Continued)March 31, 2024 (Unaudited)
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| The collateral requirements are determined at the beginning of each business day based on the market value of the loaned securities from the end of the prior day. On March 28, 2024, the last business day of the period, there was sufficient collateral based on the end of day market value from the prior business day; however, as a result of market movement from March 27 to March 28, the value of the related securities loaned was above the collateral value received. See Note 2E - Securities Lending in the Notes to Financial Statements. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Indxx Global Agriculture ETF (FTAG)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.8% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Sociedad Quimica y Minera de Chile S.A., ADR | |
| | |
| First Tractor Co., Ltd., Class H (HKD) | |
| | |
| | |
| | |
| Evonik Industries AG (EUR) | |
| | |
| | |
| | |
| Chambal Fertilisers and Chemicals Ltd. (INR) | |
| Coromandel International Ltd. (INR) | |
| Escorts Kubota Ltd. (INR) | |
| Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (INR) | |
| Gujarat State Fertilizers & Chemicals Ltd. (INR) | |
| Mahindra & Mahindra Ltd. (INR) | |
| | |
| Rashtriya Chemicals & Fertilizers Ltd. (INR) | |
| Sumitomo Chemical India Ltd. (INR) | |
| Tata Chemicals Ltd. (INR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Mitsui Chemicals, Inc. (JPY) | |
| Nippon Soda Co., Ltd. (JPY) | |
| Nissan Chemical Corp. (JPY) | |
| | |
| Sumitomo Chemical Co., Ltd. (JPY) | |
| | |
| | |
|
| | |
| Petronas Chemicals Group Bhd (MYR) | |
| | |
| Orbia Advance Corp. S.A.B. de C.V. (MXN) | |
| | |
| | |
| | |
| | |
| | |
| Industries Qatar QSC (QAR) | |
| | |
| PhosAgro PJSC (RUB) (c) (d) (e) (f) | |
| | |
| Wilmar International Ltd. (SGD) | |
| | |
| Bucher Industries AG (CHF) | |
| | |
| | |
| | |
| Gubre Fabrikalari T.A.S. (TRY) (d) | |
| Turk Traktor ve Ziraat Makineleri A.S. (TRY) | |
| | |
| United Arab Emirates — 1.3% | |
| | |
| | |
| | |
| | |
| CF Industries Holdings, Inc. | |
| | |
| | |
| | |
| | |
| | |
| Scotts Miracle-Gro (The) Co. | |
| SiteOne Landscape Supply, Inc. (d) | |
| | |
| | |
| | |
| | |
See Notes to Financial Statements
First Trust Indxx Global Agriculture ETF (FTAG)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (g) | |
| | |
|
|
| Total Investments — 100.1% | |
| | |
| Net Other Assets and Liabilities — (0.1)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| Non-income producing security. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| – United Arab Emirates Dirham |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Investment is valued at $0. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
| Investment is valued at $0. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.6% |
| | |
| | |
| | |
| Telefonica Brasil S.A., ADR | |
| | |
| | |
| Rogers Communications, Inc., Class B (CAD) | |
| | |
| | |
| | |
| Xiaomi Corp., Class B (HKD) (c) (d) (e) | |
| | |
| China Tower Corp., Ltd., Class H (HKD) (c) (e) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Deutsche Telekom AG (EUR) | |
| Infineon Technologies AG (EUR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| HCL Technologies Ltd. (INR) | |
| | |
| Tata Consultancy Services Ltd. (INR) | |
| | |
| | |
| | |
| | |
| Telkom Indonesia Persero Tbk PT (IDR) | |
| | |
| Infrastrutture Wireless Italiane S.p.A. (EUR) (c) (e) | |
| | |
|
| | |
| | |
| Telecom Italia S.p.A. (EUR) (d) (f) | |
| | |
| | |
| | |
| | |
| | |
| Mitsubishi Electric Corp. (JPY) | |
| | |
| Nippon Telegraph & Telephone Corp. (JPY) | |
| Renesas Electronics Corp. (JPY) | |
| | |
| | |
| | |
| | |
| | |
| | |
| America Movil S.A.B. de C.V., Series B (MXN) | |
| | |
| Koninklijke KPN N.V. (EUR) | |
| | |
| STMicroelectronics N.V. (EUR) | |
| | |
| | |
| Spark New Zealand Ltd. (NZD) | |
| | |
| | |
| | |
| Globe Telecom, Inc. (PHP) | |
| | |
| | |
| | |
| Mobile TeleSystems PJSC, ADR (d) (g) (h) (i) | |
| | |
| Singapore Telecommunications Ltd. (SGD) | |
| | |
| | |
| | |
| | |
| | |
| | |
| LG Electronics, Inc. (KRW) | |
| Samsung Electronics Co., Ltd. (KRW) | |
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Samsung SDS Co., Ltd. (KRW) | |
| SK Telecom Co., Ltd. (KRW) | |
| | |
| | |
| Cellnex Telecom S.A. (EUR) (c) (e) | |
| | |
| | |
| | |
| | |
| Telefonaktiebolaget LM Ericsson, Class B (SEK) (f) | |
| | |
| | |
| | |
| | |
| | |
| Advantech Co., Ltd. (TWD) | |
| ASE Technology Holding Co., Ltd. (TWD) | |
| Chunghwa Telecom Co., Ltd. (TWD) | |
| Delta Electronics, Inc. (TWD) | |
| Far EasTone Telecommunications Co., Ltd. (TWD) | |
| | |
| Taiwan Mobile Co., Ltd. (TWD) | |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
| United Microelectronics Corp. (TWD) | |
| | |
| | |
| Advanced Info Service PCL (THB) | |
| United Arab Emirates — 0.5% | |
| Emirates Telecommunications Group Co. PJSC (AED) | |
| | |
| | |
| | |
| | |
| | |
| Advanced Micro Devices, Inc. (d) | |
| | |
| | |
| | |
| | |
|
| United States (Continued) | |
| Arista Networks, Inc. (d) | |
| | |
| | |
| | |
| | |
| | |
| Digital Realty Trust, Inc. | |
| | |
| | |
| Hewlett Packard Enterprise Co. | |
| | |
| International Business Machines Corp. | |
| | |
| Keysight Technologies, Inc. (d) | |
| | |
| Microchip Technology, Inc. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Verizon Communications, Inc. | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (j) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (j) (k) | |
| | |
| | |
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
REPURCHASE AGREEMENTS — 0.8% |
| Royal Bank of Canada, 5.29% (j), dated 03/28/24, due 04/01/24, with a maturity value of $3,011,925. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $3,101,442. (k) | |
| | |
|
|
| Total Investments — 100.7% | |
| | |
| Net Other Assets and Liabilities — (0.7)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| Non-income producing security. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $3,406,268 and the total value of the collateral held by the Fund is $3,616,443. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| – United Arab Emirates Dirham |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
| Investment is valued at $0. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.4% |
| | |
| | |
| Pilbara Minerals Ltd. (AUD) | |
| | |
| | |
| | |
| | |
| Lithium Americas Argentina Corp. (c) | |
| Magna International, Inc. | |
| | |
| | |
| | |
| | |
| Geely Automobile Holdings Ltd. (HKD) | |
| | |
| | |
| | |
| Yadea Group Holdings Ltd. (HKD) (e) (f) | |
| | |
| | |
| Sociedad Quimica y Minera de Chile S.A., ADR (d) | |
| | |
| BYD Co., Ltd., Class H (HKD) | |
| Ganfeng Lithium Group Co., Ltd., Class H (HKD) (e) (f) | |
| Great Wall Motor Co., Ltd., Class H (HKD) | |
| Guangzhou Automobile Group Co., Ltd., Class H (HKD) | |
| Tianqi Lithium Corp., Class H (HKD) | |
| Zhejiang Leapmotor Technology Co., Ltd. (HKD) (c) (e) (f) | |
| | |
| | |
| Schneider Electric SE (EUR) | |
| | |
| Bayerische Motoren Werke AG (EUR) | |
| | |
| Infineon Technologies AG (EUR) | |
| Mercedes-Benz Group AG (EUR) | |
| | |
| | |
| | |
|
| | |
| Merdeka Copper Gold Tbk PT (IDR) (c) | |
| | |
| | |
| Alps Alpine Co., Ltd. (JPY) | |
| | |
| Honda Motor Co., Ltd. (JPY) | |
| Nissan Motor Co., Ltd. (JPY) | |
| Panasonic Holdings Corp. (JPY) | |
| Renesas Electronics Corp. (JPY) | |
| | |
| | |
| | |
| | |
| | |
| Arcadium Lithium PLC (AUD) (c) | |
| | |
| | |
| Alfen N.V. (EUR) (c) (e) (f) | |
| | |
| | |
| | |
| | |
| Yandex N.V., Class A (c) (g) (h) (i) | |
| | |
| | |
| Ecopro BM Co., Ltd. (KRW) (c) | |
| Hyundai Mobis Co., Ltd. (KRW) | |
| | |
| | |
| | |
| Lotte Energy Materials Corp. (KRW) | |
| LX Semicon Co., Ltd. (KRW) | |
| Samsung Electronics Co., Ltd. (KRW) | |
| Samsung SDI Co., Ltd. (KRW) | |
| SK IE Technology Co., Ltd. (KRW) (c) (e) (f) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Polestar Automotive Holding UK PLC, Class A, ADR (c) (d) | |
| | |
| | |
| Advanced Micro Devices, Inc. (c) | |
| | |
| Allegro MicroSystems, Inc. (c) | |
| Alphabet, Inc., Class A (c) | |
| | |
| | |
| Aurora Innovation, Inc. (c) | |
| | |
| | |
| ChargePoint Holdings, Inc. (c) (d) | |
| | |
| | |
| | |
| | |
| indie Semiconductor, Inc., Class A (c) | |
| | |
| | |
| Lucid Group, Inc. (c) (d) | |
| Luminar Technologies, Inc. (c) (d) | |
| | |
| | |
| Microchip Technology, Inc. | |
| | |
| | |
| MicroVision, Inc. (c) (d) | |
| Mobileye Global, Inc., Class A (c) | |
| | |
| | |
| ON Semiconductor Corp. (c) | |
| | |
| Piedmont Lithium, Inc. (c) | |
| | |
| | |
| | |
| | |
| Rivian Automotive, Inc., Class A (c) | |
| Silicon Laboratories, Inc. (c) | |
| | |
| | |
| | |
|
| United States (Continued) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.9% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (j) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (j) (k) | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 3.3% |
| Royal Bank of Canada, 5.29% (j), dated 03/28/24, due 04/01/24, with a maturity value of $1,254,960. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $1,292,258. (k) | |
| | |
|
|
| Total Investments — 103.6% | |
| | |
| Net Other Assets and Liabilities — (3.6)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $1,462,447 and the total value of the collateral held by the Fund is $1,506,840. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
| Investment is valued at $0. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Cloud Computing ETF (SKYY)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
|
| | |
| | |
| | |
| Arista Networks, Inc. (a) | |
| | |
| | |
| Diversified Telecommunication | |
| Lumen Technologies, Inc. (a) | |
| | |
| Eventbrite, Inc., Class A (a) | |
| Financial Services — 0.7% | |
| | |
| | |
| Veeva Systems, Inc., Class A (a) | |
| Interactive Media & Services | |
| Alphabet, Inc., Class A (a) | |
| | |
| Akamai Technologies, Inc. (a) | |
| Cloudflare, Inc., Class A (a) | |
| DigitalOcean Holdings, Inc. (a) | |
| Fastly, Inc., Class A (a) | |
| International Business Machines Corp. | |
| | |
| Shopify, Inc., Class A (a) | |
| Snowflake, Inc., Class A (a) | |
| Squarespace, Inc., Class A (a) | |
| Twilio, Inc., Class A (a) | |
| | |
| | |
| | |
| Trade Desk (The), Inc., Class A (a) | |
| Professional Services — 1.3% | |
| | |
| Paylocity Holding Corp. (a) | |
| | |
| | |
| | |
| Appfolio, Inc., Class A (a) | |
| Appian Corp., Class A (a) | |
| AppLovin Corp., Class A (a) | |
| | |
| Atlassian Corp., Class A (a) | |
| | |
| | |
|
| | |
| | |
| | |
| Confluent, Inc., Class A (a) | |
| Crowdstrike Holdings, Inc., Class A (a) | |
| Datadog, Inc., Class A (a) | |
| | |
| Dropbox, Inc., Class A (a) | |
| | |
| | |
| Gitlab, Inc., Class A (a) | |
| HashiCorp, Inc., Class A (a) | |
| | |
| | |
| Klaviyo, Inc., Class A (a) (b) | |
| | |
| Nutanix, Inc., Class A (a) | |
| | |
| | |
| Palo Alto Networks, Inc. (a) | |
| | |
| | |
| RingCentral, Inc., Class A (a) | |
| | |
| | |
| | |
| Smartsheet, Inc., Class A (a) | |
| Sprout Social, Inc., Class A (a) | |
| Workday, Inc., Class A (a) | |
| | |
| Zoom Video Communications, Inc., Class A (a) | |
| | |
| | |
| | |
| Technology Hardware, Storage | |
| Dell Technologies, Inc., Class C | |
| Hewlett Packard Enterprise Co. | |
| | |
| Pure Storage, Inc., Class A (a) | |
| | |
| | |
| | |
See Notes to Financial Statements
First Trust Cloud Computing ETF (SKYY)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (c) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (c) (d) | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 1.2% |
| Royal Bank of Canada, 5.29% (c), dated 03/28/24, due 04/01/24, with a maturity value of $37,177,660. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $38,282,614. (d) | |
| | |
|
|
| Total Investments — 101.4% | |
| | |
| Net Other Assets and Liabilities — (1.4)% | |
| | |
| Non-income producing security. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $43,176,972 and the total value of the collateral held by the Fund is $44,639,520. |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for industry breakout. |
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
See Notes to Financial Statements
First Trust Cloud Computing ETF (SKYY)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF (FPXI)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.7% |
| | |
| | |
| | |
| Caixa Seguridade Participacoes S.A. (BRL) | |
| | |
| | |
| Brookfield Asset Management Ltd., Class A (CAD) | |
| Celestica, Inc. (CAD) (c) | |
| Constellation Software, Inc. (CAD) | |
| Fairfax Financial Holdings Ltd. (CAD) | |
| | |
| SNC-Lavalin Group, Inc. (CAD) | |
| | |
| | |
| | |
| New Oriental Education & Technology Group, Inc., ADR (c) | |
| NU Holdings Ltd., Class A (c) | |
| PDD Holdings, Inc., ADR (c) | |
| | |
| Trip.com Group Ltd., ADR (c) | |
| | |
| | |
| | |
| | |
| Daimler Truck Holding AG (EUR) | |
| Dr. Ing hc F Porsche AG (Preference Shares) (EUR) (d) (e) | |
| | |
| | |
| Amman Mineral Internasional PT (IDR) (c) | |
| Barito Renewables Energy Tbk PT (IDR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| | |
| M&A Research Institute Holdings, Inc. (JPY) (c) | |
| Rakuten Bank Ltd. (JPY) (c) | |
| | |
| | |
| | |
| | |
| Birkenstock Holding PLC (c) (f) | |
| | |
| | |
| | |
| | |
| Samsonite International S.A. (HKD) (c) (d) (e) | |
| Spotify Technology S.A. (c) | |
| | |
| | |
| Technip Energies N.V. (EUR) | |
| Universal Music Group N.V. (EUR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Riyadh Cables Group Co. (SAR) | |
| Saudi Aramco Base Oil Co. (SAR) | |
| | |
| | |
| | |
| Swedish Orphan Biovitrum AB (SEK) (c) | |
| | |
| | |
| Sandoz Group AG (CHF) (c) | |
| | |
| | |
| United Arab Emirates — 2.2% | |
| Emaar Development PJSC (AED) | |
| | |
| ARM Holdings PLC, ADR (c) | |
| | |
| Wise PLC, Class A (GBP) (c) | |
| | |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF (FPXI)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.1% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (g) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (g) (h) | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 0.2% |
| Royal Bank of Canada, 5.29% (g), dated 03/28/24, due 04/01/24, with a maturity value of $243,097. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $250,322. (h) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — (0.0)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $287,328 and the total value of the collateral held by the Fund is $291,888. |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| – United Arab Emirates Dirham |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF (FPXI)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Nasdaq Cybersecurity ETF (CIBR)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.7% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Check Point Software Technologies Ltd. (c) | |
| CyberArk Software Ltd. (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Akamai Technologies, Inc. (c) | |
| Booz Allen Hamilton Holding Corp. | |
| | |
| | |
| Cloudflare, Inc., Class A (c) | |
| Crowdstrike Holdings, Inc., Class A (c) | |
| | |
| | |
| | |
| | |
| NetScout Systems, Inc. (c) | |
| | |
| Palo Alto Networks, Inc. (c) | |
| | |
| | |
| Science Applications International Corp. | |
| SentinelOne, Inc., Class A (c) | |
| Tenable Holdings, Inc. (c) | |
| Varonis Systems, Inc. (c) | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.1% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (d) | |
| | |
|
|
| Total Investments — 99.8% | |
| | |
| Net Other Assets and Liabilities — 0.2% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.6% |
| | |
| OneSpaWorld Holdings Ltd. (c) | |
| | |
| | |
| | |
| | |
| | |
| Conduit Holdings Ltd. (GBP) | |
| | |
| | |
| | |
| | |
| | |
| MoonLake Immunotherapeutics (c) | |
| Patria Investments Ltd., Class A | |
| | |
| | |
| | |
| HeadHunter Group PLC, ADR (c) (d) (e) (f) | |
| Theon International PLC (EUR) (c) | |
| | |
| | |
| Better Collective A/S (SEK) (c) | |
| Novo Nordisk A/S, Class B (DKK) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| La Francaise des Jeux SAEM (EUR) (g) (h) | |
| | |
| | |
| Daimler Truck Holding AG (EUR) | |
| Dr. Ing hc F Porsche AG (Preference Shares) (EUR) (g) (h) | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| | |
| | |
| Schott Pharma AG & Co KGaA (EUR) | |
| Siemens Healthineers AG (EUR) (g) (h) | |
| | |
| | |
| | |
| Athens International Airport S.A. (EUR) (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Oddity Tech Ltd., Class A (c) | |
| | |
| | |
| Ferretti S.p.A. (EUR) (c) | |
| Lottomatica Group S.p.A. (EUR) (c) | |
| | |
| | |
| Technoprobe S.p.A. (EUR) (c) | |
| | |
| | |
| Birkenstock Holding PLC (c) (i) | |
| Janus Henderson Group PLC | |
| Yellow Cake PLC (GBP) (c) (g) (h) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Spotify Technology S.A. (c) | |
| | |
| | |
| | |
| | |
| | |
| Iveco Group N.V. (EUR) (c) | |
| | |
| Newamsterdam Pharma Co. N.V. (c) | |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| | |
| | |
| Technip Energies N.V. (EUR) | |
| Universal Music Group N.V. (EUR) | |
| | |
| | |
| | |
| Hoegh Autoliners ASA (NOK) | |
| Norconsult Norge AS (NOK) (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Greenvolt-Energias Renovaveis S.A. (EUR) (c) | |
| | |
| | |
| BoneSupport Holding AB (SEK) (c) (g) (h) | |
| | |
| | |
| | |
| Munters Group AB (SEK) (g) (h) | |
| | |
| | |
| | |
| Swedish Orphan Biovitrum AB (SEK) (c) | |
| | |
| | |
| | |
| Accelleron Industries AG (CHF) | |
| Galderma Group AG (CHF) (c) | |
| On Holding AG, Class A (c) | |
| Sandoz Group AG (CHF) (c) | |
| | |
| | |
| Alphawave IP Group PLC (GBP) (c) | |
| ARM Holdings PLC, ADR (c) | |
| Ashtead Technology Holdings PLC (GBP) | |
| Baltic Classifieds Group PLC (GBP) | |
| | |
|
| United Kingdom (Continued) | |
| Bridgepoint Group PLC (GBP) (g) (h) | |
| Bytes Technology Group PLC (GBP) | |
| Centessa Pharmaceuticals PLC, ADR (c) | |
| Compass Pathways PLC, ADR (c) | |
| | |
| Deliveroo PLC (GBP) (c) (g) (h) | |
| Finablr PLC (GBP) (c) (d) (e) (f) (g) | |
| Frasers Group PLC (GBP) (c) | |
| | |
| | |
| Immunocore Holdings PLC, ADR (c) | |
| | |
| Trustpilot Group PLC (GBP) (c) (g) (h) | |
| Wise PLC, Class A (GBP) (c) | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (j) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 5.16% (j) (k) | |
| | |
| | |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
REPURCHASE AGREEMENTS — 0.3% |
| Royal Bank of Canada, 5.29% (j), dated 03/28/24, due 04/01/24, with a maturity value of $16,807. Collateralized by U.S. Treasury Securities, interest rates of 1.63% to 3.75%, due 12/31/30 to 05/15/31. The value of the collateral including accrued interest is $17,306. (k) | |
| | |
|
|
| Total Investments — 100.2% | |
| | |
| Net Other Assets and Liabilities — (0.2)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| All or a portion of this security is on loan (see Note 2E - Securities Lending in the Notes to Financial Statements). The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. The aggregate value of such securities, including those sold and pending settlement, is $19,547 and the total value of the collateral held by the Fund is $20,180. |
| Rate shown reflects yield as of March 31, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Amount is less than 0.1%. |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of Investments (Continued)March 31, 2024 (Unaudited)
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
| Investments are valued at $0. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
Offsetting Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset, and to disclose instruments and transactions subject to master netting or similar agreements (see Note 2C - Offsetting on the Statements of Assets and Liabilities in the Notes to Financial Statements).
The Fund’s loaned securities were all subject to an enforceable Securities Lending Agency Agreement. Securities lent in accordance with the Securities Lending Agency Agreement on a gross basis were as follows:
Securities Lending Agency Agreement |
Total gross amount presented on the Statements of Assets and Liabilities(1) | |
| |
| |
| The amount presented on the Statements of Assets and Liabilities, which is included in “Investments, at value,” is not offset and is shown on a gross basis. |
| At March 31, 2024, the value of the collateral received from each borrower exceeded the value of the related securities loaned. This amount is disclosed on the Portfolio of Investments. |
The Fund’s investments in repurchase agreements were all subject to an enforceable Master Repurchase Agreement. Repurchase Agreements on a gross basis were as follows:
|
Total gross amount presented on the Statements of Assets and Liabilities(3) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At March 31, 2024, the value of the collateral received from each seller exceeded the value of the repurchase agreements. |
See Notes to Financial Statements
First Trust Dow Jones International Internet ETF (FDNI)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 98.4% |
| | |
| | |
| | |
| | |
| WiseTech Global Ltd. (AUD) | |
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| Descartes Systems Group (The), Inc. (CAD) (c) | |
| Shopify, Inc., Class A (CAD) (c) | |
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| Alibaba Group Holding Ltd. (HKD) | |
| Baidu, Inc., Class A (HKD) (c) | |
| JD.com, Inc., Class A (HKD) | |
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| Kuaishou Technology (HKD) (c) (d) (e) | |
| Meituan, Class B (HKD) (c) (d) (e) | |
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| PDD Holdings, Inc., ADR (c) | |
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| Tencent Holdings Ltd. (HKD) | |
| Tencent Music Entertainment Group, ADR (c) | |
| Vipshop Holdings Ltd., ADR | |
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| Delivery Hero SE (EUR) (c) (d) (e) | |
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| Zalando SE (EUR) (c) (d) (e) | |
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| GoTo Gojek Tokopedia Tbk PT (IDR) (c) | |
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| Flutter Entertainment PLC (GBP) (c) | |
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|
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| Rakuten Group, Inc. (JPY) (c) | |
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| Spotify Technology S.A. (c) | |
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| Adyen N.V. (EUR) (c) (d) (e) | |
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| Yandex N.V., Class A (c) (f) (g) (h) | |
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| Naspers Ltd., Class N (ZAR) | |
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| Auto Trader Group PLC (GBP) (d) (e) | |
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MONEY MARKET FUNDS — 0.0% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (i) | |
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|
|
| Total Investments — 98.4% | |
| | |
| Net Other Assets and Liabilities — 1.6% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
See Notes to Financial Statements
First Trust Dow Jones International Internet ETF (FDNI)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Pursuant to procedures adopted by the Trust’s Board of Trustees, this security has been determined to be illiquid by First Trust Advisors L.P., the Fund’s advisor. |
| This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At March 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
| This security’s value was determined using significant unobservable inputs (see Note 2A - Portfolio Valuation in the Notes to Financial Statements). |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
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Currency Exposure Diversification | |
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Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
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| | | | |
| See Portfolio of Investments for country breakout. |
| Investment is valued at $0. |
Level 3 investments are fair valued by the Advisor’s Pricing Committee and are footnoted in the Portfolio of Investments. All Level 3 values are based on unobservable inputs.
See Notes to Financial Statements
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.6% |
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| B3 S.A. - Brasil Bolsa Balcao (BRL) | |
| Banco Bradesco S.A. (Preference Shares) (BRL) | |
| Banco BTG Pactual S.A. (BRL) | |
| Banco do Brasil S.A. (BRL) | |
| Banco Santander Brasil S.A. (BRL) | |
| Itau Unibanco Holding S.A. (Preference Shares) (BRL) | |
| Itausa S.A. (Preference Shares) (BRL) | |
| Localiza Rent a Car S.A. (BRL) | |
| Petroleo Brasileiro S.A. (Preference Shares) (BRL) | |
| | |
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| Chailease Holding Co., Ltd. (TWD) | |
| | |
| Sociedad Quimica y Minera de Chile S.A., Class B (Preference Shares) (CLP) | |
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| Avenue Supermarts Ltd. (INR) (c) (d) (e) | |
| | |
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| HCL Technologies Ltd. (INR) | |
| | |
| Hindustan Unilever Ltd. (INR) | |
| | |
| | |
| | |
| | |
| Kotak Mahindra Bank Ltd. (INR) | |
| Larsen & Toubro Ltd. (INR) | |
| Mahindra & Mahindra Ltd. (INR) | |
| Maruti Suzuki India Ltd. (INR) | |
| | |
| | |
|
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| Power Grid Corp. of India Ltd. (INR) | |
| Reliance Industries Ltd. (INR) | |
| | |
| State Bank of India (INR) | |
| Sun Pharmaceutical Industries Ltd. (INR) | |
| Tata Consultancy Services Ltd. (INR) | |
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| UltraTech Cement Ltd. (INR) | |
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| America Movil S.A.B. de C.V., Series B (MXN) | |
| Cemex S.A.B. de C.V., Series CPO (MXN) (d) | |
| Fomento Economico Mexicano S.A.B. de C.V., Series UBD (MXN) | |
| Grupo Financiero Banorte S.A.B. de C.V., Class O (MXN) | |
| Grupo Mexico S.A.B. de C.V., Series B (MXN) | |
| Wal-Mart de Mexico S.A.B. de C.V. (MXN) | |
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| SM Investments Corp. (PHP) | |
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| Naspers Ltd., Class N (ZAR) | |
| Standard Bank Group Ltd. (ZAR) | |
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| Ecopro BM Co., Ltd. (KRW) (d) | |
| Hana Financial Group, Inc. (KRW) | |
| Hyundai Mobis Co., Ltd. (KRW) | |
| | |
| | |
See Notes to Financial Statements
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| KB Financial Group, Inc. (KRW) | |
| | |
| | |
| LG Electronics, Inc. (KRW) | |
| LG Energy Solution Ltd. (KRW) (d) | |
| | |
| POSCO Holdings, Inc. (KRW) | |
| Samsung Biologics Co., Ltd. (KRW) (c) (d) (e) | |
| Samsung Electronics Co., Ltd. (KRW) | |
| Samsung SDI Co., Ltd. (KRW) | |
| Shinhan Financial Group Co., Ltd. (KRW) | |
| | |
| | |
| | |
| ASE Technology Holding Co., Ltd. (TWD) | |
| Cathay Financial Holding Co., Ltd. (TWD) | |
| | |
| Chunghwa Telecom Co., Ltd. (TWD) | |
| CTBC Financial Holding Co., Ltd. (TWD) | |
| Delta Electronics, Inc. (TWD) | |
| E.Sun Financial Holding Co., Ltd. (TWD) | |
| Evergreen Marine Corp. Taiwan Ltd. (TWD) | |
| First Financial Holding Co., Ltd. (TWD) | |
| Formosa Plastics Corp. (TWD) | |
| Fubon Financial Holding Co., Ltd. (TWD) | |
| Hon Hai Precision Industry Co., Ltd. (TWD) | |
| | |
| Mega Financial Holding Co., Ltd. (TWD) | |
| Nan Ya Plastics Corp. (TWD) | |
| Novatek Microelectronics Corp. (TWD) | |
| Quanta Computer, Inc. (TWD) | |
| Taiwan Cooperative Financial Holding Co., Ltd. (TWD) | |
| Taiwan Mobile Co., Ltd. (TWD) | |
| | |
|
| | |
| Taiwan Semiconductor Manufacturing Co., Ltd. (TWD) | |
| Uni-President Enterprises Corp. (TWD) | |
| United Microelectronics Corp. (TWD) | |
| Yuanta Financial Holding Co., Ltd. (TWD) | |
| | |
| | |
| Anglogold Ashanti PLC (ZAR) | |
| | |
| | |
MONEY MARKET FUNDS — 0.4% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (f) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — (0.0)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| Non-income producing security. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
See Notes to Financial Statements
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) Abbreviations throughout the Portfolio of Investments: |
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| |
Currency Exposure Diversification | |
| |
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| |
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| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
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First Trust Exchange-Traded Fund IIStatements of Assets and LiabilitiesMarch 31, 2024 (Unaudited)
| First Trust STOXX® European Select Dividend Index Fund
(FDD) | First Trust Alerian Disruptive Technology Real Estate ETF
(DTRE) | First Trust Dow Jones Global Select Dividend Index Fund
(FGD) |
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Foreign currency, at value | | | |
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Investment securities sold | | | |
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Securities lending income | | | |
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Shareholder reporting fees | | | |
Investment securities purchased | | | |
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Deferred foreign capital gains tax | | | |
Collateral for securities on loan | | | |
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|
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Accumulated distributable earnings (loss) | | | |
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NET ASSET VALUE, per share | | | |
Number of shares outstanding (unlimited number of shares authorized, par value $0.01 per share) | | | |
| | | |
Foreign currency, at cost (proceeds) | | | |
Securities on loan, at value | | | |
See Notes to Financial Statements
First Trust Global Wind Energy ETF
(FAN) | First Trust Alerian U.S. NextGen Infrastructure ETF
(RBLD) | First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund
(GRID) | First Trust Indxx Global Natural Resources Income ETF
(FTRI) | First Trust Indxx Global Agriculture ETF
(FTAG) |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Assets and Liabilities (Continued)March 31, 2024 (Unaudited)
| First Trust Indxx NextG ETF
(NXTG) | First Trust S-Network Future Vehicles & Technology ETF
(CARZ) | First Trust Cloud Computing ETF
(SKYY) |
| | | |
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Foreign currency, at value | | | |
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Investment securities sold | | | |
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Securities lending income | | | |
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Shareholder reporting fees | | | |
Investment securities purchased | | | |
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Deferred foreign capital gains tax | | | |
Collateral for securities on loan | | | |
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|
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Accumulated distributable earnings (loss) | | | |
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NET ASSET VALUE, per share | | | |
Number of shares outstanding (unlimited number of shares authorized, par value $0.01 per share) | | | |
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Foreign currency, at cost (proceeds) | | | |
Securities on loan, at value | | | |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF
(FPXI) | First Trust Nasdaq Cybersecurity ETF
(CIBR) | First Trust IPOX® Europe Equity Opportunities ETF
(FPXE) | First Trust Dow Jones International Internet ETF
(FDNI) | First Trust Bloomberg Emerging Market Democracies ETF
(EMDM) |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of OperationsFor the Six Months Ended March 31, 2024 (Unaudited)
| First Trust STOXX® European Select Dividend Index Fund
(FDD) | First Trust Alerian Disruptive Technology Real Estate ETF
(DTRE) | First Trust Dow Jones Global Select Dividend Index Fund
(FGD) |
| | | |
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Securities lending income (net of fees) | | | |
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|
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Accounting and administration fees | | | |
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Shareholder reporting fees | | | |
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Trustees’ fees and expenses | | | |
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Less fees waived and expenses reimbursed by the investment advisor | | | |
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NET INVESTMENT INCOME (LOSS) | | | |
|
NET REALIZED AND UNREALIZED GAIN (LOSS): | | | |
Net realized gain (loss) on: | | | |
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Foreign currency transactions | | | |
Foreign capital gains tax | | | |
| | | |
Net change in unrealized appreciation (depreciation) on: | | | |
| | | |
Foreign currency translation | | | |
Deferred foreign capital gains tax | | | |
Net change in unrealized appreciation (depreciation) | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | |
| Fund is subject to a unitary fee (see Note 3 in the Notes to Financial Statements). |
See Notes to Financial Statements
First Trust Global Wind Energy ETF
(FAN) | First Trust Alerian U.S. NextGen Infrastructure ETF
(RBLD) | First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund
(GRID) | First Trust Indxx Global Natural Resources Income ETF
(FTRI) | First Trust Indxx Global Agriculture ETF
(FTAG) |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Operations (Continued)For the Six Months Ended March 31, 2024 (Unaudited)
| First Trust Indxx NextG ETF
(NXTG) | First Trust S-Network Future Vehicles & Technology ETF
(CARZ) | First Trust Cloud Computing ETF
(SKYY) |
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Securities lending income (net of fees) | | | |
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|
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Accounting and administration fees | | | |
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Shareholder reporting fees | | | |
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Trustees’ fees and expenses | | | |
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Less fees waived and expenses reimbursed by the investment advisor | | | |
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NET INVESTMENT INCOME (LOSS) | | | |
|
NET REALIZED AND UNREALIZED GAIN (LOSS): | | | |
Net realized gain (loss) on: | | | |
| | | |
| | | |
Foreign currency transactions | | | |
Foreign capital gains tax | | | |
| | | |
Net change in unrealized appreciation (depreciation) on: | | | |
| | | |
Foreign currency translation | | | |
Deferred foreign capital gains tax | | | |
Net change in unrealized appreciation (depreciation) | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | |
| Fund is subject to a unitary fee (see Note 3 in the Notes to Financial Statements). |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF
(FPXI) | First Trust Nasdaq Cybersecurity ETF
(CIBR) | First Trust IPOX® Europe Equity Opportunities ETF
(FPXE) | First Trust Dow Jones International Internet ETF
(FDNI) | First Trust Bloomberg Emerging Market Democracies ETF
(EMDM) |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Changes in Net Assets
| First Trust STOXX® European Select Dividend Index Fund (FDD) | First Trust Alerian Disruptive Technology Real Estate ETF (DTRE) |
| Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
| | | | |
Net investment income (loss) | | | | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | | |
Net increase (decrease) in net assets resulting from operations | | | | |
|
DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | |
| | | | |
|
SHAREHOLDER TRANSACTIONS: | | | | |
Proceeds from shares sold | | | | |
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Net increase (decrease) in net assets resulting from shareholder transactions | | | | |
Total increase (decrease) in net assets | | | | |
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CHANGES IN SHARES OUTSTANDING: | | | | |
Shares outstanding, beginning of period | | | | |
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Shares outstanding, end of period | | | | |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD) | First Trust Global Wind Energy ETF (FAN) | First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD) |
Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Changes in Net Assets (Continued)
| First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID) | First Trust Indxx Global Natural Resources Income ETF (FTRI) |
| Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
| | | | |
Net investment income (loss) | | | | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | | |
Net increase (decrease) in net assets resulting from operations | | | | |
|
DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | |
| | | | |
|
SHAREHOLDER TRANSACTIONS: | | | | |
Proceeds from shares sold | | | | |
| | | | |
Net increase (decrease) in net assets resulting from shareholder transactions | | | | |
Total increase (decrease) in net assets | | | | |
|
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CHANGES IN SHARES OUTSTANDING: | | | | |
Shares outstanding, beginning of period | | | | |
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Shares outstanding, end of period | | | | |
See Notes to Financial Statements
First Trust Indxx Global Agriculture ETF (FTAG) | First Trust Indxx NextG ETF (NXTG) | First Trust S-Network Future Vehicles & Technology ETF (CARZ) |
Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Changes in Net Assets (Continued)
| First Trust Cloud Computing ETF (SKYY) | First Trust International Equity Opportunities ETF (FPXI) |
| Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
| | | | |
Net investment income (loss) | | | | |
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Net change in unrealized appreciation (depreciation) | | | | |
Net increase (decrease) in net assets resulting from operations | | | | |
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DISTRIBUTIONS TO SHAREHOLDERS FROM: | | | | |
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SHAREHOLDER TRANSACTIONS: | | | | |
Proceeds from shares sold | | | | |
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Net increase (decrease) in net assets resulting from shareholder transactions | | | | |
Total increase (decrease) in net assets | | | | |
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CHANGES IN SHARES OUTSTANDING: | | | | |
Shares outstanding, beginning of period | | | | |
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Shares outstanding, end of period | | | | |
See Notes to Financial Statements
First Trust Nasdaq Cybersecurity ETF (CIBR) | First Trust IPOX® Europe Equity Opportunities ETF (FPXE) | First Trust Dow Jones International Internet ETF (FDNI) |
Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | | Six Months
Ended
3/31/2024 (Unaudited) | |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Changes in Net Assets (Continued)
| First Trust Bloomberg Emerging Market Democracies ETF (EMDM) |
| Six Months
Ended
3/31/2024 (Unaudited) | |
| | |
Net investment income (loss) | | |
| | |
Net change in unrealized appreciation (depreciation) | | |
Net increase (decrease) in net assets resulting from operations | | |
|
DISTRIBUTIONS TO SHAREHOLDERS FROM: | | |
| | |
|
SHAREHOLDER TRANSACTIONS: | | |
Proceeds from shares sold | | |
| | |
Net increase (decrease) in net assets resulting from shareholder transactions | | |
Total increase (decrease) in net assets | | |
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CHANGES IN SHARES OUTSTANDING: | | |
Shares outstanding, beginning of period | | |
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Shares outstanding, end of period | | |
| Inception date is March 2, 2023, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial HighlightsFor a share outstanding throughout each period First Trust STOXX® European Select Dividend Index Fund (FDD)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
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Net asset value, end of period | | | | | | |
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|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. The total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
| The variation in the portfolio turnover rate is due to the change in the Fund’s underlying index effective September 30, 2022, which resulted in a complete rebalance of the Fund’s portfolio. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Dow Jones Global Select Dividend Index Fund (FGD)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Global Wind Energy ETF (FAN)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
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|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. The total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. The total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
| The variation in the portfolio turnover rate is due to the change in the Fund’s underlying index effective July 29, 2022, which resulted in a complete rebalance of the Fund’s portfolio. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. The total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Indxx Global Natural Resources Income ETF (FTRI)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (e) | | | | | | |
| Based on average shares outstanding. |
| The per share amount does not correlate with the aggregate realized and unrealized gain (loss) due to the timing of the Fund share sales and repurchases in relation to market value fluctuation of the underlying investments. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Indxx Global Agriculture ETF (FTAG)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (e) | | | | | | |
| Based on average shares outstanding. |
| The per share amount does not correlate with the aggregate realized and unrealized gain (loss) due to the timing of the Fund share sales and repurchases in relation to market value fluctuation of the underlying investments. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Indxx NextG ETF (NXTG)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust S-Network Future Vehicles & Technology ETF (CARZ)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
| The variation in the portfolio turnover rate is due to the change in the Fund’s underlying index effective January 26, 2022, which resulted in a complete rebalance of the Fund’s portfolio. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Cloud Computing ETF (SKYY)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust International Equity Opportunities ETF (FPXI)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (e) | | | | | | |
| Based on average shares outstanding. |
| The Fund received a payment from the advisor in the amount of $806, which represents less than $0.01 per share. Since the advisor reimbursed the Fund, there was no effect on the Fund’s total return. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Nasdaq Cybersecurity ETF (CIBR)
| Six Months
Ended
3/31/2024
(Unaudited) | |
| | | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (d) | | | | | | |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust IPOX® Europe Equity Opportunities ETF (FPXE)
| Six Months
Ended
3/31/2024
(Unaudited) | | Period
Ended
9/30/2019 (a) |
| | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (e) | | | | | | |
| Inception date is October 4, 2018, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Dow Jones International Internet ETF (FDNI)
| Six Months
Ended
3/31/2024
(Unaudited) | | Period
Ended
9/30/2019 (a) |
| | | | |
Net asset value, beginning of period | | | | | | |
Income from investment operations: | | | | | | |
Net investment income (loss) | | | | | | |
Net realized and unrealized gain (loss) | | | | | | |
Total from investment operations | | | | | | |
Distributions paid to shareholders from: | | | | | | |
| | | | | | |
Net asset value, end of period | | | | | | |
| | | | | | |
|
Ratios to average net assets/supplemental data: | | | | | | |
Net assets, end of period (in 000’s) | | | | | | |
Ratio of total expenses to average net assets | | | | | | |
Ratio of net investment income (loss) to average net assets | | | | | | |
Portfolio turnover rate (h) | | | | | | |
| Inception date is November 5, 2018, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Amount represents less than $0.01. |
| The per share amount does not correlate with the aggregate realized and unrealized gain (loss) due to the timing of the Fund share sales and repurchases in relation to market value fluctuation of the underlying investments. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Amount is less than 0.01%. |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Bloomberg Emerging Market Democracies ETF (EMDM)
| Six Months
Ended
3/31/2024
(Unaudited) | |
|
Net asset value, beginning of period | | |
Income from investment operations: | | |
Net investment income (loss) (b) | | |
Net realized and unrealized gain (loss) | | |
Total from investment operations | | |
Distributions paid to shareholders from: | | |
| | |
Net asset value, end of period | | |
| | |
|
Ratios to average net assets/supplemental data: | | |
Net assets, end of period (in 000’s) | | |
Ratio of total expenses to average net assets | | |
Ratio of net investment income (loss) to average net assets | | |
Portfolio turnover rate (e) | | |
| Inception date is March 2, 2023, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
Notes to Financial Statements
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) 1. Organization
First Trust Exchange-Traded Fund II (the “Trust”) is an open-end management investment company organized as a Massachusetts business trust on July 6, 2006, and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”).
The Trust currently consists of nineteen exchange-traded funds. This report covers the sixteen funds (each a “Fund” and collectively, the “Funds”) listed below:
First Trust STOXX® European Select Dividend Index Fund – (NYSE Arca, Inc. (“NYSE Arca”) ticker “FDD”) |
First Trust Alerian Disruptive Technology Real Estate ETF – (NYSE Arca ticker “DTRE”) |
First Trust Dow Jones Global Select Dividend Index Fund – (NYSE Arca ticker “FGD”) |
First Trust Global Wind Energy ETF – (NYSE Arca ticker “FAN”) |
First Trust Alerian U.S. NextGen Infrastructure ETF – (NYSE Arca ticker “RBLD”) |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund – (Nasdaq, Inc. (“Nasdaq”) ticker “GRID”) |
First Trust Indxx Global Natural Resources Income ETF – (Nasdaq ticker “FTRI”) |
First Trust Indxx Global Agriculture ETF – (Nasdaq ticker “FTAG”) |
First Trust Indxx NextG ETF – (Nasdaq ticker “NXTG”) |
First Trust S-Network Future Vehicles & Technology ETF – (Nasdaq ticker “CARZ”) |
First Trust Cloud Computing ETF – (Nasdaq ticker “SKYY”) |
First Trust International Equity Opportunities ETF – (Nasdaq ticker “FPXI”) |
First Trust Nasdaq Cybersecurity ETF – (Nasdaq ticker “CIBR”) |
First Trust IPOX® Europe Equity Opportunities ETF – (Nasdaq ticker “FPXE”) |
First Trust Dow Jones International Internet ETF – (Nasdaq ticker “FDNI”) |
First Trust Bloomberg Emerging Market Democracies ETF – (NYSE Arca ticker “EMDM”) |
Each of DTRE, FAN, GRID, FTRI, FTAG, CARZ, FPXI, CIBR, FPXE, FDNI and EMDM operates as a non-diversified series of the Trust. Each of FDD, FGD, RBLD, NXTG and SKYY operates as a diversified open-end management investment company as defined in Section 5(b) of the 1940 Act. Each Fund represents a separate series of shares of beneficial interest in the Trust. Unlike conventional mutual funds, each Fund issues and redeems shares on a continuous basis, at net asset value (“NAV”), only in large blocks of shares known as “Creation Units.” The investment objective of each Fund is to seek investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of the following indices:
| |
First Trust STOXX® European Select Dividend Index Fund | STOXX® Europe Select Dividend 30 Index |
First Trust Alerian Disruptive Technology Real Estate ETF | Alerian Disruptive Technology Real Estate Index |
First Trust Dow Jones Global Select Dividend Index Fund | Dow Jones Global Select Dividend Index |
First Trust Global Wind Energy ETF | ISE Clean Edge Global Wind EnergyTM Index |
First Trust Alerian U.S. NextGen Infrastructure ETF | Alerian U.S. NextGen Infrastructure Index |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | Nasdaq Clean Edge Smart Grid InfrastructureTM Index |
First Trust Indxx Global Natural Resources Income ETF | Indxx Global Natural Resources Income Index |
First Trust Indxx Global Agriculture ETF | Indxx Global Agriculture Index |
First Trust Indxx NextG ETF | Indxx 5G & NextG Thematic IndexSM |
First Trust S-Network Future Vehicles & Technology ETF | S-Network Electric & Future Vehicle Ecosystem Index |
First Trust Cloud Computing ETF | ISE CTA Cloud ComputingTM Index |
First Trust International Equity Opportunities ETF | IPOX® International Index |
First Trust Nasdaq Cybersecurity ETF | Nasdaq CTA CybersecurityTM Index |
First Trust IPOX® Europe Equity Opportunities ETF | |
First Trust Dow Jones International Internet ETF | Dow Jones International Internet Index |
First Trust Bloomberg Emerging Market Democracies ETF | Bloomberg Emerging Market Democracies Index |
2. Significant Accounting Policies
The Funds are each considered an investment company and follow accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, “Financial Services-Investment Companies.” The following is a
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) summary of significant accounting policies consistently followed by the Funds in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Each Fund’s NAV is determined daily as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined as of that time. Foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities. Each Fund’s NAV is calculated by dividing the value of all assets of each Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of shares outstanding.
Each Fund’s investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing Committee of the Funds’ investment advisor, First Trust Advisors L.P. (“First Trust” or the “Advisor”), in accordance with valuation procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the 1940 Act and rules thereunder. Investments valued by the Advisor’s Pricing Committee, if any, are footnoted as such in the footnotes to the Portfolio of Investments. Each Fund’s investments are valued as follows:
Common stocks and other equity securities listed on any national or foreign exchange (excluding Nasdaq and the London Stock Exchange Alternative Investment Market (“AIM”)) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the primary exchange for such securities.
Securities trading on foreign exchanges or over-the-counter markets that close prior to the NYSE close may be valued using a systematic fair valuation model provided by a third-party pricing service. If these foreign securities meet certain criteria in relation to the valuation model, their valuation is systematically adjusted to reflect the impact of movement in the U.S. market after the close of the foreign markets.
Shares of open-end funds are valued based on NAV per share.
Equity securities traded in an over-the-counter market are valued at the close price or the last trade price.
Overnight repurchase agreements are valued at amortized cost when it represents the most appropriate reflection of fair market value.
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor’s Pricing Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s NAV or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the security’s fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
1)
the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price;
3)
the size of the holding;
4)
the initial cost of the security;
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) 5)
transactions in comparable securities;
6)
price quotes from dealers and/or third-party pricing services;
7)
relationships among various securities;
8)
information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
9)
an analysis of the issuer’s financial statements;
10)
the existence of merger proposals or tender offers that might affect the value of the security; and
11)
other relevant factors.
If the securities in question are foreign securities, the following additional information may be considered:
1)
the last sale price on the exchange on which they are principally traded;
2)
the value of similar foreign securities traded on other foreign markets;
3)
ADR trading of similar securities;
4)
closed-end fund or exchange-traded fund trading of similar securities;
5)
foreign currency exchange activity;
6)
the trading prices of financial products that are tied to baskets of foreign securities;
7)
factors relating to the event that precipitated the pricing problem;
8)
whether the event is likely to recur;
9)
whether the effects of the event are isolated or whether they affect entire markets, countries or regions; and
10)
other relevant factors.
In addition, differences between the prices used to calculate a Fund’s NAV and the prices used by such Fund’s corresponding index could result in a difference between a Fund’s performance and the performance of its underlying index.
Because foreign markets may be open on different days than the days during which investors may transact in the shares of a Fund, the value of the Fund’s securities may change on the days when investors are not able to transact in the shares of the Fund. The value of the securities denominated in foreign currencies is converted into U.S. dollars using exchange rates determined daily as of the close of regular trading on the NYSE. Any use of a different rate from the rates used by a relevant index may adversely affect the Fund’s ability to track the index.
The Funds are subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
• Level 1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
• Level 2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly.
o Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).
o Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 – Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the investment.
The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value each Fund’s investments as of March 31, 2024, is included with each Fund’s Portfolio of Investments.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) B. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the information becomes available after the ex-dividend date. Interest income, if any, is recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for in accordance with each Fund’s understanding of the applicable country’s tax rules and rates.
Distributions received from a Fund’s investments in master limited partnerships (“MLPs”) generally are comprised of return of capital and investment income. A Fund records estimated return of capital and investment income based on historical information available from each MLP. These estimates may subsequently be revised based on information received from the MLPs after their tax reporting periods are concluded.
Distributions received from a Fund’s investments in real estate investment trusts (“REITs”) may be comprised of return of capital, capital gains, and income. The actual character of the amounts received during the year are not known until after the REITs’ fiscal year end. A Fund records the character of distributions received from the REITs during the year based on estimates available. The characterization of distributions received by a Fund may be subsequently revised based on information received from the REITs after their tax reporting periods conclude.
C. Offsetting on the Statements of Assets and Liabilities
Offsetting assets and liabilities requires entities to disclose both gross and net information about instruments and transactions eligible for offset on the Statements of Assets and Liabilities and disclose instruments and transactions subject to master netting or similar agreements. These disclosure requirements are intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on a Fund’s financial position. The transactions subject to offsetting disclosures are derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions.
This disclosure, if applicable, is included within each Fund’s Portfolio of Investments under the heading “Offsetting Assets and Liabilities.” For financial reporting purposes, the Funds do not offset financial assets and financial liabilities that are subject to master netting arrangements (“MNAs”) or similar agreements on the Statements of Assets and Liabilities. MNAs provide the right, in the event of default (including bankruptcy and insolvency), for the non-defaulting counterparty to liquidate the collateral and calculate the net exposure to the defaulting party or request additional collateral.
The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of investments and items of income and expense are translated on the respective dates of such transactions. Unrealized gains and losses on assets and liabilities, other than investments in securities, which result from changes in foreign currency exchange rates have been included in “Net change in unrealized appreciation (depreciation) on foreign currency translation” on the Statements of Operations. Unrealized gains and losses on investments in securities which result from changes in foreign exchange rates are included with fluctuations arising from changes in market price and are shown in “Net change in unrealized appreciation (depreciation) on investments” on the Statements of Operations. Net realized foreign currency gains and losses include the effect of changes in exchange rates between trade date and settlement date on investment security transactions, foreign currency transactions and interest and dividends received and are included in “Net realized gain (loss) on foreign currency transactions” on the Statements of Operations. The portion of foreign currency gains and losses related to fluctuations in exchange rates between the initial purchase settlement date and subsequent sale trade date is included in “Net realized gain (loss) on investments” on the Statements of Operations.
The Funds may lend securities representing up to 33 1/3% of the value of their total assets to broker-dealers, banks and other institutions to generate additional income. When a Fund loans its portfolio securities, it will receive, at the inception of each loan, collateral equal to at least 102% (for domestic securities) or 105% (for international securities) of the market value of the loaned securities. The collateral amount is valued at the beginning of each business day and is compared to the market value of the loaned securities from the prior business day to determine if additional collateral is required. If additional collateral is required, a request is
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) sent to the borrower. Securities lending involves the risk that the Fund may lose money because the borrower of the Fund’s loaned securities fails to return the securities in a timely manner or at all. The Fund could also lose money in the event of (i) a decline in the value of the collateral provided for the loaned securities, (ii) a decline in the value of any investments made with cash collateral or (iii) an increase in the value of the loaned securities if the borrower does not increase the collateral accordingly and the borrower fails to return the securities. These events could also trigger adverse tax consequences for the Funds.
Under the Funds’ Securities Lending Agency Agreement, the securities lending agent will generally bear the risk that a borrower may default on its obligation to return loaned securities. Brown Brothers Harriman & Co. (“BBH”) acts as the Funds’ securities lending agent and is responsible for executing the lending of the portfolio securities to creditworthy borrowers with the exception of FAN. The Bank of New York Mellon (“BNYM”) acts as FAN’s securities lending agent and is responsible for executing the lending of the portfolio securities to creditworthy borrowers. The Funds, however, will be responsible for the risks associated with the investment of cash collateral. A Fund may lose money on its investment of cash collateral, which may affect its ability to repay the collateral to the borrower without the use of other Fund assets. Each Fund that engages in securities lending receives compensation (net of any rebate and securities lending agent fees) for lending its securities. Compensation can be in the form of fees received from the securities lending agent or dividends or interest earned from the investment of cash collateral. The fees received from the securities lending agent are accrued daily. The dividend and interest earned on the securities loaned is accounted for in the same manner as other dividend and interest income. At March 31, 2024, FAN, GRID, FTRI, NXTG, CARZ, SKYY, FPXI, and FPXE had securities in the securities lending program. During the six months ended March 31, 2024, FAN, RBLD, GRID, FRTI, NXTG, CARZ, SKYY, FPXI, and FPXE participated in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH or BNYM will exercise any and all remedies provided under the applicable borrower agreement to make the Funds whole. These remedies include purchasing replacement securities by applying the collateral held from the defaulting broker against the purchase cost of the replacement securities. If, despite such efforts by BBH and BNYM to exercise these remedies, a Fund sustains losses as a result of a borrower’s default, BBH or BNYM will indemnify the Fund by purchasing replacement securities at its own expense, or paying the Fund an amount equal to the market value of the replacement securities, subject to certain limitations which are set forth in detail in the Securities Lending Agency Agreement between the Trust on behalf of the Funds and BBH or BNYM.
Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase the securities at a mutually agreed upon date and price, under the terms of a Master Repurchase Agreement (“MRA”). During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of a Fund, including accrued interest, is required to exceed the value of the repurchase agreement, including accrued interest. The underlying securities for all repurchase agreements are held at the Funds’ custodian or designated sub-custodians under tri-party repurchase agreements.
MRAs govern transactions between a Fund and select counterparties. The MRAs contain provisions for, among other things, initiation, income payments, events of default, and maintenance of collateral for repurchase agreements.
Repurchase agreements received for lending securities are collateralized by U.S. Treasury securities. The U.S. Treasury securities are held in a joint custody account at BBH or BNYM on behalf of the Funds participating in the securities lending program. In the event the counterparty defaults on the repurchase agreement, the U.S. Treasury securities can either be maintained as part of a Fund’s portfolio or sold for cash. A Fund could suffer a loss to the extent that the proceeds from the sale of the underlying collateral held by the Fund are less than the repurchase price and the Fund’s costs associated with the delay and enforcement of the MRA.
While the Funds may invest in repurchase agreements, any repurchase agreements held by the Funds during the six months ended March 31, 2024, were received as collateral for lending securities.
G. Dividends and Distributions to Shareholders
Dividends from net investment income of each Fund, if any, are declared and paid quarterly, or as the Board of Trustees may determine from time to time. Distributions of net realized capital gains earned by each Fund, if any, are distributed at least annually. Each Fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
Distributions from net investment income and realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) and gain/loss on significantly modified portfolio securities held by the Funds and have no impact on net assets or NAV per share. Temporary differences, which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some time in the future.
The tax character of distributions paid by each Fund during the fiscal year ended September 30, 2023 was as follows:
| Distributions
paid from
Ordinary
Income | Distributions
paid from
Capital
Gains | Distributions
paid from
Return of
Capital |
First Trust STOXX® European Select Dividend Index Fund | | | |
First Trust Alerian Disruptive Technology Real Estate ETF | | | |
First Trust Dow Jones Global Select Dividend Index Fund | | | |
First Trust Global Wind Energy ETF | | | |
First Trust Alerian U.S. NextGen Infrastructure ETF | | | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | | | |
First Trust Indxx Global Natural Resources Income ETF | | | |
First Trust Indxx Global Agriculture ETF | | | |
First Trust Indxx NextG ETF | | | |
First Trust S-Network Future Vehicles & Technology ETF | | | |
First Trust Cloud Computing ETF | | | |
First Trust International Equity Opportunities ETF | | | |
First Trust Nasdaq Cybersecurity ETF | | | |
First Trust IPOX® Europe Equity Opportunities ETF | | | |
First Trust Dow Jones International Internet ETF | | | |
First Trust Bloomberg Emerging Market Democracies ETF | | | |
As of September 30, 2023, the components of distributable earnings on a tax basis for each Fund were as follows:
| Undistributed
Ordinary
Income | Accumulated
Capital and
Other
Gain (Loss) | Net
Unrealized
Appreciation
(Depreciation) |
First Trust STOXX® European Select Dividend Index Fund | | | |
First Trust Alerian Disruptive Technology Real Estate ETF | | | |
First Trust Dow Jones Global Select Dividend Index Fund | | | |
First Trust Global Wind Energy ETF | | | |
First Trust Alerian U.S. NextGen Infrastructure ETF | | | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | | | |
First Trust Indxx Global Natural Resources Income ETF | | | |
First Trust Indxx Global Agriculture ETF | | | |
First Trust Indxx NextG ETF | | | |
First Trust S-Network Future Vehicles & Technology ETF | | | |
First Trust Cloud Computing ETF | | | |
First Trust International Equity Opportunities ETF | | | |
First Trust Nasdaq Cybersecurity ETF | | | |
First Trust IPOX® Europe Equity Opportunities ETF | | | |
First Trust Dow Jones International Internet ETF | | | |
First Trust Bloomberg Emerging Market Democracies ETF | | | |
H. Income and Other Taxes
Each Fund intends to continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) timing and amount of distributions, each Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of each Fund’s taxable income exceeds the distributions from such taxable income for the calendar year.
Certain countries assess a capital gains tax on securities sold in their local markets. This tax is accrued as the securities in these foreign markets appreciate in value and is paid at the time of sale to the extent a capital gain is realized. Taxes accrued on securities in an unrealized appreciation position are included in “Net change in unrealized appreciation (depreciation) on deferred foreign capital gains tax” on the Statements of Operations. The capital gains tax paid on securities sold, if any, is included in “Net realized gain (loss) on foreign capital gains tax” on the Statements of Operations.
India’s Finance Bill, 2018 (“Finance Bill, 2018”) was enacted into law on March 29, 2018 and amongst other provisions, it introduced a long-term capital gains tax beginning April 1, 2018. Long-term capital gains on the sale of listed shares in excess of INR 0.1 million are taxed at the rate of 10% (plus applicable surcharge and cess (which is a type of tax)) subject to satisfaction of certain conditions. Long-term capital gains accruing as of January 31, 2018 are considered exempt due to a grandfather clause in the provision. The aforesaid exemption from long-term capital gains tax is available with respect to shares acquired between October 1, 2004 and March 31, 2018 only if on such acquisitions Securities Transaction Tax (“STT”) was chargeable. Certain exceptions in this regard, such as acquisition of shares in a public offer, bonus, rights issued, etc. for which the condition of chargeability of STT on acquisition is not applicable, have been notified.
In the case of the sale of listed shares held by a Fund for one year or less, the income is classified as short-term capital gains and is taxable at 15% (plus applicable surcharge and cess) provided the shares are sold on the stock exchange and subjected to STT. For above purposes, the applicable rate of surcharge is 2% or 5% (depending on the level of income of the Fund). The Finance Bill, 2018 increases the cess imposed on the sum of tax and surcharge from 3% to 4%. The cess 4% rate is applied to the capital gains tax, resulting in a higher effective rate of capital gains tax.
Where the sale of shares is outside the stock exchange and not subject to STT, the long-term capital gains are taxed at 10% (plus applicable surcharge and cess) and short-term capital gains are taxed at 30% (plus applicable surcharge and cess). The Finance Bill, 2018, approves the carry forward of long-term capital losses to be offset against long-term capital gains. Short-term losses can be netted against both short-term gains and long-term gains.
Until March 31, 2020, dividends received by a Fund from Indian companies were exempt from tax in India because Indian companies were required to pay dividend distribution tax. The Indian Finance Act, 2020 has amended the dividend taxation framework effective April 1, 2020 and accordingly dividends would now be taxable in the hands of the shareholders at 20%, plus applicable surcharge and cess. Subsequent to the Indian Finance Act, 2020, “The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020” (the “Bill”) was enacted into law and is effective retroactively to April 1, 2020. The Bill caps the maximum surcharge at 15% of the tax on dividend income earned by the Fund. The highest effective tax rate proposed for non-corporate entities on dividends will be 23.92%. Note the Fund will not obtain relief under the US-India tax treaty as the treaty rate of 25% is higher than the domestic rate. Any excess taxes withheld can be offset against capital gains tax liability during the year or claimed as a refund in the annual tax return.
Please note that the above description is based on current provisions of Indian law, and any change or modification made by subsequent legislation, regulation, or administrative or judicial decision could increase the Indian tax liability of a Fund and thus reduce the return to a Fund’s shareholders. There can be no assurance that the Indian tax authorities and/or regulators will not take a position contrary to the views expressed herein. If the Indian tax authorities and/or regulators take a position contrary to the views expressed herein, adverse unpredictable consequences may follow.
The Funds are subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. For all the Funds except EMDM, the taxable years ended 2020, 2021, 2022, and 2023 remain open to federal and state audit. For EMDM, the taxable period ended 2023 remains open to federal and state audit. As of March 31, 2024, management has evaluated the application of these standards to the Funds and has determined that no provision for income tax is required in the Funds’ financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. Each Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At September 30, 2023, for federal income tax purposes, each applicable Fund had a capital loss carryforward available that is shown in the following table, to the extent provided by regulations, to offset future capital
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) gains. To the extent that these loss carryforwards are used to offset future capital gains, it is probable that the capital gains so offset will not be distributed to each applicable Fund’s shareholders.
| Non-Expiring
Capital Loss
Carryforwards |
First Trust STOXX® European Select Dividend Index Fund | |
First Trust Alerian Disruptive Technology Real Estate ETF* | |
First Trust Dow Jones Global Select Dividend Index Fund | |
First Trust Global Wind Energy ETF | |
First Trust Alerian U.S. NextGen Infrastructure ETF | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | |
First Trust Indxx Global Natural Resources Income ETF | |
First Trust Indxx Global Agriculture ETF | |
First Trust Indxx NextG ETF | |
First Trust S-Network Future Vehicles & Technology ETF | |
First Trust Cloud Computing ETF | |
First Trust International Equity Opportunities ETF | |
First Trust Nasdaq Cybersecurity ETF | |
First Trust IPOX® Europe Equity Opportunities ETF | |
First Trust Dow Jones International Internet ETF | |
First Trust Bloomberg Emerging Market Democracies ETF | |
| $75,097 of First Trust Alerian Disruptive Technology Real Estate ETF’s non-expiring net capital losses is subject to loss limitation resulting from reorganization activity. This limitation generally reduces the utilization of these losses to a maximum of $38,346 per year. |
During the taxable year ended September 30, 2023, the following Fund utilized capital loss carryforwards in the following amounts:
| Capital Loss
Carryforward
Utilized |
First Trust Alerian U.S. NextGen Infrastructure ETF | |
Certain losses realized during the current fiscal year may be deferred and treated as occurring on the first day of the following fiscal year for federal income tax purposes. For the fiscal year ended September 30, 2023, the Funds had no net late year ordinary or capital losses.
As of March 31, 2024, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation) on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
| | Gross Unrealized
Appreciation | Gross Unrealized
(Depreciation) | Net Unrealized
Appreciation
(Depreciation) |
First Trust STOXX® European Select Dividend Index Fund | | | | |
First Trust Alerian Disruptive Technology Real Estate ETF | | | | |
First Trust Dow Jones Global Select Dividend Index Fund | | | | |
First Trust Global Wind Energy ETF | | | | |
First Trust Alerian U.S. NextGen Infrastructure ETF | | | | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | | | | |
First Trust Indxx Global Natural Resources Income ETF | | | | |
First Trust Indxx Global Agriculture ETF | | | | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) | | Gross Unrealized Appreciation | Gross Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) |
First Trust Indxx NextG ETF | | | | |
First Trust S-Network Future Vehicles & Technology ETF | | | | |
First Trust Cloud Computing ETF | | | | |
First Trust International Equity Opportunities ETF | | | | |
First Trust Nasdaq Cybersecurity ETF | | | | |
First Trust IPOX® Europe Equity Opportunities ETF | | | | |
First Trust Dow Jones International Internet ETF | | | | |
First Trust Bloomberg Emerging Market Democracies ETF | | | | |
Expenses that are directly related to one of the Funds are charged directly to the respective Fund, except for First Trust Alerian Disruptive Technology Real Estate ETF, First Trust Alerian U.S. NextGen Infrastructure ETF, First Trust Indxx Global Natural Resources Income ETF, First Trust Indxx Global Agriculture ETF, First Trust Indxx NextG ETF, First Trust S-Network Future Vehicles & Technology ETF, First Trust Cloud Computing ETF, First Trust International Equity Opportunities ETF, First Trust Nasdaq Cybersecurity ETF, First Trust IPOX® Europe Equity Opportunities ETF, First Trust Dow Jones International Internet ETF, and First Trust Bloomberg Emerging Market Democracies ETF (the “Unitary Fee Funds”), for which expenses other than excluded expenses (discussed in Note 3) are paid by the Advisor. General expenses of the Trust are allocated to all the Funds based upon the net assets of each Fund.
First Trust has entered into licensing agreements with each of the following “Licensors” for the respective Funds:
| |
First Trust STOXX® European Select Dividend Index Fund | |
First Trust Alerian Disruptive Technology Real Estate ETF | |
First Trust Dow Jones Global Select Dividend Index Fund | S&P Dow Jones Indices LLC |
First Trust Global Wind Energy ETF | |
First Trust Alerian U.S. NextGen Infrastructure ETF | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | |
First Trust Indxx Global Natural Resources Income ETF | |
First Trust Indxx Global Agriculture ETF | |
First Trust Indxx NextG ETF | |
First Trust S-Network Future Vehicles & Technology ETF | |
First Trust Cloud Computing ETF | |
First Trust International Equity Opportunities ETF | |
First Trust Nasdaq Cybersecurity ETF | |
First Trust IPOX® Europe Equity Opportunities ETF | |
First Trust Dow Jones International Internet ETF | S&P Dow Jones Indices LLC |
First Trust Bloomberg Emerging Market Democracies ETF | Bloomberg Index Services Limited |
The respective license agreements allow for the use by First Trust of each Fund’s respective index and of certain trademarks and trade names of the respective Licensors. The Funds are sub-licensees to the applicable license agreements. The Funds, except for the Unitary Fee Funds, are required to pay licensing fees, which are shown on the Statements of Operations. The licensing fees for the Unitary Fee Funds are paid by First Trust from the unitary investment advisory fees it receives from each of these Funds.
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Funds, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen,
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Chief Executive Officer of First Trust. First Trust is responsible for the selection and ongoing monitoring of the securities in each Fund’s portfolio, managing the Funds’ business affairs and providing certain administrative services necessary for the management of the Funds.
For the Unitary Fee Funds, First Trust is paid an annual unitary management fee based on a percentage of each Fund’s average daily net assets and is responsible for the expenses of such Fund including the cost of transfer agency, custody, fund administration, legal, audit, license and other services, and excluding fee payments under the Investment Management Agreement, distribution and service fees pursuant to a Rule 12b-1 plan, if any, brokerage expenses, acquired fund fees and expenses, taxes, interest, and extraordinary expenses. The annual unitary management fee payable by each Fund to First Trust for these services will be reduced at certain levels of each Fund’s net assets (“breakpoints”) and calculated pursuant to the following schedule:
| | | |
Fund net assets up to and including $2.5 billion | | | |
Fund net assets greater than $2.5 billion up to and including $5 billion | | | |
Fund net assets greater than $5 billion up to and including $7.5 billion | | | |
Fund net assets greater than $7.5 billion up to and including $10 billion | | | |
Fund net assets greater than $10 billion up to and including $15 billion | | | |
Fund net assets greater than $15 billion | | | |
| | | | |
Fund net assets up to and including $2.5 billion | | | | |
Fund net assets greater than $2.5 billion up to and including $5 billion | | | | |
Fund net assets greater than $5 billion up to and including $7.5 billion | | | | |
Fund net assets greater than $7.5 billion up to and including $10 billion | | | | |
Fund net assets greater than $10 billion | | | | |
| | | | |
Fund net assets up to and including $2.5 billion | | | | |
Fund net assets greater than $2.5 billion up to and including $5 billion | | | | |
Fund net assets greater than $5 billion up to and including $7.5 billion | | | | |
Fund net assets greater than $7.5 billion up to and including $10 billion | | | | |
Fund net assets greater than $10 billion | | | | |
| |
Fund net assets up to and including $2.5 billion | |
Fund net assets greater than $2.5 billion up to and including $5 billion | |
Fund net assets greater than $5 billion up to and including $7.5 billion | |
Fund net assets greater than $7.5 billion up to and including $10 billion | |
Fund net assets greater than $10 billion | |
For the First Trust STOXX® European Select Dividend Index Fund, First Trust Dow Jones Global Select Dividend Index Fund, First Trust Global Wind Energy ETF, and First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (such Funds, the “Expense Cap Funds”), First Trust is paid an annual management fee of each Fund’s average daily net assets and calculated pursuant to the following schedule:
| |
Fund net assets up to and including $2.5 billion | |
Fund net assets greater than $2.5 billion up to and including $5 billion | |
Fund net assets greater than $5 billion up to and including $7.5 billion | |
Fund net assets greater than $7.5 billion up to and including $10 billion | |
Fund net assets greater than $10 billion | |
For the Expense Cap Funds, the Trust and the Advisor have entered into an Expense Reimbursement and Fee Waiver Agreement (“Agreement”) in which First Trust has agreed to waive fees and/or reimburse Fund expenses to the extent that the operating expenses of each Fund (excluding interest expense, brokerage commissions and other trading expenses, acquired fund fees and expenses, taxes
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) and extraordinary expenses) exceed the following amount as a percentage of average daily net assets per year (the “Expense Cap”). The Expense Cap will be in effect until at least January 31, 2025.
| |
First Trust STOXX® European Select Dividend Index Fund | |
First Trust Dow Jones Global Select Dividend Index Fund | |
First Trust Global Wind Energy ETF | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | |
The Trust has multiple service agreements with BNYM. Under the service agreements, BNYM performs custodial, fund accounting, certain administrative services, and transfer agency services for each Fund. As custodian, BNYM is responsible for custody of each Fund’s assets. As fund accountant and administrator, BNYM is responsible for maintaining the books and records of each Fund’s securities and cash. As transfer agent, BNYM is responsible for maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates (“Independent Trustees”) is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome fund or an index fund.
Additionally, the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee, the Vice Chair of the Audit Committee, the Lead Independent Trustee and the Vice Lead Independent Trustee are paid annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Committee Chairs, the Audit Committee Vice Chair, the Lead Independent Trustee and the Vice Lead Independent Trustee rotate periodically in serving in such capacities. The officers and “Interested” Trustee receive no compensation from the Trust for acting in such capacities.
4. Purchases and Sales of Securities
For the six months ended March 31, 2024, the cost of purchases and proceeds from sales of investments for each Fund, excluding short-term investments and in-kind transactions, were as follows:
| | |
First Trust STOXX® European Select Dividend Index Fund | | |
First Trust Alerian Disruptive Technology Real Estate ETF | | |
First Trust Dow Jones Global Select Dividend Index Fund | | |
First Trust Global Wind Energy ETF | | |
First Trust Alerian U.S. NextGen Infrastructure ETF | | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | | |
First Trust Indxx Global Natural Resources Income ETF | | |
First Trust Indxx Global Agriculture ETF | | |
First Trust Indxx NextG ETF | | |
First Trust S-Network Future Vehicles & Technology ETF | | |
First Trust Cloud Computing ETF | | |
First Trust International Equity Opportunities ETF | | |
First Trust Nasdaq Cybersecurity ETF | | |
First Trust IPOX® Europe Equity Opportunities ETF | | |
First Trust Dow Jones International Internet ETF | | |
First Trust Bloomberg Emerging Market Democracies ETF | | |
For the six months ended March 31, 2024, the cost of in-kind purchases and proceeds from in-kind sales for each Fund were as follows:
| | |
First Trust STOXX® European Select Dividend Index Fund | | |
First Trust Alerian Disruptive Technology Real Estate ETF | | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) | | |
First Trust Dow Jones Global Select Dividend Index Fund | | |
First Trust Global Wind Energy ETF | | |
First Trust Alerian U.S. NextGen Infrastructure ETF | | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | | |
First Trust Indxx Global Natural Resources Income ETF | | |
First Trust Indxx Global Agriculture ETF | | |
First Trust Indxx NextG ETF | | |
First Trust S-Network Future Vehicles & Technology ETF | | |
First Trust Cloud Computing ETF | | |
First Trust International Equity Opportunities ETF | | |
First Trust Nasdaq Cybersecurity ETF | | |
First Trust IPOX® Europe Equity Opportunities ETF | | |
First Trust Dow Jones International Internet ETF | | |
First Trust Bloomberg Emerging Market Democracies ETF | | |
5. Creations, Redemptions and Transaction Fees
Each Fund generally issues and redeems its shares in primary market transactions through a creation and redemption mechanism and does not sell or redeem individual shares. Instead, financial entities known as “Authorized Participants” have contractual arrangements with a Fund or one of the Fund’s service providers to purchase and redeem Fund shares directly with the Fund in Creation Units. Prior to the start of trading on every business day, a Fund publishes through the National Securities Clearing Corporation the “basket” of securities, cash or other assets that it will accept in exchange for a Creation Unit of the Fund’s shares. An Authorized Participant that wishes to effectuate a creation of a Fund’s shares deposits with the Fund the “basket” of securities, cash or other assets identified by the Fund that day, and then receives the Creation Unit of the Fund’s shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the Fund’s shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the Authorized Participant redeems a Creation Unit of a Fund’s shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in a Fund’s shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of a Fund’s shares at or close to the NAV per share of the Fund.
Each Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of a Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of a Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by a Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.
The Board of Trustees adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Rule 12b-1 plan, the Funds are authorized to pay an amount up to 0.25% of their average daily net assets each year to reimburse First Trust Portfolios L.P. (“FTP”), the distributor of the Funds, for amounts expended to finance activities primarily intended to result in the sale of Creation Units or the provision of investor services. FTP may also use this amount to compensate securities dealers or other persons that are Authorized Participants for providing distribution assistance, including broker-dealer and shareholder support and educational and promotional services.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) No 12b-1 fees are currently paid by the Funds, and pursuant to a contractual arrangement, no 12b-1 fees will be paid any time before January 31, 2025 for all the Funds except EMDM, and February 28, 2025 for EMDM.
The Trust, on behalf of the Funds, has a variety of indemnification obligations under contracts with its service providers. The Trust’s maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements that have not already been disclosed.
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Proxy Voting Policies and Procedures
A description of the policies and procedures that the Trust uses to determine how to vote proxies and information on how each Fund voted proxies relating to its portfolio securities during the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 988-5891; (2) on each Fund’s website at www.ftportfolios.com; and (3) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
Each Fund files portfolio holdings information for each month in a fiscal quarter within 60 days after the end of the relevant fiscal quarter on Form N-PORT. Portfolio holdings information for the third month of each fiscal quarter will be publicly available on the SEC’s website at www.sec.gov. Each Fund’s complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year is included in the semi-annual and annual reports to shareholders, respectively, and is filed with the SEC on Form N-CSR. The semi-annual and annual report for each Fund is available to investors within 60 days after the period to which it relates. Each Fund’s Forms N-PORT and Forms N-CSR are available on the SEC’s website listed above.
Risks are inherent in all investing. Certain general risks that may be applicable to a Fund are identified below, but not all of the material risks relevant to each Fund are included in this report and not all of the risks below apply to each Fund. The material risks of investing in each Fund are spelled out in its prospectus, statement of additional information and other regulatory filings. Before investing, you should consider each Fund’s investment objective, risks, charges and expenses, and read each Fund’s prospectus and statement of additional information carefully. You can download each Fund’s prospectus at www.ftportfolios.com or contact First Trust Portfolios L.P. at (800) 621-1675 to request a prospectus, which contains this and other information about each Fund.
Concentration Risk. To the extent that a fund is able to invest a significant percentage of its assets in a single asset class or the securities of issuers within the same country, state, region, industry or sector, an adverse economic, business or political development may affect the value of the fund’s investments more than if the fund were more broadly diversified. A fund that tracks an index will be concentrated to the extent the fund’s corresponding index is concentrated. A concentration makes a fund more susceptible to any single occurrence and may subject the fund to greater market risk than a fund that is more broadly diversified.
Credit Risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer’s ability to make such payments.
Cyber Security Risk. The funds are susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. In addition, cyber security breaches of a fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in which the fund invests, can also subject a fund to many of the same risks associated with direct cyber security breaches.
Defined Outcome Funds Risk. To the extent a fund’s investment strategy is designed to deliver returns tied to the price performance of an underlying ETF, an investor may not realize the returns the fund seeks to achieve if that investor does not hold shares for the entire target outcome period. In the event an investor purchases shares after the first day of the target outcome period or sells shares prior to the end of the target outcome period, the buffer that the fund seeks to provide against a decline in the value of the underlying ETF may not be available, the enhanced returns that the fund seeks to provide (if any) may not be available and the investor may not participate in a gain in the value of the underlying ETF up to the cap for the investor’s investment period. Additionally, the fund will not participate in gains of the underlying ETF above the cap and a shareholder may lose their entire investment. If the fund seeks enhanced returns, there are certain time periods when the value of the fund may fall faster than the value of the underlying ETF, and it is very unlikely that, on any given day during which the underlying ETF share price increases in value, the fund’s share price will increase at the same rate as the enhanced returns sought by the fund, which is designed for an entire target outcome period. Trading flexible exchange options involves risks different from, or possibly greater than, the risks associated with investing directly in securities, such as less liquidity and correlation and valuation risks. A fund may experience substantial downside from specific flexible exchange option positions and certain positions may expire worthless.
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Derivatives Risk. To the extent a fund uses derivative instruments such as futures contracts, options contracts and swaps, the fund may experience losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivative. These risks are heightened when a fund’s portfolio managers use derivatives to enhance the fund’s return or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the fund.
Equity Securities Risk. To the extent a fund invests in equity securities, the value of the fund’s shares will fluctuate with changes in the value of the equity securities. Equity securities prices fluctuate for several reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as market volatility, or when political or economic events affecting the issuers occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company, industry or sector of the market.
ETF Risk. The shares of an ETF trade like common stock and represent an interest in a portfolio of securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs. Shares of an ETF trade on an exchange at market prices rather than net asset value, which may cause the shares to trade at a price greater than net asset value (premium) or less than net asset value (discount). In times of market stress, decisions by market makers to reduce or step away from their role of providing a market for an ETF’s shares, or decisions by an ETF’s authorized participants that they are unable or unwilling to proceed with creation and/or redemption orders of an ETF’s shares, could result in shares of the ETF trading at a discount to net asset value and in greater than normal intraday bid-ask spreads.
Fixed Income Securities Risk. To the extent a fund invests in fixed income securities, the fund will be subject to credit risk, income risk, interest rate risk, liquidity risk and prepayment risk. Income risk is the risk that income from a fund’s fixed income investments could decline during periods of falling interest rates. Interest rate risk is the risk that the value of a fund’s fixed income securities will decline because of rising interest rates. Liquidity risk is the risk that a security cannot be purchased or sold at the time desired, or cannot be purchased or sold without adversely affecting the price. Prepayment risk is the risk that the securities will be redeemed or prepaid by the issuer, resulting in lower interest payments received by the fund. In addition to these risks, high yield securities, or “junk” bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and the market for high yield securities is generally smaller and less liquid than that for investment grade securities.
Index or Model Constituent Risk. Certain funds may be a constituent of one or more indices or ETF models. As a result, such a fund may be included in one or more index-tracking exchange-traded funds or mutual funds. Being a component security of such a vehicle could greatly affect the trading activity involving a fund, the size of the fund and the market volatility of the fund. Inclusion in an index could increase demand for the fund and removal from an index could result in outsized selling activity in a relatively short period of time. As a result, a fund’s net asset value could be negatively impacted and the fund’s market price may be significantly below its net asset value during certain periods. In addition, index rebalances may potentially result in increased trading activity in a fund’s shares.
Index Provider Risk. To the extent a fund seeks to track an index, it is subject to Index Provider Risk. There is no assurance that the Index Provider will compile the Index accurately, or that the Index will be determined, maintained, constructed, reconstituted, rebalanced, composed, calculated or disseminated accurately. To correct any such error, the Index Provider may carry out an unscheduled rebalance or other modification of the Index constituents or weightings, which may increase the fund’s costs. The Index Provider does not provide any representation or warranty in relation to the quality, accuracy or completeness of data in the Index, and it does not guarantee that the Index will be calculated in accordance with its stated methodology. Losses or costs associated with any Index Provider errors generally will be borne by the fund and its shareholders.
Investment Companies Risk. To the extent a fund invests in the securities of other investment vehicles, the fund will incur additional fees and expenses that would not be present in a direct investment in those investment vehicles. Furthermore, the fund’s investment performance and risks are directly related to the investment performance and risks of the investment vehicles in which the fund invests.
LIBOR Risk. To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate (“LIBOR”) as a reference interest rate, it is subject to LIBOR Risk. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31, 2021.
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate (“SOFR”) will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on the fund or on certain instruments in which the fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to the fund.
Management Risk. To the extent that a fund is actively managed, it is subject to management risk. In managing an actively-managed fund’s investment portfolio, the fund’s portfolio managers will apply investment techniques and risk analyses that may not have the desired result. There can be no guarantee that a fund will meet its investment objective.
Market Risk. Market risk is the risk that a particular security, or shares of a fund in general, may fall in value. Securities held by a fund, as well as shares of a fund itself, are subject to market fluctuations caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on a fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain fund investments as well as fund performance. The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets. While the U.S. has resumed “reasonably” normal business activity, many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease. These events also adversely affect the prices and liquidity of a fund’s portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of a fund’s shares and result in increased market volatility. During any such events, a fund’s shares may trade at increased premiums or discounts to their net asset value and the bid/ask spread on a fund’s shares may widen.
Non-U.S. Securities Risk. To the extent a fund invests in non-U.S. securities, it is subject to additional risks not associated with securities of domestic issuers. Non-U.S. securities are subject to higher volatility than securities of domestic issuers due to: possible adverse political, social or economic developments; restrictions on foreign investment or exchange of securities; capital controls; lack of liquidity; currency exchange rates; excessive taxation; government seizure of assets; the imposition of sanctions by foreign governments; different legal or accounting standards; and less government supervision and regulation of exchanges in foreign countries. Investments in non-U.S. securities may involve higher costs than investments in U.S. securities, including higher transaction and custody costs, as well as additional taxes imposed by non-U.S. governments. These risks may be heightened for securities of companies located, or with significant operations, in emerging market countries.
Operational Risk. Each fund is subject to risks arising from various operational factors, including, but not limited to, human error, processing and communication errors, errors of a fund’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. Each fund relies on third-parties for a range of services, including custody. Any delay or failure relating to engaging or maintaining such service providers may affect a fund’s ability to meet its investment objective. Although the funds and the funds’ investment advisor seek to reduce these operational risks through controls and procedures, there is no way to completely protect against such risks.
Passive Investment Risk. To the extent a fund seeks to track an index, the fund will invest in the securities included in, or representative of, the index regardless of their investment merit. A fund generally will not attempt to take defensive positions in declining markets.
Preferred Securities Risk. Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt securities in a company’s capital structure in terms of priority to corporate income, subjecting them to greater credit risk than those debt securities. Generally, holders of preferred securities have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may obtain limited rights. In certain circumstances, an issuer of preferred securities may defer
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) payment on the securities and, in some cases, redeem the securities prior to a specified date. Preferred securities may also be substantially less liquid than other securities, including common stock.
Valuation Risk. The valuation of certain securities may carry more risk than that of common stock. Uncertainties in the conditions of the financial markets, unreliable reference data, lack of transparency and inconsistency of valuation models and processes may lead to inaccurate asset pricing. A fund may hold investments in sizes smaller than institutionally sized round lot positions (sometimes referred to as odd lots). However, third-party pricing services generally provide evaluations on the basis of institutionally-sized round lots. If a fund sells certain of its investments in an odd lot transaction, the sale price may be less than the value at which such securities have been held by the fund. Odd lots often trade at lower prices than institutional round lots. There is no assurance that the fund will be able to sell a portfolio security at the price established by the pricing service, which could result in a loss to the fund.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
First Trust Exchange-Traded Fund II
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, IL 60606
Chapman and Cutler LLP
320 South Canal Street
Chicago, IL 60606
|
For the Period Ended
March 31, 2024 |
First Trust Exchange-Traded Fund II
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) |
First Trust Indxx Metaverse ETF (ARVR) |
First Trust Emerging Markets Human Flourishing ETF (FTHF) |
First Trust Exchange-Traded Fund II
Semi-Annual Report
March 31, 2024
Caution Regarding Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding the goals, beliefs, plans or current expectations of First Trust Advisors L.P. (“First Trust” or the “Advisor”) and its representatives, taking into account the information currently available to them. Forward-looking statements include all statements that do not relate solely to current or historical fact. For example, forward-looking statements include the use of words such as “anticipate,” “estimate,” “intend,” “expect,” “believe,” “plan,” “may,” “should,” “would” or other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of any series of First Trust Exchange-Traded Fund II (the “Trust”) described in this report (each such series is referred to as a “Fund” and collectively, as the “Funds”) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. When evaluating the information included in this report, you are cautioned not to place undue reliance on these forward-looking statements, which reflect the judgment of the Advisor and its representatives only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events and circumstances that arise after the date hereof.
Performance and Risk Disclosure
There is no assurance that any Fund described in this report will achieve its investment objective. Each Fund is subject to market risk, which is the possibility that the market values of securities owned by the Fund will decline and that the value of the Fund’s shares may therefore be less than what you paid for them. Accordingly, you can lose money by investing in a Fund. See “Risk Considerations” in the Additional Information section of this report for a discussion of certain other risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit www.ftportfolios.com or speak with your financial advisor. Investment returns, net asset value and share price will fluctuate and Fund shares, when sold, may be worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund performance on each Fund’s webpage at www.ftportfolios.com.
This report contains information that may help you evaluate your investment. It includes details about each Fund and presents data and analysis that provide insight into each Fund’s performance and investment approach.
By reading the market overview by Robert F. Carey, Chief Market Strategist of the Advisor, you may obtain an understanding of how the market environment affected the performance of each Fund. The statistical information that follows may help you understand each Fund’s performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the Advisor are just that: informed opinions. They should not be considered to be promises or advice. The opinions, like the statistics, cover the period through the date on the cover of this report. The material risks of investing in each Fund are spelled out in its prospectus, statement of additional information, and other Fund regulatory filings.
First Trust Exchange-Traded Fund II
Semi-Annual Letter from the Chairman and CEO
March 31, 2024
First Trust is pleased to provide you with the semi-annual report for certain series of the First Trust Exchange-Traded Fund II (the “Funds”), which contains detailed information about the Funds for the six-month period ended March 31, 2024. Please note that the First Trust Emerging Markets Human Flourishing ETF (FTHF) was incepted on October 30, 2023, so information in this letter and the report prior to that date will not apply to that Fund.
On March 21, 2024, the Swiss National Bank (“SNB”) unexpectedly announced a reduction of 25 basis points (“bps”) to its policy interest rate, lowering the metric from 1.75% to 1.50%. The move marked the SNB’s first interest rate cut in nine years and made Switzerland the first member of the so-called “Group of 10” (“G10”) to announce a policy rate reduction since the global battle with inflation began post COVID-19. Notably, the SNB’s announcement stood in stark contrast to the Bank of Japan’s revelation earlier in the same week that it would be raising interest rates for the first time in 17 years. Investors may be wondering why these two nations are undertaking divergent interest rate policies. From our perspective, the answer lies in the data. Despite recent disinflation, just two of the 11 countries that comprise the G10 boast headline inflation that lies below their target rate. Those countries are Denmark and Switzerland, with headline inflation of 0.8% and 1.0%, respectively. By contrast, headline inflation stood at 2.8% in Japan, above the Bank of Japan’s stated policy rate of 2.0%.
In the U.S., the trailing 12-month rate of the Consumer Price Index stood at 3.5% at the end of March 2024, down from its most-recent high of 9.1% at the end of June 2022, but up from its most recent low of 3.0% in June 2023. Continued inflationary pressures, along with better-than-expected economic data, continue to fuel the debate regarding the timing of interest rate cuts in the U.S. In December 2023, the Federal Reserve (the “Fed”) announced that they expected to implement three interest rate cuts for a total of 75 bps in 2024. The announcement was met with exuberance, sending the S&P 500® Index surging by 12.10% on a total return basis between December 13, 2023, the date of the Fed’s announcement, and the end of March 2024. That said, investors may have overestimated the timing of these cuts. On December 29, 2023, the Federal Funds rate futures market projected that the Fed would implement six rate cuts totaling 158 bps in 2024. As of the end of March 2024, that same futures market estimated that just two cuts, totaling 67 bps, were likely to occur by the end of the year.
Attention remains focused on the U.S. consumer, with reports that the current pace of spending may be unsustainable over the long-term. One justification for this view is recent analysis by the Federal Reserve Bank of San Francisco, which revealed that the excess savings consumers built up during the pandemic are likely to be completely drawn down in the first half of 2024. That said, the Fed also reported that U.S. household net worth surged by 3.2% on a quarter-over-quarter basis to a record $156.2 trillion in the fourth quarter of 2023. While it is true that many households are feeling the sting of persistent inflation, the increase in wealth brought on by surging equity valuations and home prices mitigated some of that pain, in our opinion.
Thank you for giving First Trust the opportunity to play a role in your financial future. We value our relationship with you and will report on the Funds again in six months.
Sincerely,
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
First Trust Exchange-Traded Fund II
Semi-Annual Report
March 31, 2024
Robert F. Carey, CFA
Senior Vice President and Chief Market Strategist
First Trust Advisors L.P.
Mr. Carey is responsible for the overall management of research and analysis of the First Trust product line. Mr. Carey has more than 30 years of experience as an Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial Analyst (“CFA”) designation. He is a graduate of the University of Illinois at Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a guest on such programs as Bloomberg TV, CNBC, and WBBM Radio, and has been quoted by several publications, including The Wall Street Journal, The Wall Street Reporter, Bloomberg News Service and Registered Rep.
State of the Global Economy/Investing
The latest global growth forecast from the International Monetary Fund (“IMF”) released in April 2024 sees real gross domestic product (“GDP”) rising by 3.2% worldwide in 2024, up from their forecast of 3.1% in January 2024. The IMF is forecasting a 2.7% increase in the U.S. GDP, up from its January 2024 estimate of 2.1%. The GDP in Emerging Market and Developing Economies is expected to grow by 4.2% this year, up from the IMF’s 4.1% estimate in January 2024. The IMF notes that its current global growth forecast remains below the historical average (2000-2019) of 3.8%, reflecting restrictive monetary policies and low productivity growth.
In the U.S., inflation, as measured by the Consumer Price Index (“CPI”), stood at 3.5% on a trailing 12-month basis at the end of March 2024, according to the U.S. Bureau of Labor Statistics. While it is true that the CPI decreased from its most recent high of 9.1% set in June 2022, the rate has increased from its most recent low of 3.0% set in June 2023.
Performance of Global Stocks and Bonds
The major U.S. stock indices were markedly higher over the past six months. The S&P 500® (the “Index”), S&P MidCap 400® and S&P SmallCap 600® Indices posted total returns of 23.48%, 22.78%, and 17.95%, respectively, for the six-month period ended March 31, 2024. Each of the 11 major sectors that comprise the Index were positive on a total return basis. The top performer was the Information Technology sector, up 32.03%, while the worst showing came from the Energy sector, which was up 5.80%.
A Bloomberg survey of twenty-one equity strategists found that their average 2024 year-end price target for the Index was 4,962 as of March 19, 2024. The highest and lowest estimates were 5,400 and 4,200, respectively. Brian Wesbury, Chief Economist at First Trust, announced in December 2023 that he is looking for a year-end price target of 4,500. The Index closed trading on March 28, 2024, at an all-time high of 5,254.35. The outlook for U.S. corporate earnings in 2024 is very strong. Bloomberg’s consensus year-over-year earnings growth rate estimates for the Index for the 2024 and 2025 calendar years stood at 8.99% and 13.34%, respectively, as of March 31, 2024.
The broader foreign stock indices experienced positive total returns over the past six months. For the six-month period ended March 31, 2024, the MSCI World ex USA and MSCI Emerging Markets equity indices posted total returns of 16.57% (USD) and 10.12% (USD), respectively, according to Bloomberg. The major foreign bond indices were also positive over the period. The Bloomberg Global Aggregate Bond Index of higher quality debt posted a total return of 6.17% (USD), while the Bloomberg EM Hard Currency Aggregate Index of emerging markets debt increased by 10.07% (USD), according to Bloomberg. The U.S. Dollar fell 1.59% over the past six months against a basket of major currencies, as measured by the U.S. Dollar Index (DXY).
The U.S. bond market also saw positive total returns. The top performing major debt group we track was long duration municipal bonds. The Bloomberg Municipal Long Bond Index (22+ Years) posted a total return of 10.78% for the six-month period ended March 31, 2024. The worst-performing U.S. debt group that we track was U.S. Treasuries. The Bloomberg U.S. Treasury Intermediate Index posted a total return of 3.69% over the period. The yield on the benchmark 10-Year Treasury Note (“T-Note”) fell by 37 basis points in the period to close at 4.20% on March 28, 2024, according to Bloomberg. For comparative purposes, the average yield on the 10-Year T-Note was 2.35% for the 10-year period ended March 31, 2024.
Fund Performance Overview (Unaudited)
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG)
The First Trust Nasdaq Lux Digital Health Solutions ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Nasdaq Lux Health TechTM Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “EKG.” The Fund will normally invest at least 80% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index. The Index is developed, maintained and sponsored by Nasdaq, Inc. (the “Index Provider”). According to the Index Provider, the Index is designed to measure the performance of a selection of companies that are primarily engaged in and involved at the intersection of healthcare and technology, as classified by Lux Capital based on analysis of the products and services offered by those companies.
|
| | | Average Annual Total Returns | |
| | | Inception
(3/22/22)
to 3/31/24 | Inception
(3/22/22)
to 3/31/24 |
| | | | |
| | | | |
| | | | |
| | | | |
Nasdaq Lux Health TechTM Index | | | | |
S&P Composite 1500® Health Care Index | | | | |
(See Notes to Fund Performance Overview on page 10.)
Nasdaq® and Nasdaq Lux Health TechTM Index are registered trademarks and service marks of Nasdaq, Inc. (together with its affiliates hereinafter referred to as the “Corporations”) and are licensed for use by First Trust. The Fund has not been passed on by the Corporations as to its legality or suitability. The Fund is not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
Fund Performance Overview (Unaudited) (Continued)
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
| |
Veeva Systems, Inc., Class A | |
| |
| |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Metaverse ETF (ARVR)
The First Trust Indxx Metaverse ETF (the “Fund”) seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Indxx Metaverse Index (the “Index”). The shares of the Fund are listed and trade on Nasdaq, Inc. under the ticker symbol “ARVR.” Under normal market conditions, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index. The Index is developed, maintained and sponsored by Indxx, Inc. (the “Index Provider”). The Index Provider is not affiliated with the Fund, the Fund’s investment advisor or the Fund’s distributor. According to the Index Provider, the Index is a rules-based index, however, the Index Provider reserves the right to use qualitative judgment to include, exclude, adjust, or postpone the inclusion of a stock in the Index. “Metaverse” is a term used to describe the next generation of the Internet, which has the potential to allow creators to build the next chapter of human interaction through immersive experiences in three-dimensional virtual spaces. The Index is comprised of companies that provide services and products that support the infrastructure and applications of the Metaverse.
|
| | | Average Annual Total Returns | |
| | | Inception
(4/19/22)
to 3/31/24 | Inception
(4/19/22)
to 3/31/24 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
(See Notes to Fund Performance Overview on page 10.)
Indxx and Indxx Metaverse Index (“Index”) are trademarks of Indxx, Inc. (“Indxx”) and have been licensed for use for certain purposes by First Trust. The Fund is not sponsored, endorsed, sold or promoted by Indxx and Indxx makes no representation regarding the advisability of trading in such product. The Index is determined, composed and calculated by Indxx without regard to First Trust or the Fund.
Fund Performance Overview (Unaudited) (Continued)
First Trust Indxx Metaverse ETF (ARVR) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
| |
| |
Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
Meta Platforms, Inc., Class A | |
| |
Advanced Micro Devices, Inc. | |
| |
| |
| |
| |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Fund Performance Overview (Unaudited) (Continued)
First Trust Emerging Markets Human Flourishing ETF (FTHF)
The First Trust Emerging Markets Human Flourishing ETF (the “Fund”) seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the Emerging Markets Human Flourishing Index (the “Index”). The shares of the Fund are listed and trade on NYSE Arca, Inc. under the ticker symbol “FTHF.” The Fund will normally invest at least 80% of its net assets (plus any borrowings for investment purposes) in the securities that comprise the Index. The Fund, using an indexing investment approach, attempts to replicate, before fees and expenses, the performance of the Index. The Index is owned and was developed and sponsored by Oak City Consulting, LLC (the “Index Provider”). The Index Provider has retained Bloomberg Index Services Limited to calculate and maintain the Index. First Trust Advisors L.P., the Fund’s investment advisor, maintains no discretion with regard to the compilation and composition of the Index or any changes thereto. According to the Index Provider, the Index is constructed to track the performance of companies within emerging market countries that sufficiently promote human flourishing. According to the Index Provider, the essence of human flourishing is that all humans are worthy of being treated with dignity and respect. To be eligible for inclusion in the Index, a security must be a constituent of the Bloomberg Emerging Markets Large & Mid Cap universe and be issued by a company domiciled in a country that has a sufficient “Human Dignity Score.”
|
| |
| Inception
(10/30/23)
to 3/31/24 |
| |
| |
| |
| |
Emerging Markets Human Flourishing Index | |
MSCI Emerging Markets Index | |
(See Notes to Fund Performance Overview on page 10.)
“Bloomberg®” and Emerging Markets Human Flourishing Index licensed herein (the “Indices”) are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by First Trust Advisors L.P. (the “Licensee”). Bloomberg is not affiliated with the Licensee, and Bloomberg does not approve, endorse, review, or recommend the financial products referenced herein (the “Financial Products”). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Indices or the Financial Products.
Fund Performance Overview (Unaudited) (Continued)
First Trust Emerging Markets Human Flourishing ETF (FTHF) (Continued)
| % of Total
Long-Term
Investments |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| % of Total
Long-Term
Investments |
Taiwan Semiconductor Manufacturing Co., Ltd. | |
Samsung Electronics Co., Ltd. | |
Itau Unibanco Holding S.A. | |
Grupo Financiero Banorte S.A.B. de C.V., Class O | |
Wal-Mart de Mexico S.A.B. de C.V. | |
| |
| |
| |
B3 S.A. - Brasil Bolsa Balcao | |
Powszechna Kasa Oszczednosci Bank Polski S.A. | |
| |
| Performance figures assume reinvestment of all distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. An index is a statistical composite that tracks a specified financial market or sector. Unlike the Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by the Fund. These expenses negatively impact the performance of the Fund. The Fund’s past performance does not predict future performance. |
Frequency Distribution of Discounts and Premiums
Information showing the number of days the market price of the Fund’s shares was greater (at a premium) and less (at a discount) than the Fund’s net asset value for the most recently completed year, and the most recently completed calendar quarters since that year (or life of the Fund, if shorter) is available at https://www.ftportfolios.com/Retail/etf/home.aspx.
Notes to Fund Performance Overview (Unaudited)
Total returns for the periods since inception are calculated from the inception date of each Fund. “Average Annual Total Returns” represent the average annual change in value of an investment over the periods indicated. “Cumulative Total Returns” represent the total change in value of an investment over the periods indicated.
Each Fund’s per share net asset value (“NAV”) is the value of one share of the Fund and is computed by dividing the value of all assets of the Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of outstanding shares. The price used to calculate market return (“Market Price”) is determined by using the midpoint of the national best bid and offer price (“NBBO”) as of the time that the Fund’s NAV is calculated. Under Securities and Exchange Commission rules, the NBBO consists of the highest displayed buy and lowest sell prices among the various exchanges trading the Fund at the time the Fund’s NAV is calculated. Since shares of each Fund did not trade in the secondary market until after its inception, for the period from inception to the first day of secondary market trading in shares of the Fund, the NAV of each Fund is used as a proxy for the secondary market trading price to calculate market returns. NAV and market returns assume that all distributions have been reinvested in each Fund at NAV and Market Price, respectively.
An index is a statistical composite that tracks a specified financial market or sector. Unlike each Fund, the indices do not actually hold a portfolio of securities and therefore do not incur the expenses incurred by each Fund. These expenses negatively impact the performance of each Fund. Also, market returns do not include brokerage commissions that may be payable on secondary market transactions. If brokerage commissions were included, market returns would be lower. The total returns presented reflect the reinvestment of dividends on securities in the indices. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. The investment return and principal value of shares of each Fund will vary with changes in market conditions. Shares of each Fund may be worth more or less than their original cost when they are redeemed or sold in the market. Each Fund’s past performance is no guarantee of future performance.
First Trust Exchange-Traded Fund IIUnderstanding Your Fund ExpensesMarch 31, 2024 (Unaudited) As a shareholder of First Trust Nasdaq Lux Digital Health Solutions ETF, First Trust Indxx Metaverse ETF, or First Trust Emerging Markets Human Flourishing ETF (each a “Fund” and collectively, the “Funds”), you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, if any, and other Fund expenses. This Example is intended to help you understand your ongoing costs (in U.S. dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period (or since inception) and held through the six-month (or shorter) period ended March 31, 2024.
The first line in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this six-month (or shorter) period.
Hypothetical Example for Comparison Purposes
The second line in the following table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as brokerage commissions. Therefore, the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
October 1, 2023 | Ending
Account Value
March 31, 2024 | Annualized
Expense Ratio
Based on the
Six-Month
Period | Expenses Paid
During the
Six-Month
Period (a) |
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
First Trust Indxx Metaverse ETF (ARVR) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
| Beginning
Account Value
October 30, 2023 (b) | Ending
Account Value
March 31, 2024 | Annualized
Expense Ratio
Based on the
Number of Days
in the Period | Expenses Paid
During the Period
October 30, 2023 (b)
to
March 31, 2024 (c) |
First Trust Emerging Markets Human Flourishing ETF (FTHF) |
| | | | |
Hypothetical (5% return before expenses) | | | | |
| Expenses are equal to the annualized expense ratio as indicated in the table multiplied by the average account value over the period (October 1, 2023 through March 31, 2024), multiplied by 183/366 (to reflect the six-month period). |
| |
| Actual expenses are equal to the annualized expense ratio as indicated in the table multiplied by the average account value over the period (October 30, 2023 through March 31, 2024), multiplied by 153/366. Hypothetical expenses are assumed for the most recent six-month period. |
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
|
| | |
| | |
| Myriad Genetics, Inc. (a) | |
| | |
| Twist Bioscience Corp. (a) | |
| | |
| | |
| | |
| Align Technology, Inc. (a) | |
| Alphatec Holdings, Inc. (a) | |
| | |
| Establishment Labs Holdings, Inc. (a) | |
| Globus Medical, Inc., Class A (a) | |
| | |
| Inspire Medical Systems, Inc. (a) | |
| | |
| Intuitive Surgical, Inc. (a) | |
| iRhythm Technologies, Inc. (a) | |
| | |
| PROCEPT BioRobotics Corp. (a) | |
| | |
| | |
| Tandem Diabetes Care, Inc. (a) | |
| TransMedics Group, Inc. (a) | |
| | |
| | |
| | |
| Guardant Health, Inc. (a) | |
| Hims & Hers Health, Inc. (a) | |
| LifeStance Health Group, Inc. (a) | |
| | |
| | |
| Privia Health Group, Inc. (a) | |
| | |
| | |
| | |
| Definitive Healthcare Corp. (a) | |
| Doximity, Inc., Class A (a) | |
| GoodRx Holdings, Inc., Class A (a) | |
| | |
| | |
| Veeva Systems, Inc., Class A (a) | |
| | |
| | |
|
| | |
| Oscar Health, Inc., Class A (a) | |
| Life Sciences Tools & Services | |
| 10X Genomics, Inc., Class A (a) | |
| Adaptive Biotechnologies Corp. (a) | |
| Cytek Biosciences, Inc. (a) | |
| | |
| | |
| Pacific Biosciences of California, Inc. (a) | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.0% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 5.16% (b) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — (0.0)% | |
| | |
| Non-income producing security. |
| Rate shown reflects yield as of March 31, 2024. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for industry breakout. |
See Notes to Financial Statements
First Trust Indxx Metaverse ETF (ARVR)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) — 99.7% |
| | |
| | |
| Electronic Equipment, Instruments & Components | |
| | |
| | |
| Sunny Optical Technology Group Co., Ltd. (HKD) | |
| | |
| | |
| | |
| | |
| | |
| GungHo Online Entertainment, Inc. (JPY) | |
| Koei Tecmo Holdings Co., Ltd. (JPY) | |
| | |
| | |
| | |
| Netmarble Corp. (KRW) (b) (c) (d) | |
| | |
| | |
| ROBLOX Corp., Class A (b) | |
| Square Enix Holdings Co., Ltd. (JPY) | |
| Take-Two Interactive Software, Inc. (b) | |
| Ubisoft Entertainment S.A. (EUR) (b) | |
| | |
| | |
| | |
| Household Durables — 2.4% | |
| | |
| Interactive Media & Services | |
| Meta Platforms, Inc., Class A | |
| | |
| Tencent Holdings Ltd. (HKD) | |
| | |
| | |
| Keywords Studios PLC (GBP) | |
| | |
|
| Semiconductors & Semiconductor Equipment | |
| Advanced Micro Devices, Inc. (b) | |
| | |
| Microchip Technology, Inc. | |
| | |
| | |
| | |
| STMicroelectronics N.V. (EUR) | |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Zoom Video Communications, Inc., Class A (b) | |
| | |
| Technology Hardware, Storage | |
| | |
| Xiaomi Corp., Class B (HKD) (b) (c) (d) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.2% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (e) | |
| | |
|
|
| Total Investments — 99.9% | |
| | |
| Net Other Assets and Liabilities — 0.1% | |
| | |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
See Notes to Financial Statements
First Trust Indxx Metaverse ETF (ARVR)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Net Other Assets and Liabilities | |
| |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for industry breakout. |
See Notes to Financial Statements
First Trust Emerging Markets Human Flourishing ETF (FTHF)Portfolio of InvestmentsMarch 31, 2024 (Unaudited)
| | |
COMMON STOCKS (a) (b) — 99.5% |
| | |
| B3 S.A. - Brasil Bolsa Balcao (BRL) | |
| BB Seguridade Participacoes S.A. (BRL) | |
| Cia de Saneamento Basico do Estado de Sao Paulo (BRL) | |
| Cia Energetica de Minas Gerais (Preference Shares) (BRL) | |
| Gerdau S.A. (Preference Shares) (BRL) | |
| Itau Unibanco Holding S.A. (Preference Shares) (BRL) | |
| Itausa S.A. (Preference Shares) (BRL) | |
| | |
| | |
| | |
| | |
| | |
| Airtac International Group (TWD) | |
| Alchip Technologies Ltd. (TWD) | |
| | |
| | |
| | |
| Sociedad Quimica y Minera de Chile S.A., Class B (Preference Shares) (CLP) | |
| | |
| | |
| | |
| | |
| Eurobank Ergasias Services and Holdings S.A. (EUR) (c) | |
| National Bank of Greece S.A. (EUR) (c) | |
| | |
| | |
| Arca Continental S.A.B. de C.V. (MXN) | |
| Coca-Cola Femsa S.A.B. de C.V. (MXN) | |
| Fibra Uno Administracion S.A. de C.V. (MXN) | |
| Grupo Aeroportuario del Sureste S.A.B. de C.V., Class B (MXN) | |
| Grupo Bimbo S.A.B. de C.V., Series A (MXN) | |
| | |
|
| | |
| Grupo Financiero Banorte S.A.B. de C.V., Class O (MXN) | |
| Grupo Financiero Inbursa S.A.B. de C.V., Class O (MXN) (c) | |
| Wal-Mart de Mexico S.A.B. de C.V. (MXN) | |
| | |
| | |
| | |
| | |
| Bank Polska Kasa Opieki S.A. (PLN) | |
| Dino Polska S.A. (PLN) (c) (d) (e) | |
| KGHM Polska Miedz S.A. (PLN) | |
| | |
| Powszechna Kasa Oszczednosci Bank Polski S.A. (PLN) | |
| Powszechny Zaklad Ubezpieczen S.A. (PLN) | |
| | |
| | |
| | |
| | |
| Bidvest Group (The) Ltd. (ZAR) | |
| Capitec Bank Holdings Ltd. (ZAR) | |
| | |
| | |
| Impala Platinum Holdings Ltd. (ZAR) | |
| | |
| | |
| | |
| | |
| Standard Bank Group Ltd. (ZAR) | |
| | |
| | |
| | |
| Hana Financial Group, Inc. (KRW) | |
| Hyundai Mobis Co., Ltd. (KRW) | |
| KB Financial Group, Inc. (KRW) | |
| | |
| Korea Zinc Co., Ltd. (KRW) | |
| | |
See Notes to Financial Statements
First Trust Emerging Markets Human Flourishing ETF (FTHF)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Samsung Biologics Co., Ltd. (KRW) (c) (d) (e) | |
| | |
| Samsung Electro-Mechanics Co., Ltd. (KRW) | |
| Samsung Electronics Co., Ltd. (KRW) | |
| Samsung Fire & Marine Insurance Co., Ltd. (KRW) | |
| Samsung Life Insurance Co., Ltd. (KRW) | |
| Samsung SDI Co., Ltd. (KRW) | |
| Shinhan Financial Group Co., Ltd. (KRW) | |
| Woori Financial Group, Inc. (KRW) | |
| | |
| | |
| Accton Technology Corp. (TWD) | |
| Advantech Co., Ltd. (TWD) | |
| Asustek Computer, Inc. (TWD) | |
| Catcher Technology Co., Ltd. (TWD) | |
| Cathay Financial Holding Co., Ltd. (TWD) | |
| Chang Hwa Commercial Bank Ltd. (TWD) | |
| China Development Financial Holding Corp. (TWD) (c) | |
| CTBC Financial Holding Co., Ltd. (TWD) | |
| Delta Electronics, Inc. (TWD) | |
| E Ink Holdings, Inc. (TWD) | |
| E.Sun Financial Holding Co., Ltd. (TWD) | |
| eMemory Technology, Inc. (TWD) | |
| First Financial Holding Co., Ltd. (TWD) | |
| Formosa Plastics Corp. (TWD) | |
| Fubon Financial Holding Co., Ltd. (TWD) | |
| Gigabyte Technology Co., Ltd. (TWD) | |
| Global Unichip Corp. (TWD) | |
| Hua Nan Financial Holdings Co., Ltd. (TWD) | |
| | |
| Largan Precision Co., Ltd. (TWD) | |
| | |
|
| | |
| Lite-On Technology Corp. (TWD) | |
| | |
| Mega Financial Holding Co., Ltd. (TWD) | |
| Micro-Star International Co., Ltd. (TWD) | |
| Novatek Microelectronics Corp. (TWD) | |
| | |
| Quanta Computer, Inc. (TWD) | |
| Realtek Semiconductor Corp. (TWD) | |
| Shin Kong Financial Holding Co., Ltd. (TWD) (c) | |
| SinoPac Financial Holdings Co., Ltd. (TWD) | |
| Taishin Financial Holding Co., Ltd. (TWD) | |
| Taiwan Cooperative Financial Holding Co., Ltd. (TWD) | |
| Taiwan Semiconductor Manufacturing Co., Ltd. (TWD) | |
| Unimicron Technology Corp. (TWD) | |
| United Microelectronics Corp. (TWD) | |
| Voltronic Power Technology Corp. (TWD) | |
| | |
| Yang Ming Marine Transport Corp. (TWD) | |
| Yuanta Financial Holding Co., Ltd. (TWD) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.2% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 5.20% (f) | |
| | |
|
|
| Total Investments — 99.7% | |
| | |
| Net Other Assets and Liabilities — 0.3% | |
| | |
See Notes to Financial Statements
First Trust Emerging Markets Human Flourishing ETF (FTHF)Portfolio of Investments (Continued)March 31, 2024 (Unaudited) | Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. For a breakdown of the portfolio securities by sector, please see the Fund Performance Overview. |
| Securities are issued in U.S. dollars unless otherwise indicated in the security description. |
| Non-income producing security. |
| This security is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”) and may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security is not restricted on the foreign exchange where it trades freely without any additional registration. |
| This security may be resold to qualified foreign investors and foreign institutional buyers under Regulation S of the 1933 Act. |
| Rate shown reflects yield as of March 31, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of March 31, 2024 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial Statements):
| | | Level 2
Significant
Observable
Inputs | Level 3
Significant
Unobservable
Inputs |
| | | | |
| | | | |
| | | | |
| See Portfolio of Investments for country breakout. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Assets and LiabilitiesMarch 31, 2024 (Unaudited)
| First Trust Nasdaq Lux Digital Health Solutions ETF
(EKG) | First Trust Indxx Metaverse ETF
(ARVR) | First Trust Emerging Markets Human Flourishing ETF
(FTHF) |
| | | |
| | | |
| | | |
Foreign currency, at value | | | |
| | | |
| | | |
| | | |
| | | |
|
| | | |
Investment advisory fees payable | | | |
| | | |
| | | |
|
| | | |
| | | |
| | | |
Accumulated distributable earnings (loss) | | | |
| | | |
NET ASSET VALUE, per share | | | |
Number of shares outstanding (unlimited number of shares authorized, par value $0.01 per share) | | | |
| | | |
Foreign currency, at cost (proceeds) | | | |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of OperationsFor the Period Ended March 31, 2024 (Unaudited)
| First Trust Nasdaq Lux Digital Health Solutions ETF
(EKG) | First Trust Indxx Metaverse ETF
(ARVR) | First Trust Emerging Markets Human Flourishing ETF
(FTHF) (a) |
| | | |
| | | |
| | | |
| | | |
|
| | | |
| | | |
| | | |
NET INVESTMENT INCOME (LOSS) | | | |
|
NET REALIZED AND UNREALIZED GAIN (LOSS): | | | |
Net realized gain (loss) on: | | | |
| | | |
| | | |
Foreign currency transactions | | | |
| | | |
Net change in unrealized appreciation (depreciation) on: | | | |
| | | |
Foreign currency translation | | | |
Net change in unrealized appreciation (depreciation) | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | |
| Inception date is October 30, 2023, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIStatements of Changes in Net Assets
| First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) |
| Six Months
Ended
3/31/2024 (Unaudited) | |
| | |
Net investment income (loss) | | |
| | |
Net change in unrealized appreciation (depreciation) | | |
Net increase (decrease) in net assets resulting from operations | | |
|
DISTRIBUTIONS TO SHAREHOLDERS FROM: | | |
| | |
|
SHAREHOLDER TRANSACTIONS: | | |
Proceeds from shares sold | | |
| | |
Net increase (decrease) in net assets resulting from shareholder transactions | | |
Total increase (decrease) in net assets | | |
|
| | |
| | |
| | |
|
CHANGES IN SHARES OUTSTANDING: | | |
Shares outstanding, beginning of period | | |
| | |
| | |
Shares outstanding, end of period | | |
| Inception date is October 30, 2023, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
See Notes to Financial Statements
First Trust Indxx Metaverse ETF (ARVR) | First Trust Emerging Markets Human Flourishing ETF (FTHF) |
Six Months
Ended
3/31/2024 (Unaudited) | | |
| | |
| | |
| | |
| | |
| | |
|
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
|
| | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial HighlightsFor a share outstanding throughout each period First Trust Nasdaq Lux Digital Health Solutions ETF (EKG)
| Six Months
Ended
3/31/2024
(Unaudited) | | Period
Ended
9/30/2022 (a) |
|
Net asset value, beginning of period | | | |
Income from investment operations: | | | |
Net investment income (loss) | | | |
Net realized and unrealized gain (loss) | | | |
Total from investment operations | | | |
Net asset value, end of period | | | |
| | | |
|
Ratios to average net assets/supplemental data: | | | |
Net assets, end of period (in 000’s) | | | |
Ratio of total expenses to average net assets | | | |
Ratio of net investment income (loss) to average net assets | | | |
Portfolio turnover rate (e) | | | |
| Inception date is March 22, 2022, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout each period First Trust Indxx Metaverse ETF (ARVR)
| Six Months
Ended
3/31/2024
(Unaudited) | | Period
Ended
9/30/2022 (a) |
|
Net asset value, beginning of period | | | |
Income from investment operations: | | | |
Net investment income (loss) | | | |
Net realized and unrealized gain (loss) | | | |
Total from investment operations | | | |
Distributions paid to shareholders from: | | | |
| | | |
Net asset value, end of period | | | |
| | | |
|
Ratios to average net assets/supplemental data: | | | |
Net assets, end of period (in 000’s) | | | |
Ratio of total expenses to average net assets | | | |
Ratio of net investment income (loss) to average net assets | | | |
Portfolio turnover rate (e) | | | |
| Inception date is April 19, 2022, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The returns presented do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights (Continued)For a share outstanding throughout the period First Trust Emerging Markets Human Flourishing ETF (FTHF)
| Period
Ended
3/31/2024 (a)
(Unaudited) |
|
Net asset value, beginning of period | |
Income from investment operations: | |
Net investment income (loss) (b) | |
Net realized and unrealized gain (loss) | |
Total from investment operations | |
Distributions paid to shareholders from: | |
| |
Net asset value, end of period | |
| |
|
Ratios to average net assets/supplemental data: | |
Net assets, end of period (in 000’s) | |
Ratio of total expenses to average net assets | |
Ratio of net investment income (loss) to average net assets | |
Portfolio turnover rate (e) | |
| Inception date is October 30, 2023, which is consistent with the commencement of investment operations and is the date the initial creation units were established. |
| Based on average shares outstanding. |
| Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all distributions at net asset value during the period, and redemption at net asset value on the last day of the period. The return presented does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption or sale of Fund shares. Total return is calculated for the time period presented and is not annualized for periods of less than a year. |
| |
| Portfolio turnover is calculated for the time period presented and is not annualized for periods of less than a year and does not include securities received or delivered from processing creations or redemptions and in-kind transactions. |
See Notes to Financial Statements
Notes to Financial Statements
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) 1. Organization
First Trust Exchange-Traded Fund II (the “Trust”) is an open-end management investment company organized as a Massachusetts business trust on July 6, 2006, and is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”).
The Trust currently consists of nineteen exchange-traded funds. This report covers the three funds (each a “Fund” and collectively, the “Funds”) listed below, each a non-diversified series of the Trust:
First Trust Nasdaq Lux Digital Health Solutions ETF – (Nasdaq, Inc. (“Nasdaq”) ticker “EKG”) |
First Trust Indxx Metaverse ETF – (Nasdaq ticker “ARVR”) |
First Trust Emerging Markets Human Flourishing ETF – (NYSE Arca, Inc. ticker “FTHF”)(1) |
| Commenced investment operations on October 30, 2023. |
Each Fund represents a separate series of shares of beneficial interest in the Trust. Unlike conventional mutual funds, each Fund issues and redeems shares on a continuous basis, at net asset value (“NAV”), only in large blocks of shares known as “Creation Units.” The investment objective of each Fund is to seek investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of the following indices:
| |
First Trust Nasdaq Lux Digital Health Solutions ETF | Nasdaq Lux Health TechTM Index |
First Trust Indxx Metaverse ETF | |
First Trust Emerging Markets Human Flourishing ETF | Emerging Markets Human Flourishing Index |
2. Significant Accounting Policies
The Funds are each considered an investment company and follow accounting and reporting guidance under Financial Accounting Standards Board Accounting Standards Codification Topic 946, “Financial Services-Investment Companies.” The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of the financial statements. The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Each Fund’s NAV is determined daily as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern time, on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV is determined as of that time. Foreign securities are priced using data reflecting the earlier closing of the principal markets for those securities. Each Fund’s NAV is calculated by dividing the value of all assets of each Fund (including accrued interest and dividends), less all liabilities (including accrued expenses and dividends declared but unpaid), by the total number of shares outstanding.
Each Fund’s investments are valued daily at market value or, in the absence of market value with respect to any portfolio securities, at fair value. Market value prices represent readily available market quotations such as last sale or official closing prices from a national or foreign exchange (i.e., a regulated market) and are primarily obtained from third-party pricing services. Fair value prices represent any prices not considered market value prices and are either obtained from a third-party pricing service or are determined by the Pricing Committee of the Funds’ investment advisor, First Trust Advisors L.P. (“First Trust” or the “Advisor”), in accordance with valuation procedures approved by the Trust’s Board of Trustees, and in accordance with provisions of the 1940 Act and rules thereunder. Investments valued by the Advisor’s Pricing Committee, if any, are footnoted as such in the footnotes to the Portfolio of Investments. Each Fund’s investments are valued as follows:
Common stocks and other equity securities listed on any national or foreign exchange (excluding Nasdaq and the London Stock Exchange Alternative Investment Market (“AIM”)) are valued at the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price. Securities traded on more than one securities exchange are valued at the last sale price or official closing price, as applicable, at the close of the securities exchange representing the primary exchange for such securities.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Securities trading on foreign exchanges or over-the-counter markets that close prior to the NYSE close may be valued using a systematic fair valuation model provided by a third-party pricing service. If these foreign securities meet certain criteria in relation to the valuation model, their valuation is systematically adjusted to reflect the impact of movement in the U.S. market after the close of the foreign markets.
Shares of open-end funds are valued based on NAV per share.
Equity securities traded in an over-the-counter market are valued at the close price or the last trade price.
Certain securities may not be able to be priced by pre-established pricing methods. Such securities may be valued by the Advisor’s Pricing Committee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a third-party pricing service is unable to provide a market price; securities whose trading has been formally suspended; a security whose market or fair value price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s NAV or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the third-party pricing service, does not reflect the security’s fair value. As a general principle, the current fair value of a security would appear to be the amount which the owner might reasonably expect to receive for the security upon its current sale. When fair value prices are used, generally they will differ from market quotations or official closing prices on the applicable exchanges. A variety of factors may be considered in determining the fair value of such securities, including, but not limited to, the following:
1)
the last sale price on the exchange on which they are principally traded or, for Nasdaq and AIM securities, the official closing price;
3)
the size of the holding;
4)
the initial cost of the security;
5)
transactions in comparable securities;
6)
price quotes from dealers and/or third-party pricing services;
7)
relationships among various securities;
8)
information obtained by contacting the issuer, analysts, or the appropriate stock exchange;
9)
an analysis of the issuer’s financial statements;
10)
the existence of merger proposals or tender offers that might affect the value of the security; and
11)
other relevant factors.
If the securities in question are foreign securities, the following additional information may be considered:
1)
the last sale price on the exchange on which they are principally traded;
2)
the value of similar foreign securities traded on other foreign markets;
3)
ADR trading of similar securities;
4)
closed-end fund or exchange-traded fund trading of similar securities;
5)
foreign currency exchange activity;
6)
the trading prices of financial products that are tied to baskets of foreign securities;
7)
factors relating to the event that precipitated the pricing problem;
8)
whether the event is likely to recur;
9)
whether the effects of the event are isolated or whether they affect entire markets, countries or regions; and
10)
other relevant factors.
In addition, differences between the prices used to calculate a Fund’s NAV and the prices used by such Fund’s corresponding index could result in a difference between a Fund’s performance and the performance of its underlying index.
Because foreign markets may be open on different days than the days during which investors may transact in the shares of a Fund, the value of the Fund’s securities may change on the days when investors are not able to transact in the shares of the Fund. The value of the securities denominated in foreign currencies is converted into U.S. dollars using exchange rates determined daily as of the close of regular trading on the NYSE.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) The Funds are subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-level hierarchy for fair valuation based upon the inputs to the valuation as of the measurement date. The three levels of the fair value hierarchy are as follows:
• Level 1 – Level 1 inputs are quoted prices in active markets for identical investments. An active market is a market in which transactions for the investment occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
• Level 2 – Level 2 inputs are observable inputs, either directly or indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets that are non-active. A non-active market is a market where there are few transactions for the investment, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly.
o Inputs other than quoted prices that are observable for the investment (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates).
o Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 – Level 3 inputs are unobservable inputs. Unobservable inputs may reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the investment.
The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. A summary of the inputs used to value each Fund’s investments as of March 31, 2024, is included with each Fund’s Portfolio of Investments.
B. Securities Transactions and Investment Income
Securities transactions are recorded as of the trade date. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the information becomes available after the ex-dividend date. Interest income, if any, is recorded on the accrual basis.
Withholding taxes and tax reclaims on foreign dividends have been provided for in accordance with each Fund’s understanding of the applicable country’s tax rules and rates.
The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of investments and items of income and expense are translated on the respective dates of such transactions. Unrealized gains and losses on assets and liabilities, other than investments in securities, which result from changes in foreign currency exchange rates have been included in “Net change in unrealized appreciation (depreciation) on foreign currency translation” on the Statements of Operations. Unrealized gains and losses on investments in securities which result from changes in foreign exchange rates are included with fluctuations arising from changes in market price and are shown in “Net change in unrealized appreciation (depreciation) on investments” on the Statements of Operations. Net realized foreign currency gains and losses include the effect of changes in exchange rates between trade date and settlement date on investment security transactions, foreign currency transactions and interest and dividends received and are included in “Net realized gain (loss) on foreign currency transactions” on the Statements of Operations. The portion of foreign currency gains and losses related to fluctuations in exchange rates between the initial purchase settlement date and subsequent sale trade date is included in “Net realized gain (loss) on investments” on the Statements of Operations.
D. Dividends and Distributions to Shareholders
Dividends from net investment income of each Fund, if any, are declared and paid quarterly, or as the Board of Trustees may determine from time to time. Distributions of net realized capital gains earned by each Fund, if any, are distributed at least annually. Each Fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
Distributions from net investment income and realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Funds and have no impact on net assets or NAV per share. Temporary differences,
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) which arise from recognizing certain items of income, expense and gain/loss in different periods for financial statement and tax purposes, will reverse at some time in the future.
The tax character of distributions paid by each Fund during the fiscal year ended September 30, 2023 was as follows:
| Distributions
paid from
Ordinary
Income | Distributions
paid from
Capital
Gains | Distributions
paid from
Return of
Capital |
First Trust Nasdaq Lux Digital Health Solutions ETF | | | |
First Trust Indxx Metaverse ETF | | | |
As of September 30, 2023, the components of distributable earnings on a tax basis for each Fund were as follows:
| Undistributed
Ordinary
Income | Accumulated
Capital and
Other
Gain (Loss) | Net
Unrealized
Appreciation
(Depreciation) |
First Trust Nasdaq Lux Digital Health Solutions ETF | | | |
First Trust Indxx Metaverse ETF | | | |
Each Fund intends to qualify or continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended, which includes distributing substantially all of its net investment income and net realized gains to shareholders. Accordingly, no provision has been made for federal and state income taxes. However, due to the timing and amount of distributions, each Fund may be subject to an excise tax of 4% of the amount by which approximately 98% of each Fund’s taxable income exceeds the distributions from such taxable income for the calendar year.
The Funds are subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. For EKG and ARVR, the taxable years ended 2022 and 2023 remain open to federal and state audit. As of March 31, 2024, management has evaluated the application of these standards to the Funds and has determined that no provision for income tax is required in the Funds’ financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws, which allow it to carry a realized capital loss forward indefinitely following the year of the loss and offset such loss against any future realized capital gains. Each Fund is subject to certain limitations under U.S. tax rules on the use of capital loss carryforwards and net unrealized built-in losses. These limitations apply when there has been a 50% change in ownership. At September 30, 2023, for federal income tax purposes, each applicable Fund had a capital loss carryforward available that is shown in the following table, to the extent provided by regulations, to offset future capital gains. To the extent that these loss carryforwards are used to offset future capital gains, it is probable that the capital gains so offset will not be distributed to each applicable Fund’s shareholders.
| Non-Expiring
Capital Loss
Carryforwards |
First Trust Nasdaq Lux Digital Health Solutions ETF | |
First Trust Indxx Metaverse ETF | |
Certain losses realized during the current fiscal year may be deferred and treated as occurring on the first day of the following fiscal year for federal income tax purposes. For the fiscal year ended September 30, 2023, the following Fund incurred and elected to defer net late year ordinary or capital losses as follows:
| Qualified Late Year Losses |
| | |
First Trust Nasdaq Lux Digital Health Solutions ETF | | |
| | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) As of March 31, 2024, the aggregate cost, gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation/(depreciation) on investments (including short positions and derivatives, if any) for federal income tax purposes were as follows:
| | Gross Unrealized
Appreciation | Gross Unrealized
(Depreciation) | Net Unrealized
Appreciation
(Depreciation) |
First Trust Nasdaq Lux Digital Health Solutions ETF | | | | |
First Trust Indxx Metaverse ETF | | | | |
First Trust Emerging Markets Human Flourishing ETF | | | | |
Expenses, other than the investment advisory fee and other excluded expenses, are paid by the Advisor (see Note 3).
3. Investment Advisory Fee, Affiliated Transactions and Other Fee Arrangements
First Trust, the investment advisor to the Funds, is a limited partnership with one limited partner, Grace Partners of DuPage L.P., and one general partner, The Charger Corporation. The Charger Corporation is an Illinois corporation controlled by James A. Bowen, Chief Executive Officer of First Trust. First Trust is responsible for the selection and ongoing monitoring of the securities in each Fund’s portfolio, managing the Funds’ business affairs and providing certain administrative services necessary for the management of the Funds.
Pursuant to the Investment Management Agreement between the Trust and the Advisor, First Trust manages the investment of each Fund’s assets and is responsible for the expenses of each Fund, including the cost of transfer agency, custody, fund administration, legal, audit, license fees and other services, but excluding fee payments under the Investment Management Agreement, interest, taxes, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees payable pursuant to a Rule 12b-1 plan, if any, acquired fund fees and expenses, and extraordinary expenses, which are paid by each respective Fund. The annual unitary management fee payable by each Fund to First Trust for these services will be reduced at certain levels of each Fund’s net assets (“breakpoints”) and calculated pursuant to the following schedule:
| | | |
Fund net assets up to and including $2.5 billion | | | |
Fund net assets greater than $2.5 billion up to and including $5 billion | | | |
Fund net assets greater than $5 billion up to and including $7.5 billion | | | |
Fund net assets greater than $7.5 billion up to and including $10 billion | | | |
Fund net assets greater than $10 billion | | | |
The Trust has multiple service agreements with The Bank of New York Mellon (“BNYM”). Under the service agreements, BNYM performs custodial, fund accounting, certain administrative services, and transfer agency services for each Fund. As custodian, BNYM is responsible for custody of each Fund’s assets. As fund accountant and administrator, BNYM is responsible for maintaining the books and records of each Fund’s securities and cash. As transfer agent, BNYM is responsible for maintaining shareholder records for each Fund. BNYM is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor or any of their affiliates (“Independent Trustees”) is paid a fixed annual retainer that is allocated equally among each fund in the First Trust Fund Complex. Each Independent Trustee is also paid an annual per fund fee that varies based on whether the fund is a closed-end or other actively managed fund, a target outcome fund or an index fund.
Additionally, the Chairs of the Audit Committee, Nominating and Governance Committee and Valuation Committee, the Vice Chair of the Audit Committee, the Lead Independent Trustee and the Vice Lead Independent Trustee are paid annual fees to serve in such capacities, with such compensation allocated pro rata among each fund in the First Trust Fund Complex based on net assets. Independent Trustees are reimbursed for travel and out-of-pocket expenses in connection with all meetings. The Committee Chairs, the Audit Committee Vice Chair, the Lead Independent Trustee and the Vice Lead Independent Trustee rotate periodically in serving in such capacities. The officers and “Interested” Trustee receive no compensation from the Trust for acting in such capacities.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) 4. Purchases and Sales of Securities
For the period ended March 31, 2024, the cost of purchases and proceeds from sales of investments for each Fund, excluding short-term investments and in-kind transactions, were as follows:
| | |
First Trust Nasdaq Lux Digital Health Solutions ETF | | |
First Trust Indxx Metaverse ETF | | |
First Trust Emerging Markets Human Flourishing ETF | | |
For the period ended March 31, 2024, the cost of in-kind purchases and proceeds from in-kind sales for each Fund were as follows:
| | |
First Trust Nasdaq Lux Digital Health Solutions ETF | | |
First Trust Indxx Metaverse ETF | | |
First Trust Emerging Markets Human Flourishing ETF | | |
5. Creations, Redemptions and Transaction Fees
Each Fund generally issues and redeems its shares in primary market transactions through a creation and redemption mechanism and does not sell or redeem individual shares. Instead, financial entities known as “Authorized Participants” have contractual arrangements with a Fund or one of the Fund’s service providers to purchase and redeem Fund shares directly with the Fund in Creation Units. Prior to the start of trading on every business day, a Fund publishes through the National Securities Clearing Corporation the “basket” of securities, cash or other assets that it will accept in exchange for a Creation Unit of the Fund’s shares. An Authorized Participant that wishes to effectuate a creation of a Fund’s shares deposits with the Fund the “basket” of securities, cash or other assets identified by the Fund that day, and then receives the Creation Unit of the Fund’s shares in return for those assets. After purchasing a Creation Unit, the Authorized Participant may continue to hold the Fund’s shares or sell them in the secondary market. The redemption process is the reverse of the purchase process: the Authorized Participant redeems a Creation Unit of a Fund’s shares for a basket of securities, cash or other assets. The combination of the creation and redemption process with secondary market trading in a Fund’s shares and underlying securities provides arbitrage opportunities that are designed to help keep the market price of a Fund’s shares at or close to the NAV per share of the Fund.
Each Fund imposes fees in connection with the purchase of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price for each Creation Unit will equal the daily NAV per share of a Fund times the number of shares in a Creation Unit, plus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the creation basket.
Each Fund also imposes fees in connection with the redemption of Creation Units. These fees may vary based upon various fact-based circumstances, including, but not limited to, the composition of the securities included in the Creation Unit or the countries in which the transactions are settled. The price received for each Creation Unit will equal the daily NAV per share of a Fund times the number of shares in a Creation Unit, minus the fees described above and, if applicable, any operational processing and brokerage costs, transfer fees, stamp taxes and part or all of the spread between the expected bid and offer side of the market related to the securities comprising the redemption basket. Investors who use the services of a broker or other such intermediary in addition to an Authorized Participant to effect a redemption of a Creation Unit may also be assessed an amount to cover the cost of such services. The redemption fee charged by a Fund will comply with Rule 22c-2 of the 1940 Act which limits redemption fees to no more than 2% of the value of the shares redeemed.
The Board of Trustees adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with the Rule 12b-1 plan, the Funds are authorized to pay an amount up to 0.25% of their average daily net assets each year to reimburse First Trust Portfolios L.P. (“FTP”), the distributor of the Funds, for amounts expended to finance activities primarily intended to result in the sale of Creation Units or the provision of investor services. FTP may also use this amount to compensate securities dealers or other persons that are Authorized Participants for providing distribution assistance, including broker-dealer and shareholder support and educational and promotional services.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) No 12b-1 fees are currently paid by the Funds, and pursuant to a contractual arrangement, no 12b-1 fees will be paid any time before January 31, 2025 for EKG and ARVR and October 27, 2025 for FTHF.
The Trust, on behalf of the Funds, has a variety of indemnification obligations under contracts with its service providers. The Trust’s maximum exposure under these arrangements is unknown. However, the Trust has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements that have not already been disclosed.
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Proxy Voting Policies and Procedures
A description of the policies and procedures that the Trust uses to determine how to vote proxies and information on how each Fund voted proxies relating to its portfolio securities during the most recent 12-month period ended June 30 is available (1) without charge, upon request, by calling (800) 988-5891; (2) on each Fund’s website at www.ftportfolios.com; and (3) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
Each Fund files portfolio holdings information for each month in a fiscal quarter within 60 days after the end of the relevant fiscal quarter on Form N-PORT. Portfolio holdings information for the third month of each fiscal quarter will be publicly available on the SEC’s website at www.sec.gov. Each Fund’s complete schedule of portfolio holdings for the second and fourth quarters of each fiscal year is included in the semi-annual and annual reports to shareholders, respectively, and is filed with the SEC on Form N-CSR. The semi-annual and annual report for each Fund is available to investors within 60 days after the period to which it relates. Each Fund’s Forms N-PORT and Forms N-CSR are available on the SEC’s website listed above.
Risks are inherent in all investing. Certain general risks that may be applicable to a Fund are identified below, but not all of the material risks relevant to each Fund are included in this report and not all of the risks below apply to each Fund. The material risks of investing in each Fund are spelled out in its prospectus, statement of additional information and other regulatory filings. Before investing, you should consider each Fund’s investment objective, risks, charges and expenses, and read each Fund’s prospectus and statement of additional information carefully. You can download each Fund’s prospectus at www.ftportfolios.com or contact First Trust Portfolios L.P. at (800) 621-1675 to request a prospectus, which contains this and other information about each Fund.
Concentration Risk. To the extent that a fund is able to invest a significant percentage of its assets in a single asset class or the securities of issuers within the same country, state, region, industry or sector, an adverse economic, business or political development may affect the value of the fund’s investments more than if the fund were more broadly diversified. A fund that tracks an index will be concentrated to the extent the fund’s corresponding index is concentrated. A concentration makes a fund more susceptible to any single occurrence and may subject the fund to greater market risk than a fund that is more broadly diversified.
Credit Risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer’s ability to make such payments.
Cyber Security Risk. The funds are susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause a fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. In addition, cyber security breaches of a fund’s third-party service providers, such as its administrator, transfer agent, custodian, or sub-advisor, as applicable, or issuers in which the fund invests, can also subject a fund to many of the same risks associated with direct cyber security breaches.
Defined Outcome Funds Risk. To the extent a fund’s investment strategy is designed to deliver returns tied to the price performance of an underlying ETF, an investor may not realize the returns the fund seeks to achieve if that investor does not hold shares for the entire target outcome period. In the event an investor purchases shares after the first day of the target outcome period or sells shares prior to the end of the target outcome period, the buffer that the fund seeks to provide against a decline in the value of the underlying ETF may not be available, the enhanced returns that the fund seeks to provide (if any) may not be available and the investor may not participate in a gain in the value of the underlying ETF up to the cap for the investor’s investment period. Additionally, the fund will not participate in gains of the underlying ETF above the cap and a shareholder may lose their entire investment. If the fund seeks enhanced returns, there are certain time periods when the value of the fund may fall faster than the value of the underlying ETF, and it is very unlikely that, on any given day during which the underlying ETF share price increases in value, the fund’s share price will increase at the same rate as the enhanced returns sought by the fund, which is designed for an entire target outcome period. Trading flexible exchange options involves risks different from, or possibly greater than, the risks associated with investing directly in securities, such as less liquidity and correlation and valuation risks. A fund may experience substantial downside from specific flexible exchange option positions and certain positions may expire worthless.
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) Derivatives Risk. To the extent a fund uses derivative instruments such as futures contracts, options contracts and swaps, the fund may experience losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivative. These risks are heightened when a fund’s portfolio managers use derivatives to enhance the fund’s return or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the fund.
Equity Securities Risk. To the extent a fund invests in equity securities, the value of the fund’s shares will fluctuate with changes in the value of the equity securities. Equity securities prices fluctuate for several reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of the relevant stock market, such as market volatility, or when political or economic events affecting the issuers occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. Equity securities may decline significantly in price over short or extended periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company, industry or sector of the market.
ETF Risk. The shares of an ETF trade like common stock and represent an interest in a portfolio of securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs. Shares of an ETF trade on an exchange at market prices rather than net asset value, which may cause the shares to trade at a price greater than net asset value (premium) or less than net asset value (discount). In times of market stress, decisions by market makers to reduce or step away from their role of providing a market for an ETF’s shares, or decisions by an ETF’s authorized participants that they are unable or unwilling to proceed with creation and/or redemption orders of an ETF’s shares, could result in shares of the ETF trading at a discount to net asset value and in greater than normal intraday bid-ask spreads.
Fixed Income Securities Risk. To the extent a fund invests in fixed income securities, the fund will be subject to credit risk, income risk, interest rate risk, liquidity risk and prepayment risk. Income risk is the risk that income from a fund’s fixed income investments could decline during periods of falling interest rates. Interest rate risk is the risk that the value of a fund’s fixed income securities will decline because of rising interest rates. Liquidity risk is the risk that a security cannot be purchased or sold at the time desired, or cannot be purchased or sold without adversely affecting the price. Prepayment risk is the risk that the securities will be redeemed or prepaid by the issuer, resulting in lower interest payments received by the fund. In addition to these risks, high yield securities, or “junk” bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and the market for high yield securities is generally smaller and less liquid than that for investment grade securities.
Index or Model Constituent Risk. Certain funds may be a constituent of one or more indices or ETF models. As a result, such a fund may be included in one or more index-tracking exchange-traded funds or mutual funds. Being a component security of such a vehicle could greatly affect the trading activity involving a fund, the size of the fund and the market volatility of the fund. Inclusion in an index could increase demand for the fund and removal from an index could result in outsized selling activity in a relatively short period of time. As a result, a fund’s net asset value could be negatively impacted and the fund’s market price may be significantly below its net asset value during certain periods. In addition, index rebalances may potentially result in increased trading activity in a fund’s shares.
Index Provider Risk. To the extent a fund seeks to track an index, it is subject to Index Provider Risk. There is no assurance that the Index Provider will compile the Index accurately, or that the Index will be determined, maintained, constructed, reconstituted, rebalanced, composed, calculated or disseminated accurately. To correct any such error, the Index Provider may carry out an unscheduled rebalance or other modification of the Index constituents or weightings, which may increase the fund’s costs. The Index Provider does not provide any representation or warranty in relation to the quality, accuracy or completeness of data in the Index, and it does not guarantee that the Index will be calculated in accordance with its stated methodology. Losses or costs associated with any Index Provider errors generally will be borne by the fund and its shareholders.
Investment Companies Risk. To the extent a fund invests in the securities of other investment vehicles, the fund will incur additional fees and expenses that would not be present in a direct investment in those investment vehicles. Furthermore, the fund’s investment performance and risks are directly related to the investment performance and risks of the investment vehicles in which the fund invests.
LIBOR Risk. To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate (“LIBOR”) as a reference interest rate, it is subject to LIBOR Risk. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31, 2021.
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate (“SOFR”) will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on the fund or on certain instruments in which the fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to the fund.
Management Risk. To the extent that a fund is actively managed, it is subject to management risk. In managing an actively-managed fund’s investment portfolio, the fund’s portfolio managers will apply investment techniques and risk analyses that may not have the desired result. There can be no guarantee that a fund will meet its investment objective.
Market Risk. Market risk is the risk that a particular security, or shares of a fund in general, may fall in value. Securities held by a fund, as well as shares of a fund itself, are subject to market fluctuations caused by factors such as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result of the risk of loss associated with these market fluctuations. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public health issues, recessions, or other events could have a significant negative impact on a fund and its investments. Such events may affect certain geographic regions, countries, sectors and industries more significantly than others. In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain fund investments as well as fund performance. The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets. While the U.S. has resumed “reasonably” normal business activity, many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease. These events also adversely affect the prices and liquidity of a fund’s portfolio securities or other instruments and could result in disruptions in the trading markets. Any of such circumstances could have a materially negative impact on the value of a fund’s shares and result in increased market volatility. During any such events, a fund’s shares may trade at increased premiums or discounts to their net asset value and the bid/ask spread on a fund’s shares may widen.
Non-U.S. Securities Risk. To the extent a fund invests in non-U.S. securities, it is subject to additional risks not associated with securities of domestic issuers. Non-U.S. securities are subject to higher volatility than securities of domestic issuers due to: possible adverse political, social or economic developments; restrictions on foreign investment or exchange of securities; capital controls; lack of liquidity; currency exchange rates; excessive taxation; government seizure of assets; the imposition of sanctions by foreign governments; different legal or accounting standards; and less government supervision and regulation of exchanges in foreign countries. Investments in non-U.S. securities may involve higher costs than investments in U.S. securities, including higher transaction and custody costs, as well as additional taxes imposed by non-U.S. governments. These risks may be heightened for securities of companies located, or with significant operations, in emerging market countries.
Operational Risk. Each fund is subject to risks arising from various operational factors, including, but not limited to, human error, processing and communication errors, errors of a fund’s service providers, counterparties or other third-parties, failed or inadequate processes and technology or systems failures. Each fund relies on third-parties for a range of services, including custody. Any delay or failure relating to engaging or maintaining such service providers may affect a fund’s ability to meet its investment objective. Although the funds and the funds’ investment advisor seek to reduce these operational risks through controls and procedures, there is no way to completely protect against such risks.
Passive Investment Risk. To the extent a fund seeks to track an index, the fund will invest in the securities included in, or representative of, the index regardless of their investment merit. A fund generally will not attempt to take defensive positions in declining markets.
Preferred Securities Risk. Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt securities in a company’s capital structure in terms of priority to corporate income, subjecting them to greater credit risk than those debt securities. Generally, holders of preferred securities have no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods, at which time the preferred security holders may obtain limited rights. In certain circumstances, an issuer of preferred securities may defer
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) payment on the securities and, in some cases, redeem the securities prior to a specified date. Preferred securities may also be substantially less liquid than other securities, including common stock.
Valuation Risk. The valuation of certain securities may carry more risk than that of common stock. Uncertainties in the conditions of the financial markets, unreliable reference data, lack of transparency and inconsistency of valuation models and processes may lead to inaccurate asset pricing. A fund may hold investments in sizes smaller than institutionally sized round lot positions (sometimes referred to as odd lots). However, third-party pricing services generally provide evaluations on the basis of institutionally-sized round lots. If a fund sells certain of its investments in an odd lot transaction, the sale price may be less than the value at which such securities have been held by the fund. Odd lots often trade at lower prices than institutional round lots. There is no assurance that the fund will be able to sell a portfolio security at the price established by the pricing service, which could result in a loss to the fund.
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
Board Considerations Regarding Approval of the Investment Management Agreement
First Trust Emerging Markets Human Flourishing ETF
The Board of Trustees of First Trust Exchange-Traded Fund II (the “Trust”), including the Independent Trustees, approved the Investment Management Agreement (the “Agreement”) with First Trust Advisors L.P. (the “Advisor”), on behalf of First Trust Emerging Markets Human Flourishing ETF (the “Fund”), for an initial two-year term at a meeting held on September 11, 2023. The Board determined that the Agreement is in the best interests of the Fund in light of the nature, extent and quality of the services expected to be provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
To reach this determination, the Board considered its duties under the Investment Company Act of 1940, as amended (the “1940 Act”), as well as under the general principles of state law, in reviewing and approving advisory contracts; the requirements of the 1940 Act in such matters; the fiduciary duty of investment advisors with respect to advisory agreements and compensation; the standards used by courts in determining whether investment company boards have fulfilled their duties; and the factors to be considered by the Board in voting on such agreements. To assist the Board in its evaluation of the Agreement for the Fund, the Independent Trustees received a report from the Advisor in advance of the Board meeting responding to a request for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services to be provided by the Advisor to the Fund (including the relevant personnel responsible for these services and their experience); the proposed unitary fee rate schedule payable by the Fund as compared to fees charged to a peer group of funds (the “Expense Group”) and a broad peer universe of funds (the “Expense Universe”), each assembled by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent source, and as compared to fees charged to other exchange-traded funds (“ETFs”) managed by the Advisor; the estimated expense ratio of the Fund as compared to expense ratios of the funds in the Fund’s Expense Group and Expense Universe; the nature of expenses to be incurred in providing services to the Fund and the potential for the Advisor to realize economies of scale, if any; profitability and other financial data for the Advisor; any indirect benefits to the Advisor and its affiliate, First Trust Portfolios L.P. (“FTP”); and information on the Advisor’s compliance program. The Independent Trustees and their counsel also met separately to discuss the information provided by the Advisor. The Board applied its business judgment to determine whether the arrangement between the Trust and the Advisor is a reasonable business arrangement from the Fund’s perspective.
In evaluating whether to approve the Agreement for the Fund, the Board considered the nature, extent and quality of the services to be provided by the Advisor under the Agreement and considered that employees of the Advisor provide management services to other ETFs and to other funds in the First Trust Fund Complex with diligence and care. The Board considered that the Advisor will be responsible for the overall management and administration of the Fund and reviewed all of the services to be provided by the Advisor to the Fund. The Board also considered the background and experience of the persons who will be responsible for the day-to-day management of the Fund’s investments. In reviewing the services to be provided, the Board noted the compliance program that had been developed by the Advisor and considered that it includes a robust program for monitoring the Advisor’s and the Fund’s compliance with the 1940 Act, as well as the Fund’s compliance with its investment objective, policies and restrictions. Because the Fund had yet to commence investment operations, the Board could not consider the historical investment performance of the Fund. Because the Fund is an index ETF that is designed to track the performance of an underlying index, the Board considered reports it receives on a quarterly basis showing the correlation and tracking error between other ETFs for which the Advisor serves as
Additional Information (Continued)
First Trust Exchange-Traded Fund IIMarch 31, 2024 (Unaudited) investment advisor and their applicable underlying indexes. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services to be provided to the Fund by the Advisor under the Agreement are expected to be satisfactory.
The Board considered the proposed unitary fee rate schedule payable by the Fund under the Agreement for the services to be provided. The Board noted that, under the unitary fee arrangement, the Fund would pay the Advisor a unitary fee starting at an annual rate of 0.75% of its average daily net assets, subject to a breakpoint schedule pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board noted that the Advisor would be responsible for the Fund’s expenses, including the cost of transfer agency, custody, fund administration, legal, audit and other services and license fees, if any, but excluding the fee payment under the Agreement and interest, taxes, acquired fund fees and expenses, if any, brokerage commissions and other expenses connected with the execution of portfolio transactions, distribution and service fees pursuant to a Rule 12b-1 plan, if any, and extraordinary expenses, if any. The Board received and reviewed information showing the fee rates and expense ratios of the peer funds in the Expense Group, as well as advisory and unitary fee rates charged by the Advisor to other ETFs. Because the Fund will pay a unitary fee, the Board determined that expense ratios were the most relevant comparative data point. Based on the information provided, the Board noted that the total (net) expense ratio for the Fund was above the median total (net) expense ratio of the peer funds in the Expense Group. With respect to the Expense Group, the Board discussed with representatives of the Advisor how the Expense Group was assembled and how the Fund compared and differed from the peer funds. The Board took this information into account in considering the peer data. With respect to fees charged to other ETFs managed by the Advisor, the Board considered the Advisor’s statement that the Fund will be unique to the market and the First Trust Fund Complex but will be most similar to two other index ETFs in the First Trust Fund Complex that are managed by the Advisor and employ emerging markets strategies, each of which has a unitary fee rate schedule starting at an annual rate of 0.75% of its average daily net assets. In light of the information considered and the nature, extent and quality of the services expected to be provided to the Fund under the Agreement, the Board determined that the proposed unitary fee was fair and reasonable.
The Board considered whether there are any potential economies of scale to be achieved in connection with the Advisor providing investment advisory services to the Fund and whether the Fund may benefit from any economies of scale. The Board noted that the proposed unitary fee rate schedule for the Fund includes breakpoints pursuant to which the unitary fee rate would be reduced as assets of the Fund meet certain thresholds. The Board considered that the Advisor has continued to build infrastructure and add new staff to improve the services to the funds in the First Trust Fund Complex. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Fund generally would benefit the Advisor, but that the unitary fee structure provides a level of certainty in expenses for shareholders of the Fund. The Board concluded that the proposed unitary fee rate schedule for the Fund reflects an appropriate level of sharing of any economies of scale that may be realized in the management of the Fund at reasonably foreseeable future asset levels. The Board took into consideration the types of costs to be borne by the Advisor in connection with its services to be performed for the Fund under the Agreement. The Board considered the Advisor’s estimate of the asset level for the Fund at which the Advisor expects the Agreement to be profitable to the Advisor and the Advisor’s estimate of the profitability of the Agreement if the Fund’s assets reach $100 million. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor’s estimated profitability level for the Fund was not unreasonable. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Fund. The Board considered that the Advisor had identified as an indirect benefit to the Advisor and FTP their exposure to investors and brokers who, absent their exposure to the Fund, may have had no dealings with the Advisor or FTP, and noted that the Advisor will not utilize soft dollars in connection with the Fund. The Board concluded that the character and amount of potential indirect benefits to the Advisor were not unreasonable.
Based on all of the information considered and the conclusions reached, the Board, including the Independent Trustees, determined that the terms of the Agreement are fair and reasonable and that the approval of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
First Trust Exchange-Traded Fund II
First Trust Advisors L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT &
TRANSFER AGENT
The Bank of New York Mellon
240 Greenwich Street
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, IL 60606
Chapman and Cutler LLP
320 South Canal Street
Chicago, IL 60606
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
| (a) | | Schedules of Investments in securities of unaffiliated issuers as of the close of the reporting period are included as part of the report to shareholders filed under Item 1 of this form. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
| (a) | | The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3 (c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15 (b)). |
| (b) | | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Item [18]. Recovery of Erroneously Awarded Compensation.
Not applicable.
Item 13. Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (registrant) | | First Trust Exchange-Traded Fund II |
| By (Signature and Title)* | | /s/ James M. Dykas |
| | | James M. Dykas, President and Chief Executive Officer
(principal executive officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | | /s/ James M. Dykas |
| | | James M. Dykas, President and Chief Executive Officer
(principal executive officer) |
| By (Signature and Title)* | | /s/ Derek D. Maltbie |
| | | Derek D. Maltbie, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer) |
