0001364608 ftetf2:C000081044Member 2021-03-31
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
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) (Zip code)
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:
Date of reporting period:
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. Reports to Shareholders.
(a) Following is a copy of the annual reports transmitted to shareholders pursuant to Rule 30e-1 under the Act.
First Trust STOXX®
European Select Dividend Index Fund
FDD | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust STOXX® European Select Dividend Index Fund (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FDD. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust STOXX® European Select Dividend Index Fund | $65 | 0.59% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 20.98% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI Europe Index, which returned 25.23% for the same Period.
The United Kingdom (“UK”) had the greatest allocation in the Fund with a weight of 23.7%. The allocation to the UK contributed the most to the Fund’s performance of any country with an 8.3% contribution to the Fund’s return. With a weight of 5.4%, Norway was the country with the most negative contribution to the Fund’s return with -1.4% in performance contribution. The Fund’s currency exposure had a 7.1% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust STOXX® European Select Dividend Index Fund | 20.98% | 4.97% | 4.11% |
| STOXX® Europe Select Dividend 30 Index | 20.96% | 5.26% | 4.39% |
| STOXX® Europe 600 Index | 25.67% | 8.98% | 5.74% |
| MSCI Europe Index | 25.23% | 8.90% | 5.59% |
Visit www.ftportfolios.com/etf/FDD for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $159,971,431 |
| Total number of portfolio holdings | 31 |
| Total advisory fee paid | $660,109 |
| Portfolio turnover rate | 43% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| NatWest Group PLC | 5.3% |
| ABN AMRO Bank N.V. | 4.9% |
| HSBC Holdings PLC | 4.8% |
| ING Groep N.V. | 4.8% |
| IG Group Holdings PLC | 4.6% |
| Taylor Wimpey PLC | 4.4% |
| Legal & General Group PLC | 4.1% |
| Rio Tinto PLC | 3.9% |
| NN Group N.V. | 3.8% |
| Tele2 AB, Class B | 3.8% |
Any amount shown as 0.0% represents less than 0.1%.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FDD to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Alerian
Disruptive Technology Real Estate ETF
DTRE | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Alerian Disruptive Technology Real Estate ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/DTRE. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Alerian Disruptive Technology Real Estate ETF | $66 | 0.60% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 18.88% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI World Real Estate Index, which returned 31.74% for the same Period.
The United States was the country with the greatest allocation in the Fund during the Period with an average weight of 75.9%. The allocation to the United States contributed the most to the Fund’s performance of any country with a 16.2% contribution. No country had a material negative return contribution to the Fund’s performance. The Fund’s currency exposure had a 1.4% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Alerian Disruptive Technology Real Estate ETF | 18.88% | 0.41% | 3.65% |
| Alerian Disruptive Technology Real Estate Index(1) (2) | 18.78% | N/A | N/A |
| FTSE EPRA/NAREIT Developed Index | 30.20% | 2.37% | 5.04% |
| S&P Global REIT Index | 30.43% | 2.54% | 4.92% |
| MSCI World REIT Index | 33.56% | 3.52% | 6.16% |
| MSCI World Real Estate Index(2) | 31.74% | 2.74% | N/A |
| MSCI World Index | 32.43% | 13.04% | 10.07% |
| (1) | 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 periods prior to this date are not necessarily indicative of the performance the Fund, based on this current index, would have generated. |
| (2) | 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. |
Visit www.ftportfolios.com/etf/DTRE for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $19,544,650 |
| Total number of portfolio holdings | 27 |
| Total advisory fee paid | $116,594 |
| Portfolio turnover rate | 28% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Crown Castle, Inc. | 7.1% |
| SBA Communications Corp. | 7.0% |
| American Tower Corp. | 6.9% |
| Equinix, Inc. | 6.8% |
| Prologis, Inc. | 6.4% |
| Digital Realty Trust, Inc. | 6.3% |
| Mapletree Logistics Trust | 4.6% |
| First Industrial Realty Trust, Inc. | 4.4% |
| STAG Industrial, Inc. | 4.2% |
| Americold Realty Trust, Inc. | 4.1% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/DTRE to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Dow Jones
Global Select Dividend Index Fund
FGD | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Dow Jones Global Select Dividend Index Fund (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FGD. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Dow Jones Global Select Dividend Index Fund | $63 | 0.56% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 24.83% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI World Index, which returned 32.43% for the same Period.
The country with the greatest allocation in the Fund was Canada with a weight of 13.5%. However, the country with the greatest contribution to the Fund’s return was South Korea with a performance contribution of 5.5%. The country with the most negative contribution to the Fund’s return was Norway with -0.4%. The Fund’s currency exposure had a 4.1% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Dow Jones Global Select Dividend Index Fund | 24.83% | 7.55% | 4.68% |
| Dow Jones Global Select Dividend Index | 25.09% | 7.86% | 4.88% |
| Dow Jones World Developed Markets IndexSM | 31.74% | 12.74% | 10.01% |
| MSCI World Index | 32.43% | 13.04% | 10.07% |
Visit www.ftportfolios.com/etf/FGD for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $566,743,125 |
| Total number of portfolio holdings | 100 |
| Total advisory fee paid | $2,286,619 |
| Portfolio turnover rate | 36% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Hapag-Lloyd AG | 3.3% |
| Fortum Oyj | 1.8% |
| CaixaBank S.A. | 1.7% |
| D/S Norden A/S | 1.7% |
| Phoenix Group Holdings PLC | 1.6% |
| Altria Group, Inc. | 1.6% |
| British American Tobacco PLC | 1.6% |
| Telia Co., AB | 1.5% |
| Bankinter S.A. | 1.4% |
| Peyto Exploration & Development Corp. | 1.4% |
Any amount shown as 0.0% represents less than 0.1%.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FGD to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Global Wind Energy ETF
FAN | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Global Wind Energy ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FAN. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Global Wind Energy ETF | $68 | 0.60% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 26.18% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI World Index, which returned 32.43% for the same Period.
The Utilities sector received the greatest allocation of any sector in the Fund with an average weight of 58.0% during the Period. However, the greatest contribution to the Fund’s return of 15.5% came from the Industrials sector with a 37.1% weight in the Fund. No sectors had a materially negative contribution to the Fund’s return. The Fund’s currency exposure had a 3.8% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Global Wind Energy ETF | 26.18% | 8.40% | 7.21% |
| ISE Clean Edge Global Wind EnergyTM Index | 27.22% | 9.29% | 8.08% |
| Russell 3000® Index | 35.19% | 15.26% | 12.83% |
| MSCI World Index | 32.43% | 13.04% | 10.07% |
Visit www.ftportfolios.com/etf/FAN for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $196,539,987 |
| Total number of portfolio holdings | 54 |
| Total advisory fee paid | $647,458 |
| Portfolio turnover rate | 20% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Orsted A/S | 7.9% |
| EDP Renovaveis S.A. | 7.3% |
| Vestas Wind Systems A/S | 6.6% |
| Northland Power, Inc. | 5.6% |
| Bank of America Corp. | 4.4% |
| JPMorgan Chase & Co. | 4.2% |
| China Longyuan Power Group Corp., Ltd., Class H | 3.5% |
| Boralex, Inc., Class A | 3.3% |
| Cadeler A/S | 2.9% |
| Nordex SE | 2.7% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FAN to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Nasdaq®, Clean Edge®, and ISE Clean Edge Global Wind EnergyTM Index (the “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.
First Trust Alerian
U.S. NextGen Infrastructure ETF
RBLD | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Alerian U.S. NextGen Infrastructure ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/RBLD. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Alerian U.S. NextGen Infrastructure ETF | $77 | 0.65% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 35.42% during the 12 months ended September 30, 2024. The Fund outperformed its benchmark, the MSCI World Industrials Index, which returned 34.73% for the same Period.
The Industrials sector received the greatest allocation of any sector in the Fund with an average weight of 43.2% during the Period. The allocation to this sector contributed 18.0% to the Fund’s overall return, the greatest contribution of any sector to the Fund’s return during the Period. No sector had a negative contribution to the Fund’s overall return.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Alerian U.S. NextGen Infrastructure ETF | 35.42% | 9.64% | 5.32% |
| Alerian U.S. NextGen Infrastructure Index(1) | 36.55% | N/A | N/A |
| MSCI World Industrials Index | 34.73% | 12.09% | 9.71% |
| Russell 3000® Index | 35.19% | 15.26% | 12.83% |
| MSCI USA Infrastructure Index | 44.28% | 7.19% | 7.80% |
| (1) | On July 29, 2022, the Fund’s underlying index changed from the ISE Global Engineering and ConstructionTM Index to the 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. |
Visit www.ftportfolios.com/etf/RBLD for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $10,160,342 |
| Total number of portfolio holdings | 102 |
| Total advisory fee paid | $57,309 |
| Portfolio turnover rate | 26% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| GE Vernova, Inc. | 1.3% |
| 3M Co. | 1.2% |
| Builders FirstSource, Inc. | 1.2% |
| Vistra Corp. | 1.2% |
| Stanley Black & Decker, Inc. | 1.2% |
| Pentair PLC | 1.1% |
| Comfort Systems USA, Inc. | 1.1% |
| Entergy Corp. | 1.1% |
| Masco Corp. | 1.1% |
| Carrier Global Corp. | 1.1% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/RBLD to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Alerian and Alerian U.S. NextGen Infrastructure 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.
First Trust NASDAQ® Clean Edge®
Smart Grid Infrastructure Index Fund
GRID | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/GRID. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | $66 | 0.56% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 36.62% during the 12 months ended September 30, 2024. The Fund outperformed its benchmark, the S&P Composite 1500® Industrials Index, which returned 34.93% for the same Period.
The Electrical Equipment industry received the greatest allocation of any industry in the Fund with an average weight of 38.6% during the Period. The allocation to this industry contributed 21.3% to the Fund’s overall return, which was the greatest contribution of any industry to return during the Period. The most negative contribution to the Fund’s return came from the Automobile Components industry with a -1.4% contribution to return. The Fund’s currency exposure had a 3.2% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | 36.62% | 21.98% | 14.90% |
| Nasdaq Clean Edge Smart Grid InfrastructureTM Index | 37.32% | 22.92% | 15.78% |
| Russell 3000® Index | 35.19% | 15.26% | 12.83% |
| S&P Composite 1500® Industrials Index | 34.93% | 14.19% | 12.02% |
| MSCI World Industrials Index | 34.73% | 12.09% | 9.71% |
Visit www.ftportfolios.com/etf/GRID for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. The Fund’s total returns would have been lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $1,846,690,043 |
| Total number of portfolio holdings | 104 |
| Total advisory fee paid | $4,538,693 |
| Portfolio turnover rate | 13% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Eaton Corp. PLC | 8.3% |
| Johnson Controls International PLC | 8.1% |
| National Grid PLC | 8.0% |
| Schneider Electric SE | 7.9% |
| ABB Ltd. | 7.7% |
| Quanta Services, Inc. | 4.1% |
| Hubbell, Inc. | 3.8% |
| Prysmian S.p.A. | 3.6% |
| Aptiv PLC | 3.0% |
| Samsung SDI Co., Ltd. | 2.4% |
Any amount shown as 0.0% represents less than 0.1%.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/GRID to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Nasdaq®, Clean Edge®, and Nasdaq Clean Edge Smart Grid InfrastructureTM Index (the “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.
First Trust Indxx
Global Natural Resources Income ETF
FTRI | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Indxx Global Natural Resources Income ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FTRI. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Indxx Global Natural Resources Income ETF | $74 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 12.11% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI ACWI Materials Index, which returned 20.71% for the same Period.
The Oil, Gas & Consumable Fuels industry received the greatest allocation of any industry in the Fund with an average weight of 37.0% during the Period. However, the greatest contribution to the Fund’s return was 10.5% which came from the Metals & Mining industry which had a weight of 23.9% in the Fund. The most negative contributions to the Fund’s return came from the Chemicals industry and the Food Products industry, each with a -1.5% contribution to the Fund’s return. The Fund’s currency exposure had a 1.3% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Indxx Global Natural Resources Income ETF | 12.11% | 9.96% | 0.36% |
| Indxx Global Natural Resources Income Index(1) | 13.22% | 11.18% | N/A |
| MSCI ACWI Materials Index | 20.71% | 10.23% | 6.64% |
| MSCI ACWI Index | 31.76% | 12.19% | 9.39% |
| (1) | Effective on the close of business on 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 total returns shown for the period prior to December 18, 2015 are not necessarily indicative of the performance 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 disclosed. |
Visit www.ftportfolios.com/etf/FTRI for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $138,577,561 |
| Total number of portfolio holdings | 50 |
| Total advisory fee paid | $1,343,301 |
| Portfolio turnover rate | 71% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Freeport-McMoRan, Inc. | 10.2% |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class | 8.7% |
| Canadian Natural Resources Ltd. | 8.7% |
| Agnico Eagle Mines Ltd. | 8.0% |
| American Water Works Co., Inc. | 5.7% |
| Weyerhaeuser Co. | 4.2% |
| Nutrien Ltd. | 4.0% |
| Ecopetrol S.A., ADR | 3.8% |
| Pentair PLC | 3.3% |
| CF Industries Holdings, Inc. | 3.1% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FTRI to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Indxx Global Agriculture ETF
FTAG | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Indxx Global Agriculture ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FTAG. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Indxx Global Agriculture ETF | $71 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 2.27% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI ACWI Materials Index, which returned 20.71% for the same Period.
The Chemicals industry received the greatest allocation of any industry in the Fund with an average weight of 49.1% during the Period. However, the greatest contribution to the Fund’s return came from the Automobiles industry which had a return of 4.7% and only a 6.4% weight in the Fund. The most negative contribution to the Fund’s return came from the Pharmaceuticals industry with a -3.3% contribution to the Fund’s return. The Fund’s currency exposure had a 1.7% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Indxx Global Agriculture ETF | 2.27% | 4.89% | -5.54% |
| Indxx Global Agriculture Index(1) | 4.45% | 6.34% | N/A |
| MSCI ACWI Index | 31.76% | 12.19% | 9.39% |
| MSCI ACWI Materials Index | 20.71% | 10.23% | 6.64% |
| (1) | Effective on the close of business on 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 total returns shown for the period prior to December 18, 2015 are not necessarily indicative of the performance 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 disclosed. |
Visit www.ftportfolios.com/etf/FTAG for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $6,269,656 |
| Total number of portfolio holdings | 51 |
| Total advisory fee paid | $66,595 |
| Portfolio turnover rate | 11% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Deere & Co. | 9.8% |
| BASF SE | 9.3% |
| Mahindra & Mahindra Ltd. | 9.0% |
| Corteva, Inc. | 8.0% |
| Bayer AG | 4.7% |
| Nutrien Ltd. | 4.4% |
| Industries Qatar QSC | 4.2% |
| Kubota Corp. | 3.4% |
| Wilmar International Ltd. | 3.3% |
| CF Industries Holdings, Inc. | 3.2% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FTAG to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Indxx NextG ETF
NXTG | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Indxx NextG ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/NXTG. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Indxx NextG ETF | $81 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 31.44% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI ACWI Information Technology Index, which returned 48.35% for the same Period.
The industry with the greatest allocation in the Fund during the Period was the Semiconductors & Semiconductor Equipment industry. This industry received an average weight of 24.7% and contributed 10.5% to the Fund’s overall return, which was the greatest contribution to return of any industry in the Fund. The only industry with a negative contribution to the Fund’s return was the Software industry, with a contribution of only ‑0.3%. The Fund’s currency exposure had a 2.3% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Indxx NextG ETF | 31.44% | 13.78% | 10.65% |
| Indxx 5G & NextG Thematic IndexSM(1) (2) | 32.82% | 15.00% | N/A |
| MSCI ACWI Information Technology Index | 48.35% | 22.78% | 19.12% |
| MSCI ACWI Index | 31.76% | 12.19% | 9.39% |
| (1) | 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 periods prior to this date are not necessarily indicative of the performance that the Fund, based on this current index, would have generated. |
| (2) | 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. |
Visit www.ftportfolios.com/etf/NXTG for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $385,646,317 |
| Total number of portfolio holdings | 103 |
| Total advisory fee paid | $2,693,527 |
| Portfolio turnover rate | 17% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class | 3.9% |
| Xiaomi Corp., Class B | 1.5% |
| Fujitsu Ltd. | 1.5% |
| F5, Inc. | 1.5% |
| International Business Machines Corp. | 1.5% |
| Ciena Corp. | 1.4% |
| Infosys Ltd., ADR | 1.4% |
| HCL Technologies Ltd. | 1.4% |
| Arista Networks, Inc. | 1.4% |
| SBA Communications Corp. | 1.4% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/NXTG to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust S-Network
Future Vehicles & Technology ETF
CARZ | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust S-Network Future Vehicles & Technology ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/CARZ. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust S-Network Future Vehicles & Technology ETF | $75 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 14.87% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI ACWI Index, which returned 31.76% for the same Period.
The Semiconductors & Semiconductor Equipment industry received the greatest allocation, with an average weight in the Fund of 39.3%. The allocation to this industry contributed 14.2% to the Fund’s overall return, which was the greatest contribution of any industry to the Fund’s return. The industry with the most negative contribution to the Fund’s return was the Automobile Components industry which contributed -1.7% to the Fund’s overall return. The Fund’s currency exposure had a 1.3% impact on performance.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust S-Network Future Vehicles & Technology ETF | 14.87% | 14.50% | 6.48% |
| S-Network Electric & Future Vehicle Ecosystem Index(1) | 15.23% | N/A | N/A |
| MSCI ACWI Index | 31.76% | 12.19% | 9.39% |
| (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 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 disclosed. |
Visit www.ftportfolios.com/etf/CARZ for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $35,140,044 |
| Total number of portfolio holdings | 103 |
| Total advisory fee paid | $263,891 |
| Portfolio turnover rate | 32% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class | 5.0% |
| Tesla, Inc. | 4.9% |
| Apple, Inc. | 4.6% |
| NVIDIA Corp. | 4.3% |
| Microsoft Corp. | 4.3% |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | 4.3% |
| Advanced Micro Devices, Inc. | 4.1% |
| Alphabet, Inc., Class A | 4.1% |
| QUALCOMM, Inc. | 3.9% |
| Samsung Electronics Co., Ltd. | 3.4% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/CARZ to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Cloud Computing ETF
SKYY | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Cloud Computing ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/SKYY. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Cloud Computing ETF | $70 | 0.60% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 34.76% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the S&P 500® Index, which returned 36.35% for the same Period.
The Software industry received the greatest allocation in the Fund, with an average weight of 49.5%. The allocation to this industry contributed 14.9% to the Fund’s overall return, which was the greatest contribution of any industry to the Fund’s return during the Period. No industry had a materially negative contribution to the Fund’s return during the Period.
FUND PERFORMANCE (September 30, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | 10 Year |
| First Trust Cloud Computing ETF | 34.76% | 12.94% | 14.55% |
| ISE CTA Cloud ComputingTM Index(1) | 35.62% | 13.61% | 15.19% |
| S&P 500® Index | 36.35% | 15.98% | 13.38% |
| S&P Composite 1500® Information Technology Index | 51.73% | 26.22% | 22.04% |
| (1) | 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.” |
Visit www.ftportfolios.com/etf/SKYY for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $2,977,532,478 |
| Total number of portfolio holdings | 65 |
| Total advisory fee paid | $17,358,724 |
| Portfolio turnover rate | 35% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Oracle Corp. | 4.5% |
| Lumen Technologies, Inc. | 4.2% |
| International Business Machines Corp. | 4.0% |
| Arista Networks, Inc. | 4.0% |
| Amazon.com, Inc. | 3.9% |
| Microsoft Corp. | 3.8% |
| Alphabet, Inc., Class A | 3.8% |
| Pure Storage, Inc., Class A | 3.6% |
| Nutanix, Inc., Class A | 3.5% |
| MongoDB, Inc. | 2.9% |
Any amount shown as 0.0% represents less than 0.1%.
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/SKYY to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Nasdaq® and ISE CTA Cloud ComputingTM Index (the “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.
First Trust International
Equity Opportunities ETF
FPXI | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust International Equity Opportunities ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FPXI. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust International Equity Opportunities ETF | $80 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 27.15% during the 12 months ended September 30, 2024. The Fund outperformed its benchmark, the MSCI ACWI ex USA Index, which returned 25.35% for the same Period.
The Fund’s greatest allocation was 19.5% to the Consumer Discretionary sector, and investments in this sector contributed 4.7% to the Fund’s performance. With a weight of 16.9%, the sector with the greatest return contribution to the Fund was the Information Technology sector at 8.5%. The only negatively contributing sector was the Energy sector, which received an allocation of 2.1% and caused a -0.3% drag on the Fund’s return. The Fund’s currency exposure had a 2.8% impact on performance.
FUND PERFORMANCE (November 4, 2014 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | Since
Inception
(11/4/14) |
| First Trust International Equity Opportunities ETF | 27.15% | 6.67% | 6.02% |
| IPOX® International Index | 28.35% | 7.66% | 6.91% |
| MSCI ACWI ex USA Index | 25.35% | 7.59% | 5.47% |
Visit www.ftportfolios.com/etf/FPXI for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $145,506,998 |
| Total number of portfolio holdings | 51 |
| Total advisory fee paid | $1,111,523 |
| Portfolio turnover rate | 106% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| ARM Holdings PLC, ADR | 7.1% |
| Spotify Technology S.A. | 5.2% |
| Monday.com Ltd. | 4.9% |
| InPost S.A. | 4.2% |
| Nordnet AB publ | 4.2% |
| NU Holdings Ltd., Class A | 4.1% |
| Sandoz Group AG | 4.0% |
| Aristocrat Leisure Ltd. | 3.8% |
| UCB S.A. | 3.5% |
| TDK Corp. | 3.4% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FPXI to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
IPOX® and IPOX® International 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.
First Trust Nasdaq Cybersecurity ETF
CIBR | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Nasdaq Cybersecurity ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/CIBR. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Nasdaq Cybersecurity ETF | $68 | 0.59% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 31.12% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the S&P Composite 1500® Information Technology Index, which returned 51.73% for the same Period.
The Fund allocated 52.1% to the Software industry and investments in this industry contributed 16.0% to the Fund’s overall return, which was more than any other industry. No industry had a negative contribution to the Fund’s return. The Fund’s currency exposure had a 0.3% impact on performance.
FUND PERFORMANCE (July 6, 2015 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | Since
Inception
(7/6/15) |
| First Trust Nasdaq Cybersecurity ETF | 31.12% | 17.31% | 13.13% |
| Nasdaq CTA CybersecurityTM Index | 31.83% | 18.15% | 13.93% |
| S&P 500® Index | 36.35% | 15.98% | 13.78% |
| S&P Composite 1500® Information Technology Index | 51.73% | 26.22% | 23.13% |
Visit www.ftportfolios.com/etf/CIBR for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $6,601,960,374 |
| Total number of portfolio holdings | 34 |
| Total advisory fee paid | $36,419,444 |
| Portfolio turnover rate | 39% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Broadcom, Inc. | 8.4% |
| Cisco Systems, Inc. | 8.3% |
| CrowdStrike Holdings, Inc., Class A | 8.0% |
| Infosys Ltd., ADR | 7.5% |
| Palo Alto Networks, Inc. | 7.4% |
| Leidos Holdings, Inc. | 4.1% |
| Booz Allen Hamilton Holding Corp. | 4.0% |
| Fortinet, Inc. | 4.0% |
| Check Point Software Technologies Ltd. | 4.0% |
| Akamai Technologies, Inc. | 3.9% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/CIBR to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Nasdaq® and Nasdaq CTA CybersecurityTM Index (the “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.
First Trust IPOX®
Europe Equity Opportunities ETF
FPXE | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust IPOX® Europe Equity Opportunities ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FPXE. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust IPOX® Europe Equity Opportunities ETF | $81 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 31.38% during the 12 months ended September 30, 2024. The Fund outperformed its benchmark, the MSCI Europe Index, which returned 25.23% for the same Period.
The sector with the greatest allocation was the Consumer Discretionary sector at 21.9%. This sector contributed 7.1% to the Fund’s return. The greatest contribution to return, however, came from investments in the Information Technology sector, which received an allocation of 12.2% and contributed 8.1% to the Fund’s overall return. No sector contributed negatively to the Fund’s return. The Fund’s currency exposure had a 4.8% impact on performance.
FUND PERFORMANCE (October 4, 2018 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | Since
Inception
(10/4/18) |
| First Trust IPOX® Europe Equity Opportunities ETF | 31.38% | 8.08% | 6.94% |
| IPOX®-100 Europe Index | 32.80% | 9.33% | 8.19% |
| MSCI Europe Index | 25.23% | 8.90% | 7.54% |
Visit www.ftportfolios.com/etf/FPXE for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $4,005,212 |
| Total number of portfolio holdings | 102 |
| Total advisory fee paid | $30,506 |
| Portfolio turnover rate | 107% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| ARM Holdings PLC, ADR | 6.6% |
| Monday.com Ltd. | 4.3% |
| Nordnet AB publ | 4.1% |
| Spotify Technology S.A. | 4.1% |
| Gen Digital, Inc. | 3.7% |
| On Holding AG, Class A | 3.5% |
| InPost S.A. | 3.3% |
| UCB S.A. | 3.1% |
| BoneSupport Holding AB | 2.6% |
| Munters Group AB | 2.6% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FPXE to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
IPOX® and IPOX®-100 Europe 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.
First Trust Dow Jones
International Internet ETF
FDNI | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Dow Jones International Internet ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FDNI. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Dow Jones International Internet ETF | $78 | 0.65% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 41.14% during the 12 months ended September 30, 2024. The Fund outperformed its benchmark, the MSCI ACWI ex-USA Information Technology Index, which returned 38.32% for the same Period.
Nearly 95% of the Fund’s assets were allocated across three sectors. The Consumer Discretionary sector had an allocation of 46.6%, the Communication Services sector had an allocation of 35.4%, and the Information Technology sector had an allocation of 12.7%. The greatest contribution to the Fund’s return came from the allocation to the Consumer Discretionary sector, with a 21.4% contribution. The most negative contribution to the Fund’s return came from investments in the Health Care sector which caused a -0.4% drag on the Fund’s overall return. The Fund’s currency exposure had a 2.9% impact on performance.
FUND PERFORMANCE (November 5, 2018 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | 5 Year | Since
Inception
(11/5/18) |
| First Trust Dow Jones International Internet ETF | 41.14% | 7.47% | 7.87% |
| Dow Jones International Internet Index | 42.64% | 8.31% | 8.70% |
| MSCI ACWI ex-USA Information Technology Index | 38.32% | 14.79% | 15.17% |
| MSCI ACWI ex-USA Index | 25.35% | 7.59% | 7.42% |
Visit www.ftportfolios.com/etf/FDNI for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $41,311,383 |
| Total number of portfolio holdings | 41 |
| Total advisory fee paid | $183,547 |
| Portfolio turnover rate | 33% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Alibaba Group Holding Ltd. | 11.7% |
| Meituan, Class B | 11.0% |
| Tencent Holdings Ltd. | 10.4% |
| JD.com, Inc., Class A | 5.5% |
| Prosus N.V. | 5.5% |
| PDD Holdings, Inc., ADR | 5.0% |
| Shopify, Inc., Class A | 5.0% |
| Spotify Technology S.A. | 4.9% |
| Adyen N.V. | 4.4% |
| Naspers Ltd., Class N | 3.9% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FDNI to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Bloomberg
Emerging Market Democracies ETF
EMDM | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Bloomberg Emerging Market Democracies ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/EMDM. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Bloomberg Emerging Market Democracies ETF | $84 | 0.75% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 23.28% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI Emerging Markets Index, which returned 26.05% for the same Period.
The Fund gave a nearly equal allocation to investments in six countries: Taiwan at 16.2%, India at 15.2%, South Africa at 14.8%, South Korea at 14.5%, Brazil at 14.4%, and Mexico at 14.1%. The greatest contributor to the Fund’s return were investments in Taiwan, which contributed 9.5% to Fund’s overall return. The greatest drag on Fund performance came from Chile. The Fund invested in only one Chilean security which contributed
-0.7% to the Fund’s return. The Fund’s currency exposure had a 0.4% impact on performance.
FUND PERFORMANCE (March 2, 2023 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | Since
Inception
(3/2/23) |
| First Trust Bloomberg Emerging Market Democracies ETF | 23.28% | 14.75% |
| Bloomberg Emerging Market Democracies Index | 25.94% | 17.25% |
| MSCI Emerging Markets Index | 26.05% | 15.23% |
Visit www.ftportfolios.com/etf/EMDM for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $8,299,720 |
| Total number of portfolio holdings | 101 |
| Total advisory fee paid | $48,470 |
| Portfolio turnover rate | 22% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Taiwan Semiconductor Manufacturing Co., Ltd. | 11.4% |
| Naspers Ltd., Class N | 7.7% |
| Samsung Electronics Co., Ltd. | 5.9% |
| FirstRand Ltd. | 4.9% |
| Standard Bank Group Ltd. | 3.8% |
| Grupo Mexico S.A.B. de C.V. | 3.2% |
| Capitec Bank Holdings Ltd. | 3.1% |
| Petroleo Brasileiro S.A. | 2.9% |
| Powszechna Kasa Oszczednosci Bank Polski S.A. | 2.8% |
| America Movil S.A.B. de C.V. | 2.2% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/EMDM to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
“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.
First Trust Nasdaq
Lux Digital Health Solutions ETF
EKG | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Nasdaq Lux Digital Health Solutions ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/EKG. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Nasdaq Lux Digital Health Solutions ETF | $72 | 0.65% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 21.01% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the S&P Composite 1500® Health Care Index, which returned 21.46% for the same Period.
The Health Care Equipment & Supplies industry received the greatest allocation in the Fund with an average weight of 52.8% and a contribution to the Fund’s return of 14.0%, which was the greatest of any industry. The Health Care Providers and Services industry was the only negatively contributing sector in the Fund with a contribution of -0.3% to the Fund’s return.
FUND PERFORMANCE (March 22, 2022 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | Since
Inception
(3/22/22) |
| First Trust Nasdaq Lux Digital Health Solutions ETF | 21.01% | -6.93% |
| Nasdaq Lux Health TechTM Index | 21.79% | -6.33% |
| Russell 3000® Index | 35.19% | 10.94% |
| S&P Composite 1500® Health Care Index | 21.46% | 6.08% |
Visit www.ftportfolios.com/etf/EKG for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $2,557,536 |
| Total number of portfolio holdings | 39 |
| Total advisory fee paid | $14,346 |
| Portfolio turnover rate | 16% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Intuitive Surgical, Inc. | 7.8% |
| ResMed, Inc. | 7.8% |
| Veeva Systems, Inc., Class A | 7.6% |
| Dexcom, Inc. | 7.6% |
| IQVIA Holdings, Inc. | 7.4% |
| Insulet Corp. | 4.5% |
| Exact Sciences Corp. | 4.3% |
| Natera, Inc. | 4.2% |
| Align Technology, Inc. | 4.2% |
| Hologic, Inc. | 3.9% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/EKG to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
Nasdaq® and Nasdaq Lux Health TechTM Index (the “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.
First Trust Indxx Metaverse ETF
ARVR | NASDAQ, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Indxx Metaverse ETF (the “Fund”) for the year of October 1, 2023 to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/ARVR. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Indxx Metaverse ETF | $81 | 0.70% |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 30.01% during the 12 months ended September 30, 2024. The Fund underperformed its benchmark, the MSCI ACWI Index, which returned 31.76% for the same Period.
The Information Technology sector received an allocation of 55.9% and contributed 17.8% to the Fund’s return, the largest of any sector for both allocation and contribution to return. The only negatively contributing sector was the Health Care sector in which the Fund held only one security that caused a -0.8% contribution to the Fund’s overall return. The Fund’s currency exposure had a 1.5% impact on performance.
FUND PERFORMANCE (April 19, 2022 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | 1 Year | Since
Inception
(4/19/22) |
| First Trust Indxx Metaverse ETF | 30.01% | 9.76% |
| Indxx Metaverse Index | 31.31% | 10.77% |
| MSCI ACWI Index | 31.76% | 10.64% |
Visit www.ftportfolios.com/etf/ARVR for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $3,778,151 |
| Total number of portfolio holdings | 43 |
| Total advisory fee paid | $17,421 |
| Portfolio turnover rate | 39% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Xiaomi Corp., Class B | 4.2% |
| Zoom Video Communications, Inc., Class A | 3.8% |
| Tencent Holdings Ltd. | 3.6% |
| ROBLOX Corp., Class A | 3.5% |
| Meta Platforms, Inc., Class A | 3.4% |
| Netflix, Inc. | 3.3% |
| NetEase, Inc. | 3.3% |
| Texas Instruments, Inc. | 3.2% |
| Apple, Inc. | 3.1% |
| Take-Two Interactive Software, Inc. | 3.1% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/ARVR to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
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.
First Trust Emerging Markets
Human Flourishing ETF
FTHF | NYSE ARCA, INC.
ANNUAL SHAREHOLDER REPORT | September 30, 2024
This annual shareholder report contains important information about the First Trust Emerging Markets Human Flourishing ETF (the “Fund”) for the period of October 30, 2023 (commencement of investment operations) to September 30, 2024 (the “Period”). You can find additional information about the Fund at www.ftportfolios.com/fund-documents/etf/FTHF. You can also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
WHAT WERE THE FUND COSTS FOR THE LAST YEAR?
(Based on a hypothetical $10,000 investment)
| Fund | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| First Trust Emerging Markets Human Flourishing ETF | $77(1) | 0.75%(2) |
(1) | The Fund commenced investment operations on October 30, 2023. Had the Fund been in operation for a complete fiscal year, the cost of a $10,000 investment would have been higher. |
(2) | Annualized. |
HOW DID THE FUND PERFORM LAST YEAR? WHAT AFFECTED THE FUND’S PERFORMANCE?
The Fund returned 22.00% from the Fund’s inception date on October 30, 2023 through September 30, 2024. The Fund underperformed its benchmark, the MSCI Emerging Markets Index, which returned 30.20% for the same Period.
Taiwan was the country with the greatest allocation in the Fund with an average weight of 21.0%. The allocation to investments in Taiwan contributed the most of any country to the Fund’s performance with a 9.9% contribution to the Fund’s return. No country had a materially negative return contribution to the Fund’s overall performance. The Fund’s currency exposure had a 1.1% impact on performance.
FUND PERFORMANCE (October 30, 2023 to September 30, 2024)
The performance line graph below shows the performance of a hypothetical $10,000 initial investment in the Fund over a ten-year period (or for the life of the Fund, if shorter). The subsequent account value as of the end of the Period is listed next to the name of the Fund or index, as applicable. The performance table below shows the average annual total returns of the Fund for the past one-, five-, and ten-year periods, as applicable (or for the life of the Fund, if shorter), as of the end of the Period. Both the line graph and performance table compare the Fund’s performance to an appropriate broad-based index and may compare to additional indices reflecting the market segment(s) in which the Fund invests over the same periods.
Investment Performance of $10,000
| Average Annual Total Returns (as of September 30, 2024) | Since
Inception
(10/30/23) |
| First Trust Emerging Markets Human Flourishing ETF | 22.00% |
| Emerging Markets Human Flourishing Index | 22.94% |
| MSCI Emerging Markets Index | 30.20% |
Visit www.ftportfolios.com/etf/FTHF for more recent performance information.
The Fund’s past performance is not a good predictor of the Fund’s future performance. The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
KEY FUND STATISTICS (As of September 30, 2024)
| Fund net assets | $42,823,683 |
| Total number of portfolio holdings | 101 |
| Total advisory fee paid | $216,974 |
| Portfolio turnover rate | 30% |
WHAT DID THE FUND INVEST IN? (As of September 30, 2024)
The tables below show the investment makeup of the Fund, representing the percentage of total investments of the Fund.
| Taiwan Semiconductor Manufacturing Co., Ltd. | 10.0% |
| Samsung Electronics Co., Ltd. | 6.2% |
| Itau Unibanco Holding S.A. | 4.7% |
| Petroleo Brasileiro S.A. | 4.5% |
| Wal-Mart de Mexico S.A.B. de C.V. | 3.0% |
| Grupo Financiero Banorte S.A.B. de C.V., Class O | 2.7% |
| FirstRand Ltd. | 2.4% |
| WEG S.A. | 2.2% |
| SM Investments Corp. | 2.0% |
| Standard Bank Group Ltd. | 1.9% |
WHERE CAN I FIND ADDITIONAL INFORMATION ABOUT THE FUND?
Visit www.ftportfolios.com/fund-documents/etf/FTHF to view additional information about the Fund such as the prospectus, financial information, Fund holdings and proxy voting information. You may also request this information by contacting us at 1-800-621-1675 or info@ftportfolios.com.
OTHER INFORMATION
“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.
| (b) | Not applicable to the Registrant. |
Item 2. Code of Ethics.
| (a) | The First Trust Exchange-Traded Fund II (“Registrant”), as of the end of the period covered by this report, has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. |
| (c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, and that relates to any element of the code of ethics description. |
| (d) | The Registrant, during the period covered by this report, has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
| (f) | A copy of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1). |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the Registrant’s Board of Trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified to serve as audit committee financial experts serving on its audit committee and that each of them is “independent,” as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $381,563 for the fiscal year ended 2023 and $406,563 for the fiscal year ended 2024. |
| (b) | Audit-Related Fees (Registrant) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
Audit-Related Fees (Distributor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
| (c) | Tax Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for tax return review and debt instrument tax analysis and reporting were $436,849 for the fiscal year ended 2023 and $288,996 for the fiscal year ended 2024. |
Tax Fees (Investment Advisor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant’s advisor and distributor $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
Tax Fees (Distributor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant’s distributor were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
These fees were for tax consultation and/or tax return preparation and professional services rendered for PFIC (Passive Foreign Investment Company) Identification Services.
| (d) | All Other Fees (Registrant) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant, other than the services reported in paragraphs (a) through (c) of this Item $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
All Other Fees (Investment Advisor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant’s investment advisor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
All Other Fees (Distributor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant’s distributor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee (the “Committee”) is responsible for the pre-approval of all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the Registrant by its independent auditors. The Chairman of the Committee is authorized to give such pre-approvals on behalf of the Committee up to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent auditor’s engagements for non-audit services with the Registrant’s advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant, subject to the de minimis exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If the independent auditor has provided non-audit services to the Registrant’s advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to its policies, the Committee will consider whether the provision of such non-audit services is compatible with the auditor’s independence.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) for the Registrant and the Registrant’s investment advisor and distributor of this Item that were approved by the audit committee pursuant to the pre-approval exceptions included in paragraph (c)(7)(i)(C) or paragraph(C)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
| Registrant: | | Advisor and Distributor: |
| (b) 0% | | (b) 0% |
| (c) 0% | | (c) 0% |
| (d) 0% | | (d) 0% |
| (f) | The percentage of hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
| (g) | The aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, and rendered to the Registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the Registrant for the fiscal year ended 2023 were $436,849 for the Registrant, $31,000 for the Registrant’s investment advisor and $45,500 for the Registrant’s distributor; and for the fiscal year ended 2024 were $288,996 for the Registrant, $28,600 for the Registrant’s investment advisor and $33,000 for the Registrant’s distributor. |
| (h) | The Registrant’s audit committee of its Board of Trustees has determined that the provision of non-audit services that were rendered to the Registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) Not applicable to the Registrant.
(j) Not applicable to the Registrant.
Item 5. Audit Committee of Listed Registrants.
| (a) | The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 consisting of all the independent directors of the Registrant. The audit committee of the Registrant is comprised of: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, Niel B. Nielson and Bronwyn Wright. |
| (b) | Not applicable to the Registrant. |
Item 6. Investments.
| (a) | The Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR. |
| (b) | Not applicable to the Registrant. |
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
(a) Following is a copy of the annual financial statements required, and for the periods specified, by Regulation S-X.
Annual Financial
Statements and
Other Information |
For the Year Ended
September 30, 2024 |
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
Annual Financial Statements and Other Information
September 30, 2024
Performance and Risk Disclosure
There is no assurance that 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”) 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.
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.
First Trust Advisors L.P., the Funds’ 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 that provides insight into each Fund’s performance and investment approach.
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 STOXX® European Select Dividend Index Fund (FDD)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 98.1% |
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| AP Moller - Maersk A/S, Class A (DKK) | |
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| Credit Agricole S.A. (EUR) | |
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| Bayerische Motoren Werke AG (Preference Shares) (EUR) | |
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| Mercedes-Benz Group AG (EUR) | |
| Volkswagen AG (Preference Shares) (EUR) | |
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| Poste Italiane S.p.A. (EUR) (c) (d) | |
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| ABN AMRO Bank N.V. (EUR) (c) (d) | |
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| Zurich Insurance Group AG (CHF) | |
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| IG Group Holdings PLC (GBP) | |
| Legal & General Group PLC (GBP) | |
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MONEY MARKET FUNDS — 0.0% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 4.76% (e) | |
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| Total Investments — 98.1% | |
| | |
| Net Other Assets and Liabilities — 1.9% | |
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| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 September 30, 2024. |
Abbreviations throughout the Portfolio of Investments: |
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See Notes to Financial Statements
First Trust STOXX® European Select Dividend Index Fund (FDD)Portfolio of Investments (Continued)September 30, 2024 Currency Exposure Diversification | |
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Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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. |
See Notes to Financial Statements
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)Portfolio of InvestmentsSeptember 30, 2024
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COMMON STOCKS (a) (b) — 99.7% |
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| Warehouses De Pauw C.V.A. (EUR) | |
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| ESR Group Ltd. (HKD) (c) (d) | |
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| Daiwa House REIT Investment Corp. (JPY) | |
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| Nippon Prologis REIT, Inc. (JPY) | |
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| Frasers Logistics & Commercial Trust (SGD) (d) | |
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| Mapletree Logistics Trust (SGD) | |
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| LondonMetric Property PLC (GBP) | |
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| Tritax Big Box REIT PLC (GBP) | |
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| Americold Realty Trust, Inc. | |
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| Digital Realty Trust, Inc. | |
| DigitalBridge Group, Inc. | |
| EastGroup Properties, Inc. | |
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| First Industrial Realty Trust, Inc. | |
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| Rexford Industrial Realty, Inc. | |
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MONEY MARKET FUNDS — 0.2% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 4.76% (e) | |
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| Total Investments — 99.9% | |
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| Net Other Assets and Liabilities — 0.1% | |
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| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 September 30, 2024. |
Abbreviations throughout the Portfolio of Investments: |
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Currency Exposure Diversification | |
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See Notes to Financial Statements
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)Portfolio of Investments (Continued)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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. |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD)Portfolio of InvestmentsSeptember 30, 2024
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COMMON STOCKS (a) (b) — 99.1% |
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| Bank of Queensland Ltd. (AUD) | |
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| Harvey Norman Holdings Ltd. (AUD) | |
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| Super Retail Group Ltd. (AUD) | |
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| CK Infrastructure Holdings Ltd. (HKD) | |
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| Bank of Nova Scotia (The) (CAD) | |
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| 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) | |
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| CK Hutchison Holdings Ltd. (HKD) | |
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| AP Moller - Maersk A/S, Class A (DKK) | |
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| Ayvens S.A. (EUR) (c) (d) | |
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| Bayerische Motoren Werke AG (Preference Shares) (EUR) | |
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| Hapag-Lloyd AG (EUR) (c) (d) | |
| Mercedes-Benz Group AG (EUR) | |
| Volkswagen AG (Preference Shares) (EUR) | |
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| BOC Hong Kong Holdings Ltd. (HKD) | |
| Henderson Land Development Co., Ltd. (HKD) | |
| New World Development Co., Ltd. (HKD) | |
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| Sino Land Co., Ltd. (HKD) | |
| Swire Properties Ltd. (HKD) | |
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| Azimut Holding S.p.A. (EUR) | |
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| Poste Italiane S.p.A. (EUR) (c) (d) | |
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| Japan Tobacco, Inc. (JPY) | |
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| Janus Henderson Group PLC | |
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| B&M European Value Retail S.A. (GBP) | |
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| 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)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
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| Spark New Zealand Ltd. (NZD) | |
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| 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) | |
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| Samsung Fire & Marine Insurance Co., Ltd. (KRW) | |
| Samsung Securities Co., Ltd. (KRW) | |
| Woori Financial Group, Inc. (KRW) | |
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| ACS Actividades de Construccion y Servicios S.A. (EUR) | |
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| Logista Integral S.A. (EUR) | |
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| Naturgy Energy Group S.A. (EUR) | |
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| Helvetia Holding AG (CHF) | |
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| Zurich Insurance Group AG (CHF) | |
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| British American Tobacco PLC (GBP) | |
| IG Group Holdings PLC (GBP) | |
| Legal & General Group PLC (GBP) | |
| Phoenix Group Holdings PLC (GBP) | |
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| First Interstate BancSystem, Inc., Class A | |
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| Northwest Bancshares, Inc. | |
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| Prudential Financial, Inc. | |
| Sitio Royalties Corp., Class A | |
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| Verizon Communications, Inc. | |
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MONEY MARKET FUNDS — 0.0% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 4.76% (e) | |
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| Total Investments — 99.1% | |
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| Net Other Assets and Liabilities — 0.9% | |
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| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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. |
See Notes to Financial Statements
First Trust Dow Jones Global Select Dividend Index Fund (FGD)Portfolio of Investments (Continued)September 30, 2024 | 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 September 30, 2024. |
Abbreviations throughout the Portfolio of Investments: |
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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 September 30, 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 InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.9% |
| | |
| Concord New Energy Group Ltd. (HKD) | |
| | |
| Serena Energia S.A. (BRL) (c) | |
| | |
| Boralex, Inc., Class A (CAD) | |
| Innergex Renewable Energy, Inc. (CAD) (d) | |
| Northland Power, Inc. (CAD) (d) | |
| | |
| | |
| China Datang Corp. Renewable Power Co., Ltd., Class H (HKD) (d) | |
| China Longyuan Power Group Corp., Ltd., Class H (HKD) | |
| China Suntien Green Energy Corp., Ltd., Class H (HKD) | |
| Goldwind Science & Technology Co., Ltd., Class H (HKD) | |
| | |
| | |
| | |
| 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) | |
| | |
| | |
| | |
| | |
| Energix-Renewable Energies Ltd. (ILS) | |
| Enlight Renewable Energy Ltd. (ILS) (c) | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Toray Industries, Inc. (JPY) | |
| | |
| | |
| | |
| | |
| | |
| | |
| CS Bearing Co., Ltd. (KRW) (c) | |
| | |
| Dongkuk Structures & Construction Co., Ltd. (KRW) (c) | |
| | |
| | |
| | |
| EDP Renovaveis S.A. (EUR) | |
| | |
| | |
| | |
| Orron Energy AB (SEK) (c) (d) | |
| | |
| | |
| | |
| | |
| | |
| Century Iron & Steel Industrial Co., Ltd. (TWD) | |
| | |
| Galata Wind Enerji A/S (TRY) | |
| | |
| 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)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| United States (Continued) | |
| | |
| TPI Composites, Inc. (c) (d) | |
| | |
| | |
| | |
| | |
REPURCHASE AGREEMENTS — 9.4% |
| Bank of America Corp., 4.86% (g), dated 09/30/24, due 10/01/24, with a maturity value of $9,412,927. Collateralized by U.S. Treasury Securities, interest rates of 0.00% to 4.25%, due 11/15/27 to 08/15/54. The value of the collateral including accrued interest is $9,599,889. (h) | |
| JPMorgan Chase & Co., 4.87% (g), dated 09/30/24, due 10/01/24, with a maturity value of $9,043,795. Collateralized by U.S. Treasury Securities, interest rates of 3.13% to 4.38%, due 11/30/29 to 02/15/43. The value of the collateral including accrued interest is $9,223,424. (h) | |
| Total Repurchase Agreements | |
| | |
|
|
| Total Investments — 109.3% | |
| | |
| Net Other Assets and Liabilities — (9.3)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 $17,373,109 and the total value of the collateral held by the Fund is $18,454,228. |
| 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 September 30, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Global Wind Energy ETF (FAN)Portfolio of Investments (Continued)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 September 30, 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 September 30, 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 InvestmentsSeptember 30, 2024
| | |
|
| | |
| Advanced Drainage Systems, Inc. | |
| Builders FirstSource, Inc. (a) | |
| | |
| | |
| Johnson Controls International PLC | |
| Lennox International, Inc. | |
| | |
| | |
| | |
| | |
| Construction & Engineering | |
| | |
| Comfort Systems USA, Inc. | |
| | |
| | |
| | |
| | |
| Martin Marietta Materials, Inc. | |
| | |
| | |
| Electric Utilities — 16.8% | |
| | |
| American Electric Power Co., Inc. | |
| Constellation Energy Corp. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Electrical Equipment — 7.7% | |
| | |
| | |
| | |
| | |
| | |
| | |
|
| 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) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| 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)September 30, 2024 | | |
COMMON STOCKS (Continued) |
| | |
| | |
| | |
| | |
| | |
| | |
| Stanley Black & Decker, Inc. | |
| Westinghouse Air Brake Technologies 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 - 4.80% (f) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — 0.0% | |
| | |
| 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 September 30, 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 September 30, 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)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.9% |
| | |
| | |
| | |
| 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) | |
| Cia Paranaense de Energia - Copel, 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) | |
| | |
| | |
| | |
| | |
|
| | |
| 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) | |
| | |
| | |
| | |
| | |
| | |
| 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)September 30, 2024 | | |
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) | |
| Shihlin Electric & Engineering Corp. (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 — 0.2% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (g) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 4.76% (g) (h) | |
| | |
| | |
|
|
| 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. |
| 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 $1,829,116 and the total value of the collateral held by the Fund is $2,124,083. |
| 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. |
See Notes to Financial Statements
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)Portfolio of Investments (Continued)September 30, 2024 | 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 September 30, 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 September 30, 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 September 30, 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 Indxx Global Natural Resources Income ETF (FTRI)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.8% |
| | |
| Gold Road Resources Ltd. (AUD) | |
| GrainCorp Ltd., Class A (AUD) | |
| | |
| | |
| Perseus Mining Ltd. (AUD) | |
| | |
| | |
| Cia de Saneamento de Minas Gerais Copasa MG (BRL) | |
| | |
| | |
| Alamos Gold, Inc., Class A | |
| | |
| Birchcliff Energy Ltd. (CAD) (c) | |
| Canadian Natural Resources Ltd. (CAD) | |
| Dundee Precious Metals, Inc. (CAD) | |
| | |
| | |
| Parex Resources, Inc. (CAD) | |
| Peyto Exploration & Development Corp. (CAD) (c) | |
| West Fraser Timber Co., Ltd. (CAD) | |
| Whitecap Resources, Inc. (CAD) (c) | |
| | |
| | |
| CMOC Group Ltd., Class H (HKD) | |
| Yankuang Energy Group Co., Ltd., Class H (HKD) | |
| Zijin Mining Group Co., Ltd., Class H (HKD) | |
| | |
| | |
| | |
| | |
| Guangdong Investment Ltd. (HKD) | |
| | |
| | |
| Gujarat State Fertilizers & Chemicals Ltd. (INR) | |
| Tata Chemicals Ltd. (INR) | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Alliance Resource Partners, L.P. (d) | |
| American Water Works Co., Inc. | |
| | |
| California Water Service Group | |
| CF Industries Holdings, Inc. | |
| Essential Utilities, Inc. | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Watts Water Technologies, Inc., Class A | |
| | |
| | |
| | |
| | |
See Notes to Financial Statements
First Trust Indxx Global Natural Resources Income ETF (FTRI)Portfolio of Investments (Continued)September 30, 2024 | | |
MONEY MARKET FUNDS — 9.7% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (e) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 4.76% (e) (f) | |
| | |
| | |
|
|
| Total Investments — 109.5% | |
| | |
| Net Other Assets and Liabilities — (9.5)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 $12,790,500 and the total value of the collateral held by the Fund is $13,186,799. |
| Security is a Master Limited Partnership (“MLP”). |
| Rate shown reflects yield as of September 30, 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 September 30, 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)September 30, 2024
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 September 30, 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 Indxx Global Agriculture ETF (FTAG)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 100.1% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| 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 — 1.2% | |
| | |
| | |
| | |
| | |
| 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)September 30, 2024 | | |
MONEY MARKET FUNDS — 0.8% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (g) | |
| | |
|
|
| Total Investments — 100.9% | |
| | |
| Net Other Assets and Liabilities — (0.9)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 September 30, 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 September 30, 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 September 30, 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 InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.9% |
| | |
| | |
| | |
| 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)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Samsung SDS Co., Ltd. (KRW) | |
| SK Telecom Co., Ltd. (KRW) | |
| | |
| | |
| Cellnex Telecom S.A. (EUR) (c) (d) (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 — 0.6% | |
| 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 — 4.1% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (j) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 4.76% (j) (k) | |
| | |
| | |
|
|
| Total Investments — 104.0% | |
| | |
| Net Other Assets and Liabilities — (4.0)% | |
| | |
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of Investments (Continued)September 30, 2024 | Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 $14,760,115 and the total value of the collateral held by the Fund is $15,467,085. |
| 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 September 30, 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 September 30, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| – United Arab Emirates Dirham |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Indxx NextG ETF (NXTG)Portfolio of Investments (Continued)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 September 30, 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 S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.7% |
| | |
| | |
| Pilbara Minerals Ltd. (AUD) (c) (d) | |
| | |
| | |
| | |
| | |
| Lithium Americas Argentina Corp. (c) (d) | |
| Magna International, Inc. | |
| Sigma Lithium Corp. (c) (d) | |
| | |
| | |
| | |
| | |
| Geely Automobile Holdings Ltd. (HKD) | |
| Li Auto, Inc., ADR (c) (d) | |
| | |
| | |
| 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) | |
| Tianqi Lithium Corp., Class H (HKD) (d) | |
| 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) | |
| Vale Indonesia Tbk PT (IDR) (c) | |
| | |
| | |
| | |
| | |
| Electreon Wireless Ltd. (ILS) (c) | |
| | |
| | |
| | |
| Honda Motor Co., Ltd. (JPY) | |
| | |
| Nissan Motor Co., Ltd. (JPY) (d) | |
| Panasonic Holdings Corp. (JPY) | |
| Renesas Electronics Corp. (JPY) | |
| | |
| | |
| | |
| | |
| | |
| Arcadium Lithium PLC (AUD) (c) | |
| | |
| | |
| | |
| Nebius Group N.V. (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) | |
| POSCO Future M Co., Ltd. (KRW) | |
| Samsung Electronics Co., Ltd. (KRW) | |
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of Investments (Continued)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Samsung SDI Co., Ltd. (KRW) | |
| SK IE Technology Co., Ltd. (KRW) (c) (e) (f) | |
| | |
| | |
| | |
| | |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
| | |
| Sensata Technologies Holding PLC | |
| | |
| | |
| Advanced Micro Devices, Inc. (c) | |
| | |
| Allegro MicroSystems, Inc. (c) | |
| | |
| | |
| | |
| Aurora Innovation, Inc. (c) | |
| | |
| ChargePoint Holdings, Inc. (c) (d) | |
| | |
| | |
| | |
| | |
| indie Semiconductor, Inc., Class A (c) | |
| | |
| Lattice Semiconductor Corp. (c) | |
| | |
| Lucid Group, Inc. (c) (d) | |
| Luminar Technologies, Inc. (c) (d) | |
| | |
| | |
| Microchip Technology, Inc. | |
| | |
| | |
| Mobileye Global, Inc., Class A (c) | |
| | |
| ON Semiconductor Corp. (c) | |
| | |
| | |
| | |
| | |
| | |
|
| United States (Continued) | |
| | |
| Rivian Automotive, Inc., Class A (c) | |
| Silicon Laboratories, Inc. (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 5.4% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (j) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 4.76% (j) (k) | |
| | |
| | |
|
|
| Total Investments — 105.1% | |
| | |
| Net Other Assets and Liabilities — (5.1)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 $1,779,595 and the total value of the collateral held by the Fund is $1,851,885. |
| 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. |
See Notes to Financial Statements
First Trust S-Network Future Vehicles & Technology ETF (CARZ)Portfolio of Investments (Continued)September 30, 2024 | 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 September 30, 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 September 30, 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 September 30, 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 September 30, 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 InvestmentsSeptember 30, 2024
| | |
|
| | |
| | |
| | |
| Arista Networks, Inc. (a) | |
| | |
| | |
| Diversified Telecommunication | |
| Lumen Technologies, Inc. (a) | |
| Financial Services — 0.7% | |
| | |
| | |
| Veeva Systems, Inc., Class A (a) | |
| Interactive Media & Services | |
| | |
| | |
| 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) | |
| 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) | |
| | |
| | |
| Klaviyo, Inc., Class A (a) | |
| | |
| Nutanix, Inc., Class A (a) | |
| | |
| | |
| Palo Alto Networks, Inc. (a) | |
| | |
| | |
| RingCentral, Inc., Class A (a) | |
| Rubrik, 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) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.0% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (b) | |
| | |
See Notes to Financial Statements
First Trust Cloud Computing ETF (SKYY)Portfolio of Investments (Continued)September 30, 2024 | | |
REPURCHASE AGREEMENTS — 0.0% |
| Bank of America Corp., 4.86% (b), dated 09/30/24, due 10/01/24, with a maturity value of $75. Collateralized by U.S. Treasury Securities, interest rates of 0.00% to 4.25%, due 11/15/27 to 08/15/54. The value of the collateral including accrued interest is $77. (c) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — 0.0% | |
| | |
| Non-income producing security. |
| Rate shown reflects yield as of September 30, 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 September 30, 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. |
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(1) | |
| |
| |
| The amount is included in “Investments, at value” on the Statements of Assets and Liabilities. |
| At September 30, 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 InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.5% |
| | |
| Aristocrat Leisure Ltd. (AUD) | |
| | |
| | |
| | |
| Caixa Seguridade Participacoes S.A. (BRL) | |
| | |
| Brookfield Asset Management Ltd., Class A | |
| Celestica, Inc. (CAD) (c) | |
| Constellation Software, Inc. (CAD) | |
| Fairfax Financial Holdings Ltd. (CAD) | |
| | |
| | |
| | |
| Akeso, Inc. (HKD) (c) (d) (e) | |
| | |
| NU Holdings Ltd., Class A (c) | |
| Pop Mart International Group Ltd. (HKD) (d) (e) | |
| | |
| Smoore International Holdings Ltd. (HKD) (d) (e) | |
| Trip.com Group Ltd., ADR (c) | |
| | |
| | |
| Midea Group Co., Ltd. (HKD) (c) | |
| | |
| | |
| | |
| | |
| | |
| Dr. Ing hc F Porsche AG (Preference Shares) (EUR) (d) (e) | |
| Siemens Energy AG (EUR) (c) | |
| | |
| | |
| Amman Mineral Internasional PT (IDR) (c) | |
| | |
| | |
| | |
|
| | |
| | |
| Teva Pharmaceutical Industries Ltd., ADR (c) | |
| | |
| | |
| Kyowa Kirin Co., Ltd. (JPY) | |
| Sega Sammy Holdings, Inc. (JPY) | |
| | |
| Sompo Holdings, Inc. (JPY) | |
| | |
| | |
| | |
| | |
| Spotify Technology S.A. (c) | |
| | |
| | |
| Vista Energy SAB de C.V., ADR (c) | |
| | |
| Universal Music Group N.V. (EUR) | |
| | |
| | |
| | |
| | |
| | |
| SAL Saudi Logistics Services (SAR) | |
| | |
| | |
| | |
| | |
| Swedish Orphan Biovitrum AB (SEK) (c) | |
| | |
| | |
| | |
| On Holding AG, Class A (c) | |
| | |
| | |
| | |
| | |
| United Arab Emirates — 2.1% | |
| ADNOC Drilling Co. PJSC (AED) | |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF (FPXI)Portfolio of Investments (Continued)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| United Arab Emirates (Continued) | |
| Emaar Development PJSC (AED) | |
| | |
| | |
| | |
| ARM Holdings PLC, ADR (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (f) | |
| | |
|
|
| 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. |
| 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 September 30, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| – United Arab Emirates Dirham |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust International Equity Opportunities ETF (FPXI)Portfolio of Investments (Continued)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 Nasdaq Cybersecurity ETF (CIBR)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.9% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| 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) | |
| | |
| | |
| Rubrik, Inc., Class A (c) | |
| Science Applications International Corp. | |
| SentinelOne, Inc., Class A (c) | |
| Tenable Holdings, Inc. (c) | |
| Varonis Systems, Inc. (c) | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 1.0% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (e) | |
| Goldman Sachs Financial Square Treasury Obligations Fund - Institutional Class - 4.76% (e) (f) | |
| | |
| | |
|
|
| Total Investments — 100.9% | |
| | |
| Net Other Assets and Liabilities — (0.9)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 $56,884,261 and the total value of the collateral held by the Fund is $58,365,755. |
| Rate shown reflects yield as of September 30, 2024. |
| This security serves as collateral for securities on loan. |
Abbreviations throughout the Portfolio of Investments: |
| – American Depositary Receipt |
| |
| |
| |
| |
See Notes to Financial Statements
First Trust Nasdaq Cybersecurity ETF (CIBR)Portfolio of Investments (Continued)September 30, 2024
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 September 30, 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 IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 99.8% |
| | |
| BAWAG Group AG (EUR) (c) (d) | |
| | |
| OneSpaWorld Holdings Ltd. | |
| | |
| | |
| | |
| | |
| | |
| Conduit Holdings Ltd. (GBP) | |
| Fidelis Insurance Holdings Ltd. | |
| | |
| Hamilton Insurance Group, Ltd., Class B (e) | |
| | |
| | |
| | |
| | |
| | |
| | |
| MoonLake Immunotherapeutics (e) | |
| | |
| | |
| HeadHunter Group PLC, ADR (e) (f) (g) (h) | |
| | |
| | |
| | |
| | |
| Novo Nordisk A/S, Class B (DKK) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| La Francaise des Jeux SAEM (EUR) (c) (d) | |
| | |
| | |
| Daimler Truck Holding AG (EUR) | |
| Dr. Ing hc F Porsche AG (Preference Shares) (EUR) (c) (d) | |
| | |
| | |
|
| | |
| | |
| | |
| | |
| Siemens Energy AG (EUR) (e) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Teva Pharmaceutical Industries Ltd., ADR (e) | |
| | |
| | |
| | |
| Lottomatica Group S.p.A. (EUR) | |
| | |
| | |
| Birkenstock Holding PLC (e) | |
| CVC Capital Partners PLC (EUR) (c) (d) (e) | |
| Janus Henderson Group PLC | |
| | |
| | |
| | |
| | |
| Allegro.eu S.A. (PLN) (c) (d) (e) | |
| Ardagh Metal Packaging S.A. | |
| | |
| Spotify Technology S.A. (e) | |
| | |
| | |
| | |
| | |
| | |
| Newamsterdam Pharma Co. N.V. (e) | |
| | |
| Technip Energies N.V. (EUR) | |
| Universal Music Group N.V. (EUR) | |
| | |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of Investments (Continued)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| | |
| | |
| Hoegh Autoliners ASA (NOK) | |
| Norconsult Norge A/S (NOK) | |
| | |
| | |
| | |
| | |
| | |
| | |
| BW LPG Ltd. (NOK) (c) (d) | |
| | |
| | |
| BoneSupport Holding AB (SEK) (c) (d) (e) | |
| | |
| | |
| | |
| Munters Group AB (SEK) (c) (d) | |
| | |
| | |
| | |
| Samhallsbyggnadsbolaget i Norden AB (SEK) | |
| Swedish Orphan Biovitrum AB (SEK) (e) | |
| | |
| Vimian Group AB (SEK) (e) | |
| | |
| | |
| | |
| Accelleron Industries AG (CHF) | |
| | |
| Galderma Group AG (CHF) (e) | |
| On Holding AG, Class A (e) | |
| | |
| Sportradar Group AG, Class A (e) | |
| | |
| | |
| | |
| ARM Holdings PLC, ADR (e) | |
| Baltic Classifieds Group PLC (GBP) | |
| Bridgepoint Group PLC (GBP) (c) (d) | |
| Centessa Pharmaceuticals PLC, ADR (e) | |
| Deliveroo PLC (GBP) (c) (d) (e) | |
| | |
| | |
|
| United Kingdom (Continued) | |
| Finablr PLC (GBP) (c) (e) (f) (g) (h) | |
| Frasers Group PLC (GBP) (e) | |
| | |
| | |
| | |
| Molten Ventures PLC (GBP) (e) | |
| Petershill Partners PLC (GBP) (c) (d) | |
| Raspberry PI Holdings PLC (GBP) (e) | |
| Trustpilot Group PLC (GBP) (c) (d) (e) | |
| Verona Pharma PLC, ADR (e) | |
| Wise PLC, Class A (GBP) (e) | |
| | |
| | |
| | |
|
|
| 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. |
| 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. |
| 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 September 30, 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). |
See Notes to Financial Statements
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)Portfolio of Investments (Continued)September 30, 2024
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 September 30, 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.
See Notes to Financial Statements
First Trust Dow Jones International Internet ETF (FDNI)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 92.4% |
| | |
| | |
| | |
| | |
| WiseTech Global Ltd. (AUD) | |
| | |
| | |
| Descartes Systems Group (The), Inc. (CAD) (c) | |
| Shopify, Inc., Class A (CAD) (c) | |
| | |
| | |
| Alibaba Group Holding Ltd. (HKD) | |
| Baidu, Inc., Class A (HKD) (c) | |
| JD.com, Inc., Class A (HKD) | |
| | |
| Kuaishou Technology (HKD) (c) (d) (e) | |
| Meituan, Class B (HKD) (c) (d) (e) | |
| | |
| PDD Holdings, Inc., ADR (c) | |
| | |
| Tencent Holdings Ltd. (HKD) | |
| Tencent Music Entertainment Group, ADR | |
| Vipshop Holdings Ltd., ADR | |
| | |
| | |
| Delivery Hero SE (EUR) (c) (d) (e) | |
| | |
| Zalando SE (EUR) (c) (d) (e) | |
| | |
| | |
| GoTo Gojek Tokopedia Tbk PT (IDR) (c) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Rakuten Group, Inc. (JPY) (c) | |
| | |
| | |
| Spotify Technology S.A. (c) | |
| | |
|
| | |
| Adyen N.V. (EUR) (c) (d) (e) | |
| Nebius Group N.V. (c) (f) (g) (h) | |
| | |
| | |
| | |
| | |
| | |
| Naspers Ltd., Class N (ZAR) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Auto Trader Group PLC (GBP) (d) (e) | |
| | |
| | |
| | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.7% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (i) | |
| | |
|
|
| Total Investments — 93.1% | |
| | |
| Net Other Assets and Liabilities — 6.9% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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. |
See Notes to Financial Statements
First Trust Dow Jones International Internet ETF (FDNI)Portfolio of Investments (Continued)September 30, 2024 | 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 September 30, 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 September 30, 2024. |
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 September 30, 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 Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) (b) — 100.1% |
| | |
| | |
| 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) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Adani Enterprises Ltd. (INR) | |
| Adani Green Energy Ltd. (INR) (c) | |
| Adani Ports & Special Economic Zone Ltd. (INR) | |
| | |
| Avenue Supermarts Ltd. (INR) (c) (d) (e) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Grasim Industries Ltd. (INR) | |
| HCL Technologies Ltd. (INR) | |
| | |
| Hindustan Unilever Ltd. (INR) | |
| | |
| | |
| | |
| | |
| Jio Financial Services Ltd. (INR) (c) | |
| Kotak Mahindra Bank Ltd. (INR) | |
| Larsen & Toubro Ltd. (INR) | |
| | |
|
| | |
| Mahindra & Mahindra Ltd. (INR) | |
| Maruti Suzuki India Ltd. (INR) | |
| | |
| | |
| 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) | |
| | |
| | |
| | |
| | |
| UltraTech Cement Ltd. (INR) | |
| | |
| | |
| | |
| America Movil S.A.B. de C.V., Series B (MXN) | |
| Cemex S.A.B. de C.V., Series CPO (MXN) | |
| 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) | |
| | |
| | |
| SM Investments Corp. (PHP) | |
| | |
| Bank Polska Kasa Opieki S.A. (PLN) | |
| | |
| Powszechna Kasa Oszczednosci Bank Polski S.A. (PLN) | |
| | |
| | |
| Capitec Bank Holdings Ltd. (ZAR) | |
| | |
See Notes to Financial Statements
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of Investments (Continued)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Naspers Ltd., Class N (ZAR) | |
| Standard Bank Group Ltd. (ZAR) | |
| | |
| | |
| | |
| Ecopro Co., Ltd. (KRW) (c) | |
| Hana Financial Group, Inc. (KRW) | |
| | |
| Hyundai Mobis Co., Ltd. (KRW) | |
| | |
| | |
| KB Financial Group, Inc. (KRW) | |
| | |
| | |
| | |
| 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) | |
| Formosa Plastics Corp. (TWD) | |
| Fubon Financial Holding Co., Ltd. (TWD) | |
| Hon Hai Precision Industry Co., Ltd. (TWD) | |
| | |
| Mega Financial Holding Co., Ltd. (TWD) | |
| Novatek Microelectronics Corp. (TWD) | |
| Quanta Computer, Inc. (TWD) | |
| | |
|
| | |
| Taiwan Semiconductor Manufacturing Co., Ltd. (TWD) | |
| Uni-President Enterprises Corp. (TWD) | |
| United Microelectronics Corp. (TWD) | |
| | |
| Yuanta Financial Holding Co., Ltd. (TWD) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (f) | |
| | |
|
|
| Total Investments — 100.4% | |
| | |
| Net Other Assets and Liabilities — (0.4)% | |
| | |
| Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 September 30, 2024. |
See Notes to Financial Statements
First Trust Bloomberg Emerging Market Democracies ETF (EMDM)Portfolio of Investments (Continued)September 30, 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 September 30, 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 Liabilities
September 30, 2024
| 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) |
| | | |
| | | |
| | | |
Foreign currency, at value | | | |
Due from authorized participant | | | |
| | | |
| | | |
| | | |
Investment securities sold | | | |
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Securities lending income | | | |
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Due to custodian foreign currency | | | |
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Shareholder reporting fees | | | |
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Investment securities purchased | | | |
Deferred foreign capital gains tax | | | |
Collateral for securities on loan | | | |
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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 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)
September 30, 2024
| 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 | | | |
Due from authorized participant | | | |
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Investment securities sold | | | |
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Securities lending income | | | |
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Due to custodian foreign currency | | | |
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Shareholder reporting fees | | | |
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Investment securities purchased | | | |
Deferred foreign capital gains tax | | | |
Collateral for securities on loan | | | |
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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 Operations
For the Year Ended September 30, 2024
| 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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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 | | | |
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Net change in unrealized appreciation (depreciation) on: | | | |
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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 Year Ended September 30, 2024
| 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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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 | | | |
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Net change in unrealized appreciation (depreciation) on: | | | |
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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) |
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Net investment income (loss) | | | | |
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Net change in unrealized appreciation (depreciation) | | | | |
Net increase (decrease) in net assets resulting from operations | | | | |
|
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 Dow Jones Global Select Dividend Index Fund (FGD) | First Trust Global Wind Energy ETF (FAN) | First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD) |
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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) |
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Net investment income (loss) | | | | |
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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 Indxx Global Agriculture ETF (FTAG) | First Trust Indxx NextG ETF (NXTG) | First Trust S-Network Future Vehicles & Technology ETF (CARZ) |
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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) |
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Net investment income (loss) | | | | |
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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 Nasdaq Cybersecurity ETF (CIBR) | First Trust IPOX® Europe Equity Opportunities ETF (FPXE) | First Trust Dow Jones International Internet ETF (FDNI) |
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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) |
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Net investment income (loss) | | |
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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 | | |
| 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 Highlights
For a share outstanding throughout each period First Trust STOXX® European Select Dividend Index Fund (FDD)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
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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 | | | | | |
| | | | | |
|
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 (c) | | | | | |
| 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)
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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 | | | | | |
| | | | | |
|
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 (c) | | | | | |
| 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)
| |
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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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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. |
| 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)
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| | | | | |
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. |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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. |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (c) | | | | | |
| 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)
| |
| | | | | |
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 (f) | | | | | |
| 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)
| | |
|
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 IISeptember 30, 2024 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”).
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 summary of significant accounting policies consistently followed by the Funds in the preparation of the financial statements. The
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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;
5)
transactions in comparable securities;
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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 September 30, 2024, is included with each Fund’s Portfolio of Investments.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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 IISeptember 30, 2024 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. During the period ended September 30, 2024, Brown Brothers Harriman & Co. (“BBH”) acted as the securities lending agent for SKYY, RBLD, FTRI, NXTG, FPXI, FPXE, CIBR, GRID, and CARZ and was responsible for executing the lending of the portfolio securities to creditworthy borrowers. For FAN, and effective June 10, 2024 for SKYY, the Bank of New York Mellon (“BNY”) is the 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 September 30, 2024, FAN, GRID, FTRI, NXTG, CARZ, and CIBR had securities in the securities lending program. During the fiscal year ended September 30, 2024, FAN, RBLD, GRID, FTRI, NXTG, CARZ, SKYY, FPXI, CIBR, and FPXE participated in the securities lending program.
In the event of a default by a borrower with respect to any loan, BBH or BNY 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 or BNY to exercise these remedies, a Fund sustains losses as a result of a borrower’s default, BBH or BNY 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 BNY.
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 BNY 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 fiscal year ended September 30, 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
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income 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, 2024 were 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 | | | |
The tax character of distributions paid by each Fund during the fiscal year ended September 30, 2023 were 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 | | | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 As of September 30, 2024, 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 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.
Capital Gains. India’s Finance Act, 2024 (“Finance Act, 2024”) was enacted into law on July 23, 2024, and amongst the other provisions, it increased long-term and short-term capital gain rates on sales of Indian securities, effective that date. As per the amended provisions, the long-term capital gains on the sale of listed shares (sold on a recognized stock exchange and where Securities Transaction Tax (“STT”) is paid) in excess of INR 0.125 million are taxed at the rate of 12.5% (plus applicable surcharge and cess), increased from 10% (plus applicable surcharge and cess), subject to satisfaction of certain conditions. As a grandfathering measure, the cost of acquisition for the purpose of calculation of long-term capital asset acquired before February 1, 2018 shall be deemed to be the higher of the following: (a) the actual cost of acquisition of such asset; and (b) lower of (i) the fair market value of such asset as on January 31, 2018 and (ii) full value of consideration as received on its transfer/disposal of the equity shares. The highest effective tax rate on long-term capital gains earned by a Fund could be 14.95% in the case of a non-corporate entity and 13.65% in the case of a corporate entity.
In the case of the sale of listed shares (sold on a recognized stock exchange and where STT is paid) held by a Fund for one year or less, the income is classified as short-term capital gains and is taxable at 20% (plus applicable surcharge and cess), increased from 15% (plus applicable surcharge and cess), provided the shares are sold on the stock exchange and subjected to STT. The highest effective tax rate on short-term capital gains earned by a Fund could be 23.92% in the case of a non-corporate entity and 21.84% in the case of a corporate entity.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 Short-term capital loss can be set-off against both short-term capital gains and long-term capital gains. However, long-term capital loss can be set-off only against long-term capital gains. The unabsorbed (remaining loss after setting off loss during the year against income of the year) short-term and long-term capital loss can be carried forward for immediately succeeding 8 (eight) assessment years.
Buy back. Finance Act, 2024 has amended the provisions for taxation of buyback of shares and provided that the gains arising on buyback of shares will be considered as deemed dividend in the hands of the shareholder and taxed accordingly. (Prior to enactment of Finance Act, 2024, the shareholders were exempt from tax on any income arising on buyback and distribution tax at the rate of 20% plus applicable surcharge and cess was payable by the Indian Company on buyback of shares). Further, the cost of acquisition in relation to buyback of shares shall be considered as capital loss in the hands of shareholder and the capital loss can be set off against the capital gain income.
Where the sale of shares is outside the stock exchange and not subject to STT, the long-term capital gains continue to be taxed at 10% (plus applicable surcharge and cess) and short-term capital gains are taxed at 30% (plus applicable surcharge and cess).
Dividend income. The dividend income earned by a Fund from Indian Companies shall be chargeable to tax at the rate of 20% (plus applicable surcharge and cess). The highest effective tax rate on dividend income arising to a Fund could be 23.92% in the case of a non-corporate entity and 21.84% in the case of a corporate entity. Note that a 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.
Interest income. Interest Income received from the Indian Investee Company shall be continued to be chargeable to tax at the rate of 20% (plus applicable surcharge and cess).
Other income. Any other income (other than capital gain, dividend, interest) earned by a Fund shall be chargeable to tax at the rate of 35% (earlier taxable at the rate of 40%) (plus applicable surcharge and cess).
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 2021, 2022, 2023, and 2024 remain open to federal and state audit. For EMDM, the taxable periods ended 2023 and 2024 remain open to federal and state audit. As of September 30, 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, 2024, 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 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 | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 | Non-Expiring Capital Loss Carryforwards |
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, 2024, the following Funds utilized capital loss carryforwards in the following amounts:
| Capital Loss
Carryforward
Utilized |
First Trust Alerian U.S. NextGen Infrastructure ETF | |
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund | |
First Trust Indxx NextG ETF | |
First Trust International Equity Opportunities ETF | |
First Trust IPOX® Europe Equity Opportunities 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, 2024, the following Fund incurred and elected to defer net late year ordinary or capital losses as follows:
| Qualified Late Year Losses |
| | |
First Trust Cloud Computing ETF | | |
| | |
In order to present paid-in capital and accumulated distributable earnings (loss) (which consists of accumulated net investment income (loss), accumulated net realized gain (loss) on investments and net unrealized appreciation (depreciation) on investments) on the Statements of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in capital, accumulated net investment income (loss) and accumulated net realized gain (loss) on investments. These adjustments are primarily due to the difference between book and tax treatments of income and gains on various investment securities held by the Funds and in-kind transactions. The results of operations and net assets were not affected by these adjustments. For the fiscal year ended September 30, 2024, the adjustments for each Fund were as follows:
| Accumulated
Net Investment
Income (Loss) | Accumulated
Net Realized
Gain (Loss)
on Investments | |
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 | | | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 | Accumulated Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) on Investments | |
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, 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 | | | | |
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.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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, 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 | | | | |
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 | | | | |
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 based on a percentage 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 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, 2026.
| |
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 BNY. Under the service agreements, BNY performs custodial, fund accounting, certain administrative services, and transfer agency services for each Fund. As custodian, BNY is responsible for custody of each Fund’s assets. As fund accountant and administrator, BNY is responsible for maintaining the books and records of each Fund’s securities and cash. As transfer agent, BNY is responsible for maintaining shareholder records for each Fund. BNY 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 IISeptember 30, 2024 4. Purchases and Sales of Securities
For the fiscal year ended September 30, 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 fiscal year ended September 30, 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 | | |
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
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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.
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, 2026.
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 was the following subsequent event:
Effective November 14, 2024, BNY replaced BBH as the securities lending agent for RBLD, FTRI, NXTG, FPXI, FPXE, CIBR, GRID, and CARZ.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of First Trust Exchange-Traded Fund II:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities 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, and First Trust Bloomberg Emerging Market Democracies ETF (the “Funds”), each a series of the First Trust Exchange-Traded Fund II, including the portfolios of investments, as of September 30, 2024, the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the periods indicated in the table below; and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of September 30, 2024, and the results of their operations for the year then ended, and the changes in their net assets and the financial highlights for each of the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.
Individual Funds
Included in the Trust | Statements of Changes
in Net Assets | |
First Trust STOXX® European Select Dividend Index Fund | For the years ended September 30, 2024, and 2023 | For the years ended September 30, 2024, 2023, 2022, 2021, and 2020 |
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 year ended September 30, 2024, and for the period from March 2, 2023 (commencement of investment operations) through September 30, 2023 |
Report of Independent Registered Public Accounting Firm (Continued)
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche, LLP
Chicago, Illinois
November 20, 2024
We have served as the auditor of one or more First Trust investment companies since 2001.
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) Changes in and Disagreements with Accountants (Item 8 of Form N-CSR)
There were no changes in or disagreements with the Funds’ accountants during the fiscal year ended September 30, 2024.
Proxy Disclosures (Item 9 of Form N-CSR)
There were no matters submitted for vote by shareholders of any Fund during the fiscal year ended September 30, 2024.
Remuneration Paid to Directors, Officers, and Others (Item 10 of Form N-CSR)
For the Expense Cap Funds (as defined in the Notes to Financial Statements), the applicable aggregate remuneration paid by each Fund during the period covered by the report is included in the Statements of Operations. For the Unitary Fee Funds (as defined in the Notes to Financial Statements), Independent Trustees and any member of any advisory board of each Fund are compensated through the unitary management fee paid by each Fund to the advisor and not directly by each Fund. The investment advisory fee paid is included in the Statements of Operations.
Statement Regarding the Basis for the Board’s Approval of Investment Advisory Contract (Item 11 of Form N-CSR)
The Board of Trustees of First Trust Exchange-Traded Fund II (the “Trust”), including the Independent Trustees, unanimously approved the continuation of the Investment Management Agreements (as applicable to a specific Fund, the “Agreement” and collectively, the “Agreements”) with First Trust Advisors L.P. (the “Advisor”) on behalf of the following series of the Trust (each a “Fund” and collectively, the “Funds”):
First Trust Alerian Disruptive Technology Real Estate ETF (DTRE)
First Trust Alerian U.S. NextGen Infrastructure ETF (RBLD)
First Trust Cloud Computing ETF (SKYY)
First Trust Dow Jones International Internet ETF (FDNI)
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust Indxx Global Natural Resources Income ETF (FTRI)
First Trust Indxx NextG ETF (NXTG)
First Trust International Equity Opportunities ETF (FPXI)
First Trust IPOX® Europe Equity Opportunities ETF (FPXE)
First Trust Nasdaq Cybersecurity ETF (CIBR)
First Trust S-Network Future Vehicles & Technology ETF (CARZ)
The Board approved the continuation of the Agreement for each Fund for a one-year period ending June 30, 2025 at a meeting held on June 2–3, 2024. The Board determined for each Fund that the continuation of the Agreement is in the best interests of the Fund in light of the nature, extent and quality of the services provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
To reach this determination for each Fund, 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. At meetings held on April 16, 2024, April 25, 2024 and June 2–3, 2024, the Board, including the Independent Trustees, reviewed materials provided by the Advisor responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services provided by the Advisor to each Fund (including the relevant personnel responsible for these services and their experience); the unitary fee rate schedule payable by each 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 clients of the Advisor, including other exchange-traded funds (“ETFs”) managed by the Advisor; the expense ratio of each Fund as compared to expense ratios of the funds in the Fund’s Expense Group and Expense Universe; performance information for each Fund, including comparisons of each Fund’s performance to that of one or more relevant benchmark indexes and to that of a performance group of funds and a broad performance universe of funds (the “Performance Universe”), each assembled by Broadridge; the nature of expenses incurred in providing services to each 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 Board reviewed initial
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) materials with the Advisor at the meeting held on April 25, 2024, prior to which the Independent Trustees and their counsel met separately to discuss the information provided by the Advisor. Following the April 25, 2024 meeting, counsel to the Independent Trustees, on behalf of the Independent Trustees, requested certain clarifications and supplements to the materials provided, and the information provided in response to those requests was considered at an executive session of the Independent Trustees and their counsel held prior to the June 2–3, 2024 meeting, as well as at the June meeting. The Board applied its business judgment to determine whether the arrangement between the Trust and the Advisor continues to be a reasonable business arrangement from each Fund’s perspective. The Board determined that, given the totality of the information provided with respect to the Agreements, the Board had received sufficient information to renew the Agreements. The Board considered that shareholders chose to invest or remain invested in a Fund knowing that the Advisor manages the Fund and knowing the Fund’s unitary fee.
In reviewing the Agreement for each Fund, the Board considered the nature, extent and quality of the services provided by the Advisor under the Agreement. The Board considered that the Advisor is responsible for the overall management and administration of the Trust and each Fund and reviewed all of the services provided by the Advisor to the Funds, as well as the background and experience of the persons responsible for such services. In reviewing the services 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 each Fund’s compliance with the 1940 Act, as well as each Fund’s compliance with its investment objective, policies and restrictions. The Board also considered a report from the Advisor with respect to its risk management functions related to the operation of the Funds. Finally, as part of the Board’s consideration of the Advisor’s services, the Advisor, in its written materials and at the April 25, 2024 meeting, described to the Board the scope of its ongoing investment in additional personnel and infrastructure to maintain and improve the quality of services provided to the Funds and the other funds in the First Trust Fund Complex. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services provided to the Trust and each Fund by the Advisor under the Agreements have been and are expected to remain satisfactory and that the Advisor has managed each Fund consistent with its investment objective, policies and restrictions.
The Board considered the unitary fee rate schedule payable by each Fund under the applicable Agreement for the services provided. The Board considered that as part of the unitary fee the Advisor is responsible for each 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 applicable Agreement and interest, taxes, 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 Groups, as well as advisory and unitary fee rates charged by the Advisor to other fund (including ETFs) and non-fund clients, as applicable. Because each Fund pays 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 of FPXE was below the median total (net) expense ratio of the peer funds in its respective Expense Group and that the total (net) expense ratio of each other Fund was above the median total (net) expense ratio of the peer funds in its respective Expense Group. With respect to the Expense Groups, the Board discussed with Broadridge its methodology for assembling peer groups and discussed with the Advisor limitations in creating peer groups for index ETFs, including differences in underlying indexes and index-tracking methodologies that can result in greater management complexities across seemingly comparable ETFs, and different business models that may affect the pricing of services among ETF sponsors. The Board took these limitations and differences into account in considering the peer data. With respect to fees charged to other non-ETF clients, the Board considered differences between the Funds and other non-ETF clients that limited their comparability. In considering the unitary fee rate schedules overall, the Board also considered the Advisor’s statement that it seeks to meet investor needs through innovative and value-added investment solutions and the Advisor’s demonstrated long-term commitment to each Fund and the other funds in the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the process it has established for monitoring each Fund’s performance and portfolio risk on an ongoing basis, which includes quarterly performance reporting from the Advisor for the Funds. The Board determined that this process continues to be effective for reviewing each Fund’s performance. The Board received and reviewed information for periods ended December 31, 2023 regarding the performance of each Fund’s underlying index, the correlation between each Fund’s performance and that of its underlying index, each Fund’s tracking difference and each Fund’s excess return as compared to its benchmark index. With respect to DTRE, the Board noted that during 2021, it approved changes to the Fund’s investment objective and, effective September 29, 2022, the Fund changed its name and ticker symbol and began tracking the Alerian Disruptive Technology Real Estate Index, and that the performance information included a blend of the old and new indexes. With respect to RBLD, the Board noted that during 2021, it approved changes to the Fund’s investment objective and, effective August 1, 2022, the Fund changed its name and ticker symbol and began tracking the Alerian U.S. NextGen Infrastructure Index, and that the performance information included a blend of the old and new indexes. With respect to CARZ, the Board noted that during
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) 2021, it approved changes to the Fund’s investment objective and, effective January 26, 2022, the Fund changed its name and began tracking the S-Network Electric & Future Vehicle Ecosystem Index, and that the performance information included a blend of the old and new indexes. With respect to NXTG, the Board noted that during 2019, it approved changes to the Fund’s investment objective and, effective May 29, 2019, the Fund changed its name and ticker symbol and began tracking the Indxx 5G & NextG Thematic Index, and that the performance information included a blend of the old and new indexes. With respect to FTRI and FTAG, the Board noted that during 2015, shareholders of each Fund approved changes to each Fund’s investment objective and, effective December 18, 2015, each Fund changed its name and ticker symbol, FTRI began tracking the Indxx Global Natural Resources Income Index and FTAG began tracking the Indxx Global Agricultural Index, and that the performance information included a blend of the old and new indexes. Based on the information provided and its ongoing review of performance, the Board concluded that each Fund was correlated to its underlying index and that the tracking difference for each Fund was within a reasonable range. In addition, the Board reviewed data prepared by Broadridge comparing each Fund’s performance to that of its respective Performance Universe and to that of a broad-based benchmark index and noted the Advisor’s discussion of FDNI’s performance at the April 25, 2024 meeting. However, given each Fund’s objective of seeking investment results that correspond generally to the performance of its underlying index, the Board placed more emphasis on its review of correlation and tracking difference.
On the basis of all the information provided on the unitary fee and performance of each Fund and the ongoing oversight by the Board, the Board concluded that the unitary fee for each Fund continues to be reasonable and appropriate in light of the nature, extent and quality of the services provided by the Advisor to each Fund under the Agreements.
The Board considered information and discussed with the Advisor whether there were any economies of scale in connection with providing advisory services to the Funds at current asset levels and whether the Funds may benefit from any economies of scale. The Board noted that the unitary fee rate schedule for each Fund includes breakpoints pursuant to which the unitary fee rate will be reduced as assets of the Fund meet certain thresholds. The Board considered the Advisor’s statement that it believes that its expenses relating to providing advisory services to the Funds will increase during the next twelve months as the Advisor continues to build infrastructure and add new staff. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Funds would benefit the Advisor, but that the unitary fee structure provides a level of certainty in expenses for shareholders of the Funds. The Board concluded that the unitary fee rate schedule for each Fund reflects an appropriate level of sharing of any economies of scale that may be realized in the management of the Fund at current asset levels. The Board considered the revenues and allocated costs (including the allocation methodology) of the Advisor in serving as investment advisor to each Fund for the twelve months ended December 31, 2023 and the estimated profitability level for each Fund calculated by the Advisor based on such data, as well as complex-wide and product-line profitability data, for the same period. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor’s profitability level for each Fund was not unreasonable. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Funds. 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 Funds, may have had no dealings with the Advisor or FTP, and noted that the Advisor does not utilize soft dollars in connection with the Funds. 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, unanimously determined that the terms of the Agreements continue to be fair and reasonable and that the continuation of the Agreements is in the best interests of each Fund. No single factor was determinative in the Board’s analysis.
The Board of Trustees of First Trust Exchange-Traded Fund II (the “Trust”), including the Independent Trustees, unanimously approved the continuation of the Investment Management Agreement (the “Agreement”) with First Trust Advisors L.P. (the “Advisor”) on behalf of the following series of the Trust (each a “Fund” and collectively, the “Funds”):
First Trust Dow Jones Global Select Dividend Index Fund (FGD)
First Trust Global Wind Energy ETF (FAN)
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund (GRID)
First Trust STOXX® European Select Dividend Index Fund (FDD)
The Board approved the continuation of the Agreement for each Fund for a one-year period ending June 30, 2025 at a meeting held on June 2–3, 2024. The Board determined for each Fund that the continuation of the Agreement is in the best interests of the Fund in light of the nature, extent and quality of the services provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) To reach this determination for each Fund, 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. At meetings held on April 16, 2024, April 25, 2024 and June 2–3, 2024, the Board, including the Independent Trustees, reviewed materials provided by the Advisor responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services provided by the Advisor to each Fund (including the relevant personnel responsible for these services and their experience); the advisory fee rate schedule payable by each 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 clients of the Advisor, including other exchange-traded funds (“ETFs”) managed by the Advisor; the expense ratio of each Fund as compared to expense ratios of the funds in the Fund’s Expense Group and Expense Universe; performance information for each Fund, including comparisons of each Fund’s performance to that of one or more relevant benchmark indexes and to that of a performance group of funds and a broad performance universe of funds (the “Performance Universe”), each assembled by Broadridge; the nature of expenses incurred in providing services to each 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 Board reviewed initial materials with the Advisor at the meeting held on April 25, 2024, prior to which the Independent Trustees and their counsel met separately to discuss the information provided by the Advisor. Following the April 25, 2024 meeting, counsel to the Independent Trustees, on behalf of the Independent Trustees, requested certain clarifications and supplements to the materials provided, and the information provided in response to those requests was considered at an executive session of the Independent Trustees and their counsel held prior to the June 2–3, 2024 meeting, as well as at the June meeting. The Board applied its business judgment to determine whether the arrangement between the Trust and the Advisor continues to be a reasonable business arrangement from each Fund’s perspective. The Board determined that, given the totality of the information provided with respect to the Agreement, the Board had received sufficient information to renew the Agreement. The Board considered that shareholders chose to invest or remain invested in a Fund knowing that the Advisor manages the Fund and knowing the Fund’s advisory fee.
In reviewing the Agreement for each Fund, the Board considered the nature, extent and quality of the services provided by the Advisor under the Agreement. The Board considered that the Advisor is responsible for the overall management and administration of the Trust and each Fund and reviewed all of the services provided by the Advisor to the Funds, as well as the background and experience of the persons responsible for such services. In reviewing the services 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 each Fund’s compliance with the 1940 Act, as well as each Fund’s compliance with its investment objective, policies and restrictions. The Board also considered a report from the Advisor with respect to its risk management functions related to the operation of the Funds. Finally, as part of the Board’s consideration of the Advisor’s services, the Advisor, in its written materials and at the April 25, 2024 meeting, described to the Board the scope of its ongoing investment in additional personnel and infrastructure to maintain and improve the quality of services provided to the Funds and the other funds in the First Trust Fund Complex. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services provided to the Trust and each Fund by the Advisor under the Agreement have been and are expected to remain satisfactory and that the Advisor has managed each Fund consistent with its investment objective, policies and restrictions.
The Board considered the advisory fee rate schedule payable by each Fund under the Agreement for the services provided. The Board considered that the Advisor agreed to extend the current expense cap for each Fund through January 31, 2026. The Board received and reviewed information showing the fee rates and expense ratios of the peer funds in the Expense Groups, as well as advisory and unitary fee rates charged by the Advisor to other fund (including ETFs) and non-fund clients, as applicable. Because each Fund’s Expense Group included peer funds that 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 of FGD was below the median total (net) expense ratio of the peer funds in its respective Expense Group and that the total (net) expense ratio of each other Fund was above the median total (net) expense ratio of the peer funds in its respective Expense Group. With respect to the Expense Groups, the Board discussed with Broadridge its methodology for assembling peer groups and discussed with the Advisor limitations in creating peer groups for index ETFs, including differences in underlying indexes and index-tracking methodologies that can result in greater management complexities across seemingly comparable ETFs, and different business models that may affect the pricing of services among ETF sponsors. The Board took these limitations and differences into account in considering the peer data. With respect to fees charged to other non-ETF clients, the Board considered differences between the Funds and other non-ETF clients that limited
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) their comparability. In considering the advisory fee rate schedules overall, the Board also considered the Advisor’s statement that it seeks to meet investor needs through innovative and value-added investment solutions and the Advisor’s demonstrated long-term commitment to each Fund and the other funds in the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the process it has established for monitoring each Fund’s performance and portfolio risk on an ongoing basis, which includes quarterly performance reporting from the Advisor for the Funds. The Board determined that this process continues to be effective for reviewing each Fund’s performance. The Board received and reviewed information for periods ended December 31, 2023 regarding the performance of each Fund’s underlying index, the correlation between each Fund’s performance and that of its underlying index, each Fund’s tracking difference and each Fund’s excess return as compared to its benchmark index. Based on the information provided and its ongoing review of performance, the Board concluded that each Fund was correlated to its underlying index and that the tracking difference for each Fund was within a reasonable range. In addition, the Board reviewed data prepared by Broadridge comparing each Fund’s performance to that of its respective Performance Universe and to that of a broad-based benchmark index and noted the Advisor’s discussion of FGD’s performance at the April 25, 2024 meeting. However, given each Fund’s objective of seeking investment results that correspond generally to the performance of its underlying index, the Board placed more emphasis on its review of correlation and tracking difference.
On the basis of all the information provided on the fees, expenses and performance of each Fund and the ongoing oversight by the Board, the Board concluded that the advisory fee for each Fund continues to be reasonable and appropriate in light of the nature, extent and quality of the services provided by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there were any economies of scale in connection with providing advisory services to the Funds at current asset levels and whether the Funds may benefit from any economies of scale. The Board noted that the advisory fee rate schedule for each Fund includes breakpoints pursuant to which the advisory fee rate will be reduced as assets of the Fund meet certain thresholds. The Board considered the Advisor’s statement that it believes that its expenses relating to providing advisory services to the Funds will increase during the next twelve months as the Advisor continues to build infrastructure and add new staff. The Board concluded that the advisory fee rate schedule for each Fund reflects an appropriate level of sharing of any economies of scale that may be realized in the management of the Fund at current asset levels. The Board considered the revenues and allocated costs (including the allocation methodology) of the Advisor in serving as investment advisor to each Fund for the twelve months ended December 31, 2023 and the estimated profitability level for each Fund calculated by the Advisor based on such data, as well as complex-wide and product-line profitability data, for the same period. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor’s profitability level for each Fund was not unreasonable. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Funds. 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 Funds, may have had no dealings with the Advisor or FTP, and noted that the Advisor does not utilize soft dollars in connection with the Funds. 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, unanimously determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of each Fund. No single factor was determinative in the Board’s analysis.
The Board of Trustees of First Trust Exchange-Traded Fund II (the “Trust”), including the Independent Trustees, unanimously approved the continuation of the Investment Management Agreement (the “Agreement”) with First Trust Advisors L.P. (the “Advisor”) on behalf of the First Trust Bloomberg Emerging Market Democracies ETF (the “Fund”). The Board approved the continuation of the Agreement for a one-year period ending June 30, 2025 at a meeting held on June 2–3, 2024. The Board determined that the continuation of the Agreement is in the best interests of the Fund in light of the nature, extent and quality of the services 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. At meetings held on April 16, 2024, April 25, 2024 and June 2–3, 2024, the Board, including the Independent Trustees, reviewed materials provided by the Advisor responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services provided by
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) the Advisor to the Fund (including the relevant personnel responsible for these services and their experience); the 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 clients of the Advisor, including other exchange-traded funds (“ETFs”) managed by the Advisor; the expense ratio of the Fund as compared to expense ratios of the funds in the Fund’s Expense Group and Expense Universe; performance information for the Fund; the nature of expenses 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 Board reviewed initial materials with the Advisor at the meeting held on April 25, 2024, prior to which the Independent Trustees and their counsel met separately to discuss the information provided by the Advisor. Following the April 25, 2024 meeting, counsel to the Independent Trustees, on behalf of the Independent Trustees, requested certain clarifications and supplements to the materials provided, and the information provided in response to those requests was considered at an executive session of the Independent Trustees and their counsel held prior to the June 2–3, 2024 meeting, as well as at the June meeting. The Board applied its business judgment to determine whether the arrangement between the Trust and the Advisor continues to be a reasonable business arrangement from the Fund’s perspective. The Board determined that, given the totality of the information provided with respect to the Agreement, the Board had received sufficient information to renew the Agreement. The Board considered that shareholders chose to invest or remain invested in the Fund knowing that the Advisor manages the Fund and knowing the Fund’s unitary fee.
In reviewing the Agreement, the Board considered the nature, extent and quality of the services provided by the Advisor under the Agreement. The Board considered that the Advisor is responsible for the overall management and administration of the Trust and the Fund and reviewed all of the services provided by the Advisor to the Fund, as well as the background and experience of the persons responsible for such services. In reviewing the services 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. The Board also considered a report from the Advisor with respect to its risk management functions related to the operation of the Fund. Finally, as part of the Board’s consideration of the Advisor’s services, the Advisor, in its written materials and at the April 25, 2024 meeting, described to the Board the scope of its ongoing investment in additional personnel and infrastructure to maintain and improve the quality of services provided to the Fund and the other funds in the First Trust Fund Complex. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services provided to the Trust and the Fund by the Advisor under the Agreement have been and are expected to remain satisfactory and that the Advisor has managed the Fund consistent with its investment objective, policies and restrictions.
The Board considered the unitary fee rate schedule payable by the Fund under the Agreement for the services provided. The Board considered that as part of the unitary fee the Advisor is 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, 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 fund (including ETFs) and non-fund clients, as applicable. Because the Fund pays 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 Broadridge its methodology for assembling peer groups and discussed with the Advisor limitations in creating peer groups for index ETFs, including differences in underlying indexes and index-tracking methodologies that can result in greater management complexities across seemingly comparable ETFs, and different business models that may affect the pricing of services among ETF sponsors. The Board took these limitations and differences into account in considering the peer data. With respect to fees charged to other non-ETF clients, the Board considered differences between the Fund and other non-ETF clients that limited their comparability. In considering the unitary fee rate schedule overall, the Board also considered the Advisor’s statement that it seeks to meet investor needs through innovative and value-added investment solutions and the Advisor’s demonstrated long-term commitment to the Fund and the other funds in the First Trust Fund Complex.
The Board considered performance information for the Fund. The Board noted the process it has established for monitoring the Fund’s performance and portfolio risk on an ongoing basis, which includes quarterly performance reporting from the Advisor for the Fund. The Board determined that this process continues to be effective for reviewing the Fund’s performance. Because the Fund commenced operations on March 2, 2023 and therefore has a limited performance history, comparative performance information for the Fund was not reviewed.
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) On the basis of all the information provided on the unitary fee for the Fund and the ongoing oversight by the Board, the Board concluded that the unitary fee for the Fund continues to be reasonable and appropriate in light of the nature, extent and quality of the services provided by the Advisor to the Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there were any economies of scale in connection with providing advisory services to the Fund at current asset levels and whether the Fund may benefit from any economies of scale. The Board noted that the unitary fee rate schedule for the Fund includes breakpoints pursuant to which the unitary fee rate will be reduced as assets of the Fund meet certain thresholds. The Board considered the Advisor’s statement that it believes that its expenses relating to providing advisory services to the Fund will increase during the next twelve months as the Advisor continues to build infrastructure and add new staff. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Fund 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 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 current asset levels. The Board considered the revenues and allocated costs (including the allocation methodology) of the Advisor in serving as investment advisor to the Fund for the period from inception through December 31, 2023 and the estimated profitability level for the Fund calculated by the Advisor based on such data, as well as complex-wide and product-line profitability data, for the twelve months ended December 31, 2023. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor’s 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 does 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, unanimously determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of the Fund. No single factor was determinative in the Board’s analysis.
Remuneration Disclosure Under the Alternative Investment Fund Managers Directive
First Trust Advisors L.P. (“First Trust”) is authorised and regulated by the U.S. Securities and Exchange Commission and is entitled to market shares of certain First Trust Exchange-Traded Fund II funds it manages (the “Funds”) in certain member states in the European Economic Area in accordance with the cooperation arrangements in Article 42 of the Alternative Investment Fund Managers Directive (the “Directive”). First Trust is required under the Directive to make disclosures in respect of remuneration. The following disclosures are made in line with First Trust’s interpretation of currently available regulatory guidance on remuneration disclosures.
During the year ended December 31, 2023, the amount of remuneration paid (or to be paid) by First Trust Advisors L.P. in respect of the Funds is $5,014,330. This figure is comprised of $220,586 paid (or to be paid) in fixed compensation and $4,793,744 paid (or to be paid) in variable compensation. There were a total of 26 beneficiaries of the remuneration described above. Those amounts include $2,504,893 paid (or to be paid) to senior management of First Trust Advisors L.P. and $2,509,437 paid (or to be paid) to other employees whose professional activities have a material impact on the risk profiles of First Trust Advisors L.P. or the Funds (collectively, “Code Staff”).
Code Staff included in the aggregated figures disclosed above are rewarded in line with First Trust’s remuneration policy (the “Remuneration Policy”) which is determined and implemented by First Trust’s senior management. The Remuneration Policy reflects First Trust’s ethos of good governance and encapsulates the following principal objectives:
i.
to provide a clear link between remuneration and performance of First Trust and to avoid rewarding for failure;
ii.
to promote sound and effective risk management consistent with the risk profiles of the funds managed by First Trust; and
iii.
to remunerate staff in line with the business strategy, objectives, values and interests of First Trust and the funds managed by First Trust in a manner that avoids conflicts of interest.
First Trust assesses various risk factors which it is exposed to when considering and implementing remuneration for Code Staff and considers whether any potential award to such person(s) would give rise to a conflict of interest. First Trust does not reward failure, or consider the taking of risk or failure to take risk in its remuneration of Code Staff.
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) First Trust assesses performance for the purposes of determining payments in respect of performance-related remuneration of Code Staff by reference to a broad range of measures including (i) individual performance (using financial and non-financial criteria), and (ii) the overall performance of First Trust. Remuneration is not based upon the performance of the Funds.
The elements of remuneration are balanced between fixed and variable and the senior management sets fixed salaries at a level sufficient to ensure that variable remuneration incentivises and rewards strong individual performance but does not encourage excessive risk taking.
No individual is involved in setting his or her own remuneration.
For the taxable year ended September 30, 2024, the following percentages of income dividends paid by the Funds qualify for the dividends received deduction available to corporations:
| Dividends Received
Deduction |
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 taxable year ended September 30, 2024, the following percentages of income dividends paid by the Funds are hereby designated as qualified dividend income:
| |
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 | |
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) | |
First Trust Dow Jones International Internet ETF | |
First Trust Bloomberg Emerging Market Democracies ETF | |
A portion of each of the Funds’ 2024 ordinary dividends (including short-term capital gains) paid to its shareholders during the fiscal year ended September 30, 2024, may be eligible for the Qualified Business Income (QBI) Deduction under the Internal Revenue Code of 1986, as amended (the “Code”), Section 199A for the aggregate dividends each Fund received from the underlying Real Estate Investment Trusts (REITs) these Funds invest in.
The following Funds meet the requirements of Section 853 of the Code and elect to pass through to their shareholders credit for foreign taxes paid. For the taxable year ended September 30, 2024, the total amounts of income received by the Funds from sources within foreign countries and possessions of the United States and of taxes paid to such countries are as follows:
| | |
| | | | |
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 | | | | |
First Trust Indxx Global Natural Resources Income ETF | | | | |
First Trust Indxx Global Agriculture ETF | | | | |
First Trust Indxx NextG ETF | | | | |
First Trust International Equity Opportunities ETF | | | | |
First Trust IPOX® Europe Equity Opportunities ETF | | | | |
First Trust Dow Jones International Internet ETF | | | | |
First Trust Bloomberg Emerging Market Democracies ETF | | | | |
First Trust Cloud Computing ETF
First Trust Nasdaq Cybersecurity ETF
Nasdaq®, ISE CTA Cloud ComputingTM Index, and Nasdaq CTA CybersecurityTM Index (“the Nasdaq Indexes”) 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 Funds have not been passed on by the Corporations as to their legality or suitability. The Funds are not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUNDS.
First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund
First Trust Global Wind Energy ETF
Nasdaq®, Clean Edge®, Nasdaq Clean Edge Smart Grid InfrastructureTM Index, and ISE Clean Edge Global Wind EnergyTM Index (“the Nasdaq Indexes”) 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 Funds have not been passed on by the Corporations as to their legality or suitability. The Funds are not issued, endorsed, sold or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUNDS.
First Trust Dow Jones Global Select Dividend Index Fund
First Trust Dow Jones International Internet ETF
Dow Jones Global Select Dividend Index and Dow Jones International Internet Index (“S&P Dow Jones Indexes”) are products of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and have 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
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) Funds are 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 nor do they have any liability for any errors, omissions, or interruptions of the S&P Dow Jones Indexes.
First Trust Alerian Disruptive Technology Real Estate ETF
First Trust Alerian U.S. NextGen Infrastructure ETF
Alerian, Alerian Disruptive Technology Real Estate Index and Alerian U.S. NextGen Infrastructure Index (“the Alerian Indexes”) are service marks of VettaFi LLC and have been licensed for use by First Trust Advisors L.P. The Funds are 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 Funds or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly or the ability of the Alerian Indexes to track general market performances. VettaFi’s only relationship to the Funds is the licensing of the service marks and the Alerian Indexes, which is determined, composed and calculated by VettaFi without regard to First Trust Advisors L.P. or the Funds. VettaFi is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Funds issued by First Trust Advisors L.P. VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of the Funds.
First Trust Indxx Global Agriculture ETF
First Trust Indxx Global Natural Resources Income ETF
First Trust Indxx NextG ETF
Indxx, Indxx Global Agriculture Index, Indxx Global Natural Resources Income Index and Indxx 5G & NextG Thematic IndexSM (“Indxx Indexes”) are trademarks of Indxx, Inc. (“Indxx”) and have been licensed for use for certain purposes by First Trust. The Funds are not sponsored, endorsed, sold or promoted by Indxx and Indxx makes no representation regarding the advisability of trading in such products. The Indxx Indexes are determined, composed and calculated by Indxx without regard to First Trust or the Funds.
First Trust International Equity Opportunities ETF
First Trust IPOX® Europe Equity Opportunities ETF
IPOX®, IPOX® International Index, and IPOX®-100 Europe Index are registered international trademarks and service marks of IPOX® Schuster LLC (“IPOX”) and have been licensed for use by First Trust. The Funds are not sponsored, endorsed, sold or promoted by IPOX, and IPOX makes no representation regarding the advisability of trading in such Funds. IPOX® is an international trademark of IPOX Schuster LLC. Index of Initial Public Offerings (IPOX) and IPOX Derivatives Patent No. US 7,698,197.
First Trust STOXX® European Select Dividend Index Fund
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.
First Trust S-Network Future Vehicles & Technology ETF
S-Network and S-Network Electric & Future Vehicle Ecosystem 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. VettaFi’s only relationship to the Fund is the licensing of the service marks and the Index, which is determined, composed and calculated by VettaFi without regard to First Trust Advisors L.P. or the Fund. VettaFi is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Fund issued by First Trust Advisors L.P. VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of the Fund.
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) First Trust Bloomberg Emerging Market Democracies ETF
“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.
Annual Financial
Statements and
Other Information |
For the Period Ended
September 30, 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
Annual Financial Statements and Other Information
September 30, 2024
Performance and Risk Disclosure
There is no assurance that 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”) 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.
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.
First Trust Advisors L.P., the Funds’ 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 that provides insight into each Fund’s performance and investment approach.
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 Nasdaq Lux Digital Health Solutions ETF (EKG)Portfolio of InvestmentsSeptember 30, 2024
| | |
|
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| | |
| Myriad Genetics, Inc. (a) | |
| | |
| Twist Bioscience Corp. (a) | |
| | |
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| | |
| 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) | |
| | |
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| Guardant Health, Inc. (a) | |
| Hims & Hers Health, Inc. (a) | |
| LifeStance Health Group, Inc. (a) | |
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| Privia Health Group, Inc. (a) | |
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| Doximity, Inc., Class A (a) | |
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| Veeva Systems, Inc., Class A (a) | |
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| Oscar Health, Inc., Class A (a) | |
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|
| Life Sciences Tools & Services | |
| 10X Genomics, Inc., Class A (a) | |
| Adaptive Biotechnologies Corp. (a) | |
| Cytek Biosciences, Inc. (a) | |
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MONEY MARKET FUNDS — 0.1% |
| Morgan Stanley Institutional Liquidity Funds - Treasury Portfolio - Institutional Class - 4.76% (b) | |
| | |
|
|
| Total Investments — 100.1% | |
| | |
| Net Other Assets and Liabilities — (0.1)% | |
| | |
| Non-income producing security. |
| Rate shown reflects yield as of September 30, 2024. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 InvestmentsSeptember 30, 2024
| | |
COMMON STOCKS (a) — 99.7% |
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| Electronic Equipment, Instruments & Components | |
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| Sunny Optical Technology Group Co., Ltd. (HKD) | |
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| GungHo Online Entertainment, Inc. (JPY) | |
| Koei Tecmo Holdings Co., Ltd. (JPY) | |
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| Netmarble Corp. (KRW) (b) (c) (d) | |
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| ROBLOX Corp., Class A (b) | |
| Square Enix Holdings Co., Ltd. (JPY) | |
| Take-Two Interactive Software, Inc. (b) | |
| Ubisoft Entertainment S.A. (EUR) (b) | |
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| Household Durables — 3.0% | |
| | |
| Interactive Media & Services | |
| Meta Platforms, Inc., Class A | |
| | |
| Tencent Holdings Ltd. (HKD) | |
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| Keywords Studios PLC (GBP) | |
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|
| Semiconductors & Semiconductor Equipment | |
| Advanced Micro Devices, Inc. (b) | |
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| Microchip Technology, Inc. | |
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| STMicroelectronics N.V. (EUR) | |
| Taiwan Semiconductor Manufacturing Co., Ltd., ADR | |
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| Zoom Video Communications, Inc., Class A (b) | |
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| Technology Hardware, Storage | |
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| Xiaomi Corp., Class B (HKD) (b) (c) (d) | |
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| | |
MONEY MARKET FUNDS — 0.3% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (e) | |
| | |
|
|
| Total Investments — 100.0% | |
| | |
| Net Other Assets and Liabilities — 0.0% | |
| | |
| 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)September 30, 2024 | 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 September 30, 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. |
| Amount is less than 0.1%. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 InvestmentsSeptember 30, 2024
| | |
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 SABESP (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) | |
| Petroleo Brasileiro S.A. (Preference Shares) (BRL) | |
| | |
| | |
| | |
| | |
| | |
| Airtac International Group (TWD) | |
| Alchip Technologies Ltd. (TWD) | |
| | |
| | |
| | |
| | |
| | |
| | |
| Eurobank Ergasias Services and Holdings S.A. (EUR) | |
| National Bank of Greece S.A. (EUR) | |
| | |
| | |
| Arca Continental S.A.B. de C.V. (MXN) | |
| Coca-Cola Femsa S.A.B. de C.V. (MXN) | |
| Grupo Aeroportuario del Pacifico S.A.B. de C.V., Class B (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) | |
| Kimberly-Clark de Mexico S.A.B. de C.V., Class A (MXN) | |
| Wal-Mart de Mexico S.A.B. de C.V. (MXN) | |
| | |
| | |
| Bank of the Philippine Islands (PHP) | |
| | |
| SM Investments Corp. (PHP) | |
| SM Prime Holdings, Inc. (PHP) | |
| | |
| | |
| 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) | |
| Santander Bank Polska S.A. (PLN) | |
| | |
| | |
| | |
| Aspen Pharmacare Holdings Ltd. (ZAR) | |
| | |
| Bidvest Group (The) Ltd. (ZAR) | |
| Capitec Bank Holdings Ltd. (ZAR) | |
| | |
| | |
| | |
| | |
| Standard Bank Group Ltd. (ZAR) | |
| | |
| | |
| | |
| Hana Financial Group, Inc. (KRW) | |
See Notes to Financial Statements
First Trust Emerging Markets Human Flourishing ETF (FTHF)Portfolio of Investments (Continued)September 30, 2024 | | |
COMMON STOCKS (a) (b) (Continued) |
| | |
| Hyundai Mobis Co., Ltd. (KRW) | |
| | |
| KB Financial Group, Inc. (KRW) | |
| | |
| | |
| LG Energy Solution Ltd. (KRW) (c) | |
| | |
| 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) | |
| Samsung SDS 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) | |
| Compal Electronics, Inc. (TWD) | |
| 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) | |
| Fubon Financial Holding Co., Ltd. (TWD) | |
| Gigabyte Technology Co., Ltd. (TWD) | |
| Globalwafers Co. Ltd. (TWD) | |
| Hua Nan Financial Holdings Co., Ltd. (TWD) | |
| | |
| | |
|
| | |
| KGI Financial Holding 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) | |
| Shanghai Commercial & Savings Bank Ltd. (The) (TWD) | |
| 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) | |
| | |
| Yuanta Financial Holding Co., Ltd. (TWD) | |
| | |
| | |
| | |
MONEY MARKET FUNDS — 0.0% |
| Dreyfus Government Cash Management Fund, Institutional Shares - 4.80% (f) | |
| | |
|
|
| Total Investments — 99.5% | |
| | |
| Net Other Assets and Liabilities — 0.5% | |
| | |
See Notes to Financial Statements
First Trust Emerging Markets Human Flourishing ETF (FTHF)Portfolio of Investments (Continued)September 30, 2024 | Portfolio securities are categorized based upon their country of incorporation, which can be different from the country categorization of the Fund’s underlying index. |
| 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 September 30, 2024. |
Abbreviations throughout the Portfolio of Investments: |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Currency Exposure Diversification | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Amount is less than 0.1%. |
Valuation InputsA summary of the inputs used to value the Fund’s investments as of September 30, 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 Liabilities
September 30, 2024
| 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 | | | |
| | | |
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| | | |
|
| | | |
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 Operations
For the Period Ended September 30, 2024
| 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) |
| | |
| | |
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) |
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See Notes to Financial Statements
First Trust Exchange-Traded Fund IIFinancial Highlights
For a share outstanding throughout each period First Trust Nasdaq Lux Digital Health Solutions ETF (EKG)
| | 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)
| | 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)
| |
|
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 IISeptember 30, 2024 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”).
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 IISeptember 30, 2024 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 IISeptember 30, 2024 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 September 30, 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 IISeptember 30, 2024 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 period ended September 30, 2024 were 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 | | | |
First Trust Emerging Markets Human Flourishing ETF | | | |
The tax character of distributions paid by each Fund during the fiscal year ended September 30, 2023 were 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, 2024, 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 | | | |
First Trust Emerging Markets Human Flourishing 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, 2023 and 2024 remain open to federal and state audit. For FTHF, the taxable period ended 2024 remains open to federal and state audit. As of September 30, 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, 2024, 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.
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 | Non-Expiring
Capital Loss
Carryforwards |
First Trust Nasdaq Lux Digital Health Solutions ETF | |
First Trust Indxx Metaverse ETF | |
First Trust Emerging Markets Human Flourishing 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 period ended September 30, 2024, 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 | | |
| | |
In order to present paid-in capital and accumulated distributable earnings (loss) (which consists of accumulated net investment income (loss), accumulated net realized gain (loss) on investments and net unrealized appreciation (depreciation) on investments) on the Statements of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in capital, accumulated net investment income (loss) and accumulated net realized gain (loss) on investments. These adjustments are primarily due to the difference between book and tax treatments of income and gains on various investment securities held by the Funds and in-kind transactions. The results of operations and net assets were not affected by these adjustments. For the fiscal period ended September 30, 2024, the adjustments for each Fund were as follows:
| Accumulated
Net Investment
Income (Loss) | Accumulated
Net Realized
Gain (Loss)
on Investments | |
First Trust Nasdaq Lux Digital Health Solutions ETF | | | |
First Trust Indxx Metaverse ETF | | | |
First Trust Emerging Markets Human Flourishing ETF | | | |
As of September 30, 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,
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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 (“BNY”). Under the service agreements, BNY performs custodial, fund accounting, certain administrative services, and transfer agency services for each Fund. As custodian, BNY is responsible for custody of each Fund’s assets. As fund accountant and administrator, BNY is responsible for maintaining the books and records of each Fund’s securities and cash. As transfer agent, BNY is responsible for maintaining shareholder records for each Fund. BNY 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 period ended September 30, 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 September 30, 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,
Notes to Financial Statements (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 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.
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, 2026.
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.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of First Trust Exchange-Traded Fund II:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of First Trust Nasdaq Lux Digital Health Solutions ETF, First Trust Indxx Metaverse ETF, and First Trust Emerging Markets Human Flourishing ETF (the “Funds”), each a series of the First Trust Exchange-Traded Fund II, including the portfolios of investments, as of September 30, 2024, and the related statements of operations, the statement of changes in net assets, and the financial highlights for the periods listed in the table below; and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of September 30, 2024, and the results of their operations, the changes in their net assets, and the financial highlights for the periods listed in the table below, in conformity with accounting principles generally accepted in the United States of America.
Individual Funds Included
in the Trust | | Statements of Changes
in Net Assets | |
First Trust Nasdaq Lux Digital Health Solutions ETF | For the year ended September 30, 2024 | For the years ended September 30, 2024, and 2023 | For the years ended September 30, 2024, and 2023, and for the period from March 22, 2022 (commencement of investment operations) through September 30, 2022 |
First Trust Indxx Metaverse ETF | For the years ended September 30, 2024, and 2023, and for the period from April 19, 2022 (commencement of investment operations) through September 30, 2022 |
First Trust Emerging Markets Human Fluorishing ETF | For the period from October 30, 2023 (commencement of investment operations) through September 30, 2024 |
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 2024, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche, LLP
Chicago, Illinois
November 20, 2024
We have served as the auditor of one or more First Trust investment companies since 2001.
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) Changes in and Disagreements with Accountants (Item 8 of Form N-CSR)
There were no changes in or disagreements with the Funds’ accountants during the fiscal period ended September 30, 2024.
Proxy Disclosures (Item 9 of Form N-CSR)
There were no matters submitted for vote by shareholders of any Fund during the fiscal period ended September 30, 2024.
Remuneration Paid to Directors, Officers, and Others (Item 10 of Form N-CSR)
Independent Trustees and any member of any advisory board of each Fund are compensated through the unitary management fee paid by each Fund to the advisor and not directly by each Fund. The investment advisory fee paid is included in the Statements of Operations.
Statement Regarding the Basis for the Board’s Approval of Investment Advisory Contract (Item 11 of Form N-CSR)
The Board of Trustees of First Trust Exchange-Traded Fund II (the “Trust”), including the Independent Trustees, unanimously approved the continuation of the Investment Management Agreement (the “Agreement”) with First Trust Advisors L.P. (the “Advisor”) on behalf of the following series of the Trust (each a “Fund” and collectively, the “Funds”):
First Trust Nasdaq Lux Digital Health Solutions ETF (EKG)
First Trust Indxx Metaverse ETF (ARVR)
The Board approved the continuation of the Agreement for each Fund for a one-year period ending June 30, 2025 at a meeting held on June 2–3, 2024. The Board determined for each Fund that the continuation of the Agreement is in the best interests of the Fund in light of the nature, extent and quality of the services provided and such other matters as the Board considered to be relevant in the exercise of its business judgment.
To reach this determination for each Fund, 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. At meetings held on April 16, 2024, April 25, 2024 and June 2–3, 2024, the Board, including the Independent Trustees, reviewed materials provided by the Advisor responding to requests for information from counsel to the Independent Trustees, submitted on behalf of the Independent Trustees, that, among other things, outlined: the services provided by the Advisor to each Fund (including the relevant personnel responsible for these services and their experience); the unitary fee rate schedule payable by each 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 clients of the Advisor, including other exchange-traded funds (“ETFs”) managed by the Advisor; the expense ratio of each Fund as compared to expense ratios of the funds in the Fund’s Expense Group and Expense Universe; performance information for each Fund, including comparisons of each Fund’s performance to that of one or more relevant benchmark indexes and to that of a performance group of funds and a broad performance universe of funds (the “Performance Universe”), each assembled by Broadridge; the nature of expenses incurred in providing services to each 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 Board reviewed initial materials with the Advisor at the meeting held on April 25, 2024, prior to which the Independent Trustees and their counsel met separately to discuss the information provided by the Advisor. Following the April 25, 2024 meeting, counsel to the Independent Trustees, on behalf of the Independent Trustees, requested certain clarifications and supplements to the materials provided, and the information provided in response to those requests was considered at an executive session of the Independent Trustees and their counsel held prior to the June 2–3, 2024 meeting, as well as at the June meeting. The Board applied its business judgment to determine whether the arrangement between the Trust and the Advisor continues to be a reasonable business arrangement from each Fund’s perspective. The Board determined that, given the totality of the information provided with respect to the Agreement, the Board had received sufficient information to renew the Agreement. The Board considered that shareholders chose to invest or remain invested in a Fund knowing that the Advisor manages the Fund and knowing the Fund’s unitary fee.
In reviewing the Agreement for each Fund, the Board considered the nature, extent and quality of the services provided by the Advisor under the Agreement. The Board considered that the Advisor is responsible for the overall management and administration of the
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) Trust and each Fund and reviewed all of the services provided by the Advisor to the Funds, as well as the background and experience of the persons responsible for such services. In reviewing the services 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 each Fund’s compliance with the 1940 Act, as well as each Fund’s compliance with its investment objective, policies and restrictions. The Board also considered a report from the Advisor with respect to its risk management functions related to the operation of the Funds. Finally, as part of the Board’s consideration of the Advisor’s services, the Advisor, in its written materials and at the April 25, 2024 meeting, described to the Board the scope of its ongoing investment in additional personnel and infrastructure to maintain and improve the quality of services provided to the Funds and the other funds in the First Trust Fund Complex. In light of the information presented and the considerations made, the Board concluded that the nature, extent and quality of the services provided to the Trust and each Fund by the Advisor under the Agreement have been and are expected to remain satisfactory and that the Advisor has managed each Fund consistent with its investment objective, policies and restrictions.
The Board considered the unitary fee rate schedule payable by each Fund under the Agreement for the services provided. The Board considered that as part of the unitary fee the Advisor is responsible for each 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, 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 Groups, as well as advisory and unitary fee rates charged by the Advisor to other fund (including ETFs) and non-fund clients, as applicable. Because each Fund pays 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 each Fund was above the median total (net) expense ratio of the peer funds in its respective Expense Group. With respect to the Expense Groups, the Board discussed with Broadridge its methodology for assembling peer groups and discussed with the Advisor limitations in creating peer groups for index ETFs, including differences in underlying indexes and index-tracking methodologies that can result in greater management complexities across seemingly comparable ETFs, and different business models that may affect the pricing of services among ETF sponsors. The Board took these limitations and differences into account in considering the peer data. With respect to fees charged to other non-ETF clients, the Board considered differences between the Funds and other non-ETF clients that limited their comparability. In considering the unitary fee rate schedules overall, the Board also considered the Advisor’s statement that it seeks to meet investor needs through innovative and value-added investment solutions and the Advisor’s demonstrated long-term commitment to each Fund and the other funds in the First Trust Fund Complex.
The Board considered performance information for each Fund. The Board noted the process it has established for monitoring each Fund’s performance and portfolio risk on an ongoing basis, which includes quarterly performance reporting from the Advisor for the Funds. The Board determined that this process continues to be effective for reviewing each Fund’s performance. The Board received and reviewed information for the one-year period ended December 31, 2023 regarding the performance of each Fund’s underlying index, the correlation between each Fund’s performance and that of its underlying index, each Fund’s tracking difference and each Fund’s excess return as compared to its benchmark index. Based on the information provided and its ongoing review of performance, the Board concluded that each Fund was correlated to its underlying index and that the tracking difference for each Fund was within a reasonable range. In addition, the Board reviewed data prepared by Broadridge comparing each Fund’s performance to that of its respective Performance Universe and to that of a broad-based benchmark index. However, given each Fund’s objective of seeking investment results that correspond generally to the performance of its underlying index, the Board placed more emphasis on its review of correlation and tracking difference.
On the basis of all the information provided on the unitary fee and performance of each Fund and the ongoing oversight by the Board, the Board concluded that the unitary fee for each Fund continues to be reasonable and appropriate in light of the nature, extent and quality of the services provided by the Advisor to each Fund under the Agreement.
The Board considered information and discussed with the Advisor whether there were any economies of scale in connection with providing advisory services to the Funds at current asset levels and whether the Funds may benefit from any economies of scale. The Board noted that the unitary fee rate schedule for each Fund includes breakpoints pursuant to which the unitary fee rate will be reduced as assets of the Fund meet certain thresholds. The Board considered the Advisor’s statement that it believes that its expenses relating to providing advisory services to the Funds will increase during the next twelve months as the Advisor continues to build infrastructure and add new staff. The Board also noted that under the unitary fee structure, any reduction in expenses associated with the management and operations of the Funds would benefit the Advisor, but that the unitary fee structure provides a level of certainty in expenses for shareholders of the Funds. The Board concluded that the unitary fee rate schedule for each Fund reflects an appropriate
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) level of sharing of any economies of scale that may be realized in the management of the Fund at current asset levels. The Board considered the revenues and allocated costs (including the allocation methodology) of the Advisor in serving as investment advisor to each Fund for the twelve months ended December 31, 2023 and the estimated profitability level for each Fund calculated by the Advisor based on such data, as well as complex-wide and product-line profitability data, for the same period. The Board noted the inherent limitations in the profitability analysis and concluded that, based on the information provided, the Advisor’s profitability level for each Fund was not unreasonable. In addition, the Board considered indirect benefits described by the Advisor that may be realized from its relationship with the Funds. 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 Funds, may have had no dealings with the Advisor or FTP, and noted that the Advisor does not utilize soft dollars in connection with the Funds. 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, unanimously determined that the terms of the Agreement continue to be fair and reasonable and that the continuation of the Agreement is in the best interests of each Fund. No single factor was determinative in the Board’s analysis.
For the taxable period ended September 30, 2024, the following percentages of income dividends paid by the Funds qualify for the dividends received deduction available to corporations:
| Dividends Received
Deduction |
First Trust Nasdaq Lux Digital Health Solutions ETF | |
First Trust Indxx Metaverse ETF | |
First Trust Emerging Markets Human Flourishing ETF | |
For the taxable period ended September 30, 2024, the following percentages of income dividends paid by the Funds are hereby designated as qualified dividend income:
| |
First Trust Nasdaq Lux Digital Health Solutions ETF | |
First Trust Indxx Metaverse ETF | |
First Trust Emerging Markets Human Flourishing ETF | |
The following Fund meets the requirements of Section 853 of the Internal Revenue Code of 1986, as amended and elects to pass through to its shareholders credit for foreign taxes paid. For the taxable period ended September 30, 2024, the total amounts of income received by the Fund from sources within foreign countries and possessions of the United States and of taxes paid to such countries are as follows:
| | |
| | | | |
First Trust Emerging Markets Human Flourishing ETF | | | | |
First Trust Nasdaq Lux Digital Health Solutions ETF
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.
Other Information (Continued)
First Trust Exchange-Traded Fund IISeptember 30, 2024 (Unaudited) First Trust Indxx Metaverse ETF
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.
First Trust Emerging Markets Human Flourishing ETF
“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.
(b) The Financial Highlights is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
This information is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
This statement is included in the Financial Statements and Other Information filed under Item 7(a) of this Form N-CSR.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 15. 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 16. 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 has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
| (a) | Not applicable to the Registrant. |
| (b) | Not applicable to the Registrant. |
Item 18. Recovery of Erroneously Awarded Compensation.
| (a) | Not applicable to the Registrant. |
| (b) | Not applicable to the Registrant. |
Item 19. Exhibits.
| (a)(2) | Not applicable to the Registrant. |
| (a)(4) | Not applicable to the Registrant. |
| (a)(5) | Not applicable to the Registrant. |
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) |
* Print the name and title of each signing officer under his or her signature.
